Process: 822/2014-T

Date: June 25, 2015

Tax Type: Selo

Source: Original CAAD Decision

Summary

CAAD arbitration case 822/2014-T concerns Stamp Tax assessments under Verba 28.1 of the Portuguese General Table of Stamp Tax (TGIS) applied to urban property owned by a closed special real estate investment fund. The claimant, a management company representing the investment fund, challenged Stamp Tax liquidations notified in 2013 relating to 2012, seeking annulment of the assessments and restitution of tax paid plus compensatory interest. The core legal issue involves whether Verba 28.1 TGIS, which imposes annual Stamp Tax on urban property ownership, applies to properties held under vertical property arrangements by real estate investment funds. The claimant argued the non-applicability of Verba 28.1 to the properties in question, asserting the assessments were illegal. Procedurally, the claimant filed a Request for Official Review (Pedido de Revisão Oficiosa) under Article 78 of the General Tax Law (LGT), which was tacitly rejected after four months without response from the tax authority. The claimant then initiated arbitral proceedings within 90 days of the tacit rejection, in accordance with Article 10 of the Legal Framework for Arbitration in Tax Matters (RJAT). The Tax Authority raised a procedural exception, arguing the arbitral request was untimely and that the claimant failed to demonstrate any error attributable to the tax services, a prerequisite under Article 78(1) LGT. The Authority contended that the Request for Official Review should not serve as a mechanism to circumvent statutory deadlines for challenging assessments. The claimant countered that the Request for Official Review is an established administrative remedy for correcting self-assessment errors, complementing normal administrative and judicial challenge procedures, and that the arbitral request following tacit rejection was timely and legitimate under RJAT provisions.

Full Decision

ARBITRAL DECISION

REPORT

A... –, S.A., Tax Identification Number ..., with registered office at Avenue ..., Lisbon (...), in its capacity as managing company of the CLOSED SPECIAL REAL ESTATE INVESTMENT FUND – A... I (hereinafter "Claimant"), tax identification number ..., with registered office at ..., No. 6, 3rd floor, Lisbon (...), came, in accordance with and for the purposes of Article 10, No. 1, paragraph a) of the Legal Framework for Arbitration in Tax Matters (RJAT), to request the constitution of a Singular Arbitral Tribunal and to present a request for arbitral decision.

The Tax and Customs Authority is the Respondent.

The Claimant seeks the annulment of the Stamp Tax assessments notified in 2013, relating to 2012, relating to item 28.1 of the General Table of Stamp Tax, with reference to the urban property corresponding to matriculation article ..., in the parish of ... (previous article ..., in the parish of ...), as well as the restitution of the tax paid, plus indemnitary interest at the legal rate, until its actual refund.

The Claimant formulates a cumulation of claims, considering that "the present request for arbitral decision is based on the same factual and legal grounds for all situations, namely, the non-applicability of item 28.1 of the TGIS to the properties sub judice and, consequently, the illegality of the notified assessments".

The Claimant opted for no designation of an arbitrator.

In accordance with paragraph a) of No. 2 of Article 6 and paragraph b) of No. 1 of Article 11 of the RJAT, as amended by Article 228 of Law No. 66-B/2012 of 31 December, the Deontological Council designated the arbitrator of the arbitral tribunal, who communicated acceptance of the designation within the applicable period.

The parties were notified of this designation and did not express any intention to challenge the designation of the arbitrator, in accordance with the combined provisions of Article 11, No. 1, paragraphs a) and b) of the RJAT and Articles 6 and 7 of the CAAD Deontological Code.

Thus, in accordance with what is provided in paragraph c) of No. 1 of Article 11 of the RJAT, as amended by Article 228 of Law No. 66-B/2012 of 31 December, the singular arbitral tribunal was constituted on 25-02-2015.

The Tax and Customs Authority submitted, on 10-04-2015, a request, filed with the record on 13-04-2015, wherein it asks the Tribunal "to require the claimant to file with the record a complete copy of the request for official review of the assessments, a document essential for the proof of what it alleged and for the tribunal's consideration and assessment" regarding the timeliness and scope of the request.

The Claimant made written submissions on the request presented by the Tax and Customs Authority, sustaining that the latter has a duty to file with the record a copy of the administrative file, which contains, necessarily, the Request for Review presented by the Claimant, whereby the non-filing of the complete Request for Official Review with the Request for Arbitral Decision aimed to avoid unnecessary duplication of documents.

In keeping with the principles of good faith and cooperation, the Claimant filed a complete copy of the Request for Official Review, and respective documents.

The Tax and Customs Authority submitted a response, presenting a defence by exception and by contestation, in which it defends the lack of merit of the request for arbitral decision.

By order of 04-05-2014, the Tribunal decided to dispense with the holding of the meeting provided for in Article 18 of the RJAT, determining that the proceedings continue with optional written submissions to be presented by the Tax and Customs Authority, within the period of 10 days and, subsequently, by the Claimant also within the period of 10 days, counted from the date of notification of the submissions of the Respondent or from the expiration of the period for their presentation.

The Parties did not present submissions.

On the exception raised by the Respondent

The Tax and Customs Authority raises, by exception, the untimeliness of the request for constitution of the Arbitral Tribunal, for not meeting the legal prerequisites provided for in No. 1 of Article 78 of the General Tax Law (LGT), including that referring to the existence of "error attributable to the services", and for the provisions contained in the remaining numbers of the same article not being applicable to the case sub judice.

The Tax and Customs Authority sustains that "the Claimant does not prove that there was any error attributable to the services, just as there undoubtedly was no error attributable to AT in the assessment in question".

And it adds that "the request for official review provided for in Article 78, No. 1, of the LGT, even if at the initiative of AT, is not, nor can it be, a way of creating a new mechanism for recourse to the arbitral tribunal independent of the elapsing of legally fixed periods, but rather as a new procedure precisely created to enable circumventing those already elapsed periods", in accordance with what the "principles of res judicata, definition of legal situations, celerity and procedural economy" determine.

The Claimant sustains, for its part, that "the Request for Official Review, in the terms in which it is provided for in the LGT, constitutes an administrative means of correcting errors in self-assessment of taxes, which is admitted as a complement to the means of administrative and contentious challenge of such acts, to be raised within the respective normal periods, which aims to enable the remedying of injustices in taxation, both in favour of the taxpayer and in favour of the administration (cf. by way of example, the Decision of the STA of 12.09.2012, case No. 0476/12)".

The Claimant understands that being "nowadays settled that the Request for Official Review is another means of reaction to which taxpayers can, legitimately, resort, the CLAIMANT presented the Request for Arbitral Decision from whose tacit rejection it appeals in the present proceedings, which is manifestly timely".

The timeliness of the request for constitution of the Arbitral Tribunal is sustained by the Claimant, in the Request for Arbitral Decision, in the following terms:

"2. The aforementioned Request for Official Review was submitted to the Lisbon-... Finance Service, on 20.05.2014, by registered mail, and was received by the said Service on 21.05.2014, as evidenced by a copy of the postal receipt and the certificate of receipt of the Request for Official Review by the Services, which are attached as Document No. 1.

  1. Now, in accordance with what is provided in No. 1 of Article 57 of the LGT, the tax procedure must be concluded within the period of four months.

  2. And, in accordance with what is provided in No. 5 of the aforementioned provision, failure to comply with the duty to decide within the period of four months, counted from the date of entry of the taxpayer's petition in the competent services of the Tax and Customs Authority, is presumed to constitute rejection thereof for purposes of hierarchical appeal, contentious appeal or Judicial Challenge.

  3. In these terms, it is verified that, having the Request for Official Review been submitted on 20.05.2014, and received by the Lisbon-10 Finance Service on 21.05.2014, the presumption of its tacit rejection was formed four months thereafter, that is, on the day 21.09.2014 (non-business day, whereby the Tax and Customs Authority had until day 22.09.2014 to pronounce itself on the request of the CLAIMANT).

  4. Furthermore, under the provisions of paragraph a) of No. 1 of Article 10 of the RJAT, the Request for Constitution of the Arbitral Tribunal is presented within the period of 90 days, counted from the facts provided for in Nos. 1 and 2 of Article 102 of the Code of Tax Procedure and Process.

  5. For its part, Article 102 of the CPPT provides that Judicial Challenge shall be presented within the period of three months counted, in particular, from the formation of the presumption of tacit rejection.

  6. Now, from the foregoing it results that the period for submission of a Request for Arbitral Decision ends on 19.12.2014, whereby the present request is manifestly timely and should be admitted for the due legal effects."

With respect to review of tax acts, Article 78 of the LGT provides as follows:

"1 - Review of tax acts by the entity that performed them may be effected at the initiative of the taxpayer, within the period of administrative claim and on the basis of any illegality, or, at the initiative of the tax administration, within the period of four years following the assessment or at any time if the tax has not yet been paid, on the basis of error attributable to the services.

2 - Without prejudice to the legal burdens of claim or challenge by the taxpayer, error in self-assessment is considered attributable to the services for purposes of the preceding number.

3 - Review of tax acts in accordance with No. 1, regardless of whether it is material or legal error, entails its proper recognition based on the terms of No. 1 of the preceding article.

4 - The highest official of the service may authorize, exceptionally, in the three years following that of the tax act the review of the taxable matter ascertained on the basis of grave or notorious injustice, provided that the error is not attributable to negligent conduct of the taxpayer.

5 - For purposes of the preceding number, only manifestly obvious and inequivocal injustice is considered notorious and grave that resulting from taxation manifestly excessive and disproportionate to reality or from which has resulted high prejudice to the National Treasury.

6 - Review of the tax act on grounds of duplication of collection may be effected, whatever the basis, within the period of four years.

7 - The request of the taxpayer directed to the competent body of the tax administration for its performance interrupts the period for official review of the tax act or of the taxable matter."

  1. It results from the first part of No. 1 of Article 78 of the LGT that the taxpayer may, on the basis of any illegality, and within the period of administrative claim, request review of tax acts by the entity that performed them.

  2. Furthermore, in accordance with what is provided in the second part of No. 1 of Article 78 of the LGT, the tax administration may, within the period of four years following the assessment or at any time, if the tax has not yet been paid, proceed with the review of tax acts on the basis of error attributable to the services – "official review".

The case law and doctrine, recognizing primacy to the principle of fiscal legality, and considering what is provided in No. 7 of Article 78, have come to affirm that "official review" constitutes a power-duty of the Administration, and not a mere discretion thereof, from which it follows that: i) the interested party may, by means of a request directed to AT, impel the review request; ii) the administrative decision on what was requested is subject to judicial review (RUI DUARTE MORAIS, Manual de Procedimento e Processo Tributário, Coimbra, Almedina, 2012, p. 212; Decision of the STA of 12-07-2006, case No. 0402/06).

As is affirmed in the Decision of the STA of 12-07-2006, case No. 0402/06, "[r]ejection, express or tacit, of the review request, even in cases where it is not formulated within the period of administrative claim but within the time limits in which the tax administration may review the act on the basis of error attributable to the services, may be contested contentiously by the taxpayer [Article 95, Nos. 1 and 2, paragraph d), of the L.G.T]".

In the same Decision it is further stated that "[t]he procedural means of review of the tax act cannot be considered as an exceptional means to react against the consequences of an assessment act, but rather as an alternative means to the administrative and contentious challenge means (when used at a time when those can still be used) or complementary to them (when the periods for use of the challenge means of the assessment act have already been exhausted)"

As written by DIOGO LEITE DE CAMPOS, BENJAMIM SILVA RODRIGUES and JORGE LOPES DE SOUSA,

"This means, therefore, that faced with a tax assessment act, the taxpayer has a triple possibility of reaction, whose success assures him in execution of the decision the full restoration of the situation that would have existed if the illegal act had not been performed, including the right to indemnitary interest from the date of payment until the date of issuance of a credit note (Articles 43, No. 1, and 100 of the LGT and 61, No. 3, of the CPPT):

  • file a gracious claim, to be decided by the head of the regional peripheral body of the tax administration;

  • request review by the entity that performed the act;

  • bring judicial challenge.

[…]

However, the taxpayer still has the faculty to request the so-called official review of the act, within the periods provided in which the tax administration may effect it, provided for in Article 78 of the LGT." (Lei Geral Tributária. Anotada e Comentada, 4th Edition, 2012, Editora Encontro da Escrita, p. 714).

It is concluded that the Claimant would have had legitimacy to present the Request for Official Review, as it did, provided that it was based on "error attributable to the services".

Now, the cause of action, in the Request for Review presented by the claimant, the erroneous application of the law by the Tax Administration, without this having resulted from any information from the taxpayer, and independently of proof of fault of any of its officials, whereby the situation at issue was manifestly one of "error attributable to the services", in light of the jurisprudential densification that has been made of this concept (see Decision of the STA of 12-12-2001, case No. 26233).

Considering the chronology of the facts (see infra, section II), it is concluded that the request for constitution of the Arbitral Tribunal presented by the Claimant is timely.

The Arbitral Tribunal was regularly constituted.

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

No nullity is apparent.

FACTUAL MATTERS

Proven Facts

The following facts are considered proven:

The Claimant is the owner of the urban property located at matriculation article ..., in the parish of ..., in Lisbon (previous article ..., in the parish of ...);

The aforementioned property is registered in the urban property registration in full ownership, also designated vertical ownership.

At the date of the tax facts, each of the 12 (twelve) units of the property had residential use, and a Tax Patrimonial Value (VPT), determined in accordance with the Code of the Municipal Property Tax (CIMI), comprised between the minimum value of € 78,033.20 and maximum of € 166,552.34;

The sum of the VPT of all units totaled, on 31 December 2011, the value of € 1,758,101.78, and, on 31 December 2012, the value of € 1,764,121.74;

Considering the residential use of the units of the aforementioned property and taking into account the total VPT of those units, AT notified the Claimant, in 2012 and 2013, of the Stamp Tax assessments relating to each of the units, in accordance with item 28.1 of the TGIS;

The total value of the Stamp Tax assessments amounted to € 26,431.73, which was paid in full, as appears from the data contained in the following table:

[Table with assessment details]

No gracious claim was filed for the assessments.

The Claimant submitted a Request for Official Review with the Lisbon-10 Finance Service, on 20-05-2014, by registered mail, and was received by the said Service on 21-05-2014;

The Tax and Customs Authority did not pronounce itself on the Request for Official Review;

The Claimant submitted the Request for Constitution of an Arbitral Tribunal to the Administrative Arbitration Centre – CAAD, which was validated and accepted on 19-12-2014 by this Centre as a Proceeding in the phase of arbitral procedure.

Unproven Facts

Of the facts with interest for the decision of the case, those not contained in the factuality described above were not proven.

Grounds for the decision on the factual matters

The facts were given as proven on the basis of documentary evidence.

LEGAL MATTERS

On the Cumulation of Claims

The Tribunal considers that the cumulation of claims in the present case is justified, considering that the merit of the same depends on the assessment of the same circumstances of fact and the interpretation and application of the same legal principles and rules (Article 3 of the RJAT).

Assessment of the Merit of the Claim

The central question for the Tribunal to decide is whether the tax patrimonial value (VPT) to be considered for purposes of application of Item 28 of the TGIS, in the case of property not held under a horizontal ownership regime, is the VPT assigned to each floor or unit with independent use and residential use, or whether it is the global VPT, corresponding to the sum of the VPT of each floor or unit susceptible of independent use and residential use.

Item 28 of the TGIS, now under consideration, was added by Law No. 55-A/2012 of 29 October, with the following text:

"28 – Ownership, usufruct or right of superficies of urban properties whose tax patrimonial value contained in the matrix, in accordance with the Code of the Municipal Property Tax (CIMI), is equal to or greater than € 1,000,000.00 – on the tax patrimonial value for purposes of IMI:

28.1 – Per property with residential use – 1%

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

The Stamp Tax Code (CIS) and its respective General Table, with the amendments introduced by Articles 3 and 4 of Law No. 55-A/2012 of 29 October, do not clarify what is meant by the expression "property with residential use".

Article 67, No. 2 of the CIS, added by Law No. 55-A/2012 of 29 October, provides that "[t]o matters not regulated in the present Code concerning item No. 28 of the General Table, the provisions contained in the CIMI apply, subsidiarily".

The legislator, in No. 1 of Article 2 of the CIMI, adopts the following concept of property:

"For purposes of the present Code, property is any fraction of territory, encompassing waters, plantations, buildings and constructions of any nature incorporated or established therein, with the character of permanence, provided that it forms part of the assets of a natural or legal person and, in normal circumstances, has economic value, as well as waters, plantations, buildings or constructions, in the preceding circumstances, endowed with economic autonomy in relation to the land where they are located, although situated in a fraction of territory that constitutes an integral part of a different asset or does not have patrimonial nature."

As observed by SILVÉRIO MATEUS and CURVELO DE FREITAS, "No. 1 of this article [of Article 2] provides for the existence of three requirements necessary for one to be faced with the concept of property, namely, physical structure, patrimonial character and economic value" (Os Impostos sobre o Património Imobiliário. O Imposto do Selo, Lisbon, Engifisco, 2005, p. 101, note No. 1.1).

Thus, floors or units of independent use of property registered in the urban property registry in full ownership are not excluded from the concept of property relevant for purposes of CIMI and CIS.

No. 4 of Article 2 of the CIMI further provides that:

"for purposes of this tax [IMI], each autonomous fraction, under the horizontal ownership regime, is deemed to constitute a property".

Once again, from this provision does not result the exclusion from the concept of property of floors or units of independent use of property in full ownership.

In No. 4 of Article 2 of the CIMI the legislator clarifies, in unequivocal manner, that autonomous fractions of properties registered under horizontal ownership are considered properties for purposes of IMI.

But this does not give the interpreter legitimacy to make an interpretation a contrario, in the sense of excluding from the concept of property the units of independent use of properties registered in full ownership.

It appears, in fact, that the ratio of No. 2 of Article 4 is precisely to permit an extensive interpretation of what is provided in No. 1 of Article 2, so as to include in the concept of property the units (fractions, floors or divisions) of independent use.

This sense appears, moreover, to be confirmed by what is provided in No. 3 of Article 12 of the CIMI, which is transcribed below:

"Each floor or part of property susceptible of independent use is considered separately in the matriculation entry, which also discriminates the respective tax patrimonial value."

From which it follows that the units of independent use of properties registered in full ownership are subject to assessment on the basis of the criteria provided for in Article 38 of the CIMI.

Article 6 of the CIMI enumerates the types of urban properties, and provides that "[r]esidential, 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 destination each of these purposes".

As is affirmed in the Arbitral Decision rendered in Case No. 50/2013,

"From this we can conclude that, in the view of the legislator, 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 or horizontal ownership did not matter, since 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".

In considering the literal element of interpretation we observe that, in the final part of the provision contained in item 28.1 of the TGIS, it is determined that the taxable value corresponds to the "tax patrimonial value used for purposes of IMI".

The Tax and Customs Authority considers as the VPT relevant for purposes of application of item 28.1 of the TGIS the global VPT of the property registered in full ownership, in manifest contradiction with the practice of a plurality of assessment acts relating to the various floors susceptible of independent use.

From the literal element of interpretation, in conjunction with the systematic and teleological elements, it results that the tax patrimonial value to be considered for purposes of application of item 28.1 of the CIS is that corresponding to each of the units susceptible of independent use.

And it appears to us to be this also the understanding most in accordance with the principle of the prevalence of substance over form.

Moreover, this is the sense most in accordance with the Constitution of the Portuguese Republic, in particular the principles of typicality, equality, proportionality and legal certainty and protection of citizens' confidence, inherent in the principle of the Rule of Law.

The Tax and Customs Authority, by applying item 28.1 of the TGIS in a differentiated manner depending on whether the residential unit is included in property registered under horizontal or vertical ownership, is causing a formal criterion of differentiation to prevail, to the detriment of the material equality required by the Fundamental Law.

From the point of view of contributive capacity, as an operative criterion of the principle of equality, which postulates material equality, it is irrelevant whether the property is in vertical or horizontal ownership – the contributive capacity evidenced is the same, and the application of item 28.1 of the TGIS should be made in the same terms.

Being possible to interpret item 28.1 of the TGIS in accordance with the Constitution, it is to be rejected the judgment of unconstitutionality of the norm contained therein.

Thus, with respect to properties registered in full ownership, only the floor or unit susceptible of independent use with residential use whose VPT is equal to or greater than € 1,000,000.00 is subject to Stamp Tax, by application of item 28.1 of the TGIS.

Considering that, in the present case, none of the floors in relation to which Stamp Tax was assessed by application of Item 28.1 of the TGIS has a VPT equal to or greater than € 1,000,000.00, it is concluded that the respective assessment acts are illegal.

In light of the foregoing, the Tribunal dispenses with assessing the alleged existence of duplication of collection.

As to indemnitary interest, No. 1 of Article 43 of the General Tax Law provides that:

"[i]ndemnitary interest is due when it is determined, in a gracious claim or judicial challenge, that there was error attributable to the services from which results payment of the tax debt in an amount greater than legally due".

It is considered that "[t]he error attributable to the services that effected the assessment is demonstrated when they proceed with a gracious claim or challenge of that same assessment and the error is not attributable to the taxpayer" (DIOGO LEITE DE CAMPOS, BENJAMIM SILVA RODRIGUES, JORGE LOPES DE SOUSA, Lei Geral Tributária. Anotada e comentada, 4th ed., Lisbon, 2012, p. 342).

The law further determines, in Article 100 of the General Tax Law, that:

"The tax administration is obliged, in case of full or partial merit of claims or administrative appeals, or of judicial proceedings in favor of the taxpayer, to the immediate and full restoration of the situation that would have existed if the illegality had not been committed, including the payment of indemnitary interest, in accordance with the terms and conditions provided for in law."

As is affirmed in the Decision of the STA of 11/02/2009, case No. 1003/08,

"Having the legislator adopted indemnification in the form of indemnitary interest, following an annulment decision of an assessment act, presuming the patrimonial prejudice derived from the deprivation of the amount paid following an illegal assessment act, the interpretation of Article 100 of the LGT in accordance with the Constitution is that it recognizes the right to indemnitary interest from the date on which the deprivation of the amount illegally assessed occurred and not only from the expiration of the period for execution of the annulment decision."

In the present case we are faced with a plurality of Stamp Tax assessments founded on error attributable to the services, from which resulted undue payments of tax obligations by the Claimant, whereby the latter is recognized as having the right to indemnitary interest on the amounts of tax unduly paid.

In accordance with what is provided in No. 1 of Article 61 of the Code of Tax Procedure and Process (CPPT), "[i]nterest is calculated from the date of undue payment of the tax until the date of processing of the respective credit note, in which they are included".

DECISION

In these terms, and with the grounds set forth, the Arbitral Tribunal decides:

To judge meritorious the request for annulment, with all legal effects, of the contested assessment acts;

To judge meritorious the request for condemnation of the Respondent to the restitution of the tax unduly paid plus indemnitary interest, at the legal rate in force, in accordance with the terms provided for in Articles 43 of the General Tax Law and 61 of the Code of Tax Procedure and Process.

Value of the Proceeding

The value of the proceeding is fixed at € 26,431.73, in accordance with what is provided in Article 97-A, No. 1, paragraph a), of the Code of Tax Procedure and Process and in Article 3, No. 2, of the Regulation of Costs in Tax Arbitration Proceedings.

Costs

In accordance with Article 22, No. 4, of the RJAT, the amount of costs is fixed at € 1,530.00, in accordance with Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, to be borne by the Tax and Customs Authority.

Lisbon, 25 June 2015

The Arbitrator,

Paulo Nogueira da Costa

Frequently Asked Questions

Automatically Created

What is Verba 28.1 of the Portuguese Stamp Tax General Table (TGIS) and how does it apply to urban properties?
Verba 28.1 of the Portuguese Stamp Tax General Table (TGIS) establishes an annual Stamp Tax on the ownership of urban property rights located in Portuguese territory. This tax applies to individuals or entities holding property rights over urban real estate, calculated based on the property's taxable patrimonial value (valor patrimonial tributário). The tax is self-assessed annually and targets the static ownership of urban properties rather than transactions. Application to urban properties depends on whether the taxpayer holds ownership or comparable real rights over buildings or urban land, with specific rules governing exemptions and calculation methodologies under the Stamp Tax Code.
Can Stamp Tax (Imposto do Selo) under Verba 28 be levied on vertical property (propriedade vertical) in Portugal?
The applicability of Stamp Tax under Verba 28 to vertical property (propriedade vertical) in Portugal is a contested legal issue. Vertical property refers to autonomous units within a building under the horizontal property regime (propriedade horizontal). CAAD case 822/2014-T specifically addresses whether Verba 28.1 applies to properties held under vertical property arrangements by real estate investment funds. The claimant argued that Verba 28.1 should not apply to such properties, suggesting potential distinctions between full property ownership and vertical property rights. The legal controversy centers on whether vertical property constitutes a taxable 'property right' under Verba 28.1 or whether the regime's specificities warrant different tax treatment. Portuguese tax jurisprudence has developed various interpretations regarding this application.
What was the outcome of CAAD arbitration process 822/2014-T regarding Stamp Tax liquidations?
While the complete decision text is not provided in the excerpt, CAAD arbitration process 822/2014-T involved a challenge to Stamp Tax liquidations under Verba 28.1 TGIS applied to urban property owned by a real estate investment fund. The case proceeded through several procedural stages: the Tax Authority raised an exception regarding the timeliness of the arbitral request, arguing the claimant failed to prove error attributable to tax services as required under Article 78 LGT. The tribunal constituted a singular arbitral panel on February 25, 2015, and dispensed with the oral hearing, proceeding through written submissions. The Tax Authority defended the assessments on their merits while challenging procedural admissibility. The ultimate outcome regarding whether the Stamp Tax assessments were annulled or upheld would be contained in the decision's conclusion.
How can a taxpayer challenge Stamp Tax assessments through arbitral proceedings (RJAT) at CAAD in Portugal?
Taxpayers can challenge Stamp Tax assessments through CAAD arbitral proceedings under the Legal Framework for Arbitration in Tax Matters (RJAT) by following these steps: (1) File a Request for Constitution of the Arbitral Tribunal within 90 days from notification of the tax assessment or tacit rejection of an administrative claim, as per Article 10(1)(a) RJAT and Article 102 CPPT; (2) The request must identify the contested acts, state factual and legal grounds, and include supporting documentation; (3) Choose between designating an arbitrator or allowing the CAAD Deontological Council to appoint one; (4) Prior administrative challenge is generally required, though exceptions exist; (5) Alternatively, file a Request for Official Review under Article 78 LGT if claiming errors attributable to tax services, and upon tacit or express rejection, initiate arbitral proceedings within 90 days; (6) Pay required arbitration fees; (7) The arbitral tribunal issues a binding decision equivalent to court judgments, subject to limited appeal grounds.
Are real estate investment funds (fundos de investimento imobiliário) subject to Stamp Tax under Verba 28.1 TGIS?
Real estate investment funds (fundos de investimento imobiliário) in Portugal are generally subject to Stamp Tax under Verba 28.1 TGIS on urban properties they own, though this application is legally contested. Case 822/2014-T specifically addresses this issue, with a closed special real estate investment fund challenging the applicability of Verba 28.1 to its property holdings. Investment funds may argue for exemptions or non-applicability based on: (1) their special legal regime and regulatory framework; (2) potential conflicts with investment fund taxation rules; (3) the nature of vertical property rights versus full ownership; (4) specific exemptions under the Stamp Tax Code (Código do Imposto do Selo); or (5) proportionality and double taxation concerns. The Tax Authority typically maintains that property ownership by investment funds triggers Verba 28.1 liability regardless of the owner's legal form, applying the tax based on patrimonial values. Definitive treatment depends on applicable exemptions, fund structure, and evolving administrative and judicial interpretations.