Process: 218/2015-T

Date: January 22, 2016

Tax Type: IMI

Source: Original CAAD Decision

Summary

Process 218/2015-T addresses the controversial IMI classification of service stations in Portugal. The claimant challenged the Tax Authority's classification of their fuel station as 'Other' urban property, arguing it should be classified as 'Commercial' property due to its commercial licensing and the sale of fuels, beverages, and foodstuffs. The taxpayer contested both the property classification and the resulting patrimonial tax value (VPT) of €334,780.00, determined using the cost method added to land value. The claimant argued that service stations constitute locations for commercial acts and should be valued under Article 38 of the IMI Code, applicable to commercial properties, rather than the cost method. Additionally, the claimant disputed the inclusion of the metal canopy in the valuation, claiming it constitutes equipment rather than real property. The Tax Authority maintained that fuel stations represent a residual category ('Other') because their primary purpose—retail fuel distribution—does not fit traditional commercial, residential, industrial, or service classifications, with the convenience store being merely ancillary. This case highlights the critical distinction between property classifications under Article 6 of the IMI Code, as classification directly impacts valuation methodology and ultimately the tax burden. The arbitration was conducted under CAAD (Administrative Arbitration Center) pursuant to the RJAT legal framework, demonstrating taxpayers' right to challenge property valuations through arbitral proceedings.

Full Decision

ARBITRAL DECISION

I. REPORT

  1. On 27 March 2015, company A..., SA, taxpayer no...., hereinafter identified as the Claimant, filed a request for arbitral pronouncement, pursuant to articles 2, no. 1, subparagraph b) and 10, no. 1, subparagraph b) of Decree-Law no. 10/2011, of 20 January (Legal Regime for Arbitration in Tax Matters, hereinafter referred to as RJAT).

  2. In the aforesaid request for arbitral pronouncement, the Claimant seeks to have the Arbitral Tribunal determine the annulment of the act fixing the property value issued with reference to the property registered in the urban property cadastre under article ..., of the parish of ..., municipality of Lousada.

  3. The request for constitution of the arbitral tribunal was accepted on 30 March 2015, by His Excellency the President of the CAAD and, subsequently, notification of the Tax and Customs Authority (hereinafter identified as the Respondent Entity) was promoted.

  4. The Claimant did not proceed to appoint an arbitrator, whereupon, pursuant to article 6, no. 1, of the RJAT, the undersigned was appointed by the President of the Deontological Council of the CAAD to constitute the present singular Arbitral Tribunal, the appointment having been accepted in accordance with the legal provisions.

  5. By agreement of the parties, there was no meeting pursuant to article 18 of the RJAT, nor production of pleadings.

  6. The Claimant contests the tax property value fixed as it does not agree with the classification of the urban property as "Other" and the fixing of the property value based on the cost method added to the land value.

  7. The Claimant argues that it is a commercial property, as it is licensed for the pursuit of a commercial activity and by virtue of the substantive and effectively exercised economic activity consisting of the sale of fuels and beverages and foodstuffs.

  8. The Claimant argues that a service station constitutes a location that has as its normal purpose the practice of acts of commerce (sale of fuels, beverages and foodstuffs).

  9. Adding that the circumstance that the license is filled in the fields "Commerce" and "Other" does not mean that the property is licensed for "Other", nor that the license classifies it as such for purposes of IMI, in the first place because a fuel station is a location where acts of commerce are practised, and the classification of urban properties should be made according to their use.

  10. Further arguing that in the case of a service station, there are no specificities that justify the property value being determined outside the common rules, which will only be justified when there are structures that do not fall within the common concept of property, understood as a main building inserted in a plot of land with outbuildings.

  11. Regarding the Manual for Assessment of Urban Properties, the Claimant understands that it does not override the IMI Code and has no external effect, adding that article 6 of the Code is clear, with service stations—like any property intended for the practice of acts of commerce and licensed for such—falling under the category of "commercial" properties or for "services".

  12. The Claimant further argues that commercial properties or for services are assessed in accordance with article 38 of the IMI Code and that "Other" properties are assessed by that same legal provision, with the necessary adaptations, which has not been applied in the present case by virtue of the Manual for Assessment.

  13. Finally, the Claimant understands that the metal canopy is not a property for purposes of IMI since the tax base cannot be extended to equipment and machinery.

  14. The Respondent Entity, on the other hand, understands that the destination of the Claimant's property is the retail sale of fuel to the public, and the property where it carries out this activity is prima facie a service station with various fueling units, with the convenience store constituting an ancillary activity.

  15. For the Respondent Entity it is essentially a fuel service station, or fueling station, to which a convenience store was annexed, and it is on the basis of this premise that the Tax Authority classified the property as urban, of the "Other" type.

  16. The Respondent Entity understands that the category of urban properties "other" is a residual category within the realities considered urban properties and that a fuel service station comprises buildings and constructions licensed for that purpose, which is the operation of fueling stations, and which is not a residential, commercial, industrial or service purpose in terms of the property's use.

  17. For the Respondent Entity, it is not the circumstance that the Claimant practises acts of commerce while selling fuel at retail that determines the property has commerce as its purpose, adding that the Claimant's activity is subject to licensing, in accordance with what is established in the legal framework for the application of the regime for construction and operation of fuel service stations.

  18. Regarding the Manual for Assessment of Urban Properties, the Respondent Entity argues that it is an internal regulation, with restricted access, only made available to regional experts, so that all appraising experts can assess according to the same rules.

  19. With respect to the determination of the tax property value, the Respondent Entity sustains the application of the cost method added to the land value, in accordance with article 46 of the IMI Code, because it is a property whose intrinsic characteristics prevent the use of the formula of article 38, namely due to the inapplicability of the comfort and age coefficients in the present case. Adding that in the determination of the tax property value of urban properties with parts classifiable under more than one classification, when one of the parts is principal and another ancillary, the value should be determined by application of the valuation rules of the principal part.

  20. Finally, the Respondent Entity argues regarding the assessment of the metal canopy that it is a movable asset integrated in a property, for which reason a value was attributed to it integrated in the value of the fueling area.

II. RULING ON JURISDICTION AND ADMISSIBILITY

The Tribunal is materially competent and is regularly constituted, pursuant to articles 2, 5 and 6, all of the RJAT.

The parties have legal personality and capacity, are legitimate and are represented, in accordance with articles 4 and 10 of the RJAT and article 1 of Order no. 112-A/2011, of 22 March.

No nullities are found, therefore it is necessary to proceed to the merits of the claim.

III. SUBJECT-MATTER OF THE ARBITRAL PRONOUNCEMENT

The following questions are raised before the Tribunal, in accordance with the terms described above:

i) To determine whether the property under consideration should be classified as an "Commercial" urban property or "for services" or as an "Other" property, in accordance with and for purposes of article 6 of the IMI Code;

ii) To determine whether the tax property value of a service station, classified as an "Other" property, should be determined in accordance with article 38 of the IMI Code with the necessary adaptations or whether the cost method added to the land value should be used, in which case it should also be examined whether the metal canopy should be taken into consideration.

IV. FACTS

Facts Established

In light of the various plausible legal solutions, the following facts are considered proven:

  1. On 21 November 2013, a Form 1 declaration was submitted for assessment of the property registered in the urban property cadastre under article ..., of the parish of ..., municipality of Lousada (cf. administrative proceedings and Doc. 1, attached with the request for arbitral pronouncement).

  2. Pursuant to the evidence of the 1st assessment, the property in question was assigned a tax property value of €334,780.00 (cf. administrative proceedings).

  3. The respective assessment sheet contains the following elements (cf. administrative proceedings):

  4. From the aforesaid assessment sheet, the following demonstration of the calculation for determining the tax property value results (cf. administrative proceedings):

(...)

  1. On 24 January 2014, the Claimant requested the second assessment of the urban property in question (cf. Doc. 2, attached with the request for arbitral pronouncement).

  2. On 16 January 2015 it was assessed "with full observance of all legal formalities, as described in the assessment sheet no... ... ..., of the property with the cadastre article ..., of the parish of ... .

Fuel service station with supporting building (convenience store and cafeteria) with merely ancillary and insignificant character, being assessed by the cost method added to the land value, as determined by no. 2 of article 46 of the CIMI.", a tax property value of €288,960.00 having been fixed (cf. administrative proceedings).

  1. From the aforesaid assessment sheet the following elements are contained (cf. administrative proceedings):

  2. From the aforesaid assessment sheet, the following demonstration of the calculation for determining the tax property value results (cf. administrative proceedings):

(...)

  1. The appraiser for the claimant made a record of their dissenting vote in the proceedings "as I disagree with the classification of the property as "other" and with the use of the valuation method provided for this type of property. In effect, we are dealing with a commercial property, as both the respective occupation license and the economic activity carried out therein demonstrate. A fact which, in accordance with the combined provisions of no. 2 and subparagraph b) of no. 1 of article 6 of the IMI Code, leads to the classification of the property as commercial."

  2. By Memorandum no. ..., of 11 February 2015, the Claimant was notified that following the 2nd assessment carried out, a tax property value of €288,960.00 was assigned to the property (cf. Doc. 3, attached with the request for arbitral pronouncement).

  3. Following notification of the tax property value fixed in the 2nd assessment, the Claimant presented the present request for arbitral pronouncement.

  4. With reference to the property under consideration, on 22 March 1995, the Municipal Council of... issued a License for Housing/Occupation of buildings for: "Commerce" and for "Other", with the latter referring to "Fuel Service Station" (cf. Doc. 5, attached with the request for arbitral pronouncement).

  5. On 27 May 1997, the Regional Delegation of the Economy of the North issued Permit no. .../P which grants the license for a period of 20 years to operate an installation for Storage of petroleum derivative products, consisting of eight underground reservoirs for sale with a capacity of 119,940 liters located at EN ..., Km ..., ..., parish of ..., municipality of ..., district of Porto (cf. Doc. 6, attached with the request for arbitral pronouncement).

The facts established are based on examination of the documents, not disputed, attached to the request for arbitral pronouncement and the administrative proceedings and on the position assumed by the parties in their written submissions.

Facts Not Established

No essential facts, relevant to the assessment of the merits of the case, were found not to have been proven.

V. LAW

  1. The present request for arbitral pronouncement is based on the Claimant's disagreement: i) with the classification of the property under consideration as "Other" and, ii) with the application of the cost method added to the land in the determination of its respective tax property value and the consideration of the metal canopy.

  2. The first question under consideration in the present proceedings concerns the classification assigned to the property whose assessment is contested in the present proceedings, with the Claimant understanding that it should be qualified as a commercial property or for services, refusing in consequence the qualification that served as the basis for the contested assessment, as an urban property falling within the "Other" category.

  3. Article 6, no. 1, of the IMI Code divides urban properties into three main categories, namely: i) Residential, commercial, industrial or for services, ii) land for construction, and iii) "Other".

  4. In what concerns the present case, it is important to determine whether a "Fuel service station with supporting building (convenience store and cafeteria)" should be qualified for purposes of article 6 of the IMI Code as a building for "Commerce or services" or in the "Other" category.

  5. From the aforesaid no. 1 of article 6 of the IMI Code, a segmentation of urban properties results, but no definition of the concept of each of the types of properties foreseen therein is offered.

  6. With regard to the first of the categories identified, the IMI Code determines that those which are residential, commercial, industrial or for services are "buildings or constructions licensed for such purposes, or, in the absence of a license, which have as their normal destination each of these purposes" (cf. no. 2 of article 6 of the IMI Code).

  7. It follows immediately that the IMI Code in qualifying properties as residential, commercial, industrial or for services refers to the use attributed by licensing and, in the absence of a license, to the criterion of normal use.

  8. The classification of urban properties depends, as a rule, "on a formal requirement which is its licensing" (MATEUS, J. Silvério and DE FREITAS, L. Corvelo – Real Estate Taxes The Stamp Tax Annotated and Commented, Engifisco, 2005, p. 116).

  9. And, also, in the sense of the relevance of licensing: "This classification essentially considers the licensing of the use which is improperly considered in valuation operations as "use"" (cf. Notebooks of Tax Science and Technique, no. 209 - Competitiveness, Efficiency and Justice of the Tax System - Report of the Group for the Study of Tax Policy, 2009, p. 481).

  10. And, "Only in the case of non-existence of a license for use issued with reference to a given property, is it possible, or rather, is it necessary, with a view to its classification in one of the various types of urban properties, to assess its actual use" (ROCHA, António Santos and BRÁS, Eduardo José Martins – Taxation of Real Estate IMI-IMT and Stamp Tax (Annotated and Commented), Almedina, 2015, p. 43).

  11. Adding, furthermore, that these same authors that "any urban property that is properly licensed for the exercise of commerce, even if it is, in reality, assigned to, for example, housing, should be classified – and evaluated – by the rules applicable to properties of the "Commercial" type (ROCHA, António Santos and BRÁS, Eduardo José Martins – Taxation of Real Estate IMI-IMT and Stamp Tax (Annotated and Commented), Almedina, 2015, p. 43).

  12. This understanding that what results from the respective license is relevant in the first place and that only the normal use of the property is relevant in the absence of that same license also appears to be settled in case law, as per the Decision handed down by the Central Administrative Court of the South, in Case no. 08035/14, on 4 June 2006, according to which "(…) it is by reference to the purpose of the building or construction resulting from its licensing or normal use, should such licensing not exist, that urban properties should be classified as residential, commercial, industrial or for services." (http://www.dgsi.pt/jtca.nsf/170589492546a7fb802575c3004c6d7d/55ddc8a03e601fe480257e5e0060115d?OpenDocument&Highlight=0,08035%2F14).

  13. In summary, the content of the respective license for use is relevant in the first place. In cases of absence of a license, the normal use is relevant.

  14. The "Other" category, for its part, comprises "lands situated within an urban agglomeration which are not land for construction nor are covered by the provision of no. 2 of article 3 and also buildings and constructions licensed or, in the absence of a license, which have as their normal use other purposes than those referred to in no. 2 and also those of the exception of no. 3." (cf. no. 4 of article 6 of the IMI Code).

  15. It is thus a residual category where properties are integrated which cannot be classified as urban properties of one of the remaining categories, namely, residential, commercial, industrial, for services or land for construction.

  16. In this sense, the aforementioned Decision of the Central Administrative Court of the South, in Case no. 08035/14, according to which "(...) with regard to the classification of the urban property as belonging to the "other" type, the legislator adopted a criterion of "residual" purpose by reference to the purposes set out in no. 2. In effect, the criterion of "residual" purpose of the "other" type results clearly from the provision of no. 4 of art. 6 of the CIMI by excluding from this type all buildings and constructions which have as their normal use the purposes referred to in no. 2 ("buildings and constructions licensed or, in the absence of a license, which have as their normal use other purposes than those referred to in no. 2"). In this way, it must be concluded, with relevance for the decision of the case, that only can an urban property be classified in the "other" type foreseen in subparagraph d) of no. 1 of art. 6 of the CIMI when the building or construction cannot be classified in the commercial, industrial or for services type. In other words, whenever an urban property can be classified in the type of urban properties "commercial, industrial or for services", in accordance with the criteria set out in no. 2 of art. 6 of the CIMI, then the possibility of its being classified in the "other" type is excluded (http://www.dgsi.pt/jtca.nsf/170589492546a7fb802575c3004c6d7d/55ddc8a03e601fe480257e5e0060115d?OpenDocument&Highlight=0,08035%2F14).

  17. For what is relevant for the present analysis, urban properties of the "Other" type should thus be considered those buildings and constructions licensed for purposes different from residential, commercial or service purposes and those buildings and constructions not licensed but assigned to purposes different from residential, commercial or service purposes.

  18. Before proceeding, it should be noted that in the case of fuel service stations, the rule will be the existence of a license for use, whereby properties should be classified according to what results from that same license.

  19. Now, in the present case, and in accordance with the respective license for use, the property is licensed for "Commerce" and "Other", with the latter type of use relating to the fuel service station.

  20. In light of what results from the license taking precedence, it is clear in what respects the fuel service station, that it was classified as "Other".

  21. The Claimant argues that the municipal license is filled in the fields "Commerce" and "Other", adding that the license was issued in 1995, preceding the IMI Code, whereby for that reason the property is not licensed for "Other", nor does the license classify it as such for purposes of IMI.

  22. The Claimant's reasoning is not endorsed to the extent that from the license for use, attached by the Claimant itself to the present proceedings, it results, unequivocally, that the fuel service station appears integrated in the type of use "Other" identified in the aforementioned license, in opposition to the type of use "Commerce", which precedes it in that same license.

  23. And the classification for purposes of IMI is determined by article 6 of the IMI Code, in accordance with which urban properties of the "Other" type are those buildings and constructions licensed for purposes different from residential, commercial, industrial or service purposes, as is the case in what, concretely, concerns the service station, since from the license for use under consideration, there does not result licensing for any of these purposes (notwithstanding these being identified in the license as possible types of use).

  24. It is recalled that it is about classifying an urban property in the "Other" type when the building or construction cannot be classified in the commercial, industrial or service type. And to be classified as an urban property "commercial, industrial or for services" it must be licensed for one of these purposes or, in the absence of a license, have as its normal use each of these purposes.

  25. In the present case, there is no need to seek the normal use because it is a licensed property. And it is a licensed property which, in what concerns the fuel service station, is not licensed for housing, industry, commerce or services, but rather for "Other".

  26. Against the foregoing, the circumstance that the license was issued in 1995, at a date prior to the date of entry into force of the IMI, does not hold, first and foremost because the classification of urban properties in the types identified in article 6 of the IMI Code corresponds to article 6 of the Municipal Tax Code, then in force.

  27. Therefore, in what concerns the fuel service station, it should be qualified as a property of the "Other" type, in accordance with and for purposes of subparagraph d), no. 1, and no. 4 of article 6 of the IMI Code, being, as regards the remaining part, licensed for "Commerce", in accordance with the same license for use and in accordance with and for purposes of subparagraph b), no. 1, of article 6 of the IMI Code.

  28. The property whose assessment is contested in the present proceedings thus presents parts classifiable under more than one of the types identified in no. 1 of article 6 of the IMI Code.

  29. In accordance with no. 1 of article 7 of the IMI Code, the tax property value of urban properties with parts classifiable under more than one of the identified types is determined depending on whether the different parts are or are not economically independent.

  30. Should one of the parts be principal and the other or others merely ancillary, the tax property value is determined by application of the valuation rules of the principal part, having regard to the increase in value resulting from the existence of the ancillary parts.

  31. In the case in which the different parts are economically independent, each part is assessed by application of the corresponding rules, the value of the property being the sum of the values of its parts.

  32. Thus, if an urban property with parts classifiable under more than one of the types listed in no. 1 of article 6 is in issue, as is the case, it is necessary to determine whether or not there is a relationship of subordination between both parts of the property.

  33. This relationship of subordination is assessed "not according to the area occupied by each of the parts in comparison, but rather according to its weight – or relevance – economic.

In this way, where the aforesaid relationship of economic subordination exists between both – or the various – constituent parts of the same property, article 2, a) of the provision, under annotation, provides that the assessment is governed by the rules of the principal part, but taking into account the increase in value caused by the existence of the ancillary parts, that is to say, the property assessed in accordance with the rules resulting from and relating to the identification of the principal part, the value determined will have to be increased to the just extent of the increase in value resulting for the property from the existence of the – or the – part considered as ancillary" (in ROCHA, António Santos and BRÁS, Eduardo José - Taxation of Real Estate – IMI-IMT and Stamp Tax (Annotated and Commented), Coimbra, 2015, pp. 50 and 51).

  1. From the Valuation Report it results that the convenience store and cafeteria have merely ancillary and insignificant character (cf. administrative proceedings).

  2. This ancillary character is not contradicted by the "Description of Assessment" which comprises Assessment Sheet no... and which specifies in greater detail the characteristics of the property assessed in the following terms: "Fuel service station, composed of fuel dispensing islands with metal canopy, fuel dispensing island pump uncovered, air/water fueling island, support building with sales shop and cafeteria, office, bathrooms, technical building, parking area for light vehicles and tank storage park." (cf. administrative proceedings).

  3. In the Dissenting Vote Statement, which accompanies the Valuation Report, the ancillary character of the convenience store and cafeteria is not questioned, and no element has been brought to the proceedings that allows the ancillary character thereof to be questioned.

  4. It is thus concluded that in the present case, by force of the application of subparagraph a), no. 2 of article 7 of the IMI Code, the valuation rules of the principal part are applicable, that is, of the fuel service station, which means that the valuation rules of properties of the "Other" type are applicable.

  5. Concluding as to the classification of the urban property in question in the types "Commercial" and "Other", in accordance with and for purposes of subparagraphs b) and d), no. 1, and no. 4 of article 6 of the IMI Code and, further, that by force of the application of subparagraph a), no. 2 of article 7 of the same Statute, the valuation rules of the "Other" type are applicable in the present case, it is important to analyse the rules in question.

  6. The procedure for assessment with a view to determining the tax property value of urban properties of the "Other" type is established in article 46 of the IMI Code.

  7. The aforesaid legal provision distinguishes between the rules applicable to buildings - provided for in its nos. 1 and 2 -, to land - provided for in its no. 3 -, and to properties in ruins - provided for in its no. 4.

  8. No. 1 of the provision regulates the assessment of buildings, determining the application with the necessary adaptations of the assessment method specific to urban properties for housing, commerce, industry and services provided for in articles 38 and following of the Code.

  9. And no. 2 determines that, when it is not possible to use the rules of article 38, the cost method added to the land value should be resorted to.

  10. The legislator did not determine the application of no. 1 or no. 2 according to which method proves to be more adequate, but rather according to the impossibility of using the assessment method provided for in article 38, requiring its application even if it is only possible to do so with adaptations.

  11. That is to say, in the case of a building of the "Other" type, the rules of article 38 of the IMI Code are applicable to it, with the necessary adaptations, except if, in light of the nature of the property, those rules cannot be used, in which case the cost method added to the land value is applicable.

  12. Thus, being concerned with buildings, only if it is genuinely not possible to apply the rules of article 38 and following of the Code, with the adaptations that prove necessary in the concrete case, should recourse be made to the cost method added to the land value.

  13. From the Valuation Report, immediate application of no. 2 of article 46 of the IMI Code results, without consideration of the possibility of application of the rules resulting from no. 1 of that same legal provision.

  14. The Respondent Entity argues in its Reply the inapplicability of the formula of article 38 to the present case, due to the alleged impossibility of applying the quality and comfort coefficient and the age coefficient.

  15. Doctrine admits as possible adaptations, by way of example only, that the use of the formula of article 38 of the IMI Code "without the Cq and Cv factors, can address the assessment of a sports complex, with a built component and with open spaces" (MATEUS, J. Silvério and FREITAS, L. Corvelo - Real Estate Taxes The Stamp Tax, Annotated and Commented, Engifisco, 2005, p. 226).

  16. A "Fuel service station" consists of an installation to which corresponds the area where the fueling units are located, their respective reservoirs and safety and protection zones, as well as integrated buildings (places intended for complementary activities, administrative purposes, storage of products and technical services) and the roads necessary for the circulation of motor vehicles to be fueled (cf. subparagraph q) of no. 1 of the Regulation for Construction and Operation of Fuel Service Stations, approved by Order no. 131/2002, of 9 February).

  17. Given the typical characteristics of a fuel service station, and those found to be present in the present case, it does not result that the valuation rules provided for in article 38 and following cannot be applied to the property under consideration, with the adaptations which experts substantively consider to be justified.

  18. Moreover, previous decisions in this matter permit the conclusion that the application of the valuation rules provided for in article 38 and following has been determined for both fuel service stations like the present one (cf. decisions of the CAAD handed down in cases 62/2013-T, 348/2015-T and 271/2015-T) and for buildings with similar characteristics, as is the case of car wash and vacuum centres (cf. Decision handed down by the Central Administrative Court of the South, in Case no. 08035/14, on 4 June 2006, in www.dgsi.pt).

  19. It is thus concluded that the property value of the property under consideration should have been determined in accordance with the rules resulting from the application of no. 1 of article 46 of the IMI Code and not by the cost method added to the land value as occurred.

  20. In light of the foregoing, the present arbitral request proceeds with the consequent annulment of the act whose legality is contested.

VI. DECISION

In light of the foregoing, it is decided to judge the request for arbitral pronouncement to be well-founded, determining the annulment of the act fixing the contested property value, issued with reference to the property registered in the urban property cadastre under article ..., of the parish of ..., municipality of....

The value of the proceedings is set at €1,069.15 (one thousand sixty-nine euros and fifteen cents), in accordance with article 97-A of the Tax Procedure and Process Code, applicable as Costs in Tax Arbitration Proceedings (RCPAT).

Costs to be borne by the Respondent Entity, in the amount of €306.00 (three hundred and six euros), in accordance with Table I of the RCPAT, given that the present request was judged to be well-founded, and in compliance with the provision of no. 2 of article 12 and no. 4 of article 22, both of the RJAT, and of the provision of no. 4 of article 4 of the aforesaid Regulation.

Notify.

Lisbon, 22 January 2016

[Text prepared on computer, in accordance with article 131, no. 5 of the Code of Civil Procedure (CPC), applicable by reference of article 29, no. 1, subparagraph e) of the RJAT, with blank verses and reviewed by the undersigned].

The Arbitrator

(Ana Moutinho Nascimento)

Frequently Asked Questions

Automatically Created

How are service stations classified for IMI property tax purposes in Portugal?
Service stations in Portugal present a classification challenge for IMI purposes. According to this arbitral decision, the Tax Authority classified fuel stations as 'Other' urban properties rather than 'Commercial' properties. The Tax Authority's position is that fuel stations constitute a residual category because their primary purpose—operating fueling stations for retail fuel distribution—does not align with traditional commercial, residential, industrial, or service classifications under Article 6 of the IMI Code. However, taxpayers may contest this classification, arguing that service stations should be classified as 'Commercial' properties based on their commercial licensing and the practice of acts of commerce (selling fuels, beverages, and foodstuffs). The classification dispute is significant because it determines which valuation method applies and directly impacts the property's tax burden.
What is the difference between 'Commercial' and 'Others' classification for urban property valuation under IMI?
The distinction between 'Commercial' and 'Others' classification fundamentally affects property valuation methodology under IMI. Commercial properties are typically valued according to Article 38 of the IMI Code, which uses a formula incorporating factors like area, location coefficients, quality, comfort, and age. In contrast, properties classified as 'Others' are valued using the cost method added to land value, as specified in Article 46 of the IMI Code, particularly when the property's intrinsic characteristics prevent application of the standard Article 38 formula. The Tax Authority argues that for service stations, certain coefficients (such as comfort and age) cannot be properly applied, justifying the cost method. This distinction is crucial because the valuation methods can produce significantly different property values and consequently different tax liabilities, which is why taxpayers frequently challenge the 'Other' classification when they believe their property performs commercial functions.
Can a taxpayer challenge the patrimonial tax value (VPT) of a property through CAAD arbitration?
Yes, taxpayers can challenge the patrimonial tax value (VPT) of a property through CAAD (Centro de Arbitragem Administrativa) arbitration in Portugal. Process 218/2015-T demonstrates this right under the RJAT (Legal Regime for Arbitration in Tax Matters, established by Decree-Law 10/2011 of 20 January). The claimant filed a request for arbitral pronouncement pursuant to Articles 2(1)(b) and 10(1)(b) of the RJAT, seeking annulment of the property valuation act. The CAAD arbitration process provides an alternative to judicial courts for resolving tax disputes, including challenges to property classifications and valuations for IMI purposes. Taxpayers can contest both the classification of the property (Commercial, Services, Industrial, Other, etc.) and the resulting tax property value, as these determinations directly impact the IMI tax burden. The arbitral tribunal has jurisdiction to review the Tax Authority's classification decisions and valuation methodology.
How does the property's licensed activity affect its IMI classification under Portuguese tax law?
The property's licensed activity is central to IMI classification disputes under Portuguese tax law. Article 6 of the IMI Code establishes that urban property classification should reflect the property's use and purpose. The claimant in this case argued that since the service station was licensed for commercial activity (specifically indicated in the 'Commerce' field of the license) and the property is used for commercial acts (selling fuels, beverages, and foodstuffs), it should be classified as 'Commercial' property. However, the Tax Authority distinguished between the commercial nature of transactions conducted at the property and the property's specific purpose as a fuel service station. The Authority maintained that licensing under the legal framework for construction and operation of fuel service stations creates a distinct category that doesn't fit traditional commercial property definitions. This case illustrates that while licensed activity is relevant, Portuguese tax authorities may apply a more nuanced analysis considering the property's primary function and intrinsic characteristics rather than solely relying on commercial licensing.
What valuation method applies to urban properties classified as 'Others' versus commercial properties for IMI?
The valuation method differs significantly between 'Others' and commercial properties for IMI purposes. Commercial properties are generally valued under Article 38 of the IMI Code, which applies a formula considering the property's covered area, location coefficients, quality coefficient, comfort coefficient, age coefficient, and specific commercial characteristics. For properties classified as 'Others,' Article 46 of the IMI Code mandates the cost method added to land value, particularly when the property's intrinsic characteristics prevent proper application of Article 38 coefficients. In this case, the Tax Authority argued that service stations cannot be properly valued using Article 38 because coefficients like comfort and age are inapplicable to fuel distribution facilities with metal canopies and fueling units. The Authority applied the cost method, which calculates value based on construction costs plus land value. The claimant contested this, arguing that even 'Other' properties should be valued according to Article 38 with necessary adaptations. This methodological difference can result in substantially different property values and tax liabilities, making the classification determination economically significant for taxpayers.