Process: 90/2015-T

Date: September 25, 2015

Tax Type: Selo

Source: Original CAAD Decision

Summary

This arbitral decision concerns a challenge by a real estate company against seven stamp duty (Imposto de Selo) assessment acts issued in 2014 relating to individual floors of an urban property located in Lisbon. The dispute centers on the application of Verba 28.1 of the Tabela Geral do Imposto de Selo (TGIS), which imposes stamp duty on high-value urban properties. The claimant argued that the tax assessments on the separate floors were illegal and sought their annulment along with reimbursement of amounts paid plus default interest. The Tax and Customs Authority raised a preliminary exception challenging the competence of the CAAD arbitral tribunal to hear the case, arguing that the tribunal lacked jurisdiction over disputes involving vertical property classifications and the specific nature of the challenged acts. The procedural history reveals that both parties waived the oral hearing and proceeded with written submissions. The central legal issue involves whether stamp duty can be assessed separately on individual floors constituting vertical property units within a single urban building, and whether such assessment acts are subject to arbitral review under the RJAT framework. The Tax Authority contended that either the arbitral tribunal was incompetent to decide the matter or that the challenged acts were not subject to judicial review. The tribunal had to first resolve the jurisdictional exception before addressing the substantive merits of whether the stamp duty assessments complied with Verba 28.1 of the TGIS and applicable constitutional provisions.

Full Decision

ARBITRAL DECISION [1]

Claimant – Real Estate Company 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 27 April 2015, with respect to the process identified above, decided as follows:

1. REPORT

1.1

Real Estate Company A… (hereinafter referred to as the "Claimant"), with registered office at Av. .., …, 1st A, …-… Lisbon, Legal Entity no. ..., filed a request for arbitral pronouncement and constitution of a single arbitral tribunal on 12 February 2015, pursuant to the provisions of Article 4 and No. 2 of Article 10 of Decree-Law No. 10/2011, of 20 January [Legal Framework for Arbitration in Tax Matters (RJAT)], in which the Tax and Customs Authority is the Respondent (hereinafter referred to as the "Respondent").

1.2

The Claimant requests that the Arbitral Tribunal:

1.2.1

Declare "(…) the illegality of the tax assessment acts for stamp duty (No. 2014 …, No. 2014 …, No. 2014 …, No. 2014 …, No. 2014 …, No. 2014 … and No. 2014 …) on the floors constituting an urban property located at Avenue …, number …, in Lisbon (…)",

1.2.2

"(…) ordering the annulment of the tax acts (…) with the legal consequences (…)".

1.3

The request for constitution of the Arbitral Tribunal was accepted by His Excellency the President of the CAAD and automatically notified to the Respondent on 16 February 2015.

1.4

The Claimant did not proceed with the appointment of an arbitrator, so pursuant to the provisions of Article 6, No. 2, paragraph a) of the RJAT, the undersigned was appointed as arbitrator by the President of the Deontological Council of the CAAD, and the appointment was accepted within the period and terms legally provided.

1.5

On 2 April 2015, both Parties were duly notified of this appointment, and neither expressed a desire to refuse the appointment of the arbitrator, in accordance with the provisions of Article 11, No. 1, paragraphs a) and b) of the RJAT combined with Articles 6 and 7 of the Code of Ethics.

1.6

Thus, in accordance with the provisions of paragraph c), No. 1 of Article 11 of the RJAT, the Arbitral Tribunal was constituted on 27 April 2015, and an arbitral order was issued on 28 April 2015, to notify the Respondent to, pursuant to Article 17, No. 1 of the RJAT, submit a response within a maximum period of 30 days and, if desired, request the production of additional evidence.

1.7

On 3 June 2015, the Tax and Customs Authority submitted its Response, defending itself by exception and objection and concluding that "(…) the exception to the incompetence of the arbitral tribunal should be judged as well-founded, or if not understood otherwise, the objection to the impugnability of the acts in question in the request for arbitral pronouncement should be considered well-founded, or, if not so decided, the present arbitral action should be judged unfounded, absolving the Respondent entity from the claim with the other legal consequences".

1.8

Additionally, the Respondent submitted, in the same procedural document as the Response, a request for waiver "of the holding of the meeting provided for in Article 18 of the RJAT, as well as the waiver of the holding of oral submissions".

1.9

However, having regard to the exception raised by the Respondent, both Parties were notified of the order of this Arbitral Tribunal, dated 9 June 2015 (notified to both Parties on 11 June 2015), to schedule the first meeting of the case, pursuant to Article 18 of the RJAT, for 30 June 2015, at 14:30, at the offices of the CAAD, to fulfil the purposes provided for in that article.

1.10

However, the Claimant submitted, on 15 June 2015, a Request responding to the matter of the exception raised by the Respondent in its Response, stating that "contrary to what the AT wishes to suggest, the Claimant impugns a tax assessment act for stamp duty", also noting that "(…) it impugned the assessment of the first and second instalment of stamp duty for 2013, which it did autonomously, in that the dates and periods of impugnation are autonomous" [2].

1.11

Also the Respondent, through a Request dated 15 June 2015, came to request "notification to the Claimant (…) to respond in writing to the exception raised in the Response (…) [3] within a period to be determined by the tribunal" and that the holding of written submissions be carried out in successive manner, "(…) within a period of 15 days, with the commencement of the period of the Respondent's submissions beginning from the notification of the Claimant's submissions".

1.12

By arbitral order dated 15 June 2015, the joinder of the procedural documents mentioned above in points 1.10. and 1.11. was admitted, and both Parties were invited to pronounce themselves, within a period of five days, on the possibility of waiver of the meeting previously scheduled for 30 June 2015 (see point 1.9., supra), being warned that, should this not occur, the said meeting would be rendered without effect and both Parties would be notified to "in this order and in successive manner, submit written submissions within a period of 15 days, with the period for the Respondent to commence upon notification of the joinder of the Claimant's submissions".

1.13

The Claimant responded on 22 June 2015 to the arbitral order of 9 June 2015, stating that it had no objection to the waiver of the holding of the meeting referred to in Article 18 of the RJAT.

1.14

The Respondent said nothing in timely manner with respect to the content of the arbitral orders identified above.

1.15

In these terms, by order of this Arbitral Tribunal, dated 25 June 2015 (notified to both Parties on 29 June 2015), it was decided:

1.15.1

To cancel the meeting previously scheduled for 30 June 2015 and waive its holding[4] (with the consequent waiver of the hearing of testimonial evidence presented by the Claimant, as it was considered that the position of the Parties was fully defined in the case file and supported by the documentary evidence already attached);

1.15.2

Not to waive the presentation of submissions, so both Parties were notified to "in this order and in successive manner, submit written submissions within a period of 15 days, with the period for the Respondent to commence upon notification of the joinder of the Claimant's submissions";

1.15.3

To designate 25 September 2015 as the date for rendering the arbitral decision.

1.16

Finally, the Claimant was further warned that "until the date of rendering of the arbitral decision, it should proceed with the payment of the subsequent arbitral fee, pursuant to the provisions of No. 3 of Article 4 of the Regulation of Costs in Tax Arbitration Proceedings and communicate this payment to the CAAD" (which it did on 4 August 2015).

1.17

On 14 July 2015, the Claimant submitted written submissions, concluding that "the present impugnation should be judged as well-founded by proof and, consequently, the annulment of the assessment acts impugned should be decreed and, as a consequence, the amounts unduly paid should be returned to the Claimant, corresponding to the value of the impugned acts, including default interest".

1.18

On the same date, an arbitral order was issued (notified to both parties on 15 July 2015), to notify the Respondent of the presentation of submissions by the Claimant, so that it could comply with the content of the arbitral order of 25 June 2015 (see point 1.15.2, supra).

1.19

On 9 September 2015, the Respondent submitted written submissions defending that "the impugned tax acts, in terms of substance, did not violate any legal or constitutional provision, and should be maintained in the legal order", concluding, as in the Response submitted, that "the exception to the incompetence of the arbitral tribunal should be judged as well-founded, or if not understood otherwise, the objection to the non-impugnability of the acts in question in the request for arbitral pronouncement should be considered well-founded, or, if not so decided, the present arbitral action should be judged unfounded, absolving the (…) Respondent from the claim, with the other legal consequences".

2. CAUSE OF ACTION

The Claimant supports its claim, in summary, as follows:

2.1

"The Claimant is the owner of the urban property located at Avenue …, No. .., in Lisbon, described in the Land Registry Office of Lisbon, under sheet no. …, registered in the urban property matrix under article … (…) (…)".

2.2

The said urban property "comprises 7 (seven) floors and divisions with independent uses, whose taxable patrimonial value (VPT) was determined separately, pursuant to the provisions of Article 7°, No. 2, paragraph b) of the Urban Real Estate Tax Code", amounting to a total "of € 1,558,250.00".

2.3

This urban property "although being composed of various floors with completely independent use, was never constituted in the horizontal property regime", and each of the "independent floors has a taxable patrimonial value attributed (…) ranging between €37,010.00 and €257,670.00".

2.4

According to the Claimant, "at issue (…) are the (…) assessments of stamp duty of € 825.86 relating to the first floor (No. 2014 …), € 825.86 relating to the second floor (No. 2014 …), € 850.63 relating to the third floor (No. 2014 …), € 850.63 relating to the fourth floor (No. 2014 …), € 858.90 relating to the fifth floor (No. 2014 …), € 858.90 relating to the sixth floor (No. 2014 …) and € 185.05 relating to the seventh floor (No. 2014 …)". [5]

2.5

The Claimant continues stating that "the AT assessed stamp duty for each of those floors, with reference to the year 2013 (…) at the rate of 0.5%" because "the AT understands that there is a basis for the incidence of stamp duty, due to the fact that the sum of the VPT of the various floors (…) amounts to the value of € 1,558,250.00", although individually considered amounting to values between EUR 37,010.00 (relating to the seventh floor) and EUR 257,670.00 (relating to the fifth and sixth floors).

2.6

For the Claimant, "in the AT's understanding, for a property in vertical ownership, the criterion for determining the incidence of stamp duty is the total VPT of the floors and divisions intended for housing", a position that the Claimant understands to be "manifestly illegal and even unconstitutional" since "the subjection to stamp duty contained in item no. 28.1. of the TGIS is determined by the combination of two criteria - residential use and the VPT shown in the property matrix equal to or greater than € 1,000,000.00" whereby "in the case of an urban property with characteristics identical to those described in the present case, the subjection to stamp duty is determined not by the VPT of the property, but by the VPT attributed to each one of the floors or divisions".

2.7

Thus, the Claimant concludes that, as the legislator has made "no distinction between properties in vertical ownership and properties subject to the horizontal property regime", "it is illegal and unconstitutional to consider as the reference value the sum of the patrimonial values attributed to each one of the floors, in that it results in a clear violation of the principle of equality and fiscal proportionality".

2.8

In these terms, the Claimant concludes that "the acts of assessment by the tax authority are manifestly illegal" and, consequently, should be annulled.

3. RESPONSE OF THE RESPONDENT

3.1

The Respondent, in the response submitted, defended itself by exception and by objection as described below:

BY EXCEPTION

Lack of Competence of the Arbitral Tribunal

3.2

In this respect, the Respondent alleges that "the Claimant does not impugn a tax act, but impugns (…) the payment of an instalment (3rd) of a tax act contained in a document that is a collection notice" and that "the object of the case is the annulment not of a tax act (…), but rather of collection notices for the payment of the 3rd instalment of a tax".

3.3

Thus, for the Respondent, this matter "(…) is not (…) included (…) in the set of the rule that delimits the competence of tax arbitral tribunals (…)" and "the act subject of the request for arbitral pronouncement exceeds the competence of the Arbitral Tribunal", and therefore is "(…) incompetent to consider the claim formulated, which is the legality of a mere collection notice".

Non-Impugnability of the Acts

3.4

The Respondent continues, stating that "the Applicant identifies the impugned acts" which are collection documents in which it is stated that "the assessment that was at its origin was dated 17 March 2014", and verifying, according to the Respondent, that "what the Claimant impugns are not the assessment acts but the 3rd instalments relating to the payment of a unit value of tax".

3.5

According to the interpretation made by the Respondent, "the Stamp Duty referred to in item 28 of the TGIS is assessed annually, payment in instalments being nothing more than a collection technique for the tax and not a partial payment thereof", "which is why, the payment of one of the instalments of the assessment made pursuant to item 28.1 of the TGIS is not a partial payment of that assessment, but only a tax collection technique of the assessed tax".

3.6

In these terms, the Respondent concludes that, verifying that "there is a single assessment", its "payment (…) being made in instalments, which does not allow the impugnation of a single instalment or collection document in that partial value"[6], "(…) for which reason the exception invoked should be well-founded and the AT should be absolved from the claim".

BY OBJECTION

3.7

In terms of defence by objection, the Respondent invokes that "none of the arguments of the Claimant can be accepted for the following reasons":

3.7.1

"The Claimant is (…) the owner of a property in a regime of full ownership or vertical ownership, so there are no autonomous fractions to which the tax law can attribute the qualification of property" ("it derives from the notion of property in Article 2 of the IMI Code" that "only autonomous fractions of property in the horizontal property regime are considered as properties").

3.7.2

According to the Respondent, "to claim that the interpreter and applicator of tax law should apply, by analogy, to the regime of full ownership, the regime of horizontal property would be, at the very least, abusive and illegal".

3.7.3

On the other hand, according to the Respondent's defence, "(…) as provided by Article 11, No. 1 of the LGT which refers to the Civil Code which, in Article 10 regarding the application of analogy, determines that it will only be applicable in case of gaps in the law", tax law does not contain, according to the Respondent, "any gap".

3.8

Thus, according to the Respondent, "it cannot be accepted that it be considered, for the purposes of item 28.1 of the General Table attached to the Stamp Tax Code, that the parts susceptible to independent use have the same tax regime as autonomous fractions of the horizontal property regime, under pain of open violation of the principle of legality".

3.9

In fact, the Respondent continues, "the unit of urban property in vertical ownership composed of several floors or divisions is not (…) affected by the fact that all or part of those floors or divisions are susceptible to independent economic use" because "such property does not cease to be only one, and (…) its distinct parts are not legally equated to autonomous fractions in the horizontal property regime", "without prejudice to the regime of co-ownership, where applicable (…)".

3.10

For the Respondent, "the fact that the IMI has been calculated based on the taxable patrimonial value of each part of property with independent economic use does not equally affect the application of item 28°, No. 1, of the General Table" because "it results from the fact that the determinative 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 one of its parcels".

3.11

And the Respondent concluded that "any other interpretation would violate, in fact, the letter and spirit of item 28.1. of the General Table and the principle of legality of the essential elements of the tax provided for in Article 103, No. 2, of the Constitution of the Portuguese Republic (CRP)", and therefore "the impugned tax acts (…) did not violate any legal or constitutional provision, and should be maintained in the legal order".

3.12

Finally, the Respondent requested that "testimonial evidence be waived".

3.13

In these terms, the Respondent concluded its Response requesting that "(…) the exception to the incompetence of the arbitral tribunal should be judged as well-founded, or if not understood otherwise, the objection to the non-impugnability of the acts in question in the request for arbitral pronouncement should be considered well-founded, or, if not so decided, the present arbitral action should be judged unfounded, absolving the Respondent entity from the claim with the other legal consequences".

4. CONSIDERATION OF PRELIMINARY MATTERS – MATTER OF EXCEPTION

4.1

In accordance with the provisions of Article 608 of the Code of Civil Procedure (CPC), applicable by virtue of the provisions of Article 22 of the RJAT, "(…) the judgment shall first decide procedural matters that may determine the dismissal of the case, according to the order imposed by its logical precedence" and the judge "shall resolve all matters that the parties have submitted to its consideration, except those whose decision is prejudiced by the solution given to others (…)" (emphasis ours).

4.2

Having the Respondent invoked the exceptions identified below:

4.2.1

Lack of competence of the Arbitral Tribunal to consider the request for arbitral pronouncement filed by the Claimant;

4.2.2

Non-impugnability of the acts subject to the request for arbitral pronouncement.

It is necessary that this Arbitral Tribunal pronounce itself, previously, on the same.

4.3

First of all, it should be noted that the analysis of the two matters mentioned above will be very interlinked, as they condition each other reciprocally, that is:

4.3.1

Should it be understood that the Arbitral Tribunal is incompetent to consider the claim, it is because it is considered that the acts (collection notices) subject to the request for arbitral pronouncement are non-impugnable autonomously;

4.3.2

Should the said acts subject to the request for arbitral pronouncement (identified above in point 2.4.) be considered impugnable autonomously, then the Tribunal will also be competent to consider the said claim.

4.4

In this respect, as the determination of the competence of tribunals is a matter of public order and its consideration must precede that of any other matter, [as can be derived from the combined reading of the provisions of Articles 16 of the Tax Procedure Code (CPPT), 13 of the Administrative Tax Procedure Code (CPTA) and 96 of the CPC, subsidiarily applicable by referral from No. 1 of Article 29 of the RJAT], this exception must be analysed first, as if it is judged well-founded, the consideration of the merits of the case will be prejudiced, justified by a decision of dismissal of the case [Article 89, No. 2 of the CPTA, subsidiarily applicable by virtue of the provisions of Article 29, No. 1, paragraph c) of the RJAT].

Lack of Competence of the Arbitral Tribunal

4.5

In general terms, in accordance with the provisions of Article 2 of the RJAT, the competence of arbitral tribunals comprises "the declaration of illegality of acts of assessment of taxes, self-assessment, withholding at source and payment on account", as well as "the declaration of illegality of acts of determination of taxable matter when this does not give rise to the assessment of any tax, of acts of determination of taxable income and of acts of fixing patrimonial values". [7]

4.6

On the other hand, Article 95 of the General Tax Law (LGT) provides that "the interested party has the right to impugn or appeal from any act harmful to its rights and legally protected interests, in accordance with the forms of process prescribed by law", and may be harmful, in particular, "the assessment of taxes (…)".

4.7

In this respect, the Respondent came to defend that "the act subject of the request for arbitral pronouncement exceeds the competence of the Arbitral Tribunal" or rather, that it "is incompetent to consider the claim formulated, which is the legality of a mere collection notice".

4.8

In this regard, the Claimant came to state that "(…) it impugns a tax assessment act for stamp duty", because "in September 2014 (…) it was notified to proceed with the payment of the 3rd instalment of stamp duty which does not fail to constitute a tax act" isolated "and with autonomous periods of impugnation".

Non-Impugnability of the Acts

4.9

In these terms, if on the one hand it results from the normative framework transcribed above that, in general terms, the claim for declaration of illegality of assessment acts may be the subject either of judicial impugnation or of a request for arbitral pronouncement, the question that is important to consider here will be whether the impugnation "of each instalment autonomously, in that the dates and periods of impugnation are autonomous" may be the subject of arbitral pronouncement, as is maintained by the Claimant, or whether, on the contrary, as the Respondent argues, verifying that "there is a single assessment", and its "payment (…) being made in instalments", it does not allow "the impugnation of a single instalment or collection document in that partial value" (emphasis ours).

4.10

Indeed, the Claimant maintains that, in the case of taxes paid in more than one instalment (as is the case under analysis), each one of these can be the subject of autonomous impugnation, whose period commences after the payment of each one of them.

4.11

For the purpose of providing a response to the question outlined above, we consider it pertinent to bear in mind the concept of assessment underlying, both in Article 97, No. 1, paragraph a) of the CPPT ("assessment of taxes"), and in Article 2, No. 1, paragraph a) of the RJAT ("acts of assessment of taxes").

4.12

In this respect, as José Casalta Nabais argues, "assessment in the broad sense, that is, as the set of all operations intended to determine the amount of tax, comprises the subjective assessment intended to determine or identify the taxpayer or subject of the fiscal legal relation, the objective assessment through which the taxable matter or taxable income of the tax is determined (and, likewise, the tax rate applicable is determined, in the case of a plurality of rates)" whereas "assessment in the strict sense" is translated "in the determination of the tax amount through the application of the tax rate to the taxable matter or taxable income and the (eventual) deductions to the tax amount" (emphasis ours). [8]

4.13

Thus, as follows from the notion of assessment transcribed above, for each taxable event there will, in principle, be a single assessment by which the tax amount to be paid will be determined, an understanding that results from the provisions of Article 23, No. 7, of the Stamp Duty Code, according to which it is stated that "where the tax is due in 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 Urban Real Estate Tax Code".

4.14

In turn, in accordance with the provisions of Article 113, No. 2 of the Urban Real Estate Tax Code (IMI), the assessment is made in the months of February and March of the year following that to which it refers and although it may be paid in several instalments, it does not follow from this fact that several assessments have occurred. [9]

4.15

In truth, the assessment of tax is only one and only it will constitute a harmful act, susceptible to being the subject of a single impugnation [10], so that when the law provides for its payment in several instalments, staggered in time, the annulment of the tax act will have consequences for all of them, causing the obligation to pay to cease or imposing the obligation to refund the amounts of tax already paid by the taxpayer, as well as the restitution of the situation through the payment of default interest, all charged to the Tax Authority.

4.16

What the law does not provide for, neither in arbitral proceedings nor in judicial impugnation proceedings, is the claim for annulment of payment of isolated tax instalments since such effect will only result from the annulment of the tax assessment act which, as we have seen, consists in the quantification of the total amount to be paid and which is only and solely a single tax act.

4.17

Thus, from the above it follows that the collection notices for Stamp Duty, subject to the present request for arbitral pronouncement, are not impugnable per se, as they do not constitute acts of assessment of taxes (and, for that reason, are to be considered non-impugnable in light of the applicable legislation), but only one of the instalments in which the payment of these taxes may be made. [11] [12]

4.18

In these terms, in light of the above, it is verified that the acts subject to the present request for arbitral pronouncement are not included within the scope of the provisions of Article 2, No. 1, paragraph a) of the RJAT, as they are not "acts of assessment of taxes" (nor are they to be confused with them, as in reality they correspond to 1/3 of the assessed amount [13]), and therefore the exception of absolute lack of competence of the Arbitral Tribunal in respect of the matter is judged as well-founded, in accordance with the provisions of Article 16, No. 1 of the CPPT (applicable by virtue of Article 29 of the RJAT), associated with the autonomous non-impugnability of the acts subject to the claim, with the consequent dismissal of the Respondent from the arbitral proceedings, in accordance with the provisions of Article 99, No. 1 and Article 576, No. 2, of the CPC (applicable ex vi of that provision of the RJAT), and as a result the consideration of the merits of the case is prejudiced. [14] [15]

DECISION

5.1

In accordance with the provisions of Article 22, No. 4, of the RJAT, "the arbitral decision rendered by the arbitral tribunal includes the fixing of the amount and the apportionment among the parties of the costs directly resulting from the arbitral proceedings".

5.2

In this respect, the basic rule concerning responsibility for the costs of proceedings is that the party that has caused them should be condemned, it being understood that the party that causes the costs of the proceedings is the losing party, in the proportion in which it loses (Article 527, No. 1 and 2 of the CPC).

5.3

In the case under analysis, having regard to the above, the principle of proportionality imposes that total responsibility for costs be attributed to the Claimant.

5.4

In these terms, having regard to the analysis conducted, this Arbitral Tribunal decided:

5.4.1

To judge as well-founded the dilatory exception of absolute lack of competence of the Arbitral Tribunal (having regard to the autonomous non-impugnability of the collection acts subject to the claim) and, as a consequence, to dismiss the Respondent from the proceedings;

5.4.2

To condemn the Claimant to payment of the costs of the present proceedings.

Value of the Proceedings: Having regard to the provisions of Articles 306, No. 2 of the CPC, Article 97-A, No. 1 of the CPPT and Article 3, No. 2 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the proceedings is fixed at EUR 5,255.83 (results from the sum of the collection notices identified in Article 6 of the claim).

Costs of the Proceedings: In accordance with the provisions of Table I of the Regulation of Costs in Tax Arbitration Proceedings, the value of the costs of the Arbitral Proceedings is fixed at EUR 612.00, charged to the Claimant, in accordance with Article 22, No. 4 of the RJAT.

Notify.

Lisbon, 25 September 2015

The Arbitrator

Sílvia Oliveira

[1] The writing of the present decision follows the spelling prior to the Orthographic Agreement of 1990, except with regard to the transcriptions made.

[2] In this respect, the Claimant further states that the respective impugnation proceedings relating to the first and second instalment of Stamp Duty for 2013 have already been heard at the CAAD, having been judged as well-founded (see Process no. 422/2014, of 9 December 2014 and Process no. 682/2014, of 30 January 2015, copies of whose respective decisions were attached to the present proceedings).

[3] Claim prejudiced by the Request submitted by the Claimant on 15 June 2015 (see point 1.10., supra), responding to the matter of exception raised by the Respondent.

[4] This decision of the Arbitral Tribunal was justified in consonance with the procedural principles set out in Article 16 RJAT, of the autonomy of the arbitral tribunal in the conduct of the proceedings and in the determination of the rules to be observed [paragraph c)], of cooperation and procedural good faith [paragraph f)] and of the free conduct of proceedings set out in Articles 19 and 29, No. 2 of the RJAT, as well as having regard to the principle of limitation of useless acts provided for in Article 130 of the CPC [applicable by virtue of the provisions of Article 29, No. 1, paragraph e) of the RJAT].

[5] The identification in bold of the acts referred to above is ours.

[6] In this respect, the Respondent refers to decisions issued by the CAAD, within the scope of Process no. 120/2012-T, of 12 June 2013, Process no. 408/2014-T of 17 December 2014 and Process no. 138/2015-T (only evidence of the Arbitral Decision rendered within the scope of Process no. 137/2015, of 30 June 2015 relating to "SD – Competence of the Arbitral Tribunal" was obtained).

[7] The provision referred to should be understood in conjunction with the provisions of Article 97 of the CPPT, in which the claims subject to tax judicial proceedings are indicated, being provided in paragraph a) of its No. 1 that tax judicial proceedings comprise "the impugnation of the assessment of taxes, including para-fiscal taxes (…)".

[8] In TAX LAW, 3rd Edition, Almedina, 2005, page 318.

[9] In this respect, see Arbitral Decision rendered within the scope of Process no. 205/2013, of 7 March 2014, in which it is written that "from the circumstance that the value of the assessment [of Stamp Duty] may be paid in several instalments, it does not follow that there are three assessments (…) being, differently, a single assessment that may be paid in several instalments".

[10] In this respect, although rendered under the aegis of analysis of another tax (and regarding interlocutory acts of the tax procedure), attention should be paid to the content of Court of Appeal judgment TCAN no. 00264/10.1BEBRG, of 16 October 2014, in which it is stated that "by virtue of the principle of unitary impugnation, embodied in Article 54 of the CPPT, it is only possible, in principle, to impugn the final act of the tax procedure" (assessment) "as only that act directly and immediately affects the legal sphere of the taxpayer" [that is, any other type of act other than that of assessment "(…) is indeed impugnable (…) through the assessment act (…) carried out, which thereby ensures the possibility of judicial control of its legality".

[11] In this matter, see Arbitral Decision rendered within the scope of Process no. 726/2014, of 10 March 2014, to the effect that "an instalment is not equivalent to an assessment of tax, as per No. 7 of Article 23 of the Stamp Duty Code (…), where the tax is due in the situations provided for in item no. 28 of the General Table, the tax is assessed annually, for each urban property, by the central services of the Tax and Customs Authority, applying, with the necessary adaptations, the rules contained in the Urban Real Estate Tax Code. Now, the expression the tax is assessed annually indicates that a single annual assessment is made and (…) the division of an assessment into instalments will therefore be nothing more than a mere tax collection technique. The payment instalments of an assessment of (…) Stamp Duty, in accordance with item 28 of the General Table of Stamp Taxes, are not autonomously reviewable, as they originate from a single annual obligation" (emphasis ours)

[12] In this respect, see also the Arbitral Decision relating to Process no. 137/2015, of 30 June 2015.

[13] Except with regard to the seventh floor as to which it corresponds to ½ of the assessment value (two instalments and not three).

[14] In this respect, see the Arbitral Decision relating to Process no. 736/2014, 13 April 2015.

[15] Note that, with the well-foundedness of this dilatory exception, the analysis of the dilatory exception of lis pendens or the dilatory exception of res judicata (both of knowledge ex officio, in accordance with the provisions of Articles 577, paragraph i), 578 and 580 of the CPC) was also prejudiced, having regard to the existence of the Arbitral Decisions rendered within the scope of Process no. 422/2014-T, of 9 December 2014 and of Process no. 682/2014-T, of 30 January 2015, which analysed the legality of the other two instalments of tax, because such would prove to be useless having regard to the consequences of the well-foundedness of the exception under analysis.

In fact, had this dilatory exception not been judged as well-founded, those other two exceptions would have been analysed, ex officio and in detail, [taking into account the phase in which the respective proceedings are (either in appeal phase or already finally decided), taking into account the possible repetition of the cause of action in the present proceedings compared to those previously decided (and identified above) as the underlying assessment acts of the three proceedings are the same (same floors of the same property, same year, same rate and same VPT).

Frequently Asked Questions

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What is Verba 28.1 of the Tabela Geral do Imposto de Selo (TGIS) and how does it apply to high-value urban properties?
Verba 28.1 of the Tabela Geral do Imposto de Selo (General Stamp Duty Table) establishes stamp duty on ownership rights over high-value urban properties. It applies an annual tax on urban properties with a taxable patrimonial value exceeding a specified threshold (historically €1 million for properties valued between €1-2 million, and higher rates for properties exceeding €2 million). The provision targets high-value real estate holdings and applies to the full ownership (propriedade plena) of urban buildings. In cases involving vertical property divisions, where a building is divided into separate autonomous units or floors, questions arise whether each floor should be assessed individually under Verba 28.1 or whether the building should be treated as a single taxable unit. The application depends on whether the floors are legally constituted as independent horizontal property units with separate registrations and ownership, or remain part of an undivided vertical property structure.
Can an arbitral tribunal rule on stamp tax (Imposto de Selo) disputes involving vertical property classifications in Portugal?
The competence of arbitral tribunals under the CAAD (Centro de Arbitragem Administrativa) framework to rule on stamp tax disputes involving vertical property classifications has been contested by the Tax Authority in several cases. Under the RJAT (Legal Framework for Arbitration in Tax Matters), arbitral tribunals have jurisdiction over disputes concerning the legality of tax acts, including stamp duty assessments. However, the Tax Authority may raise incompetence exceptions arguing that certain types of disputes fall outside arbitral jurisdiction, particularly when they involve complex property law classifications or allegedly non-impugnable administrative acts. When such exceptions are raised, the arbitral tribunal must first rule on its own competence as a preliminary matter. Generally, CAAD tribunals have affirmed their jurisdiction over substantive stamp duty disputes, including those involving property classifications, as these concern the legality of tax liquidation acts which are expressly subject to arbitral review under Article 2 of the RJAT.
What are the grounds for challenging stamp tax liquidation acts on individual floors of an urban building under Portuguese tax law?
Grounds for challenging stamp duty liquidation acts on individual floors of an urban building under Portuguese tax law include: (1) incorrect legal classification of the property structure—arguing that separate floors do not constitute independent taxable units under Verba 28.1 of the TGIS when they form part of a vertical property regime rather than horizontal property (propriedade horizontal); (2) improper application of the taxable base—contending that the patrimonial value should be calculated for the building as a whole rather than aggregating values of individual floors; (3) violation of the legal requirements for stamp duty assessment under vertical property ownership; (4) constitutional violations, including potential double taxation or violation of principles of tax equality and legality; (5) procedural irregularities in the liquidation process; and (6) errors in determining whether the property meets the threshold requirements for Verba 28.1 taxation. Taxpayers must demonstrate that the assessment acts are illegal either due to misapplication of substantive tax law or violation of procedural requirements.
How does the concept of propriedade vertical (vertical property) affect stamp tax liability under the TGIS?
The concept of propriedade vertical (vertical property) significantly affects stamp tax liability under the TGIS because it determines how ownership rights are structured and consequently how stamp duty under Verba 28.1 is assessed. Vertical property refers to a regime where different floors or sections of a building are owned separately but have not been formally constituted as autonomous fractions under the horizontal property regime (propriedade horizontal) governed by the Civil Code. In vertical property situations, each floor may have a distinct owner, but the legal structure differs from condominium-style horizontal property. This distinction is crucial for stamp duty purposes because Verba 28.1 applies to 'property rights' over urban buildings. If floors are treated as separate vertical property units, the Tax Authority may issue individual stamp duty assessments for each floor if each meets the value threshold independently. However, taxpayers may argue that vertical property should not be fragmented for tax purposes and that the building constitutes a single taxable unit, or that the legal framework for vertical property does not permit the separate taxation approach applied under horizontal property regimes.
What happens when the tax authority raises an incompetence exception before the CAAD arbitral tribunal in stamp tax cases?
When the Tax Authority raises an incompetence exception before the CAAD arbitral tribunal in stamp tax cases, the tribunal must address this preliminary jurisdictional issue before proceeding to the merits of the dispute. The exception challenges the tribunal's legal authority to hear the case, typically arguing that: (1) the matter falls outside the scope of arbitrable tax disputes under the RJAT; (2) the challenged acts are not 'impugnable' (subject to judicial review); or (3) the dispute involves issues beyond tax law requiring specialized civil or administrative court jurisdiction. Procedurally, the claimant must respond to the exception, usually through written submissions. The tribunal then rules on its own competence as a threshold matter. If the exception is upheld, the arbitral proceedings are terminated and the claimant must seek relief through alternative channels (such as administrative courts). If the exception is rejected, the tribunal proceeds to analyze the substantive merits of the tax challenge. The RJAT grants broad jurisdiction to arbitral tribunals over the legality of tax acts, so incompetence exceptions are typically rejected unless the dispute genuinely falls outside tax arbitration scope, such as when it primarily concerns civil property law determinations rather than tax assessment legality.