Summary
Full Decision
ARBITRAL DECISION
Process No. 95/2013-T
Claimants: A... and B...
Defendant: AT - Tax and Customs Authority
I - REPORT
- A..., taxpayer no. ..., on her own behalf and as legal representative of her daughter, B..., taxpayer no. ..., both resident at Rua ..., ..., submitted, on 29/04/2013, a request for an opinion from the Arbitral Court, pursuant to articles 2 and 10 of Decree-Law No. 10/2011, of 20 January (Legal Regime for Arbitration in Tax Matters, hereinafter referred to as RJAT), requesting under articles 97 of the General Tax Law (LGT), 99, paragraph a) of the Code of Tax Procedure and Process (CPPT), and item no. 28 of the General Table of Stamp Duty (TGIS), the following:
a. Declaration of illegality and consequent annulment of Stamp Duty contained in ten assessment notices (docs. 25-34) notified to claimant A..., totalling €5,777.58, and also the stamp duty contained in assessment notices equally notified to claimant B... (docs. 35-44), totalling €4,358.34;
b. Condemnation of the Defendant to pay interest;
c. Condemnation of the Defendant to indemnify the claimants for the provision of bank guarantees made, in the amounts of €258 and €210, respectively;
d. Condemnation of the Defendant to pay the costs of the arbitral proceedings;
or, alternatively,
e. Declaration of illegality and consequent annulment of the assessments made to the ten units individually, and ordering a new assessment of the property as a whole;
f. Suspension of the Municipal Property Tax (IMI) collections already levied and paid, with reimbursement to the Claimants, in the amounts of €468.14 and €445.27, respectively; or, alternatively,
g. Condemnation of the Defendant to apply the safeguard clause only once, following the suspension of IMI, namely an increase of €75 to the IMI collection in the first year;
h. Condemnation of the Defendant to refund €300 to each one, paid as IMI for their individually taxed units;
all with reference to the assessments made by the Tax and Customs Authority - ... Finance Service of ....
2 - The request for constitution of the arbitral court was accepted by the Esteemed President of CAAD, having been notified to the Tax and Customs Authority (hereinafter referred to as "AT" or the "Defendant") on 30 April 2013.
3 - In the request for arbitral opinion, the Claimants waived the designation of an arbitrator, requesting its appointment in accordance with paragraph 1 of article 6, and paragraph a) of paragraph 1 of article 11 of the RJAT, whereby the Deontological Council of CAAD designated the undersigned singular arbitrator of the arbitral court, who communicated acceptance of the assignment within the legally established period, the Singular Arbitral Court being constituted on 2/07/2013, and the parties were notified on the same date.
4 – On 8/10/2013, the meeting referred to in article 18 of the RJAT took place, all as per the minutes attached to the file, in which the parties' option to present written arguments was recorded, for which a period of 10 days was set, the issue of irregularity in the representation in court of claimant B... by her mother, previously raised by the Defendant, being immediately remedied, who stated at that time to have nothing to declare regarding the representation that would be formulated with the presentation of a power of attorney, which subsequently occurred.
5 – During the same meeting, the representative of the Claimant raised the issue of the untimeliness of the Defendant's answer, given that it only entered on 07/10/2013, at 17:34h at CAAD, presenting a request requesting its removal from the file as the submission of that pleading should be considered untimely, with the effects of Default following with the legal consequences arising therefrom.
6 – The representatives of the defendant did not waive the period for review of the request submitted, stating that they would pronounce on it in the arguments, to which the Claimants did not object. It was also decided by the Court that the pronouncement on the exceptions would only be made in the final decision.
7 – The Court is regularly constituted and is materially competent to appraise and decide the subject matter of the proceedings, which does not suffer from any nullities, the parties enjoying legitimacy, personality and judicial capacity.
II – GROUNDS
8 – The claimants sustain, in summary, the request for arbitral opinion referred to above, on the following facts with relevance to the appraisal of the questions raised, which were not contested and which are considered proven by the documentary evidence inserted in the file:
a) "The Claimants are owners in regime of co-ownership (57% belonging to the 1st Claimant and 43% belonging to the 2nd Claimant) of an urban property in regime of full ownership, situated at Rua ..., in ..., inscribed in the matrix under article ..., parish of ..., consisting of ten units for independent use, which are entirely rented.
b) The aforementioned units have been, for tax purposes, always treated unit by unit, individually, that is, each unit being considered as an autonomous and independent dwelling.
c) The Tax Authority taxed each unit separately, as can be seen from the examination of the IMI demonstration notes relating to the years 2011 and 2012 (docs. 1 to 4).
d) The claimants, at the beginning of December, were notified of ten tax assessments as to the value for tax purposes, dated 24 November 2012, relating to each of the ten units that comprise their property, whose total value for tax purposes amounted to €1,013,560.00.
e) The Tax Authority issued an assessment notification note for each dwelling, relating to the ground floor right, ground floor left, 1st floor right, 1st floor left, 2nd floor right, 2nd floor left, 3rd floor right, 3rd floor left, 4th floor right, 4th floor left, considering all units individually (docs. 5 to 24). The claimants did not contest the values presented in those independent assessments, with values for tax purposes "around one hundred thousand euros each", which value was calculated based on the specific and individual characteristics arising especially from their identity and autonomy as independent units. The claimants were never notified of a single assessment to their property, considered in its entirety, as a single unit and with a single assessment value, to which a value for tax purposes greater than one million euros had been assigned.
f) Subsequently, the Claimants were notified of the IMI collection demonstration notes attached to the file, in which an amount is verified levied as IMI for each unit individually, based on different and specified values for tax purposes for the ground floor right, ground floor left, 1st floor right, 1st floor left, 2nd floor right, 2nd floor left, 3rd floor right, 3rd floor left, 4th floor right and 4th floor left. Different collections were thus determined for each unit and individual identified collections were suspended, by virtue of the declaration of rents relating to leases prior to 1991, suspending the collection relating to the ground floor right, ground floor left, 3rd floor right and 3rd floor left.
g) The claimants were never notified of any IMI note in which only a single collection was levied, referring to a single value for tax purposes; nor were they ever notified of the suspension of a single IMI collection, that is, the suspension of the entire IMI collection; or alternatively, of a single increase in IMI collection, in the amount of only €75 for the entire property.
h) On 3 April 2013, claimant A... received ten stamp duty assessment notices for payment of the 1st installment of stamp tax where ten notifications were made, in separate envelopes, unit by unit, indicating for each one, a different and autonomous value for tax purposes, namely: ground floor right - €566.98 (1st installment - €189); ground floor left - €566.98 (1st installment - €189); 1st floor right - €566.98 (1st installment - €189); 1st floor left - €603.35 (1st installment - €201.13); 2nd floor right - €560.65 (1st installment - €186.89); 2nd floor left - €597.02 (1st installment - €199.02); 3rd floor right - €560.65 (1st installment - €186.89); 3rd floor left - €597.02 (1st installment - €199.02); 4th floor right - €560.65 (1st installment - €186.89); 4th floor left - €597.02 (1st installment - €199.02), in a total of €5,777.30 (Doc. 25-34).
i) On the same date, claimant B... also received ten stamp duty assessment notices for payment of the 1st installment of stamp tax where ten notifications were made, in separate envelopes, unit by unit, indicating for each one, a different and autonomous value for tax purposes, namely: ground floor right - €427.72 (1st installment - €213.86); ground floor left - €427.72 (1st installment - €213.86); 1st floor right - €427.72 (1st installment - €213.86); 1st floor left - €455.16 (1st installment - €227.58); 2nd floor right - €422.95 (1st installment - €211.48); 2nd floor left - €450.38 (1st installment - €225.19); 3rd floor right - €422.95 (1st installment - €211.48); 3rd floor left - €450.38 (1st installment - €255.19); 4th floor right - €422.95 (1st installment - €211.48); 4th floor left - €450.38 (1st installment - €225.19, in a total of €4,358.31 (Doc. 35-44)".
9 - With reference to the ownership of this property, inscribed under article ... of the parish of ..., in ..., with allocation to housing, not constituted in regime of horizontal property (therefore, in regime of vertical property), with the value for tax purposes of €1,013,560[1], the AT levied Stamp Duty provided for in Item 28.1 of the General Table of Stamp Duty (TGIS), in the wording given to it by Law No. 55-A/2012, of 29 October, at the rate of 1%, with reference to the year 2012, in a total of €10,135.61, whose assessment was notified to the Claimants separately, for each fraction, all in accordance with notification documents attached.
10 - Not conforming to the assessment thus made, the Claimants appeal to this Court, in summary, for the declaration of illegality of those assessments, on the basis of a defect of violation of law, with the consequent annulment of all amounts assessed, and the reimbursement of those already paid for this purpose, all plus payment of indemnification corresponding to interest and other amounts that may have to be spent with the bank guarantees presented by them, in the amount of €258 and €210, respectively, and the amount of costs supported by the Claimants in the arbitration proceedings in the amount of €918.
11 - Alternatively, in the event of a finding against the main annulment request, it requests the annulment of the independent tax assessments of the ten units, ordering a new assessment of the property in question, considered as a whole, with the consequent annulment of the partial stamp duty assessments, performing only one Stamp Duty assessment;
12 - And further condemn AT to suspend the twenty IMI assessments already made and paid, resulting from these twenty assessments or, alternatively, to apply the safeguard clause and increase IMI by only €75, reimbursing the amounts paid before the application of this safeguard clause.
13 - Notified on 3/7/2013, by reply presented on 17/09/2013, the Public Treasury corroborated the facts described, however challenging the factual matter alleged in the PI pertaining to the state of conservation of the property as that matter is not proven, in addition to which that issue, in its view, is irrelevant to the substantive decision.
14 - AT in its Reply, in addition to the defense by challenge, raised exceptions:
· the legitimacy of the mandate of the first claimant to represent in court the second claimant, B..., a question that is resolved with the presentation of a power of attorney issued in favor of Dr. ..., Attorney, making it unnecessary, therefore, to analyze this dilatory exception;
· the ineptitude of the initial petition in the part in which an alternative request is formulated - "as a precaution, in case of finding against the main request, for the court to decree a new assessment of the property in question, now as a whole, with the consequent annulment of the previous assessments";
· the untimeliness of the petition in case of finding against the exception of ineptitude of the initial petition above referred to, in the part in which it requests either the declaration of illegality of the IMI assessments, which "the claimants do not identify", or the declaration of illegality of the act of fixing the values for tax purposes which the claimants also do not identify in their initial request, but which, if possible, should have been deduced the respective illegalities at the Administrative Arbitration Center within the period of 90 days and 30 days, respectively.
15 - By challenge, and in summary, AT understands that the provision contained in Item 28 of the TGIS is applicable indistinctly to all cases in which the respective factual and legal assumptions are verified, with the respective rate of 1% applying to the ownership, usufruct or right of superficies of urban properties with housing allocation, whose value for tax purposes contained in the matrix, in accordance with the CIMI, is equal to or greater than €1,000,000.00,
16 - This is because "the different valuation and taxation of a property in full ownership compared to a property constituted in horizontal property regime results from different legal effects inherent to these two figures. Indeed, the constitution in horizontal property regime determines the division/scission of full ownership and the independence or autonomy of each of the fractions that constitute it, for all legal purposes, in accordance with paragraph 2 of article 4 of the CIMI and article 1414 of the Civil Code, whereas a property in horizontal property regime constitutes, for all purposes, a single legal-tax reality. Thus, one cannot conclude an alleged discrimination in violation of the principle of equality, when, in fact, we are faced with distinct realities, valued by the legislator differently. Moreover, taxation under stamp duty follows the criterion of adequacy, to the exact extent that it aims to tax the wealth embodied in the ownership of high-value properties, arising in a context of economic crisis that cannot be ignored. Thus, one cannot conclude an alleged discrimination in violation of the principle of equality, when, in fact, we are faced with distinct realities".
17 - AT understands, in summary, that the legislative measure is justified in order to seek maximum effectiveness in obtaining revenue, affecting indistinctly the wealth manifested by the holding of ownership rights over high-value properties, with housing allocation.
18 - AT also contests the indemnification request formulated with respect to expenses incurred with the provision of bank guarantee, given that the Services reported that there is no tax enforcement proceeding instituted, as of the date, against the Claimants, and these should perfect the PI in this part.
19 – Finally, AT invokes the incompetence of the Arbitral Court to condemn AT to pay the Claimants the costs supported by them, as, being a party costs request, that matter relating to party costs is contained in the Regulation of Procedural Costs and in the provisions of Ordinance No. 419-A/2009, of 17/04, and the request, if the respective requirements are met, should be made under that legislation.
**
20 - The parties presented arguments, with AT raising the non-verification of the untimeliness of the submission of the reply to the PI, a question raised by Claimant A... at the meeting held for the purposes of article 18 of the RJAT, by means of a request which is attached to the file, due to the fact that it only entered at 17:14h on the last day of the period, that is, after the closing time of AT's services, which violates article 17 of the same RJAT, such violation implying the removal from the file of the reply pleadings.
21 - Immediately deciding this question, the Court considers that the Claimants are not correct. As provided for in paragraph 4 of article 134 of the CPC (previous paragraph 4 of article 143), "the parties may perform procedural acts by electronic transmission or by facsimile, on any day, regardless of the hour of opening and closing of the courts". Therefore, since the Reply of AT was entered at CAAD on day 17, through electronic means, the last day of the period, it is timely, regardless of the time at which this fact occurred. On the other hand, as it is applicable to arbitral proceedings, subsidiarily, the CPPT[2], account must be taken of what is determined in paragraph 6 of its article 110: "the failure to contest does not represent the admission of the facts alleged by the claimant".
Therefore, the eventual untimely entry of the Reply could never be equivalent to the lack of contest, admission or acknowledgment of the alleged facts, which, for purposes of civil proceedings, is provided for in article 566 and following of the CPC (previous article 484 and following).
22 - The main request of the Claimants is founded, in summary, on the following: the assessment of stamp duty at 1% provided for in Item 28 of the TGIS that AT made on the property situated at Rua Actor Taborda No. 42, inscribed in the property matrix and described in article ... of the parish of ..., in ..., composed of ten units for independent use with housing allocation, is illegal and should be annulled, because it is a property constituted in regime of full ownership, with housing allocation, and none of those independent units possesses a value for tax purposes equal to or greater than €1,000,000.00, in addition to which they are treated by AT, for purposes of IMI, as ten different units, properly and independently described in the property matrix, and there were ten assessments for purposes of determining the respective value for tax purposes, one for each unit, and ten IMI assessments, also one for each of the fractions.
In this manner, the Claimants base their claim on the fact that they understand that, having the fractions the possibility of independent use and being treated autonomously for purposes of IMI, even having the property housing allocation, as none of them possesses a value for tax purposes equal to or greater than €1,000,000.00, the rule of incidence provided for in Item 28.1 of the TGIS is not verified.
23 - AT contests this interpretation saying that although the legislator in the CIMI treats autonomously, in the matrix, the fractions with independent use[3] and issues collection notices relating to each of them, still considers them as integral parts of a single property because, although being fractions with independent use belonging to a property constituted in regime of vertical property, they cannot be included in the rule of paragraph 4 of article 2, which only accommodates as constituting a property "for purposes of this tax" the autonomous fraction of a property that is constituted in regime of horizontal property.
Therefore, it is essentially in this difference of interpretations that the litigation here under appraisal resides.
III
Let us see
The legislator, by amendment to article 4 of Law No. 55-A/2012, of 29 October, gave new wording to article 28 of the General Table of Stamp Duty, ordering the assessment of stamp duty on:
28 - Ownership, usufruct or right of superficies of urban properties whose value for tax purposes contained in the matrix, in accordance with the Code of Municipal Property Tax (CIMI), is equal to or greater than (euro) 1,000,000 - on the value for tax purposes used for purposes of IMI:
28.1 - For property with housing allocation - 1%;
28.2 - For property, when the taxpayers who are not natural persons are resident in a country, territory or region subject to a clearly more favorable tax regime, contained in the list approved by Ordinance of the Minister of Finance.
In the application of this provision, various doubts have arisen as to whether or not to include in the rule of incidence of IS properties that are in vertical property ownership, constituted in fractions of autonomous and independent use, with housing allocation, and in which the value for tax purposes, in the sum of the fractions, is equal to or greater than one million euros, but in which none of them, separately considered, for purposes of IMI, has a value equal to or greater than that amount. The fact is that article 28 itself provides that the relevant value is the "value used for purposes of IMI", and, in the case of vertical property, each of the fractions of independent use is evaluated autonomously.
Within this basis of appraisal, the fundamental matter is to decide, with support in the law, which value for tax purposes should be considered relevant for purposes of stamp duty assessment on properties not constituted in regime of horizontal property formed by autonomous fractions of independent use, with housing allocation: is it the sum of the values for tax purposes of all fractions or the value for tax purposes of each of the fractions? Can a fraction of independent use belonging to a property in full ownership be considered property for purposes of the IS of Item 28 of the TGIS, although not included in the definition of property in paragraph 4 of article 2 of the CIMI, where only autonomous fractions integrated in property constituted in regime of horizontal property fit?
Posed thus the questions, it seems to us that it is necessary to begin the exercise of interpretation by analyzing the course followed by the legislator with a view to the introduction of this incidence rule, in order to decide which properties are encompassed there for purposes of stamp duty assessment, however without prejudice to that interpretation not being consensual, as is obvious.
In accordance with the provisions contained in the legislative proposal No. 98/XX in the Republic Assembly, contained in the DAR, Series I, No. 9/XX/2, of 11 October 2012, with the legislative amendment it is intended to create "a rate under Stamp Duty applying to urban properties with housing allocation whose value for tax purposes is equal to or greater than one million euros". "These measures are fundamental to reinforce the principle of social equity in austerity, ensuring an effective sharing of the necessary sacrifices for compliance with the adjustment program. The Government is strongly committed to ensuring that the sharing of those sacrifices will be made by all and not only by those who live from the income of their work. In accordance with that objective, this Act broadens the taxation of income from capital and property, encompassing equitably a broad range of sectors of Portuguese society". Appeal is therefore made, along with the creation of one more mechanism for generating revenue, to the need to accommodate the principles of social equity and fiscal justice so that they contribute especially natural persons who are holders of homes of value equal to or greater than €1,000,000.00.
It is obvious that what was primarily sought was a way to provide an increase in revenue[4], already that the Act itself says nothing more on the subject, without prejudice to having intended to convey the idea that this increase in revenue provided for in the rule would come only from the taxation of those individual citizens who demonstrate a greater contributive capacity through the use of high-value real estate. And this is so much so that in Item 28.2 properties not held by natural persons whose seat is in countries, territories or regions where a more favorable tax regime is in effect are also considered as subject to tax, contained in the list contained in an Ordinance of the Government[5].
Apparently, it is, therefore, lawful to conclude from the legislative amendment that the intention was to tax the contributive capacity revealed by the holding or use, for purposes of individual housing, of properties of high value revealing a use, which some have already called "hedonistic" and private, by persons of high social status, or that is, and put differently, intended to tax luxury properties used or enjoyed individually by persons of high social status.
Thus, taking into account the letter of the law, we can enumerate the essential elements for the existence of taxation: ownership, usufruct or right of superficies of (i) urban properties, (ii) held by natural persons, (iii) with housing allocation, (iv) whose value for tax purposes contained in the matrix is equal to or greater than 1,000,000.00€, (v) to be calculated on the same value for tax purposes that is used for purposes of IMI, are taxed in stamp duty.
We must also take into account, as absolutely essential for the clarification of the case, the rule of article 67, paragraph 2 of the IS, introduced itself by law when it establishes that "To matters not regulated in this Code relating to item no. 28 of the General Table, the provisions of the CIMI shall apply subsidiarily", article 4 of the CIMI which contains the definition of what urban properties are and, in turn, article 6 which lists the various categories of urban properties.
However, if we retain the ideas expressed above that presided, in our view, over the taxation of the so-called luxury properties, then we must consider the urban property in the function of individual housing, which the CIMI contemplates, when it treats individually for purposes of that tax all fractions of a property, whether they are part of a property constituted in regime of horizontal property or in regime of vertical property. The relevant criterion used in the Code is the concept of economic unit with susceptibility to be used autonomously. This very thing for buildings constituted in regime of horizontal property that, according to article 92 of the CIMI, are treated by means of a single matricial entry for the entire property, yet each of the autonomous fractions being detailed described and individualized by the letter that corresponds to it according to alphabetical order.
Said in other words, the CIMI treats autonomously all fractions of a property susceptible to independent use, whether in assessment, or in matricial entry and description, or even in the own collection function when it performs assessments and issues collection notices for each fraction.
If the legislator of stamp duty orders to consider the rules of the CIMI when referring to the value for tax purposes used for purposes of IMI, and that the tax applies to the value for tax purposes contained in the matrix, the truth is that, being the CIMI structured to consider as independent or individual tax units, so to speak, the various fractions of a property, whether or not it is constituted in horizontal property, it is appropriate to conclude, with some confidence, that the legislator of stamp duty admits a concept different from that of the legislator of IMI because the objectives and grounds of taxation are diverse, whereby the value to be considered will be that which the matrix contains on the date provided for in the law for each fraction. There is no relevant difference whatsoever in the IMI Code as to the rules for taxation of an autonomous fraction with housing allocation compared to those of a property in horizontal property regime or a fraction of independent use of a property in vertical property regime, except that, formally, the autonomous fraction of the property in horizontal property regime is denominated as property in article 2, paragraph 4, and the others are not.
We would say that the concerns for convenience and simplification of administrative rules, or those relating to the maintenance in good order of property matrices, prevailed more, when qualifying as property the autonomous fraction in accordance with article 2, than those properly relating to incidence.
The legal definition of property for purposes of taxation of assets has been the same since the Code of Real Property Contribution of 1963, and in which the doctrine recognizes three essential elements of a constitutive nature: that it is a material reality or that it is concretized in a fraction of territory (physical element); that this reality is part of the assets of a natural or collective person (legal element) and that it is susceptible of income in normal conditions (economic element)[6].
Therefore, what is ultimately intended to be known is, admitting as certain that only urban properties allocated to housing are encompassed, whether the expression "property" referred to in the Table is coincident with the fiscal concept of property in the legal rigor of the definition referred to above.
There is already CAAD jurisprudence, Proc. No. 50/2013-T, which decided that "... in the perspective of the legislator, the legal-formal rigor of the concrete situation of the property does not matter but rather its normal use, the purpose to which the property is intended. We also conclude that for the legislator the situation of the property in vertical property regime or in horizontal property regime did not matter, as no reference or distinction is made between one and the other. What matters is the material truth underlying its existence as an urban property and its use".
Unless we are mistaken, and for all the reasons set out above, we are led to agree with the decision that it is the economic relevance emerging from the combined reality of urban property and its respective use that was intended to be taxed in stamp duty, appealing to rules already contained in the CIMI for the determination of other elements of incidence, namely those related to the value for tax purposes registered in the matrix which should be equal to or greater than 1,000,000.00€.
IV
But will the value for tax purposes relevant for comparison with the limit fixed in Item 28 be that which results from that autonomous entry, for each fraction, or rather the sum of the values of the fractions with housing allocation when properties formed by fractions of independent use are in question but in which the legal status inherent to horizontal property is not verified?
AT understands in its Reply that article 2, paragraph 4 of the CIMI is clear and that, regardless of each unit or part of the property not constituted in horizontal property regime being susceptible to independent use and being considered in the matricial entry with its own value for tax purposes, for purposes of IS the property in its entirety is relevant, as divisions susceptible to independent use are not had as property.
That is, "...the different valuation and taxation of a property in full ownership compared to a property constituted in horizontal property regime results from different legal effects inherent to these two figures". Only the constitution in regime of horizontal property allows the division/scission of full ownership, so the value to be considered will be the sum of the values of the fractions whenever it is a matter of property in full ownership.
We are, therefore, faced with an eminently literal interpretation[7] that adheres to the definition of property contained in the cited article 2, even for purposes of stamp duty.
Conversely, the Claimants appeal to other grounds to defend the thesis that the relevant value for tax purposes is the value of each fraction autonomously considered, because that same value results from individual assessment acts for each fraction at the time of the general assessment and separate assessment for each fraction.
Law No. 55-A/2012, in its article 67, paragraph 2, determined that to matters not regulated in this Code relating to item 28 of the General Table, the CIMI shall apply subsidiarily. In turn, the IMI Code provides that the entry in the matrix of a property constituted by different parts, units or divisions with independent use, follows the same rules of entry of properties constituted in regime of horizontal property, with IMI being assessed individually for each of the parts. Therefore, we follow the thesis of the Decision issued in Proc. No. 50/2013-T when it states that "if the legal criterion requires the issuance of individualized assessments for the autonomous parts of properties in vertical property regime, in the same manner as it establishes for properties in horizontal property regime, it clearly established the criterion, which must be single and unambiguous, for the definition of the rule of incidence of the new tax".
Item 28 taxes properties with a value equal to or greater than one million euros, but the value to be considered for purposes of this tax is the value for tax purposes for purposes of IMI. In the situation of the present case we are faced with a property in regime of full ownership composed of five units – ground floor, first, second, third and fourth - each with two parts or fractions susceptible to independent use, all of them allocated to housing, but in which none has a value for tax purposes equal to or greater than 1,000,000.00 euros, whereby the assessment of Stamp Duty of item 28 of the TGIS made by AT, having as reference the sum of fractions with independent use suffers from the defect of violation of law.
If the same property were constituted in regime of horizontal property, none of the fractions would be taxed in stamp duty, so taxation in IS cannot result differently from that verified in IMI (fraction by fraction or unit by unit) only because the legal status of the property is altered without there being, materially, any difference in treatment of the property for purposes of IMI, because the legislator treats both situations in the same manner.
To tax the same material reality differently only on the basis of the legal-formal reality would violate the principle of tax equality because the legislator did not intend to treat differently what materially is equal, and this conviction is further strengthened when we note the unnecessary nature of a new assessment of the fractions or parts that have already been assessed in the case of transformation of a property entered in the matrix in regime of full ownership to a property constituted in regime of horizontal property.
All considered, it appears to violate the cited rules the conduct adopted for the assessment of IS, with reference to the property of the present case, that is, properties not possessing the status of horizontal property regime, composed of parts or fractions of independent use, with housing allocation, are only subject to stamp duty of Item 28 as to units in which the respective value for tax purposes is equal to or greater than one million euros.
Questions of Precluded Knowledge
Resulting from the above the declaration of illegality of the assessments that are the subject of the present proceedings – main request -, due to the defect of violation of law which prevents the renewal of the acts, the knowledge of the defects imputed by the Claimants to the remaining alternative requests is precluded, by inutility, namely to those relating to new assessments, suspension of assessments, application of safeguard clause and reimbursement of amounts paid.
In fact, article 124 of the CPPT, subsidiarily applicable by virtue of the provision in article 29, paragraph 1, of the RJAT, when establishing an order of knowledge of defects, presupposes that, when a defect that ensures effective protection of the rights of the claimants is judged well-founded, it is not necessary to know of the remaining ones, as, if it were always necessary to appraise all defects imputed to the challenged act, the order of their knowledge would be indifferent.
For the foregoing, knowledge is not taken of the remaining defects imputed by the Claimants to the acts whose declaration of illegality they requested, namely the request for annulment of assessments and the questions linked to IMI assessments.
Indemnification
With respect to the supplementary requests of the main request for condemnation of the Defendant to indemnify for "interest and other charges that may have to be spent with the bank guarantee", it is necessary to agree with the Defendant.
Indeed, it is invoked in the PI that interest supported by the claimants with the provision of bank guarantee should be paid, as well as other inherent charges, without these being quantified.
On the other hand, the guarantee may be provided, in accordance with article 53 of the LGT and article 169 of the CPPT, with a view to the suspension of tax enforcement, the provision of guarantees in other phases of collection is not provided for in law, even for lack of usefulness with a view to the legal purpose to which it is intended.
Consequently, neither the existence of enforcement in which a guarantee was provided nor the effective costs of the respective provision being proven, the request must be considered insubstantial, whereby the same will be dismissed.
Costs of Party
The claimants further requested the condemnation of AT to pay the costs supported with the filing of the arbitral request.
Here too AT is correct.
On the one hand, observing the rule that enumerates the matters for which the arbitral court (article 2 of the RJAT) is competent, the relevant matter for this request does not appear.
On the other hand, the legal regime of party costs is established in the Regulation of Judicial Costs, that is, in case of well-foundedness of the action, and after it becomes final, the winning party may, in accordance with its articles 25 and 26, request from the losing party the payment of the amount of costs supported with the action, calculated in accordance with the law.
It is, therefore, a request that is not for this Court to decide, which leads to the absolution of the Defendant from the instance in this part.
V - DECISION
In view of the foregoing, this Arbitral Court decides:
a) To judge as fully well-founded the request for declaration of illegality, with the consequent annulment of the stamp duty assessment acts duly identified above.
b) To judge as not well-founded the request for indemnification for the purpose of charges with the provision of bank guarantee;
c) To judge likewise as not well-founded the request for condemnation of AT to pay party costs.
Value of the Proceedings
In accordance with the provision of article 306, paragraphs 1 and 2, of the CPC and 97-A, paragraph 1, paragraph a), of the CPPT and 3, paragraph 2, of the Regulation of Costs in Tax Arbitration Proceedings, the value of €10,135.61 is fixed to the proceedings.
Costs
The costs, in the amount of €918.00 [Table I, attached to the Regulation of Costs in Tax Arbitration Proceedings], are entirely charged to the defendant [article 22-4, of the CAAD Regulation on tax arbitration matters]
· Let it be notified.
Lisbon, 2013-12-16
The Arbitrator
(José Ramos Alexandre)
[1] Value corresponding to the sum of the value for tax purposes of each independent fraction.
[2] Article 29 of the RJAT
[3] With discrimination and matricial description of each fraction and also with determination of the respective value for tax purposes by means of specific assessment of each fraction.
[4] Of which precise indication is the fact that the law considers that the taxable event still occurs on 31/10/2012, considering as value for tax purposes for purposes of stamp duty assessment that which corresponds to the value resulting from the CIMI rules, in accordance with paragraph c) of paragraph 1 of article 6 of Law No. 55-A/2012, and with respect to the year 2012 the rate will be 0.5% or 0.8%, depending on whether the property is assessed or not.
[5] We know that the option for the taxation of these properties has more to do with the taxation also of cases in which individuals use these vehicles to avoid displaying wealth, which only confirms the idea that the legislator intended to tax the wealth revealed by the holding or use of high-value assets, a fact which itself also demonstrates the high social status of those enjoying those properties and a greater contributive capacity.
[6] See "Real Estate Patrimonial Taxes – Stamp Duty – Annotated and Commented", Ed Engifisco, by J Silvério Mateus and L. Corvelo de Freitas, page 101 and following, in annotation to article 2 of the CIMI.
See also "Real Property Contribution and Tax on Agriculture – Legislation, Notes and Commentary", 4th Ed. Coimbra Editora, by António Manuel Cardoso Mota, in the same sense.
[7] Conviction assumed in the Binding Opinion-Proc. No. 2013000226-IVE no. 4599, with agreement dispatch of the Legal Substitute of the Director-General of AT (in the Finance Portal).
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