Process: 800/2014-T

Date: November 2, 2015

Tax Type: Selo

Source: Original CAAD Decision

Summary

This arbitration case concerns the application of item 28.1 of Portugal's General Stamp Tax Table (TGIS), which imposes a 0.5% annual stamp tax on residential properties with taxable patrimonial value (VPT) equal to or exceeding €1,000,000. The Estate of A… challenged 13 stamp tax assessments issued in November 2012 for twelve residential floors within a single building in Lisbon. The property comprised 14 independent units with a combined VPT of €1,355,649.39, though individual floor values ranged from €49,748 to €116,324. The Tax Authority assessed stamp tax on the aggregate value of the 13 residential floors (€1,333,830.76), which exceeded the €1 million threshold. The claimant argued that each floor should be assessed individually based on its separate cadastral registration, and since no individual floor exceeded €1 million, no stamp tax should apply. The claimant cited Article 12(3) of the Municipal Property Tax Code, which treats each independently-usable floor as a separate property for cadastral purposes. However, critical procedural issues emerged during the proceedings. The case title references 'intempestividade' (untimeliness) and 'caducidade do direito de impugnar a liquidação' (expiration of the right to challenge the assessment), suggesting procedural defects. The claimant mentioned filing a prior hierarchical appeal in the petition but failed to provide a copy despite the tribunal's explicit order. This non-compliance with procedural requirements, particularly regarding proof of exhausting prior administrative remedies as required by Article 10 of the Tax Arbitration Legal Framework (RJAT), appears central to the decision. The excerpt suggests the tribunal likely ruled on these preliminary procedural grounds rather than reaching the substantive question of whether item 28.1 applies to individual floors or aggregate property values.

Full Decision

Case no. 800/2014-T

Claimant: Estate of A…, Tax Identification Number …

Respondent: Tax and Customs Authority

ARBITRAL DECISION

I. Report

  1. On 5 December 2014, the Estate of A…, Tax Identification Number …, applied for the Constitution of an Arbitral Tribunal pursuant to Article 5(2) of the Legal Framework for Tax Arbitration, in accordance with Order 112-A/2011 of 22 March, with a view to declaring the illegality of 13 Stamp Tax Assessments relating to the year 2012, corresponding to twelve floors of a property listed in the urban real estate register under registration no. U-…, corresponding to the left basement, left ground floor, 1st right floor, 1st left floor, 2nd right floor, 2nd left floor, 3rd right floor, 3rd left floor, 4th right floor, 4th left floor, 5th right floor, 5th left floor, all with independent use and for residential purposes, of the property located on …Street, …-…, …, parish of …, municipality of Lisbon.

  2. Pursuant to Article 6(2)(a) and Article 11(1)(b) of Decree-Law no. 10/2011 of 20 January, as amended by Article 228 of Law no. 66-B/2012 of 31 December, the Ethics Council of the Administrative Arbitration Centre appointed Ana Teixeira de Sousa as arbitrator, and the parties, after being duly notified, raised no objection to this appointment.

  3. Accordingly, in compliance with Article 11(1)(c) of Decree-Law no. 10/2011 of 20 January, as amended by Article 228 of Law no. 66-B/2012 of 31 December, the arbitral tribunal was constituted on 10 March 2015.

  4. The head of the Tax and Customs Authority (hereinafter referred to as the "Respondent") was notified to submit a response and request additional evidence production within 30 days if it so wished. A response was submitted on 21 April 2012, signed by legal counsel Ms. … on behalf and in representation of the Respondent, and the administrative file was not attached by the Respondent.

  5. Following the Response of the Tax Authority, the tribunal, through an order, scheduled the meeting referred to in Article 18 of the RJAT for 2 June 2014, and neither the representatives of the Respondent nor the attorney for the Claimant appeared.

  6. On 2 June 2014, the tribunal issued an order determining a period of 10 days for the Tax Authority to attach the administrative file or justify why it had not done so, given the exception raised by this party.

  7. Within the same period, the tribunal ordered that the Claimant attach to the file the decision on the hierarchical appeal that related to the Stamp Tax assessments in dispute, mentioned by the Claimant in the heading of the petition for arbitral decision and in the final request.

  8. In response to the Tribunal's Order, the representatives of the Respondent stated that the contested legal issue present in the case is a question exclusively of law, considering that nothing could be added to the body of evidence by attaching the administrative file to the case, considering the period established for the submission of the petition for arbitral decision in the final part of Article 10(1)(a) of the RJAT as well as the provision of Article 10(2)(d) of the same legal provision, regarding the burden on the Claimant to accompany the petition with evidence of the facts alleged.

  9. Considering additionally that the documentary evidence attached to the case would be sufficient for deciding the case and that it therefore became unnecessary to present the administrative file, which was never attached.

  10. The Claimant did not respond to the Tribunal's Order and also did not deliver a copy of the decision on the Hierarchical Appeal that related to the Stamp Tax assessments in dispute and that is mentioned in the heading and final part of the petition for arbitral decision.

  11. Until the deadline fixed by the tribunal for the delivery of the decision, which was initially set for 30 July and extended until 31 October, the Claimant did not attach a copy of the Hierarchical Appeal or its dismissal, as requested by the Tribunal.

The Petition for Arbitral Decision

  1. In summary, the grounds presented by the Claimant are as follows.

  2. The tax was assessed on the taxable patrimonial value (TPV) of €1,333,830.76 recorded in the urban real estate register under registration no. U-…, corresponding to the left basement, left ground floor, 1st right floor, 1st left floor, 2nd right floor, 2nd left floor, 3rd right floor, 3rd left floor, 4th right floor, 4th left floor, 5th right floor, 5th left floor, all with independent use and for residential purposes, of the property located on …Street, …-…, …, parish of …, municipality of Lisbon, hereinafter referred to only as "floors".

  3. The floors, like the entire property of which they form part, belong to the undivided estate of A…, in which three heirs were qualified without distinction of share or right (cf. Copy of the deed of qualification of heirs which is attached with doc. 14 and which is given as wholly reproduced for all legal purposes).

  4. The property to which the floors relate comprises a total of 14 floors and divisions with independent use whose TPV varies between €49,748.13 and €116,324.50 and totals €1,355,649.39 (cf. copy of the urban real estate registry booklet which is attached with doc. no. 15 and is given as reproduced for all proper and legal purposes).

  5. All fourteen floors and divisions are for residential purposes with the patrimonial value referred to above.

  6. On the TPV of the floors, the tax authority assessed the stamp tax provided for in item 28.1 of the General Table of Stamp Tax (GTST) attached to the Stamp Tax Code (STC) as amended by Article 4 of Law no. 55-A/2012 of 29 October, at the rate of 0.5% provided for in sub-item i) of item f) of Article 6(1) of the same legal instrument, relating to the year 2012.

  7. The Tax Authority assessed the tax now being contested on 7 November 2012, since the thirteen floors and divisions with independent use have residential purposes and their respective thirteen taxable patrimonial values (TPV) total €1,333,830.76 as indicated in docs. 1 to 13 which are attached—"patrimonial value of the property—total subject to tax".

  8. The property comprises 6 floors, with 14 floors or divisions with independent use, whose taxable patrimonial value was determined separately, in accordance with Article 7(2)(b) of the Municipal Property Tax Code (MPTC).

  9. The Claimant acknowledges that the subjection to stamp tax of item 28.1 of the General Table results from the mere conjunction of two facts, namely, the residential use and the taxable patrimonial value of the urban property registered in the cadastre being equal to or greater than €1,000,000.00.

  10. In its view, when the urban property is composed of floors or divisions, the subjection to stamp tax is determined, not on the basis of the total taxable patrimonial value of the property, but on the basis of the taxable patrimonial value of each floor or division.

  11. This fact is implicitly acknowledged by the Tax Authority in the very assessment act, which declared as subject to tax only the sum of the taxable patrimonial values of the floors or divisions with residential use that make up the property in question.

  12. This doctrine is consistent with the fact that, for purposes of the municipal property tax (IMI), pursuant to Article 12(3) of the Municipal Property Tax Code (MPTC), each floor or part of a property capable of independent use is considered separately in the property register entry.

  13. It thus understands that it is to the taxable patrimonial value recorded in the cadastre that the legislator of item 28.1 of the General Table intends to apply.

  14. In effect, the stamp tax of item 28.1 of the GTST is a tax that applies to real estate property, and can apply to real estate property of lesser value concentrated in a single taxpayer, excluding from its application real estate property of greater value that is dispersed across several properties.

  15. The Claimant concludes that the taxable patrimonial value recorded in the cadastre would thus be that of each floor or division capable of independent use and not the total taxable patrimonial value of the urban property, and cannot be understood, contrary to what results from the disputed stamp tax assessments, how this value could in any way be understood as the sum of the taxable patrimonial values of urban properties capable of residential use.

  16. It therefore considers it abundantly clear and easily concludes that the scope of application of item 28.1 of the GTST attached to the STC is unconstitutional due to a clear and blatant violation of the principle of equality provided for in Article 13 of the Constitution of the Portuguese Republic.

  17. The Claimant requests, finally, that the present action be "judged wholly well-founded and proven and, in consequence, Your Excellency deign to proceed to the annulment of the administrative decision, determining, in consequence, the annulment of the decision issued in the assessment of stamp tax, determining the consequent refund of the amounts of tax wrongfully paid plus interest in compensation by virtue of the provision of Article 43 of the LGT".

Response of the Tax and Customs Authority

  1. The Tax and Customs Authority (or Respondent) submitted a response maintaining the contested assessments on the basis, briefly summarized, of the following arguments, by exception and by contest:

  2. Although the Claimant refers, in the heading of the petition for arbitral decision, to having been notified of the decision that was rendered on the hierarchical appeal, it does not indicate nor bring to the case proof of the date of notification of such decision, which immediately does not allow ascertaining whether or not the submission of the present petition was timely.

  3. For, pursuant to Article 10(1)(a) of the RJAT, the petition for arbitral decision should have been submitted within 90 days from the decision or the expiry of the legal period for decision of the hierarchical appeal.

  4. In that regard, the issue arises of the untimeliness of the present petition for arbitral decision regarding the illegality of the Stamp Tax assessments of item 28 of the GTST relating to the year 2012, identified in the tax collection documents that the Claimant attached as Docs. nos. 1 to 13, by virtue of the provision of Article 10(1)(a) of Decree-Law 10/2011 of 20 January and Article 102(1)(a) of the TCPP.

  5. Thus, the legal period for submission of the petition for arbitral decision having been exceeded, the present petition for arbitral decision should be dismissed, and the Respondent Entity should be entirely absolved of the petition, by virtue of the provision of Article 576(3) and Article 579 of the Code of Civil Procedure, subsidiarily applicable pursuant to Article 29(1)(e) of the RJAT.

  6. Without conceding, it further considers, briefly summarized, the following:

  7. In the present case, the taxable patrimonial value on which the application of the stamp tax of item 28.1 of the General Table depends had to be, as it was, the total patrimonial value of the property and not that of each of its independent parts.

  8. The fact that the urban property with residential use is part of an undivided estate does not impair the application of item 28 of the General Table.

  9. According to Article 81(1) of the MPTC, property that is part of an undivided estate is registered in the respective property register in the name of the deceased with the notation "Head of the undivided estate of A….", and the respective tax identification number is assigned to the undivided estate ex officio by the tax service referred to in Article 25 of the Stamp Tax Code.

  10. The undivided estate is a subject to the municipal property tax (IMI) pursuant to Articles 2(4) of the Stamp Tax Code and Article 8(1) of the MPTC, to which the first legal provision refers.

  11. The fact that the IMI was calculated on the basis of the taxable patrimonial value of each part of property with independent economic use does not likewise affect the application of Article 28(1) of the General Table.

  12. This is because the determining fact for the application of that item of the General Table is the total patrimonial value of the property and not separately that of each of its parcels.

  13. Any other interpretation would violate, indeed, the letter and spirit of item 28.1 of the General Table and the principle of legality of the essential elements of tax provided for in Article 103(2) of the Constitution of the Portuguese Republic (CRP).

  14. It is the duty of the law—law of the Assembly of the Republic and authorized decree-law—to establish the essential elements of the scope of taxation.

  15. A type of scope of taxation according to which the taxable patrimonial value of urban properties on which the application of item 28.1 of the General Table depends is the taxable patrimonial value of each floor or division capable of independent use and not the total taxable patrimonial value of the urban property with residential use has certainly no expression whatsoever in the law.

  16. It is therefore unconstitutional, as offensive to the principle of tax legality, to interpret item 28.1 of the General Table in the sense that the patrimonial value on which its scope depends is determined globally and not floor by floor or division by division.

  17. It cannot be perceived how, on the other hand, the taxation in question could have violated the principle of equality.

  18. In truth, horizontal property and vertical property are differentiated legal institutions.

  19. The establishment of horizontal property entails, in fact, a mere legal alteration of the property, with no new assessment (Office—Circular no. 40.025 of 11 August 2000, of the Department of Municipal Contribution Services (DMCS)).

  20. The legislator can, however, subject to a distinct tax legal framework, and therefore discriminatory, properties under regimes of horizontal and vertical ownership, in particular, benefiting the legally more advanced institution of horizontal property, without such discrimination being necessarily considered arbitrary.

  21. Such discrimination may also be imposed by the need to impose coherence on the tax system.

  22. The fact that the Claimant of the petition for arbitral decision legitimately disagrees with such discrimination does not imply a violation of any constitutional principle.

  23. Accordingly, the assessments in dispute constitute a correct interpretation and application of law to facts, not being subject to the defect of violation of law, and therefore the petition for arbitral decision should be judged dismissible and the Respondent Entity should be absolved of the petition.

  24. What is in question, in truth, is merely the interpretation of item 28 of the General Table of the Stamp Tax Code, added by Article 4 of Law 55-A/2012 of 29 December, in conjunction with Article 6(1)(f) and (i) of the same legal instrument, in light of the principle of tax legality.

  25. From all the foregoing, it follows that the contested legal issues in the present case are exclusively questions of law, and the position of the parties, as regards the legality of the acts of assessment of item 28 of the GTST, is fully defined in the case file and sufficiently supported by the means of evidence attached by the Claimant.

  26. Concluding:

A) The petition formulated by the Claimant in the present petition for arbitral decision regarding the illegality of the Stamp Tax assessments of the year 2012 appears to be untimely and should be dismissed.

B) Item 28.1 of the General Table of Stamp Tax applies to urban properties with residential use.

C) The taxable patrimonial value equal to or greater than €1,000,000.00 on which the application of this legal provision depends is, as clearly results from its letter, the taxable patrimonial value of each property and not of its distinct parts, even though they are capable of independent use.

D) The unity of the urban property in vertical property ownership composed of several floors or divisions is not, however, affected by the fact that all or some of those floors or divisions are capable of independent economic use, nor by the ownership of the immovable property being an undivided estate.

E) Any other interpretation violates the principle of legality inscribed in Article 103(2) of the CRP.

F) The principle of tax equality only prohibits arbitrary or unjustified discriminations, but not discriminations that may be justified by the more advanced character of the institutions or by the coherence of the tax system.

G) The tax act in question did not, therefore, violate any legal or constitutional provision and should accordingly be maintained.

  1. On these grounds, the petition for annulment of the disputed assessments should be judged dismissible, and the Tax Authority should be absolved of all petitions, with all proper and legal consequences.

Object of the Petition

  1. The issue that the Claimant seeks to have decided is:

· Legality of the assessment of Stamp Tax relating to the year 2012, provided for in item 28.1 of the GTST (added by Article 4 of Law no. 55-A/2012 of 29 October) regarding the total taxable patrimonial value of a building, corresponding to the sum of the taxable patrimonial values of several floors or divisions capable of independent use.

Sanitation of the Proceedings

  1. The arbitral tribunal is materially competent, pursuant to the provision of Articles 2(1)(a) of the Legal Framework for Tax Arbitration.

  2. The parties have legal personality and capacity and have standing pursuant to Article 4 and Article 10(2) of the Legal Framework for Tax Arbitration (RJAT), and Article 1 of Order no. 112-A/2011 of 22 March.

  3. Let us first examine whether the act subject to the present proceedings is admissible, and then assess the exception of untimeliness raised by the Respondent.

  4. From the determination of the nature and type of act subject to the proceedings results, in the first place, the consideration of exceptions, namely those of incompetence or error in the form of the proceedings or others.

  5. Article 2 of the RJAT establishes the matters on which the arbitral tribunal can pronounce, and among the competencies so defined is "the declaration of illegality of acts of assessment of taxes" (covered by item a) of that article).

  6. The scope of application of the statement "declaration of illegality of acts of assessment of taxes", used in Article 2(1)(a) of the RJAT, does not restrict arbitral jurisdiction to cases in which an act of that nature is directly contested, as stated in the Decision of the Superior Administrative Court in case no. 8/2015 of 16 September 2015.

  7. In truth, the illegality of assessment acts may be declared judicially as a corollary of the illegality of a second-degree act, which confirms an assessment act, incorporating its illegality.

  8. "Tax laws provide for the possibility for the taxpayer to contest administratively the assessment acts, in the broad sense, through a gracious claim (Articles 68 et seq., 131, 132 nos. 3 and 4 and 133 nos. 2 to 4 of the TCPP) and to contest the decisions denying gracious claims through a hierarchical appeal (Articles 66, 67 and 76 of the same Code)", in Guide to Tax Arbitration, Comments on the Legal Framework for Tax Arbitration, pages 121 et seq., by Jorge Lopes de Sousa and Tânia Carvalhais Pereira, Almedina Editions 2013.

  9. Continuing, Jorge Lopes de Sousa explains that, "The acts that decide gracious claims and hierarchical appeals from decisions on gracious claims will, in this context, be acts of second and third degree, in which the legality of assessment acts, which are first-degree acts, can be evaluated."

  10. "Although Article 2(1)(a) of the RJAT only makes explicit reference to the competence of arbitral tribunals to declare the illegality of assessment acts, acts that establish the amount to be paid by the taxpayer, that competence also extends to acts of second and third degrees, which evaluate the legality of those primary acts, namely acts denying gracious claims and acts denying hierarchical appeals filed against the decisions of such claims.", idem.

  11. This analysis and conclusion are confirmed by Article 10(1)(a) of the RJAT itself when it expressly prescribes the period of 90 days for the submission of the petition for constitution of the arbitral tribunal, "… counted from the facts provided for in nos. 1 and 2 of Article 102 of the Tax Procedure and Process Code, as regards acts susceptible to autonomous challenge, and likewise, from the notification of the expiry of the legal period for decision of the hierarchical appeal."

  12. Thus, "the inclusion in the competencies of arbitral tribunals operating in the CAAD, of cases in which the declaration of illegality of acts, listed in Article 2 of the RJAT, is effected through the declaration of illegality of second-degree acts (...) results with certainty from the reference made to that provision", namely, to assessment acts of taxes "which are expressly referred to as included among the competencies of arbitral tribunals", Decision of the Superior Administrative Court cited above in case no. 8/2015 of 16 September 2015.

  13. Accordingly, we can thus conclude that the provision of Article 2(1)(a) of the RJAT does not exclude cases in which the declaration of illegality results from the illegality of a second-degree act, which incorporates the illegality of the first.

II - GROUNDS

Preliminary Issue – Exception of Untimeliness

  1. The Respondent raises in its response the exception of untimeliness of the petition for arbitral decision, considering the following:

  2. Although the Claimant refers, in the heading of the petition for arbitral decision, to having been notified of the decision rendered on the hierarchical appeal, it does not indicate nor bring to the case proof of the date of notification of such decision, which immediately does not allow ascertaining whether or not the submission of the present petition was timely.

  3. For, pursuant to Article 10(1)(a) of the RJAT, the petition for arbitral decision should have been submitted within 90 days from the decision or the expiry of the legal period for decision of the hierarchical appeal.

  4. In that regard, the issue arises of the untimeliness of the present petition for arbitral decision regarding the illegality of the Stamp Tax assessments of item 28 of the GTST relating to the year 2012, identified in the tax collection documents that the Claimant attached as Docs. nos. 1 to 13, by virtue of the provision of Article 10(1)(a) of Decree-Law 10/2011 of 20 January and Article 102(1)(a) of the TCPP.

  5. In the case submitted for the tribunal's consideration, the now Claimant comes to judicially contest the legality of the Stamp Tax assessments effected under item 28.1 of the GTST, whose collection documents show as the assessment date 7 November 2012 and as the payment deadline 20 December 2012.

  6. The petition for arbitral decision having been submitted by the Claimant to the CAAD on 5 December 2014.

  7. And, as that petition for arbitral decision makes reference to the dismissal, by the Tax Authority, of a hierarchical appeal filed against the Stamp Tax assessment in dispute, without identification of that same appeal, nor subsequent delivery of a copy of the same and of the act dismissing the hierarchical appeal by the Tax Authority, notwithstanding having been expressly summoned by the tribunal to do so.

  8. The Claimant attached to the petition a power of attorney attributed to its attorney, a copy of the deed of qualification of heirs and a property register booklet and 13 Stamp Tax collection documents under item 28.1 of the GTST, of the year 2012.

  9. Never having attached a copy of the hierarchical appeal filed or its dismissal by the Tax Authority.

  10. In accordance with Article 608 of the CPC in force, applicable by virtue of Article 22 of the RJAT, "(…) the judgment considers, in the first place, the procedural issues that may determine the dismissal of the instance, according to the order imposed by their logical precedence, and the judge must "resolve all issues submitted to the court's consideration by the parties, excepting those whose decision is prejudiced by the solution given to others (…)" according to the Decision of the Superior Administrative Court cited in case no. 8/2015 of 16 September 2015.

  11. On these grounds, considering the preliminary issue raised by the Respondent, it becomes necessary to consider and decide previously, in the present arbitral proceedings, the same, before deciding on the merits of the same.

  12. In effect, it may be verified that it is impossible to evaluate the merits of the case, due to knowledge of dilatory or peremptory exceptions, which the tribunal may even recognize ex officio.

  13. In these situations, as Saldanha Sanches refers in "The Burden of Proof in Tax Proceedings", in Cadernos de Ciência e Técnica Fiscal, no. 151, 1987, pages 81 et seq.: "The same occurs, that is, the absence of a decision on the substance or merits of the issue, when the challenger has proposed to prove the non-existence of certain facts or the absence of grounds for the official information—a ground that is required by the sole paragraph of Article 97 in order for these to have probative value in court—but does not make presentation of this evidence; in all cases, because the judge cannot know of the petition, the proceedings cannot have as their object the tax act, given the absence of the procedural prerequisites for the legality or illegality of a particular administrative act to be considered. Knowledge of its legality is prejudiced by procedural reasons that impede its examination.

  14. Continuing to quote Saldanha Sanches op. identified above, "And to assert, therefore, that the proceedings for challenge have as their object the act, because it has not been clearly identified by the taxpayer, completely escapes the tribunal's knowledge, is equivalent to saying that we are dealing with a proceeding without an object".

  15. That is, it is necessary to decide previously on the timeliness of the petition for arbitral decision in as much as the hierarchical appeal whose annulment is being requested was not brought into the proceedings, a hierarchical appeal relating to the Stamp Tax assessment acts of the year 2012, whose voluntary payment deadline expired on 20 December 2012.

  16. Accordingly, the Respondent contends that the submission on 5 December 2014, of a petition for arbitral decision, as defined in Article 10 of the RJAT, demonstrates its manifest untimeliness.

  17. Pursuant to Article 102(1) of the TCPP, the (general) period for filing judicial challenges is 90 days counted from the facts enumerated in that article, being that period 15 days (special period), in case of denial of a gracious claim, counted from notification of the decision.

  18. In terms of arbitral proceedings, Article 10(1)(a) of the RJAT provides that the period of 90 days applies for submission of the petition for constitution of the arbitral tribunal, "…. counted from the facts provided for in nos. 1 and 2 of Article 102 of the Tax Procedure and Process Code, as regards acts susceptible to autonomous challenge, and likewise, from the notification of the decision or the expiry of the legal period for decision of the hierarchical appeal.

  19. Following the terms set forth in the Decision of the Superior Administrative Court no. 16/95 of 16 August 2015, cited above:

  20. In general terms, the periods for bringing actions are:

a) Substantive periods, of lapse, and form an integral part of the contested legal relationship itself, aiming to determine the period for the exercise of a right; and

b) Peremptory periods, as their expiry extinguishes the right itself.

  1. Thus, before an action is filed, regardless of the nature of the courts to which it is presented for filing, there is not yet a proceeding, and there are no judicial or procedural periods before there is a proceeding.

  2. In either case provided for in point 89 above, it is a substantive period, counted in accordance with the terms provided in Article 279 of the Civil Code (by reference from Article 20 of the TCPP), that is, continuously, and is not suspended during judicial recess periods (In this regard, see in particular, Decision of the Superior Administrative Court case 01038/12 of 28 November 2012, Decision of the Superior Administrative Court case 0677/10 of 7 September 2011 and Decision of the Superior Administrative Court case 01922/13 of 5 February 2014).

  3. As Jorge Lopes de Sousa refers in his annotations to Article 102 of the TCPP, "as no special period is provided in this article for judicial challenge of decisions rendered on hierarchical appeal, the appropriate period will be the 90 days provided for in item e) of no. 1 of that article" (see TCPP, annotated and commented, II vol. 6th ed. 2011, annotation 7 c) to Article 102, page 152).

  4. Thus, as the special period for challenge is provided only for the decision denying a gracious claim, and not also for challenging the subsequent decision denying a hierarchical appeal, it will be only to that decision and not to this latter that such shorter period applies" (see TCPP, annotated and commented, II, vol. 6th ed. 2011, annotation 7 c) to Article 102, page 153).

  5. Consequently, the decision on the hierarchical appeal that involves the evaluation of the legality of the assessment act (…) falls within the provision of Article 102(1)(e), and therefore the period of 90 days counted from the respective notification applies to it" 16 (See TCPP, Annotated and Commented, II Vol., 6th ed., 2011, annotation 7 c) to Article 102, page 153).

  6. Within the framework of the tax arbitration regime, Article 10(1) of the RJAT establishes that the petition for constitution of an arbitral tribunal must be submitted:

a) "Within 90 days, counted from the facts provided for in nos. 1 and 2 of Article 102 of the TCPP, as regards acts susceptible to autonomous challenge and likewise from the notification of the decision or the expiry of the legal period for decision of the hierarchical appeal" and,

b) "Within 30 days, counted from the notification of the acts provided for in Article 2(b), in the other cases".

  1. In this regard, it should be noted that the arbitral nature of this tribunal and the application of the tax arbitration regime do not entail any modification as to the nature, procedures and form of period calculation, as extracted from the reading of the RJAT, and much less concerning substantive periods, which are an integral part of the material status of the very tax credit right itself.

  2. And, if there were any doubt, Article 29 of the RJAT provides for the subsidiary application of the norms of a procedural or tax process nature, the norms concerning organization and proceedings in administrative and tax courts, the Code of Administrative Procedure and the Code of Civil Procedure (CPC).

  3. On these grounds, the petition for constitution of the arbitral tribunal had to be submitted, within a maximum period of 90 days counted from the date of notification of the decision of the hierarchical appeal dismissing the gracious claim submitted by the Claimant regarding the Stamp Tax assessment acts included in the present proceedings.

  4. Now, the petition for constitution of the arbitral tribunal having been submitted on 5 December 2014, it was incumbent upon the Claimant to prove that this petition was submitted within the legal period, that is, within the period fixed in Article 10(1) of the RJAT, which corresponds to the period of 90 days counted from the notification of the decision or the expiry of the legal period for decision of the hierarchical appeal, if the latter exists.

  5. Otherwise, Article 10 of the RJAT establishes, as to assessment acts, that the period for submission of the petition for arbitral decision is 90 (ninety) days, referring, as to the moment when counting begins, to what is provided in Article 102, nos. 1 and 2, of the TCPP. Pursuant to Article 102(1)(a) of the TCPP, the 90-day period is counted from the expiry of the voluntary payment period of the tax obligation. In the case at hand, that date is 20 December 2012.

  6. Therefore, in the absence of a hierarchical appeal, the petition for arbitral decision should have been submitted within 90 days from 21 December 2012.

  7. As the period for filing the petition is a period of lapse with peremptory effect, it constitutes a peremptory exception. In this sense, see Decision of the Superior Administrative Court 340/13 of 20 May 2013, pursuant to which it is written that "the lapse of the right of action, since it prevents the production of the legal effect of the facts alleged by the claimant, constitutes a peremptory exception. In truth, the lapse of the right of action constitutes a cause to which substantive law attributes the cessation of the right that the claimant invokes as already validly established and, from this perspective, is part of the domain of peremptory exceptions which "are those that result in the invocation of facts or causes that are imperative, modifying or extinctive of the Claimant's right, thereby leading to the total or partial dismissal of the action (…)".

Proven Facts

Based on the documents attached by the Claimant (petition for arbitral decision, Docs. nos. 1 to 15 attached with that Petition; Response of the Tax Authority), the following facts are established:

  1. The floors, like the entire property of which they form part, belong to the undivided estate of A…, in which three heirs were qualified without distinction of share or right (cf. Copy of the deed of qualification of heirs which is attached with doc. 14 and which is given as wholly reproduced for all legal purposes).

  2. The tax was assessed on the taxable patrimonial value (TPV) of €1,333,830.76 recorded in the urban real estate register under registration no. U-…, corresponding to the left basement, left ground floor, 1st right floor, 1st left floor, 2nd right floor, 2nd left floor, 3rd right floor, 3rd left floor, 4th right floor, 4th left floor, 5th right floor, 5th left floor, all with independent use and for residential purposes, of the property located on …Street, …-…, …, parish of …, municipality of Lisbon.

  3. The property to which the floors relate comprises a total of 14 floors and divisions with independent use whose TPV varies between €49,748.13 and €116,324.50 and totals €1,355,649.39 (cf. copy of the urban real estate registry booklet which is attached with doc. no. 15 and is given as reproduced for all proper and legal purposes).

  4. All fourteen floors and divisions are for residential purposes with the patrimonial value referred to above.

  5. On the TPV of the floors, the tax authority assessed the stamp tax provided for in item 28.1 of the General Table of Stamp Tax (GTST) attached to the Stamp Tax Code (STC) as amended by Article 4 of Law no. 55-A/2012 of 29 October, at the rate of 0.5% provided for in sub-item i) of item f) of Article 6(1) of the same legal instrument, relating to the year 2012.

  6. The assessments referred to the year 2012, indicated as their basis item 28.1 of the GTST, applied the rate of 0.5% to the patrimonial value of the property subject to IMI, but taking into account the total TPV of the property in which each of the properties taxed was located.

  7. The assessments have a date of 7 December 2012 and a payment deadline of 20 December 2012.

Unproven Facts

It is not proven that the Claimant delivered, within the prescribed period, the hierarchical appeal relating to the challenge of the Stamp Tax assessments now in dispute, the annulment of the decision rendered in which is the object of the present petition for arbitral decision.

Applicable Law

  1. It is therefore finally necessary to conclude whether or not the lapse of the Claimant's right to submit a petition for arbitral decision to request the declaration of illegality of the acts of assessment of Stamp Tax under item 28.1 of the GTST relating to the year 2002, took place, given the date of submission of that petition to the CAAD system on 5 December 2014.

  2. Based on the evidence presented by the parties and the conviction created by the same for the tribunal.

  3. Article 10(2)(d) of the RJAT establishes that the petition for constitution of the arbitral tribunal is made by means of a request submitted electronically to the president of the CAAD which must contain, among other elements: "the evidence of the facts indicated and the indication of the means of evidence to be produced".

  4. Secondly, the procedural norms concerning the burden of proof must be taken into account.

  5. Article 74 of the LGT provides that:

"Burden of Proof 1—The burden of proof of the facts constituting the rights of the tax administration or of the taxpayers falls on whoever invokes them. 2—When the evidence of the facts is in the possession of the tax administration, the burden provided for in the preceding number is considered satisfied if the interested party has properly identified them with the tax administration. 3—In case of determination of the taxable amount by indirect methods, the tax administration bears the burden of proof of verification of the prerequisites for its application, and it falls to the taxpayer the burden of proof of any excess in the respective quantification."

  1. On the other hand, Article 342 of the Civil Code—(Burden of Proof) provides as a general rule regarding burden of proof: "1. He who invokes a right bears the burden of proving the constitutive facts of the right alleged. 2. The burden of proving the facts that are imperative, modifying or extinctive of the right invoked falls on he against whom the invocation is made. 3. In case of doubt, the facts shall be considered as constitutive of the right."

  2. The problem of the burden of proof thus translates into this inquiry: how is the burden of furnishing evidence distributed among the litigants? And further: which of the parties must bear the consequences of the lack or insufficiency of proof?

  3. The first question expresses the first aspect of the problem; the second corresponds to the second aspect. In other words: the importance of the question of which party bears the burden of proof lies precisely in the consequence derived therefrom for the meaning of the decision to be rendered, for the positive content of the rule of judgment. Once it is determined that the burden of proof fell on the claimant, the judge, in the case of lack or insufficiency of proof, must disregard the claimant's claim; once it is determined that the burden of proof fell on the defendant, the judge, faced with uncertainty about the facts, must reject the defendant's claim.

  4. It is not enough that a fact be asserted for the judge to base his decision on it; it is essential that it be proven in the proceedings, that its existence be demonstrated.

  5. Therefore, to the burden of assertion is added the burden of proof. If the fact is proven, if the judge becomes convinced of its existence, such circumstance will benefit the party that put it as the basis of its claim (action or exception); if it is not proven, the outcome will benefit the opposing party. There is thus a risk inherent in the lack or insufficiency of proof: the risk of the party seeing its petition disregarded (Code of Civil Procedure Annotated, Vol. 3, 3rd edition, page 271/272).—Decision of the Superior Court of Justice 4146/07.6TVLSB.L1.S1

  6. In the present case, at the date of submission of the petition for arbitral decision to the CAAD, the period for direct challenge of the assessment has been exceeded, which places the possibility of the arbitral tribunal evaluating the legality of the assessment in dependence on the filing and unfavorable decision of an administrative remedy.

  7. The Claimant makes reference to the existence of this administrative remedy—Hierarchical Appeal—and requests the annulment of the respective decision but does not bring it to the proceedings, nor after being expressly notified by the tribunal to do so.

  8. Failing the Claimant to prove the existence of that Hierarchical Appeal, never identifying it or bringing it into the proceedings, neither in its initial petition nor subsequently, and being the scope of the tribunal's powers of investigation limited by the petition, it must be concluded, in the present case, that the Tribunal will not be able to examine the legality of the assessment act as a corollary of the illegality of the act dismissing the Hierarchical Appeal.

  9. Being that the tribunal did not form the conviction regarding the evidence produced by the Claimant of the timeliness of the petition for arbitral decision.

Conclusion

Based on the foregoing, it is concluded that the exception of untimeliness/lapse of the petition for arbitral decision is well-founded.

The well-foundedness of the exception prevents examination of the merits of the petition and leads to the total absolution of the Respondent of the petition.

Decision

Based on the foregoing, the tribunal decides to uphold the exception of untimeliness raised by the Respondent and, in consequence, absolves the Respondent of the petition.

The evaluation of the grounds presented by the Claimant regarding the violation of the constitutional principles of equality and other grounds supporting the petition for arbitral decision is prejudiced as unnecessary.

Value of the Case

In accordance with Article 315(2) of the CPC, Article 97-A(1)(a) of the TCPP and also Article 3(2) of the Regulation of Costs in Tax Arbitration Proceedings, the value of the case is fixed at €6,669.15 (six thousand, six hundred and sixty-nine euros and fifteen cents).

Costs

For the purposes of Article 12(2) and Article 22(4) of the RJAT and Article 4(4) of the Regulation of Costs in Tax Arbitration Proceedings, the amount of costs is fixed at €612.00, in accordance with Table I attached to the said Regulation, to be borne entirely by the Claimant.

Let notification be made.

Lisbon, 2 November 2015

The Arbitrator

(Ana Teixeira de Sousa)

[Text prepared by computer, in accordance with Article 131, number 5 of the Code of Civil Procedure (CPC), applicable by reference to Article 29, no. 1, item e) of the Framework for Tax Arbitration. The drafting of this decision follows the old spelling rules.]

Frequently Asked Questions

Automatically Created

What is Verba 28.1 of the Portuguese General Stamp Tax Table (TGIS) and how does it apply to high-value residential properties?
Item 28.1 of the General Stamp Tax Table (TGIS), introduced by Law 55-A/2012 of October 29, 2012, establishes an annual stamp tax on residential real estate properties. It applies when two conditions are met: (1) the property has residential use, and (2) the taxable patrimonial value (VPT) registered in the cadastre is equal to or greater than €1,000,000. The tax rate is 0.5% of the VPT under Article 6(1)(f)(i) of the Stamp Tax Code. A key interpretive question, as raised in this case, is whether the €1 million threshold applies to each independently registered floor or division within a building, or to the aggregate value of all residential units. The Tax Authority's approach of aggregating values of residential floors within a single property suggests they interpret the provision as applying to the combined residential value when floors share common ownership, particularly in undivided estates.
What are the legal deadlines for challenging a Stamp Tax assessment in Portugal and what happens if they are missed?
Portuguese tax law establishes strict deadlines for challenging tax assessments. Taxpayers must first file a 'reclamação graciosa' (hierarchical appeal) with the Tax Authority within specific timeframes after notification of the assessment. For judicial or arbitral review, Article 10 of the Tax Arbitration Legal Framework (RJAT) requires petitions to be filed within established periods. If these deadlines are missed, the legal consequence is 'caducidade' (expiration or lapse) of the right to challenge the assessment. The assessment becomes definitive and can no longer be contested on its merits. In arbitration proceedings at CAAD, tribunals must examine whether challenges were filed timely as a preliminary issue. If the right to challenge has expired, the tribunal lacks jurisdiction to review the substantive legality of the assessment, regardless of potential illegalities in the tax assessment itself.
How does the expiration (caducidade) of the right to challenge a tax assessment affect taxpayers in Portuguese arbitration proceedings?
The expiration (caducidade) of the right to challenge a tax assessment has severe consequences in Portuguese tax arbitration. When caducidade occurs due to missing statutory deadlines, the taxpayer permanently loses the right to contest the assessment's legality through administrative or judicial means. In CAAD arbitration proceedings, the tribunal must dismiss the case on procedural grounds without analyzing the merits, even if the underlying assessment contains substantive errors. This makes caducidade a preliminary bar to arbitration. Article 10(1)(a) of RJAT establishes the deadline for filing arbitration petitions, and Article 10(2)(d) requires petitioners to provide documentary evidence supporting their compliance with procedural requirements, including proof of prior administrative appeals. Failure to demonstrate timely filing or to prove exhaustion of required prior remedies results in the arbitration request being rejected for procedural inadmissibility rather than substantive review.
Can an estate (herança) file a tax arbitration request against Stamp Tax assessments on multiple property units in a single building?
Yes, an estate (herança indivisa) has legal standing to file tax arbitration requests against stamp tax assessments on multiple property units within a single building. In this case, the Estate of A… successfully initiated arbitration proceedings challenging 13 separate stamp tax assessments related to 12 residential floors within one property. The estate, composed of three qualified heirs holding undivided interests, acted as a single taxpayer for purposes of the arbitration. Under Portuguese law, an undivided estate is treated as a distinct taxable entity until partition occurs among heirs. The estate can challenge multiple related assessments in a single arbitration proceeding when they involve the same legal and factual issues, promoting procedural efficiency. However, the estate must comply with all procedural requirements, including demonstrating that prior administrative remedies were exhausted for each contested assessment and providing documentary evidence as required by Article 10(2)(d) of RJAT.
What procedural requirements must taxpayers meet before submitting a case to CAAD tax arbitration, including prior administrative appeals?
Before submitting a case to CAAD tax arbitration, taxpayers must generally exhaust prior administrative remedies, primarily the 'reclamação graciosa' (hierarchical appeal) filed with the Tax Authority. Article 10 of the Tax Arbitration Legal Framework (RJAT) establishes the framework for admissibility. Under Article 10(2)(d), the arbitration petition must be accompanied by documentary evidence proving the facts alleged, including proof of prior administrative appeals and their outcomes. The tribunal may order the petitioner to provide copies of hierarchical appeal decisions. In this case, the claimant mentioned filing a hierarchical appeal in the petition but failed to comply with the tribunal's order to provide a copy of the appeal decision. This failure to demonstrate compliance with preliminary procedural requirements—exhaustion of administrative remedies and proper documentation—can result in dismissal on procedural grounds. Additionally, petitions must be filed within the deadlines specified in Article 10(1)(a) of RJAT, calculated from the date of notification of the administrative decision being challenged.