Process: 781/2014-T

Date: October 16, 2015

Tax Type: Selo

Source: Original CAAD Decision

Summary

This arbitration case (Process 781/2014-T) concerns Stamp Tax assessments totaling €20,148.10 imposed on a housing cooperative for a property with 16 independent units in vertical ownership under item 28.1 of the General Stamp Tax Table (TGIS). The central dispute revolves around whether the €1,000,000 threshold for high-value property taxation applies to each independent unit individually or to the aggregate taxable property value (VPT) of the entire building. The cooperative argued it was exempt under Article 66-A(12) of the Tax Benefits Statute (EBF) and that since no individual unit exceeded €1 million VPT, no tax was due. Additionally, the cooperative contended that the relevant VPT should be the 2011 valuation (€75,008.31) rather than a March 2013 revaluation applied retroactively to 2012, and that if tax applied, the transitional rate of 0.5% should apply instead of 1%. The Tax Authority maintained that cooperatives lack exemption for item 28 TGIS (only Article 44 EBF exemptions apply), that the total property VPT determines tax incidence rather than individual unit values, and that the 1% rate applies to late assessments issued in 2013. The case raises critical questions about vertical property taxation, the timing of property valuations for determining tax liability, cooperative tax benefits, and the application of transitional tax regimes. The resolution impacts how properties divided into independent units are assessed for Stamp Tax purposes and whether cooperative status provides protection from high-value property taxation, with significant implications for property ownership structures and tax planning.

Full Decision

ARBITRAL AWARD

CAAD: Tax Arbitration

Case No. 781/2014 – T

Subject Matter: Stamp Tax – item 28.1 of the General Stamp Tax Table (TGIS)

Claimant / Applicant: COOPERATIVA A… CRL

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

1. Statement of Facts

On 20-11-2014, COOPERATIVA A…, CRL, a legal entity No. …, with registered office at Avenue …, No. …, …, …-… Lisbon, hereinafter referred to as the Claimant, submitted to the Administrative Arbitration Center (CAAD) a request for the constitution of an arbitral tribunal with a view to annulling the tax assessment acts for Stamp Tax Nos. 2013 …, 2013 …, 2013 …, 2013 …, 2013 …, 2013 …, 2013 …, 2013 …, 2013 …, 2013 …, 2013 …, 2013 …, 2013 …, 2013 …, 2013 … and 2013 …, in the total amount of € 20,148.10, relating to item 28.1 of the General Table of Stamp Tax. Said assessments relate to the urban property located at Avenue of …, No. …, parish of …, municipality of Lisbon, registered in the urban property register of the parish of … under article …, constituted in full ownership and with 16 units with independent use, for the year 2012.

The Claimant further requests the annulment of the consequent express dismissal act of the administrative complaint that had as its object the aforementioned Stamp Tax assessments.

The Claimant alleges that the A.T.A., in issuing the Stamp Tax assessments, failed to take into account the tax status of the taxpayer, namely the fact that the Claimant is a housing cooperative and is therefore exempt from stamp tax, under the terms of Article 66º-A, No. 12 of the Tax Benefits Statute (EBF).

The Claimant further alleges that, since none of the units with independent use has a taxable property value (VPT) exceeding one million euros (€1,000,000), Stamp Tax cannot be assessed or collected, under penalty of violating the principles of contributory capacity, legality, equality and tax justice.

The Claimant states that the 2012 Stamp Tax assessments in question are unlawful due to violation of law. First, the taxable property value (VPT) to be considered would be that of 2011, which in this case was € 75,008.31, and therefore there would be no taxable fact subject to Stamp Tax. The Claimant confirms that neither on 31-10-2012 nor on 31-12-2012 was the VPT equal to or exceeding one million euros. It further states that the law required that the taxable fact occur on 31-10-2012 and the property valuation carried out in March 2013 could not have operated retroactively.

Furthermore, it argues that, even if the VPT of the property at the date of the taxable fact were exceeding one million euros, the applicable rate would be that of the transitional regime, 0.5%, and not 1%.

The Claimant further requests the refund of taxes paid in the amount of € 20,148.10, as well as the payment of compensatory interest, and further requesting that the nullity of the assessments be declared.

The Tax and Customs Authority presented its response on 19-03-2015, defending the maintenance of the tax assessment acts in question, requesting the dismissal of the claim, and alleging that the relevant property value for purposes of tax incidence is the total taxable property value of the urban property and not the taxable property value of each of the units or divisions that compose it, even if they are susceptible to independent use.

The A.T.A. begins by stating that the rate applied in the assessments in question was 1% and not 0.5%, because it understood that the transitional regime of Article 6 of Law No. 55-A/2012 would not apply because this is a late assessment and not an assessment made in 2012 (assessments were issued on 17-07-2013).

The Respondent alleges that cooperatives are not exempt from item 28 of the General Table of Stamp Tax (TGIS), and that item 28 only provides for the exemption under Article 44 of the EBF, and that its interpretation by means of analogical interpretation is not possible.

A sole arbitrator, Suzana Fernandes da Costa, was appointed on 15-01-2015. In accordance with Article 11, No. 1, subparagraph c) of the Tax Arbitration Regulations (RJAT), the sole arbitral tribunal was constituted on 10-02-2015.

On 31-03-2015, the A.T.A. filed the administrative proceeding, which it had protested in joining when presenting its response.

The arbitral tribunal meeting provided for in Article 18 of the RJAT was scheduled for 08-06-2015 at 3:00 p.m.

On 06-05-2015, the Claimant filed a request and substitution of counsel without reservation in favor of Mr. Lawyer, Dr. B….

And on 27-05-2015, the filing of said request and substitution of counsel was admitted.

The A.T.A. came, on 29-05-2015, to request the waiver of the meeting provided for in Article 18 of the RJAT.

And on 01-06-2015, the date designated for the holding of the arbitral tribunal meeting was cancelled due to supervening impossibility of the arbitrator's schedule, and it was decided to notify the Claimant to pronounce itself within 10 days on the request for waiver of the meeting.

Since the Claimant did not pronounce itself, a ruling was issued on 13-07-2015, waiving the holding of the meeting, as there were no exceptions to be considered and given the position of the parties. The parties were further notified to submit their written arguments within a period of 15 days. The date of 16-10-2015 was further designated for the issuance of the arbitral award, and the Claimant was cautioned regarding payment of the subsequent arbitration fee.

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

On 29-07-2015, having verified that the date for issuance of the award exceeded the six-month period provided for the issuance of the decision, a ruling was issued extending the deadline to 16-10-2015.

On 14-09-2015, the Claimant submitted a request stating that all of its legal arguments were reflected in the initial petition and that the case should proceed to immediate issuance of the arbitral award.

The arbitration request is timely, in accordance with Article 10, No. 1, subparagraph a) of Decree-Law No. 10/2011 of 20 January and Article 102, No. 1, subparagraph a) of the Code of Tax Procedure and Process.

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

2. Factual Matter

2.1. Facts Established:

Having examined the documentary evidence produced and the position of the parties contained in the procedural documents, the following facts are considered proven and having interest for the decision of the case:

  1. The Claimant, COOPERATIVA B… CRL, in 2012, was the owner of the urban property located at Avenue …, No. …, parish of …, municipality of Lisbon, registered in the urban property register of the parish of … under article …, constituted in vertical ownership and with 16 units with independent use, all intended for housing, as per the property records attached to the arbitration request as document 1.

  2. The Claimant was notified of the following 2012 Stamp Tax assessments:

  • Assessment No. 2013 … in the amount of € 1,147.50, relating to unit 1D of the aforementioned property, whose VPT is € 114,750.00;

  • Assessment No. 2013 … in the amount of € 1,085.90, relating to unit 1E of the aforementioned property, whose VPT is € 108,590.00;

  • Assessment No. 2013 … in the amount of € 1,100.80, relating to unit 2D of the aforementioned property, whose VPT is € 110,080.00;

  • Assessment No. 2013 … in the amount of € 1,035.30, relating to unit 2E of the aforementioned property, whose VPT is € 103,530.00;

  • Assessment No. 2013 … in the amount of € 2,032.40, relating to unit 3 of the aforementioned property, whose VPT is € 203,240.00;

  • Assessment No. 2013 … in the amount of € 2,032.40, relating to unit 4 of the aforementioned property, whose VPT is € 203,240.00;

  • Assessment No. 2013 … in the amount of € 2,032.40, relating to unit 5 of the aforementioned property, whose VPT is € 203,240.00;

  • Assessment No. 2013 … in the amount of € 1,100.80, relating to unit 6D of the aforementioned property, whose VPT is € 110,080.00;

  • Assessment No. 2013 … in the amount of € 1,038.00, relating to unit 6E of the aforementioned property, whose VPT is € 103,800.00;

  • Assessment No. 2013 … in the amount of € 1,100.80, relating to unit 7D of the aforementioned property, whose VPT is € 110,080.00;

  • Assessment No. 2013 … in the amount of € 1,035.30, relating to unit 7E of the aforementioned property, whose VPT is € 103,530.00;

  • Assessment No. 2013 … in the amount of € 2,032.40, relating to unit 8 of the aforementioned property, whose VPT is € 203,240.00;

  • Assessment No. 2013 … in the amount of € 1,100.80, relating to unit 9D of the aforementioned property, whose VPT is € 110,080.00;

  • Assessment No. 2013 … in the amount of € 1,035.30, relating to unit 9E of the aforementioned property, whose VPT is € 103,530.00;

  • Assessment No. 2013 … in the amount of € 619.00, relating to unit 10D of the aforementioned property, whose VPT is € 61,900.00;

  • Assessment No. 2013 … in the amount of € 619.00, relating to unit 10E of the aforementioned property, whose VPT is € 61,900.00.

The assessments in question were issued on the basis of the total VPT of the property in the amount of € 2,014,810.00.

None of the units or divisions with independent use possesses a taxable property value exceeding one million euros.

The Claimant was notified on 01-03-2013 of the general valuation of each of the 16 units with independent use and did not request a revaluation.

The Claimant submitted an administrative complaint of all the Stamp Tax assessments in question in the present case.

The administrative complaint of the Stamp Tax assessments was expressly dismissed, the Claimant being notified of its dismissal by registered mail with proof of receipt on 26-08-2014, as per copy of the decision filed with the administrative proceeding.

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

2.2. Justification of Established Factual Matters:

With regard to the facts established, the arbitrator's conviction was based, on the one hand, on the documents filed with the proceedings by the Claimants, in particular the assessments and the property records, and on the other hand, on the positions taken by the parties.

2.3. Facts Not Proven

The Claimant failed to prove that it made any payment relating to the Stamp Tax assessments in question in the present case.

2.4. Justification of Unproven Factual Matters:

With regard to the unproven factual matter, the conviction was based on the analysis of the documents filed.

3. Legal Matters:

3.1. Object and Scope of the Present Proceeding

The following questions are to be decided in the present case:

  • to determine whether cooperatives benefit or not from the exemption of item 28.1 of the TGIS, under Article 66º-A, No. 12 of the EBF;

  • to determine whether item 28.1 of the General Table of Stamp Tax (TGIS), in the case of properties not constituted in horizontal property regime, is levied on the sum of the taxable property value attributed to the different units or floors (global VPT), or, rather, on the taxable property value of each part of the property with independent economic use.

On this latter question, among others, the CAAD awards issued in cases No. 280/2013-T, 26/2014-T, 88/2014-T, 206/2014-T, 290/2014-T, 428/2014-T, 451/2014-T, 457/2014-T, 458/2014-T and 567/2014-T have already pronounced.

3.2. Question of the Exemption Applicable to Cooperatives

The State Budget Law for 2012, Law No. 64-B/2011 of 30 December, repealed the Cooperative Tax Statute, which provided certain exemptions applicable to cooperatives, and added Article 66º-A to the Tax Benefits Statute.

This Article 66º-A, in its No. 12, provides as follows: "cooperatives are exempt from stamp tax on acts, contracts, documents, titles and other facts, including free transfers of property, when this tax constitutes their burden."

From the letter of the law results a subjective exemption of cooperatives with respect to stamp tax, provided in sufficiently broad terms to cover the exemption relating to item 28.1 of the TGIS. The exemption results from the letter of the law and does not require any recourse to analogy.

Since the stamp tax in question in the present case is a burden of the cooperative, the latter will be exempt from it by virtue of the wording of No. 12 of Article 66º-A of the EBF (see award of the Central Administrative Court South of case No. 04457/11 of 30-04-2013, which states that "cooperatives are exempt from stamp tax when the tax constitutes their burden").

Thus, the Claimant is exempt from stamp tax corresponding to item 28.1 of the TGIS.

Even if this could not be understood thus, the Stamp Tax assessments in question in the present case would still have to be annulled, because the legal prerequisite for the incidence of Stamp Tax provided in Item 28 of the TGIS is not verified, as we shall see.

3.3. Question of the Taxable Property Value Relevant for Application of Item 28.1 of the TGIS and the Alleged Violation of the Principle of Equality

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

For the Claimant, the subjection to the stamp tax contained in item No. 28.1 of the TGIS should be assessed not by the total value of the property but by the value attributed to each of the parts with independent use, according to the respective VPT, and should follow the same criterion as the determination of the Property Tax (IMI).

Let us examine:

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

"28 – Ownership, usufruct or right of superficies of urban properties whose taxable property value shown in the property register, in accordance with the Code of Property Tax (CIMI), is equal to or exceeding € 1,000,000 – on the taxable property value used for purposes of Property Tax:

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

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

c) The taxable property value to be used in the assessment of the tax corresponds to what results from the rules provided in the Property Tax Code by reference to the year 2011; (…)

f) The applicable rates are as follows:

i) Properties with residential use assessed under the Property Tax Code: 0.5%;

ii) Properties with residential use not yet assessed under the Property Tax Code: 0.8%;"

Item 28.1 TGIS and subitems i) and ii) of subparagraph f) of No. 1 of Article 6 of Law No. 55-A/2012 contains a concept that is not used in any other tax legislation, which is "property with residential use."

For its part, Article 67, No. 2 of the Stamp Tax Code, added by said Law, provides that "to matters not regulated in this Code relating to item 28 of the General Table the Property Tax Code applies subsidiarily."

The rule of incidence refers to urban properties, whose concept is that which results from Article 2 of the Property Tax Code, with the determination of the VPT following the terms provided in Article 38 and following of the same code.

For its part, Article 6 of the Property Tax Code indicates the different species of urban properties, and determines that "residential, commercial, industrial or for services are the buildings or constructions licensed for such purpose or, in the absence of a license, that have as their normal destination each of these purposes." (See subparagraph a) of No. 1 of Article 6 of the Property Tax Code).

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

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

From this it follows that the respective Property Tax, as well as the Stamp Tax, are assessed individually with respect to each of the parts. For that reason, the legal criterion for defining the incidence of the new tax must be the same.

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

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

The criterion defended by the A.T.A., which takes into account the sum of the parts, with the argument that the property would not be constituted under the horizontal property regime, finds no legal support and is contrary to the criterion that results from the Property Tax Code and that applies by referral, in the seat of Stamp Tax.

Furthermore, the law itself expressly establishes, in the final part of item 28 of the TGIS, that Stamp Tax to be levied on urban properties of value equal to or exceeding one million euros (€1,000,000) – "on the taxable property value used for purposes of Property Tax."

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

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

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

Regarding the principle of equality, see CAAD awards No. 50/2012-T and 218/2013-T, and Constitutional Court awards No. 142/04 and 187/2013.

We conclude as in CAAD award No. 218/2013-T, "the Stamp Tax assessment now under review manifestly violates the principle of tax equality provided for in Article 13 of the Portuguese Constitution, because: i) it is based on a rule that treats taxpayers who are in identical situations in very different ways, the measure of difference not being gauged by their real contributory capacity; ii) it is based on an arbitrary legal solution devoid of any rational foundation."

In the case before us, the property in question is in vertical ownership and contains sixteen units and divisions with independent use intended for housing, as proven above. Given that none of the units intended for housing has a taxable property value equal to or exceeding one million euros (€1,000,000), as results from the documents filed with the proceedings, it is concluded that the legal prerequisite for the incidence of Stamp Tax provided for in Item 28 of the TGIS is not verified.

Looking now at the ratio legis of the provision in question in item 28.1 TGIS and citing CAAD award No. 50/2013-T "the legislator, in introducing this legislative innovation, considered as the determining element of contributory capacity urban properties, with residential use, of high value (luxury), more precisely, of value equal to or exceeding one million euros (€1,000,000), on which it introduced a special stamp tax rate, intending to introduce a principle of taxation on wealth made manifest in the ownership, usufruct or right of superficies of urban properties of luxury with residential use. For this reason, the criterion was the application of the new rate to urban properties with residential use, whose VPT is equal to or exceeding one million euros (€1,000,000). It is clear that the legislator understood that this value, when attributed to a residence (house, autonomous unit or apartment with independent use) translates a contributory capacity above the average and, as such, liable to determine a special contribution to ensure fair apportionment of the tax burden." But when applied to a part or unit that does not exceed the said value of one million euros, the rule of incidence will not be verified.

The principle of tax equality determines that what is equal should be treated equally from a fiscal perspective and what is different should be treated differently. Now, there is no justification for differential treatment of units or parts of a property solely on the basis that it is already in horizontal ownership, provided that the units or parts have independent use.

As stated in CAAD award of case No. 218/2013-T, "The principle of tax equality is based on the general principle of equality provided for in Article 13 of the Portuguese Constitution, from which results the principle of contributory capacity which, by constitutional imperative, is the prerequisite and criterion of taxation."

Professor Casalta Nabais states that the principle of tax equality inherently contains above all "the idea of generality or universality, under which all citizens are bound by the obligation to pay taxes, and of uniformity, requiring that such obligation be gauged by a single criterion — the criterion of contributory capacity. This thus implies equal taxation for those with equal contributory capacity (horizontal equality) and different taxation (in qualitative or quantitative terms) for those with different contributory capacity in proportion to this difference (vertical equality) (Casalta Nabais, Tax Law, 5th edition, Coimbra, 2009, p. 151-152)."

In CAAD award of case No. 50/2013-T it can be read that "the tax legislator cannot treat equal situations differently. Now, if the property were in the horizontal property regime, none of its residential units would be subject to the incidence of the new tax."

Thus, and in line with CAAD jurisprudence, we conclude by violation of the principle of tax equality and contributory capacity.

The Claimant failed to prove that it made the payments relating to the Stamp Tax assessments in question in the present case. Should it have done so, the refund of taxes paid is a consequence of the annulment of the respective assessments, since, pursuant to Article 100 of the General Tax Law, the tax administration is obliged, in case of full or partial success of judicial proceedings in favor of the taxpayer, to immediately and fully restore the situation that would exist if the illegality had not been committed.

5. Compensatory Interest

The Claimant requested the condemnation of the A.T.A. to payment of compensatory interest.

Having failed to prove payment, said request is dismissed.

6. Decision

Based on the foregoing, it is determined:

a) to judge the claim filed by the Claimant in the present tax arbitration case as having merit, as to the illegality of the Stamp Tax assessments, for the year 2012, No. 2013 … in the amount of € 1,147.50, No. 2013 … in the amount of € 1,085.90, No. 2013 … in the amount of € 1,100.80, No. 2013 … in the amount of € 1,035.30, No. 2013 … in the amount of € 2,032.40, No. 2013 … in the amount of € 2,032.40, Assessment No. 2013 … in the amount of € 2,032.40, No. 2013 … in the amount of € 1,100.80, No. 2013 … in the amount of € 1,038.00, No. 2013 … in the amount of € 1,100.80, No. 2013 … in the amount of € 1,035.30, No. 2013 … in the amount of € 2,032.40, No. 2013 … in the amount of € 1,100.80, No. 2013 … in the amount of € 1,035.30, No. 2013 … in the amount of € 619.00, and No. 2013 … in the amount of € 619.00;

b) to judge as having merit the request for condemnation of the A.T.A. to payment of compensatory interest, filed by the Claimant.

7. Value of the Case:

In accordance with Article 306, No. 2, of the Civil Procedure Code and 97º-A, No. 1, subparagraph a) of the Tax Procedure and Process Code and Article 3, No. 2 of the Regulations of Costs in Tax Arbitration Proceedings, the value of the action is fixed at € 20,148.10.

8. Costs:

Pursuant to Article 22, No. 4, of the Tax Arbitration Regulations, and Table I attached to the Regulations of Costs in Tax Arbitration Proceedings, the amount of costs is fixed at € 1,224.00, payable by the Tax and Customs Authority.

Notify.

Lisbon, 16 October 2015.

Text prepared by computer, in accordance with Article 138, No. 5 of the Civil Procedure Code (CPC), applicable by referral from Article 29, No. 1, subparagraph e) of the Tax Arbitration Regulations, revised by me.

The sole arbitrator,

Suzana Fernandes da Costa

Frequently Asked Questions

Automatically Created

Is a housing cooperative exempt from Stamp Tax under Article 66-A(12) of the EBF on high-value properties?
Housing cooperatives are generally NOT exempt from Stamp Tax under item 28.1 of the TGIS (high-value property tax). While Article 66-A(12) of the Tax Benefits Statute provides various tax benefits to housing cooperatives, the exemption specifically referenced in item 28 of the TGIS is limited to Article 44 of the EBF. Tax authorities typically interpret these exemptions restrictively, and analogical interpretation to extend exemptions beyond those expressly stated is not permitted under Portuguese tax law principles. Therefore, housing cooperatives remain subject to Stamp Tax on properties with VPT equal to or exceeding €1,000,000.
Does Stamp Tax verba 28.1 apply to each independent unit or the total VPT of a vertical property?
Stamp Tax under item 28.1 applies to the total aggregate VPT of the entire property, not to each independent unit separately, even in cases of vertical ownership with multiple autonomous units. The Tax Authority's position is that the relevant taxable base is the global property value registered as a single article in the property registry, regardless of internal subdivision into independent units. This interpretation means that even if no individual unit exceeds €1 million VPT, the property remains subject to Stamp Tax if the sum of all units exceeds this threshold. This approach treats the property as a unified taxable asset for purposes of item 28.1 of the TGIS.
What is the relevant date for determining the VPT threshold of €1,000,000 for Stamp Tax purposes?
The relevant date for determining whether the VPT threshold of €1,000,000 is met depends on the tax year in question. For 2012, the taxable event occurred on October 31, 2012, as established by law. The VPT to be considered should be that in effect on the date of the taxable event. A property valuation conducted after this date (such as in March 2013) should not operate with retroactive effect to trigger tax liability for 2012. If the VPT on the relevant date was below the threshold, subsequent revaluations cannot create retroactive tax obligations for prior years, as this would violate principles of legal certainty and legitimate expectations.
Can a retroactive property valuation be used to trigger Stamp Tax liability under verba 28.1 of the TGIS?
Generally, a retroactive property valuation cannot be used to trigger Stamp Tax liability under item 28.1 of the TGIS for past tax years. Portuguese tax law principles require that the taxable event and its constituent elements (including VPT) be determined as of the specific date established by law for tax incidence. For Stamp Tax on high-value properties, this date is October 31 of each year. A revaluation conducted after this date applies prospectively to subsequent tax years but cannot retroactively create tax liability for years when the VPT was below the €1,000,000 threshold. Retroactive application would violate principles of legality, legal certainty, and protection of legitimate expectations enshrined in the Portuguese Tax Code and Constitution.
What transitional tax rate applies to Stamp Tax on high-value residential properties for the year 2012?
For the 2012 tax year, the transitional regime established by Article 6 of Law No. 55-A/2012 prescribed a reduced Stamp Tax rate of 0.5% for high-value residential properties, rather than the standard 1% rate that became fully applicable in subsequent years. However, this transitional rate applies specifically to assessments made during 2012. For late assessments issued after 2012 (such as those issued in July 2013), tax authorities have argued that the 1% standard rate applies since the assessment was not conducted within the transitional year. This interpretation remains contentious, as taxpayers argue the relevant factor should be the tax year to which the liability relates (2012), not the administrative date of assessment issuance.