Process: 367/2018-T

Date: January 25, 2019

Tax Type: IMI

Source: Original CAAD Decision

Summary

This CAAD arbitration case (Process 367/2018-T) addressed whether married taxpayers could retroactively elect joint AIMI taxation after missing the statutory deadline under Article 135-D of the IMI Code. The claimant, married under a separation of property regime, was assessed €3,173.80 in AIMI for 2017 based on individual taxation of urban properties valued at €1,037,379.98. After receiving the assessment in August 2017, the claimant and spouse submitted a joint taxation election on September 29, 2017, requesting annulment of the individual assessment and issuance of a new joint assessment. The Tax Authority dismissed the administrative complaint, arguing that the election was submitted outside the legal deadline. The claimant challenged this decision on two grounds: insufficient reasoning in the dismissal decision, and incorrect application of Article 135-D. The AT argued that joint taxation requires timely declaration within the statutory period, and that the 2017 assessment was legally valid since no timely election was made. The tribunal examined whether the election deadline was merely formal or substantive, and whether Law 114/2017 (2018 State Budget) creating Article 135-M, which established a new correction period for AIMI options, could apply retroactively. The case highlights the critical importance of procedural deadlines in Portuguese tax law, particularly for married couples seeking to optimize their AIMI liability through joint taxation, which can significantly reduce tax burden when one spouse has property values below the AIMI threshold.

Full Decision

ARBITRAL DECISION

REPORT

  1. A... taxpayer no. ..., resident at ..., no. ..., ..., in Lisbon, (Claimant), filed on 02/08/2018, a request for arbitral pronouncement, in which it petitions for the annulment of the dismissal of the administrative complaint that it had filed against the assessment of the Additional Municipal Property Tax (AIMI), no. 2017..., relating to 2017, in the amount of € 3,173.80.

  2. The Honorable President of the Ethics Council of the Center for Administrative Arbitration (CAAD) designated, on 27/08/2018, as sole arbitrator the signatory of this decision.

  3. On 12/10/2018 the arbitral tribunal was constituted.

  4. In compliance with the provisions of Article 17(1) of the Legal Framework for Tax Arbitration (RJAT), the Tax and Customs Authority (AT) was notified on 12/10/2018, in order to, if it wished, present a response and request the production of additional evidence.

  5. On 12/11/2018 the AT presented a response, accompanied by the administrative file.

  6. On 19/11/2018, by arbitral order, this arbitral tribunal decided to dispense with the holding of the meeting provided for in Article 18 of the RJAT, inviting both parties to, if they wished, submit optional written submissions and scheduled the date for the rendering of the final decision.

  7. On 29/11/2018, the AT submitted written submissions stating that there was no change to the arguments raised in the arbitral petition, referring to the arguments developed in the response.

  8. On 30/11/2018, the Claimant submitted written submissions.

  9. On 20/12/2018, by arbitral order, this arbitral tribunal decided to extend the deadline for the rendering of the final decision until 25/01/2019 January 2019, due to an administrative error in the notification to the AT of the Claimant's submissions.

  10. The AT did not submit written submissions.

PRELIMINARY EXAMINATION

The arbitral tribunal was duly constituted.

The parties have legal personality and capacity and are legitimate, with no defects in representation.

The proceedings do not suffer from defects that would affect its validity.

Consequently, the conditions are met for the final decision to be rendered.

POSITIONS OF THE PARTIES

There are two positions in opposition: that of the Claimant, set forth in the request for arbitral pronouncement, and that of the AT in its response and in the subsequent submissions.

As grounds, the Claimant argues, in summary, that the decision to dismiss the administrative complaint presented by it suffers from the defect of lack or insufficiency of reasoning and, furthermore, is based on an incorrect application of Article 135-D of the Municipal Property Tax Code (IMI Code).

The AT argues, in summary, that:

Regarding the defect of lack or insufficiency of reasoning, 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.

It is not possible to assert that a given act is unfounded when, in the concrete case, the contextual motivation allowed its recipient to understand the factual and legal reasons that led the AT to make the decision in question, with that meaning and content.

As for the alleged defect of violation of law, contrary to what the Claimant alleges, it is understood that the norm provided for in Article 135-D(4) of the IMI Code is applicable to the situations established in Article 135-D(1) of the same provision, notwithstanding the word "declaration" only appearing in Article 135-D(2) (joint declaration for identification of ownership of properties belonging to married couples in community of property regime who do not opt for joint taxation) and Article 135-D(3) (consequence of non-election of joint taxation or the said joint declaration).

Thus, in order for the AT to be able to timely issue the assessment, considering joint taxation, there would always have to be information to that effect, provided by the tax subjects, and on the basis of which the assessment would be made.

In this way, the election for joint taxation would necessarily have to be stated in a declaration presented by the spouses or de facto partners, within a certain period, as provided for in Article 135-D of the IMI Code.

Only through Law no. 114/2017, of 29 December (State Budget Law 2018), was the IMI Code amended, with the addition of Article 135-M, which provides for a new deadline for correction or manifestation of options within the scope of the AIMI, creating, by way of law, a new period for the exercise of the subjective rights that belong to interested parties in the express declaration of their will in this tax.

Thus, the express declaration of election for joint taxation cannot be understood to be of a merely formal nature as the Claimant suggests, especially because it does not constitute any initiative of an administrative procedure.

Now, the declaration in question aims to provide the AT with information to be taken into account in the issuance of the assessment, but is not indispensable to its existence, since, as has been seen, the assessment can be issued even if the declaration is non-existent.

Therefore, it must always be concluded that the 2017 AIMI assessment issued in the name of the tax subject is correct and legally valid, since the tax subject and the spouse did not timely express their wishes in the sense of having the joint taxation regime applied to them in that year, within the legally provided deadline.

MATTER OF FACT

1. FACTS CONSIDERED PROVEN

Based on the documents submitted to the proceedings, the following are considered proven:

4.1.1. The Claimant was notified, in August 2017, of the AIMI assessment no. 2017..., relating to the tax due, with reference to the year 2017, from which results an amount of tax to be paid of € 3,173.80.

4.1.2. The Claimant was cited, in July, in the tax enforcement proceedings instituted for the collection of the debt relating to AIMI, and submitted a bank guarantee for the suspension of the respective proceedings to be applied because the legality of the debt was being contested.

4.1.3. The assessment in question was based on the global taxable property value of urban properties intended for residential purposes of which the Claimant is the owner, in the amount of € 1,037,379.98.

4.1.4. The Claimant is married to B..., taxpayer no. ... .

4.1.5. The Claimant and his spouse are not married in community of property regime.

4.1.6. On 29/09/2017, the Claimant, jointly with his spouse, sent a declaration to the AT electing joint taxation for purposes of AIMI.

4.1.7. As a result of the election then made, annulment of the AIMI assessment, meanwhile notified, was also requested and issuance of a new AIMI assessment reflecting the election for joint taxation was requested.

4.1.8. The Claimant's spouse has only one property, whose taxable property value is € 131,565.07.

4.1.9. The Claimant did not receive any notification relating to the annulment of the AIMI assessment initially issued or relating to the issuance of a new AIMI assessment, taking into account the election for joint taxation that was exercised, with reference to the year 2017.

4.1.10. The Claimant filed, on 02/01/2018, an administrative complaint against the AIMI assessment of which it was notified, on the grounds that it should be annulled.

4.1.11. On 08/05/2018, the Claimant was notified of the decision dismissing the said administrative complaint procedure.

4.1.12. The Claimant filed, on 02/08/2018, the arbitral pronouncement request in question.

2. FACTS NOT CONSIDERED PROVEN

There are no facts relevant to the decision that have not been given as proven.

LAW

1. ORDER OF EXAMINATION OF DEFECTS

In accordance with the provisions of Article 124 of the Tax Procedure and Process Code (CPPT), subsidiarily applicable by virtue of Article 29(1) of the RJAT, since no defects leading to a declaration of non-existence or nullity are imputed to the challenged acts, nor is a relationship of subsidiarity indicated, the order of examination of the defects should be that which, according to the prudent discretion of the judge, is most effective for the protection of the offended interests.

In the case in question, we shall first examine the defects of a procedural nature invoked by the Claimant (lack of reasoning and incongruent reasoning), and then the substantive issue: the illegality of the AIMI assessment.

2. DEFECT OF FORM DUE TO LACK OF REASONING AND INCONGRUENT REASONING

The AT dismissed the administrative complaint filed by the Claimant against the AIMI assessment without reasoning for the decision taken, or doing so in a manifestly insufficient manner.

The duty of the AT to reason its decisions derives from Article 268(3) of the Portuguese Republic Constitution (CRP) – it is therefore not a mere formality of lesser importance.

In accordance with Article 268(3) of the CRP, "[a]dministrative acts are subject to notification to interested parties [...] and require express and accessible reasoning, when they affect legally protected rights or interests]" (cited).

Reasoning that is also required and guaranteed by ordinary law, namely by Article 77(1) of the General Tax Law (LGT), prescribing that "the decision of a procedure is always reasoned" (cited).

Such reasoning – according to the interpretation that jurisprudence and doctrine make of these concepts – must be clear, i.e., allowing one to perfectly grasp the meaning of the reasons that determined the assessment, congruent, i.e., the grounds of the decision are premises that inevitably lead to the assessment and which the latter, in turn, functions as the logical and necessary conclusion of the motivation advanced, and, finally, sufficient, i.e., in the sense that there are no reasons left unsaid that explain the assessment in question.

Now, the importance of reasoning is connected with the possibility for the tax subject to understand the cognitive process of the AT's decision and, thereby, if it so wishes, to contest the decision that was made.

In the case in question, the AT ignored the arguments of illegality and unconstitutionality advanced by the Claimant in the administrative complaint, limiting itself to affirming its disagreement with the same without presenting any plausible justifications for doing so.

The AT came to invoke, with respect to (the lack of) reasoning for the decision dismissing the administrative complaint, that "a reasonable person placed in the position of the recipient is able to understand the meaning of the information provided in the procedure".

Stating, further, that "the reasoning of the act is a relative concept that varies according to the type of act and the circumstances of the concrete case, and reasoning is sufficient when it allows a normal recipient to understand the cognitive and evaluative path followed by the author of the act, that is, when the recipient can know the reasons that led the author of the act to decide in that way and not in another".

The AT concluding, thus, that "the reasoning is sufficiently clear and unequivocal, all the more so because the claimant, through this present arbitral petition, admits and demonstrates (...) to have fully understood the factual and legal framework on which the decision of the Respondent was based, since it attempts to refute its action".

Indeed, in all of the cited statements, the AT starts from a presupposition: that the reasoning existed and that, as such, what is being discussed is its content.

Well, the AT in the order dismissing the administrative complaint, limits itself to transcribing the law and making affirmations and interpretations contrary to those that the Claimant reproduced in the said administrative complaint.

In addition to the lack of reasoning, the AT wrongly invokes that the Claimant would be obliged to submit a declaration within the deadline allegedly established by law – 1 April to 31 May – to be able to benefit from the election for joint taxation.

Indeed, in the decision dismissing which is now being contested, the AT concluded that "the administrative complaint that is based on the possibility of untimely exercise of the right of election... is to be dismissed".

Now, according to Article 135-D(1) of the Municipal Property Tax Code (IMI Code), the legislator limited itself to prescribing that joint taxation can be carried out by election of married tax subjects or de facto partners, without, however, determining how or in what period these taxpayers should proceed to do so.

Indeed, "Tax subjects who are married or in de facto union for purposes of Article 14 of the Personal Income Tax Code can elect joint taxation of this additional tax, by adding the taxable property values of the properties in their ownership and multiplying by two the amount of the deduction provided for in Article 135-C(2)(a)" (see Article 135-D of the IMI Code).

That is, in the justification presented, the AT confuses (deliberately or not...) the regime provided for in Article 135-D(1) of the IMI Code, applicable to the present case, with the regime provided for in Article 135-D(2) of the IMI Code, which could never apply to the present case since the Claimant is not married in community of property regime.

Thus, and contrary to what the AT insists on affirming, the law only provides for the submission of a declaration (of a model to be approved by Order and to be submitted exclusively through the Tax Authority Portal), within the period between 1 April and 31 May, for tax subjects married under community of property regimes, covered by the regime within the scope of Article 135-D(2) of the IMI Code (which, precisely, have not exercised the election for joint taxation provided for in Article 135-D(1) of the IMI Code).

In these terms, it is clear that there are two groups of persons covered by this norm and with different rules applicable to both.

Whence, ubi lex non distinguit nec nos distinguere debemus,

As such, neither the manner nor the deadline for proceeding with the election for joint taxation results from the law, and therefore the AT's argument that the Claimant would have exercised the respective right of election for joint taxation in an untimely manner does not hold.

In light of the foregoing, due to lack of clear, sufficient and congruent reasoning, in fact and in law, the act of dismissal of the complaint must be annulled as it is defective in form and illegal.

The arbitral pronouncement request therefore proceeds on this defect.

3. VIOLATION OF LAW

General Framework

The AIMI was introduced by Law no. 42/2016, of 28 December, centering its subjective scope, pursuant to Article 135-A(1) of the IMI Code, on natural or legal persons who are owners, usufructuaries or superficiaries of urban properties located in Portuguese territory.

With respect to objective scope, pursuant to Article 135-B(1) of the IMI Code, the AIMI applies to the sum of the taxable property values of urban properties located in Portuguese territory of which the tax subject is the owner.

As for the determination of the taxable value, the same corresponds to the sum of the taxable property values, as of 1 January of the year to which the AIMI relates, of properties listed in the property rolls as owned by the tax subject, pursuant to Article 135-C(1) of the IMI Code.

And in the case where the tax subject is a natural person, it benefits from a deduction to the taxable value determined in the manner described above in the amount of € 600,000.00, in accordance with the provisions of Article 135-C(2)(a) of the IMI Code.

Likewise, within the scope of the rules applicable to natural persons, to the taxable value determined, once the legal deduction is applied, a rate of 0.7% is applied, and to the taxable value exceeding € 1,000,000.00 the applicable rate is 1%, pursuant to Article 135-F(1) and (2) of the IMI Code.

On the Election for Joint Taxation

Without prejudice to the general framework advocated above, and still within the scope of the rules applicable to natural person tax subjects, the applicable tax regime also establishes two other means of determining the tax due, namely:

  • the election for joint taxation; and,
  • the joint declaration of property ownership for tax subjects married under community of property regime.

Indeed, with respect to the election for joint taxation, Article 135-D(1) of the IMI Code provides that "Tax subjects who are married or in de facto union for purposes of Article 14 of the Personal Income Tax Code can elect joint taxation of this additional tax, by adding the taxable property values of the properties in their ownership and multiplying by two the amount of the deduction (...)" of € 600,000.00, which thus amounts to € 1,200,000.00.

On the other hand, with respect to the taxation of married persons under community of property regimes, Article 135-D(2) of the IMI Code establishes that the same, when not exercising the election for joint taxation, "can identify, through joint declaration, the ownership of properties, indicating which are the separate property of each of them and which are the common property of the couple" [our emphasis].

In addition to the foregoing provision, Article 135-D(3) establishes that "if the declaration is not made within the established period (that is, the joint declaration for married tax subjects in community mentioned in Article 135-D(2)) the additional municipal property tax applies, with respect to each of the spouses, to the sum of the properties that already appeared in the roll in their respective ownership".

Still with reference to this joint declaration, Article 135-D(4) establishes that "the declaration, of a model to be approved by order and to be submitted exclusively through the Tax Authority Portal, must be made from 1 April to 31 May".

Finally, pursuant to Article 135-G(2) of the IMI Code "when the election for the joint declaration provided for in Article 135-D(2) is exercised (and only this), a single assessment is issued, and both tax subjects are jointly and severally liable for the payment of the tax".

From the foregoing, two conclusions thus emerge:

  • Regarding the ownership of properties of tax subjects married under community of property regime, the legislator has regulated in detail that these tax subjects must identify the ownership of these properties through a joint declaration (of a model to be approved by order) to be submitted exclusively through the Tax Authority Portal and within the period that runs between 1 April and 31 May of each year;

  • Regarding the joint taxation of tax subjects married under any property regime or de facto partners, the legislator limited itself to prescribing that this can be done by election of these tax subjects, without, however, determining how or in what period these should proceed to do so.

Now, since neither the manner nor the deadline for proceeding with the election for joint taxation results from the law, no other conclusion is possible except that the Claimant exercised that election in a timely manner, when sending the exercise of the respective election to the Tax Service.

For this reason, the AT should have annulled the AIMI assessment that had been issued, with the corresponding issuance of a new assessment that respected the election exercised by the Claimant.

The AT thus demonstrates confusion between the regime of joint taxation and the regime of joint declaration.

On the other hand, the AT's argument is manifestly unfounded that the "(...) restrictive literal interpretation [of the Claimant] cannot have any merit because of Order no. 90-A/2017, of 1 March, which expressly states, in its Article 1, that the declarative models normatively adopted apply to the election for joint taxation provided for in Article 135-D(1) of the IMI Code".

Indeed, such reasoning grossly ignores the principle of legality, let us see.

If in fact the said Order applied the deadline to both realities, contrary to what the law provides, we would be faced with an Order with innovative character, thus violating the principle of legality to which the AT is subject.

On the Non-Preclusion of the Right to Joint Taxation

Even if a different understanding were admitted regarding the manner and deadline for exercising the election for joint taxation, which would always be a violation of the principle of legality to which the AT is subject, for having no correspondence in or result from the legal provisions in question, such understanding also could never place in question the right to exercise the election for joint taxation in the terms in which it was effected by the Claimant.

Indeed, such preclusion would always have to result expressly from the law, which is manifestly not the case.

Indeed, even if it were considered that the provision of Article 135-D(3) of the IMI Code were applicable to the election for joint taxation, which is not conceded because it does not result from the law in the manner set forth above, it would always be noted that this merely establishes that if the declaration is not made within the established period, the AIMI is assessed on each of the spouses on the sum of the values of the properties that already appeared in the roll in their respective ownership.

However, the law does not provide that the right of the tax subject to exercise the respective election for joint taxation is precluded thereafter.

Nor could it, since such preclusion would determine an increase in the amount of tax due by the tax subject, constituting itself as a true fiscal penalty on the tax subject.

Now, given the fact that this tax subject may be subject to the application of penalties for non-compliance with timely declarative obligations, pursuant to the General Regime of Tax Infringements (RGIT), the increase in the amount of tax to be paid would always represent a violation of the ne bis in idem principle, departing from the scope of tax law, since this does not establish itself as a branch of sanctionary law.

From the foregoing, it is clear that even if the manner and deadline for exercising the election for joint taxation were legally established, no preclusion of the possibility of election for joint taxation for non-observance of a given deadline would be established, and therefore any understanding to the contrary would always be defective with illegality.

Indeed, the understanding set forth is confirmed by the jurisprudence of the superior courts regarding the election for joint or separate taxation within the scope of Personal Income Tax (IRS), which is worthy of mention, as a parallel reference, notwithstanding it being a different tax, given the similarity of the legal issues involved.

Indeed, the jurisprudence of the Supreme Administrative Court (STA) came to confirm that "not resulting from the law the irreversibility of the election of tax subjects living in de facto union for separate or joint declaration or the impossibility of in a replacement declaration altering the election initially formulated, the administrative interpretation which considers the election of the composition of the family unit to be irreversible, particularly in cases of de facto unions, lacks legal foundation". [1]

It is concluded, therefore, that as there is no express provision in the law for the preclusion of a given right by untimely exercise or the irreversibility of an election of the tax subject, the AT cannot come to assert that preclusion or irreversibility, because it is bound by the principle of legality.

In this regard, it should also be noted that the preclusion of the election for joint taxation within the scope of IRS was already the subject of express provision, by virtue of the 2014 Reform.

However, given its particularly burdensome character, as well as for reasons identical to those advanced above, a transitional regime was approved, by Law no. 3/2017, of 16 January, with reference to IRS for 2015, in order to avoid the disproportionate and unjust effects that would result from the said preclusion of the right to joint taxation, and such provision was, moreover, subsequently eliminated.

Indeed, if the perception regarding the disproportionate effects of such a preclusion existed within the scope of IRS, even justifying a legislative amendment, it is clear that any position sustaining the preclusion of the right of election for joint taxation within the scope of AIMI is even less defensible, when the said preclusion simply and plainly does not result from any legal instrument.

For this reason, the act of dismissal under analysis, in basing itself on the premise that the Claimant exercised the respective election for joint taxation in an untimely manner, is defective with illegality and must consequently be annulled.

On the Merely Formal Nature of the Exercise of Election

In addition to everything that has been expended above, it should still be noted that the norm establishing the need for the tax subject to expressly manifest its will to benefit from joint taxation is susceptible of violating constitutional provisions.

Given the configuration of the AIMI, it will always be more advantageous for tax subjects to bear the tax under the rule of joint taxation than under the regime provided for joint singular taxation.

In this measure, and particularly in 2017, which was the first year of application of this tax that is based on a legal regime deficient in its legislative technique, it is all too evident that the existence of an obligation of merely formal election is susceptible of violating the principle of trust and predictability, in the terms in which these are derived from Article 2 of the Portuguese Republic Constitution (CRP), considering that it is always more beneficial to the tax subject to opt for the regime of joint taxation.

As such, according to basic criteria of economic rationality of any reasonable person, it is clear that only by oversight or ignorance would a tax subject who could benefit from joint taxation fail to exercise the election in that direction.

However, a norm that creates an obligation of election, which will only not be exercised by oversight or ignorance of the tax subject, is susceptible of violating the principle of trust constitutionally protected.

Furthermore, contrary to what the AT has stated, the addition of Article 135-M, by Law no. 114/2017, of 29 December (State Budget Law for 2018), which establishes a new deadline for correction or manifestation of options within the scope of AIMI has in no way altered the reasoning of the present decision, because, as of the date of the facts, the legal wording in force did not stipulate any deadline for making this election, and therefore the AT cannot seek to avail itself of a subsequent legal amendment to make its argument prevail.

DECISION

With the grounds set forth, the arbitral tribunal decides:

  • To find the arbitral pronouncement request well-founded, concluding by the annulment of the decision dismissing the administrative complaint filed, with the consequences flowing therefrom;

  • To condemn the AT to pay the costs of the proceedings.

VALUE OF THE PROCEEDINGS

The value of the proceedings is fixed at € 3,173.80 (three thousand, one hundred seventy-three euros and eighty cents), pursuant to Article 97-A of the Tax Procedure and Process Code (CPPT), applicable by virtue of subarticles a) and b) of Article 29(1) of the RJAT and Article 3(2) of the Costs Regulation in Tax Arbitration Proceedings (RCPAT).

COSTS

Costs to be borne by the AT, in the amount of € 612 (six hundred twelve euros), pursuant to Table I of the Costs Regulation for Tax Arbitration Proceedings, pursuant to Article 22(2) of the RJAT.

Notify.

Lisbon, 25 January 2019

The Arbitrator,

(Hélder Filipe Faustino)

Text prepared by computer, in accordance with the provisions of Article 131(5) of the Code of Civil Procedure (CPC), applicable by referral from Article 29(1)(e) of the RJAT. The wording of this decision is governed by the spelling prior to the Orthographic Agreement of 1990.

[1] See Decision of the Supreme Administrative Court of 29-06-2016, case no. 099/16.

Frequently Asked Questions

Automatically Created

What is the 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 on municipal property tax that applies to the total taxable value of urban properties for residential purposes exceeding €600,000 for individual taxpayers. For married couples or de facto partners in community of property regimes, the threshold is €1,200,000, and they are automatically subject to joint taxation. For couples married under separation of property regimes, joint taxation is optional but must be elected through formal declaration to the Tax Authority within the statutory deadline established in Article 135-D of the IMI Code.
Can married couples opt for joint taxation under AIMI, and what is the deadline to exercise this right?
Yes, married couples can opt for joint AIMI taxation under Article 135-D of the IMI Code, but this right is subject to strict procedural requirements. For couples not in community of property regimes, the election must be exercised through a formal declaration submitted to the Tax Authority. The deadline is critical and must be observed before the AIMI assessment is issued. According to the Tax Authority's interpretation in this case, missing the deadline results in preclusion of the right to joint taxation for that tax year. Law 114/2017 subsequently introduced Article 135-M, creating an additional period for correction or manifestation of options within AIMI, though its retroactive application remains subject to interpretation.
What happens if married taxpayers miss the deadline to elect joint AIMI taxation under Article 135-D of the IMI Code?
If married taxpayers miss the deadline to elect joint AIMI taxation under Article 135-D of the IMI Code, they face preclusion of this right for the relevant tax year. The Tax Authority will issue individual assessments based on each spouse's separate property holdings. As demonstrated in this case, submitting the election after the assessment has been issued (here, in September 2017 after an August 2017 assessment) does not entitle taxpayers to annulment of the individual assessment or issuance of a new joint assessment. The AT considers the election deadline substantive rather than merely formal, meaning late elections cannot be accepted. This can result in significant additional tax liability, as individual thresholds (€600,000) are lower than joint thresholds (€1,200,000).
What are the grounds for challenging an AIMI assessment through arbitration at CAAD?
Taxpayers can challenge AIMI assessments through arbitration at CAAD (Centro de Arbitragem Administrativa) on several grounds, as illustrated in this case: (1) substantive illegality, such as incorrect application of tax law provisions including Article 135-D of the IMI Code regarding joint taxation elections; (2) procedural defects, including lack or insufficiency of reasoning in Tax Authority decisions dismissing administrative complaints; (3) violation of taxpayer rights or guarantees; and (4) incorrect calculation of taxable values or tax amounts. The arbitration request must be filed within the legal deadline after exhausting administrative remedies (such as the gracious complaint procedure). Taxpayers must establish legal standing, and can request suspension of tax enforcement proceedings by providing a bank guarantee.
Does insufficient reasoning in a tax authority decision on a gracious complaint constitute grounds for annulment in Portuguese tax law?
Insufficient reasoning in a Tax Authority decision can constitute grounds for annulment in Portuguese tax law, but the standard is contextual rather than absolute. According to the Tax Authority's position in this case, a decision is sufficiently reasoned if 'a reasonable person placed in the position of recipient is able to understand the meaning of the information provided.' The reasoning need not be exhaustive or address every argument raised by the taxpayer. Contextual motivation that allows the recipient to understand the factual and legal grounds for the decision satisfies the legal requirement. Courts and arbitral tribunals examine whether the decision enables the taxpayer to comprehend why their complaint was rejected and to effectively exercise their right to judicial review. Mere disagreement with the decision's substance does not establish insufficient reasoning.