Process: 849/2014-T

Date: May 18, 2015

Tax Type: Selo

Source: Original CAAD Decision

Summary

CAAD Process 849/2014-T addressed the application of Verba 28.1 of the General Stamp Duty Table (TGIS) to vertical property structures. The claimant owned a building with 44 independent units (40 residential) registered under full ownership rather than horizontal property regime. Each unit had an individually determined taxable patrimonial value (TPV) below €1,000,000, with a combined total of €3,820,940. The Tax Authority assessed stamp duty of €33,219.30, treating the property as a single taxable unit based on aggregate value. The claimant challenged this interpretation, arguing that Article 67(2) of the Stamp Duty Code mandates subsidiary application of Municipal Property Tax Code (MPTC) rules. Under MPTC Articles 7(2)(b) and 12(3), economically independent units are valued separately, with each storey registered individually with its own TPV. The claimant contended that Verba 28.1's express reference to TPV 'used for purposes of Municipal Property Tax' requires treating vertical property units identically to horizontal property fractions. Furthermore, the legislative history of Law 55-A/2012 indicated the stamp duty targeted high-value residential properties exceeding €1,000,000, not aggregated values of multi-unit buildings. The claimant argued the Tax Authority's own conduct—issuing individualized assessments per unit—contradicted its legal position that the property should be treated as one taxable entity. The case raised fundamental questions about fiscal coherence between municipal property tax and stamp duty treatment of vertical property ownership structures with independent units.

Full Decision

Arbitral Decision

CAAD: Tax Arbitration

Case No. 849/2014-T

I – Report

  1. On 30.12.2014, the Claimant, A..., taxpayer No. …, resident at Av. …, filed a request with the CAAD for the constitution of an arbitral tribunal, in accordance with Article 10 of Decree-Law No. 10/2011, of 20 January (Legal Framework for Tax Arbitration, hereinafter referred to only as LFTA), in which the Tax and Customs Authority is the Respondent, with a view to annulling the stamp duty assessments made by the Respondent on 18-03-2014 with the Claimant as the liable party, concerning item 28.1 of the General Stamp Duty Table and the year 2013, relating to the urban property registered in the property register under article U-..., of the parish of ... and ..., Municipality of ..., to which correspond the documents numbered 2014 ... to 2014 ... totalling €33,219.30, and also with a view to annulling the decision rejecting the administrative complaint filed against those assessments, handed down on 3.10.2014.

  2. The request for constitution of the arbitral tribunal was accepted by the Honourable President of the CAAD and notified to the Tax and Customs Authority.

In accordance with and for the purposes of Article 6, paragraph 1 of the LFTA, by decision of the President of the Deontological Council, duly communicated to the parties within the legally applicable time limits, the undersigned was appointed as arbitrator and communicated acceptance of the appointment to the Deontological Council and to the Administrative Arbitration Centre within the regularly applicable time limit.

The Arbitral Tribunal was constituted on 10.03.2015.

  1. Verifying the absence of any situation provided for in Article 18, paragraph 1 of the LFTA, which would make the arbitral meeting provided therein necessary, the holding thereof was dispensed with, on the grounds of the prohibition of performing useless acts.

The holding of oral arguments was also dispensed with, in accordance with Article 18, paragraph 2 of the LFTA, "a contrario".

  1. The grounds presented by the Claimant in support of her claim were, in summary, as follows:

a. The claimant is the owner of the urban property in full ownership, with storeys capable of independent use, registered in the property register under article ..., of the Union of Parishes of ... and ..., Municipality of ..., consisting of 44 storeys or units with independent use, whose taxable patrimonial value (TPV) was determined individually for each storey, as stated in the respective property register entry, in compliance with Articles 7, paragraph 2, sub-paragraph b), and 12, paragraph 3 of the MPTC, with 40 of those storeys being intended for residential purposes.

b. This property is not held under a horizontal property regime, although it is entirely composed of storeys or units with independent use.

c. None of the storeys comprising the property has a patrimonial value exceeding €1,000,000, with the total patrimonial value amounting to €3,820,940.

d. On 18-03-2014 the Respondent made stamp duty assessments, with the Claimant as the liable party, concerning item 28.1 of the GSDT and the year 2013, relating to property register article U-..., of the parish of ... and ..., at the rate of 1% on the patrimonial value of each storey comprising this property, to which correspond documents numbered 2014 ... to 2014 ..., totalling €33,219.30.

e. Against those stamp duty assessments an administrative complaint was filed on 08 July 2014, addressed to the Director of Finance of ..., which was rejected by decision dated 3.10.2014, on the grounds that for purposes of stamp duty taxation, properties held in full ownership are considered in their entirety as a single property.

f. Item 28 of the GSDT states, at the end, that the TPV to be used in the calculation of stamp duty corresponds to what results from the rules provided in the Municipal Property Tax Code.

g. Article 67, paragraph 2 of the SDC, introduced by Law No. 55-A/2012 which added item 28 to the GSDT, provides that "Matters not regulated in this Code relating to item No. 28 of the General Table shall be governed, subsidiarily, by the provisions of the MPTC."

h. Therefore, for purposes of the scope of application of item 28.1 of the GSDT, it is important to consider the rules provided in the Municipal Property Tax Code which in its Article 7 provides that:

1 - The taxable patrimonial value of properties is determined in accordance with this Code.

2 - The taxable patrimonial value of urban properties with parts that fall into more than one of the classifications in paragraph 1 of the preceding article is determined:

(...)

b) Where the different parts are economically independent, each part is assessed by applying the corresponding rules, and the value of the property is the sum of the values of its parts."

i. In turn, paragraph 3 of Article 12 of the Municipal Property Tax Code provides that "Each storey or part of property capable of independent use is considered separately in the property register entry, which also specifies its respective taxable patrimonial value."

j. Therefore, in light of the Municipal Property Tax Code, each autonomous part of the property, each storey or unit with independent use, has its own taxable patrimonial value, and that is the taxable value for purposes of this tax just as is the case with autonomous fractions of properties held under a horizontal property regime.

k. For which reason, being this the legal criterion for the incidence of the Municipal Property Tax, it is also this taxable value for purposes of stamp duty, which, moreover, provides for this expressly, by stating at the end of item 28 of the GSDT that the value to be considered is the "taxable patrimonial value used for purposes of the Municipal Property Tax".

l. Taxation under the Municipal Property Tax of properties in vertical ownership, composed of different parts or storeys capable of independent use, follows the same registration and taxation rules as properties held under a horizontal property regime.

m. Indeed, the Tax Authority itself acknowledges that this is the criterion to be followed, since, instead of issuing a single stamp duty assessment based on the total TPV of the property, it issued individualized assessments, considering each one of the storeys of the property and its own taxable patrimonial value, just as would occur under the Municipal Property Tax.

n. Therefore, for purposes of stamp duty, the Tax Authority cannot consider the total value of the property, given that this distinction violates the statutory provision itself, which expressly refers to the criterion established in the MPTC, and also violates the principle of unity of the legal system, enshrined in Article 9 of the Civil Code, which presupposes its axiological and evaluative coherence.

o. Moreover, in the context of application of item 28 of the GSDT, account should also be taken of the legislative intent, the legislative thinking and the intention underlying the creation of the rule whose interpretation is in question.

p. The legislative works of the bill of the National Assembly that are the genesis of Law No. 55-A/2012, of 29 October, refer to the creation of special taxation on high-value properties intended for residential purposes and therefore to houses, autonomous fractions intended for residential purposes or parts of property for that purpose with value exceeding €1,000,000.

q. A situation that has no similarity whatsoever with the one at issue here, in which it is sought to tax a property not held under a horizontal property regime but with storeys with independent use, considering its total patrimonial value and not the TPV of each of its storeys.

r. In this way, for purposes of calculation of the stamp duty provided for in item 28.1 of the GSDT the TPV determined in accordance with the MPTC should be taken into account, and in the present case, of properties held in full ownership with storeys or units of independent use, the individual TPV of each of the storeys or units of independent use.

s. Therefore, stamp duty will only apply if any of the storeys or units with independent use has a TPV exceeding €1,000,000, which is not the case here.

t. And this constitutes grounds for annulment of the assessments at issue, for violation of the principles of legality, equality and unity of the legal system.

  1. The Tax and Customs Authority, called upon to respond, contested the Claimant's claim, defending itself by way of objection, in summary, with the following grounds:

a. Subjection to stamp duty under item 28.1 of the General Table attached to the SDC results from the combination of residential use and the patrimonial value of each urban property registered in the property register being equal to or exceeding €1,000,000.

b. The situation of the claimant's property falls literally within the provision of the item in question as only autonomous fractions of property under a horizontal property regime are considered properties — paragraph 4 of the cited Article 2 of the MPTC — therefore, given that the property in question is held under a full ownership regime, it does not have autonomous fractions to which tax law attributes the qualification of property, so the petitioner, for purposes of both the Municipal Property Tax and stamp duty, by force of the wording of the said item, is not the owner of 44 autonomous fractions, but rather of a single property.

c. It cannot therefore be accepted that for purposes of item 28.1 of the General Table attached to the SDC, parts capable of independent use should be given the same tax regime as autonomous fractions under a horizontal property regime.

d. Where the property is subject to a full ownership regime, but is physically composed of parts capable of independent use, tax law has attributed relevance to this materiality, assessing these parts individually, in accordance with Article 12 and consequently, in accordance with Article 12, paragraph 3 of the MPTC, each storey or part of property capable of independent use is considered separately in the property register entry, but in the same register, with the Municipal Property Tax calculated taking into account the taxable patrimonial value of each part.

e. The fact that the Municipal Property Tax was calculated based on the taxable patrimonial value of each part of property with economically independent use does not affect the application of item 28, paragraph 1 of the General Table as results from the fact that the determining factor for the application of that item of the General Table is the total patrimonial value of the property and not, separately, that of each of its component parts.

f. Any other interpretation would indeed violate the letter and spirit of item 28.1 of the General Table and the principle of legality of the essential elements of taxation provided for in Article 103, paragraph 2 of the Portuguese Republic's Constitution.

g. It is therefore unconstitutional, as offensive to the principle of tax legality, the interpretation of item 28.1 of the General Table to the effect that the patrimonial value upon which its application depends is ascertained storey by storey or unit by unit and not globally.

h. On the other hand, it is unclear how the taxation at issue could have violated the principle of equality, and moreover, horizontal property and vertical property are differentiated legal institutions.

i. The establishment of horizontal property does indeed imply a mere legal alteration of the property, with no new assessment required, but the legislator may, however, subject to a distinct tax legal treatment, and therefore discriminatory treatment, properties under horizontal and vertical ownership regimes, in particular, to the benefit of the legally more advanced institution of horizontal property, without such discrimination having to be considered necessarily arbitrary.

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

k. The taxable event of stamp duty under item 28.1, consisting of ownership of urban properties whose taxable patrimonial value shown in the property register, in accordance with the MPTC, is equal to or exceeding €1,000,000, the relevant patrimonial value for purposes of the application of the tax is thus the total patrimonial value of the urban property and not the patrimonial value of each of the component parts, even when capable of independent use.

l. Thus, the claimant's request does not succeed to the effect that by analogy with her property the horizontal property regime should apply, considering each of the fractions capable of independent use as constituting a property, as this would not be a correct interpretation of the MPTC provisions and consequently of the SDC, and would subvert the entire regime established therein, with the violations of the aforementioned principles.

  1. The tribunal is materially competent and is regularly constituted in accordance with the LFTA.

The parties have legal personality and capacity, are entitled to participate and are legally represented.

The proceedings do not suffer from defects that would invalidate them.

  1. It is necessary to resolve the following question:

Whether the decision rejecting the administrative complaint and all the assessments sub judice are illegal and (as a consequence) should be annulled.

II – The Relevant Facts

  1. The tribunal considers the following facts to be proven:

I. The claimant is the owner of the urban property, registered in the property register under article ..., of the Union of Parishes of ... and ..., Municipality of ..., consisting of 44 storeys or units with independent use, whose taxable patrimonial value was determined individually for each storey, with 40 of those autonomous parts being intended for residential purposes.

II. This property is not held under a horizontal property regime.

III. All parts capable of independent use that comprise the property have their own taxable patrimonial value, inferior to €1,000,000 in all cases, with the total patrimonial value of the property amounting to €3,820,940, which corresponds to the sum of the taxable values of each of the autonomous parts.

IV. On 18-03-2014 the Respondent made stamp duty assessments, with the Claimant as the liable party, relating to item 28.1 of the General Stamp Duty Table and the year 2013, relating to each of the parts capable of independent use intended for residential purposes of the property identified above in I), being one assessment for each of the said parts capable of independent use, to which correspond documents numbered 2014 ... to 2014 ..., totalling €33,219.30, in accordance with documents submitted by the Claimant, through the so-called "document No. 2", which is hereby reproduced.

V. Against those stamp duty assessments an administrative complaint was filed on 8 July 2014, addressed to the Director of Finance of ..., which was rejected by decision dated 3.10.2014, on the grounds that for purposes of taxation under stamp duty, properties held in full ownership, even if composed of autonomous parts, are considered as a single property.

With relevance for the decision of the case, there are no unproven facts.

  1. The tribunal's conviction as to the decision on the facts was based on the documents contained in the file, as well as on the submissions presented, being noteworthy that there is complete agreement between the parties regarding the facts, with disagreement limited to the law.

III – The Applicable Law

  1. Item 28 of the General Stamp Duty Table provided, in the wording as of the date of the facts, that ownership of properties with residential use with TPV equal to or exceeding €1,000,000 was subject to stamp duty, in the following terms:

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

28.1 – For property with residential use – 1%;

28.2 – For property, when the liable parties are not natural persons and are resident in a country, territory or region subject to a clearly more favourable tax regime, listed in the list approved by order of the Minister of Finance – 7.5%".

  1. Article 67, paragraph 2 of the SDC establishes that "Matters not regulated in this Code relating to item 28 of the General Table shall be governed, subsidiarily, by the provisions of the MPTC".

  2. Article 2, paragraph 4 of the Municipal Property Tax Code (hereinafter MPTC) provides that "For purposes of this tax, each autonomous fraction, under a horizontal property regime, is deemed to constitute a property".

Article 92 of the same code further establishes:

"1 – Each building under a horizontal property regime corresponds to a single entry in the property register.

2 – The generic description of the building must mention the fact that it is held under a horizontal property regime.

3 – Each of the autonomous fractions is described in detail and individualized by the capital letter corresponding to it according to alphabetical order."

  1. In turn, Article 12, paragraph 3 of this Code establishes that "Each storey or part of property capable of independent use is considered separately in the property register entry, which also specifies its respective taxable patrimonial value".[1]

Writing on this rule, J. Silvério Mateus and L. Corvelo de Freitas tell us: "An example that may illustrate this situation is the case of an urban property not held under a horizontal property regime and which is composed of several storeys. Legally this property constitutes a single unit (…). However, since each of these units may be the subject of rental or any other use by the respective owner, the property register must evidence these units and a taxable patrimonial value must be attributed to each of them".[2]

It appears, therefore, that Article 12, paragraph 3 applies to situations of properties in conditions to satisfy the objective requirements for submission to the horizontal property regime, provided for in Article 1415 of the Civil Code, but in which there is no constitutive title.

  1. With regard to urban properties in conditions to satisfy the objective requirements for submission to the horizontal property regime, in substance, the economic reality that is the subject of taxation does not cease to be the same due to the fact that the act constituting the horizontal property has, or has not, taken place.

And, from the perspective of taxation of these realities, there is found in the MPTC no substantive difference in treatment of a property based on the establishment of horizontal property.

  1. Indeed, under the scheme of Articles 38 et seq. of the MPTC which regulate the determination of the taxable patrimonial value of properties, there is no substantive differentiation between properties held under horizontal property and properties with objective conditions for such, but in which submission to such a regime has not occurred[3], specifically, such circumstances do not appear in the elements that increase or decrease the amounts provided in the tables of Article 43, paragraph 2 of the code.

  2. The essential question to be resolved in the present proceedings relates to the question of whether in properties with parts capable of independent use, but not subject to a horizontal property regime, the property will be considered as a unit for purposes of application of item 28 of the GSDT or whether its independent parts will be considered individually.

  3. In the first case, the relevant value for purposes of subsumption to item 28 will be that resulting from the consideration of the totality of its parts and, in keeping with this, a single assessment should be made, only relating to the property and not as many assessments as there are parts or storeys capable of independent use.

  4. In the second case, the value to be considered for this purpose will be that of each of the parts capable of independent use, in the manner similar to what occurs with autonomous fractions of properties subject to the horizontal property regime, and assessments should be made for each of the parts capable of independent use but only, and solely, for parts capable of independent use whose value is equal to or exceeding €1,000,000.

  5. The Tax Authority made as many assessments as there are parts capable of independent use, a procedure which in our view does not harmonize with its own thesis that in these cases the reality envisaged by Item 28 of the GSDT is the property as a whole and not each of its autonomous parts.

  6. The question has already been addressed in various arbitral decisions[4], which were to the effect of considering that the value to be considered for this purpose will be that of each of the parts capable of independent use, in the manner similar to what occurs with autonomous fractions of properties subject to the horizontal property regime, a solution which we consider to be correct.

  7. In a first interpretative moment of item 28 of the GSDT, the expression "urban property" in combination with Article 2, paragraph 4 of the MPTC, which attributes the status of urban property to autonomous fractions under a horizontal property regime and apparently does not attribute it to parts capable of independent use, could point towards consideration of the property as a whole.

  8. But, still within the scope of the literal element, the item points in a different direction in referring to "property with residential use", in that in the cases of properties with parts capable of independent use, the use can only be determined fraction by fraction[5] and not globally, in that it may happen, and frequently does in this type of property, that some parts are used for residential purposes and others for other purposes.

Thus, when the legislator refers to "property with residential use", with respect to properties with storeys or parts capable of independent use, could only have had in mind each one of these fractions and not the property as a whole.

  1. This reading of the literal element is in complete harmony with the rules of the MPTC mentioned above, as well as with the other interpretative elements, as demonstrated in various CAAD decisions on this matter, and to whose jurisprudence we adhere without reservation.

  2. As was written in the decision handed down in case 50/2013-T:

"the ratio legis underlying the rule of item 28 of the GSDT, introduced by Law No. 55-A/2012 of 29 October, and in obedience to the provisions of Article 9 of the Civil Code, according to which the interpretation of a legal rule should not be limited to the letter of the law, but should reconstruct from the texts and other interpretative elements the legislative thinking, taking into account the unity of the legal system, the circumstances in which it was drafted and the specific conditions of the time in which it is applied.

The legislator in introducing this legislative innovation considered as the determining element of contributory capacity urban properties, with residential use, of high value (luxury), more precisely, of value equal to or exceeding €1,000,000.00, on which it proceeded to impose a special rate of stamp duty, intending to introduce a principle of taxation on wealth expressed in ownership, usufruct or right of superficies of luxury urban properties with residential use. For this reason, the criterion was the application of the new rate to urban properties with residential use, whose TPV is equal to or exceeding €1,000,000.00.

This very conclusion is reached from the analysis of the discussion of bill No. 96/XII in the National Assembly, available for consultation in the National Assembly Journal, I series, No. 9/XII/2, of 11 October 2012.

The justification for the measure designated as "special tax on high-value residential urban properties" is based on the invocation of the principles of social equity and fiscal justice, calling on the holders of high-value properties intended for residential purposes to contribute in a more intense manner, applying the new special rate to "houses of value equal to or exceeding 1 million euros."

Clearly the legislator understood that this value, when attributed to a residence (house, autonomous fraction or storey with independent use) reflects above-average contributory capacity and, as such, capable of determining a special contribution to ensure fair distribution of the tax burden."

  1. The respondent further contends that it is unconstitutional, as offensive to the principle of tax legality, the interpretation of item 28.1 of the General Table to the effect that the patrimonial value upon which its application depends is ascertained globally and not storey by storey or unit by unit.

It appears to us that the respondent is not correct, for the above reasons and further because it is unclear how the principle of legality could interfere with the application of the interpretative criteria provided for in Article 9 of the Civil Code.

  1. On the other hand, it is understood that the interpretation sustained here, in line with the peaceful arbitral jurisprudence mentioned above, is the one that harmonizes with the constitutional principles of tax equality and contributory capacity in that it would not be acceptable, in light of these principles, the unequivocally unequal taxation of substantially identical realities, merely for the formal reason that in some cases the establishment of horizontal property has occurred and in others it has not.

  2. In the same vein, goes the consideration of the principle of systematic coherence, which would also be affected by the consideration of these realities under the Municipal Property Tax in a manner substantially identical to that of fractions of properties formally held under a horizontal property regime, rather than what would occur under stamp duty, in accordance with the solution sustained by the Respondent.

  3. For the foregoing reasons, it is considered that in the case of urban properties with parts or storeys capable of independent use the value to be considered for purposes of application of item 28 of the GSDT is the taxable patrimonial value of each of those independent parts, with only those parts capable of independent use whose own taxable patrimonial value exceeds €1,000,000 being subject to this tax.

  4. In the case at issue, being the taxable patrimonial value of each of the parts capable of independent use less than that amount, these do not fall within the tax incidence rule so that the assessments sub judice suffer from the defect of violation of law and consequently cannot but be annulled.

IV – Decision

Accordingly, the Arbitral Tribunal decides to fully uphold the objection, declaring the illegality and consequent annulment of the decision rejecting the administrative complaint, as well as all of the assessments sub judice.

Value of the action: €33,219.30 (thirty-three thousand two hundred and nineteen euros and thirty cents) in accordance with the provisions of Article 306, paragraph 2 of the CPC and Article 97-A, paragraph 1, sub-paragraph a) of the TPPC and Article 3, paragraph 2 of the Costs Regulations in Arbitration Proceedings.

Costs to be borne by the Respondent, in the amount of €1,836.00 (one thousand eight hundred and thirty-six euros) in accordance with paragraph 4 of Article 22 of the LFTA.

Let notification be made.

Lisbon, CAAD, 18 May 2015

The Arbitrator

Marcolino Pisão Pedreiro

[1] Also pointing in the direction of individual consideration of these parts capable of independent use, Article 119, paragraph 1 of the MPTC provides that the tax collection document shall contain the "description of properties, their parts capable of independent use, respective taxable patrimonial value".

Pointing also in the same direction, Article 15-O of Decree-Law No. 287/2003, of 20 November, added by Law 60-A/2011 of 30/11, referring to the collection of Municipal Property Tax for purposes of the safeguard regime, mentions "property or part of urban property subject to general assessment".

[2] TAXES ON REAL ESTATE PROPERTY, STAMP DUTY, Annotated and Commented, Engifisco, 1st Edition, 2005, pp. 159-160.

[3] This was already the case under the Code of Real Estate Contribution and the Tax on Industry and Agriculture and the Code of Municipal Contribution.

The circular offices Nos. 40012, of 23.12.1999 and 40.025, of 11.08.2000 (which may be consulted in MUNICIPAL PROPERTY TAX CODE, Commented and Annotated, by Martins Alfaro, Áreas Editora, 2004, 589-592, in the cited work by Silvério Mateus and Corvelo de Freitas, pp. 294-295 and 259-261, and the second may still today be consulted on the website http://info.portaldasfinancas.gov.pt/pt/informacao_fiscal/legislacao/instrucoes_administrativas/oficios_circulados_contribuicao_autarquica.htm) even clarified the understanding that except in cases of reconstruction, modification or improvement of the property that entails some variation of the taxable value, the transition to the horizontal property regime does not give rise to a new assessment.

[4] Handed down in cases 50/2013-T, 132-2013-T, 181/2013-T, 183/2013-T, 185/2013-T, 248/13, which may be consulted at https://caad.org.pt/.

[5] We use the expression here in the sense of part or storey capable of independent use.

Frequently Asked Questions

Automatically Created

Does Verba 28.1 of the Stamp Tax Table apply to vertical property buildings where individual units are valued below €1,000,000?
According to the claimant's arguments in Process 849/2014-T, Verba 28.1 of the TGIS should not apply to vertical property buildings where individual units are valued below €1,000,000, even if the aggregate property value exceeds this threshold. The claimant argued that the Municipal Property Tax Code (MPTC), which applies subsidiarily per Article 67(2) of the Stamp Duty Code, treats each economically independent unit separately with its own taxable patrimonial value. Since Verba 28.1 expressly references the TPV 'used for purposes of Municipal Property Tax,' and the legislative intent was to tax high-value residential properties exceeding €1,000,000, the threshold should apply to individual units, not aggregated values of multi-unit buildings under vertical ownership.
How is the taxable value determined under Imposto de Selo for buildings with multiple independent units not under horizontal property regime?
For buildings with multiple independent units not under horizontal property regime (vertical property), the taxable value determination under Imposto de Selo was disputed in this case. The Tax Authority's position was to consider the total patrimonial value of the property as a single unit (€3,820,940 in this case). However, the claimant argued that Article 67(2) of the Stamp Duty Code requires subsidiary application of MPTC rules. Under MPTC Articles 7(2)(b) and 12(3), each storey or unit capable of independent use must be registered separately with its own taxable patrimonial value. The claimant contended that the same valuation methodology used for Municipal Property Tax—individual TPV per independent unit—should apply for stamp duty purposes, treating vertical property identically to horizontal property fractions.
Can a taxpayer challenge Stamp Tax assessments on vertical property through CAAD tax arbitration?
Yes, taxpayers can challenge Stamp Tax assessments on vertical property through CAAD tax arbitration, as demonstrated by Process 849/2014-T itself. The claimant successfully filed a request for arbitral tribunal constitution under Article 10 of Decree-Law 10/2011 (Legal Framework for Tax Arbitration) on December 30, 2014. The request sought annulment of stamp duty assessments totaling €33,219.30 made under Verba 28.1 of the TGIS for 2013, as well as annulment of the decision rejecting the administrative complaint filed against those assessments. The arbitral tribunal was duly constituted on March 10, 2015, confirming that CAAD provides a valid jurisdictional avenue for challenging stamp tax assessments on vertical property ownership structures.
What is the difference between vertical and horizontal property for purposes of Verba 28.1 TGIS stamp duty liability?
For purposes of Verba 28.1 TGIS stamp duty liability, vertical property refers to buildings owned in full ownership with multiple storeys or units capable of independent use, each with separately registered taxable patrimonial values, but not legally constituted under a horizontal property regime. Horizontal property involves legally divided autonomous fractions with formal separate ownership. The key dispute in Process 849/2014-T was whether these structures should receive identical tax treatment. The claimant argued that MPTC Articles 7(2)(b) and 12(3) mandate the same registration and taxation rules for both: each independent unit receives its own TPV regardless of legal ownership structure. The Tax Authority countered that vertical property under full ownership should be treated as a single taxable entity, unlike horizontal property fractions which are separately owned and taxed based on individual fraction values.
What was the outcome of CAAD Process 849/2014-T regarding the €1,000,000 threshold for residential property stamp tax?
The document excerpt from CAAD Process 849/2014-T does not include the tribunal's final decision regarding the €1,000,000 threshold for residential property stamp tax under Verba 28.1. The case presentation shows the claimant's comprehensive arguments that the threshold should apply to individual units (none exceeding €1,000,000) rather than aggregate property value (€3,820,940 total). The claimant cited legislative intent from Law 55-A/2012's parliamentary works indicating the tax targeted 'high-value properties intended for residential purposes'—individual houses or fractions exceeding €1,000,000—not multi-unit buildings valued in aggregate. The claimant also emphasized that MPTC subsidiary application and fiscal system coherence required treating vertical property units identically to horizontal property fractions. However, the arbitral tribunal's reasoning and ultimate ruling are not provided in the available excerpt.