Process: 325/2015-T

Date: November 10, 2015

Tax Type: IMT

Source: Original CAAD Decision

Summary

This CAAD arbitration case (Process 325/2015-T) addresses whether the Tax Authority can retroactively assess IMT six years after a property purchase when an exemption for own permanent residence was initially granted. In 2004, the taxpayer acquired an urban property for €75,000, declaring intent to use it as own permanent residence. The notary recognized the IMT exemption under Article 9 of the CIMT at the time of the deed. However, in 2010, the Tax Authority assessed IMT of €6,089.98, claiming the exemption expired under Article 11(7) CIMT because the property was partially used as a warehouse rather than exclusively for residence. The taxpayer argued that: (1) the property was always used for residence and household storage purposes; (2) the exemption was validly granted by a competent public official; (3) under Article 14(4) of the Tax Benefits Statute, any improperly granted tax benefit can only be revoked through formal administrative procedures within legal time limits; and (4) the Tax Authority cannot simply assess tax years later without first formally revoking the benefit. The central legal question involves whether mixed residential use invalidates the exemption, and critically, whether procedural safeguards under the Tax Benefits Statute require formal revocation before retroactive assessment. This case highlights the tension between substantive tax requirements and procedural protections for taxpayers who rely on officially recognized tax benefits at the time of property acquisition.

Full Decision

ARBITRAL DECISION

The arbitrator Dr. André Festas da Silva, appointed by the Deontological Council of the Administrative Arbitration Center (CAAD) to form the Arbitral Tribunal, constituted on 11 August 2015, decides as follows.

I. REPORT

I.1

  1. On 22 May 2015, the taxpayer A…, Tax Identification Number …, resident at …, n.º… …, requested, under the terms and for the purposes of the provisions of paragraph a) of section 1 of Article 2 and Article 10, both of Decree-Law n.º 10/2011, of 20 January, the constitution of an Arbitral Tribunal with the appointment of a single arbitrator by the Deontological Council of the Administrative Arbitration Center, under the terms of the provisions of section 1 of Article 6 of the aforesaid statute.

  2. The request for constitution of the Arbitral Tribunal was accepted by the Honorable President of CAAD and was notified to the Tax and Customs Authority (hereinafter referred to as AT or "Respondent") on 08 June 2015.

  3. The Applicant did not proceed with the appointment of an arbitrator, wherefore, under the provisions of Article 5, section 2, paragraph b) and Article 6, section 1, of the RJAT, the undersigned was appointed by the President of the Deontological Council of CAAD to constitute the present single Arbitral Tribunal, having accepted under the legally foreseen terms.

  4. The AT submitted its response on 30 September 2015.

  5. By order of 02.10.2015, the holding of the meeting provided for in Article 18 of the RJAT was dispensed with and it was decided that the proceedings should continue with written submissions.

  6. On 05 October 2015 the Applicant submitted its legal submissions.

  7. On 16 October 2015 the Respondent submitted its legal submissions.

  8. The Applicant seeks that the Arbitral Tribunal declare the illegality of the assessment of Municipal Tax on Onerous Property Transfers (IMT) n.º …., in the amount of €6,089.98, dated 06.01.2011.

I.A. The Applicant sustains its claim, in summary, on the following grounds:

  1. By public deed of sale and purchase, executed on 30 August 2004, at the … Notarial Registry of ..., at folio … V, of the notary book n.º…H, the applicant acquired by onerous title the urban property, registered in the urban property register of the parish of the … under article …, for the price of €75,000.00.

  2. As verified from the said deed of sale and purchase, on the date of execution of the deed was exhibited a photocopy in substitution of the urban property register issued on 4 March 2004, by the Tax Office of ... –… .

  3. And, as stated by the Applicant in the referred deed, the applicant always intended to acquire the property for own permanent residence of its family household.

  4. The notary having recognized the exemption from IMT, under the provisions of Article 9 of the Municipal Tax on Onerous Property Transfers.

  5. Subsequently, in late 2010, the Tax Office of ... -… proceeded to officially assess IMT, in the amount of €4,875.00, relating to such transfer, invoking the expiration of the exemption, under the provisions of section 7 of Article 11 of the CIMT.

  6. For allegedly having given the property a different purpose from that on which the benefit was based, given that the property was partially used as a warehouse and industrial activity on 30/8/2004.

  7. The mentioned Tax Office applied the rate referred to in paragraph d) of section 1 of Article 17 of the CIMT.

  8. It considered that the tax should have been paid by 29/09/2004, under the terms of section 6 of Article 36 of the CIMT.

  9. And assessed compensatory interest in the amount of €1,214.88 with reference to the period from 30/09/2004 to 21 December 2010.

  10. After which it notified the now applicant for payment of such amounts.

  11. The transfer in question is subject to IMT as determined by section 1 of Article 2 of the CIMT.

  12. The assessment must precede the act or fact transferring the property, as determined by section 1 of Article 22 of the CIMT.

  13. Since, according to the AT's argument, the property was not a property held in full ownership, intended exclusively for residence, but a property with floors or autonomous units susceptible of being let separately, with the ground floor intended for warehouse and the first floor for residence.

  14. The taxpayer always intended to use, as he actually used, the property for his own residence and storage and that of his family household.

  15. Hence, the applicant entered into the deed of acquisition of the identified property with the sole purpose that it should be used for own permanent residence.

  16. The notary, a public official at the time, recognized the IMT exemption referred to in Article 9 of the respective Code.

  17. An exemption which covered the acquisitions of urban property or autonomous unit of urban property intended exclusively for residence.

  18. Given that the exemption was recognized by the competent entity for that purpose, as determined by paragraph a) of section 2 of Article 10 of the CIMT.

  19. Such exemption being a tax benefit, in view of the provisions of section 2 of Article 2 of the Tax Benefits Statute.

  20. Furthermore, as Article 9 of the CIMT is a tax benefit, its extinction is subject to the rules of Article 14 of the Tax Benefits Statute.

  21. Section 4 of the same article determines that "the administrative act granting a tax benefit is not revocable, nor can the respective agreement of concession be rescinded, or the rights acquired be diminished, by unilateral act of the tax administration, save if there is breach attributable to the beneficiary of the obligations imposed, or if the benefit was granted improperly, in which case such act may be revoked".

  22. Up to the present date, the applicant has never been notified of any decision by the AT revoking the tax benefit granted to him.

  23. The AT limiting itself to proceeding with the assessment of IMT, with the argument that the exemption granted had expired, based on section 7 of Article 11 of the CIMT.

  24. Under the terms of which the following no longer benefit from exemption and reduction of rates provided in paragraphs a) and b) of section 1 of Article 17:

a) When the property has been given a different purpose from that on which the benefit was based, within six years from the date of acquisition, save in the case of sale;

b) When the properties are not used for own permanent residence within six months from the date of acquisition.

Now,

  1. Neither of these situations occurred, as was demonstrated above, since residence was established in the property and the property was intended in its entirety for own permanent residence, being intended solely for that purpose and not for another or others.

  2. What may have occurred was the improper granting of a tax benefit.

  3. A benefit whose revocability is provided for in section 4 of Article 14 of the Tax Benefits Statute.

  4. Which must be done within the revocation period of administrative acts, provided for in Article 141 of the already repealed Administrative Procedure Code, in force at the date.

  5. Which did not occur in the present case, where the services, without ever having revoked such act, proceeded with the assessment of IMT more than 6 years later.

  6. Invoking for that purpose, not the improper granting of the tax benefit, but the different use of the assumptions on which its granting was based.

  7. Having applied the provisions of paragraph a) of section 7 of Article 11 of the IMT, which, if it were to be applied, should always have been applied by 30-08-2010, and not already in December 2010, as came to pass.

I.B In its Response the AT invoked the following:

  1. The question that arises is whether the property as a whole is intended for residence or whether the 1st floor is actually intended for residence and the ground floor has a different purpose.

  2. Article 1 of the IMI code, approved by Decree-Law n.º 287/2003, of 12 November, stipulates that the I.M.I. applies to the tax property value of rural and urban properties situated in Portuguese territory.

  3. Regarding the exemption, in discussion within the scope of the present arbitral request, Article 9 presents the following wording, at the date of the facts:

Exemption for the acquisition of properties intended for residence

Acquisitions of urban property or autonomous unit of urban property intended exclusively for residence are exempt from IMT, whose value serving as the basis for assessment does not exceed (euros) 81,600. (Red. Law 55/-B/2004, of 30 December)

  1. This exemption comprises an objective element (urban property or autonomous unit of urban property intended exclusively for residence).

  2. From the elements exhibited at the time of execution of the deed, it was possible for the notary to verify that the Municipal Chamber of ... awarded the "building permit n.º …, issued on 31-12-97" to the first floor of the property, and awarded the "occupancy permit n.º …, issued on 13-09-77 to the ground floor.

  3. In turn, from the analysis of the technical specifications and justification report concerning the property, it is found that the Municipal Chamber of ..., on 29-09-75, refers to a project for the construction of "a property composed of ground floor and floor intended for own residence".

  4. The Applicant was notified through official letter n.º …, of 2010-07-29 to proceed with the presentation of the IMI model 1 declaration, which at the date was lacking, thus observing the discipline of Article 13, section 1, paragraph l of the CIMI.

  5. However, since the Applicant did not submit the said model 1 IMI declaration, it was officially inserted on 2010-10-06.

  6. Following this procedure, the services of the Respondent verified that from the detail of the urban property, the registration article under consideration presented a 1st floor used for residence and a ground floor used for warehouse and industrial activity.

  7. The assessment report resulting from the officially filed model 1 IMI declaration was notified to the Applicant, and from the said assessment report the Applicant presented no means of challenging the elements notified to him.

  8. Now, if the Municipal Chamber of ... awarded the "building permit n.º …, issued on 31-12-97" to the first floor of the property, and awarded the "occupancy permit n.º .., issued on 13-09-77" to the ground floor, and

  9. Neither the ground floor nor the first floor possess autonomous registration, it is evident that the property is not intended exclusively for residence.

  10. The property, now under analysis, appears in the register as ground floor as a floor/division of independent use whose use is warehouse and industrial activity, and 1st floor used for residence, with assessment of 2010-10-19.

  11. The Chief of the Tax Office, very rightly, proceeded with the official assessment of IMT and the respective compensatory interest.

  12. And it must not be said, as the Applicant wishes to make it appear, that the Respondent did not comply with the period referred to in Article 11, which in the Respondent's understanding, when the regime of Article 11, section 7, paragraph a) of the CIMT is applied, could only have been done by 2010.08-30.

  13. As has always been referred to, the wording of section 7 of Article 11 of the CIMT in force at the date of the facts was as we transcribe:

7 - Shall no longer benefit equally from exemption and reduction of rates provided in Article 9 and in paragraph a) of section 1 of Article 17, when the property has been given a different purpose from that on which the benefit was based, within six years from the date of acquisition, save in the case of sale

  1. In turn, the temporal limit of six years from the date of acquisition, corresponds to the period which the Applicant should have observed in the exclusive use of the property for residence.

  2. Under the terms of Article 13 of the CIMI, the owner of the property should have communicated to the AT any event likely to determine a change in the classification of the property, which he did not do, and the Respondent is unaware of any moment in which the Applicant requested any change to the respective permit, from the competent services.

  3. Having considered all of the above, we must necessarily conclude that the tax acts in question, in terms of substance, do not violate any legal or constitutional provision, and must therefore be maintained.

II. SANITATION

The Tribunal is competent and is regularly constituted, under the terms of Articles 2, section 1, paragraph a), 5 and 6, all of the RJAT.

The proceedings are proper.

The parties have legal capacity and standing.

The parties are legitimate and are legally represented, under the terms of Articles 4 and 10 of the RJAT and Article 1 of Ordinance n.º 112-A/2011, of 22 March.

There are no other preliminary matters to be considered nor defects that invalidate the proceedings.

It is now necessary to examine the merits of the claim.

III. THEMA DECIDENDUM

The question to be decided is as follows:

a) Having the Applicant benefited from an exemption from IMT, improperly, can the AT at a later date proceed with the assessment of the tax owed?

IV. FACTUAL MATTERS

IV.1. Proven Facts

Before proceeding to examine the questions, it is necessary to present the factual matter relevant to its understanding and decision, which, having examined the documentary evidence, the administrative tax proceedings attached and having regard to the facts alleged, is determined as follows:

  1. By public deed of sale and purchase, executed on 30 August 2004, at the … Notarial Registry of ..., at folio … V, of the notary book n.º…H, the applicant acquired by onerous title the urban property, registered in the urban property register of the parish of the Sé under article …, for the price of €75,000.00.

  2. On the date of execution of the deed a photocopy was exhibited in substitution of the urban property register issued on 4 March 2004, by the Tax Office of ... –… Service.

  3. The Applicant declared in the said deed that the acquisition of the property was for own permanent residence of its family household.

  4. The notary recognized the exemption from IMT.

  5. The property was partially used as a warehouse and industrial activity on 30/8/2004.

  6. The property was not a property held in full ownership, intended exclusively for residence, but a property with floors or autonomous units susceptible of being let separately, with the ground floor intended for warehouse and the first floor for residence.

  7. In late 2010, the … Tax Office of ... proceeded to officially assess IMT, in the amount of €4,875.00, relating to such transfer.

  8. The mentioned Tax Office applied the rate referred to in paragraph d) of section 1 of Article 17 of the CIMT.

  9. The Tax Office considered that the tax should have been paid by 29/09/2004.

  10. Having assessed compensatory interest in the amount of €1,214.88 with reference to the period from 30/09/2004 to 21 December 2010.

  11. The taxpayer was notified of the assessments.

  12. Disagreeing, the taxpayer presented on 06.01.2011 an administrative complaint, which was rejected.

  13. Notified of the rejection, the taxpayer presented on 29.03.2011 an administrative appeal, which was likewise rejected.

IV.2. Facts Given as Not Proven

There are no facts given as not proven, since all facts relevant to the examination of the claim were given as proven.

IV.3. Reasoning on Factual Matters

The facts given as proven constitute uncontested matter and documentally demonstrated in the proceedings.

The facts contained in numbers 1 to 13 are given as established by agreement of the parties, by analysis of the administrative procedure and by the documents attached by the Respondent (docs. 1 to 3 of the request for constitution of the Arbitral Tribunal).

V. Application of Law to Facts

Matters of Law

Having regard to the factuality under analysis in the present proceedings and to the submissions of the parties, the question that must be addressed is as follows:

"Having the Applicant benefited from an exemption from IMT, improperly, can the AT at a later date proceed with the assessment of the tax owed?"

At issue in the present dispute is a tax benefit from which the applicant benefited on 30.08.2004.

According to the law, tax benefits must be considered measures of an exceptional character, instituted for the protection of relevant extrafiscal public interests and which are superior to those of taxation which they prevent (See Article 2, section 1, of the Tax Benefits Statute, approved by Decree-Law n.º 215/89, of 1/7 - EBF).

From a legal point of view, and from the perspective of the tax legal relationship, tax benefits constitute, above all, facts which, being subject to taxation, are preventive of the birth of the tax obligation or, at least, of its arising in full. In truth, as a preventive fact, the tax benefit is always expressed in situations that are subject to taxation, that is, which are subsumable to the legal rules that define the objective and subjective incidence of the tax. And, precisely because the tax benefit constitutes a preventive fact of rule taxation, its extinction or lack of application assumptions has the immediate effect of the automatic restoration of that same taxation, as established by Article 14, section 1, of the EBF (former Article 12, section 1, in the wording of the EBF that was in force prior to the republication thereof by Decree-Law n.º 108/2008, of 26/06, but with the same wording) (See Decision of the Administrative Court of the South - 2nd Section, 11/12/2012, case 5810/12; Decision of the Administrative Court of the South - 2nd Section, 2/07/2013, case 6629/13; Nuno Sá Gomes, General Theory of Tax Benefits, CTF 359, page 75 et seq.; Nuno Sá Gomes, Manual of Tax Law, I, 1996, Rei dos Livros Publisher, page 323 et seq.).

It is today settled that fiscal laws are interpreted as any others, and their true meaning must be determined in accordance with the techniques and interpretative elements generally accepted by legal doctrine (See Article 9 of the Civil Code, Article 11 of the LGT; José de Oliveira Ascensão, The Law, Introduction and General Theory, Verbo Editorial, 4th edition, 1987, page 335 et seq.; J. Baptista Machado, Introduction to Law and the Legitimizing Discourse, Almedina, 1989, page 181 et seq.; Nuno Sá Gomes, Manual of Tax Law, II, Tax Science and Technique Notebooks, n.º 174, 1996, page 363 et seq.).

Specifically, the norms establishing tax benefits are not susceptible of analogical integration, although they admit of extensive interpretation (See Article 10 of the EBF - Corresponds to Article 9, in the wording of the EBF that was in force prior to the republication thereof by Decree-Law n.º 108/2008, of 26/06 - ; Decision of the Administrative Court of the South - 2nd Section, 25/6/2013, case 6588/13; Decision of the Administrative Court of the South - 2nd Section, 2/07/2013, case 6629/13; J. L. Saldanha Sanches, Manual of Tax Law, 3rd edition, Coimbra Editora, 2007, page 463 et seq.; Nuno Sá Gomes, General Theory of Tax Benefits, Tax Science and Technique Notebooks, n.º 165, 1991, page 253 et seq.).

On the date of the facts under analysis, that is, on 30.08.2004, Article 9 of the CIMT had the following wording:

Acquisitions of urban property or autonomous unit of urban property intended exclusively for residence are exempt from IMT, whose value serving as basis for assessment does not exceed (euro) 80,000.

Having regard to the factuality given as proven, the property in question was not intended exclusively for residence, but also for warehouse (See Articles 5 and 6 of the proven facts).

Under the terms of Article 12 of the EBF, "[t]he right to tax benefits must be attributed to the date of verification of the respective assumptions (…)".

It is settled between the parties that the taxpayer should not have benefited from the tax exemption, since the factual assumptions were not verified (the property was not intended, nor was it intended, exclusively for residence) on 30.08.2004.

Having regard to the date of the facts, Article 10, section 6 of the CIMT had the following wording:

6 - Exemptions are recognized:

a) Those provided for in paragraph a) of Article 6 and in Articles 7 and 9 are of automatic recognition, responsibility for their verification and declaration being incumbent on the entity intervening in the execution of the act or contract, without prejudice to the provision of paragraph e);

In view of the provisions of the cited norm, the exemption in question is a tax benefit of automatic recognition.

The present Article 5 of the EBF (Corresponds to Article 4, in the wording of the EBF that was in force prior to the republication thereof by Decree-Law n.º 108/2008, of 26/06) clarifies that:

  1. Tax benefits are automatic or dependent on recognition; the former result directly and immediately from the law, the latter presuppose one or more subsequent acts of recognition.

  2. The recognition of tax benefits may take place by administrative act or by agreement between the Administration and the interested parties, having, in both cases, a merely declaratory effect, save where the law provides otherwise.

  3. The procedure for the recognition of tax benefits is governed by the provisions of the general tax law and the Tax Procedure and Process Code.

Thus, automatic tax benefits are those which result from the law, that is, those which do not presuppose any act of recognition.

"As provided in section 1 of Article 5 of the EBF, tax benefits may be automatic or dependent on recognition. Automatic benefits result directly and immediately from the law, merely requiring that the assumptions fixed therein be met. Benefits dependent on recognition presuppose, in addition to the verification of the objective and subjective assumptions defined in the law, the practice, by the tax administration, of one or more subsequent acts of recognition." In JONATAS E. M. MACHADO and PAULO NOGUEIRA DA COSTA, in TAX LAW COURSE, Coimbra Editora, 2009, page 333.

"In such cases, once the legal assumptions of the tax benefit in question are met, it arises, automatically, "ope lege" without necessity of any initiative of the beneficiary entity or intervention of the Tax Administration. Therefore, in such situations, tax benefits are not granted by the tax administration, but established directly in the law, the right to the corresponding benefit being born, of the simple historical verification of the respective assumptions. And this circumstance also has natural repercussions in the economic-financial analysis of tax benefits, for, being automatic measures, there is not, at present, and it is difficult, if not impossible, to establish, in the future, modes of expenditure control or spending associated therewith, which are totally effective. And, for this very reason, the final part of section 4, of Article 2 of the Tax Benefits Statute, dealing with generic and automatic tax benefits, exempts taxpayers from the declaration of exempt income, for the purpose of controlling the respective tax expenditure, entrusting such burden to the tax services.

And note: it appears that the automatism of tax benefits, when it takes place, is not necessarily founded on a special intensity of the public interest protected thereby, which determines the dispensing of official recognition, but rather on a particular legal configuration, wherefore, in such cases, having in view a certain procedural economy, the law considers it advisable to dispense with the respective case-by-case examination and corresponding recognition by the Tax Administration, thus granting, automatically and generically, the benefits in the hypotheses foreseen, without necessity of control of the respective tax expenditure arising therefrom" — NUNO DE SÁ GOMES, GENERAL THEORY OF TAX BENEFITS, Tax Science and Technique, n.º 359, page 136-138.

Being the law the immediate source of the benefit, without necessity of any act of autonomous intermediation at the tax level that expressly recognizes it, the exemption in question must necessarily be qualified as being of automatic nature, under the terms of the provision in Article 5 of the EBF.

On the date of the facts, responsibility only fell to the entity which intervened in the public deed of sale and purchase, that is to the notary, to verify and declare the recognition of the exemption (Article 10, section 6, paragraph a) of the CIMT). This verification did not presuppose the performance of any administrative act by the AT granting the exemption, this because we are dealing with an automatic tax benefit. There is no express or implied act.

From the conjunction of various norms of the CIMT (Articles 49 and 54) it is not possible to conclude that the non-requirement by the Notary, at the moment of execution of a notarial deed, of prior assessment of the tax, by accepting the interpretation that a tax benefit applied, constitutes the practice of an act in tax matters in the broad sense. The CIMT is very clear in characterizing the intervention of the Notary and other public authorities as "cooperation" with the Tax Administration – it is a matter of verifying (monitoring) whether tax was paid or whether the assumptions provided for in the exemption norms are invoked. In this sense See Arbitral Decision of 02.08.2015, case 648/2014.

It is not within the competence of the notary to recognize or not the right to a tax benefit of a taxpayer. In August 2004 it did not result from the assignment to the Notary of competence for the practice of tax acts of recognition of exemption.

The interpretation most consonant with the remaining norms of the legal system (Article 9 of the Civil Code) is that, responsibility falling to the Notary for the verification of the assumptions of application of the exemption norm, the notary should gather the necessary elements for the qualification of the situation, accepting the declarations and characterization made by the parties to the transaction.

It is not a matter of an administrative act in the sense provided for in Article 120 of the CPA (in the version prior to Decree-Law n.º 4/2015, of 7 January, under the terms of Article 12, section 1 of the CC), because the notary does not externalize any decision on a concrete situation, limiting itself to a verification of the assumptions of the existence of the tax benefit.

Moreover, the fact that the notary acquiesced in the exemption from IMT, is not opposable to the Tax Authority, in the light notably of Article 36, section 4 of the LGT, according to which "the qualification of the legal transaction effected by the parties, even in an authentic document, does not bind the tax administration".

Furthermore, it makes no sense to refer to the institute of revocation. "Revocation" is the administrative act intended to extinguish the effects of another prior administrative act". In Administrative Law, DIOGO FREITAS DO AMARAL, Vol. III, Lisbon 1989, Page 351. "Revocation (properly speaking) consists in the extinction of all or part of the effects of an administrative act, caused by a new administrative act which is practiced, explicitly or implicitly (…)" In Annotated CPA, 2nd ed., Mário Esteves de Oliveira, and others, Almedina, 1997, page 667.

In the case at hand there was no prior administrative act before the assessment, sub judice. With no prior administrative act in existence we cannot invoke the institute of revocation. (In the same sense See Arbitral Decision, of 25.07.2014, case n.º 104/2014).

Thus it shall not, in any event, be applicable the regime arising from the provisions of Articles 141 of the CPA (in the version prior to Decree-Law n.º 4/2015, of 7 January, under the terms of Article 12, section 1 of the CC). The assessment in question is not an act revoking an act granting a tax benefit (in a process of recognition of benefit) but the original assessment of a tax which had not yet been assessed.

With neither the intervening authority nor the parties perceiving an incorrect legal characterization, taxpayers remain subject to possible detection of improper treatment as an exemption, the situation being the subject of a subsequent assessment.

In the case of automatic benefits, the tax law left, at the date of 2004, for a later moment the possibility for the services to ascertain the tax situation and to assess, if owed, the tax due.

This control was necessary, always having as limit for the performance of this control the eight-year period provided for in Article 35, section 1 of the CIMT.

Having the AT ascertained that the factual assumptions to enjoy the exemption did not exist, it was necessary to restore automatic taxation (Article 14 of the EBF). The right to the exemption never came to be constituted.

Having the impugned assessment been made and notified to the taxpayer on 06.01.2011 we conclude that the eight-year period was complied with.

All things considered, the tribunal considers that the acts whose legality is the subject of examination in the proceedings, are not violative of legality, wherefore the claim is unfounded.

VI. DECISION

In view of all that has been set forth, it is decided:

The claim for arbitral ruling is dismissed in its entirety, the impugned assessments being maintained, and the respondent entity is accordingly absolved from the claim.

The value of the proceedings is fixed at €6,089.88 under the terms of Article 97-A, section 1, a), of the CPPT, applicable by force of paragraph a) of section 1 of Article 29 of the RJAT and of section 2 of Article 3 of the Regulation of Costs in Tax Arbitration Proceedings.

The arbitration fee is fixed at €612.00, under the terms of Table I of the Regulation of Costs in Tax Arbitration Proceedings, to be paid in full by the Applicant, since the claim was entirely rejected, under the terms of Articles 12, section 2, and 22, section 4, both of the RJAT, and Article 4, section 4, of the cited Regulation.

Let it be notified.

Lisbon, 10 November 2015

The arbitrator,

(André Festas da Silva)

Frequently Asked Questions

Automatically Created

What is the IMT exemption for primary and permanent housing in Portugal?
The IMT exemption for primary and permanent housing in Portugal, under Article 9 of the CIMT (Municipal Tax on Onerous Property Transfers Code), applies to acquisitions of urban property or autonomous units intended exclusively for own permanent residence. To qualify, the taxpayer must declare the intention to use the property as their main residence at the time of purchase, establish residence within six months of acquisition, and maintain that residential use for at least six years. The exemption is recognized by the notary at the time of the deed based on the taxpayer's declaration. However, Article 11(7) provides that the exemption can expire if the property is given a different purpose than residence within six years (except in case of sale) or if the taxpayer fails to establish permanent residence within six months.
Can the tax authority revoke an IMT exemption previously granted at the time of property purchase?
According to the Tax Benefits Statute, particularly Article 14(4), an administrative act granting a tax benefit cannot be revoked or unilaterally diminished by the tax administration except in specific circumstances: (1) breach of obligations by the beneficiary, or (2) improper granting of the benefit. Critically, such revocation must follow formal administrative procedures and must occur within the legal time limits for revocation of administrative acts (previously set in Article 141 of the Administrative Procedure Code). The tax authority cannot simply proceed with retroactive tax assessment years later without first formally revoking the granted benefit through proper administrative channels. If a notary validly recognized an IMT exemption at the time of property purchase, the taxpayer has acquired rights that require procedural protection, and the mere expiration provisions of Article 11(7) CIMT may not override these procedural safeguards when the benefit was officially granted.
How does CAAD arbitration work for disputes over IMT tax liquidation?
CAAD (Centro de Arbitragem Administrativa) arbitration for IMT disputes begins when a taxpayer submits a request for arbitral tribunal constitution under Decree-Law 10/2011. The taxpayer can challenge tax assessments by filing with CAAD, which appoints a single arbitrator if parties don't agree on selection. The process includes: submission of the initial request, notification to the Tax Authority, response by the AT (typically within 30 days), optional hearing (which can be waived), written legal submissions by both parties, and a final arbitral decision. In this case, the tribunal process moved through written submissions only. The arbitrator analyzes whether the tax assessment was legal, examining both substantive tax law (whether exemption requirements were met) and procedural requirements (whether proper administrative procedures were followed). CAAD provides an alternative to judicial courts for resolving tax disputes, offering specialized expertise in administrative and tax law matters.
What are the legal requirements under Article 9 of the IMT Code for housing tax exemption?
Article 9 of the CIMT establishes that urban property or autonomous units intended exclusively for own permanent residence are exempt from IMT. The legal requirements include: (1) the property must be urban and intended exclusively for residential purposes (not commercial or mixed use); (2) it must be for 'own permanent residence' (habitação própria e permanente) - meaning the taxpayer's principal dwelling, not a second home or investment property; (3) the taxpayer must declare this intention at the time of acquisition; (4) the exemption must be recognized by the competent authority (typically the notary) at the deed; (5) under Article 11, the taxpayer must establish actual residence within six months of acquisition; and (6) the residential use must be maintained for at least six years without giving the property a different purpose. The exemption applies to the entire property value, but the 'exclusively for residence' requirement means that partial commercial or warehouse use may disqualify the property, though this interpretation has been subject to dispute when ancillary uses serve the residential household.
What happens if a taxpayer contests an IMT liquidation issued years after the original property acquisition?
When a taxpayer contests an IMT liquidation issued years after property acquisition, several legal issues arise regarding temporal limits and procedural rights. If the original exemption was recognized at the time of purchase, the taxpayer may argue: (1) the assessment violates legal certainty and legitimate expectations since they relied on official recognition of the exemption; (2) under the Tax Benefits Statute Article 14(4), any revocation of an improperly granted benefit must follow formal procedures within statutory time limits for revocation of administrative acts; (3) the tax authority cannot bypass revocation procedures by simply issuing a new assessment years later; (4) statute of limitations issues may apply, particularly regarding when the six-year period under Article 11(7) should be calculated and whether the assessment itself was timely; and (5) compensatory interest calculations must be properly justified. The taxpayer can challenge such assessments through administrative complaint, hierarchical appeal, or directly through arbitration at CAAD. The key distinction is between legitimate expiration of an exemption due to changed use versus retroactive denial of an exemption that was validly granted, which requires formal revocation with procedural safeguards.