Process: 380/2015-T

Date: February 25, 2016

Tax Type: IMT Selo

Source: Original CAAD Decision

Summary

In this CAAD arbitral decision, the tribunal addressed whether it has competence to review challenges to IMT and Stamp Tax assessments based on alleged illegal revocation of a previously granted tax exemption. The claimant argued the Tax Authority violated Article 140 of the CPA by revoking a valid administrative act that constituted taxpayer rights, and exceeded the four-year statute of limitations under Article 31(3) of the IMT Code for additional assessments. The Tax Authority raised a preliminary exception, arguing the tribunal lacked competence under RJAT Article 2 to decide matters concerning revocation of administrative acts granting tax benefits, claiming this was an administrative law issue rather than a tax assessment challenge. The arbitral tribunal rejected this exception, applying the principle of unitary challenge in tax litigation. The tribunal held that under RJAT Article 2(1)(a), it has competence to assess the legality of IMT and Stamp Tax assessments, and that procedural defects in prior administrative acts—including allegedly improper revocation of tax exemptions—can be raised when challenging the final tax assessment. The tribunal emphasized that the tax assessment itself is the directly damaging act to the taxpayer, and pursuant to CPPT Article 54, interlocutory procedural acts cannot be independently challenged. Therefore, the first opportunity to challenge the revocation was through challenging the resulting tax assessments. The tribunal concluded that examining whether the underlying revocation violated consolidated taxpayer rights falls within its competence when determining the concrete legality of the contested tax acts.

Full Decision

ARBITRAL DECISION

1. Report

A…, with tax identification number…, resident at…, Apt…., Block…, …-… Portimão, hereinafter designated as the Claimant, submitted to the Administrative Arbitration Centre (CAAD) a request for arbitral pronouncement with a view to the annulment of the tax acts concerning the assessment of IMT and Stamp Tax, contained in office n.º…, issued by the Finance Service of….

The Claimant grounds the illegality of the IMT assessment and consequent annulment of the tax act, based on the defects concisely listed as follows:

A) Violation of subsection b) of n.º 1 in conjunction with subsection a) of n.º 2 of article 140º of the CPA, given that there is a valid administrative act, not freely revocable, since it is constitutive of rights or legally protected interests;

B) Lapse of the right to assess the tax acts, due to violation of n.º 3 of article 31º of the IMT Code, which establishes that additional assessment can only be carried out up to four years after the assessment to be corrected;

The Tax and Customs Authority, in turn, defended itself by exception and objection, arguing as an exceptional matter that the Claimant based articles 10º to 25º of its request for arbitral pronouncement in challenging an act in tax matters (revocation of a valid administrative act) and not the concrete legality of any tax act, thus arguing for the impropriety of the means of defence used by the Claimant and also for the incompetence of this Court to decide on such matter, in light of the provisions of article 2º of the Legal Regime for Tax Arbitration (RJAT).

As for objection, the Respondent AT stated that there is no illegality in the tax acts, emphasizing that the requirements for the exemption are not met, basing itself for this purpose on various case law, also arbitral.

The sole arbitrator was designated and appointed on 27.02.2015.

In accordance with the provisions of article 11º n.º 1 subsection c) of the RJAT, the sole arbitral tribunal was constituted on 16.03.2015.

Written and simultaneous pleadings were produced by the Respondent, in which the position already established in the Reply was reiterated in summary.

2. Preliminary Matters

2.1. Exceptions Raised:

i) On the inadequacy of the means of procedural defence and consequent incompetence of the tribunal to decide on the matter relating to the revocation of tax benefit:

On the matter of exceptions, the Respondent argued the inadequacy of the procedural means of defence to challenge the allegedly illegal revocation of the grant of tax benefit previously granted by an administrative act, arguing that such cause of action does not find legal accommodation in the present means of arbitral defence and, consequently, considers there to be incompetence of this tribunal to decide on such matter, in light of what is provided for in article 2º of the RJAT.

The Claimant countered, concluding to the lack of merit of such exception, invoking the principle of unitary challenge, reiterating for this purpose that the proper forum for discussion on the legality or otherwise of the revocation of a tax benefit which also underlies the supposed illegality in concreto of the tax acts under challenge is judicial challenge or, in this case, via request for arbitral pronouncement.

It further argues that the inadmissibility of considering such question would violate the principle of effective judicial protection enshrined in article 268, n.º 4, of the Constitution of the Republic, invoking the recent judgment of the Constitutional Court n.º 410/2015, of 29-09-2015, delivered in case 592/14, in appeal of a CAAD decision where the AT defended an identical position.

Since the IMT and IS assessments constitute the tax act which is the subject matter of the present proceedings, it is difficult to conceive how such act, potentially damaging to the sphere of the respective taxpayer, could not have a framework within the scope of the competence of this tribunal for the purpose of assessing the defects attributed to it.

Under the terms of Article 2º of the Legal Regime for Tax Arbitration:

"1 – The competence of arbitral tribunals comprises the assessment 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 the assessment of any tax, of acts of determination of taxable income and of acts of determination of patrimonial values;"

Before the reading of the provision cited above, specifically of subsection a) of its n.º 1, it is thus verified that the request for illegality based on the invoked violation of law in the revocation of tax benefit in IS and IMT is framed and subsumed within the scope of the competence of this tribunal.

Let us see otherwise:

Within the scope of tax dispute resolution, the principle of unitary challenge applies and in tax procedures that lead to an act of tax assessment, as is the case under consideration, the legal sphere of the taxpayer subject is affected by the act of determination of the tax or assessment, wherefore this is the final act capable of challenge.

Having the assessments been preceded by a draft decision regarding the issuance of the tax act, the said draft decision regarding the tax act of tax assessment, in itself, is not an act directly damaging to the interests and rights of the taxpayer, since it does not produce any autonomous and different legal effects from the legal effects produced by the final act of assessment.

Such assertion is evidenced by article 54º of the CPPT, under the terms of which: "Except when they are directly damaging to the rights of the taxpayer or express provision to the contrary, interlocutory acts of the procedure are not susceptible to contentious challenge, without prejudice to any illegality previously committed being able to be invoked in the challenge of the final decision."

Meaning what is stated, that the Claimant was not permitted, at a time prior to the assessment of IMT and Stamp Tax, to initiate contentious challenge regarding any act of the tax procedure upstream of those same final tax acts, the assessments of IMT and IS.

Thus, after the assessment of IMT and IS, this was the first procedural opportunity that the Claimant had, as taxpayer subject, to challenge in the context of contentious challenge, any act of the tax procedure that preceded it.

In this sense and not losing sight of the present case, it results that what the Claimant calls discussion of questions relating to valid administrative acts, to acts constitutive of rights and to the periods for their revocation and brought before the arbitral forum had precisely their genesis in the tax acts of assessment issued by the AT, whose procedure tending to them began with the draft decision regarding the issuance of those same assessments.

That is, the act supposedly damaging to the interests of the taxpayer subject aimed at are the IMT and IS assessments, and it is this decision to issue the tax acts by the AT whose concrete legality the Claimant seeks to challenge, raising, among other grounds, that relating to the circumstance that those tax acts have at their base and origin a violation of a right that allegedly would already be temporally consolidated and unsusceptible to revocation – that of having a tax benefit previously recognized through an administrative act.

Now, contrary to what the Respondent defends, it does not follow from the tenor of the request for arbitral pronouncement as regards the grounds relating to the illegal revocation of an act constitutive of rights, that the Claimant intends for this Tribunal to deliver a decision in the sense of the recognition of the exemption which the Claimant claims to deserve.

Precisely because, the claim finally formulated, in no way contends with such recognition, but rather and solely aims at the declaration of illegality of the IMT and IS assessments, basing itself for this purpose on the circumstance that these assessments revoke, outside the law, a certain tax benefit, which in the understanding of the Claimant will be illegal.

Illegality which, in the theoretical plane, cannot fail to contend with the concrete legality of the tax acts of IMT and IS.

Moreover, as the Claimant well sustains, the Constitutional Court itself, in the scope of the judgment already identified above, is clear in assuming a position according to which, in the context of judicial challenge and, to that extent, equally in the context of arbitral pronouncement, it is permitted for the taxpayer subject beneficiary of a certain tax benefit to discuss in this arbitral instance the questions relating to the cessation or revocation of tax benefit and that motivated the assessment of the taxes.

Wherefore, it is not envisioned that the cause of action expended by the Claimant goes beyond the scope of challenge of the present request for arbitral pronouncement in question with the consequent annulment of those same tax acts, and it cannot fail to be concluded that the exception relating to the procedural inadequacy of the cause of action and relating to the incompetence in terms of subject matter of this Arbitral Tribunal lacks merit, since it is found in strict conformity with the provisions of article 2º of the RJAT.

The sole arbitral tribunal is materially competent, under the terms of the provisions of articles 2º, n.º 1, subsection a) of the Legal Regime for Tax Arbitration.

The parties have legal personality and capacity and have standing under the terms of art.º 4º and n.º 2 of art.º 10º of the Legal Regime for Tax Arbitration (RJAT), and art.º 1º of Order n.º 112-A/2011, of 22 March.

The joinder of claims relating to the tax acts of assessment of IMT and IS depends, in its essence, on the verification of the same facts and of similar rules of law, reason for which the joinder of claims as to the two tax acts now being challenged are in conformity with the provisions of n.º 1 of article 3º of the RJAT.

The proceedings do not suffer from any nullity, there are no exceptions that prevent the assessment of the merits of the case beyond those already resolved above, the claim is timely, wherefore the conditions are met for the issuance of the arbitral decision.

3. Facts

3.1. Proven Facts:

Having analyzed the documentary evidence produced and the position of the parties, the following facts are considered proven and relevant for the decision of the case:

  1. Following the submission by the Claimant of a Form 1 declaration, the Finance Service issued document n.º…, with no amount payable as IMT, in accordance with benefit 33 – tourist utility – article 20º of DL 423/83, of 5 December and document n.º…, with an amount payable in Stamp Tax (item 1.1.) of € 147.20 – 80% on the taxable matter - in accordance with benefit 33 – tourist utility – article 20º of DL 423/83, of 5 December.

  2. By public deed of purchase and sale executed on 25 February 2010, the Claimant acquired, for the price of € 92,000.00, from company B…, S.A., the right of superficies relating to the autonomous unit designated by the letters CC of the urban property recorded in the urban property register of the parish and municipality of Portimão, under article…, integrated in the tourist enterprise "Hotel …".

  3. Considering that the said enterprise was attributed tourist utility as a preliminary matter, in accordance with Order of the Minister of Tourism of 19 October 2004 and published in the official journal, III Series, n.º 269, of 16 November 2004, it was noted in the said deed that the transmission was exempt from Municipal Tax on Onerous Transmissions of Immovable Property, under article 20º of Decree-Law n.º 423/83, of 5 December.

  4. The Finance Service of … proceeded to notify the claimant herein of the draft assessment of Stamp Tax (IS) and Tax on Onerous Transmissions (IMT), in which it is invoked that the transmission in favor of the claimant did not meet the legal requirements for the exemption by "Tourist Utility".

  5. By office n.º…, the Finance Service of … refuted the argumentation of the Claimant, proceeding to assess IMT and IS, in the amount determined of € 5,980.00 and € 801.79, respectively.

  6. On 17.03.2015, the respective payment notices for the respective IMT and IS assessments were issued.

  7. On 05.01.2015, the request for pronouncement and constitution of arbitral tribunal was submitted, via computer platform, by the Claimant.

  8. The Claimant proceeded to the payment of the initial court fee;

No other facts with relevance for the decision of the case were proven.

3.2. Grounds for the Proven Facts:

Regarding the proven facts, the arbitrator's conviction was based on the documentary evidence attached to the file, as well as on the acceptance by the Claimant and Respondent regarding the facts brought before these proceedings and the position taken by each of them.

3.3. Unproven Facts

The matter taken as proven is sufficient for the assessment of the questions raised in these proceedings, which are reduced to questions of law, with no unproven facts relevant for the solution of the present dispute.

4. Legal Matters:

4.1. Object and Scope of the Present Proceedings

The request for arbitral pronouncement has as its object the declaration of illegality of the acts of assessment of IMT and IS, notified to the Claimant through office nº …, of 18.02.2015, and has as its cause of action the illegal revocation of administrative act in tax matters which granted him the tax benefit for tourist utility, as well as invokes the lapse of the right to assess, both IMT and IS.

In light of the foregoing, in accordance with the provisions of article 124º of the CPPT, applicable by virtue of subsection a) of n.º 1 of article 29º of the RJAT, it is necessary to know the defects that come pointed out in the tax acts of IMT and IS which are the subject matter of these arbitral proceedings, in light of such criterion.

4.2. On the Alleged Illegal Revocation of Tax Benefit by Administrative Act in Tax Matters:

In the understanding of the Claimant, the documents of IMT and IS, dated 23.02.2010 and 24.02.2010, respectively, and to which we referred at point 1. of the facts proven, constitute an administrative act of recognition by the AT of the tax benefit relating to article 20º of DL 423/83, of 5 December.

Recognition which, in accordance with subsection b) of n.º 1 in conjunction with subsection a) of n.º 2 of article 140º, both of the CPA, given in the view of the Claimant that there is a valid administrative act, not freely revocable, since it is constitutive of rights or legally protected interests of the Claimant, was not susceptible to being revoked, by the expiration of the period for such purpose.

Let us frame, first of all, the concept of tax benefits.

According to the law, more precisely through what is laid down in n.º 1 of article 2º of the Tax Benefits Code (EBF), in the version in force as of the date of the tax fact: "Tax benefits are considered to be exceptional measures instituted for the protection of relevant extra-fiscal public interests that are superior to those of taxation itself that prevent"

Adding n.º 2 of the same legal provision, that "Tax benefits are exemptions, reductions of rates, deductions to taxable matter and tax, accelerated depreciations and reinstatements and other tax measures that comply with the characteristics set out in the previous number."

In the case of the present proceedings, the legislator, through DL 423/83, of 5 December, in its article 20º, approved a tax benefit in the form of an exemption, in casu, from SISA and Tax on Succession and Gifts, which gave rise, after the reform of the taxation of property, carried out through DL 287/2003, of 12 November, to IMT and Stamp Tax, respectively, with no doubts arising in this context as to the consideration of such IMT and IS exemption as a tax benefit.

Through the EBF the legislator thus came to regulate the matter relating to a multiplicity of tax benefits, which, as is observed, are not even entirely provided for in such legal diploma, but also in separate legislation, as is the case with the exemption from IMT and IS, for tourist utility.

Under the terms of n.º 1 of article 5º of the EBF "Tax benefits are automatic or dependent on recognition; the former result directly and immediately from law, the latter presuppose one or more subsequent acts of recognition."

And, in the case of tax benefits dependent on recognition, it is important to keep in mind the two hypotheses by which such recognition can operate "The recognition of tax benefits can take place by administrative act or by agreement between the Administration and the interested parties, having, in both cases, merely declaratory effect, unless the law provides otherwise." – cf. n.º 2 of article 5º of the EBF.

Now, given the legal dichotomy relating to automatic tax benefits and those dependent on recognition, it is important for the clarification of the cause of action of the Claimant now under consideration, to establish whether the tax benefit relating to article 20º of DL 423/83, of 5 December, should be framed in the first or second of the hypotheses identified.

In this regard and in light of the tenor of article 20º of DL 423/83, of 5 December, as well as of any provision contained in the EBF, it is found that there is no mechanism or procedure tending towards recognition by the Tax Authority of the IMT and IS exemption under the tax benefit to which the said article refers.

In the face of the lack of normative provision as to the existence of a procedure tending towards recognition by the AT, case by case, of the tax benefit for tourist utility and subsequent issuance of act or contract that in concreto would confer the right to benefit from such exemption, we cannot fail to conclude that we are dealing with, in the words of the law, an "automatic tax benefit".

Which means the same as stating that such tax benefit results directly and immediately from law, without need for recognition in concreto and case by case, by the Tax Authority or by any other entity legally authorized for such purpose.

That is, in the case of the present proceedings, we are dealing with a tax benefit for tourist utility, laid down by way of article 20º of DL 423/83, of 5 December, with such benefit operating automatically ope legis.

In this regard, for its relevance, pertinence and clarity, we cannot fail to cite an excerpt from the summary in the judgment delivered by the Central Administrative Court of the South, in the scope of case 0936/09, of 16-12-2009: "II - After the revision given to art.º 16º, n.º 4 of Decree-Law n.º 423/83, of 5 December, by art.º 4º of Decree-Law n.º 38/94, of 8 February, the definition, measure and periods of tax benefits to be granted to enterprises of tourist utility, in the order of attribution of tourist utility, only became mandatory regarding exemption or reduction of rates due for licenses to civil governments and to the Directorate-General of Entertainment.

III - Thus, in the cases referred to in art.º 20º, n.º 1, of the same diploma - exemption from sisa and tax on succession and gifts and reduction of stamp tax - the tax benefits provided therein apply automatically, once the requirements established in that same diploma are met.

IV - In this way, the tourist utility being recognized for the fraction acquired by the claimant, by order of the Secretary of State for Tourism, of 25.08.2006, the claimant benefited from exemption from sisa (now IMT) and reduction of stamp tax, benefits these of automatic application and without the need for the same to be recognized in the said order."

More recently and in the same sense, we cannot fail to equally cite an excerpt from the summary relating to the decision delivered by the Supreme Administrative Court, of 14.04.2010, in case n.º 120/10, according to which:

"I- The tax benefits provided for in n.º 1 of article 20º of DL 423/83, of 5/12, were not revoked by DL 485/88, of 30/12, as the scope of the revocation effected by article 3º, n.º 22 of this latter diploma is restricted solely to tax benefits attributed in the context of industrial contribution and complementary tax.

II - Such tax benefits are of automatic application once the conditions provided for in that same provision are verified: that the acquisition of the immovable property is intended for the installation of enterprise qualified as tourist utility, even though such qualification is attributed as a preliminary matter, provided that it remains valid and that the period fixed for the opening to the public of the enterprise is observed.
III - Given the nature of the benefits in question, it is not a condition that the same appear in the order of attribution of tourist utility."

Having compared the legal framework in which the tax benefit provided for in article 20º of DL 423/83, of 5 December gravitates and also the numerous decisions of the superior courts regarding the question relating to the automatic or recognition-dependent character of that same benefit, it cannot fail to be concluded that we are dealing with an automatic tax benefit, that is, under the terms of n.º 1 of article 5º of the EBF, it results directly and immediately from law, without any need for recognition.

Established the automatic nature relating to the tax benefit in question in these proceedings, it is necessary to conclude that there does not exist, in the case of the tax benefit referred to in these proceedings, the revocation of a tax benefit previously granted by administrative act or by contract.

The Claimant invokes, in support of its thesis, that the documents to which point 1. of the proven facts refers have the virtue of recognition of the tax benefit contained in article 20º of DL 423/83, of 5 December, in IMT and IS.

Now, as demonstrated above, such document did not constitute the Claimant in any rights that would allow it to displace the taxation-rule, since the tax benefit under analysis operates directly and immediately from law.

In this result, there does not exist in the case under consideration any act of the Tax Authority or of any other entity legally competent for such purpose that has recognized the tax benefit to the Claimant, in IMT and IS.

Although it is useful to note that under the terms of article 120º of the Administrative Procedure Code, in the version in force as of the date of the issuance of the documents to which point 1. of the proven facts refers, the concept of administrative act, which is as follows:

"For the purposes of this law, administrative acts are considered to be decisions of the organs of the Administration that, under the authority of norms of public law, are intended to produce legal effects in an individual and concrete situation"

Wherefore, once again, it is necessary to conclude that there does not exist in this case any decision delivered by the Administration (Tax) in the sense of recognition of the tax benefit under investigation.

Not being in the presence of tax benefit recognized by administrative act (in tax matters), it is not envisioned that it be applicable to the situation sub judice the provisions contained in n.º 4 of article 14º of the EBF, under the terms of which:

Thus, the extinction of tax benefits is provided for in article 14º of the EBF, and n.º 4 specifically refers to tax benefits granted by administrative act, under the terms of which:

"Article 14º
Extinction of tax benefits

4 – The administrative act granting a tax benefit is not revocable, nor may the respective agreement of grant be rescinded, nor may the rights acquired be diminished, by unilateral act of the tax administration, save if there is non-compliance imputable to the beneficiary of the obligations imposed, or if the benefit was unduly granted, in which case that act may be revoked."

It follows from the normative provision cited above the principle according to which a tax benefit granted by administrative act in tax matters is not susceptible to revocation, except if there is non-compliance imputable to its beneficiary for him to be able to benefit therefrom and also in the case of undue grant of the latter.

Which means that the revocation of the administrative act in tax matters that grants a tax benefit is prohibited, except if non-compliance of the obligations imposed imputable to the beneficiary is verified or if the benefit was unduly granted, in which case the act may be revoked.

The legal norm aims to grant taxpayers the guarantee that administrative decisions of recognition or grant of tax benefits are not subject to alteration, except in the hypotheses referred to above, which aims to confer on them the possibility of making their economic-financial choices with security.

Now, having not existed an administrative act (with the respective recognition) at the genesis of the tax benefit of which the Claimant was a beneficiary, not only is the application of the provisions of n.º 4 of article 14º of the EBF inapplicable, as equally the provisions of articles 138º, 140º and 141º of the CPA do not apply to the case of these proceedings, insofar as the applicability of the same depends on the prior verification of the presupposition of the existence of an administrative act in tax matters that recognizes that same tax benefit.

Presupposition which, as demonstrated above, is not verified, insofar as we are not dealing with the grant of any tax benefit by way of administrative act (in tax matters).

Wherefore and in summary, the argumentation adduced by the Claimant cannot fail to lack merit, with the consequence that the illegality of the tax acts reviewed is not recognized.

4.3. On the Lapse of the Right of the Tax Authority to Proceed to the Assessment of IMT and Stamp Tax

The Claimant defends that, in light of the subsumption of the assessment which is the subject matter of these proceedings to the provision of articles 78º of the General Tax Law and 31º of the IMT Code, the period for the Tax Authority to proceed to the determination of the tax due by such real estate acquisition is four years and not eight, reason for which the assessment, which it considers to be additional, notified beyond the said four years, through the office referred to above, is illegal.

Let us see:

Under the terms of n.º 1 of article 35º of the IMT Code "Tax can only be assessed in the eight years following the transmission or the date on which the exemption ceased to have effect, without prejudice to the provisions of the following number and, as to the rest, in article 46º of the General Tax Law."

For its part, article 31º of the said legal compendium provides that:

"1 - In case of omission of assets or values subject to taxation or if there are well-founded indications that acts or contracts were practiced or executed with the objective of diminishing the tax debt or obtaining other undue advantages, the powers of correction attributed to the tax administration by this Code or by other tax laws are applicable.

2 - When it is found that in the assessments an error of fact or law was committed, which resulted in prejudice to the State, as well as in cases in which there is ground for appraisal, the head of the finance service where the assessment was made or where the declaration was filed for the purposes provided in n.º 3 of article 19º, promotes the competent additional assessment.

3 - Assessment can only be made until four years have elapsed from the date of the assessment to be corrected, except if it is for omission of assets or values, in which case it may still be made later, being reserved, in all cases, the provisions of article 35º.

4 - Additional assessment must be notified to the taxpayer, in the terms provided in the Code of Procedure and Tax Process, in order to effect payment and, if applicable, to be able to use the means of defence provided therein."

It thus results from the concatenated interpretation of the provisions cited above the existence of two distinct periods for the purposes of proceeding to the issuance of IMT assessments, namely: four and eight years.

A period of four years this, applicable when it is in the presence of additional assessment and always considering the exceptions provided in n.º 3 of article 35º of the IMT Code, in case of omission of assets or values.

And a period of eight years applicable to situations in which the correction of prior assessments is not in question, that is, which do not configure additional assessments for the purposes of article 31º of the IMT Code.

Thus, the question to be decided necessarily involves understanding whether the assessment issued and notified to the Claimant by the Respondent through office n.º…, configures or not an additional assessment, so that from such qualification, it is possible to extract the applicable framework to this tax act regarding the period of lapse of the right to assess the IMT in question.

For such purpose - qualification of the assessment which is the subject matter of these arbitral proceedings – it is necessary, first of all and as stated, to understand whether the document extracted by the Finance Service Lisbon-… on 11.08.2011 and to which point 1. of the proven facts refers, configures or not an assessment of tax, in casu of IMT.

We understand that it does not.

In fact, any characterization of tax assessment cannot fail to reveal an arithmetic operation of application of the tax rate to the previously determined taxable matter.

That is, the concept of assessment necessarily contains an operation of quantitative determination regarding the tax burden to be borne by the taxpayer of the tax legal relationship.

This does not mean that from such determination regarding the quantum, there must necessarily result a final value to be paid by the taxpayer, since the rules of tax determination themselves can determine that the result of such assessment is null in terms of the tax burden for the tax subject, a situation easily illustrated, for example, in the context of PIT, in which, either by way of the concrete income earned, or by way of the amounts already delivered to the tax creditor by way of withholding at source, the final result of the arithmetic operation of tax determination is null or zero at the level of tax to be paid upon assessment of the tax in question.

Now, as easily follows, the circumstance that the final result of such determination is "zero" tax to be paid (or received) does not eliminate or annul the essential element and characterizer of that same assessment which is the existence of the quantitative determination itself through arithmetic operations with a view to determining the existence or otherwise of tax to be paid or to be reimbursed.

Thus equally, the argument of the Respondent according to which, having the assessment a result of "zero" tax to be paid, such would make it impossible to qualify such document as an assessment, does not hold.

But equal disagreement does not occur with respect to the argument of the non-existence of arithmetic/quantitative determination, insofar as, as is demonstrated through the reading of the said document, the same does not result in the effectuation of any arithmetic determination with a view to the determination of IMT, that is, at no moment is the application of the IMT rate to the taxable matter proceeded with, for example.

And this did not happen by virtue of the operation of the exemption under cover of which the Claimant submitted the Form 1 declaration: Transaction exempt from IMT under the terms of n.º 1 of article 20º of 423/83, of 5/12.

That is, the Finance Service Lisbon-… did not even proceed to any determination of the tax that would be due by way of such transmission, insofar as the activation (correct or incorrect) of the exemption under cover of which the Claimant submitted that same declaration, ended up by preventing the possibility of the Tax Authority proceeding to any determination regarding the IMT eventually due by way of such transmission of the autonomous unit.

In light of the circumstances set out above, it is thus not possible or viable to qualify the IMT assessment sub judice as an additional assessment, given that this was not preceded by any other tax assessment which this latter aimed to correct, because and as established above, the operation of the exemption prevented and made it impossible to proceed to any arithmetic determination through the application of the rate to the previously determined taxable matter.

In this sense, we cannot fail to partially reproduce previous case law from superior courts here, which, notwithstanding still dealing with the now repealed Sisa Code, takes a position on an identical substantive matter.

Thus, the Supreme Administrative Court pronounced itself, in the scope of case n.º 0153/11, of 18.05.2011, establishing: "As results from the probative material, the claimant acquired the property referred to in these proceedings on 4/6/2001, being exempt from sisa, by virtue of the provisions of article 7º of DL 540/76, of 9 July.

By virtue of having been subject to an internal inspection procedure, it was found that, after all, the real value of the transaction was higher than declared, and sisa was thus due, which was thus assessed and notified to the claimant on 7/7/2005.

The claimant argues that the fact that the transmission was exempt from sisa necessarily implies that there was an assessment, since the recognition of the exemption implies that there is a tax fact and consequent tax assessment which only did not give rise to tax payment, by virtue of that same exemption.

And, if that be so, the assessment challenged is not a "de novo" assessment, as was considered in the challenged decision, but rather an additional assessment. However, the claimant is not correct.

In fact, additional assessment is merely the correction of a deficient assessment as a result of errors or omissions, which can be the responsibility of either the services or the taxpayers.
Its objective is merely to determine the difference in tax so that the taxpayer is required, in total, an amount equal to what would result from an assessment made in one go – cf., in this sense, Francisco Pinto Fernandes and José Cardoso dos Santos, in Sisa Code and Tax on Succession and Gifts, volume II, p. 992.
Now, in this case, when the deed of purchase and sale was executed, no assessment was made since the claimant benefited from exemption from sisa under article 7º of DL 540/76 (savings – emigrant account).
It is true that the tax fact occurred but from this it cannot be drawn, without more, that there was an assessment from which no tax would have resulted to be paid because the claimant was exempt therefrom; on the contrary, by virtue of that exemption, no sisa assessment was then carried out.

The assessment that subsequently came to be carried out as a consequence of the inspection conducted on the claimant is not, thus, an additional assessment since the same was not intended to correct a prior assessment vitiated by error of fact or law or by omissions or inaccuracies in the statements made for the purposes of assessment.

Hence, as was understood in the challenged decision, article 111º, § 3º of the Sisa Code, SISSD does not apply here and, the limitation period being that provided in article 92º of the same Code – eight years, the alleged lapse of the right to assess is not verified, since at the time the claimant was notified of the assessment, on 7/7/2005, eight years had not yet elapsed since the date of the transmission (4/6/2001)."

Thus and not losing sight of the case of the present proceedings, we have that, similarly to the situation described in the appeal whose excerpt has just been cited, by virtue of an exemption (correct or incorrect) of the tax, no assessment was carried out.

Having not effected any assessment operations tending to the determination of IMT to be paid, by virtue of the operationalization of alleged cause of exemption from IMT on such transmission, it cannot fail to be concluded that the assessment which is the subject matter of the present arbitral proceedings is not susceptible to being qualified as an additional assessment, reason for which the Tax Authority had a period of eight years for the issuance of the IMT assessment in question, in accordance with and respect for what is established in n.º 1 of article 35º of the IMT Code

Wherefore, considering the aforesaid applicable period and regardless of the two initial possible dates contained in the provision in question, the assessment in question was issued and notified within the period of lapse of the right to assess which the Tax Authority had, and therefore cannot the ground relating to the lapse of the right to assess invoked by the Claimant be sustained.

As regards the IS assessment, an identical conclusion is necessary, insofar as, also here, by virtue of the provisions of n.º 1 of article 39º of the IS Code, the period for the Tax Authority to proceed to the assessment of this tax in concreto is fixed at eight years, similar to what occurs, in the manner described above, in the context of IMT.

Thus, n.º 1 of article 39º of the Stamp Tax Code provides that:

"Article 39º
Lapse of the right to assess

1 - Tax can only be assessed in the periods and terms provided in articles 45º and 46º of the LGT, save in the case of acquisitions of assets taxed under item 1.1 of the General Table or of gratuitous transmissions, in which the assessment period is eight years from the transmission or from the date on which the exemption ceased to have effect, without prejudice to the provisions of the following numbers."

It is thus gathered from the provision cited above, that although the general period for the assessment of this tax is that resulting from the norms contained in the General Tax Law, such period is, however, subject to two exceptions.

Namely, in the case of acquisitions of assets taxed through item 1.1. of the General Table of Stamp Tax (TGIS) and also in situations of subjection to Stamp Tax by virtue of gratuitous transmissions.

It is thus important, not being in the case of these proceedings in the presence of any acquisition by gratuitous title, to keep in mind the normative provision to which the said item 1.1. of the TGIS refers:

"1.1 - Onerous acquisition or by gift of the right of ownership or of parcellary figures of that right over immovable property, as well as the dissolution, invalidity or extinction, by mutual consent, of the respective contracts - at the rate of 0.8%"

Now, in the case under consideration in these proceedings, we are in the presence of the acquisition of the right of superficies relating to a determined autonomous unit, wherefore and without room for any doubt, we cannot fail to establish that we are in the presence of the transmission of a parcellary figure of the right of ownership, whose concept is set out in article 1524º of the Civil Code.

In this context, not losing sight of the tenor of the already cited n.º 1 of article 39º of the IS Code, it is concluded that we are in one of the situations expressly laid down by the legislator as an exception to the rule regarding the IS assessment period, an exception which extends the limitation period to a time span of eight years, counted from the transmission or from the date on which the exemption ceased to have effect.

And in whichever of the two hypotheses existing regarding the initial date for counting that same period, it is manifest to conclude that the limitation period for this same tax has not elapsed up to the date of notification of the IS assessment (nor up to the present date), reason for which, also in the context of Stamp Tax, the ground invoked by the Claimant cannot fail to lack merit.

For all that has been expounded, the assessments of IMT and IS which are the subject matter of the present request for arbitral pronouncement merit no censure.

5. DECISION:

In these terms and with the grounds set out above, this arbitral tribunal decides:

  1. To judge the claim for declaration of illegality of the tax acts of assessment of IMT and IS to be entirely devoid of merit, due to the non-verification of any of the defects pointed out to it by the Claimant.

  2. To condemn the Claimant to the payment of costs under the terms of Table I of the RCPTA, calculated in function of the value of the case - arts. 4º-1, of the RCPTA and 6º, n.º 2, subsection a) and 22º, n.º 4, of the RJAT

Value of case: € 6,568.80 – arts. 97º-A, of the CPPT, 12º, of the RJAT (DL 10/2011), 3º-2, of the Regulation of Costs in Tax Arbitration Process (RCPAT).

Let this arbitral decision be notified to the parties and, in due course, the file is to be archived.

Lisbon, 25 February 2016.

The sole arbitrator

(Luís Ricardo Farinha Sequeira)

Text prepared by computer, under the terms of article 138º, n.º 5 of the Code of Civil Procedure (CPC), applicable by remittance of article 29º, n.º 1, subsection e) of the Tax Arbitration Regime, with blank lines and reviewed by me.

Frequently Asked Questions

Automatically Created

Can the Tax Authority revoke a previously granted IMT tax exemption through additional liquidation?
Yes, but subject to legal limitations. The Tax Authority can issue additional IMT liquidations that effectively revoke previously granted exemptions, but such revocations must comply with Article 140 of the CPA regarding valid administrative acts constitutive of rights, and must respect the four-year statute of limitations under Article 31(3) of the IMT Code. The revocation must be legally grounded and cannot freely disregard consolidated taxpayer rights without proper justification.
What is the four-year statute of limitations for additional IMT liquidation under Article 31(3) of the IMT Code?
Article 31(3) of the IMT Code establishes that additional assessment or correction of IMT can only be carried out within four years from the date of the original assessment that is being corrected. This means the Tax Authority cannot indefinitely revisit and revoke IMT exemptions—there is a temporal limitation protecting taxpayers from perpetual uncertainty regarding finalized tax positions after this four-year period expires.
Is arbitral tribunal competent to review the revocation of a valid administrative act granting tax benefits under RJAT Article 2?
Yes, the arbitral tribunal is competent. Under RJAT Article 2(1)(a), CAAD tribunals have jurisdiction to declare the illegality of tax assessment acts. The tribunal applies the principle of unitary challenge, meaning challenges to prior administrative acts (including revocation of tax benefits) can be raised when contesting the final tax assessment. The tribunal reviews whether the revocation underlying the tax assessment was legal, as this affects the concrete legality of the contested IMT and Stamp Tax liquidations.
What are the grounds for challenging IMT and Stamp Tax liquidation acts before CAAD?
Grounds include: (1) violation of Article 140 of the CPA when a valid administrative act granting tax benefits is improperly revoked; (2) violation of the four-year statute of limitations under Article 31(3) of the IMT Code for additional assessments; (3) substantive illegality in the tax calculation or application of exemptions; (4) procedural defects in the assessment process; and (5) violation of constitutional principles including effective judicial protection under Article 268(4) of the Portuguese Constitution.
Does Article 140 of the CPA protect taxpayer rights acquired through a valid tax benefit grant from subsequent revocation?
Article 140 of the CPA provides protection for valid administrative acts that are constitutive of rights or legally protected interests, establishing they cannot be freely revoked. When the Tax Authority grants a tax benefit through a formal administrative act, this creates consolidated rights for the taxpayer. Subsequent revocation of such acts must be justified and comply with legal requirements, including temporal limitations. Taxpayers can challenge tax assessments based on improper revocation of these protected administrative acts as a violation of acquired rights.