Process: 128/2016-T

Date: July 8, 2016

Tax Type: Selo

Source: Original CAAD Decision

Summary

This arbitral decision addresses the constitutionality of retroactive stamp tax requirements imposed on Real Estate Investment Funds for Residential Rental (FIIAH). The claimant, acting as fund manager, acquired properties in December 2013 exclusively for residential leasing purposes, benefiting from stamp tax exemption under the original FIIAH regime. When these properties were sold in 2015 without having been leased, the Tax Authority issued stamp tax assessments totaling €2,208, arguing the properties were given a purpose other than residential rental. The dispute centers on Law 83-C/2013 (State Budget 2014), which introduced Article 235 adding a new temporal condition requiring properties to be subject to residential rental contracts within three years of acquisition to maintain stamp tax exemption. Critically, Article 236 contained a transitional provision applying this three-year requirement retroactively to properties acquired before January 1, 2014, with the period counted from that date. The claimant challenged this retroactive application as unconstitutional, arguing it violated the principle of non-retroactivity of tax law, protection of legitimate expectations, and legal certainty. At the time of acquisition in 2013, no temporal conditions existed for the exemption—only that properties be acquired for residential rental purposes. The claimant contends that imposing additional requirements retroactively on already-granted tax benefits creates an impermissible more onerous situation, fundamentally altering the legal framework under which the investment decisions were made and the tax benefits were originally conceded.

Full Decision

ARBITRAL DECISION

I. REPORT

A… – INVESTMENT FUND MANAGEMENT COMPANY, S.A. (hereinafter referred to as "Claimant"), with tax identification number … and with registered address at Rua…, n.º…, …, …-…Lisbon, in its capacity as fund manager and on behalf of B… – CLOSED REAL ESTATE INVESTMENT FUND FOR RESIDENTIAL RENTAL, with tax identification number …, filed a request for the constitution of a single Arbitral Tribunal, in accordance with the combined provisions of articles 2.º and 10.º of Decree-Law no. 10/2011, of 20 January (Legal Regime of Arbitration in Tax Matters, hereinafter referred to as RJAT), in which the Tax and Customs Authority (hereinafter AT) is the Respondent, with the objective of obtaining the declaration of illegality of the dismissal orders issued by AT regarding the administrative appeals presented by the Claimant and, consequently, of the Stamp Tax (IS) assessment acts nos. … and ..., in the amount of €2.208.

The request for constitution of the Arbitral Tribunal was accepted by the Esteemed President of CAAD on 18 March 2016 and automatically notified to AT.

In accordance with the provision in subparagraph c) of article 11.º, n.º 1 of RJAT, the single Arbitral Tribunal was constituted on 23 May 2016.

AT responded defending the lack of merit of the claim.

The meeting referred to in article 18.º of RJAT was waived, given the nature of the subject matter contained in the case file.

The Arbitral Tribunal is regularly constituted and is materially competent, in accordance with subparagraph a) of article 2.º, n.º 1 of RJAT.

The parties have legal personality and capacity, have standing and are represented (article 4.º, and n.º 2 of article 10 of RJAT and article 1.º of Order no. 112/2011, of 22 March).

There are no nullities, exceptions or preliminary issues that prevent the immediate consideration of the merits of the case.

II. FACTUAL MATTERS

Based on the evidence contained in the case file, the following facts are considered proven:

A) On 23 December 2013, the Claimant, in its capacity as fund manager and on behalf of B… – CLOSED REAL ESTATE INVESTMENT FUND FOR RESIDENTIAL RENTAL, acquired the autonomous fraction designated by the letter "Z" of the urban property registered in the land registry under article … and the autonomous fraction designated by the letters "AC" of the urban property registered in the land registry under article …;

B) The aforementioned properties were acquired with the exclusive purpose of being let for permanent residential use;

C) The acquisition of said properties benefited from Stamp Tax exemption under n.º 8 of article 8.º of the Legal Regime of FIIAHs;

D) On 27 March 2015 and 14 April 2015, the identified properties were sold;

E) Stamp Tax assessments no. … in the amount of €1.264,00 and no.…, in the amount of €944,00 were made;

F) The Claimant presented an administrative appeal against the above-identified Stamp Tax assessment acts;

G) On 7 December 2015, the Claimant was notified of the dismissal orders of the administrative appeals presented;

H) The identified Stamp Tax assessment acts were based on the fact that the properties were given a purpose other than rental for residential use.

Taking into account the positions assumed by the parties, in light of article 110.º, n.º 7 of CPPT and the documentary evidence attached to the case file, the above-listed facts are considered proven, as relevant to the decision.

III. LEGAL MATTERS

A – THE PARTIES' POSITIONS

The Claimant alleges in its arbitral petition the following:

  1. The illegality of the dismissal orders of the administrative appeals presented regarding the identified Stamp Tax assessment acts (cf. Documents 1 to 4) should be declared, and they should be annulled, with the consequent restitution of the tax paid, plus indemnification interest, all in accordance with subparagraph a) of article 2.º, n.º 1 of Decree-Law no. 10/2011;

  2. Following the economic crisis triggered in 2008, various entities faced credit constraints, which resulted in real obstacles to the fulfilment of commitments made to financial and credit institutions;

  3. In light of the pressing need to devise an effective and immediate response to the economic-financial situation, the legislator introduced into the Portuguese legal system the figure of FIIAHs (Real Estate Investment Funds for Residential Rental), having established the special regime applicable to them (cf. articles 102.º and following of Law no. 64-4/2008, of 31 December – State Budget for 2009);

  4. In tax matters, the legislator granted FIIAHs a wide range of tax benefits, substantially more significant than those provided for other real estate investment funds;

  5. In this context, reference is made to the Stamp Tax exemption provided for in n.º 8 of article 8.º of the special regime under analysis, according to which "all acts performed are exempt from stamp tax, provided they are connected with the transfer of urban properties intended for permanent residential use that occurs as a result of the conversion of the ownership right of such properties into a rental right over them, as well as with the exercise of the purchase option";

  6. In accordance with the above, it was evident from the wording of the provision that the application of those tax benefits, in Stamp Tax, in the sphere of FIIAHs was not subject to any temporal condition, being sufficient, for this purpose, the mere occurrence of the taxable fact, i.e. the act of acquisition of the ownership right over the properties;

  7. Nevertheless, the State Budget for 2014 (Law no. 83-C/2013, of 31 December) introduced significant changes to the tax regime applicable to FIIAHs, establishing, namely, new conditions for the grant of tax benefits to operations carried out by this type of real estate investment fund;

  8. In this context, it is important to highlight n.º 14 added to the aforementioned article 8.º, which established that, for the purposes of application of the above-mentioned Stamp Tax exemption, "urban properties are considered to be intended for rental for permanent residential use whenever they are the subject of a rental contract for permanent residential use within three years from the moment they became part of the fund's assets (…)" – provision added by article 235.º of Law no. 83-C/2013;

  9. And, within the scope of these changes, the legislator further provided for a transitional provision, establishing that the new rules, in addition to being applicable to urban properties acquired by investment funds from 1 January 2014, should also be applicable to "(…) properties that were acquired by FIIAH before 1 January 2014, counting in those cases the three-year period provided for in n.º 14 from 1 January 2014" (emphasis ours) – cf. article 236.º of Law no. 83-C/2013.

  10. Now, the change promoted by the aforementioned provisions thus assumed a markedly retroactive character, stipulating additional conditions or requirements for the application of tax benefits to operations carried out in the past – which had already benefited from those benefits.

  11. Thus, in these terms, the above-mentioned transitional provision clearly violates the principle of non-retroactivity of tax law and, furthermore, violates the principle of protection of confidence and legal certainty, all constitutionally enshrined, and the Claimant cannot accept its application in this case and the inherent Stamp Tax assessments that it now challenges;

  12. Indeed, in the situation under analysis, the legislator altered the applicable legal regime and, in the respective transitional provision, came to condition the grant of tax benefits already conceded in the past to compliance with the (new) requirements and conditions – which were not provided for at the moment when the tax acts were performed and when the tax benefit of Stamp Tax exemption was granted to those acts;

  13. The new regime thus created a more onerous situation in the Fund's sphere – which acquired the properties under the previous regime, benefiting from Stamp Tax exemption (and IMT exemption) – imposing a new legal framework to the taxable fact that occurred in the past, without the Fund being able to "adapt its conduct in accordance with the new rules". This is an unacceptable and manifestly abusive situation, which cannot proceed;

  14. Indeed, this "new" framework applied to property acquisitions made in 2013 is manifestly detrimental to the Fund, thwarting all its expectations and preventing it from "adapting" its decisions – in effect, if the Stamp Tax exemption (and IMT exemption) had not been applicable to the acquisition operations in question, the Fund would certainly not have made that investment;

  15. In light of the above, it is important to infer that the provision that based the assessments sub judice – i.e. article 236.º of Law no. 82-C/2013, of 31 December – violates the constitutional principle of non-retroactivity of tax law, as enshrined in article 103.º, n.º 3 of the CRP (Portuguese Constitution);

  16. And, therefore, that provision should be disapplied, in the specific case, as manifestly unconstitutional, with the consequent annulment of the Stamp Tax assessment acts sub judice.

  17. Parallel to the unconstitutionality inherent in the position advocated by AT, the Claimant understands that the Stamp Tax assessment acts that are the object of the present petition do not include, clearly and sufficiently, the necessary factual and legal reasoning;

  18. Thus, it requests that AT be condemned to pay indemnification interest, at the legal rate, calculated from the date of payment of the tax in question until its full reimbursement.

For its part, AT alleges, in summary, the following:

  1. First, it must be noted that, at the time of creation of the tax regime applicable to FIIAHs, Stamp Tax exemptions required, respectively: (i) that the acquisition of the properties had as exclusive purpose "rental for permanent residential use" and, (ii) that the transfer had as its object "properties intended for permanent residential use that occurs as a result of the conversion of the ownership right of such properties into a rental right over them, as well as with the exercise of the purchase option provided for in n.º 3 of article 5";

  2. Now, in the case in question, the property was not given the purpose provided for in the law, the allocation to rental;

  3. In truth, the objective for the grant of a tax benefit under IMT to FIIAHs was established clearly from the beginning - "The acquisitions of urban properties or autonomous fractions of urban properties intended exclusively for rental for permanent residential use, by investment funds";

  4. That is, the taxpayers who wished to benefit from the aforementioned exemptions always had, since the beginning of the tax regime applicable to FIIAHs, to comply with the requirement that such properties be intended exclusively for rental for permanent residential use;

  5. The assessments now challenged were precisely based on the fact that the property was given a purpose different from that which gave rise to the grant of the tax benefit;

  6. In the Portuguese legal and administrative order, for reasons of legal certainty the general rule of invalidity of administrative acts is mere voidability, which ensures that, if an act suffers from a defect that implies its voidability, after a certain time period without its validity being challenged, such act becomes definitive, thus becoming valid;

  7. The assessment acts, insofar as they do not violate the essential content of the fundamental right but only the principle of tax legality, are merely voidable;

  8. However, in the case in question the challenged acts were performed in accordance with the law in force and there is no violation of constitutional principles;

  9. By virtue of the changes introduced, from 1 January 2014:

a) The exemption from IMT and IS of properties integrated in FIIAHs is extended until 2015.

b) Proof of the existence of a rental contract for permanent residential use became required for the purpose of complying with the requirement of allocation of properties to rental for permanent residential use.

  1. These changes apply to properties that have been acquired by FIIAH from 1 January 2014;

  2. Regarding properties that have been acquired by FIIAH before 1 January 2014, the three-year period is counted from 01.01.2014;

  3. The new law does not alter the requirements, the conditions of grant and recognition of the Stamp Tax exemption benefit, there being only the legal provision of the time and manner of compliance with a legal requirement previously established;

  4. Therefore, it is easy to infer that the exemption in question simply ceased to apply: what happened, only, was that proof means were established that aimed to implement a legal requirement provided for in an indeterminate manner with total and absolute respect for the principle of legal certainty and protection of confidence;

  5. For which reason it cannot be stated that there is any violation of the principle of non-retroactivity of tax law, namely, through the subsequent imposition of any conditions determining the lapse of the right to exemption from IMT or IS that were not initially provided for;

  6. The new wording introduced by Law no. 83-C/2013, of 31 December, in favor of legal certainty and the principle of protection of confidence and in the spirit of the legislator, when creating the regime, only served to densify the criterion already required, stipulating "that urban properties are intended for rental for permanent residential use whenever they are the subject of a rental contract for permanent residential use within three years from the moment they became part of the fund's assets".

  7. Therefore, there is no situation of retroactivity of tax law in the case in question, but, even if it were not understood thus, the Constitutional Court has understood, in Rulings nos. 11/83 and 66/84 and 141/85 that, although a radical prohibition of retroactive taxes cannot be drawn from the Constitution, this should be considered constitutionally prohibited when such retroactivity is «arbitrary and oppressive and violated «in an intolerable manner the legal certainty and confidence that persons have the obligation (and also the right) to place in the legal order that governs them»;

  8. It is thus evident that, from the beginning of the regime, the tax benefits applicable to FIIAHs always depended on the allocation of properties to rental for permanent residential use;

  9. Notwithstanding the legislative changes introduced by the State Budget Law for 2014, AT, within the scope of its supervisory powers, would always be able to assess, in order to conclude for the continuation of the benefit or, rather, for the restoration of the system of taxation-rule in accordance with article 14º of the EBF;

  10. Indeed, the lapse of the exemption due to failure of the requirements for grant was already expressly provided for in article 14.º, n.º 2 of the EBF, with article 8.º, n.º 16 of the regime merely establishing a defined period whose calculation begins only after the entry into force of the new law;

  11. The Constitutional Court has already pronounced on this matter in the appeals presented by the now Claimant in proceedings nos. 688/2015-T and 398/2015-T in which it decided not to know the merits of the appeal;

  12. The request for payment of indemnification interest is therefore groundless as there is no error in the conduct of the respondent entity, much less an error attributable to its services, thus excluding the application of article 43.º of the LGT.

In light of the above, regarding the position of the Parties and the arguments presented, to determine whether the Stamp Tax assessment acts sub judice are or are not illegal by violation of the provision in article 103.º, n.º 3 of the CRP, it will be necessary to verify what interpretation should be made of article 236.º of Law no. 83-C/2013, of 31 December.

For this, it is important to consider the provision of article 11.º of the General Tax Law (LGT), according to which the interpretation of tax law should be carried out in light of the general principles of interpretation.

The general principles of interpretation are established in article 9.º of the Civil Code (CC), as follows:

"1. The interpretation should not be confined to the letter of the law, but should reconstruct from the texts the legislative intent, taking especially into account the unity of the legal system, the circumstances in which the law was elaborated and the specific conditions of the time in which it is applied.

  1. However, the interpreter cannot consider the legislative intent that does not have in the letter of the law a minimum of verbal correspondence, even if imperfectly expressed.

  2. In fixing the meaning and scope of the law, the interpreter shall presume that the legislator enshrined the most correct solutions and knew how to express its intent in adequate terms."

In light of those principles, let us then examine what the tax regime applicable to acquisitions of urban properties or autonomous fractions of urban properties intended exclusively for rental for permanent residential use by FIIAHs and SIIAHs was before the amendments provided for by article 236.º of the State Budget Law for 2014 were introduced.

Article 8.º of the legal regime of FIIAHs and SIIAHs provided as follows:

"Article 8.º

Tax Regime

1 - Exempt from Corporate Income Tax (IRC) are the income of any nature obtained by FIIAHs constituted between 1 January 2009 and 31 December 2013, which operate in accordance with national legislation and in compliance with the conditions provided for in the previous articles.

2 - Exempt from Personal Income Tax (IRS) and IRC are the income relating to units of participation in the investment funds referred to in the previous number, paid or made available to their respective holders, whether by distribution or redemption, excluding the positive balance between the capital gains and losses resulting from the sale of units of participation.

3 - Exempt from IRS are the capital gains resulting from the transfer of properties intended for own use for residential purposes to investment funds referred to in n.º 1, which occurs as a result of the conversion of the ownership right of such properties into a rental right.

4 - The capital gains referred to in the previous number shall be taxed, under the general rules, if the taxpayer terminates the lease contract or does not exercise the purchase option right provided for in n.º 3 of article 5.º, with the periods of expiration and prescription being suspended for the purposes of collection and charging of IRS, until the end of the contractual relationship.

5 - Deductible from the tax assessment, under the terms and limits contained in subparagraph c) of n.º 1 of article 85.º of the IRC Code, are the amounts borne by the tenants of the properties of the investment funds referred to in n.º 1 as a result of the conversion of an ownership right of a property into a rental right.

6 - Exempt from IMI (Municipal Property Tax), while they remain in the portfolio of the FIIAH, are the urban properties intended for rental for permanent residential use that form part of the assets of the investment funds referred to in n.º 1.

7 - Exempt from IMT (Transfer Tax):

a) The acquisitions of urban properties or autonomous fractions of urban properties intended exclusively for rental for permanent residential use, by investment funds referred to in n.º 1;

b) The acquisitions of urban properties or autonomous fractions of urban properties intended for own use for permanent residential use, as a result of the exercise of the purchase option referred to in n.º 3 of article 5.º by the tenants of properties that form part of the assets of the investment funds referred to in n.º 1.

8 - Exempt from stamp tax are all acts performed, provided they are connected with the transfer of urban properties intended for permanent residential use that occurs as a result of the conversion of the ownership right of such properties into a rental right over them, as well as with the exercise of the purchase option provided for in n.º 3 of article 5.º

9 - Exempt from supervision fees are the managing entities of FIIAHs with respect exclusively to the management of funds of this nature.

10 - Excluded from the exemptions provided for in this article are entities that are resident in a country, territory or region subject to a clearly more favorable tax regime, contained in a list approved by order of the Minister of Finance.

11 - The obligations provided for in article 119.º and in n.º 1 of article 125.º of the IRC Code must be complied with by managing or recording entities.

12 - If the requirements referred to in n.º 1 cease to be met, the application of the regime provided for in this article ceases, with the regime provided for in article 22.º of the Tax Benefits Statute applying, with the income of the investment funds referred to in n.º 1 that, at that date, have not yet been paid or made available to their respective holders being taxed autonomously, at the rates provided for in article 22.º of the same instrument, plus compensatory interest.

13 - The managing entities of the investment funds referred to in n.º 1 are jointly and severally liable for the tax debts of the funds whose management is their responsibility."

From the above, it results, with interest for the appreciation of the assessment acts sub judice, that "Exempt from stamp tax are all acts performed, provided they are connected with the transfer of urban properties intended for permanent residential use that occurs as a result of the conversion of the ownership right of such properties into a rental right over them, as well as with the exercise of the purchase option provided for in n.º 3 of article 5.º"

Thus, covered by the Stamp Tax exemption are i) all acts performed by eligible FIIAHs; ii) connected with the transfer of urban properties intended for permanent residential use; iii) that occurs as a result of the conversion of the ownership right of such properties into a rental right over them; or iv) the exercise of the purchase option by the tenant until 31 December 2020.

Thus, if there had been no legislative amendment to article 8.º, the Stamp Tax exemption would only be applicable i) in the case of transfer as a result of the conversion of the ownership right into a rental right and ii) in the case of the exercise of the purchase option right by the tenant.

This means that the Claimant has the right to the tax benefit in question, provided it complies with the legal conditions established for its grant.

In truth, the Stamp Tax exemption in question is conditioned to the facts and circumstances for which it is granted and which result from the provision and statutory establishment of article 8.º, n.º 8 of the FIAHH Regime.

Now, as results from n.º 2 of article 14.º of the LGT that "The holders of tax benefits of any nature are always obliged to disclose or authorize disclosure to the tax administration of the requirements for their grant, or to comply with other obligations provided for in the law or in the instrument of recognition of the benefit, namely those relating to taxes on income, expenditure or assets, or to the rules of the social security system, under penalty of the aforementioned benefits becoming ineffective."

It is therefore not understandable that it be argued that the Stamp Tax exemption in question was not at that time conditioned to the subsequent occurrence of any facts or circumstances, nor subject to any lapse regime. If such an understanding were to prevail, theoretically, this would mean that, within the scope of the FIAHH regime, alienations of goods intended for residential rental could be carried out exempt from taxes on assets on one day and the next day those same goods could be sold by the Fund for another purpose than rental, without any tax burden in terms of taxes on assets. Such tax differentiation would be unjustified.

It is therefore concluded that, resulting from the proven facts that the assessment acts in question relate to properties which were alienated on 27 March 2015 and 14 April 2015, it is found that, either in light of the legal regime of FIIAHs established ab initio, or in light of the same legal regime, amended by the State Budget Law for 2014, the Stamp Tax exemption lapsed, as it was not demonstrated that there was a transfer as a result of the conversion of the ownership right into a rental right or that the purchase option right was exercised by the tenant.

Taking into account that the Stamp Tax assessment acts now in question are based on the legal provision of article 8.º, n.º 8 of the Tax Regime of FIIAHs, whose current wording was already in force at the date of acquisition of the property by the Fund, the assessment acts in question are legal, since the exemption granted lapsed with the alienation of the properties, outside the situations provided for in article 8.º, n.º 8 of the FIAHH Regime.

The question raised by the Claimant regarding whether or not the provisions introduced by article 236.º of Law no. 83-C/2013, of 31 December are retroactive is therefore irrelevant for assessing the legality of the assessment acts sub judice in this specific case.

In truth, the State Budget Law for 2014 added to article 8.º, numbers 14 to 16, in the following terms:

"14 - For the purposes of the provision in nos. 6 to 8, it is considered that urban properties are intended for rental for permanent residential use whenever they are subject to a rental contract for permanent residential use within three years from the moment they became part of the fund's assets, and the taxpayer must communicate and provide proof to AT of the respective rental, within 30 days following the end of the aforementioned period.

15 - When the properties have not been subject to a rental contract within the three-year period provided for in the previous number, the exemptions provided for in nos. 6 to 8 become ineffective, and in that case the taxpayer must request AT, within 30 days following the end of the aforementioned period, the assessment of the respective tax.

16 - If the properties are alienated, with the exception of the cases provided for in article 5.º, or if the FIIAH is subject to liquidation, before the period provided for in n.º 14 has elapsed, the taxpayer must equally request AT, before the alienation of the property or the liquidation of the FIIAH, the assessment of the tax due under the terms of the previous number."

In the situation under analysis, none of the situations specifically provided for in the transcribed provisions is at issue, or at least, no facts in that sense were alleged.

The provision questioned by the Claimant establishes the following:

"Article 236.º

Transitional Provision within the Scope of the Special Regime Applicable to FIIAHs and SIIAHs

1 - The provision in nos. 14 to 16 of article 8.º of the special regime applicable to FIIAHs and SIIAHs, approved by articles 102.º to 104.º of Law no. 64-A/2008, of 31 December, applies to properties that have been acquired by FIIAH from 1 January 2014.

2 - Without prejudice to the provision in the previous number, the provision in nos. 14 to 16 of article 8.º of the special regime applicable to FIIAHs and SIIAHs, approved by articles 102.º to 104.º of Law no. 64-A/2008, of 31 December, also applies to properties that have been acquired by FIIAH before 1 January 2014, counting in those cases the three-year period provided for in n.º 14 from 1 January 2014."

Since the aforementioned transitional provision refers to the provision in nos. 14 to 16 of article 8.º, whose provision is inapplicable to the present situation, the discussion of the retroactivity of the provision in question has no place in the present case.

Regarding the alleged lack of reasoning of the assessment acts, the Claimant alleges that the Stamp Tax assessment acts underlying the present proceedings suffer from the defect of lack of reasoning, and are therefore voidable.

From the analysis of the Stamp Tax assessment acts it is found that they contain the applicable legal provisions, the qualification and quantification of the taxable facts, as well as the operations for determining the taxable amount.

Consequently, no defect of lack of reasoning can be imputed to these acts, since the acts contain the legally required elements.

IV. DECISION

On these grounds, this Arbitral Tribunal decides:

A) To judge the petition for annulment of the dismissal of the administrative appeals presented regarding the identified Stamp Tax assessment acts entirely unmeritorious;

B) To condemn the Claimant to pay the costs of the present proceedings, as the unsuccessful party.

V. VALUE OF THE CASE

In accordance with the provision of article 306.º, n.º 2 of the Code of Civil Procedure, 97.º-A, n.º 1 a) of CPPT and article 3.º, n.º 2 of the Regulations of Costs in Tax Arbitration Proceedings, the value of the claim is fixed at €2.208.

VI. COSTS

In accordance with the provision of articles 12.º, n.º 2 and 22.º, n.º 4, both of RJAT, and article 4.º, n.º 4 of the Regulations of Costs in Tax Arbitration Proceedings, the value of the arbitration fee is set at €612, in accordance with Table I of the aforementioned Regulations, at the expense of the Claimant.

Notify accordingly.

Lisbon, 8 July 2016

The Arbitrator

Magda Feliciano

(The text of this decision was prepared using a computer, in accordance with article 131.º, n.º 5, of the Code of Civil Procedure, applicable by reference to article 29.º, n.º 1, subparagraph e) of Decree-Law no. 10/2011, of 20 January (RJAT), its wording being governed by the spelling prior to the 1990 Orthographic Agreement.)

Frequently Asked Questions

Automatically Created

What stamp tax exemptions apply to real estate investment funds (FIIAH) for residential leasing in Portugal?
Under the original FIIAH regime established by Law 64-4/2008, stamp tax exemptions applied to all acts connected with the transfer of urban properties intended for permanent residential use, including acquisitions resulting from conversion of ownership rights into rental rights and exercise of purchase options. The exemption required no temporal conditions—merely that properties be acquired for permanent residential rental purposes. However, Law 83-C/2013 (State Budget 2014) substantially modified this regime by adding Article 8, paragraph 14, which established that properties are only considered intended for residential rental when subject to a residential rental contract within three years from becoming part of the fund's assets.
Is the retroactive application of Article 236 of Law 83-C/2013 to FIIAH stamp tax exemptions unconstitutional?
The claimant argued that Article 236's retroactive application is unconstitutional because it violates the principle of non-retroactivity of tax law enshrined in the Portuguese Constitution. The provision imposed new conditions—a three-year leasing requirement—on tax benefits already granted under the prior regime. Properties acquired in 2013 under rules requiring no time limitations were suddenly subjected to requirements that did not exist at the time of acquisition. This retroactive conditioning of already-conceded benefits violates constitutional principles of protection of legitimate expectations and legal certainty, as taxpayers who acted in conformity with applicable law found themselves penalized by subsequent legislative changes applied to past transactions.
Can the tax authority reclaim stamp tax after a FIIAH property is sold before the lease period ends?
Yes, under the regime introduced by Law 83-C/2013 and its transitional provision (Article 236), the Tax Authority can reclaim stamp tax on FIIAH property acquisitions if properties are sold before being leased for residential purposes within the required three-year period. The tax authorities consider that properties given a purpose other than residential rental—including sale before leasing—fail to meet the exemption conditions. For properties acquired before January 1, 2014, the three-year period counts from that date under Article 236's transitional rule, meaning properties acquired in late 2013 and sold in early 2015 without prior leasing would be subject to stamp tax assessments retroactively.
How does the CAAD arbitral tribunal review stamp tax liquidation decisions for real estate investment funds?
The CAAD (Administrative Arbitration Center) provides an alternative dispute resolution mechanism for tax matters under Decree-Law 10/2011 (RJAT). Taxpayers can request constitution of an arbitral tribunal to challenge stamp tax liquidation decisions after exhausting administrative appeals. The process involves: filing a request for tribunal constitution, acceptance by CAAD's President, automatic notification to the Tax Authority, constitution of a single or three-member tribunal, response by the Tax Authority, optional hearing under Article 18 of RJAT, and issuance of an arbitral decision declaring the legality or illegality of the tax assessments and related administrative decisions. The tribunal reviews both procedural and substantive legality, including constitutional issues.
What is the procedure for filing a gracious complaint against stamp tax assessments on FIIAH property acquisitions?
The procedure for filing a gracious complaint (reclamação graciosa) against stamp tax assessments on FIIAH property acquisitions follows the general tax procedure code (CPPT). Taxpayers must file the administrative appeal within three months of notification of the stamp tax liquidation. The complaint should identify the contested acts, present legal and factual grounds for challenging the assessment, and request annulment. The Tax Authority must decide within the statutory deadline. If the complaint is dismissed, as occurred in this case on December 7, 2015, taxpayers may subsequently challenge the dismissal decision through hierarchical appeal, judicial review in tax courts, or arbitration before CAAD.