Process: 288/2016-T

Date: December 21, 2016

Tax Type: IMT IMI

Source: Original CAAD Decision

Summary

CAAD Process 288/2016-T addresses the constitutionality of retroactive tax rules affecting real estate investment funds for residential rental (FIIAH). A fund management company challenged IMT and Stamp Tax assessments totaling €13,647.63 imposed after selling a property acquired before 2014. Originally, FIIAH enjoyed unconditional exemptions from IMT and Stamp Tax on properties intended for permanent residential rental under Article 8(7) and 8(8) of the FIIAH Tax Regime. However, Law 83-C/2013 (2014 State Budget) introduced Article 236, establishing a transitional regime that retroactively applied a three-year holding period to properties acquired before January 1, 2014, with the period counted from that date rather than the actual acquisition date. The applicant argued this violated Article 103(3) of the Portuguese Constitution, which prohibits retroactive tax legislation, because it imposed new expiration conditions on already-crystallized tax exemptions. The fund contended that when it acquired the property, no legal provisions existed for exemption forfeiture, making subsequent imposition of such conditions unconstitutional. The Tax Authority countered that the exemption expired under general tax benefit rules because selling the property necessarily gave it a different purpose than residential rental, invoking Article 14(2) of the Tax Benefits Statute. The Tax Authority cited numerous CAAD precedents supporting this position, including cases 727/2015-T, 320/2015-T, and 61/2016-T. This case illustrates the tension between protecting vested tax rights and applying new legislative conditions retroactively, raising fundamental questions about constitutional limits on tax law amendments affecting real estate investment vehicles.

Full Decision

ARBITRAL DECISION

Claimant / Applicant: A… FUND MANAGEMENT COMPANY FOR INVESTMENT FUNDS, S.A.

Respondent: Tax and Customs Authority (hereinafter T.C.A.)

1. Report

On 23-05-2016, A…– Fund Management Company for Investment Funds, S.A., legal entity no. …, with registered office at …, n.º…, …, …-… Lisbon, registered in the Commercial Registry Office of Lisbon under no. …, in its capacity as management company of the real estate investment fund B…– Closed Real Estate Investment Fund for Residential Rental, registered with the Securities Commission and bearing tax identification number …, hereinafter referred to as the Applicant, submitted to the Administrative Arbitration Center (CAAD) a request for constitution of an arbitration tribunal with a view to declaring unlawful the assessments of Municipal Tax on Onerous Property Transfers (IMT) and Stamp Tax, in the total amount of 13,647.63 €.

The Applicant begins by stating that the request for arbitral award aims to determine whether article 236 - a transitional provision within the scope of the Special Regime Applicable to Real Estate Investment Funds for Residential Rental (FIIAH) and Real Estate Investment Companies for Residential Rental (SIIAH) - provided for by Law No. 83-C/2013 of 31 December, in so far as it determines the application of the current Transitional Regime of FIIAH "to properties that have been acquired by FIIAH before 1 January 2014, in which cases the three-year period provided in paragraph 14 shall be counted from 1 January 2014", constitutes a new regime for the expiration of the exemptions provided for in paragraph 7 sub-paragraph a) and paragraph 8 of article 8 of the Tax Regime of FIIAH, revealing a clear and unequivocal violation of the principle of non-retroactivity of tax law, enshrined in article 103 paragraph 3 of the Constitution of the Portuguese Republic (CRP).

The Applicant mentions that, taking into account the amendments made by the State Budget Law for 2014 in the Tax Regime of FIIAH, it requested from the Tax and Customs Authority (T.A.) the assessment of IMT and Stamp Tax for the acts of alienation by Fund B… of the urban property located at …, n.º…, …/… and Street …, n.º…, …/…, …, …, registered in the urban property register no. …, fraction …, of the parish of …, Lisbon.

The application, presented orally by the Applicant, was based on the provisions of article 236 of Law No. 83-C/2013, of 31 December (transitional provision within the scope of the special regime applicable to FIIAH and SIIAH), which mandates the application to properties that have been acquired before 2014 of the provisions of paragraphs 14 to 16 of article 8 of the Tax Regime of FIIAH, that is, if the Applicant intended to alienate the property, it should request from the T.A. the assessment of the respective tax.

Consequently, the Applicant states that it did not mention the issuance of the tax assessment because it intended to give the property in question a different purpose from that on which the benefit was based, the exemption thus lapsing, as allegedly would have been placed by the T.A. in the assessment documents in question in these proceedings.

The Applicant argues that the sole requirement of the exemption at the time it acquired the property in question and when such exemption was realized, was that the properties acquired by FIIAH were intended to be rented for permanent residential purposes, in accordance with article 8 paragraphs 7 and 8 of the Tax Regime of FIIAH. And that the amendment of the said regime has provided that the alienation of properties owned by FIIAH or the liquidation of FIIAH itself, before the three-year period has elapsed, counted from the date the relevant properties entered the assets of FIIAH, in accordance with paragraph 16 of article 8, results in the expiration of the exemption. The Applicant thus considers that these amendments aimed to establish a regime for the expiration of exemptions that did not exist at the time the taxable events occurred and that have affected an exemption already crystallized in the Applicant's legal order, in violation of what is provided for in article 103 paragraph 3 of the CRP.

In summary, the Applicant argues that: "since (…) there are not legally provided, at the moment of recognition of the exemption, any facts or circumstances upon which the expiration of the recognized exemption depended, it is manifest that the subsequent imposition of these facts or circumstances to exemptions crystallized in the Applicant's tax-legal order suffers from unconstitutionality, by violation of the principle of non-retroactivity of tax law, enshrined in article 103 (Tax System), paragraph 3, of the Constitution of the Portuguese Republic".

Moreover, the Applicant further states that article 236 (transitional provision within the scope of the special regime applicable to FIIAH and SIIAH) of Law No. 83-C/2013 of 31 December (State Budget Law for 2014), in extending the application of the current Tax Regime of FIIAH to properties that have been acquired before 01-01-2014, in which cases the three-year period provided in paragraph 14 shall be counted from 01-01-2014, "is violating in a direct and unequivocal manner the principle of non-retroactivity of tax law constitutionally enshrined".

The Applicant further invokes the unconstitutionality of article 236 paragraph 2 of the said Law No. 83-C/2013 of 31 December, and submits an opinion signed by Messrs. Professors Dr. C… and Doctor D…, which corroborates the thesis of unconstitutionality defended by the Applicant.

Finally, the Applicant requests that the nullity of the IMT and Stamp Tax assessments be declared, subject of the arbitration request, on the basis of their unconstitutionality, or, alternatively, that the assessments be annulled, and that the T.C.A. be condemned to reimburse the Applicant for the entire amount of tax paid, plus compensatory interest, in accordance with article 43 of the General Tax Law.

A sole arbitrator was appointed on 20-07-2016: Suzana Fernandes da Costa.

In accordance with the provisions of article 11 paragraph 1, sub-paragraph c) of the Legal Regime of Tax Arbitration (RJAT), the single arbitration tribunal was constituted on 23-08-2016.

The T.C.A. submitted its response on 30-09-2016 (within the legal time limit).

The T.C.A. argues that the request for declaration of illegality and consequent annulment of the IMT and Stamp Tax assessments in dispute should be ruled unfounded, since with the alienation of the property a different purpose is necessarily given to the property, the expiration of the exemption occurring in accordance with article 14 paragraph 2 of the Tax Benefits Statute, since it is no longer possible for the Applicant to assign it to the purpose pursued by the tax benefit in question, namely its assignment to residential rental. And it cites the judgments of CAAD that decided in that sense: cases no. 727/2015-T, 61/2016-T and 93/2016-T.

It also indicates the following arbitral decisions favorable to the T.C.A.: 320/2015-T, 689/2015-T, 694/2016-T, 705/2015-T, 706/2015-T, 707/2015-T, 708/2015-T, 709/2015-T, 710/2015-T, 717/2015-T, 729/2015-T, 735/2015-T, 6/2016-T, 62/2016-T, 63/2016-T, 85/2016-T, 93/2016-T, 121/2016-T and 165/2016-T.

The T.C.A. further requested, on the same date, the waiver of the holding of the meeting provided for in article 18 of the Tax Arbitration Regime, as well as the waiver of the submission of arguments.

On 04-10-2016, an order was issued notifying the Applicant to make its statement within 10 days regarding the request to waive the meeting.

On the same date, the Applicant informed the file that it has no objection to waiving the holding of the meeting.

On 11-10-2016, an order was issued waiving the holding of the meeting, taking into account the fact that there were no exceptions to be considered and the position of the parties. In the same order, both parties were notified to, if they so wished, submit written arguments within 15 days. The date of 21-12-2016 was also set for the issuance of the arbitral decision and the Applicant was warned to, by that date, proceed with the payment of the subsequent arbitration fee.

Neither party submitted arguments.

The parties have legal personality and capacity and are legitimate (articles 4 and 10 paragraphs 1 and 2 of the RJAT and article 1 of Ordinance No. 112-A/2011 of 22 March).

The present request for arbitral award was submitted timely, in accordance with article 10 paragraph 1 sub-paragraph a) of Decree-Law No. 10/2011 of 20 January.

The case is not affected by nullities and no preliminary issues were raised.

Although the Applicant has not expressly requested the joinder of claims, the arbitration request has as its object two taxes and there is identity of the taxable events, of the tribunal competent to decide and of the factual and legal grounds.

In this case the joinder of claims is permissible, in accordance with articles 104 of the Tax Procedure and Process Code (CPPT) and 3 of the RJAT, whereby it is admitted.

2. Factual Matter

2.1. Proven Facts:

Based on the documentary evidence produced, the following facts are considered proven and relevant to the decision of the case:

  • On 29-11-2013, the Applicant acquired fraction … of the urban property registered in the urban property register of the parish of …, municipality of Lisbon, under article … .

  • The said fraction was acquired benefiting from the IMT exemption under sub-paragraph a) of paragraph 7 of article 8 of the legal regime of FIIAH.

  • On 19-02-2016, the above-mentioned fraction was alienated.

  • On the same date, 19-02-2016, the T.C.A. issued IMT assessment no. … in the amount of 11,410.63 €, and Stamp Tax assessment no. … in the amount of 2,237.00€, attached to the arbitration request as document 1, following a verbal statement by the Applicant for this purpose.

  • In the assessments above identified it is expressly stated that they result from the fact that "in the deed of sale a different purpose will be given from that on which the benefit was based, the exemption thus lapsing".

No other facts with relevance to the decision of the case have been proven.

2.2. Legal Basis of the Proven Factual Matter:

As to the proven facts, the arbitrator's conviction was based on the documentary evidence attached to the file and on the facts admitted by agreement.

3. Legal Matter:

3.1. Object and Scope of the Present Case

The issue to be decided in the present proceedings is whether or not the IMT and Stamp Tax assessments in question, issued by the T.A. following the verbal statement by the Applicant, are legal, in accordance with article 236 of Law No. 83-C/2013 of 31 December (State Budget Law for 2014).

On this same issue have ruled, among others, the judgments of CAAD issued in cases number 710/2015-T, 133/2016-T, 163/2016-T, 164/2016-T, 165/2016-T, 231/2016-T.

3.2. Issue of the Framework of the IMT Exemption and the Expiration of the Exemption

Let us analyze the legal matter on which the present case turns.

The State Budget Law for 2009, Law No. 64-A/2008 of 31 December, approved the Special Regime applicable to Real Estate Investment Funds for Residential Rental, which provides in its article 8 paragraph 7 that:

"7 - The following are exempt from IMT:

a) acquisitions of urban properties or of autonomous fractions of urban properties intended exclusively for rental for permanent residential purposes, by the investment funds referred to in paragraph 1;

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

The State Budget Law for 2014, Law No. 83-C/2013 of 31 December, added to the above-mentioned article 8 the following paragraphs:

"14 – For the purposes of the provisions in paragraphs 6 to 8, it is considered that urban properties are intended for rental for permanent residential purposes whenever they are subject to a rental agreement for permanent residential purposes within three years from the moment they entered the assets of the fund, the taxpayer being required to communicate and provide proof to the T.A. of the respective effective rental, within 30 days following the end of the said period.

15 – When the properties have not been subject to a rental agreement within the three-year period provided for in the previous paragraph, the exemptions provided for in paragraphs 6 to 8 shall cease to have effect, in which case the taxpayer shall request from the T.A., within 30 days following the end of the said period, the assessment of the respective tax.

16 – If the properties are alienated, except in the cases provided for in article 5, or if the FIIAH is subject to liquidation, before the period provided for in paragraph 14 has elapsed, the taxpayer shall equally request from the T.A., prior to the alienation of the property or the liquidation of the FIIAH, the assessment of the tax due in accordance with the previous paragraph."

On the other hand, article 236 (transitional provision within the scope of the special regime applicable to FIIAH and SIIAH) of the said Law No. 83-C/2013 of 31 December, provides that:

"1 – The provisions in paragraphs 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 31 December, shall apply to properties that have been acquired by FIIAH as from 1 January 2014.

2 – Without prejudice to the provision of the previous paragraph, the provisions in paragraphs 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 31 December, shall equally apply to properties that have been acquired by FIIAH before 1 January 2014, in which cases the three-year period provided in paragraph 14 shall be counted from 1 January 2014."

In the case of the present proceedings, the fraction whose transfer motivated the assessments in question of IMT and Stamp Tax, was acquired on 29-11-2013, benefiting in that operation and on that date from exemption from IMT under sub-paragraph a) of paragraph 7 of article 8 of the special regime above mentioned.

It is important to note from the outset that we adhere to the reasoning contained in the judgment of CAAD in case no. 710/2015-T, when it states that the said provision already presupposed that the property was intended for rental for permanent residential purposes in order to benefit from such exemption. Thus, we understand that the obligation to assign the property for residential rental is not a requirement of the amendments introduced by Law No. 83-C/2013 of 31 December, but rather a requirement of the tax regime of FIIAH itself.

In effect, it is difficult to demonstrate that there is a violation of legal expectations on the part of the Applicant, nor even in the aspect of the prohibition of retroactive tax law. Indeed, it was only the alienation of the fraction by the Applicant, subsequent to the entry into force of Law No. 83-C/2013 of 31 December, that gave rise to taxation under the provision already in force at the moment of alienation. This aspect invokes the position of the Constitutional Court of the prevalence, as the taxable event, of the moment of alienation of the property and not the moment of its acquisition. In this sense, see the judgment of the Constitutional Court no. 85/2010 of 03-03-2010.

Following closely the judgment of CAAD issued in case no. 710/2015-T, it is not even a matter of retroactivity of the law applied, but rather the fact that the fraction in question was alienated without having fulfilled its purpose – assignment to permanent residential rental – and that once the fraction is alienated, that purpose can no longer be fulfilled, whereby the requirement established for the IMT exemption to be applicable was not met.

As stated in the judgment of CAAD in case no. 710/2015-T, "in summary, the Applicant acquired and alienated a fraction. And it did so without having rented it between the date of acquisition and alienation. However, it benefited, on the date of its acquisition, from the tax benefit of non-payment of IMT and Stamp Tax applicable to the acquisition of fractions intended exclusively for rental for permanent residential purposes. A benefit whose regime was regulated by the State Budget Law for 2014, the above-mentioned alienation having taken place precisely at a time subsequent to the entry into force of the said law. In this measure, we understand that the IMT assessment in question, as well as the Stamp Tax assessment which has as its basis the same factuality, are legal under the provisions of the Special Regime above cited".

3.3. On the Unconstitutionality of Article 236 Paragraph 2 of Law No. 83-C/2013 of 31 December

The Applicant further states that article 236 (transitional provision within the scope of the special regime applicable to FIIAH and SIIAH) of Law No. 83-C/2013 of 31 December (State Budget Law for 2014), in extending the application of the current Tax Regime of FIIAH to properties that have been acquired before 01-01-2014, in which cases the three-year period provided in paragraph 14 shall be counted from 01-01-2014, "is violating in a direct and unequivocal manner the principle of non-retroactivity of tax law constitutionally enshrined".

The Applicant further invokes the unconstitutionality of the article on which the assessments in question are based, article 236 paragraph 2 of the said Law No. 83-C/2013 of 31 December. And submits an opinion signed by Messrs. Professors Doctors C… and D…, which corroborates the thesis of unconstitutionality defended by the Applicant.

Paragraph 2 of article 236 (transitional provision within the scope of the special regime applicable to FIIAH and SIIAH) of the said Law No. 83-C/2013 of 31 December, provides that: "2 – Without prejudice to the provision of the previous paragraph, the provisions in paragraphs 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 31 December, shall equally apply to properties that have been acquired by FIIAH before 1 January 2014, in which cases the three-year period provided in paragraph 14 shall be counted from 1 January 2014."

The authors of the attached opinion conclude that "the provision of article 236, paragraph 2, of the State Budget Law for 2014 is an authentically retroactive provision, as it orders the application of the new presuppositions of the exemptions – rental and no alienation within a period of 3 years, under penalty of these ceasing to have effect – to acquisitions and acts (that is, to taxable events) prior to its entry into force and that were completed before it".

However, we cannot adhere to the learned position defended therein, and adhering to the position of previous decisions of CAAD, in the sense that the presuppositions for the IMT exemption are contained in article 8 paragraph 7 sub-paragraph a) of the legal regime of FIIAH approved by Law No. 64-A/2008 of 31 December, which states that the following are exempt from IMT "acquisitions of urban properties or of autonomous fractions of urban properties intended exclusively for rental for permanent residential purposes, by the investment funds referred to in paragraph 1".

And it was not the State Budget Law for 2014, in adding article 236 paragraph 2 to the said legal regime, that came to create new presuppositions. This paragraph 2 merely came to state that the provisions in paragraphs 14 to 16 of article 8 (expiration of exemptions) shall equally apply to properties that have been acquired by FIIAH before 1 January 2014, in which cases the three-year period provided in paragraph 14 shall be counted from 1 January 2014.

In effect, this article merely came to specify that the expiration of exemptions contained in paragraphs 14 to 16 of article 8 also applies to properties acquired before 1 January 2014.

But the presupposition for the IMT exemption - urban properties intended exclusively for rental for permanent residential purposes - was already enshrined in law when the property was acquired.

Note that in the present case, the property was not assigned to rental for permanent residential purposes within the three-year period, but rather was alienated. And for that reason, the Applicant submitted a verbal statement to the T.A. for the purpose of issuing the IMT and Stamp Tax assessments, given that the purpose given to the property was not residential rental, and the expiration of the exemption of which it had benefited when acquiring the said property occurred.

In effect, we understand as in the judgment of CAAD issued in case no. 164/2016-T, that "it is not possible to conclude that the obligation to assign the property to rental for permanent residential purposes constitutes a requirement introduced by Law No. 83-C/2013 of 31 December. Such obligation was already expressed and concretely contained in art. 8, paragraphs 7 and 8 of the legal regime of FIIAH in its initial version".

Thus, we conclude as in the judgment of CAAD above mentioned, that there is no violation of the principle of non-retroactivity of tax law or worsening of the tax position of the Applicant, and the unconstitutionality of the said provision is not in question.

3.4. Application of the Regime to the Applicant's Situation

The State Budget Law for 2014 came to establish a new requirement for the exemption: if the assignment to rental for permanent residential purposes does not occur within the three-year period following the entry of the property into the fund, the fund shall request the assessment of the IMT that was not assessed.

However, that is not what occurred in this case. The IMT and Stamp Tax assessments in question were not based on its retention in the fund for a period equal to or greater than three years without there having been an assignment to rental for permanent residential purposes. In fact, the assessments were based on the fact that a different purpose was given to the property from that on which the benefit was based, as is stated in the said assessments.

Once the fraction is alienated, that purpose can no longer be fulfilled, whereby the requirement established for the IMT exemption to be applicable was not met.

In effect, we understand that the effects resulting from the alienation of the property contained in article 8 paragraphs 15 and 16 of the legal regime of FIIAH do not have an innovative character, as they already resulted from article 8 paragraphs 7 and 8 of the said regime. Thus, the unconstitutionality of such provision (article 8 paragraphs 15 and 16 of the legal regime of FIIAH, added by Law No. 83-C/2013 of 31 December) is not in question.

Moreover, the above-mentioned property was acquired on 29-11-2013, benefiting from the IMT exemption provided for in article 8 paragraph 7 sub-paragraph a) of the legal regime of FIIAH, since the Applicant declared that the property in question would be intended for rental for permanent residential purposes.

On the other hand, in the statement made by the Applicant with a view to the assessments in question there is express mention that they are based on the fact that a different purpose was given to that on which the benefit was based.

And on this point, we fully adhere to the reasoning contained in the judgment of CAAD issued in case no. 164/2016-T, which states that: "and we do not reach a different conclusion by the fact that the Applicant has submitted a document in which it requests the assessment of IMT and Stamp Tax, notwithstanding that this expressly states that the provision leading to the aforesaid request is illegal and unconstitutional. In effect, such request does not concern the property object of these proceedings and if the statement that justified the assessment of IMT and Stamp Tax (…) had as its origin any other ground distinct from the assignment of the property to a purpose different from rental, it was only incumbent upon the Applicant to prove the assignment to rental for permanent residential purposes. With no different proof existing in the file, it is imperative to conclude that the basis of the assessments in question consisted of the fact that Fund B… intended to give the property a purpose different from rental for residential purposes".

And the same judgment continues by stating that "(…) what is at issue in these proceedings consists of the fact that the use that founded the exemption was not given, the assignment to rental for permanent residential purposes and not a question of period. This removes the issue of violation of the principle of non-retroactivity of tax law".

It further states that "in summary, the grant of the tax benefit does not require a mere stated intention, at the moment of execution of the public deed of purchase and sale, of assignment of the property to permanent residential rental, but rather the actual assignment. Now, if the Applicant expressed that intention, but did not proceed to effect such assignment or at least does not prove it in these proceedings, the application must be dismissed".

The application by the Applicant must thus be dismissed and it is to be concluded that the IMT and Stamp Tax assessments in question are legal under sub-paragraph a) of paragraph 7 of article 8 of the special regime applicable to real estate investment funds for residential rental.

4. Decision

In light of the foregoing, it is determined that the application filed by the Applicant in the present tax arbitration case is ruled unfounded, as to the illegality of the IMT assessments in the amount of 11,410.63 € and Stamp Tax assessments in the amount of 2,237.00 €.

5. Value of the Proceedings:

In accordance with the provisions of article 315, paragraph 2, of the Civil Procedure Code (CPC) and article 97-A, paragraph 1, sub-paragraph a) of the Tax Procedure and Process Code (CPPT) and paragraph 3, paragraph 2 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the action is fixed at 13,647.63 €.

6. Costs:

In accordance with article 22, paragraph 4, of the RJAT, and Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, the amount of costs is fixed at 918.00 € due by the Applicant.

Notify.

Lisbon, 21 December 2016.

Text prepared by computer, in accordance with article 138, paragraph 5 of the Civil Procedure Code (CPC), applicable by reference to article 29, paragraph 1, sub-paragraph e) of the Tax Arbitration Regime, revised by me.

The sole arbitrator

Suzana Fernandes da Costa

Frequently Asked Questions

Automatically Created

Are real estate investment funds for residential leasing (FIIAH) exempt from IMT and Stamp Duty on property acquisitions?
Yes, under Article 8(7) and 8(8) of the FIIAH Tax Regime in effect at the time, real estate investment funds for residential rental were exempt from IMT (Municipal Tax on Onerous Property Transfers) and Stamp Tax on property acquisitions intended for permanent residential rental purposes. This exemption was originally granted without holding period requirements or other conditions that would cause it to expire.
Does the transitional regime in Article 236 of Law 83-C/2013 violate the principle of non-retroactivity of tax law under Article 103(3) of the Portuguese Constitution?
The applicant argued that Article 236 of Law 83-C/2013 violates Article 103(3) of the Portuguese Constitution by retroactively imposing a three-year holding period on properties already acquired with unconditional exemptions, thereby affecting crystallized tax rights. The Tax Authority contended that the provision does not violate constitutional principles because the exemption expired when the property was given a different purpose (sale instead of rental), consistent with general tax benefit expiration rules under Article 14(2) of the Tax Benefits Statute.
What happens to IMT and Stamp Duty exemptions when a FIIAH sells a property acquired before January 1, 2014?
When a FIIAH sells a property acquired before January 1, 2014, the IMT and Stamp Tax exemptions previously granted are forfeited if the sale occurs before the three-year period established in the transitional regime expires. Under Article 236 of Law 83-C/2013, this three-year period is counted from January 1, 2014 (not from the actual acquisition date), and the Tax Authority assesses the taxes that would have been due at acquisition, which the fund must then pay.
How does the three-year deadline in the FIIAH transitional tax regime affect exemption forfeiture for properties acquired before 2014?
For properties acquired before 2014, Article 236 of Law 83-C/2013 mandates that the three-year holding period required under paragraphs 14-16 of Article 8 of the FIIAH Tax Regime begins on January 1, 2014, regardless of when the property was actually acquired. If a FIIAH sells the property or liquidates before this three-year period expires, the previously granted IMT and Stamp Tax exemptions are forfeited, and the fund must request assessment and pay the taxes that were originally exempted.
Can taxpayers challenge IMT and Stamp Duty assessments issued under the FIIAH regime through CAAD tax arbitration?
Yes, taxpayers can challenge IMT and Stamp Tax assessments issued under the FIIAH regime through CAAD (Administrative Arbitration Center). This case demonstrates CAAD's jurisdiction over such disputes, with Process 288/2016-T being one of many similar cases (including 727/2015-T, 320/2015-T, 61/2016-T, and others) where funds challenged assessments related to Article 236's transitional provisions. The arbitration process follows the Legal Regime of Tax Arbitration (RJAT), with decisions rendered by appointed arbitrators.