Process: 818/2014-T

Date: May 14, 2015

Tax Type: Selo

Source: Original CAAD Decision

Summary

CAAD arbitral decision 818/2014-T addresses the application of Stamp Tax under Item 28 of the General Stamp Tax Table (TGIS) to vertical property. The taxpayer challenged 14 Stamp Tax assessment acts totaling €14,094.10 concerning an urban property in vertical ownership comprising 15 floors/units with independent use and a total Tax Property Value (TPV) of €1,779,910.00. The central dispute involved whether the €1,000,000 threshold under Item 28.1 TGIS should apply to the property as a whole or to each individual unit. The taxpayer argued that vertical property should be treated like horizontal property, with each floor assessed separately—since no individual unit exceeded €1,000,000 TPV, Stamp Tax should not apply. The taxpayer also challenged procedural defects, claiming inadequate notification and improper single-payment collection instead of the legally required three installments. The Tax Authority contended that Item 28.1 applies when an urban property with housing allocation has a TPV equal to or exceeding €1,000,000, arguing the total property value of €1,779,910.00 met this requirement. Additional grounds included alleged violations of notification requirements under Articles 36, 37, and 39 of the General Tax Procedure Code and incorrect payment scheduling under Article 23(7) of the Stamp Tax Code. The case raises fundamental questions about the tax treatment of vertical versus horizontal property ownership structures under Portuguese Stamp Tax legislation introduced by Law 55-A/2012.

Full Decision

ARBITRAL DECISION

I – REPORT

A - PARTIES

A..., taxpayer number ..., holder of identity card number ..., issued on 13/03/1997 by the Civil Identification Services of Lisbon, resident at Avenue ..., Lisbon, hereinafter referred to as the Claimant or taxpayer.

TAX AND CUSTOMS AUTHORITY (which succeeded the Directorate-General of Taxes, by means of Decree-Law No. 118/2011 of 15 December) hereinafter referred to as the Respondent or TA.

The application for constitution of the arbitral tribunal was accepted by the President of the CAAD, and the Arbitral Tribunal was duly constituted on 18-12-2014, to hear and decide the subject matter of this proceeding, and was automatically notified to the Tax and Customs Authority on 18-12-2014.

The Claimant did not appoint an arbitrator, therefore, pursuant to Article 6, No. 1 and Article 11, No. 1, paragraph 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 Deontological Council designated Dr. Paulo Ferreira Alves, and such designation was accepted in accordance with legal provisions.

On 02-10-2015 the parties were duly notified of such designation and did not express any desire to refuse the arbitrators' designation, in accordance with Article 11, No. 1, paragraphs a) and b) of the TAR and Articles 6 and 7 of the Deontological Code.

In accordance with the provision of Article 11, No. 1, paragraph 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 sole arbitral tribunal is duly constituted on 24-03-2014.

Both parties agree to waive the meeting provided for in Article 18 of the TAR.

The arbitral tribunal is duly constituted. It is materially competent, in accordance with Articles 2, No. 1, paragraph a), and 30, No. 1, of Decree-Law No. 10/2011 of 20 January.

The parties possess legal personality and capacity, are legitimated and are legally represented (Articles 4 and 10, No. 2, of the same decree-law and Article 1 of Ordinance No. 112-A/2011 of 22 March).

The proceeding is not affected by defects that would invalidate it.

B – CLAIM

The Claimant seeks a declaration of illegality of the tax assessment acts in respect of Stamp Duty, Nos. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ..., which fixed a total tax to be paid of €14,094.10 (fourteen thousand ninety-four euros and ten cents).

C – GROUNDS FOR THE CLAIM

  1. In support of its request for an arbitral decision, the Claimant alleged, with a view to obtaining a declaration of illegality of the tax assessment acts in respect of Stamp Duty, No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ..., in summary, the following:

  2. The assessment act in dispute, in respect of taxation of item 28.1 of the General Tax Table, concerns an urban property in vertical ownership, but composed of floors or units capable of independent use, which make up the urban property registered in the property register under article ..., of the extinct parish of ....

  3. The claimant alleges that it is the trustee of the respective urban property.

  4. The property is constituted urban property comprising 15 (fifteen) floors and units with independent uses, whose tax property value (TPV) was determined separately, in accordance with the provisions of Article 7, No. 2, paragraph b) of the Municipal Property Tax Code.

  5. The property is in vertical ownership and comprises a total of 14 floors with independent use, each of the floors capable of independent use has a TPV of less than €1,000,000.00, all being dedicated to housing, and its total TPV of the property amounts to €1,779,910.00.

  6. The claimant contends that the assessment acts notified to it do not contain all the elements required by Articles 36, No. 2, 37, No. 1 and 39, No. 12 of the General Tax Procedure Code, and that it was not notified of the assessments claimed herein.

  7. The Claimant alleges that pursuant to Article 23, No. 7 of the Stamp Tax Code (STC), the tax is levied annually once only, and pursuant to Article 120, No. 1, paragraph c) of the Municipal Property Tax Code (hereinafter abbreviated as MPTC), applicable ex vi Article 44, No. 5 of the STC, is paid in three installments, if the amount of tax exceeds €500.00 (five hundred euros), by issuance of collection documents referred to in Articles 46, No. 5 of the STC and 119 of the MPTC.

  8. Therefore, the tax should have been collected in 3 installments, and not in a single installment.

  9. The Claimant thus contends that they are therefore null and void due to lack of notification of the assessments and insufficiency of the collection notes due to lack of grounds.

  10. The Claimant alleges that Law 55-A/2012 says nothing about the qualification of the concepts of "property with housing allocation," however Article 67, No. 2 of the Stamp Tax Code, added by the said Law, provides that "matters not regulated in this code relating to item 28 of the General Table shall apply subsidiarily the MPTC."

  11. Thus, 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 MPTC, the determination of the TPV obeying the provisions of Articles 38 et seq. of the same code.

  12. Furthermore, it argues that using the criterion introduced by the law itself in Article 67, No. 2 of the Stamp Tax Code and considering that registration in the property register of properties in vertical ownership, constituted by different parts, floors or units with independent use, in accordance with the MPTC, obeys the same registration rules as properties constituted in horizontal ownership, and their respective property tax (PT), as well as the new Stamp Tax, are levied individually in relation to each of the parts, it leaves no doubt that the legal criterion for defining the incidence of the new tax must be the same.

  13. The Claimant states that in the present case the property in question is in vertical ownership and contains 14 floors or units with independent use intended for housing and as none of the floors intended for housing has a tax property value equal to or exceeding €1,000,000.00, as results from the attached documents, it can only be concluded that the legal presupposition for the incidence of Stamp Tax provided for in Item 28 of the General Stamp Tax Table is not met.

  14. The claimant contends that by treating differently a reality that the legislation treats equally, the TA makes an erroneous interpretation of Article 1, No. 1 of the STC and of Item 28.1 of the General Stamp Tax Table, or if you prefer, commits the so-called "error of law regarding the facts," which constitutes grounds for annulment of the Assessments in accordance with Article 99 of the General Tax Procedure Code and Article 135 of the General Administrative Code, applicable ex vi of Article 2, paragraph d) of the General Tax Procedure Code.

  15. The claimant concludes by contending for the voidability of the assessment acts in respect of Stamp Tax due to violation of law.

D - RESPONDENT'S REPLY

  1. The Respondent, duly notified for such purpose, filed a timely reply in which, in abbreviated summary, alleged the following:

  2. The Claimant's property situation falls literally within the provision of item 28.1 of the General Stamp Tax Table, and further contends that the subjection to Stamp Tax of item 28.1 of the General Table attached to the STC results from the combination of two facts: the housing allocation and the tax property value of the urban property registered in the register being equal to or exceeding €1,000,000.00.

  3. The Respondent alleges that the Claimant is, therefore, owner of a property in the regime of full ownership or vertical ownership, whereby there are no autonomous units to which tax law can attribute the qualification of property.

  4. The Respondent contends that it follows from the notion of property in Article 2 of the MPTC, according to which only autonomous units of property in the regime of horizontal ownership are considered as properties.

  5. Thus, the Claimant, for purposes of property tax and stamp tax, by virtue of the wording of the said item, is not owner of 12 autonomous units, but rather of a single property.

  6. The Respondent contends that what the Claimant is actually seeking is that the TA consider, for purposes of assessment of this tax, that there is analogy between the regime of full ownership and that of horizontal ownership, on the ground that it is illegal for there to be discrimination in the legal-tax treatment of the two ownership regimes.

  7. The Respondent further argues that horizontal ownership is a specific legal regime of ownership provided for in Articles 1414 et seq. of the Civil Code, which provides for and regulates the manner of constitution as well as other rules regarding the rights and liabilities of co-owners, and it is recognized as having a more evolved ownership regime. These two ownership regimes are legal regimes of civil law, which were imported into tax law, namely in accordance with the provisions of Article 2 of the MPTC.

  8. Supporting its position, the Respondent contends that, given that in determining the meaning of tax norms and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed, as provided in Article 11, No. 1 of the General Tax Law, which refers to the Civil Code, which in Article 10 on the application of analogy, determines that this shall only be applicable in case of gaps in the law, a gap that tax law does not contain.

  9. Furthermore, it states that according to the MPTC, to which item 28.1 of the General Stamp Tax Table refers, in the regime of horizontal ownership, the units constitute properties. Not being the property subject to this regime, legally the units are parts capable of independent use, without common parts.

  10. Thus, it cannot be accepted that it be considered, for purposes of item 28.1 of the General Table attached to the STC, that the parts capable of independent use have the same tax regime as the autonomous units of the horizontal ownership regime, under penalty of a clear violation of the principle of legality.

  11. Therefore, the property being subject to the regime of full ownership, but being physically constituted by parts capable of independent use, tax law attributed relevance to such materiality, assessing individually, in accordance with Article 12, No. 3, of the MPTC, each floor or part of property capable of independent use - considered separately in the property register inscription, but integrating the same register - and proceeding with the assessment of property tax taking into account the tax property value of each part.

  12. Given that the floors or independent units, assessed in accordance with Article 12, No. 3, of the MPTC, are considered separately in the property register inscription, which equally discriminates the respective tax property value on which property tax is assessed.

  13. And due to the fact that property tax has been calculated based on the tax property value of each part of property with independent economic use does not equally affect the application of item 28, No. 1, of the General Table.

  14. The Respondent argues that it follows from the determinative fact for the application of that item of the General Table being the total tax property value of the property and not separately that of each of its parts.

  15. In this sense, it contends that 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 the tax provided for in Article 103, No. 2, of the Portuguese Constitutional Republic (CRP).

  16. The Respondent bases its position by noting that the property register inscription of each part capable of independent use is not autonomous, per register, but rather appears as a description in the register of the property in its entirety - see the property deed of this property which represents the document of the owner containing the property register elements of the property.

  17. What the Respondent intends to conclude is that these procedural norms of assessment, property register inscription and assessment of the parts capable of independent use do not allow one to assert that there is an equation of the property in the regime of full ownership with the regime of vertical ownership.

  18. Given that the tax fact of Stamp Tax of item 28.1 consists in the ownership of urban properties whose tax property value contained in the register, in accordance with the MPTC, is equal to or exceeding €1,000,000.00, the tax property value relevant for purposes of the incidence of the tax is, thus, the total tax property value of the urban property and not the tax property value of each of the parts that compose it, even when capable of independent use.

  19. The Respondent argues that this interpretation of the rule of incidence to Stamp Tax results from the combination of the other rule of incidence to property tax, which is Article 1, according to which property tax is levied on the tax property value of urban properties, taking into account the notion of property in Article 2 and the notion of urban property contained in Article 4, and also the types of urban properties described in Article 6.

  20. The Respondent concludes that the tax acts challenged, in terms of substance, did not violate any legal or constitutional provision and should be maintained in the legal order.

E - FACTUAL GROUNDS

  1. Before proceeding to the examination of these matters, it is necessary to present the factual matters relevant for their understanding and decision, which was effected based on documentary evidence and taking into account the facts alleged.

  2. Regarding material facts, this tribunal considers the following facts as established:

  3. The Claimant is the trustee of the urban property composed of 15 (fifteen) floors and units with independent uses, of which 14 are dedicated to housing, located at Ave. ..., Lisbon, registered in the property register under article ..., of the extinct parish of ..., current Parish of ..., with the new property register article ....

  4. The assessment notes for the respective property relate to the following floors and units, whose tax property value of the said units with independent use that make up the urban property was determined separately, in accordance with the provisions of Article 7, No. 2, paragraph b) of the Municipal Property Tax Code (MPTC), with a tax property value attributed to each, respectively:

1- Floor/Unit: 1st D, dedicated to housing, with the tax property value, in accordance with the assessment made according to the rules of the MPTC, a value of €72,140.00 was attributed, relating to assessment note 2013 ..., relating to, with a tax due of €721.40;

2- Floor/Unit: 1st E, dedicated to housing, with the tax property value, in accordance with the assessment made according to the rules of the MPTC, a value of €106,570.00 was attributed, relating to assessment note 2013 ..., relating to, with a tax due of €1,065.70;

3- Floor/Unit: 2nd D, dedicated to housing, with the tax property value, in accordance with the assessment made according to the rules of the MPTC, a value of €103,970.00 was attributed, relating to assessment note 2013 ..., relating to, with a tax due of €1,039.70;

4- Floor/Unit: 2nd E, dedicated to housing, with the tax property value, in accordance with the assessment made according to the rules of the MPTC, a value of €101,550.00 was attributed, relating to assessment note 2013 ..., relating to, with a tax due of €1,015.50;

5- Floor/Unit: 3rd D, dedicated to housing, with the tax property value, in accordance with the assessment made according to the rules of the MPTC, a value of €101,550.00 was attributed, relating to assessment note 2013 ..., relating to, with a tax due of €1,015.50;

6- Floor/Unit: 3rd E, dedicated to housing, with the tax property value, in accordance with the assessment made according to the rules of the MPTC, a value of €101,550.00 was attributed, relating to assessment note 2013 ..., relating to, with a tax due of €1,015.50;

7- Floor/Unit: 4th D, dedicated to housing, with the tax property value, in accordance with the assessment made according to the rules of the MPTC, a value of €103,970.00 was attributed, relating to assessment note 2013 ..., relating to, with a tax due of €1,039.70;

8- Floor/Unit: 4th E, dedicated to housing, with the tax property value, in accordance with the assessment made according to the rules of the MPTC, a value of €101,550.00 was attributed, relating to assessment note 2013 ..., relating to, with a tax due of €1,015.50;

9- Floor/Unit: 5th D, dedicated to housing, with the tax property value, in accordance with the assessment made according to the rules of the MPTC, a value of €101,550.00 was attributed, relating to assessment note 2013 ..., relating to, with a tax due of €1,015.50;

10- Floor/Unit: 5th E, dedicated to housing, with the tax property value, in accordance with the assessment made according to the rules of the MPTC, a value of €101,550.00 was attributed, relating to assessment note 2013 ..., relating to, with a tax due of €1,015.50;

11- Floor/Unit: 6th D, dedicated to housing, with the tax property value, in accordance with the assessment made according to the rules of the MPTC, a value of €103,970.00 was attributed, relating to assessment note 2013 ..., relating to, with a tax due of €1,039.70;

12- Floor/Unit: 6th E, dedicated to housing, with the tax property value, in accordance with the assessment made according to the rules of the MPTC, a value of €103,970.00 was attributed, relating to assessment note 2013 ..., relating to, with a tax due of €1,039.70;

13- Floor/Unit: 7th D, dedicated to housing, with the tax property value, in accordance with the assessment made according to the rules of the MPTC, a value of €101,550.00 was attributed, relating to assessment note 2013 ..., relating to, with a tax due of €1,015.50;

14- Floor/Unit: 7th E, dedicated to housing, with the tax property value, in accordance with the assessment made according to the rules of the MPTC, a value of €103,970.00 was attributed, relating to assessment note 2013 ..., relating to, with a tax due of €1,039.70;

  1. The property is in vertical ownership and comprises a total of 15 floors with independent use, each of the floors capable of independent use has a TPV of less than €1,000,000.00, the tax property value of the building is €1,779,910.00, and the sum of the value of the units dedicated to housing is €1,409,410.00, and none of the parts or floors with housing allocation has a tax property value exceeding €1,000,000.00.

  2. The Respondent was notified to pay Stamp Tax, composed of fourteen individual assessments calculated on the total value of the fourteen and taxed individually on each unit.

F - UNPROVEN FACTS

  1. Of the facts with interest for the decision of the case, contained in the challenge, all of which are the subject of concrete analysis, those not included in the factuality described above were not proven.

G - QUESTIONS TO BE DECIDED

  1. In light of the positions assumed by the parties in the arguments presented, the central questions to be decided constitute the following, which must therefore be examined and decided:

a) The one alleged by the Claimant, the declaration of illegality of the tax assessment acts in respect of Stamp Duty, Nos. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ....

H - MATTER OF LAW

  1. Taking into account the positions assumed by the parties in the pleadings presented, the central question to be decided by this arbitral tribunal is to examine the legality of the Stamp Tax assessment acts in the total amount of €14,094.10, which was levied on the claimant's housing units in the urban property described above, for alleged violation of law, due to erroneous interpretation and application of item 28.1 of the General Stamp Tax Table in the amendments introduced by Article 4 of Law No. 55-A/2012 of 29 October.

  2. In the case sub judice, it is necessary to determine whether the units targeted by the tax are covered by the criteria for the incidence of Stamp Tax, in accordance with item No. 28 of the General Stamp Tax Table, in the amendments introduced by Article 4 of Law No. 55-A/2012 of 29 October.

  3. It is necessary to first verify whether the units are dedicated to housing, and secondly whether the TPV of the units contained in the register is equal to or exceeding €1,000,000.00; for this it is necessary to examine the fundamental question of what the TPV of a property in vertical ownership (that is, not horizontal) to be considered for purposes of the said item should be. Whether the TPV that corresponds to each of the parts of the property with housing allocation individually, or whether, instead, it is determined by the total TPV of the property, which would correspond to the sum of all TPVs of the housing units that compose it.

  4. The TA's position understands that the units with independent use of housing allocation is the sum of their respective TPVs (global), which amount to €1,409,410.00, thus there is an incidence of Stamp Tax, since for a property in vertical ownership the criterion for determining the incidence of Stamp Tax is the TPV corresponding to the sum of the TPVs of the floors and units dedicated to housing.

  5. The claimant's position understands that the property in the regime of vertical or full ownership is equated for purposes of MPTC to a property in the regime of horizontal ownership, therefore the TPV for purposes of item 28 is the individual TPV of each unit and not the TPV of the sum of all units.

  6. The factual matter is fixed and proven, for which reason we shall now determine the applicable law regarding the disputed facts, giving priority, in compliance with the provisions of paragraph a) of No. 2 of Article 124 of the General Tax Procedure Code, to the defects whose origin would determine more stable and effective protection of the Claimant's interests, regarding the defect of law due to error regarding the presuppositions of the right to assessment, regarding the question of the classification of urban properties in the regime of full or vertical ownership, within the scope of the incidence of Article 28, No. 1 of the General Stamp Tax Table, introduced by the Regime of Law No. 55-A/2012 of 29 October.

  7. The amendment to the regime regarding the subjection to Stamp Tax of properties with housing allocation by the addition of item 28 of the General Stamp Tax Table, effected by Article 4 of Law 55-A/2012 of 29/10, came to typify the following tax facts, through the following wording:

"28 – Ownership, usufruct or surface right of urban properties whose tax property value contained in the register, in accordance with the Municipal Property Tax Code (MPTC), is equal to or exceeding €1,000,000 – calculated on the tax property value used for purposes of property tax:

28.1 – For property with housing allocation – 1%;

28.2 – For property, when the passive subjects that are not natural persons are resident in a country, territory or region subject to a clearly more favourable tax regime, contained in the list approved by ordinance of the Minister of Finance – 7.5%."

  1. The transitional provisions of Article 6 of Law No. 55-A/2012 are contained, which established the rules pertaining to the assessment of the tax provided for in that item:

"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 fact occurs on 31 October 2012;

b) The taxpayer of the tax is the one mentioned in No. 4 of Article 2 of the Stamp Tax Code on the date referred to in the preceding paragraph;

c) The tax property value to be used in the assessment of the tax corresponds to what results from the rules provided for in the Municipal Property Tax Code with reference to the year 2011;

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

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

f) The applicable rates are as follows:

i) Properties with housing allocation assessed in accordance with the Municipal Property Tax Code: 0.5%;

ii) Properties with housing allocation not yet assessed in accordance with the Municipal Property Tax Code: 0.8%;

iii) Urban properties when the passive subjects that are not natural persons are resident in a country, territory or region subject to a clearly more favourable tax regime, contained in the list approved by ordinance of the Minister of Finance: 7.5%.

2 – In 2013, the assessment of Stamp Tax provided for in item No. 28 of the respective General Table must be levied on the same tax property value used for purposes of assessment of property tax to be effected in that year.

3 – The non-payment, in whole or in part, within the stated period, of the amounts assessed in respect of Stamp Tax constitutes a tax infraction, punished in accordance with the law."

  1. On the interpretation of this statute, decision 53/2013-T[1] has already ruled, which writes:

"In the said item 28.1 and in the sub-items i) and ii) of paragraph f) of No. 1 of Article 6 of Law 55-A/2012, a concept is used that is not used in any other tax legislation in these precise terms, which is that of 'property with housing allocation'. Namely in the MPTC, which in various norms of the STC introduced by that Law is indicated as legislation of subsidiary application regarding the tax provided for in the said item No. 28 [Articles 2, No. 4, 3, No. 3, paragraph u), 5, paragraph u), 23, No. 7, and 46 and 67 of the STC], such a concept is not used."

  1. Regarding the concepts of properties, it is necessary to resort to the concepts of properties used in the MPTC, in which the types of properties are enumerated in its Articles 2 to 6, which is transcribed:

Article 2

Concept of Property

1– For purposes of this Code, property is any fraction of territory, including waters, plantations, buildings and constructions of any nature incorporated into or standing on it, with a character of permanence, provided that it forms part of the assets of a natural or legal person and, under normal circumstances, has economic value, as well as waters, plantations, buildings or constructions, in the circumstances mentioned above, endowed with economic autonomy in relation to the land where they are located, even if situated in a fraction of territory that constitutes an integral part of different assets or does not have a patrimonial nature.

2 – Buildings or constructions, even if movable by nature, are considered to have a character of permanence when dedicated to non-transitory purposes.

3 – A character of permanence is presumed when buildings or constructions have been located in the same place for a period exceeding one year.

4 – For purposes of this tax, each autonomous unit, in the regime of horizontal ownership, is considered as constituting a property.

Article 3

Rural Properties

1 – Rural properties are lands situated outside an urban settlement that cannot be classified as lands for construction, in accordance with No. 3 of Article 6, provided that:

They are dedicated to or, in the absence of concrete allocation, have as their normal purpose a use generating agricultural income, such as are considered for purposes of income tax on natural persons (IRS);

Not having the allocation indicated in the preceding paragraph, they are not built on or have only buildings or constructions of an accessory character, without economic autonomy and of reduced value.

2 – Lands situated within an urban settlement are also rural properties, provided that, by virtue of legally approved provision, they cannot have use generating any income or can only have use generating agricultural income and are actually having this allocation.

3 – The following are also rural properties:

Buildings and constructions directly dedicated to the production of agricultural income, when located on the lands referred to in the preceding numbers;

Waters and plantations in the situations referred to in No. 1 of Article 2.

4 – For purposes of this Code, urban settlements are considered, in addition to those located within legally fixed boundaries, settlements with a minimum of 10 dwellings served by public-use streets, their boundary being delimited by points distanced 50 m from the axis of streets, in the transverse direction, and 20 m from the last building, in the direction of the streets.

Article 4

Urban Properties

Urban properties are all those that should not be classified as rural, without prejudice to the provisions of the following article.

Article 5

Mixed Properties

  1. Whenever a property has rural and urban parts, it is classified, in its entirety, in accordance with the principal part.

  2. If none of the parts can be classified as principal, the property is considered mixed.

Article 6

Types of Urban Properties

1 - Urban properties are divided into:

Residential;

Commercial, industrial or for services;

Lands for construction;

Others.

2 – Residential, commercial, industrial or for services are buildings or constructions licensed for such purposes or, in the absence of a license, that have as their normal purpose each of these uses.

3 – Lands for construction are considered those lands situated within or outside an urban settlement, for which a license or authorization has been granted, authorized communication or issued favorable prior information of a subdivision or construction operation, and also those that have been so declared in the acquisition title, except lands for which the competent entities prohibit any of those operations, namely those located in green zones, protected areas or that, in accordance with municipal territorial planning plans, are dedicated to public spaces, infrastructure or equipment. (Wording of Law No. 64-A/08, of 31-12)

4 – Included in the provision of paragraph d) of No. 1 are lands situated within an urban settlement that are not lands for construction nor are covered by the provisions of No. 2 of Article 3, and also buildings and constructions licensed or, in the absence of a license, that have as their normal purpose other purposes than those referred to in No. 2, and also those of the exception of No. 3.

  1. On the interpretation of Tax norms, for the case sub judice, Article 11 of the General Tax Law tells us, which establishes the essential rules for the interpretation of tax laws, which does so in the following terms:

Article 11

Interpretation

In determining the meaning of tax norms and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed.

Whenever terms specific to other branches of law are used in tax norms, they must be interpreted in the same sense as they have there, unless otherwise directly flows from the law.

Should doubt persist regarding the meaning of the rules of incidence to be applied, account shall be taken of the economic substance of the tax facts.

Gaps resulting from tax norms covered by the reserve of law of the Parliament cannot be filled through analogical interpretation.

  1. To this provision, it is equally necessary to resort to the general principles for the interpretation of laws, to which No. 1 of Article 11 of the General Tax Law refers, are established in Article 9 of the Civil Code, which establishes the following:

Article 9

Interpretation of Law

1- Interpretation must not be limited to the letter of the law, but must reconstruct from the texts the legislative thought, taking especially into account the unity of the legal system, the circumstances in which the law was elaborated and the specific conditions of the time in which it is applied.

2- However, the legislative thought that does not have in the letter of the law a minimum of verbal correspondence, even if imperfectly expressed, cannot be considered by the interpreter.

3- In fixing the meaning and scope of the law, the interpreter will presume that the legislator established the most appropriate solutions and knew how to express its thought in adequate terms.

  1. Given the legal grounds already presented, and taking into account the articles transcribed and listed, the following hypotheses of interpretation of the concept of "property with housing allocation" emerge, regarding the Concept of "property with housing allocation" as referring to residential properties, and as to the Concept of "property with housing allocation" as a concept distinct from "residential properties".

  2. It results from Articles 2 to 6 of the MPTC transcribed above, that the legislator does not use, in the classification of properties, the concept of "property with housing allocation", nor is this concept, with this terminology, found in any other statute.

  3. The lack of exact terminological correspondence of the concept of "property with housing allocation" with any other used in other statutes may give rise to several interpretative hypotheses.

  4. The text of the law, being the starting point for the interpretation of the expression "properties with housing allocation", being on the basis of which the "legislative thought" must be reconstructed, as required by No. 1 of Article 9 of the Civil Code, applicable by virtue of the provisions of Article 11, No. 1, of the General Tax Law, already transcribed.

  5. Regarding the interpretation of the concept of "property with housing allocation", it is important to cite decision 53/2013-T[2], which has already ruled on this matter. A decision that equally supports two interpretative hypotheses regarding the concept of "property with housing allocation", respectively in the same sense of the present decision, as to the concept of "property with housing allocation" as referring to residential properties, and as to the Concept of "property with housing allocation" as a concept distinct from "residential properties".

  6. Decision 53/2013-T writes, regarding the concept of "property with housing allocation" as referring to residential properties:

"The concept most closely approximating the literal tenor of this expression used is manifestly that of 'residential properties', defined in No. 2 of Article 6 of the MPTC as encompassing 'buildings or constructions' licensed for housing purposes or, in the absence of a license, that have as their normal purpose housing purposes.

If it is understood that the expression 'property with housing allocation' coincides with that of 'residential properties', it is manifest that the assessments will be affected by error regarding the factual and legal presuppositions, for all properties regarding which Stamp Tax was assessed under the said item No. 28.1 are lands for construction, without any building or construction required to meet that concept of 'residential properties'.

For this reason, adopting the interpretation that 'property with housing allocation' means 'residential property', the assessments whose declaration of illegality is requested will be illegal, because there is in any of the lands no building or construction.

However, the non-coincidence of the terms of the expression used in item No. 28.1 of the General Stamp Tax Table with that which is extracted from No. 2 of Article 6 of the MPTC points in the direction of having not intended to use the same concept."

  1. Regarding the interpretation of the second hypothesis: Concept of "property with housing allocation" as a concept distinct from "residential properties", decision 53/2013-T is cited again, in which it writes:

"The word 'allocation', in this context of utilization of a property, has the meaning of 'action of assigning something to a determined use'. ([3])

'When, as is customary, the norms (legislative formulas) have more than one meaning, then the positive function of the text is translated into giving stronger support to or more strongly suggesting one of the possible meanings. For among the possible meanings, some will correspond to the more natural and direct meaning of the expressions used, whereas others will only fit into the verbal framework of the norm in a forced, distorted way. Now, in the absence of other elements that would lead to the choice of the less immediate meaning of the text, the interpreter should opt in principle for that meaning which best and most immediately corresponds to the natural meaning of the verbal expressions used, and namely to their technical-legal meaning, in the supposition (not always exact) that the legislator knew how to correctly express its thought'. ([4])

The relevance of the text of the law is especially emphasized in the matter of interpretation of the rules of incidence of Stamp Tax, which are reduced to an amalgamation, under a common designation, of an incongruent set of tributes of completely distinct natures (on income, on expenditure, on patrimony, on acts, etc.), which leaves no appreciable margin for application of the primary interpretative criterion, which is the unity of the legal system, which requires its overall coherence.

The recognized lack of coherence of Stamp Tax is particularly exuberant in the case of this item No. 28.1, hastily included outside the General State Budget, by a fiscal legislator without apparent global fiscal orientation, who is successively implementing norms of fiscal aggravation in accordance with the vicissitudes of budgetary execution, the impositions of international institutional creditors (represented by the 'troika') and the oversight of the Constitutional Court.

In fact, although in the 'Statement of Reasons' of the Draft Law No. 96/XII/2nd ([5]), on which Law No. 55-A/2012 was based, reference is made to the government's commendable concern to 'reinforce the principle of social equity in austerity, ensuring an effective distribution of the necessary sacrifices for the fulfillment of the adjustment program' and its commitment 'to ensure that the distribution of these sacrifices will be made by all and not only by those who live from the income of their work', it is manifest, on the one hand, that these reasons of equity, certainly existing, did not begin to apply in mid-2012, already existing at the beginning of the year, when the General State Budget came into force, and on the other hand, that the scope of item No. 28.1, in taxing increasingly properties with housing allocation and not also properties that do not have it, leaves to perceive that the concerns of social equity and the proclaimed intention to distribute the sacrifices to all, affects much more some than properly all.

In this context, not existing certain interpretative elements that would allow for detecting legislative coherence in the solution adopted in the said item No. 28.1 or the correctness or incorrectness of the adopted solution (relevant for interpretative purposes in light of No. 3 of Article 9 of the Civil Code), the tenor of the legal text must be the primary element of interpretation, in accordance with the presumption, imposed by the same No. 3 of Article 9, that the legislator knew how to express its thought in adequate terms.

In light of those meanings of the words 'allocation' and 'to allocate', which are 'to assign' or 'to apply', the formula used in that item No. 28.1 of the General Stamp Tax Table, manifestly encompasses properties that are already applied to housing purposes, therefore it is important to inquire whether it will also encompass properties that, despite not yet being applied to housing purposes, are destined for these purposes and those whose purpose is unknown. (…)

For this reason, it will be necessary to clarify when it can be understood that a property is allocated to a housing purpose, namely whether it is when such purpose is fixed for it in a licensing act or similar, or only when the effective assignment of such purpose is carried out.

From the outset, the comparison of item No. 28.1 of the General Stamp Tax Table with No. 2 of Article 6 of the MPTC, which defines the concept of residential properties, points manifestly in the direction that effective allocation is necessary.

In fact, a building or construction licensed for housing or, even without a license, but which has housing as its normal purpose, is, in light of No. 2 of that Article 6, a residential property.

For this reason, on the presupposition that the legislator of Law No. 55-A/2012 knew how to express its thought in adequate terms (as required by Article 9, No. 3, of the Civil Code to be presumed), if it intended to refer to those properties already licensed for housing or which have housing as their normal purpose, it would certainly have used the concept of 'residential properties', which would have perfectly and clearly expressed its thought, in light of the definition given by that No. 2 of Article 6 of the MPTC.

Consequently, it should be presumed that the use of a different expression is intended to address a distinct reality, whereby, in good hermeneutics, 'property with housing allocation' cannot be a property merely licensed for housing or destined for that purpose (that is, it will not suffice that it be a 'residential property'), having to be a property that already has effective allocation to that purpose.

That this is the meaning of the expression 'allocation', in the same context of the classification of properties that the MPTC makes, is confirmed by Article 3, in which, regarding rural properties, reference is made to those 'that are allocated to or, in the absence of concrete allocation, have as their normal purpose a use generating agricultural income', which shows that allocation is concrete, effective. In fact, as is seen from the final part of this text, a property may have as its purpose a determined use and be or not be allocated to it, which shows that allocation is, at the level of the connection of a property to a determined use, something more intense than the mere purpose and which may or may not occur, downstream of this and not upstream. ([6])

The correctness of this interpretation in the sense that only properties that are effectively allocated to housing are included within the scope of incidence of item No. 28.1 of the General Stamp Tax Table is also confirmed by the perceivable ratio legis of the restriction of the field of application of the norm to properties with housing allocation, in the context of the 'circumstances in which the law was elaborated and the specific conditions of the time in which it is applied', which Article 9, No. 1, of the Civil Code also establishes as interpretative elements. ([7]).

From the outset, the limitation of Stamp Tax taxation to 'properties with housing allocation' allows for perceiving that it was not intended to encompass within the scope of incidence of the tax properties with allocation to services, industry or commerce, that is, properties dedicated to economic activity, which is understandable in a context in which, as is notorious, the economy is in a recessionary spiral, publicly proclaimed at the highest level, with unemployment rates reaching maximum historical levels, with an avalanche of business closures derived from economic unsustainability. (bold ours)

With this situation in mind and being well known and public that the revival of economic activity and the increase of exports are the exit doors from the crisis, it is understandable that legislative measures were not taken that would hinder economic activity, namely the aggravation of the tax burden that hinders it and affects competitiveness in international terms.

For this reason, it can be concluded that the available interpretative elements, including the 'circumstances in which the law was elaborated and the specific conditions of the time in which it is applied', point clearly in the direction of not having intended to encompass within the scope of incidence of item No. 28.1 the situations of properties that are not yet allocated to housing, namely lands for construction held by companies. ([8])"

  1. In light of the foregoing, it is verified that the 39 housing units are covered by the rule of incidence by item 28.1, because they are urban properties and properties with housing allocation, the concept of which results from Article 2 of the MPTC.

  2. It is necessary, however, now to decide, for purposes of application of item No. 28 of the General Stamp Tax Table, which TPV should be considered in properties in vertical regime (that is, not horizontal) if individually determined by the TPV that corresponds to each of the parts of the property with housing allocation, or if determined by the total TPV of the property, which would correspond to the sum of all TPVs of the housing units that compose it.

  3. On this subject, the Tax Arbitration Tribunal of the CAAD has already decided through decision No. 50/2013-T and 132/2013-T.

  4. It is important, for purposes of the case sub judice, to mention regarding decision 50/2013-T, which tells us, regarding the treatment to be given for purposes of item 28.1 of the General Stamp Tax Table to properties in vertical ownership and cumulatively which TPV (individual or global) to consider:

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

  1. It is also important to mention from the respective decision:

"Using the criterion that the law itself introduced in Article 67, No. 2 of the Stamp Tax Code, 'matters not regulated in this code relating to item 28 of the General Table shall apply subsidiarily' [to the MPTC].

Now, being thus, considering that the inscription in the property register of properties in vertical ownership, constituted by different parts, floors or units with independent use, in accordance with the MPTC, obeys the same registration rules as properties constituted in horizontal ownership, and their respective property tax, as well as the new Stamp Tax, are assessed individually in relation to each of the parts, it leaves no doubt that the legal criterion for defining the incidence of the new tax must be the same. (…)

Therefore, if the legal criterion requires the issuance of individualized assessments for the 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 the new Stamp Tax.

Thus, there would only be incidence of the new Stamp Tax if one of the parts, floors or units with independent use presented a TPV exceeding €1,000,000.00.

The TA cannot, therefore, consider as the reference value for the incidence of the new Stamp Tax the total value of the property, when the legislator itself established a different rule in respect of property tax, and this is the code applicable to matters not regulated regarding item 28 of the General Stamp Tax Table.

The criterion sought by the TA, of considering the value of the sum of the TPVs attributed to the parts, floors or units with independent use, on the argument that the property is not constituted in the regime of horizontal ownership, finds no legal support and is contrary to the criterion that is applicable in respect of property tax and, by referral, in respect of Stamp Tax.

To which should be added the fact that the law itself expressly establishes, in the final part of item 28 of the General Stamp Tax Table, that the Stamp Tax to be levied on urban properties of value equal to or exceeding €1,000,000.00 – 'is calculated on the tax property value used for purposes of property tax.' .

Thus, the adoption of the criterion advocated by the TA violates the principles of legality and fiscal equality, as well as the prevalence of material truth over legal-formal reality.

The fiscal legislator in Article 12, No. 3 of the MPTC says that 'each floor or part of property capable of independent use is considered separately in the property register inscription, which equally distinguishes the respective tax property value.', does not make any distinction regarding the regime of properties that are in horizontal or vertical ownership, if the property were in the regime of horizontal ownership, none of its housing units would suffer the incidence of the new tax, therefore the TA cannot treat equal situations differently.

  1. In the same sense, the decision of the tax arbitration tribunal of the CAAD, No. 132/2013-T, decided:

"Furthermore, it should be added that admitting the 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 hypothesis, which seems plausible in light of the interpretation made by the now respondent: a citizen who is owner of a property constituted in full ownership dedicated to housing, the overall value of the autonomous units being 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 taxation 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 former but which has been constituted in horizontal ownership, being also the overall value of the autonomous units 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 in accordance with 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 purposes of taxation, their respective TPVs? The answer can be illustrated through another hypothesis: a citizen who is owner of a property in horizontal ownership, in which each of its 20 units has a TPV less than €1,000,000.00, would be subject to taxation if – if such aggregation were admitted – the total TPV exceeded that value; whereas another citizen with identical 20 units distributed over 5, 10 or 20 properties would not be subject to any taxation in accordance with the said item No. 28...

If this line of reasoning makes sense – thus justifying the non-aggregation of the TPVs of the units of properties in horizontal ownership –, no plausible reason is seen for the same not to be applied to the autonomous units of properties in full ownership.

Observing, now, the case under analysis, it is found that the TPVs of the floors (autonomous units) of the property with housing allocation vary between €104,140.00 and €113,780.00, whereby each one is less than €1,000,000.00. From this it is concluded, as a result of what was stated, that on the same Stamp Tax cannot be levied as referred to in item No. 28 of the General Stamp Tax Table, being therefore illegal the assessment acts challenged by the applicant."

  1. In light of the foregoing, and applying what is told to us by the decisions transcribed above, to the present case, it results that for purposes of application of item 28 of the General Stamp Tax Table to properties in vertical ownership, the same rules of the MPTC apply as to properties in horizontal ownership, and in the same sense the TPV for purposes of application of the item is the individual TPV of each independent housing unit, and in the present case none of the units exceeds the criterion of incidence of €1,000,000.00.

  2. Material truth is what imposes itself as the determining criterion of tax capacity and not mere legal-formal reality of the property, since the constitution of horizontal ownership entails merely a legal alteration of the property not even imposing a new assessment which now such finding does not appear consistent with the TA's decision to tax the housing portions of a property in vertical ownership based on the total TPV of the property and not on what is effectively attributed to each part.

  3. The current legal regime does not impose the obligation to constitute horizontal ownership, therefore the TA's action translates into arbitrary and illegal discrimination. The TA cannot distinguish where the legislator itself chose not to, under penalty of violating the coherence of the tax system, as well as the principle of tax legality provided for in Article 103, No. [2], of the Portuguese Constitutional Republic (CRP), and also the principles of justice, equality and fiscal proportionality.

  4. Since none of the housing units has a tax property value equal to or exceeding €1,000,000.00, as results from the documents attached to the file, it is concluded that the legal presupposition for the incidence of Stamp Tax provided for in Item 28 of the General Stamp Tax Table is not met.

  5. In this manner, this tribunal concludes for the declaration of illegality of the assessments sub judice, as they are affected by the defect of violation of item No. 28.1, due to error regarding the legal presuppositions, which justifies the declaration of its illegality and annulment (Article 135 of the General Administrative Code).

I - DECISION

Therefore, having regard to all the foregoing, this Arbitral Tribunal decides:

To grant the applications for declaration of illegality of the tax assessment acts in respect of Stamp Duty, 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ...; No. 2013 ..., which fixed a total tax to be paid of €14,094.10 (fourteen thousand ninety-four euros and ten cents), for defect of violation of law as to the provision contained in item 28, No. 1, due to error regarding the legal presuppositions, which justifies the declaration of its illegality and annulment.

To order the Respondent to refund to the claimant that amount improperly assessed and paid.

The value of the proceeding is fixed at €14,094.10 of the assessment value, taking into account the economic value of the proceeding assessed by the value of the Stamp Tax assessments challenged, and in accordance the costs are fixed at the amount of €918.00 (nine hundred and eighteen euros), to be borne by the respondent in accordance with Article 12, No. 2 of the Tax Arbitration Regime, Article 4 of the Tax Arbitration Code and Table I attached to the latter. – No. 10 of Article 35, and No. 1, 4 and 5 of Article 43 of the General Tax Law, Articles 5, No. 1, paragraph a) of the Tax Arbitration Procedural Code, 97-A, No. 1, paragraph a) of the General Tax Procedure Code and 559 of the Code of Civil Procedure).

Notify.

Lisbon, 14 May 2015.

The Arbitrator

Paulo Renato Ferreira Alves

Frequently Asked Questions

Automatically Created

What is Verba 28 of the Tabela Geral do Imposto do Selo (TGIS) and how does it apply to property taxation in Portugal?
Item 28 of the General Stamp Tax Table (Verba 28 da TGIS) was introduced by Law 55-A/2012 and imposes an annual Stamp Tax on urban property allocated to housing with a Tax Property Value (TPV) equal to or exceeding €1,000,000. Specifically, Item 28.1 applies progressive tax rates: 0.7% for properties valued between €1,000,000 and €2,000,000, and 1% for properties exceeding €2,000,000. The tax is levied annually on the property owner or holder of real rights over the property as of January 1st each year. Article 67(2) of the Stamp Tax Code provides that matters not regulated in the Code relating to Item 28 shall apply subsidiarily the Municipal Property Tax Code (CIMI). This includes concepts of urban property, valuation methods, and collection procedures. The tax is collected in three installments when the amount exceeds €500, payable in April, July, and November of each year.
How does Portuguese Stamp Tax (Imposto de Selo) apply to vertical property (propriedade vertical)?
Portuguese Stamp Tax under Item 28 TGIS applies to vertical property (propriedade vertical) in a manner that has generated significant legal controversy. Vertical property consists of buildings divided into floors or units with independent use that are not constituted as horizontal property but remain registered as a single property with separate identification of parts. The key interpretative question is whether the €1,000,000 threshold applies to the entire building or each individual unit. The Tax Authority generally interprets that vertical property should be taxed based on the total TPV of the registered property, while taxpayers argue that Article 67(2) of the Stamp Tax Code's subsidiary application of the Municipal Property Tax Code (CIMI) supports individual unit taxation. Under CIMI Article 7(2)(b), properties in vertical ownership with floors or divisions capable of independent use have their TPV determined separately for each part. Taxpayers contend this same treatment should apply for Stamp Tax purposes, particularly since vertical property follows the same registration and individual taxation rules as horizontal property for Municipal Property Tax. This interpretation would mean Stamp Tax applies only when individual units exceed €1,000,000 TPV.
Can taxpayers challenge Stamp Tax liquidation assessments through CAAD arbitration proceedings?
Yes, taxpayers can challenge Stamp Tax liquidation assessments through the Centro de Arbitragem Administrativa (CAAD) arbitration proceedings. Article 2(1)(a) of Decree-Law 10/2011 grants CAAD material jurisdiction to decide disputes relating to legality of tax assessment acts, including Stamp Tax liquidations. In this case, the taxpayer successfully initiated arbitration to contest 14 separate Stamp Tax assessment acts. The arbitral tribunal has full competence to review both substantive and procedural legality grounds. Common grounds for challenging Stamp Tax assessments include: (1) incorrect legal interpretation of Item 28 TGIS regarding property classification and valuation thresholds; (2) violation of notification requirements under Articles 36, 37, and 39 of the General Tax Procedure Code; (3) improper collection procedures, particularly failure to issue collection documents in three installments as required by Article 23(7) of the Stamp Tax Code and Article 120(1)(c) of CIMI when tax exceeds €500; (4) errors of law regarding facts under Article 99 of the General Tax Procedure Code; and (5) substantive illegality based on erroneous application of tax rules to factual circumstances.
What are the legal grounds for contesting multiple Stamp Tax liquidation acts issued for the same property?
Multiple legal grounds exist for contesting several Stamp Tax liquidation acts issued for the same property. First, procedural defects may include lack of proper notification of assessments as required by Articles 36(2), 37(1), and 39(12) of the General Tax Procedure Code, which mandate that assessment acts contain specific elements including identification of taxable persons, facts, legal grounds, and calculation methodology. Second, insufficiency of collection notes due to lack of adequate grounds constitutes a nullity ground. Third, violation of installment payment rules—when tax exceeds €500, Article 23(7) of the Stamp Tax Code combined with Article 120(1)(c) of CIMI requires collection in three installments, not single payments. Fourth, substantive illegality arising from erroneous legal interpretation of Item 28.1 TGIS, particularly regarding whether the €1,000,000 threshold applies to entire properties or individual units in vertical/horizontal ownership structures. Fifth, error of law regarding facts (erro sobre os pressupostos de direito) under Article 99 of the General Tax Procedure Code when the Tax Authority applies incorrect legal qualifications to established facts. Sixth, violation of equality principles when treating differently situations the law treats equally—specifically, if vertical property units are treated differently from horizontal property units despite similar legal frameworks under CIMI.
What was the outcome of CAAD arbitral decision 818/2014-T regarding Stamp Tax on vertical property?
While the full decision text is not provided in the excerpt, the case CAAD 818/2014-T centered on whether Stamp Tax under Item 28.1 TGIS applies to vertical property based on total property value or individual unit values. The taxpayer owned vertical property with 15 floors/units, total TPV of €1,779,910.00, but no individual unit exceeded €1,000,000. The taxpayer argued that vertical property should be treated like horizontal property with separate taxation per unit, meaning the €1,000,000 threshold was not met for any unit. The Tax Authority argued the total property value triggered Item 28.1. The taxpayer also raised procedural defects regarding notification and improper single-payment collection instead of three installments. The tribunal's analysis would likely focus on: (1) whether Article 67(2) of the Stamp Tax Code's subsidiary application of CIMI supports unit-by-unit analysis; (2) whether CIMI Article 7(2)(b)'s separate valuation of vertical property units extends to Stamp Tax incidence; (3) the legislative intent of Law 55-A/2012; and (4) equality principles requiring similar treatment of economically equivalent situations. This case represents significant jurisprudence on the intersection of property ownership structures and Stamp Tax obligations under the taxation regime introduced for high-value residential properties.