Stamp Tax on Vertical Property Under Verba 28.1 TGIS – CAAD Arbitration 84/2016-T

Arbitral Decision [1]

Claimant – A… – …, S. A.

Respondent - Tax and Customs Authority

The Arbitrator, Dr. Sílvia Oliveira, appointed by the Deontological Council of the Administrative Arbitration Centre (CAAD) to form the Arbitral Tribunal, constituted on 29 April 2016, with respect to the process identified above, decided as follows:

1. REPORT

1.1 A… – …, S. A., Legal Entity No. …, with registered office at Road …, No. …, …, …, …-… (hereinafter referred to as "Claimant"), filed a request for arbitral decision and constitution of a single Arbitral Tribunal, on 16 February 2016, pursuant to the provisions of article 4 and No. 2 of article 10 of Decree-Law No. 10/2011, of 20 January [Legal Regime of Tax Arbitration (RJAT)], in which the Tax and Customs Authority is the Respondent (hereinafter referred to as "Respondent").

1.2 The Claimant "(…) having been notified of the rejection of the administrative complaint, made by the Head of the Finance Service of the … …, of the Stamp Tax assessment acts made by the Head of the Finance Service of the … …, relating to the first and second instalments received in 2015, relating to the year 2014, in the total amount of EUR 11,197.12" and "having been notified of the Stamp Tax assessment acts made by the Head of the Finance Service of the … …, relating to the third instalment received in 2015, relating to the year 2014, to pay the total amount of EUR 5,598.48, by 30/11/2015", "not accepting the said rejection, nor the content of the assessments (…)", came to request "(…) that the decision be to the effect of considering that the administrative complaint should have been upheld, as well as all other assessments under analysis should be annulled for lack of factual and legal grounds" and, "as a consequence of the annulment of the assessments, the Tax and Customs Authority shall be ordered to:

a) refund to the Claimant all amounts already paid in tax enforcement proceedings resulting from non-payment of the assessments identified above, as well as the respective default interest;

b) refund to the Claimant all procedural costs already paid in tax enforcement proceedings resulting from non-payment of the assessments identified above;

c) pay to the Claimant compensatory interest on the amounts that it has paid and will pay and until full payment, from the date the payment was made, calculated on the basis of the amounts paid and from the date each payment was made and the date of full reimbursement of the amounts (…)".

1.3 The request for constitution of the Arbitral Tribunal was accepted by the Honourable President of CAAD, and automatically notified to the Respondent on 17 February 2016.

1.4 Given that the Claimant did not proceed to appoint an arbitrator, pursuant to the provisions of article 6, No. 2, subparagraph a) of RJAT, the undersigned was appointed as arbitrator on 12 April 2016 by the President of the Deontological Council of CAAD, and the appointment was accepted within the prescribed period and terms.

1.5 On the same date, the parties were duly notified of this appointment, and did not manifest any intention to refuse the appointment of the arbitrator, in accordance with the provisions of article 11, No. 1, subparagraphs a) and b) of RJAT, in conjunction with articles 6 and 7 of the Deontological Code.

1.6 Thus, in accordance with the provisions of subparagraph c), No. 1 of article 11 of RJAT, the Arbitral Tribunal was constituted on 29 April 2016, and an arbitral order was issued on 2 May 2016, to the effect of notifying the Respondent, pursuant to the provisions of article 17, No. 1 of RJAT, to:

1.6.1 Submit a response within a maximum period of 30 days and, should it wish, request the production of additional evidence;

1.6.2 Submit to the Arbitral Tribunal, within the period of the response, a copy of the administrative file.

1.7 On 31 May 2016, the Respondent attached to the file the administrative file and submitted its response on 2 June 2016, in which it defended itself by means of a challenge and concluded that the "present request for arbitral decision should be judged as unfounded, by not being proven, with the tax assessment acts challenged being maintained in the legal order, accordingly absolving the respondent entity of the request".

1.8 Additionally, the Respondent in the response submitted, invoked that there is no "(…) any interest and utility in holding the meeting provided for in article 18 of the Legal Regime of Tax Arbitration, and even less in hearing the witness presented by the Claimant", "(…) does not intend, should this understanding be confirmed, to produce any submissions (…)", came to request "(…) the waiver of the said meeting (…), as well as the waiver of hearing the witness presented by the Claimant, and should it not object, to proceed directly to the decision of the case".

1.9 Thus, both Parties were notified of the arbitral order dated 2 June 2016, and the Claimant was notified to submit its views, within a period of 5 days, on the possibility of waiving:

1.9.1 The holding of the meeting referred to in article 18 of RJAT;

1.9.2 The examination of the witness indicated in the request;

1.9.3 The submission of submissions.

1.10 The Claimant filed a motion on 8 June 20165, to the effect of declaring that "(…) it does not object to the waiver: of the holding of the meeting referred to in article 18 of RJAT; of the examination of the witness indicated in the request; and of the submission of submissions".

1.11 In these terms, it was decided by the Arbitral Tribunal, in an order dated 8 June 2016, in accordance with the procedural principles established in article 16 of RJAT, of the autonomy of the Arbitral Tribunal in conducting the proceedings and in determining the rules to be observed [subparagraph c)], of cooperation and procedural good faith [subparagraph f)] and of the free conduct of proceedings established in articles 19 and 29, No. 2 of RJAT, and also taking into account the principle of limitation of useless acts provided for in article 130 of the Code of Civil Procedure (CPC) [applicable by virtue of the provisions of article 29, No. 1, subparagraph e) of RJAT]:

1.11.1 To dispense with the holding of the meeting referred to in article 18 of RJAT;

1.11.2 To dispense with the examination of the witness;

1.11.3 To dispense with the submission of submissions;

1.11.4 To set 18 July 2016 as the date for the pronouncement of the arbitral decision.

1.12 In the same order, the Claimant was also warned that "until the date of the pronouncement of the arbitral decision it should proceed to payment of the subsequent arbitration fee, in accordance with the provisions of No. 3 of article 4 of the Regulation of Costs in Tax Arbitration Proceedings and communicate this payment to CAAD", which it proceeded to do on 14 July 2016.

2. CAUSE OF ACTION

Of the Assessments, Administrative Complaint and express rejection thereof, relating to the first and second instalments of the 2014 Stamp Tax

2.1 "The Claimant is a public limited company that engages in general transactions on real estate, promotion of investments, construction, purchase and sale and administration of real estate (…)" and, within this scope, "is the owner of the properties situated on Road …, … and …, as verified from the permanent certificate of the property which covers Road …, Nos. … to … (…)".

2.2 The Claimant continues by stating that "it was notified by the Finance Service of the … …, of sixteen assessments relating to the payment of the first instalment of the 2014 Stamp Tax, based on Item 28.1 of the General Table of Stamp Tax with respect to the properties situated on Road …, … and …, registered in the urban property matrix under article U-…, of the parish of …, in Porto (…)" which it identifies, as well as "(…) it was notified by the Finance Service of the … …, of sixteen assessments relating to the payment of the second instalment of 2014 Stamp Tax (…)", which it also identifies.

2.3 "The Claimant, as it did not agree with the assessments, filed the respective administrative complaint requesting the annulment of all assessments (…) identified, which was sent on 24/08/2015 (…)".

2.4 The Claimant states that "through official letter …/…-…, of 16/11/2015 (…) it was notified by the Finance Service (…) of the proposed decision and draft order issued in the complaint filed (…)", and that "(…) the proposed decision was to the effect of rejecting the complaint (…)".

2.5 The Claimant clarifies that it exercised, "on 04/12/2015 (…) its right of hearing (…)", having raised "in the submission filed, in addition to the defects already invoked in the administrative complaint filed (…)", "(…) the nullity of the decision, for violation of the principles of collaboration of the Administration with individuals, of participation and of decision".

2.6 However, according to the Claimant, "the Tax Administration made no any reference to the evidence presented (…) having merely limited itself to transcribing in points what was alleged by it, without truly assessing the grounds contained in the Complaint" and, at a later time (the Claimant states) "by letter received on 18/12/2015 (…) it was notified by the Finance Service (…) of the rejection of its complaint (…)".

2.7 Now, "the Claimant cannot accept the rejection of the administrative complaint that it filed, which is why it submits the present request for arbitral decision".

2.8 The Claimant further clarifies that "it was notified of sixteen assessments relating to the payment of the third instalment of 2014 Stamp Tax, based on Item 28.1 of the General Table of Stamp Tax with respect to the properties situated on Road …, … and … (…)".

Partial annulment of assessment acts for defect of violation of law – right of hearing - arts. 56, 58, 59 and 60, Nos. 1 and 7 of LGT, 268 of CRP and 45 of CPPT

2.9 In this connection, the Claimant considers that the Respondent did not assess the administrative complaint "(…) filed by the Claimant" "and more seriously, even after the Claimant had raised the nullity of the draft decision, AT notified it of the rejection of its complaint (…)", ignoring the defects invoked, both in the administrative complaint and in the right of hearing, revealing "(…) conduct (…)" that "(…) reinforces the inequality existing between the parties, clearly violating the principles of collaboration, participation and decision, to which the Tax Administration is bound".

2.10 In this sense, the Claimant considers that "(…) the principles of decision, of inquisitorial procedure and of participation were violated".[2]

Annulment of assessment acts for error as to the factual presuppositions and lack of legal grounds - defect of violation of law – property subject to commercial use

2.11 In this connection, the Claimant clarifies that, as shown in "the permanent certificate attached (…) the property in question here is a Building of seven storeys, for residential and commercial use" and that "(…) the entrance of Road …, No. …, corresponds to the storefront of a commercial shop (…)" and that "the numbers … and … of Road … are, without a shadow of doubt, commercial establishments".

2.12 Now, the Claimant continues by stating that "the item of the General Table of Stamp Tax that applies to properties (…) indicates that this tax applies in cases where the ownership, usufruct or surface right of urban properties whose tax patrimonial value (…) is equal to or greater than (euro) 1,000,000 (…)", but "beyond these requirements (…) only applies to properties with residential use", understanding that "one of the essential conditions for the application of this tax (…) is that the property has a (…) residential use".

2.13 For the Claimant, "there is no doubt that the real estate in question does not have residential use" since "from the registration description of numbers … and …, it is verified that they are intended for commerce" and therefore considers that "(…) the administrative complaint should have been upheld as to the assessment of the first and second instalments of 2014, as well as all other assessments under analysis should be annulled for lack of factual and legal grounds".

Annulment of assessment acts for lack of legal grounds – defect of violation of law - Item 28.1 of the General Table of Stamp Tax

2.14 On this matter, the Respondent considers that "the assessments under scrutiny relate to sixteen apartments, each with its own patrimonial values, which do not reach (…) the amount of one million euros" and that "the patrimonial value of the sixteen apartments (…) between EUR 104,710 and EUR 105,760".

2.15 Thus, for the Claimant, "(…) the expression tax patrimonial value can only have one interpretation, in a systematic logic of all taxes", and questions "what is the justification for the fact that the shares of properties in horizontal ownership are not subject to Stamp Tax and independent units of properties in full ownership are? ", concluding that "it is manifest that there is discriminatory treatment when there are no reasons and/or grounds for this, since there is no obligation to constitute a property in horizontal ownership".

2.16 On the other hand, the Claimant alleges that "it was proclaimed in the media that this tax would apply and tax owners of allegedly luxury properties, but this interpretation by the Tax Administration is penalizing owners of rental properties without any justification or ground", and therefore considers that "the conduct of the Tax Administration violates the principle of prevalence of material truth over juridical-formal reality (…)", "not respecting the literal interpretation, nor the historical interpretation of the rule, nor even its spirit when it was created".

2.17 Thus, the Claimant considers that "AT cannot distinguish where the legislature itself understood not to do so (…) at the risk of violating the logical coherence of the tax system, as well as the principle of fiscal legality provided for in article 103, No. 2 of CRP, and also the principles of justice, equality and proportionality", and that "the erroneous interpretation by the Tax Administration of Item 28.1 of the General Table of Stamp Tax is a violation of this same rule".

2.18 In these terms, the Claimant considers that "also on this ground, the administrative complaint should have been upheld as to the assessments of the first and second instalments of 2014, as well as all other assessments under analysis should be annulled for lack of factual and legal grounds".

Annulment of assessment acts for defect of violation of law - art. 24, No. 1, subparagraph d) of RJAT

2.19 On this matter, the Claimant states that within the scope of the arbitral decision issued in process No. 804/2014-T (of 08/05/2015), "the Arbitral Tribunal judged the Claimant's request as founded, having ordered the annulment of the Stamp Tax assessments (…) of the year 2012 (…) and of the year 2013 (…) and condemned AT in the payment of compensatory interest".

2.20 Taking into account that "pursuant to article 2 of Ordinance No. 112-A/2011, of 22 March, the Tax Authority is bound by the jurisdiction of arbitral courts operating in CAAD whose object is the assessment of claims relating to taxes whose administration is entrusted to them (…)" the Claimant considers that "such binding of the Tax Authority presupposes strict compliance with the decisions issued by arbitral courts, and the same cannot ignore the existence of a decision favorable to the Claimant with respect to the properties in question here".[3]

2.21 Thus, the Claimant considers that "the assessments at issue here should be annulled for the defect of violation of law, in accordance with article 24, No. 1, subparagraph d) of RJAT".

Compensatory Interest

2.22 In this connection, the Claimant states that "all proceedings, with the exception of proceedings …2015… and …2015…, which are only partially paid, were paid in full through (…) credit compensation", and have thus been "(…) seized of various amounts", the Claimant understanding that "(…) it will have paid to the Tax Authority undue amounts, (…) which amounted to EUR 11,401.64", and that "(…) with the granting of the Claimant's claim, it has the right, in addition to the refund of the amounts paid, to be compensated for the accrued and accruing interest from the various dates of compensation until full settlement".

Conclusion

2.23 In these terms, "for all the foregoing, and by the materiality contained in any one of the points listed above (…)" the Claimant requests "(…) that the decision be to the effect of considering that the administrative complaint should have been upheld, as well as all other assessments under analysis should be annulled for lack of factual and legal grounds", concluding as in point 1.2, above.

3. RESPONDENT'S RESPONSE

3.1 The Respondent submitted a response arguing for the unfoundedness of the request for arbitral decision and invoking the arguments which follow.

3.2 The Respondent states that, at the date of the assessments, "(…) the Claimant held full ownership of the urban properties in question, assessed in accordance with the CIMI, within the scope of the general assessment of urban properties, described as property in full ownership with storeys or divisions capable of independent use (…) with tax patrimonial value (…) exceeding EUR 1,000,000.00".

3.3 The Respondent clarifies that "with reference to the year 2014, in compliance and in accordance with the provisions of article 6, No. 2 of Law No. 55-A/2012, of 29/10, which amended item No. 28 of TGIS, with the amendment made by Law No. 83-C/2013 of 31/12 and whose respective incidence rule refers to urban properties, assessed in accordance with CIMI, with VP equal to or greater than EUR 1,000,000.00 and, in accordance with its No. 28.1, residential use, AT proceeded to notify the collection documents for payment of the assessments in question".

3.4 Thus, according to the Respondent, "what is at issue here are assessments that result from the direct application of the legal rule, which translates into objective elements, without any subjective or discretionary assessment".

3.5 The Respondent continues by alleging that "it follows from the analysis of the normative provision that a property in full ownership with storeys or divisions capable of independent use is, unequivocally, different from a real estate in the regime of horizontal ownership, constituted by autonomous shares, that is, several properties" and "as far as the assessment of IMI is concerned, in the case of properties in full ownership, the VP that serves as the basis for its calculation, will undoubtedly be the VP that the now Claimant defines as the global value of the property".

3.6 Thus, the Respondent clarifies that "in compliance with the provisions of article 119, No. 1 of CIMI, the collection document is sent to the tax subject with a breakdown of the parts capable of independent use, the respective tax patrimonial value and the tax collected attributable to each municipality of the location of the properties", concluding that "the assessment being correct and the appraised tax being due, no compensatory interest is due (…) because there is no error attributable to the Services, which merely acted, as they should, in strict compliance with the legal rule".

On the violation of the principle of legality, tax equality and of contributory capacity

3.7 On this matter, the Respondent considers that "the thesis defended by the Claimant lacks (…) legal support, because although the assessment of IS, in the situations provided for in item No. 28.1 of TGIS, is processed in accordance with the rules of CIMI, the truth is that the legislature reserves the aspects that require appropriate adjustments (…), as is the case with properties in full ownership, even though with storeys or divisions capable of independent use (…) for the purposes of IS the property matters in its entirety because the divisions capable of independent use are not deemed as property, but only autonomous shares in the horizontal ownership regime, in accordance with No. 4 of article 2 of CIMI".

3.8 In these terms, the Respondent defends that "what expressly results from the letter of the law is that the legislature intended to tax with item 28.1 under discussion properties as a single juridical-tax reality (…)", and that "the subjection to stamp tax of item 28.1 of the General Table (…) results from the combination of two facts: residential use and the tax patrimonial value of the urban property registered in the matrix being equal to or greater than EUR 1,000,000.00".

3.9 In fact, according to the Respondent, "it appears from the property records that the properties are in the regime of full ownership, composed of several parts capable of independent use", and therefore "with this being the registration information (…) the stamp tax assessments for the year 2014 were made (…) taking into account the nature of urban properties, at the date of the tax event, applying, with the necessary adjustments, the rules contained in CIMI".

3.10 Now, the Respondent alleges, "in accordance with the rules of CIMI (…), the assessment is made on the basis of the tax patrimonial values of the properties and in relation to the tax subjects that appear in the matrices on 31 December of the year to which they relate".

3.11 "The properties being in the regime of full ownership, not possessing autonomous shares, to which tax law attributes the qualification of property (…)", the Respondent considers that "the defect of violation of law for error as to the presuppositions of law should be judged as unfounded, with the assessment acts impugned being maintained in the legal order because they constitute a correct application of law to the facts".

3.12 On the other hand, "the AT also considers that the provision of item 28.1 of TGIS does not constitute any violation of the principle of equality, there being no discrimination in the taxation of properties constituted in horizontal ownership and properties in full ownership with storeys or divisions capable of independent use, or between properties with residential use and properties with other uses, because from the notion of property in article 2 of CIMI, only autonomous shares of property in the horizontal ownership regime are deemed as properties (…)".

3.13 In fact, "horizontal ownership and vertical ownership are differentiated legal institutes", and that "the constitution of horizontal ownership implies (…) merely a juridical alteration of the property, with no assessment (…) occurring, but the legislature can (…) submit to a distinct tax legal framework, and thus discriminatory, properties in the horizontal ownership regime and vertical, in particular, benefiting the more legally advanced institute of horizontal ownership, without such discrimination necessarily being considered arbitrary", because "this discrimination can also be imposed by the need to impose coherence to the tax system".

3.14 The Respondent, in its explanations of the two regimes, states that "what is intended to be concluded is that these rules procedures of assessment, the rules on registration in the matrix, and also the rules on the assessment of parts capable of independent use, do not allow for it to be stated that there should be an equation of the property in the regime of full ownership to the regime of vertical ownership, this because (…) it would be illegal and unconstitutional", because it considers that "these juridical-civil law regimes are different, and the tax law respects them!"

3.15 Thus, the Respondent concludes that "(…) the relevant patrimonial value for the purposes of the incidence of the tax (…)" should be "(…) the total patrimonial value of the urban property and not the patrimonial value of each one of the parts that compose it, even when capable of independent use" because "(…) a property in full ownership constitutes, for all purposes, a single juridical-tax reality", and therefore "cannot one conclude for an alleged discrimination, or violation of the principle of equality when, in truth, we are faced with distinct realities, valued by the legislature differently".

3.16 On the other hand, the Respondent defends that "(…) the taxation under IS follows the criterion of adequacy, in the exact measure in which it aims at the taxation of the wealth embodied in the ownership of real estate of high value, arising in a context of economic crisis that cannot be ignored", and that "the measure implemented seeks to seek maximum effectiveness, as to the objective to be achieved, with minimum harm to other interests considered relevant".

3.17 In these terms, for the Respondent "the option for this mechanism of obtaining income is legitimate, which would only be censurable, in the face of the principle of proportionality, if it resulted in manifestly indefensible", which the Respondent does not believe "(…) because such a measure is applicable indistinguishably to all holders of real estate with residential use of value exceeding EUR 1,000,000.00"

3.18 In these terms, the Respondent considers that "we must necessarily conclude that the notifications made for payment of the tax in question did not violate any legal or constitutional principle, and should therefore be maintained".[4]

3.19 On the other hand, the Respondent considers that "the facts on which the decision is requested being fixed and given that only a matter of law is at issue, the documents submitted by the Claimant and by the Respondent (…) are sufficient for the issuance of the arbitral decision", and that:

3.19.1 "There being no interest and utility in holding the meeting provided for in article 18 of the Legal Regime of Tax Arbitration, and even less in hearing the witness presented by the Claimant";

3.19.2 "(…) AT does not intend (…) to produce any submissions, since their production is not capable of influencing the decision of the case";

3.19.3 "AT requests the (…) waiver of the meeting (…), as well as the waiver of hearing the witness presented by the Claimant, and should it not object, to proceed directly to the decision of the case".

3.20 The Respondent concludes the response submitted, requesting that it be "judged the present request for arbitral decision as unfounded, by not being proven, maintaining in the legal order the tax assessment acts impugned, accordingly absolving the respondent entity of the request".

4. PRELIMINARY ASSESSMENT

4.1 The request for arbitral decision is timely since it was filed within the period provided for in subparagraph a) of No. 1 of article 10 of RJAT.[5]

4.2 The parties have juridical personality and capacity, are legitimate with respect to the request for arbitral decision and are duly represented, in accordance with the provisions of articles 4 and 10 of RJAT and article 1 of Ordinance No. 112-A/2011, of 22 March.

4.3 The cumulation of requests made here by the Claimant is legal and valid, in accordance with the provisions of article 3, No. 1 of RJAT, given that the foundedness of the requests depends, essentially, on the assessment of the same factual circumstances and on the interpretation and application of the same principles or rules of law.

4.4 The Tribunal is competent with respect to the assessment of the request for arbitral decision formulated by the Claimant.

4.5 No exceptions were raised that need to be addressed.

4.6 There are no nullities, so it is now necessary to address the merits of the request.

5. FACTUAL MATTER

Of the Proven Facts

5.1 The following facts are considered as proven, documented by the following documents joined to the file:

5.1.1 The Claimant is a limited liability company owning the urban property situated on Road …, No. … to …, in Porto, registered in the urban property matrix under registration article No. U-… of the Union of Parishes of … and …(…), in accordance with docs. Nos. 1 and 2 attached with the request:

5.1.2 The said urban property is constituted in the regime of vertical (or full) ownership, being composed of seven storeys and nineteen storeys or divisions (intended for commerce and residential use), capable of independent use in accordance with a copy of the urban property record contained in the administrative file attached by the Respondent.

5.1.3 The total TPV of the said urban property was EUR 2,324,780.00, determined in 2012, within the scope of an assessment carried out on 15 December 2012, and the sum of the TPV of all divisions or storeys or parts capable of independent use intended for residential purposes was, on 31 December 2014, EUR 1,679,560.00 (in accordance with the administrative file attached by the Respondent).

5.1.4 The TPV of each of the divisions (or parts capable of independent use) intended for residential use is between EUR 104,710.00 (value attributed to 1D, 1E, 2D, 2E, 3D and 3E of No. 51 and of No. …) and EUR 105,760.00 (value attributed to 4D and 4E of No. … and of No. …), in accordance with a copy of the urban property record contained in the administrative file attached by the Respondent.

5.1.5 The Claimant was notified of collection notes for payment of the 1st, 2nd and 3rd instalments of tax, which are identified below (amounts expressed in Euros – EUR), relating to the Stamp Tax assessments No. 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 … 2014 …, dated 20 March 2015, relating to the year 2014 (with the payment deadline being, respectively "April/2015", "July/2015" and "November/2015"), relating to the real estate identified above, in accordance with copies of the collection documents attached to the file (docs. Nos. 3 to 18, 19 to 34 and 40 to 55 attached with the request):

5.1.6 For the purposes of determining the incidence of Stamp Tax of item 28 on various autonomous parts of the real estate (identified above), there was considered (i) the sum of the TPV of all divisions or storeys capable of independent use with residential use (which amounted, on 31 December 2014, to EUR 1,679,560.00, i.e., exceeded EUR 1,000,000.00) and (ii) the residential use of said autonomous parts, and that, for the purposes of assessing the tax, the Respondent applied the rate of 1% of Stamp Tax on the individual TPV of each of the divisions intended for residential purposes identified in the previous point (in accordance with doc. contained in the administrative file attached by the Respondent).

5.1.7 The Claimant filed, on 24 August 2015, an administrative complaint (No. …2015…) relating to the Stamp Tax assessments identified in point 5.1.5, above, relating to the year 2014, requesting the annulment of those assessments, alleging lack of legal grounds, error as to the factual presuppositions and lack of legal grounds (in accordance with doc. No. 36 attached with the request).

5.1.8 The Claimant was notified of Official Letter No. …/…-…, of 16 November 2015, relating to the draft decision for rejection of the administrative complaint identified above, to the effect of exercising, if it wished, within a period of fifteen days the respective right of hearing, "(…) bringing new elements to the process, which will be taken into account in the grounds of the final decision" (in accordance with doc. No. 37 attached with the request).

5.1.9 The Claimant exercised the said right of prior hearing, in writing, on 4 December 2015, having reiterated therein the facts alleged in the complaint (in accordance with doc. No. 38 attached with the request).

5.1.10 The Claimant was notified, by registered letter dated 17 December 2015, of the decision to reject the administrative complaint identified above, by Official Letter No. …/…-…, of 15 December 2015 (in accordance with doc. No. 39 attached with the request).

5.1.11 In the course of the administrative complaint procedure, tax enforcement proceedings were instituted as identified below, to collect coercively the amounts of Stamp Tax assessed (expressed in Euros – EUR), relating to the year 2014, identified in point 5.1.5, above, (in accordance with docs. Nos. 66 to 113 attached with the request):

5.1.12 The Claimant submitted to the Respondent a request to offer a property of its ownership as security for the suspension of the enforcement proceedings identified in document No. 114 attached with the request.

5.1.13 The Tax Authority proceeded to credit compensation in accordance with credit application statements and account adjustment statements (docs. Nos. 115 and 116 attached with the request).

5.2 No other facts capable of affecting the decision on the merits of the request were proven.

Of the Unproven Facts

5.3 No other facts were found to be unproven with relevance to the arbitral decision.

6. LEGAL GROUNDS

6.1 In the case under analysis, in order to assess the legality of the Stamp Tax assessments notified to the Claimant, with reference to the year 2014, it will be important to address a controversial legal issue underlying the request for arbitral decision:

6.1.1 Is the subjection to Stamp Tax, in accordance with the provisions of item No. 28.1 of the General Table of Stamp Tax (TGIS), determined by the TPV corresponding to each one of the parts of the property with residential use or, conversely, is it determined by the global TPV of the property, which would correspond to the sum of all the TPVs of the storeys (with that type of use), which form part thereof?

6.2 In this connection, it should be noted that the Claimant grounds the request for annulment of the Stamp Tax assessment acts (identified above) on the basis of the existence of:

6.2.1 "(…) defect of violation of law – right of hearing – arts. 56, 58, 59 and 60, Nos. 1 and 7 of LGT, 268 of CRP and 45 of CPPT", for the reasons presented in points 2.9 and 2.10, above;

6.2.2 "(…) error as to the factual presuppositions and lack of legal grounds – defect of violation of law – property subject to commercial use", for the reasons presented in points 2.11 to 2.13, above;

6.2.3 "(…) lack of legal grounds – defect of violation of law – Item 28.1 of the General Table of Stamp Tax", for the reasons presented in points 2.14 to 2.18, above;

6.2.4 "(…) defect of violation of law – article 24, No. 1, subparagraph d) of RJAT", for the reasons presented in points 2.19 to 2.21, above.

6.3 Next, we will begin by analyzing the normative provision on the incidence of Stamp Tax (item 28) in order to assess whether the assessments in question suffer or not from lack of legal grounds for defect of violation of law.

On the Incidence of Stamp Tax

6.4 For this purpose, it is important to analyze the essence of the changes resulting from Law No. 55-A/2012, of 29 October (i.e., the amendment to TGIS of item 28), in order to address the issue stated in point 6.1.1, above.

6.5 In fact, that law "introduced a set of amendments to the codifying laws of three taxes – IRS, IRC and Stamp Tax – as well as to the General Tax Law, among which the rule under analysis, all guided by obtaining supplementary tax revenue and, in general, by countering budgetary imbalance".[6]

6.6 Thus, "invoking the principles of social equity and fiscal justice, taxation of capital income and mobility gains was increased, measures were introduced to strengthen the fight against tax fraud and evasion, through the reinforcement of the regime applicable to manifestations of wealth of tax subjects and transfers to and from tax havens, to which was added the introduction, within the scope of Stamp Tax, of taxation of legal situations (…), which were understood to be capable of bearing increased fiscal burden, thus distributing more equitably the sacrifice to achieve the budgetary consolidation required of taxpayers" (emphasis ours).[7]

6.7 And if there were any doubts as to a possible unconstitutionality of item 28 of TGIS, for alleged violation of the principles of proportionality, equality and contributory capacity, the Constitutional Court ruled, in the scope of Decision of 11 November 2015 (in the scope of process No. 542/14), to the effect that "(…) it did not deem unconstitutional the rule of items 28 and 28.1 of the General Table of Stamp Tax, amended by article 4 of Law No. 55-A/20121, of 29 October, to the extent that it imposes annual taxation on the ownership of urban properties with residential use, whose tax patrimonial value is equal to or greater than EUR 1,000,000.00", "with no violation of constitutionality parameters (…), nor any others (…)" (emphasis ours).[8][9]

6.8 In these terms, in accordance with the amendment introduced by the said law, item 28 of TGIS now has the following wording (bold ours):

"28. Ownership, usufruct or surface right of urban properties whose TPV contained in the matrix, in accordance with the IMI Code, is equal to or greater than EUR 1,000,000.00 – on the TPV for the purpose of IMI:

28.1 - Per property with residential use - 1%.

28.2 - Per property, when the tax subjects who are not natural persons are residents in a country, territory or region subject to a clearly more favorable tax regime, as listed in a notice approved by the Finance Minister - 7.5%".

6.9 Now, although Law No. 55-A/2012 (in force since 30 October 2012) did not proceed to qualify the concepts contained in said item No. 28, namely the concept of "property with residential use", if the provisions of article 67, No. 2 of the Stamp Tax Code (also amended by the said Law No. 55-A/2012) are observed, it is verified that "to matters not regulated in this Code relating to item 28 of TGIS shall apply, subsidiarily, the IMI Code".

6.10 Therefore, from a reading of the IMI Code, it is easily apparent that the concept of "property with residential use" refers to the concept of "urban property", defined in accordance with articles 2 and 4 of that Code.

6.11 Indeed, in accordance with the provisions of article 2, No. 1 of the IMI Code, "for the purposes of this Code, property is any fraction of land, including waters, plantations, buildings and constructions of any nature incorporated or set 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 circumstances above, endowed with economic autonomy in relation to the land where they are located, albeit situated in a fraction of land that constitutes an integral part of an asset other or does not have patrimonial nature" (emphasis ours).

6.12 Also in accordance with No. 2 and No. 3 of the same article, "buildings or constructions, although movable by nature, are deemed to have the character of permanence when intended for non-transitory purposes", and it is presumed "the character of permanence when the buildings or constructions are located on the same site for a period exceeding one year".

6.13 For the purposes of IMI, "each autonomous share, in the horizontal ownership regime, is deemed to constitute a property" and, in accordance with the provisions of article 4 of that tax Code "urban properties are all those which should not be classified as rural (…)" (emphasis ours).

6.14 Among the various types of "urban properties" referred to in article 6 of the IMI Code, "residential urban properties" are expressly mentioned [No. 1, subparagraph a)], with No. 2 of the same article adding that these "are the buildings or constructions licensed for such purpose or, in the absence of a license, which have as their normal destination each of these purposes".

6.15 On the other hand, if it is true that No. 4 of article 2 of the IMI Code states that "for the purposes of this tax, each autonomous share, in the horizontal ownership regime, is deemed to constitute a property" it is also true that there is nothing in the law that points to a distinction between properties in horizontal ownership and property in vertical ownership with respect to their identification as "residential urban properties".

6.16 Thus, it can be concluded that the autonomous parts of properties in vertical ownership, with residential use, should be considered as "residential urban properties".

6.17 As defended in various Arbitral Decisions, notably the one issued in the scope of Process No. 88/2013-T, "in the legislature's perspective, it does not matter the juridical-formal rigor of the concrete situation of the property but rather its normal use, the purpose to which it is intended", and therefore "one must conclude that for the legislature it is irrelevant whether the property is constituted in vertical or horizontal ownership, mattering only the material truth underlying its existence as an urban property and its use" (emphasis ours).

6.18 In fact, in the interpretation of the legal text, it makes no sense to distinguish what the law itself does not distinguish because to distinguish, in this context, between properties constituted in horizontal ownership and properties constituted in full ownership would be an "innovation" without associated legal support.

6.19 In fact, neither in item No. 28 of TGIS, nor in the provisions of the IMI Code, is there anything indicative of a justification for such differentiation.[10]

6.20 Indeed, it can be stated that it is now settled understanding that tax laws are interpreted through the determination of their true meaning, assessed in accordance with the techniques and interpretative elements generally accepted by legal scholarship (see article 9 of the Civil Code and article 11 of the General Tax Law - LGT).[11]

6.21 On the other hand, it is also necessary to take into account that the rules on the incidence of taxes must be interpreted in their exact terms, without resorting to analogy, making prevail certainty and security in their application.[12]

6.22 In these terms, the uniform criterion that is required is one that determines that the incidence of the provision in question (item 28 of TGIS) only takes place when some of the parts, storeys or divisions with independent use of a property in horizontal (or full) ownership, with residential use, possesses a TPV exceeding EUR 1,000,000.00 (emphasis ours).

6.23 Thus "if the legal criterion imposes 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 clearly established a single and unequivocal criterion for the definition of the rule of incidence of item 28.1 of TGIS" [13], and therefore establishing as the reference value for this objective the global TPV of the property in question (as the Respondent intends) finds no basis in applicable legislation (emphasis ours).[14]

6.24 Finally, it is also important to inquire what the ratio legis underlying the rule of item 28 of TGIS is and, in obedience to the provisions of article 9 of the Civil Code[15], what the circumstances were in which the rule was drawn up and what the specific conditions of the time in which it is applied are.

6.25 In fact, at the time of the amendment, the legislature intended to introduce a principle of taxation on wealth externalized in the ownership, usufruct or surface right of urban properties of luxury with residential use, having considered, as a determining element of contributory capacity, urban properties, with residential use, of high value (luxury), that is, of value equal to or greater than EUR 1,000,000.00, on which a special rate of Stamp Tax would now be applied.

6.26 In fact, we understand that this is what can be concluded from the analysis of the discussion of Bill No. 96/XII in the Assembly of the Republic[16], with no invocation of a ratio interpretativa different from that presented here.[17]

6.27 In fact, the justification of the measure designated "special tax on residential urban properties of the highest value" is based on the invocation of the principles of social equity and fiscal justice, calling to contribute in a more intense manner the holders of high-value properties intended for residence, thus causing the new special tax to apply to "homes of value equal to or greater than 1 million euros" (emphasis ours).

6.28 Now, if such logic seems to make sense when applied to a "residential property" (whether it is a house, an autonomous share, a part of a property with independent use or an autonomous unit) whenever it represents, on the part of its holder, an above-average contributory capacity (and, in that measure, capable of determining a special contribution to ensure fair distribution of fiscal burden), it would make no sense if applied "unit by unit" to, through the sum of the individual TPVs of the same (because held by the same individual), ascertain such value equal to or greater than one million euros (emphasis ours).

6.29 Additionally, admitting the differentiation of treatment could produce results incomprehensible and discriminatory from a legal point of view, as they would be contrary to the objectives (of promoting social equity and fiscal justice) that the legislature defended in amending said item No. 28.

6.30 Thus, the existence of a property in vertical or horizontal ownership cannot, by itself, be indicative of contributory capacity, and it follows from the law that both must receive the same tax treatment in obedience to the principles of justice, fiscal equality and material truth.

6.31 Conversely, the existence in each property of independent residences, in the regime of horizontal or vertical ownership, can be capable of triggering the incidence of the new tax if the TPV of each one of the parts or shares is equal to or greater than the limit defined by law, that is, EUR 1,000,000.00.

6.32 In this way, it is illegal to consider that the reference value for the assessment of the tax is the corresponding to the sum of the TPVs attributed to each part or division, first of all because we would be faced with a clear violation of the principle of equality and proportionality in fiscal matters, since the tax legislature cannot treat equal situations differently, based on whether we are dealing with a property in horizontal or vertical ownership.

6.33 Now, if the properties in question were in the regime of horizontal ownership, it would be clear that none of the residential divisions that form part thereof would be subject to the incidence of the new tax, since none of them individually would exceed the limit of EUR 1,000,000.00 defined by law (see point 5.1.4, above, regarding the TPV of each of the storeys or divisions capable of independent use).

6.34 It is for this very reason that article 12, No. 3 of the IMI Code provides that "each storey or part of property capable of independent use is considered separately in the property registration, which also discriminates the respective TPV" so as not to generate situations violating the principles of social equity and fiscal justice (emphasis ours).

6.35 Since the constitution of horizontal ownership implies merely a juridical alteration of the property, not even imposing a new assessment, it is the material truth that must be imposed as the determining criterion of contributory capacity and not the mere juridical-formal reality of the property, and therefore the discrimination operated by the Respondent translates into arbitrary and illegal discrimination.[18]

6.36 And, taking into account the entire social and economic reality often underlying many properties in vertical ownership, the tax legislature itself in the IMI Code treated the two situations (horizontal and vertical ownership) equitably, applying the same criteria.

6.37 In fact, let it be reiterated that the Respondent cannot distinguish where the legislature itself understood not to do so, at the risk of violating the coherence of the tax system and the principles of fiscal legality (article 103, No. 2 of the Constitution of the Portuguese Republic - CRP), justice, equality and proportional taxation, therein included.

6.38 Analyzing the situation sub judice, it is found that the TPV of the storeys (autonomous units) with residential use in the real estate described above varies between the lowest value of EUR 104,710.00 (value attributed to 1D, 1E, 2D, 2E, 3D and 3E of No. … and of No. …, identified in point 5.1.4, above) and the highest value of EUR 105,760.00 (value attributed to 4D and 4E of No. … and of No. …, identified in point 5.1.4, above) so that in any of them, individually considered, the said TPV is always less than EUR 1,000,000.00 (as already stated above in point 6.33).

6.39 Thus, in view of the above, the answer to be given to the question raised above (see point 6.1.1) will be that the subjection to Stamp Tax, for the purposes of item 28 of TGIS, is determined by the TPV corresponding to each one of the parts of the property with residential use and not by the global TPV of the property, and therefore it will be concluded that the storeys with residential use (of the property identified in the file) cannot be subject to the Stamp Tax referred to in item No. 28 of TGIS, and therefore the assessment acts under the request for arbitral decision presented by the Claimant are illegal. [19] [20] [21]

6.40 As a consequence, being illegal the assessment acts in question, for the reasons set out above, the analysis of the remaining defects invoked by the Claimant (identified in point 6.2, above) is rendered moot, in the sense of defending the annulment of the said Stamp Tax assessments.

On the Refund of Tax Paid, with Compensatory Interest

6.41 In these terms, and taking into account the conclusion referred to in point 6.39, above, as well as the fact that part of the Stamp Tax assessments was paid by credit compensation (see above point 5.1.13), the now Claimant has the right to refund the amounts unduly paid.

6.42 Now, as regards the payment of compensatory interest, in accordance with the provisions of No. 5 of article 24 of RJAT "payment of interest, regardless of its nature, is due, in the terms provided in LGT and in CPPT", resulting from this that an arbitral decision is not limited to the assessment of the legality of the tax act.

6.43 Equally, in accordance with the provisions of article 24, No. 1, subparagraph b) of RJAT, it should be understood that the request for compensatory interest is a claim relating to tax acts (e.g. of assessment), which aims to clarify/implement the content of the duty to "restore the situation that would exist if the tax act subject to the arbitral decision had not been performed, adopting the acts and operations necessary for this purpose".

6.44 As Jorge Lopes de Sousa states "falls within the competence of arbitral courts operating in CAAD the determination of the effects of the arbitral decision which can be defined in a process of judicial impugnartion, namely, the annulment of the acts whose declaration of illegality is requested, the condemnation of the Tax and Customs Authority in the payment of compensatory interest (…)" (emphasis ours).[22] [23]

6.45 Thus, in tax arbitration proceedings there can be a right to payment of compensatory interest, in the terms of the provisions of articles 43, Nos. 1 and 2, and 100 of LGT, when it is determined that there was error attributable to the services from which resulted the payment of the tax debt in an amount greater than that legally due.

6.46 In these terms, the right to compensatory interest will always depend on the verification of an error attributable to the Respondent's services, from which resulted payment of the tax debt in an amount greater than that legally due.

6.47 Following the illegality of the assessment acts already identified above (see point 5.1.5 and 6.39, above), and in accordance with the provisions in subparagraph b), No. 1 of article 24 of RJAT (in accordance with what is established therein), "the arbitral decision on the merits of the claim to which there is no further remedy or impugnartion binds the tax administration from the end of the period provided for remedy or impugnartion, and it must restore the situation that would exist if the tax act subject to the arbitral decision had not been performed, adopting the acts and operations necessary for this purpose", so there must be a refund of the amounts paid by the Claimant, as a way to achieve the restoration of the situation that would exist if the illegality had not been committed.

6.48 Thus, in view of what is established in article 61 of the Code of Tax Procedure and Process (CPPT), with the requirements for the right to compensatory interest fulfilled (that is, with the existence of error attributable to the services verified from which resulted payment of the tax debt in an amount greater than that legally due, as provided for in No. 1 of article 43 of LGT), the Claimant has the right to compensatory interest, at the legal rate, calculated on the amount paid within the scope of the Stamp Tax assessments subject to the request for arbitral decision, which will be counted in accordance with the provisions of No. 3 of article 61 of CPPT, that is, from the date of payment of the undue tax to the date of issuance of the respective credit note.

On Responsibility for Payment of Arbitration Costs

6.49 In accordance with the provisions of article 22, No. 4 of RJAT, "the arbitral decision issued by the arbitral court includes the determination of the amount and allocation among the parties of the costs directly resulting from the arbitration proceedings".

6.50 Thus, in accordance with the provisions of article 527, No. 1 of CPC (ex vi 29, No. 1, subparagraph e) of RJAT), it must be established that the Party which caused them shall be condemned in costs or, where there is no success in the action, whoever derived benefit from the proceedings.

6.51 In this connection, No. 2 of said article clarifies the expression "which caused them", in accordance with the principle of burden of loss, understanding that the losing party is responsible for the costs of the proceedings, in the proportion in which it is beaten.

6.52 In the case under analysis, taking into account the above, the principle of proportionality requires that the entire responsibility for costs be attributed to the Respondent, in accordance with the provisions of article 12, No. 2 of RJAT and article 4, No. 4 of the Regulation of Costs in Tax Arbitration Proceedings.

7. DECISION

7.1 Taking into account the analysis made in the previous chapter, this Arbitral Tribunal decided:

7.1.1 To judge the request for arbitral decision presented by the Claimant as founded, and to condemn the Respondent as to the request for declaration of illegality of the Stamp Tax assessments (dated 20 March 2015 and relating to the year 2014), underlying the collection notes identified in this proceeding, annulling, as a consequence thereof, all respective tax assessment acts, with the consequent refund of the amounts unduly paid, increased by compensatory interest at the legal rate, counted in accordance with the legal terms;

7.1.2 To judge as founded the request for annulment of the decision rejecting the administrative complaint filed against the Stamp Tax assessments now annulled, with the legal consequences resulting therefrom;

7.1.3 To condemn the Respondent in the payment of the costs of the present proceedings.

Value of the Proceedings: Taking into account the provisions of articles 306, No. 2 of CPC, article 97-A, No. 1 of CPPT and article 3, No. 2 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the proceedings is set at EUR 16,795.60.

Costs of the Proceedings: In accordance with the provisions of Table I of the Regulation of Costs of Tax Arbitration Proceedings, the value of the costs of the Arbitration Proceedings is set at EUR 1,224.00, to be borne by the Respondent, in accordance with article 22, No. 4 of RJAT.

Notify.

Lisbon, 8 July 2016

The Arbitrator

Sílvia Oliveira

[1] The wording of this decision is governed by the spelling prior to the Orthographic Agreement of 1990, except with respect to transcriptions made.

[2] The Claimant states that "the draft decision makes no reference to the evidence presented by the Claimant and merely limits itself to transcribing in points what was alleged by it, without truly assessing the grounds contained in the Complaint", and has not "heard (…) the witnesses presented by the Claimant in its complaint (…)", nor has it diligenced "(…) for the determination of truth (…)".

[3] In this connection, the Claimant cites a note of Jorge Lopes de Sousa, contained in the Commentary on the Legal Regime of Tax Arbitration (page 221), regarding the "duty of the Tax Administration to refrain from assessing (…) in cases where it is not possible to draw up a new assessment without incurring the illegality declared in the arbitral decision".

[4] In this sense, the Respondent cites the Arbitral Decision issued in the scope of process 668/2015-T, of 5 May 2016, pursuant to which it is concluded that "the request for declaration of nullity of the assessments in question does not proceed on the basis of lack of legal presupposition of the tax event: as demonstrated, the tax event exists (the ownership of urban property with tax patrimonial value exceeding €1,000,000.00)" and "the request for annulment of the assessments in question also does not proceed on the ground of error in the presuppositions, of fact or law, because the presuppositions for the assessment and collection of the tax clearly occur in the case in question".

[5] In this connection, it should be noted that the request for arbitral decision has, expressly, as its object the declaration of illegality:

a) Of the Stamp Tax assessment acts, relating to the year 2014, in the amount of EUR 16,795.60, on the grounds of item 28.1 of the General Table of Stamp Tax, with respect to the urban property identified in the file;

b) Of the decision rejecting the administrative complaint filed against the Stamp Tax assessment acts referred to in subparagraph a).

In this connection, taking into account that in the request for arbitral decision the request for review of the decision rejecting the administrative complaint is included (notified on 17 December 2015), as a way to be able to declare, ultimately, the illegality of the Stamp Tax assessments subject of the request, the decision of the administrative complaint that entails the assessment of the legality of the assessment act is covered by the provisions of No. 1 of article 102 of CPPT, in the terms of which the three-month period (in force since 1 January 2013) applies, counted from the respective notification, for the filing of judicial impugnartion.

On the other hand, also taking into account what is provided for in article 10, No. 1, subparagraph a) of RJAT [which provides that the request for constitution of arbitral court must be presented "within a period of 90 days, counted from the facts provided for in Nos. 1 and 2 of article 102 of CPPT, as to the acts susceptible to autonomous impugnartion (….)"]], as well as the date of filing of the request for arbitral decision (16 February 2016), it is considered that the request for arbitral decision filed is timely.

[6] See Constitutional Court Decision No. 590/2015, of 11 November (Process No. 542/14) - point 9.

[7] See previous footnote.

[8] And already referring to the amendments introduced by Law No. 83-C/20123 of 31 December.

[9] Indeed, the Constitutional Court concludes that "(…) item 28 of TGIS is not affected by any unconstitutionality, with no violation of the constitutional principles forming the tax law, specifically the principles of fiscal equality, contributory capacity and proportionality (…)".

[10] In this connection, note the provisions of article 12, No. 3 of the IMI Code, when referring to the fact that "each storey or part of property capable of independent use is considered separately in the property registration, which also discriminates the respective TPV".

[11] In this sense, see AC TCAS Process 07648/14, of 10 July 2014.

[12] See AC TCAS Process 5320/12, of 2 October 2012, AC TCAS Process 7073/13, of 12 December 2013 and AC TCAS 2912/09, of 27 March 2014.

[13] See Arbitral Decision No. 50/2013-T (CAAD), of 29 October 2013.

[14] Which is the IMI Code, given the reference made by the cited article 67, No. 2 of the Stamp Tax Code.

[15] According to which the interpretation of the legal rule should not be limited to the letter of the law, but should reconstruct the legislative intent, based on the texts and other elements of interpretation, taking into account the unity of the legal system.

[16] Available for consultation in the Record of the Assembly of the Republic, I series, No. 9/XII/2, of 11 October 2012.

[17] As already referred to in various Arbitral Decisions issued by CAAD (see Process No. 48/2013-T and Process No. 50/2013-T).

[18] Since the law does not impose the obligation to constitute a property in the regime of horizontal ownership.

[19] In this sense, see notably Arbitral Decision No. 368/2014-T, of 18 December 2014, issued by the undersigned.

[20] In this sense, the Supreme Court of Administrative Courts (STA) Decision No. 01354/15 of 2 March 2016 was pronounced, pursuant to which "with respect to properties in vertical ownership, for the purposes of incidence of Stamp Tax (…), subjection is determined by the combination of two factors: residential use and the TPV contained in the matrix equal to or greater than € 1,000,000. Where it is a property constituted in vertical ownership, the incidence of IS should be determined, not by the TPV resulting from the sum of the TPV of all divisions or storeys capable of independent use (individualized in the property article), but by the TPV attributed to each one of those storeys or divisions intended for residential purposes".

In the same sense, see also Supreme Court of Administrative Courts Decision No. 047/15, of 9 September 2015.

[21] In this sense, see Arbitral Decision No. 804/2014, of 8 May 2015, relating to the same real estate and tax.

[22] See Leite de Campos, Diogo, Silva Rodrigues, Benjamim, Sousa, Jorge Lopes, in "General Tax Law - Annotated and Commented", 4th Ed., 2012, page 116).

[23] On the topic of compensatory interest, see the same author (Sousa, Jorge Lopes), Interest in Tax Relations, in "Fundamental Problems of Tax Law", Lisbon, 1999, page 155 et seq).