Process: 32/2017-T

Date: May 22, 2017

Tax Type: IMT Selo

Source: Original CAAD Decision

Summary

CAAD arbitral decision 32/2017-T examines the constitutionality of Article 236(2) of Law 83-C/2013 regarding IMT and Stamp Tax exemptions for FIIAH (Closed Real Estate Investment Funds for Residential Lease). The claimant, managing a FIIAH that acquired property before January 1, 2014 with tax exemptions, challenged assessments totaling €687.15 (IMT) and €549.72 (Stamp Tax) after disposing of the property. The central legal issue concerns whether Article 236(2)'s transitional regime—which counts the mandatory three-year holding period from January 1, 2014 for pre-2014 acquisitions—violates Article 103(3) of the Portuguese Constitution prohibiting retroactive tax legislation. The claimant argued this provision retroactively imposed new forfeiture conditions on previously acquired exemptions, seeking nullity or annulment of assessments plus reimbursement with compensatory interest. The Tax Authority defended the provision's constitutionality, asserting it merely established an implementation timeline for pre-existing requirements rather than retroactively changing exemption prerequisites. The Authority emphasized that disposal triggered the assessments because the property received a destination different from that justifying the original benefit. The case raises fundamental questions about temporal application of tax benefits, constitutional limits on transitional tax provisions, and the distinction between retroactivity and prospective implementation of compliance periods for grandfathered transactions in real estate investment fund taxation.

Full Decision

ARBITRAL DECISION

1. REPORT

1. A…, S.A., taxpayer no.…, with registered office at…, no.…, Lisbon, in its capacity as managing company of B… – CLOSED REAL ESTATE INVESTMENT FUND FOR RESIDENTIAL LEASE registered with the Securities Market Commission, with the tax identification number…, came on 6 January 2017 to request the establishment of an arbitral tribunal, pursuant to article 2, no. 1, letter a) of Decree-Law no. 10/2011, of 20 January (hereinafter RJAT).

1.2. The Respondent in the proceedings is the TAX AND CUSTOMS AUTHORITY

1.3 The Ethics Council of the Administrative Arbitration Center (CAAD) appointed the undersigned to form the Single Arbitral Tribunal, notifying the parties, and the Tribunal was constituted on 21 March 2017.

1.4 The request for arbitral decision concerns the IMT assessment number…, in the amount of €687.15, and the IS assessment number…, in the amount of €549.72, both relating to Property U-…-C located on Street…, …, registered in the urban property register of the parish of… (current Union of Parishes of… and…), …, assessments and property which are better identified in the Claimant's request and in the documents attached thereto, to which reference is hereby made.

The Claimant requests that the Tribunal assess whether number 2 of article 236 (Transitional Provision in the scope of the Special Regime Applicable to FIIAH and SIIAH) provided by Law no. 83 – C/2013, of 31 December - in that it determines the application of the current Tax Regime of the FIIAH to properties that have been acquired by FIIAH before 1 January 2014, counting, in those cases, the three-year period provided in no. 14 from 1 January 2014 - constitutes a new regime of forfeiture of the exemptions provided in no. 7, letter a) and no. 8 of article 8 (Tax Regime) of the Tax Regime of the FIIAH and whether, to that extent, it reveals a violation of the principle of non-retroactivity of tax law, embodied in article 103, number 3, of the Constitution of the Portuguese Republic, which, in its view, leads to its unconstitutionality.

The Claimant invokes the illegality of the assessments based on their unconstitutionality which, it argues, leads to their respective nullity, which it wishes to be declared by the Tribunal, or to their voidability, whereby subsidiarily it requests that the assessments be annulled.

The Claimant understands that the assessments in question are, consequently, vitiated by a defect that has nullity as its consequence, under letter d) of no. 2 of article 133.2 of the Code of Administrative Procedure (CPA) because they violate the essential content of a fundamental right.

And it further understands that, in any event, the assessments will be voidable, as illegal, on the same grounds.

Furthermore, the Claimant petitions for the condemnation of the Respondent to the reimbursement of the amounts paid by virtue of the assessments in question, plus compensatory interest on all amounts paid accrued up to the date of reimbursement.

1.5 The TAX AND CUSTOMS AUTHORITY responded on 4 May 2017, defending itself by way of objection, arguing the consistency with the Constitution of the rule in question.

It alleges that the law in question is not afflicted with retroactivity, having not established any new requirement for the application of the exemption provided for in the tax regime of the FIAH, but merely having granted a period for compliance with a requirement already underlying the regime itself, a period that only begins after the entry into force of the new law.

It is not, therefore, a matter of altering the prerequisites, conditions for attribution or recognition of a tax benefit, but solely and only of implementing that regime, regulating the time period for purposes of proving compliance with a previously established requirement.

It adds that, in the case at hand, the tax assessments in question are grounded in the fact that the Claimant has disposed of the property, thereby giving it a destination different from that on which the benefit was based.

It further adds, regarding the supposed nullity of the assessment acts, that in the Portuguese legal-administrative order the standard regime of invalidity of acts is, for reasons of legal certainty, mere voidability, including for those carried out on the basis of illegal or unconstitutional decisions, with the Supreme Administrative Court having pronounced itself in that same sense.

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

The acts in question, being, without such being conceded, violations of the principle of tax legality, would thus be voidable, but not null. It being certain that, it continues, the acts in question are not illegal and therefore do not suffer from any defect that would even warrant their respective voidability, in that, it reiterates, the assessments in question based on the fact that the property was given "a destination different from that on which the benefit was based" then, contrary to what the Claimant intends, not only is the retroactivity of the legal provision better identified by it at the outset of the arbitral request not in issue, but neither is there any violation of its expectations.

It finally understands that, even if the Claimant's requests were to proceed, compensatory interest would, in any event, not be owed, as it cannot, in its view, be imputed with any error of fact or law, being bound as it is by the principle of legality, and therefore the prerequisites of article 43 of the LGT are not met.

Wherefore the Respondent concludes that the requests should be judged unfounded and ends by requesting that if the Tribunal comes to accept the Claimant's claim and, inherently, refuses the application of article 236 of the Regime applicable to FIIAH, on grounds of unconstitutionality, it is requested, by appeal to the provisions of article 280, no. 3 of the CRP and article 72, no. 3 of the Constitutional Court Law, that notification of this learned arbitral decision be made to the Public Prosecutor so that it may fulfil its legal prerogatives.

1.6. On the same date, the Respondent came to request the waiver of presentation of the administrative file, "given the matter at hand and in view of the contents of the documents already attached by the claimant".

1.7 The Tribunal issued, on 8 May 2017, an order to the effect of waiving the meeting of the arbitral tribunal provided for in article 18 of the RJAT and likewise the arguments, and setting a date for the pronouncement of the arbitral decision.

1.8. The parties, having been notified, did not object.

2. PRELIMINARY HEARING

The Tribunal was regularly constituted and is competent.

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

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

3. FACTUAL MATTERS

As relevant to the decision on the merits, the Tribunal considers the following facts to be proven:

1) The Claimant was the owner of Property U-…-C located on Street…, …, registered in the urban property register of the parish of… (current Union of Parishes of… and…), …

2) The property was acquired benefiting from the IMT and IS exemptions contained, respectively, in numbers 7, letter a), and 8 of article 8 of the Tax Regime of the FIIAH, which were recognized upon request, pursuant to article 10 of the IMT Code.

3) The Claimant submitted, on 10.08.2016, a declaration for IMT and IS assessment, requesting payment of IMT and Stamp Duty on the basis of no. 16 of article 8 of the Regime of the FIIAH, applicable ex vi of 236 of Law no. 83 – C/2013, of 31 December (Transitional Provision in the scope of the Special Regime Applicable to FIIAH and SIIAH);

4) The Claimant indicated as the price of the disposal the amount of €68,715.50, which served as the basis for the assessments in question;

5) Such declarations gave rise to the IMT assessment number…, in the amount of €687.15, and the IS assessment number…, in the amount of €549.72;

6) These amounts were paid by the Claimant on 19 October 2016;

Facts Not Proven

No material facts were found, relevant to the assessment of the merits of the case, which were not proven.

Grounds of the Decision on Factual Matters

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

4. ISSUES FOR DECISION

The issue which is under the Tribunal's consideration is to assess the legality of the IMT and IS assessments sub judice and to decide on the consequences of their possible illegality and, consequently, on the legality of the IMT and IS assessments sub judice.

Let us examine:

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

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

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

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

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

"14 — For the purposes of the provisions of nos. 6 to 8, urban properties are considered to be intended for lease for permanent residence whenever they are subject to a lease contract for permanent residence within three years from the moment they became part of the fund's assets, the taxpayer being required to communicate and provide proof to the TA of the respective actual lease within 30 days following the end of said period. 15 — When properties have not been subject to a lease contract within the three-year period provided in the preceding number, the exemptions provided in nos. 6 to 8 cease to have effect, the taxpayer being required in this case to request from the TA, within 30 days following the end of said period, the assessment of the respective tax. 16 — Should properties be disposed of, with the exception of cases provided in article 5, or should the FIIAH be subject to liquidation, before the period provided in no. 14 has elapsed, the taxpayer is equally required to request from the TA, before the disposal of the property or the liquidation of the FIIAH, the assessment of the tax owed pursuant to the preceding number."

In article 236 appears the following transitional provision: "The provisions of nos. 14 to 16 of article 8 of the special regime applicable to FIIAH and SIIAH, approved by articles 102 to 104 of Law no. 64-A/2008, of 31 December, apply to properties that have been acquired by FIIAH from 1 January 2014. 2 - Notwithstanding the provisions of the preceding number, the provisions of nos. 14 to 16 of article 8 of the special regime applicable to FIIAH and SIIAH, approved by articles 102 to 104 of Law no. 64-A/2008, of 31 December, are equally applicable to properties that have been acquired by FIIAH before 1 January 2014, counting, in those cases, the three-year period provided in no. 14 from 1 January 2014."

It is against this transitional provision that the Claimant rises up, considering it unconstitutional, for violation of the principle of non-retroactivity of tax law, embodied in article 103, number 3, of the CRP, in that, in its view, it constitutes a new regime of forfeiture of exemptions.

Upon examination, it results from the proven facts that the property in question was acquired by the Claimant benefiting from IMT exemption under letter a) of no. 7 of article 8 of the legal regime of the FIIAH.

Such provision requires that the property be intended for lease for permanent residence in order to benefit from such exemption.

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

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

The State Budget for 2014 certainly comes to establish new rules for the exemption: should the allocation to lease for permanent residence not occur within the 3-year period following the entry of the property into the Fund and, further should the FIIAH be subject to liquidation, before that period has elapsed, the acquirer must request the assessment of the IMT that was not assessed.

The Claimant alleges that it was only for this reason – and by application of these rules, which it considers unconstitutional - that it proceeded with the declarations that gave rise to the assessments in question.

It does not, therefore, escape the Tribunal that the Claimant seeks to circumscribe the scope of assessment of the issue sub judice to the constitutionality of the provision and to seek that the Tribunal be thereby prevented from having the possibility to assess the legality of the assessment by application of the provisions, as to the forfeiture of exemption, in the Statute of Tax Benefits, thereby forcing recourse to the Constitutional Court.

Well then, let us examine:

It should be noted, from the outset, that the IMT and IS assessments effected regarding the autonomous fraction described were not based on its retention in the fund for a period equal to or greater than 3 years without allocation to lease for permanent residence.

The assessments in question, as indeed appears from the assessment notices attached to the proceedings, were based on the provisions of number 16 of that article 8. This - and despite the Claimant not having stated it expressly – was based on the fact that the Claimant had decided to dispose of the property which, with benefit, it had acquired to allocate to lease.

Which, for purposes of the provisions of the EBF, corresponds to the intention of giving it a destination different from that on which the benefit was based, thereby making the exemption lapse.

The fact that the disposal of the property makes the exemption lapse is not, as will be explained below, a new fact resulting from the amendment made by the State Budget for 2014.

What will be new, at most, is the obligation for the acquirer to request the assessment of the taxes that were not assessed before the disposal.

A provision that is not only merely procedural, but is not even in issue in these proceedings, given that this is precisely what the Claimant did and the consequence would always be, as we will see results from the Statute of Tax Benefits, that the taxes would be assessed ex officio by the Treasury (plus interest and penalties provided by law), once the disposal was ascertained.

The disposal of the property in question by the Claimant determines the forfeiture of the exemption because it was given by it a destination different from that which had determined the granting of the benefit.

In fact, to comply with letter a) of no. 7 of article 8, a mere declared intention at the time of acquisition of the property is not sufficient, but an actual allocation to lease for permanent residence is required.

It is not, therefore, true that the facts or circumstances on which its forfeiture depended were not already legally provided for at the moment of recognition of the exemption, at least as regards the circumstances that actually occurred: the disposal of the property.

In fact, the granting of a benefit already depended – and always depends – on the actual verification of its respective prerequisites, pursuant to article 12 of the EBF (article 11, in the version of the EBF that was in force prior to its reissue by Decree-Law no. 108/2008, of 26/06).

The fact that the Claimant proceeded with the declaration for assessment pursuant to no. 16 of the provision, indicating a price, which indicates intention to dispose of the fraction, which, upon acquiring, it declared it would allocate so as to permit it be recognized – as it was – the exemption of IMT and IS, would always determine, even though the added number 16 did not expressly provide for it, the forfeiture of such exemptions, by virtue of the provisions of article 12 and no. 3 of article 14 of the Statute of Tax Benefits (former 12, no. 3, in the version of the EBF that was in force prior to its reissue by Decree-Law no. 108/2008, of 26/06), according to which "When the tax benefit concerns the acquisition of assets intended for the direct realization of the purposes of the acquirers, it ceases to have effect if they are disposed of or given another destination without authorization from the Minister of Finance, without prejudice to other sanctions or different regimes established by law."

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

It is not, on the other hand, true that the special regime applicable to real estate investment funds for residential lease (FIIAH) and real estate investment companies for residential lease (SIIAH), which, in its article 8, creates the exemption, excludes the application of the provisions in the cited articles of the EBF, given that nothing in the regime of the Funds – prior to the entry into force of the provision whose retroactive application the respondent puts in question – excluded the application of those provisions, which are general.

It thus seems to us evident that, to the extent corresponding to the disposal of the property, no. 16 of article 8 of the Legal Regime of the FIIAH merely reiterates what already resulted from the provisions of the Statute of Tax Benefits.

Wherefore we understand that the provision in question, to that extent, does not establish any new, substantive regime of forfeiture of the benefit, but rather procedural rules relating to the timing and manner of assessment of the taxes.

It is not, therefore, correct what the Claimant alleges: the granting of the benefit does not constitute an act that becomes definitively crystallized in the legal-tax order.

In fact, the ratio for attribution of the tax benefit in respect of IMT and IS to FIIAH is, clearly, its allocation to lease for permanent residence— "The acquisitions of urban properties or autonomous fractions of urban properties intended exclusively for lease for permanent residence, by the investment funds...".

Wherefore the consequence of its being given a different destination would always be the forfeiture of the exemption, there being a need to restore legality by assessing the taxes which, but for the declaration of intention made at the time of acquisition, would have had to be assessed.

None of the allegations of the Claimant in article 19 of its request for arbitral decision are therefore relevant, namely, that "Had the Tax Regime of the FIIAH not been altered (cf. articles 235 (Amendment to the tax regime of real estate investment funds and companies for residential lease), and article 236 (Transitional Provision in the scope of the Special Regime applicable to FIIAH and SIIAH), of Law no. 83 – C/2013, of 31 December) the Claimant would never have requested the Assessments." This is because, had it not done so, the assessments would have been made ex officio by the TA by reason of the forfeiture of the benefit.

Concluding, it is not true that there were not legally provided for, at the moment of recognition of the exemption, any facts or circumstances on which the forfeiture of the recognized exemption depended, an argument on which the Claimant bases, entirely, its thesis of the unconstitutionality of the provision (cf. article 41 of the request for arbitral decision).

The learned Opinion which the Claimant attaches and of which it seeks to make use does, it is true, pronounce on the unconstitutionality of the provision, but in a situation different from that which occurred here, confining itself to those cases in which the forfeiture of the exemption occurs because the property acquired with exemption was not allocated to lease within the period – that being indeed new – set by the provision whose unconstitutionality is invoked.

The case at hand is manifestly different. The IMT and Stamp Duty assessment did not arise in the course of this period without the Fund having allocated the fraction to lease. Rather, it occurred by reason of the fraction having been disposed of.

And, for that case, the rule in question establishes even a more favorable regime: the exemption now only lapses if the property is disposed of before the three-year period has elapsed. Without this provision, by mere application of the provisions of the Statute of Tax Benefits, the exemption would lapse whenever the property was disposed of, without prejudice, naturally, to the periods of expiration of the right to assess the tax.

The provision in question is not, therefore, to the extent that it applies to the case at hand, a provision that restricts the scope of application of the exemption, but rather a provision that permits that, after three years from the acquisition have elapsed, the property may be sold without the exemption lapsing.

Otherwise, the disposal of the fraction would always determine the forfeiture of the exemption by application of the provisions of no. 3 of article 14 of the EBF, there being therefore not in issue, in the situation sub judice, any retroactive application of a provision introducing a new regime of forfeiture of exemptions, nor is there any violation of expectations of the Claimant or deterioration of its tax position, wherefore we thus understand that the IMT and Stamp Duty assessments in question are legal.

We thus understand that the provision in question does not suffer from unconstitutionality and, consequently, that the assessments challenged are legal.

To this effect, see, among others, the decision handed down in case 398/2015-T which was heard at CAAD: "In the specific case – disposal of properties that were never allocated to lease for permanent residence by the fund – this no. 16, combined with no. 15, does not alter the substance or requirements of the exemption established by letter a) but has a more procedural/operative nature – reading that should there be disposal of properties that have not been subject to a lease contract, the exemptions cease (namely that of letter a) of no. 7), the taxpayer being required to request the assessment of the respective tax. Concluding, we maintain that there is no question of retroactivity or otherwise of the law, nor is there violation of expectations of the Claimant or deterioration of its tax position, wherefore we thus understand that the IMT assessment in question is legal."

Similarly, the decisions handed down in cases 684/2015-T, 688/2015-T, 690/2015-T, 691/2015-T, all at CAAD, among many others in the same sense and with identical grounds.

As regards now the invoked nullity of the assessment: taking into account that above we decided for the constitutionality of the provision, the analysis of the issue proposed by the Claimant is moot, which is to determine whether an assessment that is based on an unconstitutional provision is non-existent, null or merely voidable.

Having decided for the legality of the assessments in question, the examination of the consequences of possible illegality is likewise moot, as well as the request for condemnation to compensatory interest.

6. DECISION

In light of the foregoing, it is decided to judge the Claimant's requests to be totally unfounded.

The value of the case is fixed at €1,236.87 (one thousand two hundred and thirty-six euros and eighty-seven cents) in accordance with the provisions of articles 3, no. 2 of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT), 97-A, no. 1, letter a) of the Tax Procedure and Process Code and 297 of the Code of Civil Procedure.

The amount of costs is fixed at €306.00 (three hundred and six euros) under article 22, no. 4 of the RJAT and Table I attached to the RCPAT, to be borne by the Claimant, in accordance with the provisions of articles 12, no. 2 of the RJAT and 4, no. 4 of the RCPAT.

Let notice be given.

Porto, 22 May 2017,

The Arbitrator

(Eva Dias Costa)

Text prepared by computer, pursuant to article 131, no. 5 of the Code of Civil Procedure, applicable by reference to article 29, no. 1, letter e) of the RJAT.

Frequently Asked Questions

Automatically Created

Are IMT and Stamp Tax exemptions for FIIAH properties acquired before January 1, 2014 subject to the transitional regime under Article 236 of Law 83-C/2013?
Yes, IMT and Stamp Tax exemptions for FIIAH properties acquired before January 1, 2014 are subject to the transitional regime under Article 236 of Law 83-C/2013. This provision specifically addresses properties acquired before the new regime's effective date, establishing that the three-year holding period required to maintain exemptions begins counting from January 1, 2014, regardless of the actual acquisition date. This transitional rule ensures uniform application of the FIIAH tax regime's holding requirements across all fund properties.
Does the retroactive application of the three-year deadline in Article 236(2) of Law 83-C/2013 violate the principle of non-retroactivity of tax law under Article 103(3) of the Portuguese Constitution?
The constitutionality of Article 236(2)'s retroactive application depends on whether it constitutes a true retroactive tax (prohibited under Article 103(3) of the Portuguese Constitution) or merely a prospective implementation rule. The claimant argued it retroactively imposes new forfeiture conditions on previously granted exemptions, violating constitutional protections against retroactive taxation. The Tax Authority contended it does not alter exemption prerequisites but simply establishes a compliance timeline beginning after the law's enactment, making it prospective rather than retroactive. The resolution hinges on distinguishing between changing substantive requirements retroactively versus implementing pre-existing conditions prospectively.
What are the legal consequences if IMT and Stamp Tax assessments on FIIAH properties are found to be based on an unconstitutional provision?
If IMT and Stamp Tax assessments are based on an unconstitutional provision, the legal consequences could include: (1) nullity of the assessment acts if they violate the essential content of a fundamental right, as argued by the claimant; (2) alternatively, voidability of the assessments as illegal administrative acts; (3) taxpayer entitlement to reimbursement of amounts paid; (4) potential compensatory interest from payment date until reimbursement if prerequisites under Article 43 of the General Tax Law are met; and (5) notification to the Public Prosecutor under Article 280(3) of the Portuguese Constitution if unconstitutionality is declared, enabling constitutional review procedures.
How does the CAAD arbitral tribunal assess the validity of IMT and Stamp Tax liquidations issued under the special FIIAH and SIIAH tax regime?
CAAD arbitral tribunals assess validity of IMT and Stamp Tax liquidations under the FIIAH/SIIAH regime by examining: (1) whether legal prerequisites for exemption or taxation are met; (2) proper application of transitional provisions to acquisitions before regime changes; (3) constitutional compliance with principles like non-retroactivity and protection of legitimate expectations; (4) whether disposal or destination changes justify exemption forfeiture; and (5) procedural correctness of assessment acts. The tribunal analyzes statutory interpretation, constitutional principles, and factual circumstances to determine if assessments are valid, null (for fundamental rights violations), or voidable (for illegality), ensuring specialized real estate fund tax regimes are applied lawfully.
Can a taxpayer claim reimbursement with compensatory interest for IMT and Stamp Tax amounts paid under allegedly unlawful assessments in CAAD arbitration proceedings?
Yes, taxpayers can claim reimbursement with compensatory interest in CAAD proceedings for IMT and Stamp Tax amounts paid under allegedly unlawful assessments. However, compensatory interest under Article 43 of the General Tax Law requires proving the Tax Authority committed an error of fact or law. The Tax Authority may contest this, arguing it acted pursuant to the legality principle and made no imputable error. Success depends on demonstrating the assessments were unlawful and the Authority's error was culpable. If the tribunal finds assessments null or voidable, reimbursement follows, but compensatory interest requires separate analysis of whether statutory prerequisites are satisfied beyond mere illegality of the underlying assessment.