Stamp Tax on Building Land: CAAD Rules on Verba 28.1 TGIS Applicability (86/2015-T)

ARBITRAL DECISION

I. REPORT

A…, LDA., with registered office at Rua da …, …, …, holding the single registration and identification number for legal entities …, hereinafter simply designated as the Claimant, filed a request for constitution of an arbitral tribunal in tax matters and a request for arbitral pronouncement, pursuant to the provisions of articles 2, no. 1, paragraph a) and 10, no. 1, paragraph a), both of Decree-Law no. 10/2011, of 20 January (Legal Framework for Tax Arbitration, hereinafter abbreviated as RJAT), petitioning for a declaration of illegality and the consequent annulment of the tax assessment act for Stamp Tax (IS), relating to the year 2012, in the total amount of € 16,176.90, as well as a judgment condemning the Tax Authority (AT) to refund to the Claimant the amount of stamp tax paid and to pay compensatory interest until reimbursement of the sum owed.

To substantiate its request, it alleges, in summary:

a) The Claimant was notified of the stamp tax assessment act relating to the year 2012;

b) The assessment referred to in the preceding subparagraph concerns a land for construction owned by the Claimant, registered in the urban property register of the parish and municipality of …, under article …;

c) Such assessment was made pursuant to item 28.1 of the General Table of Stamp Tax (TGIS);

d) The urban property subject to assessment consists of a "land for construction," and is not "a property with residential use";

e) The material reality of the land in question is reflected in its property register description: "lot of land intended for urban construction";

f) A "lot of land for construction" is not "a property with residential use," neither from a material nor from a legal perspective;

g) The provision contained in item 28.1 of the TGIS, in the wording in force at the date of the facts, applies solely and exclusively to urban properties with residential use, with lands for construction falling outside its scope of application;

h) Article 41 of the Property Tax Code (CIMI) is not applicable to the situation at hand insofar as it refers to "the use coefficient (Ca) depends on the type of use of built properties";

i) A land for construction is not a built property;

j) In the present case, the use of the land is not residential because it concerns land with no construction whatsoever and, as such, incapable of residential use;

k) The assessment of stamp tax is illegal and cannot be maintained in the legal order, by violation of the principle of tax legality, enshrined in article 103 of the Constitution;

l) Although the use coefficient for residential purposes was considered for the purposes of calculating the taxable property value, the existence of any residential use cannot be presumed;

m) The land for construction, on which the Stamp Tax assessment in question was made, does not fall within the provision of item 28.1 of the TGIS.

The Claimant attached fourteen (14) documents and did not list any witness.

In its request for arbitral pronouncement, the Claimant chose not to appoint an arbitrator; accordingly, pursuant to the provisions of article 6, no. 1 of the RJAT, the undersigned was appointed by the Ethics Council of the Administrative Arbitration Center, and the appointment was accepted in accordance with legal provisions.

The arbitral tribunal was constituted on 20 April 2015.

Notified in accordance with the terms and for the purposes of the provisions of article 17 of the RJAT, the Respondent filed a response, defending itself by exception and by objection, alleging, in summary, the following:

By way of exception:

a) The Claimant is not challenging a tax assessment act, but rather the payment of three installments contained in the collection notices no.s 2013 …, 2013 … and 2013 …;

b) The object of the proceedings is the annulment not of a tax assessment act, but rather of these collection notices;

c) This matter is not included in the provision delimiting the jurisdiction of arbitral tribunals, namely in article 2 of the RJAT;

d) The request for arbitral pronouncement exceeds the jurisdiction of the arbitral tribunal, and this tribunal is incompetent to review the legality of a mere collection notice;

e) The Claimant identifies as the challenged acts the collection documents no.s 2013 …, 2013 … and 2013 …;

f) The Stamp Tax provided for in item 28.1 of the TGIS is assessed annually, and payment in installments is nothing more than a collection technique for the tax;

g) Given that there is a single assessment and its payment is made in installments, it is not permitted to challenge a single installment or collection document in that partial amount;

h) Therefore, the collection documents are not challengeable in themselves.

By way of objection:

a) It is the understanding of the Tax Authority that the property in question in the present case has the legal nature of a property with residential use;

b) In the absence of any definition of the concepts of urban property, land for construction, and residential use, in the context of stamp tax, one must resort to the provisions of the CIMI, namely those contained in articles 2 and 6 of that Code;

c) The notion of use of the urban property is found in the section relating to the valuation of immovables;

d) The use of the immovable (aptitude or purpose) is a coefficient that contributes to the valuation of the immovable in the determination of taxable property value, applicable to lands for construction;

e) The concept of "properties with residential use," for the purposes of the provision in item 28 of the TGIS, comprises both built properties and lands for construction;

f) The legislator does not refer to "properties intended for residence," having instead opted for the notion of "residential use";

g) Item 28 of the TGIS applies to the ownership, usufruct, or right of superficies of urban properties with residential use, whose taxable property value contained in the register, pursuant to the CIMI, equals or exceeds € 1,000,000.00, that is, it applies to the value of the immovable;

h) The tax assessment acts challenged do not violate any legal or constitutional provision and should be maintained in the legal order.

The Respondent attached a copy of the administrative file and did not list any witness.

In response to the exceptions raised by the Tax Authority, the Claimant alleged that it requested the review of the legality of the stamp tax assessment notices, constituted by documents no.s 1, 2, and 3 of the initial request, as these were the only documents formalizing the assessment act whose legality review and annulment is requested and of which it was notified, for which reason it concludes that the exceptions raised are without merit.

Given the position assumed by the parties and the absence of need for additional evidence production, the holding of the meeting referred to in article 18 of the RJAT was dispensed with, and the parties submitted written submissions, in which they maintained the positions initially defended.

II. PRELIMINARY MATTERS:

The Arbitral Tribunal is duly constituted.

The parties have legal personality and capacity, are legitimate, and are duly represented.

The proceedings are not affected by any defects that would affect their validity.

III. ISSUES TO BE DECIDED:

In the present proceedings, the issues to be decided are:

a) To rule on the exception of incompetence of the arbitral tribunal;

b) To rule on the exception of non-challengeability of the collection notices;

c) To determine whether, for the purposes of the application of item 28.1 of the TGIS annexed to the Stamp Tax Code, in the wording in force at the date of the facts, a land for construction is considered as a property with residential use.

IV. FINDINGS OF FACT:

a. Facts proved:

With relevance to the decision to be rendered in the present proceedings, the following facts were established as proved:

1. Registered in the urban property register under article …, in favor of the Claimant, is the urban property situated at Rua de …, …-… …, parish and municipality of ….;

2. The property referred to in 1 above has a taxable property value of € 1,617,690.00, is registered in the register as a "land for construction," and is described as "lot of land intended for urban construction";

3. On 21/03/2013, the Tax Authority assessed, pursuant to item 28.1 of the TGIS annexed to the Stamp Tax Code, stamp tax on the said immovable, for the year 2012, in the total amount of € 16,176.90;

4. The Claimant was notified of the three installments to be paid of the IS assessed by the Tax Authority, corresponding to collection documents no.s 2013 …, 2013 … and 2013 …, in the amount of € 5,392.30 each;

5. Notified of the 1st installment of stamp tax, the Claimant filed, on 29/04/2013, at the Tax Office of …, an administrative complaint, to which was assigned the number … 2013 …, having requested the annulment of the tax assessment act;

6. By letter dated 21/05/2013, the Claimant was notified of the draft decision denying the administrative complaint and to exercise, if desired, the right of prior hearing;

7. On 17/06/2013, the Claimant exercised the right of prior hearing;

8. By letter dated 20/06/2013, the Claimant was notified of the order denying the administrative complaint filed, issued on 19/06/2013;

9. On 24/07/2013, the Claimant filed a hierarchical appeal of the decision denying the request for annulment of the stamp tax assessment, made in the context of the administrative complaint proceeding … 2013 …;

10. Notified of the 2nd installment of stamp tax, the Claimant filed, on 17/10/2013, at the Tax Office of …, an administrative complaint, to which was assigned the number … 2013 …, having requested the annulment of the tax assessment act;

11. By letter of 27/11/2013, the Claimant was notified of the draft decision rejecting summarily the administrative complaint … 2013 … and to exercise, if desired, the right of prior hearing;

12. On 18/12/2013, the Claimant exercised the right of prior hearing, within the context of the administrative complaint proceeding … 2013 …;

13. Notified of the 3rd installment of stamp tax, the Claimant filed, on 26/12/2013, at the Tax Office of …, an administrative complaint, to which was assigned the number … 2014 …, having requested the annulment of the tax assessment act;

14. On 30/12/2013, an order was issued rejecting summarily the administrative complaint filed within the context of the proceeding … 2013 …;

15. By letter of 16/01/2014, the Claimant was notified of the draft decision rejecting summarily the administrative complaint … 2014 … and to exercise, if desired, the right of prior hearing;

16. On 05/02/2014, the Claimant exercised the right of prior hearing, within the context of the administrative complaint proceeding identified in the preceding point;

17. By letter of 06/02/2014, the Claimant was notified of the order rejecting summarily the administrative complaint filed within the context of the proceeding identified in point 15 above;

18. On 08/01/2015, the Claimant was notified of the decision denying the hierarchical appeal filed;

19. The Claimant paid the assessed tax, increased by default interest and costs, in the total amount of € 16,809.99.

b. Facts not proved:

With interest for the proceedings, there is no factual matter not proved.

c. Grounds for the findings of fact:

The conviction regarding the facts established as proved was based on the documentary evidence attached by the Claimant, indicated with respect to each of the points, whose authenticity and adherence to reality was not contested by the Respondent.

V. ON THE LAW:

a. On matters of exception:

Since, although the Respondent has separated out the exceptions invoked, it is verified that the facts invoked to support one and the other are the same, they will be addressed simultaneously here.

Thus,

The Tax Authority bases its contention, with regard to the exception of incompetence of the tribunal, on the fact that what was challenged was not a tax assessment act, but rather the payment of three installments of stamp tax embodied in collection notices no.s 2013 …, 2013 … and 2013 ….

The object of the proceedings corresponds, thus, from the Tax Authority's perspective, not to the annulment of a tax assessment act, but rather of collection notices.

Now, according to the Tax Authority, this matter is not subsumed within the scope of jurisdiction of tax arbitral tribunals, provided for in article 2 of the RJAT, and the object of the specific request for arbitral pronouncement exceeds the scope of jurisdiction of the arbitral tribunal.

For its part, with regard to non-challengeability, the Tax Authority contends that, given that stamp tax is assessed annually and consists of a single act, the law does not permit challenge of a single installment or collection document, and therefore considers the collection documents submitted by the Claimant to be non-challengeable.

In response to the exceptions raised, the Claimant rebuts by alleging, on the one hand, that the object of the request is the tax assessment act and not the collection notices, and on the other hand, invoking that it was not notified of any other document that formalized the assessment act whose legality review and annulment is requested, other than the referred collection notices, for which reason it concludes that both preliminary issues raised lack merit.

Let us examine.

Article 2, no. 1, paragraph a) of the RJAT provides that arbitral tribunals are competent to review claims for declaration of illegality of tax assessment acts, self-assessments, withholdings at source, and payments on account.

For its part, with regard to the binding of the tax administration to the jurisdiction of arbitral tribunals, article 4, no. 1 of the said framework provides that this depends on a regulation of the Government members responsible for the areas of finance and justice.

The jurisdiction of the arbitral forum is, thus, delimited by the regulation binding the Tax Administration to the jurisdiction of the Administrative Arbitration Center (Regulation no. 112-A/2011, of 22 March).

Pursuant to article 2 of the indicated Regulation, the General Directorate of Taxes and the General Directorate of Customs and Special Consumption Taxes bind themselves to the jurisdiction of arbitral tribunals operating in the CAAD that have as their object the review of claims relating to taxes whose administration is entrusted to them, referred to in no. 1 of article 2 of Decree-Law no. 10/2011, of 20 January (RJAT), in which are expressly included claims for declaration of illegality of tax assessment acts, self-assessments, withholdings at source, and payments on account.

It is concluded, thus, that the tax arbitral proceeding has as its object, directly or indirectly, the tax assessment act, as the act of determination of the quantitative amount of tax to be paid (tax collection), by application of a rate to the taxable base.

The review of the exceptions raised depends, therefore, on the question of whether the Claimant is challenging the stamp tax assessment act or whether, instead, it is merely challenging each of the stamp tax installments individually.

Now, in cases where the tax must be paid in installments, the assessment is notified to the taxpayer together with the notification to pay each installment, and can only be challenged in its entirety and not installment by installment[1].

In this regard, the distinguished Professor José Casalta Nabais[2] elucidates: "Assessment in the broad sense, that is, as the set of all operations intended to determine the amount of tax, comprises: 1) The subjective assessment intended to determine or identify the taxpayer or obligated party in the tax legal relationship, 2) The objective assessment through which the taxable or taxable base of the tax is determined and, likewise, the rate to be applied, in the case of multiple rates, is determined, 3) Assessment in the strict sense reflected in the determination of tax collection through application of the rate to the taxable or taxable base, and 4) the (possible) reductions to the tax collection."

For each tax event, there will, in principle, be a single assessment, by which the tax collection to be paid will be determined.

In these terms, no. 7 of article 23 of the Stamp Tax Code provides that "in the case of tax due under the situations provided for in item no. 28 of the General Table, the tax is assessed annually (…)" applying, with the necessary adaptations, the rules contained in the CIMI."

Similarly, no. 5 of article 44 of the Stamp Tax Code further provides that "where the tax referred to in item no. 28 of the General Table is to be assessed, the tax is paid within the timeframes, terms, and conditions defined in article 120 of the CIMI."

That is, pursuant to no. 2 of article 113 of the CIMI, "the assessment (…) is made in the months of February and March of the following year," and the tax is to be paid in three installments in the months of April, July, and November, given its amount – cf. subparagraph c), no. 1 of article 120 of the CIMI.

From the conjugation of the legal provisions cited above, it is derived that stamp tax is assessed annually, and payment in installments is nothing more than a collection technique for the tax and not a partial payment thereof, as referred to in the arbitral decision rendered in the context of proceeding no. 408/2014-T, available at www.dgsi.pt, cited by the Tax Authority.

Therefore, the assessment is only one and only it constitutes a harmful act, capable of being challenged.

Having said that,

From the analysis of the initial request, it appears that the Claimant requests the constitution of the sole arbitral tribunal with a view to "the declaration of illegality of the tax assessment act for Stamp Tax issued with the numbers 2013/… (Doc. 1); 2013/… (Doc. 2) and 2013/… (Doc. 3) relating, respectively, to the 1st, 2nd, and 3rd installments of the said Stamp Tax," petitioning, finally, the "declaration of illegality of the tax assessment acts for Stamp Tax sub judice" and its consequent annulment.

That is, the declaration of illegality of the tax assessment acts for Stamp Tax is requested, to which correspond the respective payment installments.

From the foregoing, it appears that, contrary to what the Tax Authority states, the object of the request for arbitral pronouncement is the tax assessment act and not each of the stamp tax installments considered individually.

This is evident from the fact that the Claimant itself, in delimiting the object of the arbitral action, circumscribes the institution of the respective proceeding to the annulment of the stamp tax assessment act relating to the year 2012, indicating as the value of the economic utility of the request the total value of the stamp tax assessment (€ 16,176.90).

Thus, although the Claimant associates the tax assessment act with the three stamp tax installments, proceeding to their attachment and identification, the fact remains that it does not circumscribe the object of the request for arbitral pronouncement to any of the stamp tax installments in particular, but rather to the stamp tax assessment considered in its totality.

Thus falls away the argumentation invoked by the Tax Authority with regard to the incompetence of the arbitral tribunal, as well as the non-challengeability of the acts, grounded in the alleged challenge by the Claimant of mere collection notices and not the tax assessment act itself.

In light of the foregoing, and without need for further consideration, the exceptions of material incompetence of the arbitral tribunal and non-challengeability of the acts are judged to lack merit.

b. On the merits:

With the findings of fact thus established, it now falls to determine, by reference thereto, the applicable law.

The Claimant invokes that lands for construction are outside the scope of application of the provision contained in Item 28.1 of the TGIS, and that a "lot of land for construction" cannot be considered, for the purposes of subjection to IS, a "property with residential use," as they are materially and legally distinct realities.

Therefore, given that "a land for construction" is not a property with residential use, as provided in the said provision of tax incidence, the assessment act does not fall within the provision of item 28.1 of the TGIS annexed to the Stamp Tax Code.

To the contrary, the Respondent alleges that the property on which the assessment was made has the legal nature of a property with residential use, in that the concept of "properties with residential use," for the purposes of the provision in item 28.1 of the TGIS, comprises both built properties and lands for construction.

In this sense, the Tax Authority argues for the maintenance of the assessment act that is the object of the request for arbitral pronouncement.

It falls to decide.

As to the objective scope of taxation, no. 1 of article 1 of the Stamp Tax Code provides that stamp tax applies to all acts, contracts, documents, titles, papers, and other legal facts or situations provided for in the General Table.

Article 4 of Law no. 55-A/2012, of 29 October, added to the TGIS, annexed to the Stamp Tax Code, approved by Law no. 150/99, of 11 September, item no. 28, with the following wording:

"28 - Ownership, usufruct, or right of superficies of urban properties whose taxable property value contained in the register, pursuant to the Property Tax Code (CIMI), equals or exceeds € 1,000,000 - on the taxable property value used for the purpose of the Property Tax:

28.1 - For a property with residential use - 1%;

28.2 - For a property, when the obligated parties who are not natural persons are residents in a country, territory, or region subject to a clearly more favorable tax regime, contained in the list approved by regulation of the Minister of Finance - 7.5%."

Having said that,

In item 28.1 of the TGIS added by Law no. 55-A/2012, of 29 October, an innovative concept was used that is not utilized by any other tax legislation: the concept of property with residential use.

Neither in the CIMI, indicated by the said Law no. 55-A/2012 as the regulation of subsidiary application with respect to the tax introduced by the addition of item 28 to the TGIS, is any such defined concept used.

Indeed, the CIMI defines the concept of property, defines the various types of properties, and identifies the species of urban properties.

Thus,

Pursuant to article 2 of the CIMI, "property is any parcel of land, including waters, plantations, buildings, and constructions of any nature incorporated into or situated on it, 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."

Properties are divided into rural (article 3), urban (article 4), or mixed (article 5), with urban properties subdivided into 4 species: residential, commercial, industrial, or for services; lands for construction and others (article 6).

No. 3 of article 6 of the CIMI clarifies that lands for construction are considered to be "lands situated within or outside an urban agglomeration, for which a building or construction license or authorization has been granted, prior notification admitted, or favorable prior information issued for a subdivision or construction operation, and also those that have been declared as such in the acquisition title."

Combining the indicated provisions, it is verified that there is no reference in any of the indicated rules to property with residential use.

Therefore, in order to determine what constitutes a property with residential use, an exercise of interpretation must be undertaken, resorting to the general rules of legal hermeneutics contained in article 9 of the Civil Code.

Thus, interpretive activity must begin with an analysis of the letter of the law, which constitutes the limit of interpretation, and one cannot consider an interpretation that does not have in the letter of the law a minimum of verbal correspondence, even if imperfectly expressed.

Now, as results from the legal provisions already cited, the concept of property with residential use is absolutely innovative in the Stamp Tax Code, not existing in any other tax law.

The closest concept is that of "residential property," defined in no. 2 of article 6 of the CIMI as being the building or construction licensed for such purpose or, in the absence of a license, that has this as its normal purpose.

The truth, however, is that the legislator, in item 28.1 of the TGIS annexed to the Stamp Tax Code, did not use the expression "residential property" but rather "property with residential use."

Therefore, starting from the principle – which is taken as certain – that the legislator knew how to express itself in adequate terms, one cannot defend that these distinct expressions have the same meaning. Instead, and through application of the principles enshrined in nos. 2 and 3 of article 9 of the Civil Code, it must necessarily be held that, in using distinct expressions, the legislator intended to encompass different realities.

Let us then focus on the word "use," noun form of the verb "to use."

This concept has already been exhaustively analyzed by diverse and learned case law rendered by this arbitral center[3], for which reason we dispense with dissecting this concept, accepting and holding that it consists in the action of destining something to a determined use.

Thus, property with "residential use" would be that which is intended for residence.

Indeed, this conclusion is reached equally through reconstruction of the legislative intent, taking into account the unity of the legal system, the circumstances in which the law was drafted, and the specific conditions of the time in which it is applied, as imposed by the indicated article 9 of the Civil Code.

First of all, it is important to note that the introduction of this item 28 into the TGIS occurred at a time when, given the absolute need to address the crisis that had been installed, it was imperative to collect the maximum possible revenue, which was intended to be achieved, namely, through the taxation of so-called "luxury" immovables.

The intention was, therefore, with the introduction of the taxation provided for in item 28 of the TGIS, to tax wealth, externalized in the ownership, usufruct, or right of superficies of "luxury" urban properties with residential use.

That only properties with residential use are included in this new taxation results explicitly from the Statement of Reasons of the Bill no. 96/XII, in which it is stated that, with a view to strengthening the "principle of social equity in austerity, ensuring an effective sharing of the sacrifices necessary to meet the adjustment program," the legal instrument to be approved "broadens the taxation of income from capital and property, encompassing equitably a broad set of sectors of Portuguese society."

Thus, it can still be read in the said Statement of Reasons that a "tax is created under the Stamp Tax applying to urban properties with residential use whose taxable property value equals or exceeds one million euros" (emphasis ours).

Already in the context of the general discussion of the said Bill, it can be read:

"First, the Government proposes the creation of a special tax to tax high-value urban residential properties. This is the first time that Portugal has created special taxation on high-value properties intended for residence. This tax will be 0.5% to 0.8% in 2012, and 1% in 2013, and will apply to houses with a value equal to or greater than 1 million euros" (emphasis ours).

There can be no doubt, therefore, that the intent of the legislator was to tax houses, residential urban properties, properties intended for residence, that is, properties that are already effectively intended for residential purposes.

Established that the concept of "property with residential use" is that property effectively intended for, devoted to, residence, it now becomes important to analyze the actual scope of such a concept. In other words, it is necessary to verify whether such residential use, for the purpose of the application of item 28.1 of the TGIS, must be present or may be future, that is, whether it will cover only properties that are already effectively devoted to residence or also properties that, being land for construction, do not yet have any defined purpose.

The distinction becomes especially acute when we note that a land for construction may be intended, in the future, to construct one or more residences, so that if future uses that may come to be given to the property are included in the concept of "residential use," it could, in this case, be argued for the application of item 28.1 of the TGIS to lands for construction.

This understanding, however, has, in our view, no adherence to the letter and spirit of the law.

Indeed, when analyzing the literal content of item 28.1 of the TGIS, it seems manifest to exclude its application to properties whose intended use is unknown, since these, manifestly and from any perspective, cannot be considered intended for residential purposes.

For, given that the intended use of the property in question is not known, it could equally be intended for residence, commerce, industry, or services, and it is certain that item 28.1 will only be applicable to properties with residential use and not to properties with any other use, designedly economic.

In the case at hand, examining the facts proved – cf. point 2 – it is verified that the property in question is a land for construction that is described in its property register and cadastral record as a "lot of land intended for urban construction," so it is manifest that item 28.1 of the TGIS is not to be applied.

Even if its intended use were known, the same does not result in that it is intended for residential construction, but solely and exclusively for urban construction, which may be directed to future commercial, industrial, or service units.

But even if the property in question in the present proceedings were intended for the possible construction of residences, it would not be covered by the application of item 28.1 of the TGIS.

This is because, from the conjugation of the provisions inherent in item 28.1 of the TGIS and in no. 3 of article 6 of the CIMI, it results, without any margin for doubt, that the use must be effective and not merely future or probable.

In sum, a land for construction whose intended use, although known, is not effective, as is the case of the property in question in the present proceedings, cannot be considered as a property with residential use for the purpose of the application of item 28.1 of the TGIS annexed to the Stamp Tax Code.

Neither should it be said, as the Respondent does, that the legal identity, for the purposes of the application of item 28.1 of the TGIS, between lands for construction and properties with residential use results clearly from the fact that the legislator determines the application to lands for construction of the same methodology for valuation of properties in general.

It is true that article 45 of the CIMI determines the application to lands for construction of the same valuation methods applicable to properties in general.

However, it cannot be omitted to note that such identity is limited to the valuation methodology and not to their classification.

As regards valuation, there is no doubt that the legislator mandates applying the same rules to both lands for construction and residential properties.

But as for the classification of the property, nothing in the law or in legislative intent in general permits us to conclude that such identity exists.

Indeed, as, in our view, is well stated in a judgment rendered by the Supreme Court of Justice, "it would be strange, moreover, if the determination of the scope of the tax incidence provision of item no. 28 of the General Table of Stamp Tax were to be found, after all, in the provisions for determination of the taxable property value of the Property Tax Code, and if the terminological imprecision of the legislator in the drafting of that rule were, in the end, clarified and finally explained by way of an indirect and ambiguous reference to the use coefficient established by the legislator with regard to built properties (article 41 of the Property Tax Code)"[4].

For this reason, and following closely case law already established by this arbitral center[5], it is to be concluded that "the interpretive elements available, including the «circumstances in which the law was drafted and the specific conditions of the time in which it is applied,» clearly point to the fact that it was not intended to encompass within the scope of incidence of item 28.1 situations of properties that are not yet devoted to residence, namely lands for construction held by companies," as is the case in the present proceedings.

But not only has the case law of this arbitral tribunal pronounced itself in this sense. In judgments rendered recently, the Supreme Administrative Court has decided that "given that the legislator has not defined the concept of «(urban) properties with residential use,» and given that article 6 of the Property Tax Code – subsidiarily applicable to Stamp Tax provided for in the new item no. 28 of the General Table – makes a clear distinction between «urban residential properties» and «lands for construction,» these cannot be considered, for the purposes of incidence of Stamp Tax (Item 28.1 of the TGIS, in the wording of Law no. 55-A/2012, of 29 October), as urban properties with residential use"[6].

And that this is so results clearly from the fact that, in the last amendment made to item 28.1 of the TGIS annexed to the Stamp Tax Code, by Law no. 83-C/2013, of 31 December, which approved the State Budget for 2014, lands for construction were expressly included here. Note, however, that even with this amendment, not all lands for construction are subject to taxation as a result of the application of item 28.1 of the TGIS annexed to the Stamp Tax Code, but only and exclusively those lands for construction whose building, authorized or planned, is for residence.

Given that the indicated 2014 State Budget Law is not an interpretive law, it seems evident that, if the legislator felt the need to include in this item 28.1 lands for construction, it is because previously such lands were not included in the same.

Any other interpretation of item 28.1 of the TGIS annexed to the Stamp Tax Code, in the wording given by Law no. 55-A/2012, of 29 October, has the minimum legal support, and cannot be upheld.

It is verified, thus, that the assessment in question in the present proceedings is clearly illegal, as it has no legal foundation or sustenance.

Thus, given that lands for construction are not included in item 28.1 of the TGIS annexed to the Stamp Tax Code, in the wording given by Law no. 55-A/2012, of 29 October, and that these cannot be classified, for this purpose, as properties with residential use, it seems evident that these cannot be the subject of taxation under this item.

Therefore, given the absence of legal basis for the assessment acts made, their annulment is imperative.

VI. DISPOSITIF:

In light of the foregoing, it is decided:

a) The dilatory exception of material incompetence of this arbitral tribunal is judged to lack merit;

b) The invoked dilatory exception of non-challengeability of the stamp tax collection notices is judged to lack merit;

c) The claim for declaration of illegality of the Stamp Tax assessment act in the total amount of € 16,176.90 is judged to be well-founded, with the consequent annulment thereof and of the payment notices issued;

d) The claim for judgment condemning the Tax Authority to pay the refund of the tax paid by the Claimant, as well as compensatory interest, is judged to be well-founded.

The value of the case is fixed at € 16,176.90, pursuant to subparagraph a) of no. 1 of article 97-A of the Code of Tax Procedure and Process, applicable by virtue of subparagraphs a) and b) of no. 1 of article 29 of the RJAT and of no. 2 of article 3 of the Regulation of Costs in Tax Arbitration Proceedings.

The value of the arbitration fee is fixed at € 1,224.00, pursuant to Table I of the Regulation of Costs in Tax Arbitration Proceedings, as well as to the provisions of no. 2 of article 12 and no. 4 of article 22, both of the RJAT, and of no. 3 of article 4 of the cited Regulation, to be paid by the Respondent as the unsuccessful party.

Register and notify.

Lisbon, 25 September 2015.

The Arbitrator,

Alberto Amorim Pereira

Text prepared by computer, pursuant to no. 5 of article 131 of the Code of Civil Procedure, applicable by reference of subparagraph e) of no. 1 of article 29 of Decree-Law no. 10/2011, of 20/01.

[1] Cf. arbitral decision rendered in the context of proceeding no. 27/2015-T, available at www.caad.org.pt.

[2] In "TAX LAW," 3rd Edition, Almedina, 2005, p. 318 apud arbitral decision rendered in the context of proceeding no. 736/2014-T, available at www.caad.org.pt.

[3] See, among others, the decisions rendered in the context of proceedings 48/2013-T; 50/2013-T and 132/2013-T, all available at www.caad.org.pt.

[4] Decision of 09/04/2014, proceeding no. 1870/13, available at www.dgsi.pt.

[5] Proceeding no. 53/2013-T, available at www.caad.org.pt.

[6] Decisions of 23/04/2014, proceeding no. 0272/14, and of 09/04/2014, proceedings no.s 1870/13, already cited, and 48/14, all at www.dgsi.pt.