Process: 82/2014-T

Date: June 16, 2014

Tax Type: Selo

Source: Original CAAD Decision

Summary

This CAAD arbitration case (Process 82/2014-T) concerns the application of Stamp Duty on building land under Law No. 55-A/2012. The claimant challenged five Stamp Duty assessments totaling €29,282.70 on urban properties classified as building land (terrenos para construção) in the property register. Law 55-A/2012 introduced item 28 to the General Table of Stamp Duty, subjecting ownership of urban properties with taxable values equal to or exceeding €1,000,000 to Stamp Tax, with a 1% rate for properties with residential use. Article 6 established transitional rules for 2012, setting the taxable event on October 31, 2012, using 2011 IMI values as the tax base, and applying rates of 0.5% for revalued properties or 0.8% for non-revalued properties. The central legal dispute involves whether building land qualifies as urban property with residential use under item 28.1. The claimant argued that residential use requires actual use—either licensed for habitation or having that normal destination—which undeveloped building land cannot satisfy. Since building land is not built upon, it lacks both a residential use license and suitability for habitation. The claimant contended that residential use refers to the concept of urban residential property under IMI Code Article 6(1)(a), excluding building land classified separately under IMI provisions. The claimant further invoked the legislative intent, arguing this was designed as a luxury tax on high-value real estate, not undeveloped land. The Tax Authority countered that the properties possess the legal nature of properties with residential use, making the assessments legally valid. The case illustrates the interpretative challenges arising from Law 55-A/2012's expansion of Stamp Duty incidence and the application of IMI Code definitions to Stamp Duty assessments.

Full Decision

ARBITRAL DECISION

CAAD: Tax Arbitration

Case No. 82/2014 – T

Subject Matter: Stamp Duty – Land for Construction – Law No. 55-A/2012

A) Report:

  1. A, S.A., taxpayer identification number …, with registered office … (hereinafter referred to as the "Claimant"), submitted a petition for an arbitral decision and constitution of an arbitral tribunal, on 3 February 2014, pursuant to Articles 2 and 10 of Decree-Law No. 10/2011, of 20 January (Legal Regime for Arbitration in Tax Matters, hereinafter referred to as "LRAT"), in which the Tax and Customs Authority (hereinafter referred to as the "Respondent") is named as respondent.

  2. The Claimant intends, in said petition for an arbitral decision, that the Arbitral Tribunal declare the annulment, on grounds of illegality, of the Stamp Duty assessments bearing numbers …, …, …, … and …, in the total amount of € 29,282.70 (twenty-nine thousand, two hundred and eighty-two euros and seventy cents), relating to the properties recorded under urban articles …, …, …, … and … respectively, of the parish and municipality of … and issued by the Tax Service, pursuant to Article 6, No. 1, paragraph f), i) of Law No. 55-A/2012.

  3. The petition for constitution of the Arbitral Tribunal was validated and accepted by His Excellency the President of CAAD, on 4 February 2014.

  4. The Claimant failed to appoint an arbitrator, and therefore, pursuant to Article 6, No. 1, of the LRAT, the undersigned was appointed as arbitrator by the President of the Deontological Council of CAAD, with the appointment having been accepted in accordance with legal provisions.

  5. The present Arbitral Tribunal was constituted on 4 April 2014, as per the order issued by His Excellency the President of the Deontological Council of CAAD on that same date.

  6. On 19 May 2014, the Respondent submitted its Reply.

  7. As there was no occasion for the production of witness testimony, the parties waived, by common agreement, the holding of the first arbitral hearing provided for in Article 18 of the LRAT.

  8. The Claimant sustains its claim, in summary, as follows:

8.1. The assessments in question concern the taxation of urban properties recorded in the property register under articles …, …, …, … and …, respectively, of the parish and municipality of …, all of which correspond to land for construction.

8.2. Law No. 55-A/2012 expanded the scope of the incidence of Stamp Duty to the new legal situation resulting from item 28 of the General Table of Stamp Duty, which subjects to this tax the ownership, usufruct or right of superficies of urban properties with a taxable property value equal to or exceeding € 1,000,000 (one million euros), with properties having residential use being subject to the rate of 1%.

8.3. The aforementioned Law No. 55-A/2012 also provided transitional provisions included in its Article 6, by means of which the rules for the assessment of Stamp Duty relating to item 28 of the General Table of Stamp Duty were determined, by reference to the year 2012, thereby establishing that the taxable event occurred on 31 October 2012, that the taxable property value constituting the tax base should be that resulting from the rules provided for in the Real Estate Transfer Tax Code (IMI) with respect to the year 2011 and, in what is relevant hereto, that the applicable rates would be 0.5% for properties revalued pursuant to the IMI Code and 0.8% for properties not yet revalued.

8.4. The aforementioned legislation also introduced Article 67, No. 2 of the Stamp Duty Code, by means of which the provisions of the IMI Code should be applied, to the extent not otherwise regulated in the Stamp Duty Code, with respect to the application of item 28 of the General Table of Stamp Duty.

8.5. Neither Law No. 55-A/2012 nor the Stamp Duty Code contains any definition of "urban property with residential use", and therefore, given the reference provided in Article 67, No. 2 of the Stamp Duty Code, such definition should be determined through the IMI Code, in accordance with the mechanisms for statutory interpretation.

8.6. Article 4 of the IMI Code defines "urban properties" as being all those that should not be classified as rural.

8.7. From the IMI Code, it follows that urban properties are divided into (i) residential, (ii) commercial, industrial or service-related, (iii) land for construction, and (iv) other.

8.8. From the definition of "residential properties" provided in the IMI Code, it follows that these are buildings or structures licensed for such use or, in the absence of a license, that have as their normal purpose each of these uses, while the legal definition of "land for construction" corresponds this concept to land situated within or outside an urban agglomeration, for which a license or authorization has been granted, prior notice admitted or favorable preliminary information issued for a subdivision or construction operation, and also those that have been declared as such in the acquisition title, with the exception of land in which the competent authorities prohibit any of those operations, namely those located in green zones, protected areas or that, in accordance with municipal land use plans, are allocated to public spaces, infrastructure or facilities.

8.9. From which it follows that the IMI Code also does not provide a definition of "urban properties with residential use", making it necessary to resort to literal interpretation of the incidence norm in question.

8.10. Thus, the Claimant submits that the expression "residential use" implies that the legislator intended to include in the incidence norm only urban properties with actual residential use, either because they are licensed for such purpose or because they have that normal destination.

8.11. The Claimant thus argues that the legislator did not intend to include in the expression "residential use" the expectation or potential for an urban property to have such "residential use" in the future.

8.12. Concluding that, inasmuch as the land for construction is not built upon, it does not satisfy any condition for it to qualify as property with residential use, insofar as, on the one hand, it does not possess a use license for residential purposes and, on the other, it is not suitable for habitation (because it is not built upon).

8.13. Thus, the Claimant submits that only when "residential use" is realized, and never before construction, can it be considered that the urban property falls within the incidence norm in question.

8.14. For which reason the Claimant argues that the use of the expression "urban property with residential use", provided in item 28.1 of the General Table of Stamp Duty corresponds to the concept of urban residential property, provided in Article 6, No. 1, paragraph a) of the IMI Code, and thus does not encompass land for construction, which renders the assessments in question illegal.

8.15. The Claimant further argues that, in addition to the interpretation that it submits flows literally from the norm in question, also in accordance with the historical element resulting from the legislative proposal (No. 96/XII-2nd), it is evident that what is at issue is a "luxury tax" on high-value real estate and not on land for construction.

8.16. In summary, the Claimant seeks annulment of the assessment acts in question on grounds of illegality resulting from an error in the interpretation of item 28 of the General Table of Stamp Duty.

  1. The Respondent replied arguing for the dismissal of the petition for an arbitral decision, impugning, from the outset, all the arguments adduced by the Claimant and alleging, in summary, that:

9.1. The properties in question have the legal nature of properties with residential use, and therefore the assessment acts should be upheld as they constitute a correct interpretation of item No. 28 of the General Table of Stamp Duty, as amended by Law No. 55-A/2012.

9.2. The Respondent argues that, in the absence of any definition of the concepts of urban property, land for construction and residential use in the Stamp Duty Code, resort must be had subsidiarily to the IMI Code, as provided in Article 67, No. 2 of the Stamp Duty Code.

9.3. The Respondent alleges that the notion of use of an urban property is based on the section relating to the valuation of immovable property, insofar as the valuation of the property (purpose) incorporates value to the property, constituting a distinctive fact determining (coefficient) for purposes of valuation.

9.4. The Respondent argues that the legislator chose to apply the methodology of valuation of properties in general to the valuation of land for construction, making the coefficient of use provided in Article 41 of the IMI Code applicable thereto, as per case law cited.

9.5. The Respondent defends the following line of reasoning: (i) in the application of law to concrete cases, it is important to determine the exact meaning and scope of the norm, as provided in Article 9 of the Civil Code, applicable by reference to Article 11 of the General Tax Law; (ii) Article 67 of the Stamp Duty Code provides for the subsidiary application of the IMI Code; (iii) the use of the property (aptitude or purpose) constitutes a coefficient taken into account in its respective valuation and consequent determination of the taxable property value, applicable to land for construction; (iv) item 28 of the General Table of Stamp Duty refers to the concept of "properties with residential use", appealing to a classification that overlaps with the categories of properties provided in Article 6 of the IMI Code.

9.6. For which reason the Respondent concludes that the concept of "property with residential use" provided in item 28 of the General Table of Stamp Duty refers to both constructed properties and land for construction, taking into account the literal element.

9.7. The Respondent argues that the mere constitution of a right of potential construction increases the value of the property in question, and therefore Article 45 of the IMI Code provides for the separation of the two parts of the land (that is, the part where the building to be constructed will be placed, and the area of free land), with the value of the land adjacent to the implantation area being determined in the same terms as the value of the area of free land and excess land area.

9.8. The Respondent further notes that the legal regime for urbanization and construction presupposes already constructed buildings, with certain elements being mandatory in the license for urbanization operations, as well as in the license for subdivision or urbanization works and for construction works, and also in the Municipal Master Plans, and therefore, well before actual construction of the property, it is possible to ascertain and determine the use of land for construction.

9.9. Although the Claimant did not allege the unconstitutionality of the incidence norm in question, the Respondent raises such argument – which was not invoked in the concrete case – arguing that the Constitution of the Portuguese Republic does not prevent differentiation of treatment, but only arbitrary, unreasonable discriminations, that is, distinctions of treatment that do not have justification and sufficient material foundation.

9.10. Adding further, the Respondent – although without contextualizing this argument, inasmuch as land for construction rather than constructed properties is at issue – that the different valuation and taxation of a property in full ownership as opposed to a property held in condominium ownership results from the different legal effects inherent in these two figures.

9.11. For the foregoing reasons, the Respondent concludes that the assessment in question constitutes a correct interpretation and application of law to the facts, violating neither the law nor the Constitution of the Portuguese Republic – despite the Claimant never having alleged the unconstitutionality of the norms in question – and that the Claimant's claim should be dismissed and the Respondent absolved of the claim.

B) Procedural Order

  1. The Tribunal is competent and has been regularly constituted, pursuant to Articles 2, No. 1, paragraph a), 5 and 6, all of the LRAT.

  2. The parties have legal personality and capacity, are legitimate and are represented, pursuant to Articles 4 and 10 of the LRAT and Article 1 of Ordinance No. 112-A/2011, of 22 March.

  3. There are no procedural nullities or prior questions affecting the entire case, and therefore it is now necessary to rule on the merits of the claim.

  4. The parties waived, by common agreement, the holding of the arbitral hearing provided for in Article 18 of the LRAT.

C) Subject Matter of the Arbitral Decision

  1. The following question is placed before the Tribunal, as described above:

(i) Should the Stamp Duty assessments effected pursuant to Article 6, No. 1, paragraph f), i) of Law No. 55-A/2012, bearing numbers …, …, …, … and …, in the total amount of € 29,282.70, relating to urban properties (land for construction) recorded under articles …, …, …, … and …, respectively, all of the parish and municipality of Valongo, be annulled as illegal?

D) Facts (Proven Facts)

  1. The following facts, with relevance to the decision, are considered proven, on the basis of documentary evidence accompanying the file:

15.1. The Claimant is the company A, S.A., with tax identification number … and with registered office ….

15.2. Pursuant to the respective property registrations, the company A, S.A. is the lawful owner of the urban properties recorded under articles …, …, …, … and …, respectively, all located in the parish and municipality of … (see documentation attached as annexes to the petition for an arbitral decision and to the administrative file) and all of them classified as "land for construction".

15.3. The Claimant was notified of the Stamp Duty assessment number …, issued by the Tax Service …, relating to the application of the incidence rule provided in Article 6, No. 1, paragraph f), i) of Law No. 55-A/2012, to the urban property recorded in the register with number …, with a taxable property value of € 1,171,780.00, in the amount of € 5,858.90, with payment due date set for 20 December 2012 (see documentation attached as annexes to the petition for an arbitral decision and to the administrative file).

15.4. The Claimant was notified of the Stamp Duty assessment number …, issued by the Tax Service of …, relating to the application of the incidence rule provided in Article 6, No. 1, paragraph f), i) of Law No. 55-A/2012, to the urban property recorded in the register with number 7415, with a taxable property value of € 1,171,190.00, in the amount of € 5,855.95, with payment due date set for 20 December 2012 (see documentation attached as annexes to the petition for an arbitral decision and to the administrative file).

15.5. The Claimant was notified of the Stamp Duty assessment number …, issued by the Tax Service of …, relating to the application of the incidence rule provided in Article 6, No. 1, paragraph f), i) of Law No. 55-A/2012, to the urban property recorded in the register with number 7416, with a taxable property value of € 1,171,190.00, in the amount of € 5,855.95, with payment due date set for 20 December 2012 (see documentation attached as annexes to the petition for an arbitral decision and to the administrative file).

15.6. The Claimant was notified of the Stamp Duty assessment number …, issued by the Tax Service, relating to the application of the incidence rule provided in Article 6, No. 1, paragraph f), i) of Law No. 55-A/2012, to the urban property recorded in the register with number 7417, with a taxable property value of € 1,171,190.00, in the amount of € 5,855.95, with payment due date set for 20 December 2012 (see documentation attached as annexes to the petition for an arbitral decision and to the administrative file).

15.7. The Claimant was notified of the Stamp Duty assessment number …, issued by the Tax Service …, relating to the application of the incidence rule provided in Article 6, No. 1, paragraph f), i) of Law No. 55-A/2012, to the urban property recorded in the register with number …, with a taxable property value of € 1,171,190.00, in the amount of € 5,855.95, with payment due date set for 20 December 2012 (see documentation attached as annexes to the petition for an arbitral decision and to the administrative file).

15.8. Gracious complaint proceedings, to which the numbers …, …, …, … and … were assigned, commenced on 2 January 2013, following the presentation of gracious complaints by the Claimant against the Stamp Duty assessment acts bearing numbers … (relating to the urban property recorded in the register with number …), number … (relating to the urban property recorded in the register with number …), number … (relating to the urban property recorded in the register with number …), number … (relating to the urban property recorded in the register with number …) and number … (relating to the urban property recorded in the register with number …) (see documentation attached to the administrative file).

15.9. From Amendment No. 30/2010 which resulted in the amendment of the Subdivision License No. …, issued by the Municipal Council of …, it follows that the urban properties in question are land for construction with a portion dedicated to residential use and a portion dedicated to commercial and service use (see documentation attached to the administrative file).

15.10. The determination of the taxable property value of the urban properties in question was made taking into account the aforementioned use (see documentation attached to the administrative file).

15.11. On 30 August 2013, orders were issued by the Head of the Tax Service of …, for notification of the Claimant regarding the draft decisions denying the gracious complaints presented against the Stamp Duty assessment acts bearing numbers …, …, …, … and …, relating to the urban properties recorded in the register with numbers …, …, …, … and …, respectively (see documentation attached to the administrative file).

15.12. On 12 September 2013, the Claimant was notified of Letters No. 4960, No. 4961, No. 4962, No. 4963 and No. 4964, all of 3 September 2013, for exercise of the right of prior hearing regarding the aforementioned draft denial decisions, within a period of 15 days (see documentation attached to the administrative file).

15.13. The Claimant was notified, on 4 November 2013, of the final decisions denying the gracious complaints presented against the Stamp Duty assessment acts bearing numbers …, …, …, … and … relating to the urban properties recorded in the register with numbers …, …, …, … and … (see documentation attached to the administrative file).

  1. No other facts capable of affecting the substantive decision were proven, considering the possible legal solutions, and there are no unproven facts of interest for the decision of the case.

E) On the Law

  1. The issue underlying the present petition for an arbitral decision concerns the correct interpretation of Article 6, No. 1, paragraph f), i) of Law No. 55-A/2012, insofar as it seeks to apply the incidence rule that this legislation introduced in item 28 of the General Table of Stamp Duty, in the wording in force at the date of the occurrence of the facts – that is, prior to the entry into force of the new wording resulting from the amendments introduced by the Law approving the State Budget for 2014 – in order to ascertain whether land for construction falls within the concept of "properties with residential use" and, consequently, whether they are, for this reason, subject to Stamp Duty in accordance with the terms arising from that incidence rule.

  2. Item 28 was added to the General Table of Stamp Duty by Law No. 55-A/2012, of 29 October, and it thereafter provided that the following are included in the field of incidence of the tax "28 — Ownership, usufruct or right of superficies of urban properties whose taxable property value recorded in the property register, pursuant to the IMI Code, is equal to or exceeding € 1,000,000 — on the taxable property value used for purposes of IMI: 28.1. - For property with residential use - 1%;".

  3. Pursuant to the transitional provisions provided in Law No. 55-A/2012, of 29 October, for application of said incidence rule still in the year 2012, it was established that: (i) the taxable event was deemed to have occurred on 31 October 2012, (ii) the Tax and Customs Authority should assess the tax due by the end of November of that year, (iii) the taxpayers should pay the tax assessed in such manner by 29 December 2012 and, furthermore, (iv) the applicable rate in that year was 0.5% for properties with residential use valued in accordance with the IMI Code and 0.8% for properties with residential use not yet valued in accordance with the IMI Code.

  4. Law No. 55-A/2012, of 29 October, also added No. 2 to Article 67 of the Stamp Duty Code, by means of which it established that "To matters not regulated in this Code concerning item No. 28 of the General Table, the provisions of the IMI Code shall apply subsidiarily".

  5. In light of the legislative framework mentioned and being concerned with the interpretation of the concept of "property with residential use", it is first necessary to inquire whether there exists a legal definition of said concept.

  6. Finding that the legislator did not define the concept of "property with residential use" in Law No. 55-A/2012, of 29 October, itself, nor in the Stamp Duty Code, nor in the General Table of Stamp Duty, it is necessary to determine whether said legal definition exists in the IMI Code, by virtue of the reference contained in No. 2 of Article 67 of the Stamp Duty Code.

  7. Article 4 of the IMI Code, under the heading "Urban Properties", defines them as being "all those that should not be classified as rural".

  8. Article 6, No. 1 of the IMI Code further provides that urban properties are divided into residential, commercial, industrial or service-related, land for construction and, residually, other.

  9. The legislator established, in Article 6, No. 2 of the IMI Code, that residential, commercial, industrial or service-related urban properties are buildings or structures licensed for such purposes or, in the absence of a license, that have as their normal purpose each of these uses.

  10. In Article 6, No. 3 of the IMI Code, the legislator provided that land for construction are "lands situated within or outside an urban agglomeration, for which a license or authorization has been granted, prior notice admitted or favorable preliminary information issued for a subdivision or construction operation, and also those that have been declared as such in the acquisition title, with the exception of lands in which the competent authorities prohibit any of those operations, namely those located in green zones, protected areas or that, in accordance with municipal land use plans, are allocated to public spaces, infrastructure or facilities".

  11. In light of the foregoing, the IMI Code also does not contain an express definition of what constitutes "properties with residential use".

  12. It follows from Article 11, No. 1 of the General Tax Law that "In determining the meaning of tax norms and in qualifying the facts to which they apply, the general rules and principles of statutory interpretation and application are observed."

  13. Thus, and taking into account the provisions of Article 9, No. 1 of the Civil Code, when it states that "Interpretation shall not be limited to the letter of the law, but shall reconstruct from the texts the legislative intent, taking especially into account the unity of the legal system, the circumstances in which the law was enacted and the specific conditions of the time in which it is applied", we proceed to analyze the possible interpretive elements. These are: the grammatical element and the logical element.

  14. Resorting, in the concrete case, to the grammatical element, we find that the legislator used the expression "properties with residential use", thus appearing to indicate that what is at issue are residential properties, as defined in Article 6, No. 2 of the IMI Code, that is, those licensed as such or intended for such purpose, because only these could have a true "residential use".

  15. With respect to the logical element, it itself comprises three distinct categories of aspects or "sub-elements" to be considered: the rational aspect or element, the systematic and, finally, the historical, being relevant, as to all three aspects, the ratio legis underlying the introduction of the norm in question into our legal system.

  16. Moreover, in the "Explanatory Memorandum" contained in Legislative Proposal No. 96/XII/2nd, which underlaid the approval of Law No. 55-A/2012 that added item 28 to the GTSD, the legislator states only that "a rate is created under Stamp Duty applicable to urban properties of residential use whose taxable property value is equal to or exceeding one million euros".

  17. Also from the Opinion of the Budget, Finance and Public Administration Commission on said Legislative Proposal there is no express clarification of said concept of "property with residential use", although, in the public discussions that took place in the Parliament, some references were made to the taxation of so-called "luxury homes", which may help us in clarifying the true meaning that the legislator intended to attribute to the concept of "properties with residential use" provided in item 28 of the General Table of Stamp Duty.

  18. Thus, we cannot fail to consider that the evidence existing points to the fact that, in adding item 28 to the General Table of Stamp Duty, and, moreover, in the incidence rule that results from the transitional provisions contained in Article 6 of Law No. 55-A/2012, the legislator considered as the determining element of taxpaying capacity urban properties with residential use with a value equal to or exceeding € 1,000,000.00, on which such taxation was made to apply.

  19. In this regard, also in the arbitral decision rendered in the context of Case No. 50/2013, of 29.10.2013, it is stated that "This same conclusion follows from analysis of the discussion of legislative proposal no. 96/XII in Parliament, available for consultation in the Official Journal of Parliament, I series, no. 9/XII/2, of 11 October 2012. The justification for the measure designated as "special rate on the highest value urban residential properties" is based on the invocation of the principles of social equity and fiscal justice, calling upon the holders of high-value properties intended for residential use to contribute more intensely, making the new special rate apply to 'homes with a value equal to or exceeding 1 million euros'. Clearly the legislator understood that this value, when attributed to a residence (house, autonomous unit or apartment with independent use) reflects an above-average taxpaying capacity and, as such, capable of determining a special contribution to ensure fair distribution of the tax burden."

  20. We cannot, moreover, ignore the legislative amendment introduced by the Law approving the State Budget for 2014, which appears to constitute an argument in favor of the understanding according to which the concept of "property with residential use" did not integrate, in the wording prior to this amendment and which is the one at issue here, land for construction.

  21. In light of the foregoing, we cannot fail to adopt the understanding according to which the concept of "property with residential use", contained in item 28 of the General Table of Stamp Duty and Article 6 of Law No. 55-A/2012, in the wording in force at the date of the occurrence of the facts, implies an actual use of an urban property for such purpose, with the creation of said concept being based on correspondence with the concept of "residential urban property".

  22. Also in arbitral decision No. 144/2013 it was held that "land for construction, by its very nature, cannot be associated with residential use as referred to in item 28.1 of the GTSD".

  23. With effect, it is held that the concept of "land for construction" does not fall within the provision of item 28 of the General Table of Stamp Duty, in the wording prior to the present one, as has been adopted by this Tribunal, see the Arbitral Decisions rendered: 42/2013, 48/2013, 49/2013, 53/2013, 75/2013 and 158/2013.

  24. This is also the understanding endorsed by the Supreme Administrative Court, in the Decision rendered on 23 April 2014, in the context of Case No. 272/14, by virtue of which it was decided that "Having the legislator not defined the concept of "urban properties with residential use", and resulting from Article 6 of the IMI Code - subsidiarily applicable to the Stamp Duty provided in the new item No. 28 of the General Table - a clear distinction between "residential urban properties" and "land for construction", these cannot be considered, for purposes of incidence of Stamp Duty (Item 28.1 of the GTSD, in the wording of Law No. 55-A/2012, of 29 October), as urban properties with residential use", insofar as "given that land for construction – whatever the type and purpose of the building that will be, or could be, erected thereon – does not satisfy, in itself, any condition for being licensed as such or for having habitation as its normal purpose, and the incidence rule of the stamp duty tax refers to urban properties with "residential use", without any specific concept being established for the purpose, it cannot be extracted from it that it contains a future potentiality, inherent to a distinct property that may possibly be built on the land".

  25. We conclude, therefore, that the concept of "property with residential use", provided in item 28 of the General Table of Stamp Duty and Article 6 of Law No. 55-A/2012, corresponds to the concept of "residential urban property", provided in Article 6, No. 1, paragraph a) and No. 2 of the IMI Code and, also, in the first part of the present wording of item 28.1 of the General Table of Stamp Duty.

  26. Therefore, being concerned, in the present petition for an arbitral decision, with land for construction of which the Claimant is the owner, the same do not fall within the scope of the incidence rule contained in item 28 of the General Table of Stamp Duty and Law No. 55-A/2012, in the wording in force at the date of the occurrence of the facts, which renders the Stamp Duty assessment acts illegal, and also the decisions denying the Gracious Complaints presented by the Claimant, thus rendering the Claimant's claim well-founded.

F) Decision:

  1. For the foregoing reasons, the Tribunal rules that the Claimant's claim is well-founded and annuls the tax assessments in dispute, with the appropriate legal consequences.

  1. The value of the action is fixed at € 29,282.70 (twenty-nine thousand, two hundred and eighty-two euros and seventy cents), pursuant to the provisions of Article 97-A, No. 1, paragraph a) of the Code of Administrative Procedure, applicable by reference to Article 3, No. 2 of the Regulation of Costs for Tax Arbitration Proceedings.

  2. The value of the Arbitration Fee is fixed at € 1,530.00 (one thousand five hundred and thirty euros), pursuant to Table I of the Regulation of Costs for Tax Arbitration Proceedings, borne by the Respondent, pursuant to the provisions of Article 22, No. 4 of the LRAT.

Notify parties.

The present decision follows the spelling conventions prior to the 1990 Orthographic Agreement.

Lisbon, 16 June 2014

The Arbitrator

Mónica Respício Gonçalves

Frequently Asked Questions

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Does Stamp Tax (Imposto do Selo) apply to building land (terrenos para construção) under Stamp Duty Table entry 28?
The central legal question in this case is whether Stamp Tax under item 28 of the General Table of Stamp Duty applies to building land (terrenos para construção). The claimant argued that building land should not be subject to this tax because it lacks actual residential use—it is not built upon, has no residential use license, and is not suitable for habitation. The claimant contended that 'residential use' requires current actual use, not future potential, and that building land is classified separately from residential properties under the IMI Code. The Tax Authority maintained that the properties have the legal nature of properties with residential use, supporting the assessments.
What did Law 55-A/2012 change regarding Stamp Tax on urban properties valued over €1,000,000?
Law 55-A/2012 expanded the scope of Stamp Duty by introducing item 28 to the General Table of Stamp Duty, which subjects to taxation the ownership, usufruct, or right of superficies of urban properties with taxable property values equal to or exceeding €1,000,000. Properties with residential use are subject to a 1% rate. The law also added Article 67(2) to the Stamp Duty Code, establishing that IMI Code provisions apply to item 28 matters not otherwise regulated in the Stamp Duty Code. This legislative change created a new annual tax on high-value urban property ownership.
Can taxpayers challenge Stamp Tax assessments on building land through CAAD tax arbitration?
Yes, taxpayers can challenge Stamp Tax assessments on building land through CAAD (Centro de Arbitragem Administrativa) tax arbitration. This case demonstrates that taxpayers have standing to contest the legal interpretation of whether building land qualifies as 'urban property with residential use' under item 28 of the General Table of Stamp Duty. The claimant successfully initiated arbitration proceedings under the Legal Regime for Arbitration in Tax Matters (LRAT), seeking annulment of five Stamp Duty assessments on grounds of illegality stemming from an error in interpreting the applicable law.
What are the transitional rules under Article 6 of Law 55-A/2012 for Stamp Tax liquidation?
Article 6 of Law 55-A/2012 established specific transitional rules for Stamp Tax liquidation for the year 2012. The taxable event occurred on October 31, 2012. The taxable property value constituting the tax base should be that resulting from IMI Code rules with respect to the year 2011. The applicable rates were differentiated: 0.5% for properties revalued pursuant to the IMI Code and 0.8% for properties not yet revalued. These transitional provisions established the framework for assessing Stamp Duty relating to item 28 of the General Table by reference to 2012.
Are building plots classified as residential properties subject to the 1% Stamp Tax rate?
This is the core dispute in the case. The claimant argued that building plots should not be classified as residential properties subject to the 1% Stamp Tax rate because they lack actual residential use—they are not built upon, have no residential license, and are not suitable for habitation. The claimant contended that 'residential use' under item 28.1 corresponds to the IMI Code concept of urban residential property, which does not encompass building land classified separately as terrenos para construção. The Tax Authority argued the properties have the legal nature of properties with residential use, justifying the 1% rate application.