Process: 126/2016-T

Date: July 8, 2016

Tax Type: IMT Selo

Source: Original CAAD Decision

Summary

This CAAD arbitral proceeding (Process 126/2016-T) concerns IMT (Transfer Tax) assessments totaling €4,619.77 issued against a Portuguese Real Estate Investment Fund for Residential Leasing (FIIAH) managed by a fund management company. The Fund acquired residential properties before January 1, 2014, benefiting from IMT exemptions under Article 7(7)(a) of the FIIAH tax regime. When the Fund subsequently sold these properties without maintaining them in permanent residential rental for the required period, the Tax Authority issued IMT assessments, invoking Article 236 of Law 83-C/2013. This transitional provision established a three-year compliance period counting from January 1, 2014, for properties acquired before that date. The Claimant challenges the assessments on constitutional grounds, arguing Article 236 violates the principle of non-retroactivity of tax law enshrined in Article 103(3) of the Portuguese Constitution by retroactively imposing new expiry conditions on previously granted exemptions. The Claimant contends this retroactive application affects the essential content of fundamental rights, rendering the assessments null under Article 133(2)(d) of the Administrative Procedure Code, or alternatively voidable as illegal. The Claimant also alleges insufficient reasoning in the tax assessments. The Tax Authority defends that the provision is not retroactive, arguing it merely grants a compliance period for an existing requirement that begins after the law's entry into force, without altering the exemption's substantive conditions. The Authority further contends that even if unconstitutional, the assessments would be merely voidable rather than null, as nullity is reserved for violations of fundamental rights and guarantees, not breaches of the legality principle. The tribunal must determine whether Article 236 constitutes unconstitutional retroactive legislation and the appropriate invalidity classification.

Full Decision

ARBITRAL DECISION

  1. REPORT

1.1 A... – REAL ESTATE INVESTMENT FUND MANAGEMENT COMPANY, taxpayer no. ..., with registered office at ..., ..., ..., –... Lisbon, in its capacity as managing company and on behalf of B... – CLOSED REAL ESTATE INVESTMENT FUND FOR RESIDENTIAL RENTAL, taxpayer no. ..., requested the constitution of an arbitral tribunal, pursuant to article 2, no. 1, paragraph a), and article 10, both of Decree-Law no. 10/2011, of January 20 (hereinafter RJAT).

1.2 THE AUTHORITY FOR TAX AND CUSTOMS is named as Respondent in these proceedings.

1.3 The Deontological Council of the Administrative Arbitration Centre (CAAD) designated the undersigned to form the Single Arbitral Tribunal, notifying the parties, and the Tribunal was constituted on May 23, 2016.

1.4 The request for arbitral decision concerns the rejection of the administrative complaints filed by the Claimant relating to Transfer Tax (IMT) assessments number... and..., complaints and assessments which are better identified in the Claimant's request and in the documents attached thereto, to which reference is made herein.

The Claimant invokes the illegality of the assessments based on their unconstitutionality which, in its understanding, leads to their nullity, which it seeks to be declared by the Tribunal, or to their voidability, for which reason it subsidiarily requests that the assessments be annulled.

The Claimant bases its request alleging that article 236 (Transitional Rule within the Special Regime Applicable to FIIAH and SIIAH) provided by Law no. 83-C/2013, of December 31 - insofar as it determines the application of the current Tax Regime of FIIAH to properties that were acquired by FIIAH before January 1, 2014, counting, in such cases, the three-year period provided for in no. 14 from January 1, 2014 - constitutes a new regime of expiry of the exemptions provided for in no. 7, paragraph a) and no. 8 of article 8 (Tax Regime) of the Tax Regime of FIIAH and reveals a flagrant and unequivocal violation of the principle of non-retroactivity of tax law, enshrined in article 103, number 3, of the Constitution of the Portuguese Republic, which, in its understanding, leads to its unconstitutionality.

The Claimant considers that the assessments in question are thus affected by a defect which results in nullity, pursuant to paragraph d) of no. 2 of article 133.2 of the Code of Administrative Procedure (CPA) because they violate the essential content of a fundamental right.

Being that, it also considers, the assessments shall always be voidable, as illegal, on the same grounds.

The Claimant further alleges the lack of sufficient reasoning of the tax acts, sustaining that the assessments in question do not include, in a clear and sufficient manner, the necessary reasoning of fact and of law, to such an extent that, it states, it failed to understand the reasons that gave rise to such assessments, which makes them illegal and leads, in its understanding, to their voidability.

Furthermore, the Claimant requests the condemnation of the Respondent to refund the amounts paid by force of the assessments in question, plus compensatory interest on all amounts paid accrued until the date of refund.

1.5 THE AUTHORITY FOR TAX AND CUSTOMS replied, defending itself by impugning, sustaining that in the Portuguese legal-administrative order the general regime of invalidity of acts is, for reasons of legal certainty, mere voidability, including for those enacted on the basis of illegal or unconstitutional deliberations, with the Supreme Administrative Court having pronounced itself in the same sense.

The Respondent states that the declaration of nullity appears reserved for those acts that violate the essential content of a fundamental right, contending with the rights, freedoms and guarantees of citizens, but not those that contend with the principle of legality, as is, it says, the case in these proceedings.

The acts in question, being, without conceding such, violators of the principle of tax legality, would thus be voidable, but not null.

It further adds that the law in question is not affected by retroactivity, having not established any new requirement for the application of the exemption provided for in the tax regime of FIIAH, but merely having granted a period for compliance with a requirement already inherent to the regime itself, a period that only begins after the entry into force of the new law.

It is not, therefore, a matter of altering the assumptions, conditions of attribution or recognition of a tax benefit, but solely and only regulating the period of time for the purposes of proving compliance with a previously established requirement. For which reason the Respondent considers that the rule in question is not unconstitutional and concludes that the requests should be judged as unfounded.

1.6 Notified of the Tribunal's intention to dispense with the meeting of the arbitral tribunal provided for in article 18 of RJAT, as well as of allegations, the parties did not come to oppose.

  1. PROCEDURAL HEARING

The Tribunal was regularly constituted and is competent ratione materiae, in accordance with article 2.9 of RJAT.

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

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

  1. MATTERS OF FACT

With relevance to the decision on the merits, the Tribunal considers proven the following factual circumstances:

  1. The Fund was owner of the autonomous unit, intended for housing, designated by the letter "Z", of the property registered in the urban property register of the parish and municipality of... under article....

  2. The Fund was owner of the autonomous unit, intended for housing, designated by the letters "AC", of the property registered in the urban property register of the parish and municipality of... under article....

  3. Both units were acquired by the Fund benefiting from the Transfer Tax (IMT) exemption contained in number 7, paragraph a), of article 7 of the Tax Regime of FIIAH, exemptions which were recognized upon request, in accordance with article 10 of the Transfer Tax Code.

  4. By means of notices sent..., dated 5.06.2015, and..., dated 25.06.2015, the Claimant was notified to proceed with the assessment and payment of IMT relating to the identified units, in whose acquisition it had benefited from exemption, by reason of having given them a destination different from that which had determined the granting of the exemption;

  5. The Transfer Tax assessment no.... was issued on 25.06.2015, in the amount of 3,183.84€, relating to the alienation of the unit designated by the letters "AC" of the property registered in the urban property register of the parish and municipality of... under article..., from which it appears that it was given a destination different from permanent residential rental, with the tax benefit expiring;

  6. The declaration for Transfer Tax assessment no.... was issued on 07.07.2015, in the amount of 1,435.93€, relating to the alienation of the unit designated by the letter "Z" of the property registered in the urban property register of the parish and municipality of... under article..., from which it appears that it was given a destination different from permanent residential rental, with the tax benefit expiring;

  7. The Claimant proceeded to pay those amounts;

  8. The Claimant filed administrative complaints against both assessments, which were rejected by decisions issued on 07.12.2015.

Facts Not Proven

No other facts with relevance to the appreciation of the merits of the case were found that were not proven.

Reasoning of the Decision on Matters of Fact

The conviction regarding the facts given as proven was based on documentary evidence submitted by the Claimant, whose authenticity and correspondence to reality were not questioned by the Respondent.

  1. QUESTION TO BE DECIDED: ON THE LEGALITY OF THE TRANSFER TAX ASSESSMENTS IN QUESTION

The question submitted for appreciation by the Arbitral Tribunal is to assess the legality of the Transfer Tax assessments sub judice and to decide on the consequences of their eventual illegality.

It will also be the responsibility of the Tribunal to decide on the eventual absence or insufficiency of reasoning of the injurious acts in such a way that should lead to their annulment.

It is therefore necessary to appreciate the merits of the request for arbitral decision of the Transfer Tax assessments sub judice.

Let us examine:

Article 102 (rule inserted in Chapter X, under the heading "Tax Benefits") of Law no. 64-A/2008 of December 31 approved the special regime applicable to real estate investment funds for residential rental (hereinafter "FIIAH").

According to no. 7 of its article 8 of FIIAH, are exempt from IMT:

"a) The acquisitions of urban properties or of autonomous units of urban properties intended exclusively for permanent residential rental, by the investment funds referred to in no. 1;

b) The acquisitions of urban properties or of autonomous units of urban properties intended for own and permanent housing, as a result of the exercise of the option to purchase referred to in no. 3 of article 5 by the lessees of the properties that comprise the assets of the investment funds referred to in no. 1."

Article 235 of 83-C/2013, of December 31 (State Budget for 2014) introduced 3 additional numbers in the said article 8:

"14 — For the purposes of the provisions of nos. 6 to 8, urban properties are considered to be intended for permanent residential rental whenever they are the subject of a rental contract for permanent housing within a period of three years counted from the moment in which they became part of the fund's assets, and the taxpayer must communicate and provide proof to the Tax Authority of the respective effective rental, within 30 days following the end of the said period. 15 — When properties have not been the subject of a rental contract within the three-year period provided for in the previous number, the exemptions provided for in nos. 6 to 8 shall cease to have effect, and in such case the taxpayer must request from the Tax Authority, within 30 days following the end of the said period, the assessment of the respective tax. 16 — If properties are alienated, with the exception of cases provided for in article 5, or if the FIIAH is subject to liquidation, before the period provided for in no. 14 has elapsed, the taxpayer must also request from the Tax Authority, before the alienation of the property or the liquidation of the FIIAH, the assessment of the tax owed in accordance with the previous number."

In article 236 the following transitional provision is contained: "The provisions of nos. 14 to 16 of article 8 of the special regime applicable to FIIAH and SIIAH, approved by articles 102 to 104 of Law no. 64-A/2008, of December 31, apply to properties that were acquired by FIIAH from January 1, 2014 onwards. 2 - Without prejudice to the provision of the previous number, the provisions of nos. 14 to 16 of article 8 of the special regime applicable to FIIAH and SIIAH, approved by articles 102 to 104 of Law no. 64-A/2008, of December 31, equally apply to properties that were acquired by FIIAH before January 1, 2014, counting, in such cases, the three-year period provided for in no. 14 from January 1, 2014."

It is against this transitional rule that the Claimant rises up, considering it unconstitutional, due to violation of the principle of non-retroactivity of tax law, enshrined in article 103, number 3, of the CRP, insofar as, in its understanding, it constitutes a new regime of expiry of the exemptions.

Upon examination, it results from the proven facts that the units in question were acquired by the Fund benefiting from IMT exemption under paragraph a) of no. 7 of article 8 of the legal regime of FIIAH.

Such rule requires that the property be intended for permanent residential rental in order to benefit from such exemption.

That is, the requirement to allocate the property to residential rental is not a requirement of the amendments introduced by articles 235 and 236 of 83-C/2013, of December 31, but rather a requirement of the tax regime of FIIAH.

It is the natural consequence of the motivations that led to the creation of a special temporary regime applicable to these Funds, linked to the economic crisis and the consequent increased difficulty of individuals and families in paying the installments of loan contracts concluded for the acquisition of their own permanent housing, the regime thereby intending to address situations of hardship and encourage permanent residential rental.

The State Budget for 2014 does, it is true, establish new rules for the exemption: if the allocation to permanent residential rental does not occur within the period of 3 years after the property enters the Fund and, also if the FIIAH is subject to liquidation, before that period has elapsed, the purchaser must request the assessment of the IMT that was not assessed.

This was not, however, the reason that gave rise to the assessments in question, which is clearly apparent from the analysis of the documents attached.

The Transfer Tax assessments carried out with respect to the properties described above were not based on their retention in the fund for a period equal to or greater than 3 years without there having been allocation to permanent residential rental.

The assessments in question, moreover as results from the assessment notes attached to the file, were based on the fact that a different destination was given to the properties "from that on which the benefit was based", "the exemption expiring".

The fact that the alienation of the property causes the exemption to expire is not, as shall be explained below, a new fact, resulting from the addition made by the State Budget for 2014.

New will be, at most, the requirement for the purchaser to request the assessment of the taxes that were not assessed before the alienation.

A provision that is merely procedural and that merely concretizes what already results from the Statute of Tax Benefits.

It seems to us, therefore, evident that the question sub judice is not connected with the eventual unconstitutionality, due to violation of the prohibition of retroactivity of tax law, of the numbers added to article 8 by the State Budget of 2014.

In fact, the alienation of the units in question by the Fund always determines the expiry of the exemption, because it was given a different destination from that which had determined the granting of the benefit.

For compliance with paragraph a) of no. 7 of article 8, it is not enough to have a declared intention at the time of acquisition of the property, but an actual allocation to permanent residential rental.

It is not therefore true, as the Claimant asserts, that the facts or circumstances on which the expiry of the exemption depended were not already legally provided for at the moment of recognition of the exemption, at least with respect to the circumstances that actually occurred: the alienation of the property.

In fact, the granting of a benefit already depended – and always depends – on the actual verification of its respective requirements, in accordance with article 12 of the Statute of Tax Benefits (article 11, in the wording of the Statute of Tax Benefits that was in force prior to its republication by Decree-Law no. 108/2008, of 26/06).

The fact that the Fund proceeded to alienate the property which, upon acquisition, it declared it would allocate so that it would be recognized – as it was – the IMT exemption - would always determine, even if the added number 16 did not expressly provide for it, the expiry of such exemption, by virtue of the provisions of article 12 and of no. 3 of article 14 of the Statute of Tax Benefits (former article 12, no. 3, in the wording of the Statute of Tax Benefits that was in force prior to its republication by Decree-Law no. 108/2008, of 26/06), according to which "When the tax benefit relates to the acquisition of property intended for the direct realization of the aims of the purchasers, it ceases to have effect if that property is alienated or given another destination without authorization from the Minister of Finance, without prejudice to the remaining sanctions or different regimes established by law."

The Claimant neither alleged nor, for that matter, demonstrated to have obtained the authorization provided therein, or any other circumstance that would prevent the granted exemptions from ceasing to have effect as a consequence of the alienation.

It is for this reason that we understand that the question of the alleged unconstitutionality of the added provisions does not arise in the case in question, insofar as, in the part corresponding to the alienation of the property, no. 16 of article 8 of the Legal Regime of FIIAH merely reiterates what already resulted from the provisions of the Statute of Tax Benefits.

Which, moreover, is well understood, taking into account the purpose of the granting of tax benefits.

The purpose for the attribution of the tax benefit in the context of IMT (and, likewise, of CIT, which is not at issue in these proceedings) to FIIAH is, clearly, its allocation to permanent residential rental— "The acquisitions of urban properties or of autonomous units of urban properties intended exclusively for permanent residential rental, by the investment funds..."

For which reason the consequence of being given a different destination is that the exemption could not have been granted, and it is necessary to restore legality, assessing the taxes which, were it not for the declaration of intention made at the time of acquisition, would have had to be assessed.

Concluding, the alienation of the property would always determine the expiry of the exemption by application of the provision of no. 3 of article 14 of the Statute of Tax Benefits, there being not therefore, in the situation sub judice, any application of a retroactive rule that comes to introduce a new regime of expiry of the exemptions, nor does there exist any injury to the expectations of the Claimant or aggravation of its tax position, for which reason we understand that the Transfer Tax assessments in question are legal.

The examination of the question raised by the Claimant regarding the alleged retroactivity of the regime provided for by article 236 of the State Budget Law for 2014 is thus prejudiced insofar as, as was demonstrated above, the conditions that gave rise to the tax assessments in question have nothing to do with the additions made by the said article, but only with the alienation of the property and consequent allocation to a purpose different from that for which the IMT exemptions were granted.

On the alleged defect of lack of reasoning of the assessments:

The Claimant further alleges the lack of sufficient reasoning of the tax acts, sustaining that the assessments in question do not include, in a clear and sufficient manner, the necessary reasoning of fact and of law, to such an extent that, it states, it failed to understand the reasons that gave rise to such assessments, which makes them illegal and leads, in its understanding, to their voidability.

Analyzing:

The requirement for reasoning of administrative acts (a concept in which tax acts are included, in the face of what is laid down in art. 120 of the CPA) is formulated in art. 268, no. 3, of the CRP, which establishes that "administrative acts are subject to notification to the interested parties, in the form provided by law, and require express and accessible reasoning when they affect rights or legally protected interests".

In no. 4 of the same article, contentious remedy is guaranteed to the interested parties, on the grounds of illegality, against any administrative acts, regardless of their form, that injure their rights or legally protected interests.

From the conjunction of these two rules it results that the right of contentious challenge of injurious acts, constitutionally recognized, is not satisfied with the mere possibility of the interested parties being able to challenge them judicially, rather it is required that they be provided with the possibility of challenging them with complete knowledge of the reasons that motivated them, that is, it is a matter of a right to contentious challenge with maximum effectiveness.

In tax matters, the duty to provide reasoning for decision-making acts of tax procedures and tax acts is concretized in art. 77 of the General Tax Law.

In accordance with the latter article, "the decision of procedure is always reasoned by means of a succinct exposition of the reasons of fact and of law that motivated it, with the reasoning being able to consist of mere declaration of agreement with the grounds of earlier opinions, information or proposals, including those that are part of the tax audit report" and the "reasoning of tax acts may be carried out in summary form, and must always contain the applicable legal provisions, the qualification and quantification of the tax facts and the operations for determining the taxable matter and the tax".

The act will be sufficiently reasoned when the administered party, placed in the position of a normal recipient – the bonus pater familias – can come to know the factual and legal reasons that are at its genesis, in such a way as to allow him to choose, in an informed manner, between the acceptance of the act or the activation of the legal means of challenge, and in such a way that, in the latter circumstance, the court can also exercise effective control of the legality of the act, assessing its legal correctness in the face of its contextual reasoning.

The same is to say, it is essential that the contextual discourse, expressed and set forth by the author of the act make known to its recipient, a recipient presumed to be normal or reasonable placed before the concrete circumstances, the functional motivation of the act, the reasons why a decision was made in a certain direction and not in any other, allowing him to choose consciously between the acceptance of the legality of the act or its challenge.

This means that the reasoning, even if made by reference or in a very summary form, cannot fail to be clear, congruent and to enclose the aspects, of fact and of law, that allow knowledge of the cognitive and evaluative itinerary pursued by the Administration for the determination of the act.

The reasoning fulfills, as is known, a function of justifying the legitimacy and rationality of the Administration, for which reason the reasoning cannot be considered as a mere formal element of the administrative act of which one can dispense when its absence or insufficiency does not cause the lack of defense of the administered party.

However, it is the case that, in the case sub judice, both the content of the notices referred to in 4) of the proven matters of fact, and that of the assessments in question, referred to in 5) and 6) of that matter, although summary, are, in our understanding, in such a way as to allow both the Respondent and the judge to be in a position to understand the reasons of fact and of law that presided over them, in addition to containing all the elements that allow for the verification of the operations for determining the taxable matter and the tax.

And so much is it evident to us, from the administrative complaints filed and from the request for constitution of the arbitral tribunal, that the taxpayer fully understood the content of the injurious tax acts here in question, as well as the reasons, of fact and of law, that presided over them.

What happens, as it rightly states, is that, although it understands them, it does not conform to them.

From which it results that only after the vast argumentation concerning the material defects which, in its view, lead to the illegality of the acts, does the Claimant come, finally, to allege that it did not understand them.

Now, the Claimant cannot contradict the understanding that led to the impugned assessments and in a single breath request that it did not understand the respective grounds.

For these reasons, the defect of lack of reasoning alleged by the Claimant is unfounded.

Having decided on the legality of the assessments in question, the examination of the consequences of an eventual illegality is thus prejudiced, as well as the request for condemnation to compensatory interest.

  1. DECISION

In view of the foregoing, it is decided to judge completely unfounded the requests of the Claimant.

The value of the process is fixed at 4,619.77€ (four thousand nine hundred and nineteen euros and seventy-seven cents) in accordance with the provisions of articles 3, no. 2 of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT), 97-A, no. 1, paragraph a) of the Code of Tax Procedure and Process and 306 of the Code of Civil Procedure.

The amount of costs is fixed at 612.00€ (six hundred and twelve euros), under article 22, no. 4 of RJAT and Table I attached to RCPAT, at the charge of the Claimant, in accordance with the provisions of articles 12, no. 2 of RJAT and 4, no. 4 of RCPAT.

Notify.

Lisbon, July 8, 2016

The Arbitrator

(Eva Dias Costa)

Text prepared by computer, in accordance with article 131, no. 5 of the Code of Civil Procedure, applicable by reference of article 29, no. 1, paragraph e) of RJAT.

Frequently Asked Questions

Automatically Created

What is the IMT and Stamp Tax exemption regime applicable to Portuguese Real Estate Investment Funds for Residential Leasing (FIIAH)?
The IMT and Stamp Tax exemption regime for Portuguese Real Estate Investment Funds for Residential Leasing (FIIAH) is governed by the special tax regime established for these funds. Under Article 7(7)(a) of the FIIAH tax regime (later Article 8(7)(a)), properties acquired by FIIAH funds benefit from IMT exemption when destined for permanent residential rental. The exemption is conditional and subject to compliance requirements, including maintaining the property in residential rental for a specified period. If the property receives a destination different from that which justified the exemption, the tax benefit expires and IMT becomes due. The exemption must be requested in accordance with Article 10 of the IMT Code. Law 83-C/2013 introduced transitional provisions through Article 236, establishing specific rules for properties acquired before January 1, 2014, including a three-year compliance period counted from that date.
Can retroactive tax legislation override previously granted IMT and Stamp Tax exemptions for FIIAH property acquisitions?
The retroactive application of tax legislation to override previously granted IMT exemptions raises serious constitutional concerns under Portuguese law. Article 103(3) of the Portuguese Constitution establishes the principle of non-retroactivity of tax laws, prohibiting taxes from being retroactive. When a taxpayer acquires property under a specific tax regime with granted exemptions, subsequent legislation that retroactively imposes new conditions or shortens compliance periods may violate this constitutional guarantee. The key issue is whether new legislation merely clarifies existing requirements or substantively alters the conditions under which exemptions were granted. If a transitional provision retroactively counts compliance periods from a date prior to the law's enactment, affecting exemptions already granted under the previous regime, it may constitute impermissible retroactive taxation. However, tax authorities may argue that provisions regulating compliance timing or proof requirements do not constitute retroactive substantive changes but rather procedural clarifications of inherent regime requirements.
Does Article 236 of Law 83-C/2013 violate the principle of non-retroactivity of fiscal law under Article 103(3) of the Portuguese Constitution?
Article 236 of Law 83-C/2013 presents significant constitutional concerns regarding violation of the non-retroactivity principle under Article 103(3) of the Portuguese Constitution. The provision establishes a transitional regime for FIIAH properties acquired before January 1, 2014, stipulating that the three-year compliance period referenced in the tax regime begins counting from January 1, 2014, regardless of the actual acquisition date. For funds that acquired properties before this date under the prior regime's exemption conditions, this transitional rule effectively retroactively imposes a new, potentially shorter, compliance timeline. The constitutional issue centers on whether this provision impermissibly applies new legal consequences to past transactions completed under different rules. Taxpayers who acquired properties years before 2014 expecting to comply with the regime as then understood may find their exemptions expire sooner than anticipated. This retroactive shortening of compliance periods could violate the constitutional prohibition on retroactive taxation, particularly if it fundamentally alters the economic and legal basis upon which the original investment and exemption application were made.
What are the legal consequences of unconstitutional tax assessments — nullity or annulability — under Portuguese administrative law?
Under Portuguese administrative law, the legal consequences of unconstitutional tax assessments involve critical distinctions between nullity (nulidade) and annulability (anulabilidade). The general regime governing administrative act invalidity favors annulability for reasons of legal certainty, even for acts based on illegal or unconstitutional norms. Nullity is reserved for the most serious defects, particularly those violating the essential content of fundamental rights under Article 133(2)(d) of the Administrative Procedure Code. Tax assessments issued pursuant to unconstitutional legislation that violates the non-retroactivity principle protected by Article 103(3) of the Constitution may constitute violations of fundamental rights, potentially justifying nullity classification. However, the Tax Authority typically argues that violations of the legality principle, as distinct from violations of fundamental rights and guarantees of citizens, result only in annulability. The Supreme Administrative Court has addressed this distinction, generally holding that unconstitutional acts are voidable unless they violate essential fundamental rights content. The classification matters significantly: null acts are void ab initio and may be challenged at any time, while voidable acts require timely challenge and may become definitive if not contested within statutory deadlines.
How does the CAAD arbitral tribunal review challenges to IMT and Stamp Tax liquidations issued by the Portuguese Tax Authority?
The CAAD (Centro de Arbitragem Administrativa) arbitral tribunal reviews challenges to IMT and Stamp Tax liquidations through a specialized administrative arbitration procedure established by Decree-Law 10/2011 (RJAT). Taxpayers may request arbitral tribunal constitution under Article 2(1)(a) and Article 10 of RJAT to challenge tax assessments, including IMT liquidations and rejected administrative complaints. The procedure involves: (1) filing a request for arbitral decision identifying the contested assessments and legal grounds; (2) designation of an arbitrator by the Deontological Council; (3) tribunal constitution; (4) submission of the Tax Authority's reply; (5) evidentiary phase establishing relevant facts; and (6) legal analysis and decision on merits. The tribunal has jurisdiction to review both legality and constitutionality issues, including whether assessments violate constitutional principles like non-retroactivity under Article 103(3). Taxpayers may challenge assessments on grounds including unconstitutionality of underlying legislation, insufficient reasoning, and procedural defects. The tribunal can declare assessments null or annul them, order refunds of amounts paid, and award compensatory interest. This arbitration provides an alternative to judicial court proceedings, offering specialized tax expertise and potentially faster resolution of IMT and Stamp Tax disputes.