Process: 378/2018-T

Date: December 7, 2018

Tax Type: IMI

Source: Original CAAD Decision

Summary

This CAAD arbitral decision (Process 378/2018-T) addresses whether construction land (terrenos para construção) intended for industrial purposes falls within the objective scope of AIMI (Adicional ao IMI) taxation under Article 135-B of the IMI Code. The taxpayer, a real estate development company, challenged the 2017 AIMI assessment of €876.20 levied on construction land with a patrimonial tax value of €219,050.00, registered as intended for industrial construction. The company argued that Article 135-B(2) should be interpreted extensively to exclude industrial construction land from AIMI, since built industrial properties are explicitly exempt. The taxpayer claimed that taxing undeveloped industrial land while exempting completed industrial buildings violates constitutional principles of tax equality and ability to pay (Articles 13 and 104(3) of the Portuguese Constitution), creating unjustified discriminatory treatment. Additionally, the taxpayer argued their contributory capacity from holding undeveloped land is necessarily lower than from owning constructed properties. The AT defended the assessment's legality based on the literal interpretation of Article 135-B(2), which includes all construction land in AIMI's taxable base. The case also raised procedural issues regarding the timeliness of the arbitral request filed on August 9, 2018, challenging a June 30, 2017 assessment. The taxpayer sought partial annulment of the AIMI assessment, reimbursement of the amount paid plus compensatory interest calculated from the payment date (September 30, 2017), and a declaration of unconstitutionality of Article 135-B(2) of the IMI Code.

Full Decision

ARBITRAL DECISION

I. REPORT

  1. A..., LDA., taxpayer no. ..., with registered office at ..., no. ..., ..., ..., parish ..., municipality of ..., requested the constitution of a sole arbitral tribunal, under the combined provisions of article 2, no. 1, paragraph a) and article 10, both of Decree-Law no. 10/2011, of 20 January (Legal Framework for Arbitration in Tax Matters, hereinafter referred to only as "RJAT") and articles 1 and 2 of Order no. 112-A/2011, of 22 March, in which the Tax and Customs Authority (AT) is the Respondent.

  2. The request for constitution of an arbitral tribunal, presented on 9 August 2018, has as its object the declaration of partial illegality of the act of additional assessment to the Municipal Property Tax (AIMI) with no. 2017..., carried out by the Tax and Customs Authority (AT), on 30-06-2017, with reference to the year 2017, insofar as it includes in the taxable value the tax patrimonial value of the building land registered in the property register of the Union of Parishes of ... and ..., municipality of ..., under article ..., in the amount of 219,050.00 €, and the consequent partial annulment of the AIMI, in the amount of 876.20 € (eight hundred and seventy-six euros and twenty cents).

  3. It further requests the condemnation of the Respondent to reimburse the amount unduly paid, plus the respective compensatory interest, under articles 43, no. 1 of the General Tax Law (LGT) and 61 of the Code of Tax Procedure and Process (CPPT), calculated from the date of undue payment of the tax (30-09-2017) until the date of processing of the respective credit note.

  4. The Applicant chose not to appoint an arbitrator.

  5. The request for constitution of the arbitral tribunal was accepted by the President of CAAD and notified to AT on 10 August 2018.

  6. The signatory was designated by the President of the Deontological Council of CAAD as arbitrator of the sole arbitral tribunal, pursuant to article 6 of the RJAT, and acceptance of the appointment was communicated within the applicable time limit.

  7. On 28 September 2018, the Parties were notified of this designation, neither having objected to it, under the combined provisions of article 11, no. 1, paragraphs a) and b) of the RJAT and articles 6 and 7 of the CAAD Deontological Code.

  8. Thus, in accordance with the provision of article 11, no. 1, paragraph c), of the RJAT, the sole arbitral tribunal was constituted on 19 October 2018.

  9. The Respondent was notified, by arbitral order of the same date, pursuant to article 17, no. 1 of the RJAT, to, within 30 days, submit a response, if it so wished, and request the production of additional evidence.

  10. It was further notified to, within the same time limit, submit the administrative process (PA) referred to in article 111 of the CPPT.

  11. On 19 November 2018, the Respondent filed its Response, defending itself by exception and by challenge, respectively arguing for the merits of the exception invoked and consequent dismissal of the claim, or, should that not be the case, for the dismissal of the request for arbitral pronouncement, as not proven, with the tax assessment act challenged remaining in the legal order.

  12. On the same date it attached the respective PA to the case file.

  13. By order of 20 November 2018, the Applicant was notified to, within 10 days, respond, if it so wished, to the matter of exception invoked, which it did on 27 of the same month.

  14. Considering that the Parties did not request the production of any evidence beyond the documentary evidence attached to the process, the Arbitral Tribunal, given the principles of autonomy in case management, celerity, simplification and procedural informality, inherent in articles 16 and 29, no. 2, of the RJAT, by order of 28 November 2017, dispensed with the holding of the meeting provided for in article 18 of the same instrument, determining that the process would proceed with optional written submissions, within a simultaneous time limit of ten days.

  15. By the same order it was determined that the arbitral decision would be delivered by the end of the time limit referred to in article 21/1 of the RJAT.

  16. On 3 December 2018 written submissions were presented by the Applicant, with AT presenting its submissions on 4 of the same month.

Position of the Parties

Of the Applicant:

It substantiates its request for arbitral pronouncement, in brief, in the following terms:

That the assessment in question was based on the tax patrimonial value of the building lands of which it was owner on 1 January 2017, registered in the property register of the Union of Parishes of ..., municipality of ..., under articles ... and ... .

With regard to the land registered in the property register under article ..., it considers that the assessment deserves no censure, since it is intended for residential purposes.

As for the land registered under article ..., with a tax patrimonial value of 219,050.00 €, it disagrees with the assessment, since the property is intended for construction for industrial purposes, and therefore the provisions of no. 2 of article 135-B of CIMI should be interpreted extensively, making no sense to exclude urban industrial properties from taxation and also not to exclude building land intended for industry.

At the origin of the creation of AIMI there is clearly a benefit granted to companies and sole proprietors, as they are the holders of properties intended for commerce, industry, services and others, therefore the mere holding of such properties does not constitute a factor demonstrating wealth nor a sufficient indicator of the contributory capacity of the holders of those properties.

There being no doubt whatsoever that the said land is intended for construction for industrial purposes, as demonstrated by the data from the evaluation contained in the respective property record and also the topographical plan and respective constraints chart issued by the Municipal Council of ... .

Moreover, regard should be had to the fact that the Applicant is a company in the real estate business, whose activity consists in the construction, purchase and sale of properties and resale of those acquired for that purpose, and the said land was sold to the company "B..., SA", on 11 April 2017, in the exercise of such activity, being recorded in the respective deed that it is intended for urban construction for industrial purposes.

Adopting a literal interpretation of the said no. 2 of article 135-B of CIMI, in the sense that all building lands are covered by the incidence of AIMI, this norm would be materially unconstitutional, as it violates the principles of fiscal equality and contributory capacity, enshrined, respectively, in articles 13 and 104, no. 3 of the Constitution, by considering as a tax fact the ownership of building land for properties intended for industry and not the ownership of the properties built on them, as it constitutes a disadvantaged treatment of taxpayers in the first situation, without material justification, since the contributory capacity indicated by real estate patrimony in that situation must necessarily be lesser, and must be present, with increase, in the second.

It concludes by arguing for the merits of the request for arbitral pronouncement and thereby for the partial annulment of the assessment in question, as well as for the reimbursement of the amount unduly assessed, in the amount of 876.20 €, plus the corresponding compensatory interest, and the declaration of unconstitutionality of no. 2 of article 135-B of CIMI, for violation of the principles of fiscal equality and contributory capacity.

Of the Respondent:

Defending itself by exception:

That the Applicant, in compliance with the provisions of paragraph b) of no. 2 of article 10 of the RJAT, petitions, finally: "a) That the unconstitutionality of no. 2 of article 135-B of CIMI be declared for violation of the principle of fiscal equality and contributory capacity, enshrined in articles 13 and 104, no. 3 of the Constitution (...). b) That the assessment in question be considered illegal insofar as it includes in the taxable value the tax patrimonial value of the building land with article ... of the urban register of the Union of Parishes of ... and ..., and should be annulled accordingly in the respective part, in accordance with the provisions of article 163, no. 1 of the Administrative Code of Procedure (CPA) subsidiarily applicable pursuant to article 2, paragraph c) of the LGT. c) That the Tax and Customs Authority be condemned to reimburse the Applicant the amount unduly paid in the amount of 876.20 €, plus the competent compensatory interest (...)".

Throughout the request for arbitral pronouncement (ppa) it made no reference to the order that dismissed the administrative claim.

That in the preamble of the ppa, the Applicant is emphatic and direct, immediately stating what it seeks: "the declaration of partial illegality of the act of additional assessment to the Municipal Property Tax (AIMI) with no. 2017..., issued by the Tax and Customs Authority (AT), with reference to the year 2017, insofar as it includes in the taxable value the tax patrimonial value of the building land with article ... of the urban register of the Union of Parishes of ... and ..., in the amount of 876.20 €, claiming from the Respondent the reimbursement of the stated amount plus compensatory interest under articles 43, no. 1, of the LGT and 61 of the CPPT, regarding the amount to be reimbursed, from the date on which the Applicant made the payment until the full payment of the amount that should be reimbursed, at the statutory default rate, pursuant to articles 43, no. 4, and 35, no. 10, of the LGT, article 61 of the CPPT, article 559 of the Civil Code and Order no. 291/2003, of 8 April".

That the legally defined time limit for challenging the tax assessment act in dispute has clearly been exceeded, in arbitral proceedings, since article 10 of the RJAT establishes, as regards assessment acts, that the time limit for submitting the request for constitution of an arbitral tribunal is 90 (ninety) days, referring, as to when counting begins, to what is provided for in article 102, nos. 1 and 2 of the CPPT.

Thus the initial term of the time limit would be the last day of September 2017, cf. no. 1 of article 135-H of CIMI, that is, in this case, 30 September 2017.

And having the ppa been submitted on 9 August 2018, it is untimely, because submitted after the respective legal time limit.

That "the 'timeliness' of the petition could only be based on the existence of some means of administrative challenge of the assessment act where a decision had been issued denying/dismissing, in whole or in part, the claims formulated therein by the tax subject (in what would constitute a second-degree act)".

Which occurred in the situation of the case file, since the Applicant administratively challenged the tax assessment act through the administrative claim, which was dismissed by AT.

However, the Applicant did not formulate/specify to the Arbitral Tribunal any petition aimed at annulling the order dismissing the claim filed in the administrative claim process, nor did it even contest, throughout the ppa, a single argument alleged by AT in the information supporting such order.

Whereby "Not having done so, there is no basis that could establish the timeliness of the petition and, consequently, the possibility of the Tribunal to appreciate the petition formulated regarding the assessment act", since "(…) with the Tribunal's powers of cognition being limited by the petition, and not being able, obviously, to exceed it, the Tribunal is prevented from appreciating and deciding regarding the specified petition", given the provisions of articles 608/2 and 609/1 of the Code of Civil Procedure.

That this is the understanding of CAAD as confirmed, among others, by the decisions handed down in cases nos. 26/2013-T, of 05-05-2014; 38/2015-T, of 03-06-2015; 346/2015-T, of 30-10-2015; and 618/2015-T, of 22-04-2016.

Thus, "as it is clear and unequivocally apparent from the learned initial application, the direct challenge of the AIMI assessment act, the petition formulated (conducive to the declaration of illegality of the act and, consequently to its proportional annulment) should be declared dismissed, as untimely and, consequently, the Respondent Entity should be absolved of the action – cf. paragraph e), of no. 1, of article 278 of the Code of Civil Procedure in force, applicable ex vi article 29, no. 1, paragraph e) of Decree-Law no. 10/2011, of 20 January".

Therefore it argues for the merits of the peremptory exception of untimeliness invoked and consequent dismissal of the petition.

Defending itself by challenge, it invokes the following arguments:

That, as follows from article 135-B of CIMI, AIMI is assessed on properties classified as residential and as building lands — regardless of their potential use (given the fact that the law refers, simply, to article 6 of the Property Tax Code) — insofar as the same do not appear expressly in the norm of negative delimitation of scope, assuming the nature of a real tax, insofar as the modeling of the amount to be paid abstracts from the economic dimension of the entities, namely the qualification as small, medium or large enterprise, and does not reach the totality of the net patrimony of the entities.

Therefore AIMI cannot be qualified as a tax of a personal nature, as, as a matter of conceptual rigor it must be said that one is not faced with a personal tax, in line with the doctrine construction (cf., Sérgio Vasques, Manual de Direito Fiscal, Almedina 2011, p. 193).

Thus, with regard to legal entities and equivalent structures, AIMI has the nature of real taxation, thereby reflecting the idea that the elements constituting the real estate patrimony held by these entities perform, as a rule, an economic function, and therefore do not represent mere accumulation of wealth.

That, given the objective formulation enshrined in article 135-B, no. 2, of CIMI, the option of case-by-case analysis advocated by the Applicant was unquestionably rejected by the legislature, in which it would be necessary to invoke elements of economic substance that are highly variable and contingent, which depend largely on the mode of management, the situational framing circumstances, the type of use made of the properties, the situation in each year of the patrimony assets held.

Thus, contrary to what the Applicant intends, not only is there no minimum in the letter of the law that permits the interpretation advocated by it, but also the ratio legis of the exclusion of taxation provided for in no. 2 of article 135-B of CIMI does not have the scope intended by the Applicant, because the criterion, objective as has been seen, chosen by the legislature – the classification of urban properties as industrial, commercial or for services and others – was made precisely to the detriment of others that would appeal to case-by-case verifications on the actual use given to the properties.

It refers to the impossibility of the AT disapplying a legal norm on the grounds of unconstitutionality, as the Administration is obliged to act in accordance with the principle of legality, cf. articles 266, no. 2 of the Constitution, 3, no. 1 of the Administrative Procedure Code and 55 of the LGT.

And of the non-existence of violation of the constitutional principles of equality and contributory capacity.

It concludes by arguing for the total dismissal of the request for arbitral pronouncement and absolution of the Respondent, since the assessment in dispute constitutes a correct interpretation and application of law to the facts, not suffering from the vice of violation of law due to errors in the premises.

However, should that not be the case, it requests that the Public Prosecutor be notified of the arbitral decision to be handed down, by reference to the provisions of article 280, no. 3 of the Constitution and article 72, no. 3 of the Constitutional Court Law.

Response of the Applicant to the Peremptory Exception of Untimeliness of the Request for Constitution of an Arbitral Tribunal, Invoked by the Respondent

That the Respondent is without reason insofar as the Applicant initially filed an administrative claim of the AIMI assessment notice at the Finance Service of ..., on 27 December 2017, which gave rise to Administrative Claim Process no. ...2018..., which was dismissed by order notified by letter no. 2018..., of 21 May 2018, registered on 23 of the same month (registration no. RD...pt).

It was in the sequence of such dismissal that the Applicant filed the request for constitution of an arbitral tribunal that gave rise to the present case file.

That pursuant to the provisions of paragraph a) of no. 1 of article 10 of D.L. no. 10/2011, the request for constitution of the arbitral tribunal is submitted within 90 days, calculated from the facts provided for in nos. 1 and 2 of article 102 of the CPPT, as regards acts susceptible to autonomous challenge and, also, from the notification of the decision or the end of the legal time limit for decision of the hierarchical review.

Thus the initial term of the time limit to submit the request for constitution of the arbitral tribunal occurred on 25 May 2018, that is on the day following the signature of the receipt notice of the decision dismissing the administrative claim, and the respective final term on 23 August 2018.

In this way, with the ppa being submitted on 9 August 2018, it is timely.

For the Applicant, the exception invoked by the Tax Authority constitutes a clear and manifest abuse of right, as it is of its perfect knowledge both the content of the administrative claim presented and the date of its presentation and dismissal, which is precisely what it states, more than once, in its Response, which demonstrates direct knowledge of such fact.

Thus it argues for the dismissal of the peremptory exception of untimeliness of the request for arbitral pronouncement invoked by the Respondent.

II – REASONING

Facts Proven:

As being relevant for the appreciation and decision of the substantive issue raised, the following facts are established and proven:

  1. The Applicant is a limited liability company, whose corporate purpose consists in the construction, purchase and sale of properties and resale of those acquired for that purpose (main CAE 41200-R3).

  2. On 1 January 2017 it was the owner of two building lands, registered in the register of the Union of Parishes of ... and ..., municipality of ..., under articles ... and ..., with tax patrimonial values of 219,050.00 € and 22,450.00 €, respectively.

  3. The land registered in the property register with article ... is intended for construction for residential purposes.

  4. Whereas the land with the property register article ... is intended for construction for industrial purposes.

  5. On 30 June 2017 the AT carried out the assessment of AIMI, in the amount of 966.00 €, based on the taxable value of 241,500.00 €, corresponding to the sum of the tax patrimonial values of the two building lands.

  6. The end of the time limit for voluntary payment occurred on 30 September 2017.

  7. The Applicant having made the payment on that date.

  8. On 27 December 2017 the Applicant filed an administrative claim, which gave rise to Administrative Claim Process no. ...2018..., having as its object the assessment now in question.

  9. The claim was dismissed by order of the Head of the Finance Service of ..., of 16 May 2018, notified to the Applicant by letter no. 2018..., of 21 May 2018, registered on 23 of the same month with no. RD...pt.

  10. On 9 August 2018, it filed a request for constitution of an arbitral tribunal with a view to the declaration of partial illegality of the assessment act aforementioned.

Facts Not Proven

There are no facts relevant to the decision of the case that should be considered as not proven.

Reasoning

With regard to the factual matter the Tribunal has no duty to pronounce on all the matter alleged, but rather the duty to select that which is relevant for the decision, taking into account the cause (or causes) of action that substantiates the petition formulated by the claimant [(cf. articles 596, no. 1 and 607, nos. 2 to 4 of the CPC, applicable ex vi of article 29, no. 1, paragraphs a) and e) of the RJAT)] and to record whether it considers it proven or not proven (cf. article 123, no. 2 of the CPPT).

According to the principle of free appreciation of evidence, the Tribunal bases its decision, in relation to the evidence produced, on its intimate conviction, formed from the examination and evaluation it carries out of the evidence produced in the process and in accordance with its life experience and knowledge of people (cf. article 607, no. 5 of the CPC). Only when the probative force of certain means is pre-established in law (e.g. full probative force of authentic documents, cf. article 371 of the Civil Code) does the principle of free appreciation not prevail in the appreciation of the evidence produced.

Thus, the conviction of the Tribunal was based on the documentary evidence attached to the case file as well as on the positions taken by the parties.

III – MAINTENANCE OF REGULARITY

  1. The Parties have legal personality and capacity, show themselves to be legitimate and are regularly represented (articles 4 and 10, no. 2, of the RJAT and article 1 of Order no. 112-A/2011, of 22 March).

  2. The process is not affected by any nullities.

  3. The Arbitral Tribunal is regularly constituted and is materially competent to hear and decide the petition, cf. article 2, no. 1, paragraph a) of the RJAT.

IV - Questions to be Decided:

  • Of the (un)timeliness of the request for constitution of the arbitral tribunal;
  • Of the (il)legality of the assessment in question; and
  • Of the request for reimbursement of the AIMI (un)duly paid, in the amount of 876.20 €, and condemnation of the Respondent to pay compensatory interest.

V - Substantive Law (Reasoning)

Of the (Un)timeliness of the Request for Arbitral Pronouncement

Pursuant to paragraph a), no. 1 of article 2 of the RJAT, the competence of arbitral tribunals encompasses the appreciation of the declaration of illegality of acts of assessment of taxes, of self-assessment, of withholding at source and of payments on account.

As Jorge Lopes de Sousa refers, in "Guia da Arbitragem Tributária", Almedina, 2013, pp. 121/122): "(…) Although in paragraph a) of no. 1 of article 2 of the RJAT only explicit reference is made to the competence of arbitral tribunals to declare the illegality of assessment acts, acts defining the amount to be paid by the taxpayer, such competence also extends to second and third degree acts that appreciate the legality of these primary acts, namely acts of dismissal of administrative claims and acts of dismissal of hierarchical reviews filed against the decisions of these claims. (…) Indeed, it is unequivocal, from what has been said regarding the decisions of dismissal of administrative claims and hierarchical reviews, that the competences of the arbitral tribunals functioning in the CAAD include cases in which the declaration of illegality of the acts indicated therein is made through the declaration of illegality of second-degree acts, which are the immediate object of the impugnatory claim (…) appreciation of the legality of primary acts through the appreciation of the legality of primary acts through the appreciation of the legality of second-degree acts is apparent in the reference made in article 2 of the RJAT to acts of self-assessment, withholding at source and payments on account, as, regarding these acts, necessary administrative claim is imposed, as a rule, in articles 131 to 133 of the CPPT, therefore, in these cases, the immediate object of the impugnatory process is, as a rule, the second-degree act that appreciates the legality of the assessment act, which act, if it confirms it, must be annulled, to obtain the declaration of illegality of the assessment act."

From the foregoing it follows that the taxpayer may resort to the request for arbitral pronouncement to challenge the assessment of taxes (primary acts) as well as to react against acts of dismissal that appreciate the legality of those acts handed down in administrative claim processes and in requests for review of tax acts, provided for, respectively, in articles 68 et seq of the CPPT and 78 of the LGT (second-degree acts) or even in hierarchical reviews provided for in article 66 of the CPPT (third-degree acts), and that, in cases of self-assessment, withholding at source and payments on account, the request for arbitral pronouncement will necessarily be preceded by administrative claim (necessary prior claim), pursuant to articles 131/1, 132/3 and 133/2 of the CPPT, except insofar as exclusively substantive law is in issue and the self-assessment or withholding at source has been carried out in accordance with generic guidance issued by the tax administration, cf. articles 131/3 and 132/6 of the same code.

Pursuant to paragraph a), no. 1 of article 10 of the RJAT, the request for constitution of an arbitral tribunal is submitted within 90 days, calculated from the facts provided for in nos. 1 and 2 of article 102 of the CPPT, as regards acts susceptible to autonomous challenge and, also, from the notification of the decision or the end of the legal time limit for decision of the hierarchical review.

In this way, given the provision in no. 1 of article 102 of this code (no. 2 was repealed by paragraph d) of article 16 of Law no. 82-E/2014, of 31-12), the time limit for submitting the request for constitution of an arbitral tribunal is counted from the end of the time limit for voluntary payment of AIMI, cf. paragraph a), no. 1 of article 102 of the CPPT, or from the notification of the act of dismissal of the assessment in question handed down in one of the administrative challenge means referred to (administrative claim, request for review of tax acts or hierarchical review).

However, from the request for arbitral pronouncement it does not appear that the Applicant had resorted to any of these means of administrative challenge and from the dismissal of the same being litigated.

Furthermore, in accordance with the preamble of the ppa, this is aimed at the declaration of partial illegality of the act of additional assessment to Property Tax, "seeking the declaration of partial illegality of the act of additional assessment to the Municipal Property Tax (AIMI) with no. 2017..., issued by the Tax and Customs Authority (AT), with reference to the year 2017, insofar as it includes in the taxable value the tax patrimonial value of the building land with article ... of the urban register of the Union of Parishes of ... and ..., in the amount of 876.20 €, claiming from the Respondent the reimbursement of the stated amount plus compensatory interest (…)".

Also the relief sought is limited to the illegality of the assessment in question, cf. paragraph b), besides the declaration of unconstitutionality of no. 2 of article 135-B of CIMI and the condemnation of AT to reimburse the amount unduly assessed, plus compensatory interest, nothing being sought regarding the act of dismissal handed down in the administrative claim process no. ...2018... which took place at the Finance Service of..., and which the request for arbitral pronouncement does not mention, therefore the Tribunal Arbitral cannot know of such dismissal as the scope of its powers of cognition is limited to the petition.

Indeed, pursuant to no. 2 of article 608 of the Code of Civil Procedure (CPC) "The judge must resolve all questions that the parties have submitted to his appreciation (…); he cannot deal with only the questions raised by the parties, except if the law permits or orders him the official knowledge of others" (knowledge "ultra petita").

The sentence not being able to condemn in a quantity superior or in an object different from what is sought, cf. no. 1 of article 609 of the CPC.

As José Lebre de Freitas refers, in "Código de Processo Civil", Annotated, Coimbra Editora, Volume 2, 2nd Edition, p. 681: "Limited by the petitions of the parties, the judge cannot, in the judgment, exceed them: the decision, whether condemning or absolving, cannot pronounce more than what was sought or on a matter different from that which was sought".

We transcribe the following excerpt from the arbitral decision of 30-06-2015, handed down in Case no. 38/2015-T, which we endorse: "The object of the petition, expressly delimited by the Petitioner, is the alleged illegality of the act of additional assessment to Income Tax and not the dismissal of the administrative claim submitted. It should be noted, moreover, that at no time in the petition or the application submitted does the Petitioner make any appreciation of the dismissal and its grounds, having formulated no petition regarding such tax act. This tribunal became aware of the existence of an administrative claim only because the Petitioner attached a copy of the dismissal decision without, however, drawing any legal or juridical effect therefrom. This document is attached to the case file but no mention is made of it and its content throughout the initial petition. With the Tribunal's powers of cognition being delimited by the facts alleged by the parties, the judge cannot decide on questions not raised by them, nor condemn in an object different or in a quantity superior to what is sought. Except for matters of official cognition, there must be identity between the cause of action and the cause of judgment, and these may not differ. In that measure, with the present case file having as its object the additional Income Tax assessment for the year 2012, carried out in February 2014, this tribunal cannot fail to agree with the Respondent and conclude that the request for arbitral pronouncement, presented on 23/01/2015, is untimely. The 90-day time limit for requesting arbitral pronouncement began on 25/04/2014, after the end of the voluntary payment period, and would be fully completed on 23/01/2015, the date of submission of the request for arbitral pronouncement [cf. paragraph a) of no. 1 of art. 102 of the CPPT by remission of paragraph a) of no. 1 of art. 10 of the RJAT]."

In this way, notwithstanding that it is proven that the legality of the act in question was the subject of an administrative claim (Case no. ...2018...), which was dismissed by order of the Head of the Finance Service of..., of 16 May 2018, notified to the Applicant by letter no. 2018..., of 21 May 2018, registered on 23 of the same month with no. RD...pt, cf. points 8 and 9 of the facts proven, the Arbitral Tribunal cannot know of it.

Thus, given that the assessment in question is AIMI of the year 2017, the end of the respective time limit for voluntary payment occurred on 30 September 2017, cf. no. 1 of article 135-H of CIMI, therefore, pursuant to paragraph b) of article 279 of the Civil Code, combined with paragraph a), no. 1 of article 102 of the CPPT and paragraph a), no. 1 of article 10 of the RJAT, the initial term or dies a quo for the submission of the request for constitution of an arbitral tribunal occurred on 1 October 2017, and the respective final term or dies ad quem occurred on 29 December 2017.

In this way the request for constitution of the arbitral tribunal is untimely as it was submitted only on 9 August 2018, that is, already after the legal expiration of the respective time limit.

Thus, the peremptory exception of untimeliness of the request for constitution of the arbitral tribunal is judged to have merit, rendering moot the appreciation of the remaining questions raised in the case file.

VI - Decision

In view of the foregoing, it is decided:

  • The peremptory exception of untimeliness of the request for arbitral pronouncement is judged to have merit;

  • The arbitral petition is judged to be dismissed, and the Respondent is absolved of the action.

  • The knowledge of the substantive issues is judged to be moot; and

  • The Applicant is condemned to pay the costs in the amount of 306.00 €.

Value of the Case

In accordance with the provisions of articles 306, no. 2, of the CPC, 97-A, no. 1, paragraph a) of the CPPT and 3, no. 2 of the Regulation of Costs in Tax Arbitration Processes (RCPAT), the case is assigned a value of 876.20 €.

Costs

Pursuant to article 22, no. 4 of the RJAT, the amount of costs is set at 306.00 €, under Table I, attached to the RCPAT, to be borne by the Applicant.

Let this be notified.

Lisbon, 7 December 2018.

The Arbitrator,

(Rui Ferreira Rodrigues)

Text prepared by computer, pursuant to article 131, no. 5, of the CPC, applicable by remission of article 29, no. 1, paragraph e), of the RJAT.

Frequently Asked Questions

Automatically Created

Does AIMI (Adicional ao IMI) apply to construction land (terrenos para construção) under Article 135-B of the IMI Code?
Yes, under Article 135-B(2) of the IMI Code, AIMI applies to construction land (terrenos para construção). The objective scope includes the sum of taxable patrimonial values of urban properties and construction land exceeding the applicable thresholds. While Article 135-B(1) exempts properties allocated to commerce, industry, and services from AIMI when used by companies or individual entrepreneurs in their activity, paragraph 2 explicitly brings construction land into the taxable base without distinguishing by intended use. This creates the controversial situation where undeveloped industrial land is taxed while completed industrial buildings may be exempt, which taxpayers argue violates constitutional equality principles.
What is the objective incidence scope of AIMI as defined in Article 135-B, paragraphs 1 and 2, of the Portuguese IMI Code?
The deadline for filing an arbitral pronouncement request challenging AIMI liquidation follows the general tax litigation rules under the RJAT (Legal Framework for Tax Arbitration). Taxpayers must file within the time limits established in Article 10 of the RJAT, read in conjunction with applicable CPPT provisions. The request must be preceded by an administrative claim or hierarchical appeal where required, unless directly challenging the assessment. In this case, the arbitral request was filed on August 9, 2018, for a June 30, 2017 AIMI assessment with reference to 2017, raising potential timeliness issues that AT addressed as a procedural exception. Compliance with statutory deadlines is essential, as untimely requests result in dismissal without substantive analysis.
What are the deadlines for filing an arbitral pronouncement request (pedido de pronúncia arbitral) challenging AIMI liquidation?
Yes, taxpayers can claim reimbursement and compensatory interest (juros indemnizatórios) for unlawfully paid AIMI on construction land under Articles 43(1) of the LGT and 61 of the CPPT. In this case, the taxpayer requested reimbursement of €876.20 paid on September 30, 2017, plus compensatory interest calculated from the payment date until issuance of the credit note. Compensatory interest compensates taxpayers for the State's undue retention of funds when taxes are subsequently deemed illegal. The interest accrues automatically from the date of undue payment without requiring proof of damages. However, reimbursement and interest are only granted if the underlying assessment is successfully challenged and declared partially or wholly illegal, making the substantive determination on AIMI's application to construction land critical to the financial remedy.
Can taxpayers claim reimbursement and compensatory interest (juros indemnizatórios) for unlawfully paid AIMI on construction land?
CAAD arbitral case law has addressed whether construction land patrimonial tax value should be included in the AIMI taxable base, particularly regarding land designated for industrial or commercial purposes. The central interpretive question is whether Article 135-B(2)'s inclusion of all construction land creates unconstitutional discrimination when compared to the exemption for built properties under paragraph 1. Taxpayers argue for extensive interpretation excluding industrial/commercial construction land to maintain consistency with the exemption for completed industrial/commercial buildings, claiming literal interpretation violates constitutional principles of tax equality (Article 13) and ability to pay (Article 104(3)). They contend that undeveloped land demonstrates less contributory capacity than completed income-generating properties. However, AT typically defends literal application of paragraph 2, which contains no distinction based on intended land use. Resolution of this issue requires balancing statutory interpretation principles, legislative intent behind AIMI's creation to tax concentrated real estate wealth, and constitutional constraints on discriminatory taxation.