Process: 37/2017-T

Date: August 30, 2017

Tax Type: IMI

Source: Original CAAD Decision

Summary

In Process 37/2017-T, the Portuguese Tax Arbitration Center (CAAD) addressed whether it has material competence to order the Autoridade Tributária to register an omitted rural property in the IMI (Municipal Property Tax) matrix. The taxpayer filed a request under Article 132(1)(f) of the CIMI Code to register a 17,710 m² rural property composed of scrubland and trees, which had been rejected by the Financial Services Department for lack of documentary proof, missing neighbor signatures on the topographical survey, insufficient evidence of possession, and absence of stamp duty proceedings. The claimant argued that the burden of proof should fall on the tax authority to demonstrate why registration should be denied, particularly given the presumption that the property might already be registered. The AT raised a dilatory exception of material incompetence pursuant to Articles 2 and 29(1)(c) of the RJAT and Article 89 of the CPTA, arguing that CAAD lacks jurisdiction to order administrative acts such as matricial inscription. The central legal issue concerns the scope of arbitral tribunal competence in tax matters: while CAAD can review tax assessments and related decisions, ordering affirmative administrative acts to effect property registration may exceed its statutory jurisdiction. This case illustrates the boundary between reviewable tax acts within CAAD's competence and administrative acts that fall outside arbitral jurisdiction, requiring taxpayers to pursue alternative remedies through administrative or judicial channels when seeking matricial inscription of omitted properties.

Full Decision

ARBITRATION DECISION

I – REPORT

A – PARTIES

A…, with tax identification number (NIF)…, resident at …, parish of …, municipality of …, hereinafter referred to as the Claimant or taxpayer, requested, in accordance with the terms and for the purposes set out in Articles 2 and 10, both of Decree-Law No. 10/2011, of 20 January, the establishment of this Singular Arbitral Tribunal.

AUTHORITY FOR TAX AND CUSTOMS (which succeeded the General Tax Directorate, by means of Decree-Law No. 118/2011, of 15 December) hereinafter referred to as the Respondent or AT.

The request for establishment of the arbitral tribunal was accepted by the President of CAAD, and the Arbitral Tribunal was duly constituted on 29-03-2017, to appraise and decide upon the subject matter of the present proceedings, and was automatically notified to the Authority for Tax and Customs on 29-03-2017, as evidenced in the respective minutes.

The Claimant did not proceed with the appointment of an arbitrator, therefore, pursuant to Article 6(1) and Article 11(1)(b) of Decree-Law No. 10/2011, of 20 January, as amended by Article 228 of Law No. 66-B/2012, of 31 December, the Deontological Council appointed Dr. Paulo Ferreira Alves, and the appointment was accepted in accordance with legal provisions.

On 06-03-2017 the parties were duly notified of that appointment, and did not manifest their will to refuse the appointment of the arbitrators, in accordance with Article 11(1)(a) and (b) of the RJAT and Articles 6 and 7 of the Deontological Code.

In accordance with the provision of Article 11(1)(c) of Decree-Law No. 10/2011, of 20 January, as amended by Article 228 of Law No. 66-B/2012, of 31 December, the singular arbitral tribunal is duly constituted on 29-03-2017.

The arbitral tribunal is duly constituted.

Both parties agree with the waiver of the meeting provided for in Article 18 of the RJAT.

The parties possess legal personality and capacity, are legitimate and are legally represented (Articles 4 and 10(2) of the same decree-law and Article 1 of Ordinance No. 112-A/2011, of 22 March).

B – REQUEST

  1. The Claimant now seeks a ruling condemning the Financial Services Department of … to carry out administrative acts aimed at the registration of the property located at the place of …, parish of …, municipality of …, composed of scrubland and trees, with an area of 17,710 m², bordering to the East with a public road and B…, South B…, West municipal road, and North common land.

C – CAUSE OF ACTION

  1. To support its request for arbitral ruling, the Claimant alleged, in summary, the following:

a. On 7 April last, it filed at the Financial Services Department of …, pursuant to Article 132(1)(f) of the Municipal Property Tax Code (CIMI), a report of omitted rural property, located at the place of …, parish of …, municipality of …, composed of scrubland and trees, with an area of 17,710 m², bordering to the East with a public road and B…, South B…, West municipal road, and North common land.

b. It submitted a topographical survey, (document attached) carried out by an accredited technician and further a statement issued by the Parish Board of … confirming possession of the property and also that, although bordering the common land, it does not include any portion of said common land.

c. The AT rejected the request by order of the Chief of the Financial Services Department of ….

d. Following clarifications to the Chief of Finance of …, by order of 28 December 2016, the request was rejected, justifying such decision on the lack of proof documents, lack of signature of a neighbouring owner on the topographical survey, lack of proof of possession of the property by the mother, and finally the absence of a stamp duty process (formerly tax on succession and donations) due to the death of the progenitor.

e. With regard to the necessary proof documents, as the Chief of Finance clarified at the appropriate time, they do not exist. If they did exist, certainly she would not be requesting the registration of the property.

f. Article 133(1) of said Code states that claims presented pursuant to the above regulation must be documented but, in our modest understanding, this requirement applies only to cadastral matrices and not to land registry matrices.

g. The order merely cites the regulation instead of specifically identifying the necessary documents.

h. The general rule of burden of proof, provided for in Article 342 of the Civil Code, belongs to the person who invokes the facts, there being, however, exceptions, with reversal of the burden of proof, for situations of impeaching facts and/or legal presumptions.

i. In the present case, we are in a situation impeaching registration of a matrix of a rural property, with the presumption that it may already be registered in the matrix.

j. Accordingly, it is incumbent upon the Chief of Finance of … to present proof to sustain the impediment and possibly to identify the property item, which is what the declarant actually intends.

  1. The Claimant concludes by petitioning that the Tax Arbitral Tribunal render a decision favourable to the plaintiff, ordering the Financial Services Department of … to carry out the necessary administrative acts, including valuation, in order to effect registration of the property.

D - RESPONSE OF THE RESPONDENT

  1. The Respondent, duly notified for that purpose, timely presented its response in which, in brief summary, it alleged the following:

a. It follows from Article 2 of the RJAT that, given the arbitral request and the cause of action, there is manifest incompetence of the Arbitral Tribunal as to subject matter to appraise the apprehension of the Claimant.

b. Therefore, the dilatory exception provided for in Article 89(1) and (4)(a) of the CPTA applies, applicable ex vi Article 29(1)(c) of the RJAT, which prevents the consideration of the request and the absolution of the AT from the suit.

  1. From the foregoing, considering the arbitral request and the documents submitted by the Claimant, which appear to be sufficient for the appraisal of the controversial issue in the case, in particular the exception raised, the dispensing of the presentation of the Administrative File is requested.

E - FACTUAL GROUNDS

  1. Before entering into the appraisal of these issues, it is necessary to present the factual matter relevant to the respective understanding and decision, which was conducted on the basis of documentary evidence, and taking into account the facts alleged.

  2. As to relevant factual matter, this tribunal considers the following facts as proven:

  3. The claimant was notified of the order of the Chief of the FS of …, dated 28.12.2016, which rejected the request for registration in the matrix submitted pursuant to Article 13(1)(f) of the IMI Code.

F - UNPROVEN FACTS

  1. Of the facts with interest for the decision of the case, contained in the challenge, all subject to concrete analysis, the facts not contained in the factuality described above were not proven.

G - ISSUES TO BE DECIDED

  1. In view of the positions taken by the parties in the arguments presented, the central issue to be resolved is the following, which must therefore be appraised and decided:

a. The exception of incompetence of the arbitral tribunal to hear the arbitral request, alleged by the Respondent and to be taken into account ex officio.

b. The condemnation of the Financial Services Department of …, alleged by the Claimant, to proceed with administrative acts aimed at the registration of the property.

H - THE DEDUCED EXCEPTION OF INCOMPETENCE OF THE ARBITRAL TRIBUNAL

  1. The issues of determining the competence of courts of primary jurisdiction and those to be considered ex officio, in accordance with Articles 13 of the Code of Procedure in Administrative Courts (CPTA) and Article 578 of the Code of Civil Procedure (CPC) by subsidiary application of Article 29 of the Legal Regime for Arbitration in Tax Matters (RJAT), make it necessary to appraise the present dilatory exception in view of the foregoing.

  2. It is raised by the Respondent that the present arbitral tribunal is materially incompetent to appraise and decide upon the request which is the subject of the dispute sub judice, in accordance with Articles 2(1)(a) and 4(1), both of the RJAT, and Articles 1 and 2(a), both of Ordinance No. 112-A/2011, which constitutes a dilatory exception barring consideration of the merits of the case, in accordance with Article 576(1) and (2) of the CPC ex vi Article 2(e) of the CPPT and Article 29(1)(a) and (e) of the RJAT, which bars consideration of the request and the absolution of the AT from the suit in accordance with Articles 576(2) and 577(a) of the CPC, ex vi Article 29(1)(a) and (e) of the RJAT.

  3. A dilatory exception is constituted by the incompetence, whether absolute or relative, of the arbitral tribunal as to its material capacity to appraise the acts that are the object of the arbitral claim, Article 577 of the CPC and Article 2 of the RJAT.

  4. The Respondent raises the issue of incompetence of the present arbitral tribunal, based on the present arbitral request and documents attached.

  5. In this regard, it is necessary to decide on the competence of the arbitral tribunals operating within CAAD.

  6. In a first respect, the competence of the arbitral tribunals operating within CAAD is limited to the matters indicated in Article 2(1) of Decree-Law No. 10/2011, of 20 January (RJAT), whose Article 2(1)(a) provides that arbitral tribunals have competence to appraise claims for declaration of illegality of acts of assessment and self-assessment of taxes.

  7. In a second respect, the competence of the arbitral tribunals operating within CAAD is also limited by the terms to which the Tax Administration bound itself to that jurisdiction, embodied in Ordinance No. 112-A/2011, of 22 March, since Article 4 of the RJAT provides that "the binding of the tax administration to the jurisdiction of tribunals constituted under the present law depends on an ordinance of the members of the Government responsible for the areas of finance and justice, which establishes, in particular, the type and maximum value of disputes covered", in which the binding to arbitral jurisdiction of the services - DGCI and DGAIEC - entities merged in the current Authority for Tax and Customs, with effect from 1 January 2012".

  8. It should be understood that the competence of the arbitral tribunals "is restricted to activity connected with acts of assessment of taxes, being outside its competence the appraisal of the legality of administrative acts of total or partial rejection or revocation of exemptions or other tax benefits, when dependent on recognition by the Tax Administration, as well as other administrative acts relating to tax matters that do not involve appraisal of the assessment act, to which paragraph (p) of Article 97(1) of the CPPT refers" (Jorge Lopes de Sousa, Commentary on the Legal Regime for Tax Arbitration in Guide to Tax Arbitration, Almedina, 2013, p. 105).

  9. The appraisal of the competence of the arbitral tribunal involves a judgment on the suitability to the case sub judice of the procedural means of the special administrative action or the process of judicial challenge, in view of Article 97 of the CPPT, which defines the respective fields of application, distinguishing "challenge of administrative acts in tax matters that involve appraisal of the legality of the assessment act" (Article 97(1)(d)) and "judicial review of total or partial rejection or revocation of exemptions or other tax benefits, when dependent on recognition by the tax administration, as well as other administrative acts relating to tax matters that do not involve appraisal of the legality of the assessment act" (Article 97(1)(p)), and whereas, under Article 97(2), "judicial review of administrative acts in tax matters, which do not involve appraisal of the legality of the assessment act, authored by the tax administration, comprising the central government, regional governments and their members, even when carried out by delegation, is governed by the rules on procedure in administrative courts".

  10. To implement such distinction between the scope of application of these procedural means, which, by virtue of Article 2(1)(a) of the RJAT, is relevant in defining the competence of tax arbitral tribunals, it is consolidated case law orientation that "the use of the process of judicial challenge or judicial review (currently special administrative action, by virtue of Article 191 of the CPTA) depends on the content of the challenged act: if this involves appraisal of the legality of an assessment act, the process of judicial challenge shall apply, and if it does not involve such appraisal, judicial review/special administrative action applies" (see the judgment of the STA of 25.6.2009, case no. 0194/09).

  11. In view of this second limitation of the competence of the arbitral tribunals operating within CAAD, the resolution of the competence issue essentially depends on the terms of this binding, since, even if one is faced with a situation that can be classified under Article 2 of the RJAT, if it is not covered by the binding, the possibility of the dispute being jurisdictionally decided by this Arbitral Tribunal will be ruled out.

  12. In Article 2(a) of this Ordinance No. 112-A/2011, claims relating to the declaration of illegality of self-assessment acts, withholding at source, and payment on account that have not been preceded by recourse to the administrative channel in accordance with Articles 131 to 133 of the Tax Code of Procedure and Process are expressly excluded from the scope of the binding of the Tax Administration to the jurisdiction of arbitral tribunals operating within CAAD.

  13. The express reference to the preceding "recourse to the administrative channel in accordance with Articles 131 to 133 of the Tax Code of Procedure and Process" should be interpreted as referring to cases where such recourse is mandatory, through gracious objection, which is the administrative means indicated in those Articles 131 to 133 of the CPPT, to whose terms reference is made.

  14. In truth, immediately, it would not be understood that, where preliminary administrative challenge were not necessary "when its ground is exclusively a matter of law and the self-assessment has been made in accordance with generic guidelines issued by the tax administration" (Article 131(3) of the CPPT, applicable to cases of assessment in the usual manner), the arbitral jurisdiction would be excluded by such administrative challenge, which is understood to be unnecessary, not having been carried out.

  15. In the case at hand, a condemnation is requested of the Financial Services Department of … to proceed with administrative acts aimed at the registration of the property in question.

  16. Therefore, it is necessary, first of all, to clarify whether the Claimant's request is included within the competences attributed to arbitral tribunals operating within CAAD by Article 2 of the RJAT.

  17. It follows from Article 2(1) of the RJAT (Competence of arbitral tribunals and applicable law): "1 — The competence of arbitral tribunals comprises the appraisal of the following claims:

a) The declaration of illegality of acts of assessment of taxes, self-assessment, withholding at source and payment on account;

b) The declaration of illegality of acts of determination of taxable matter when it does not give rise to assessment of any tax, of acts of determination of collective taxable matter and of acts of determination of taxable property values;"

  1. It follows that the request of the Claimant, which is substantiated in the request for condemnation of the AT to carry out an administrative act.

  2. The objective or purpose sought in the present arbitral request consists of the registration in the property registry of the immovable property, the act challenged being the order of the Financial Services Department of ….

  3. As we can verify, the respective act (order) is not included in the acts listed in Article 2 of the RJAT, over which arbitral tribunals have competence to decide, as we can see.

  4. Paragraph (a) tells us that assessment acts of taxes, self-assessment, withholding at source and payment on account are covered, the Claimant's request does not constitute or fall within any of these acts.

  5. For its part, paragraph (b) covers acts of determination of taxable matter, determination of collective taxable matter and acts of determination of taxable property values, the present act (order) does not determine taxable matter or proceed to determination of collective taxable matter or determines taxable property values.

  6. In view of the foregoing, the appraisal of the request and condemnation petitioned by the claimant is excluded from arbitral jurisdiction, as it is not covered by Article 2(1) of the RJAT.

  7. In truth, there was a legislative concern to exclude from the competence of arbitral tribunals operating within CAAD the appraisal of the legality of administrative acts that do not involve appraisal of the legality of assessment acts, as is evident from the outset from the general directive for the creation of an alternative means to the process of judicial challenge and to the action for recognition of a right or legitimate interest – See paragraph (a) of Article 124(4) of Law No. 3-B/2010, of 28 April, in which are indicated among the possible objects of the tax arbitral process "administrative acts that involve appraisal of the legality of assessment acts", specification that can only be justified by a legislative intention to exclude from the possible objects of the arbitral process the appraisal of the legality of acts that do not involve appraisal of the legality of assessment acts.

  8. From paragraphs (d) and (p) of Article 97(1) and Article 97(2) of the CPPT, it is inferred that the rule is that challenge of administrative acts in tax matters can be made, in the tax judicial process, through judicial challenge or special administrative action depending on whether these acts involve or do not involve appraisal of the legality of administrative acts of assessment – and, in the concept of "assessment", in the broad sense, all acts that fall under the application of a rate to a given collective taxable matter are included, and therefore also acts of withholding at source, self-assessment and payment on account.

  9. For this reason, the arbitral ruling requested is outside the scope of material competence of CAAD established in the RJAT and in the Ordinance (No. 112-A/2011, of 22-3) of binding to arbitration of the Authority for Tax and Customs (AT).

  10. In effect, this request could only be decided within the scope of a special administrative action and not within the scope of the present process.

  11. For this reason, it must be considered that the present tribunal is incompetent to decide in the terms petitioned by the Claimant.

  12. Therefore and in conclusion: this Arbitral Tribunal is materially incompetent to appraise and decide upon the request which is the subject of the dispute sub judicio, in accordance with Articles 2(1)(a) and 4(1), both of the RJAT, and Articles 1 and 2(a) of Ordinance No. 112-A/2011, which constitutes a dilatory exception barring consideration of the merits of the case, in accordance with Articles 576(1) and (2) of the CPC ex vi Article 2(e) of the CPPT and Article 29(1)(a) and (e) of the RJAT, which bars consideration of the request and the absolution of the AT from the suit, in accordance with Articles 576(2) and 577(a) of the CPC, ex vi Article 29(1)(a) and (e) of the RJAT.

  13. Which obviously leaves prejudiced the appraisal of the other issues raised in the case.

J - DECISION

Therefore, given all the foregoing, the present Arbitral Tribunal decides:

I. To uphold the exception of material incompetence of the Arbitral Tribunal, and in consequence, to absolve the Respondent from the suit;

II. To find, in consequence, that consideration of the other exceptions and the question on the merits is prejudiced.

To condemn the claimant to the payment of costs (Article 22(4) of the RJAT), fixing the value of the case at €500.00 (five hundred euros), taking into account the economic value of the case assessed by the value assigned by the Respondent, and in accordance therewith, the costs are fixed at the respective amount of €306.00 (three hundred and six euros), to be borne by the claimant in accordance with Article 12(2) and Article 22(4) of the Legal Regime for Tax Arbitration, Article 4 of the RCPAT and Table I annexed thereto – Article 35(10), and Articles 43(1), (4) and (5) of the LGT, Articles 5(1)(a) of the RCPT, 97-A(1)(a) of the CPPT and 559 of the CPC).

Notify.

Lisbon, 30 August 2017

The Arbitrator

Paulo Renato Ferreira Alves

Frequently Asked Questions

Automatically Created

What happens when a taxpayer requests property matricial inscription through CAAD arbitration in Portugal?
When a taxpayer requests property matricial inscription through CAAD arbitration in Portugal, the tribunal must first determine whether it has material competence to hear such requests. CAAD's jurisdiction under the RJAT typically covers disputes over tax assessments and related tax decisions, not orders to perform administrative acts like property registration. In Process 37/2017-T, the AT raised material incompetence as a dilatory exception, arguing that ordering matricial inscription exceeds arbitral jurisdiction.
Does the CAAD tax arbitration tribunal have material competence to order IMI property registration?
The CAAD tax arbitration tribunal generally lacks material competence to order IMI property registration. Under Article 2 of the RJAT, arbitral jurisdiction is limited to challenging specific tax acts, such as assessments and related decisions. Ordering administrative authorities to perform affirmative acts like matricial inscription falls outside this scope, as evidenced by the AT's invocation of Article 89 of the CPTA. Taxpayers seeking property registration must typically pursue administrative or judicial remedies rather than tax arbitration.
What is the legal basis for challenging omitted rural property registration under Article 132 of the CIMI?
Article 132(1)(f) of the CIMI Code allows taxpayers to file reports of omitted rural properties for matricial inscription. The legal basis for challenging rejections of such requests depends on the nature of the dispute. If challenging the AT's refusal to register property involves reviewing an administrative decision rather than a tax assessment, it may fall outside CAAD's competence under the RJAT and require pursuit through administrative courts under the CPTA instead.
How does the Autoridade Tributária handle requests for matricial inscription of omitted properties?
The Autoridade Tributária handles requests for matricial inscription of omitted properties by requiring specific documentation including topographical surveys, proof of ownership or possession, neighbor confirmations, and compliance with stamp duty obligations. In Process 37/2017-T, the AT rejected the request due to insufficient proof documents, missing neighbor signatures, lack of evidence of maternal possession, and absence of stamp duty proceedings related to inheritance. The AT may reject requests that fail to meet documentary requirements established in the CIMI Code.
What are the grounds for material incompetence in Portuguese tax arbitration proceedings?
Grounds for material incompetence in Portuguese tax arbitration proceedings include requests that fall outside the scope defined in Article 2 of the RJAT. Material incompetence arises when the tribunal is asked to order affirmative administrative acts rather than review tax assessments or related decisions. This dilatory exception under Article 89 of the CPTA, applicable via Article 29(1)(c) of the RJAT, must be raised or considered ex officio and results in absolution of the AT from the suit without consideration of the merits.