Process: 344/2018-T

Date: April 2, 2019

Tax Type: IMI

Source: Original CAAD Decision

Summary

This CAAD arbitration case (344/2018-T) addresses the subjective incidence of AIMI (Additional Municipal Property Tax) on married taxpayers under a separation of property regime in Portugal. The claimant, married under separation of property, was assessed AIMI of €1,394.61 on urban housing properties valued at €799,230.00. After receiving the assessment in August 2017, the taxpayer and spouse submitted a Declaration of Option for Joint Taxation in September 2017, requesting annulment of the original assessment and issuance of a new joint assessment. The Tax Authority dismissed the subsequent gracious objection, arguing the declaration was submitted outside the April 1-May 31 deadline. The claimant contested this decision, arguing that Article 135-D(1) of the IMI Code allows joint taxation by option for married taxpayers regardless of property regime, but does not specify deadlines or procedures for exercising this option. The claimant distinguished this from Article 135-D(2), which applies specifically to community property regimes and establishes the April-May deadline. The central legal issue concerns whether the Tax Authority can impose timing requirements not explicitly established in law, potentially violating the legality principle. The claimant also challenged the insufficient justification provided by the Tax Authority in dismissing the objection, which failed to address constitutional and legal arguments raised. This case has significant implications for married taxpayers seeking to optimize AIMI liability through joint taxation, particularly those under separation of property regimes who wish to benefit from combined exemptions and lower tax burdens.

Full Decision

ARBITRAL DECISION

I – REPORT

1. A..., with tax identification number..., resident at Rua..., n.º..., in Lisbon, filed on 17-07-2018 a request for constitution of the arbitral tribunal, pursuant to articles 2º and 10º of Decree-Law n.º 10/2011, of 20 January (Legal Framework for Arbitration in Tax Matters, hereinafter referred to as RJAT), in conjunction with article 102º of the Code of Procedural and Process Taxation (CPPT), in which the Tax and Customs Authority (hereinafter referred to only as the Respondent, or ATA) is summoned.

2. The Claimant seeks, through his request, the declaration of illegality of the dismissal of the gracious objection presented with respect to the tax act of assessment of the Additional Municipal Property Tax – AIMI – n.º 2017..., with reference to the year 2017.

3. The request for constitution of the arbitral tribunal was accepted by the President of CAAD and automatically notified to the Tax and Customs Authority on 18-07-2018.

3.1. The Claimant did not proceed to appoint an arbitrator, whereby, pursuant to subparagraph a) of n.º 2 of article 6º and subparagraph b) of n.º 1 of article 11º of the RJAT, the President of the Deontological Council designated the undersigned as arbitrator of the arbitral tribunal, who communicated acceptance of the designation within the respective time limit.

3.2. On 06-09-2018 the parties were notified of the designation of the arbitrator, no impediment being raised.

3.3. In accordance with the provisions of subparagraph c) of n.º 1 of article 11º of the RJAT, the arbitral tribunal was constituted on 26-09-2018.

3.4. In these terms, the Arbitral Tribunal is regularly constituted to examine and decide the object of the proceedings.

4. To support his request for arbitral determination, the Claimant alleges, in summary, the following:

Being married under a regime of separation of property with B..., taxpayer n.º...

In August 2017 he was notified of the assessment of AIMI with the number 2017..., referring to the tax allegedly owed by him in this matter, with reference to the year 2017, from which resulted a tax amount payable of 1,394.61 €, which was levied on the global taxable patrimonial value of urban properties intended for housing of which he is the owner, in the total amount of 799,230.00 €.

On 28 September 2017, together with his spouse, he timely submitted to the Tax and Customs Authority a Declaration of Option for Joint Taxation for purposes of Additional IMI and, by virtue of the option made therein, was also requested the annulment of the AIMI assessment meanwhile notified and the corresponding issuance of a new AIMI assessment.

Not having received any notification concerning the annulment of the AIMI assessment initially issued or concerning the issuance of a new AIMI assessment, taking into consideration the option that was exercised for joint taxation in this matter, he filed a gracious objection against the AIMI assessment of which he was notified, which was dismissed.

It happens that the Tax Administration dismissed the gracious objection presented without justifying the decision taken, or doing so in a manifestly insufficient manner, and the obligation of the Tax Administration to justify its decisions derives from article 268.º, n.º 3 of the Constitution of the Portuguese Republic and also from ordinary law, namely from article 77.º, n.º 1, of the LGT. Such justification must be clear, congruent and sufficient.

In the present case, the Tax Administration ignored the arguments of illegality and unconstitutionality raised by the Claimant in the Gracious Objection, limiting itself to affirming its disagreement with respect to the same without presenting any plausible justifications therefor.

In addition to the lack of justification, the Tax Administration wrongly invokes that the Claimant would be obliged to submit a declaration within the time limit allegedly established in law – 1 April to 31 May – in order to benefit from the option for joint taxation.

Pursuant to article 135.º-D, n.º 1 of the IMI Code, the legislator merely prescribed that joint taxation may be effected by option of the married taxpayers or those in a de facto union, without however determining how or within what time frame these taxpayers should proceed to the same. That is, in the justification presented, the ATA confuses the regime provided for in article 135.º-D, n.º 1 of the IMI Code, applicable to the present case, with the regime provided for in article 135.º-D, n.º 2 of the IMI Code, which could never be applied to the present case since the Claimant is not married under a regime of community of property.

It does not result from the law how or within what time frame one should proceed to the option for joint taxation, whereby the erroneous argument of the Tax Administration according to which the Claimant would have exercised the respective right of option for joint taxation untimely does not hold.

With regard to AIMI, as the Claimant is a natural person, he benefits from a deduction to the taxable value in the amount of 600,000.00 €, in accordance with the provisions of subparagraph a) of n.º 2 of article 135.º-C of the IMI Code.

In the context of AIMI, within the scope of natural person taxpayers, the applicable legal regime further establishes two other means of determining the tax owed, namely:

- the option for joint taxation

- the joint declaration of property ownership for married taxpayers under a regime of community of property.

In light of what is provided in article 135.º-D of the IMI Code it results that:

Regarding the property ownership of married taxpayers under a regime of community of property, the legislator regulated in detail that these taxpayers must identify the ownership of these properties through a joint declaration (of a model to be approved by regulation) to be submitted exclusively through the Finance Portal and within the period that runs from 1 April to 31 May of each year;

Regarding the joint taxation of married taxpayers under any regime of property or those in a de facto union, the legislator merely prescribed that this may be effected by option of these taxpayers, without however determining how or within what time frame they should proceed to such option.

Not resulting from the law how or within what time frame one should proceed to the option for joint taxation, no other conclusion can be drawn from the concrete case except that the Claimant exercised timely this option, at the moment of sending the exercise of the respective option to the Finance Service.

A different understanding as to the manner and time frame for exercising the option for joint taxation would always violate the principle of legality to which the ATA is subject, as it has no correspondence and does not result from the legal provisions in question.

Even if it were considered that the provision in n.º 3 of article 135.º-D of the IMI Code were applicable to the option for joint taxation, which is not conceded as this does not result from the law as stated above, it is still noted that it merely establishes that if the declaration is not made within the established time frame, AIMI is assessed against each of the spouses on the sum of the values of the properties that already appeared in the property register in their respective ownership. However, it does not result from the law that the right of the taxpayer to exercise the respective option for joint taxation a posteriori is not precluded.

Indeed, not being expressly established in law the preclusion of a certain right by untimely exercise or the irreversibility of a taxpayer option, the ATA cannot argue such preclusion or irreversibility, as it is subject to the principle of legality.

Having regard to basic criteria of economic rationality of any reasonable person, it is clear that only by oversight or lack of knowledge would a taxpayer who could benefit from joint taxation not exercise his option in that direction.

A norm that creates an obligation of option, which will only not be exercised due to oversight or lack of knowledge on the part of the taxpayer, is susceptible to violating the principle of confidence that is constitutionally protected.

He concludes by arguing that the act of dismissal of the gracious objection now contested is afflicted with illegality and unconstitutionality.

5. The Tax and Customs Authority presented its response, invoking in summary the following:

It is manifest that the decision to dismiss the gracious objection presented does not suffer from the defect of lack or insufficiency of justification, as it is clear that a reasonable person placed in the position of recipient is able to understand the meaning of the Information provided in the procedure.

Contrary to what is alleged by the Claimant, it is understood that the provision in n.º 4 of article 135.º-D of the IMI Code is applicable to the situations established in n.º 1 of the same provision, notwithstanding the word "declaration" only appearing in n.ºs 2 (joint declaration for identification of property ownership belonging to married persons under a regime of community of property who do not opt for joint taxation) and 3 (consequence of non-option for joint taxation or such joint declaration).

For the ATA to proceed timely to the issuance of the assessment, considering joint taxation, there would always have to be information to that effect, provided by the taxpayers of the tax, and on the basis of which the assessment would be made.

On the contrary, the justification is sufficiently clear and unequivocal, all the more so as the Claimant, by way of the present arbitral request, admits and demonstrates, in light of the arguments he has explained throughout his pleading, to have fully understood the factual and legal framework on which the Respondent's decision was based, as he attempts to rebut its action. In this way, the option for joint taxation necessarily had to appear in a declaration presented by the spouses or those in a de facto union, within a certain time frame, as results from article 135.º-D.

If this were not the case, it would imply that there would be obvious discrimination between taxpayers solely based on the regime of property of the marriage, which would be entirely unacceptable and unconstitutional by violation of the principle of equality.

Moreover, this restrictive literal interpretation cannot merit any consideration by virtue of Regulation n.º 90-A/2017, of 1 March, which expressly states in its article 1.º that the declarative models normatively adopted apply to the option for joint taxation provided for in n.º 1 of article 135.º-D of the IMI Code.

N.º 3 of the norm in question merely provides for the subsidiary regime for objective and subjective delimitation of the taxable base when taxpayers do not submit declarations for the purposes of n.ºs 1 and 2 of article 135.º-D.

The legal possibility of influencing the assessment of AIMI granted to taxpayers constitutes a subjective right, whose manifestation of will requires the express declaration of both subjects in that sense, and in which silence determines the application of the subsidiary regime, based on the property register information held by the ATA.

In these terms, the time limit provided for in n.º 4 of article 135.º-D of the IMI Code applies in the situation sub judice and, being of a substantive nature, is subject to the regime of expiration provided for in articles 298.º and 328.º and following of the Civil Code. It cannot, therefore, be understood that the express declaration of the option for joint taxation is merely formal in nature as the Claimant points out, especially since it does not constitute any initiative of an administrative procedure.

The declaration in question aims to provide the ATA with information to be taken into account in the issuance of the assessment, but is not indispensable to its existence, since, as we have seen, the assessment can be triggered even if the declaration is non-existent.

The Respondent concludes for the legality of the act of dismissal of the gracious objection, as well as of the tax assessment, which should, thus, be maintained.

6. By order of 08-01-2019, the meeting provided for in article 18º of the RJAT was dispensed with, and likewise, with the consent of the parties, the submission of allegations.

II – SANITATION

8.1. The tribunal is competent and regularly constituted.

8.2. The parties have legal personality and capacity, show themselves to be legitimate and are regularly represented (articles 4º and 10º, n.º 2, of the RJAT and article 1º of Regulation n.º 112-A/2011, of 22 March).

8.3. The proceedings are not affected by any nullities.

8.4. No exceptions were raised that would prevent the tribunal from examining the merits of the case.

III – MATTERS OF FACT AND LAW

III.1. Matters of Fact

Having regard to the positions assumed by the parties and to the documentary evidence attached to the file – bearing in mind that the Tribunal has no duty to rule on all matters alleged, but rather the duty to select those that matter for the decision, taking into account the cause of action that justifies the claim formulated [see articles 596.º, n.º 1 and 607º, n.ºs 2 to 4, of the Civil Code, as amended by Law 41/2013, of 26/6, and to state whether it considers them proved or not proved (see article 123.º, n.º 2, of the CPPT)] – the following facts are considered, with relevance for the examination and resolution of the questions raised:

The Claimant is married under a regime of separation of property with B..., taxpayer n.º ... (as results from the public deed of purchase and sale attached to the administrative file);

The Claimant was, at the date of the facts, the owner of two urban properties (articles ... and ...) and his spouse of one (article...), with taxable patrimonial values of 16,290.00 €, 782,940.00 € and 36,893.50 €, respectively (doc 3 and 5)

The Claimant was notified by the ATA, in August 2017, of the assessment of AIMI, with respect to the properties described under articles ... and ..., with n.º 2017..., with reference to the year 2017;

The Claimant, together with his spouse, submitted to the Tax and Customs Authority, on 28-09-2017, a "Declaration of Option for Joint Taxation for purposes of Additional IMI" and, in parallel, a request for issuance of a new AIMI assessment, in replacement of the previous one (doc 4).

The Claimant filed a gracious objection to that assessment, which was instituted under n.º ...2018...;

In the aforementioned gracious objection, an order of dismissal was issued which was notified to the Respondent, through her representative, on 19-04-2018;

Justification of the Matters of Fact:

The matters of fact given as proved are based on the critical examination of the documentary evidence presented and not contested, which is hereby reproduced, as well as of the administrative file attached to the proceedings.

There are no facts given as not proved with relevance for the examination of the claim.

III.2. Matters of Law

As results from the arbitral request, the Respondent manifests its disagreement with the act of dismissal of the gracious objection that it presented, unfolding into three levels:

I - lack of justification and incongruent justification in the decision to dismiss the gracious objection;

II - violation of law, which it sustains on the fact that:

- on the one hand, it exercised timely the option for joint taxation in AIMI;

- on the other hand, on the fact that the option to exercise this right does not preclude by its untimely exercise, as this is not established in law;

III – it being a violation of the constitutional principle of confidence, the obligation of express exercise for the benefit of joint taxation in AIMI, with that having merely a formal character.

I – Lack of Justification or Incongruent Justification

The Claimant invokes, for this purpose, that the Tax Administration ignored the arguments of illegality and unconstitutionality raised by it in the gracious objection.

With regard to the invoked arguments of unconstitutionality, it is manifest that such matter is excluded from the scope of action of the Tax Administration, given its binding to the law and the impossibility of disapplying it based on a judgment of unconstitutionality of ordinary law which is not its responsibility and which it cannot make. What, obviously, is applicable at all levels of the administrative procedure and, therefore, also in the gracious objection.

As for the other defects invoked in the gracious objection, it appears to us that, contrary to what the Claimant argues, the ATA examined the objection presented in an unequivocal manner, having clearly stated the questions raised therein and having taken an express position on them. See how, by examining the arguments raised, it examined them and, in summary, concluded:

"- The law requires the express and formal declaration of the will of each of the spouses or those in a de facto union for the option for joint taxation of AIMI, which did not occur in the case at hand.

- If the aforementioned option is not exercised, the right to opt for joint taxation of AIMI expires.

- If the declaration is not made within the established time frame, the additional municipal property tax is levied, with respect to one of the spouses, on the sum of the values of the properties that already appeared in the property register in his respective ownership.

- Not having delivered this declaration within the established time frame – 1 April to 31 May – the assessment of AIMI is made based on the property registers in force on 1 January of the year to which the tax refers and in relation to each of the taxpayers identified therein."

What occurs in the case at hand – and it is quite different – is that the Claimant does not agree with the grounds invoked by the ATA, which falls within the second defect now invoked: violation of law.

Indeed, the Claimant may not agree with the justification presented – a question we will examine below – but it is indisputable that it exists, is clear, non-contradictory and congruent with the conclusion that led to its dismissal.

The justification of the act of assessment is nothing more than the manner by which the "Tax Administration externalizes the reasons why it proceeded to that assessment and not to any other, in a clear, congruent and rational manner so as to constitute the basis that supports the decision" (Court of Appeal judgment from 25-01-2011 – Proc. 04410/10, which is applicable, with the appropriate adaptations, to the order of consideration of gracious objection.

As stated in the Supreme Administrative Court judgment of 2-07-2014 - Proc. n.º 01074/13: "It is beyond question that the Administration has the duty to justify the acts that affect the rights or the legitimate interests of the administered – in harmony with the principle set out in article 268º of the CRP and endorsed in articles 124º of the CPA and 77º of the LGT. Now, as doctrine and case law have exhaustively repeated, the justification must be express, through a brief exposition of the factual and legal grounds of the decision; clear, allowing one to understand through its terms the facts and the law on the basis of which the decision is made; sufficient, enabling the taxpayer to have concrete knowledge of the motivation of the act; and congruent, so that the decision constitutes the logical and necessary conclusion of the reasons invoked as its justification. It is also undisputed that the requirements for justification are not rigid, varying according to the type of act and the concrete circumstances in which it was issued, being satisfied with the clear expression of the reasons that led to a particular decision. The determination of the scope of the justifying declaration presupposes, therefore, the search for adequate content, which must be, in a broad sense, sufficient to formally support the administrative decision. Thus, justification should be understood as the obligation to expressly state (directly or by reference) the factual and legal reasons that determined the agent or decision-making body, clarifying its recipient of the reasons that motivated it and the reason for the sense of the decision, aimed at providing the administered person with knowledge of the cognitive and evaluative process of the act. In this way, the act will be sufficiently justified when the administered person, placed in his position as normal recipient - the bonus pater familiae referred to in article 487º, n.º 2, of the Civil Code – is able to know the factual and legal reasons that are at its genesis, so as to enable him to choose, in an informed manner, whether or not to accept the act".

From the examination of the gracious objection procedure and, in particular, of the proposed decision to which the dismissal order refers, it is manifest that the ATA fully fulfilled such duty of justification which, it must be said, the arbitral request itself reveals that the Claimant understood.

Being certain that "there is no formal defect of lack of justification if the party challenging the decision itself expressly reveals that it has perfectly understood the logical and legal process that led to the taxation decision, recognizing that it understood the assumptions concretely taken into account by the author of the act and the reasons why the taxed values were achieved, denouncing the cognitive and evaluative path taken" (…», in (Supreme Administrative Court judgment from 0-01-2013 – Proc. n.º 0105/12).

Thus, with the act of dismissal of the gracious objection properly justified, it is apt to produce its effects, the Claimant's request being unfounded on this point.

II – Violation of Law

Law 42/2016, of 28 December, added to the IMI Code, among others, article 135º-A which establishes: "natural or legal persons who are owners, usufructuaries or superficiaries of urban properties situated in Portuguese territory are liable taxpayers of the additional municipal property tax".

With the following article – 135º-B – providing:

"1. The additional municipal property tax is levied on the sum of the taxable patrimonial values of urban properties situated in Portuguese territory of which the taxpayer is the holder".

And, for purposes of determining the taxable value, article 135º-C provides:

"1. The taxable value corresponds to the sum of the taxable patrimonial values, as of 1 January of the year to which the additional municipal property tax refers, of the properties that appear in the property registers in the ownership of the taxpayer.

2. From the taxable value determined under the previous number, the following amounts are deducted:

a) € 600,000, when the taxpayer is a natural person;

b) € 600,000, when the taxpayer is an undivided estate".

With regard to married taxpayers or those in a de facto union, given the deduction from the taxable value provided for in article 135º-C, n.º 2, a), article 135º-D must be considered, which establishes:

"1. Married taxpayers or those in a de facto union for purposes of article 14.º of the Personal Income Tax Code may opt for joint taxation of this additional, adding the taxable patrimonial values of the properties in their ownership and multiplying by two the value of the deduction provided for in subparagraph a) of n.º 2 of the previous article.

2. Married taxpayers under regimes of community of property who do not exercise the option provided for in the previous number may identify, through a joint declaration, the ownership of the properties, indicating which are personal assets of each of them and which are common assets of the couple.

3. If the declaration is not made within the established time frame, the additional municipal property tax is levied, with respect to each of the spouses, on the sum of the values of the properties that already appeared in the property register in their respective ownership.

4. The declaration, of a model to be approved by regulation and to be submitted exclusively through the Finance Portal, must be made from 1 April to 31 May.

5. The declaration presented under n.º 2 updates the property register as to the ownership of the properties.

6. The option referred to in n.º 1 is valid until the exercise of the respective waiver".

Having regard to the provisions indicated above and, in particular, article 135º-D, we can conclude, in the first place, that within the scope of the rules applicable to married natural person taxpayers, the tax regime establishes two means of determining the tax: on the one hand, the option for joint taxation and, on the other, the joint declaration of property ownership for married taxpayers under a regime of community of property.

It is also clear that with respect to married taxpayers under regimes of community of property who, should they not wish to exercise the option for joint taxation, may identify which are personal assets and which are common assets. In that case, the law determines that they must identify the ownership of such properties through a joint declaration (in a model to be approved by Regulation) to be submitted between 1 April and 31 May of each year.

On the other hand, keeping in mind the possibility of joint taxation, if the law prescribes that the same may be effected by option of those taxpayers, it is manifest that, however, it did not determine how or within what time frame they must make such option.

What n.º 3 of article 135º-D establishes is that if the declaration is not made – necessarily referring to the joint declaration of property ownership mentioned in n.º 2 – the tax is levied, with respect to each of the spouses, on the sum of the values of the properties that already appeared in the property register in their respective ownership.

It results from what is stated that there will be confusion between the regime for joint taxation and the regime for joint declaration.

Moreover, as stated in Arbitral Decision n.º 367/2018, of 25-01-2018, "the ATA's argument according to which the «(…) restrictive literal interpretation of the cannot merit any consideration by virtue of Regulation n.º 90-A/2017, of 1 March, which expressly states in its article 1.º that the declarative models normatively adopted apply to the option for joint taxation provided for in n.º 1 of article 135.º-D of the IMI Code» is manifestly unfounded". Indeed, such reasoning ignores in a gross manner the principle of legality … if in fact the referred Regulation applied the time limit to both realities, contrary to what is provided in the law, we would be faced with a Regulation with an innovative character, thereby violating the principle of legality to which the ATA is bound".

But, even if this were not the case, would the right to opt for joint taxation be inevitably precluded if not exercised within the established time frame? Such a conclusion must have express support in the law, which we understand is manifestly not the case.

It must be said, moreover, that such preclusion would result in an increase in the amount of tax owed by the taxpayer, constituting a true tax penalty for the taxpayer.

That from non-compliance with that declarative obligation a contra-ordination may be imputable to the taxpayer, liable to be punished with a fine, there is no objection to. But from the violation of that ancillary obligation could never result the irreversible aggravation of the payment of tax, without the possibility of correction.

This is what occurs specifically in the context of Personal Income Tax, as determined by the Supreme Administrative Court judgment when it determined that "not resulting from the law the irreversibility of the option of taxpayers living in a de facto union for separate or joint declaration or the impossibility of altering the option initially formulated in a substitute declaration, the administrative interpretation which considers the option of the composition of the family group to be irreversible, in particular in cases of de facto union, lacks legal foundation" (judgment of 29-06-2016 – Proc. 099/16).

We do not see any reasons why the same understanding should not be adopted in the context of AIMI and, therefore, for considering that the Claimant exercised the right to opt for joint taxation untimely.

The request submitted by the Claimant and spouse on 28-09-2017, denominated "Declaration of Option for Joint Taxation for purposes of Additional IMI", performs the role of "substitute declaration" with a view to the annulment of the assessment made and its replacement by another that takes into account the new elements.

We have, therefore, to conclude that the decision to dismiss the gracious objection is afflicted with illegality, by violation of law, and should be annulled.

Thus, the examination of the other questions raised is rendered moot.

IV. DECISION

In these terms, this Arbitral Tribunal decides:

To fully uphold the arbitral claim formulated, concluding that the act of dismissal of the gracious objection submitted by the Claimant should be annulled, with the effects resulting therefrom

To order the Respondent to pay the costs of the proceedings.

V. VALUE OF THE PROCEEDINGS

The value of the proceedings is fixed at 1,394.61 €, pursuant to article 97.º-A, n.º 1, a), of the Code of Procedural and Process Taxation, made applicable by virtue of subparagraphs a) and b) of n.º 1 of article 29.º of the Legal Framework for Tax Arbitration and n.º 2 of article 3.º of the Regulation of Costs in Tax Arbitration Proceedings.

VI. COSTS

The value of the arbitration fee is fixed at 306.00 €, pursuant to Table I of the Regulation of Costs in Tax Arbitration Proceedings, pursuant to articles 12.º, n.º 2, and 22.º, n.º 4, both of the Legal Framework for Tax Arbitration, and article 4.º, n.º 4, of the cited Regulation.

Lisbon, 02 April 2019

The Arbitrator

(António Alberto Franco)

Frequently Asked Questions

Automatically Created

What is AIMI (Adicional ao Imposto Municipal sobre Imóveis) and how does it apply to married taxpayers in Portugal?
AIMI (Adicional ao Imposto Municipal sobre Imóveis) is an additional tax levied on the ownership of urban property in Portugal with values exceeding certain thresholds. For married taxpayers, AIMI applies based on the sum of property values owned by each spouse. Individual taxpayers benefit from a €600,000 exemption under Article 135-C(2)(a) of the IMI Code. Married couples can opt for joint taxation, potentially benefiting from combined exemptions and different rate structures. The subjective incidence depends on the marital property regime: those married under community property must file joint declarations identifying ownership, while those under separation of property or in de facto unions may opt for joint taxation, though the IMI Code does not explicitly specify the procedure or deadline for exercising this option.
Can married couples opt for joint taxation under AIMI and what is the deadline to submit the declaration?
Article 135-D of the IMI Code establishes two distinct regimes for married taxpayers regarding AIMI. For couples married under community property regimes (Article 135-D(2)), a mandatory joint declaration must be submitted through the Finance Portal between April 1 and May 31 each year. However, for couples under other property regimes or in de facto unions (Article 135-D(1)), the law permits joint taxation by option but does not specify the deadline or procedure for exercising this choice. This legislative gap creates interpretive challenges, as demonstrated in this case where the Tax Authority applied the April-May deadline to all married taxpayers, while the claimant argued that no deadline exists for optional joint taxation under separation of property regimes, and imposing one without legal basis violates the legality principle binding the Tax Authority.
What happens if the Portuguese Tax Authority fails to process a joint taxation option for AIMI after a timely declaration?
When the Portuguese Tax Authority fails to process a timely joint taxation option for AIMI, taxpayers can challenge the original assessment through administrative and judicial remedies. The taxpayer should first file a gracious objection (reclamação graciosa) under Article 77 of the LGT, requesting annulment of the individual assessment and issuance of a new joint assessment. If the Tax Authority dismisses the objection without proper justification or based on incorrect legal interpretation, the taxpayer can seek arbitration at CAAD (Centro de Arbitragem Administrativa). The Tax Authority has a duty to provide clear, congruent, and sufficient justification for its decisions under Article 268(3) of the Portuguese Constitution and Article 77(1) of the LGT. Failure to address substantive legal and constitutional arguments raised by taxpayers constitutes a procedural defect that can form grounds for successful challenge in arbitration proceedings.
How can taxpayers challenge an AIMI assessment through arbitration at CAAD in Portugal?
Taxpayers can challenge AIMI assessments through arbitration at CAAD by filing a request for constitution of an arbitral tribunal under Decree-Law 10/2011 (RJAT) in conjunction with Article 102 of the CPPT. The process begins with submitting a written request identifying the contested tax act (such as an AIMI assessment or dismissal of a gracious objection) within the legal deadline. The claimant may appoint an arbitrator or allow the President of CAAD's Deontological Council to designate one. Once the arbitral tribunal is constituted, it examines whether the Tax Authority's decision was illegal, including evaluating procedural defects, insufficient justification, incorrect legal interpretation, or constitutional violations. CAAD arbitration provides an alternative to traditional administrative courts, offering specialized expertise in tax matters, potentially faster resolution, and binding decisions that can order annulment of illegal tax assessments and recognition of taxpayer rights under Portuguese tax law.
Does the property separation regime between spouses affect AIMI subjective incidence and joint taxation eligibility?
The property regime between spouses significantly affects AIMI subjective incidence and joint taxation eligibility under Article 135-D of the IMI Code. For couples married under community property regimes, a specific procedure exists: they must submit a joint declaration (modelo 1 do IMI) identifying property ownership through the Finance Portal between April 1 and May 31 annually. Failure to comply results in separate assessment against each spouse based on properties registered in their individual names. However, for couples under separation of property regimes or de facto unions, Article 135-D(1) permits joint taxation by option without specifying procedural requirements or deadlines. This distinction is crucial because the Tax Authority cannot apply the April-May deadline established for community property regimes to separation of property situations without violating the legality principle. The property regime thus determines whether joint taxation is mandatory (requiring specific procedural compliance) or optional (with procedural ambiguity requiring clarification through administrative practice or judicial interpretation).