Process: 382/2016-T

Date: December 13, 2016

Tax Type: IMT

Source: Original CAAD Decision

Summary

This CAAD arbitration decision (Process 382/2016-T) addresses the application of IMT (Municipal Property Transfer Tax) exemptions to property acquired from insolvent estates under Article 270(2) of the Portuguese Insolvency Code (CIRE). The claimant purchased an urban property fraction from the insolvent estate of B... Lda. through insolvency proceedings and was assessed IMT of €2,894.94 and Stamp Duty of €1,217.76. The claimant argued that the acquisition should be exempt from both taxes under CIRE provisions applicable to assets sold during liquidation of insolvent estates. During proceedings, the Tax Authority revoked the Stamp Duty assessment, leading the claimant to withdraw that portion of the claim while maintaining the challenge to the IMT assessment. The case hinges on whether Article 270(2) CIRE, which exempts acts performed in the context of insolvency estate liquidation, applies to property transfers taxed under IMT. The claimant properly identified the transaction using code 31 (insolvency acquisition) on IMT Form 1, noting the property was acquired from an insolvent estate. The Tax Authority classified it as an acquisition by judicial or administrative auction. This decision is significant for determining the scope of tax exemptions in insolvency proceedings and whether CAAD arbitral tribunals have jurisdiction over IMT exemption disputes arising from insolvency sales, as it may involve preliminary questions regarding the impropriety of the procedural means and tribunal competence referenced in the decision's theme.

Full Decision

ARBITRAL DECISION

PARTIES

Claimant: A…, NF …, resident at Rua …, nº…, … - … …. - ....

Respondent: Tax and Customs Authority (AT)

I. REPORT

a) On 11-07-2016, the Claimant submitted to the CAAD a request seeking, under the Legal Regime for Arbitration in Tax Matters (RJAT), the constitution of a singular arbitral tribunal (TAS).

THE REQUEST

b) The Claimant requests the annulment of the IMT assessment contained in the Single Collection Document (DUC) "document identification" … of 18.04.2016, in the amount of 2,894.94 euros and the annulment of the Stamp Duty (IS) contained in the Single Collection Document (DUC) "document identification" … of 18.04.2016, in the amount of 1,217.76 euros, totalling 4,112.60 euros.

c) As well as the condemnation of the AT to reimburse the amounts paid, plus compensatory interest.

d) Taxes assessed for the acquisition of fraction "E" of the urban property in horizontal property ownership registered under article …, municipality of ..., parish of …, located at Rua …, …, … and …, nº … …, … – … … ..., described in the CRP of ... under nº …/2011…, in the insolvency proceedings ....3TBSJM J2 2nd Section Commerce - ....

e) Since the AT, notified on 04.08.2016 of the constitution of the TAS, came on 15.09.2016, pursuant to no. 1 of article 13 of the RJAT, to communicate that the tax act assessing stamp duty was revoked, the Claimant on 15.09.2016 amended the request in the following terms: "given the position assumed by the AT regarding the stamp duty assessment act, there exists an objective futility (subsequent to the request for constitution of the Arbitral Tribunal formulated by the Claimant) in the continuation of the present proceeding regarding the challenge to the stamp duty assessment act, whereby he withdraws that request".

f) Adding that "he maintains interest in the continuation of the present proceeding…" regarding the "IMT assessment act", concluding that "the value of the … proceeding should be reduced to the value of the IMT assessment act".

THE CAUSE OF ACTION

g) The Claimant invokes the illegality of the challenged acts, alleging the defect of violation of law due to possible legal error by the AT.

h) As to IMT, due to non-compliance with the exemption norm contained in no. 2 of article 270 of the CIRE and as to IS, due to non-compliance with the exemption norm contained in paragraph e) of article 269 of the CIRE.

i) And for the reason that it considers, because it acquired the autonomous fraction of urban property in horizontal property ownership intended for housing, in the insolvency proceedings ....3TBSJM J2 2nd Section Commerce - ..., that it has the right to the tax benefits in question that prevent the assessment of IMT and IS.

j) Which the AT recognizes by "having identified as the taxable event the acquisition of property by judicial or administrative auction".

k) So much so that it stated in Form 1 of the IMT that "such property would be acquired from the insolvent estate of B…, Lda., within the scope of the insolvency proceeding", resulting in that this acquisition constituted an act carried out in the context of the liquidation of the insolvent estate of the company, that is, an act of sale of an asset that formed an integral part of the insolvent estate, carried out in the context of the liquidation of the insolvent estate that falls within the provision of no. 2 of article 270 of the CIRE.

OF THE SINGULAR ARBITRAL TRIBUNAL (TAS)

l) The request for constitution of the TAS was accepted by the President of the CAAD and automatically notified to the AT on 04-08-2016.

m) By the CAAD Deontological Council, the signatory of this decision was appointed as arbitrator, with the parties being notified thereof on 19-09-2016. The parties did not express willingness to refuse the appointment, pursuant to article 11, no. 1, paragraphs a) and b) of the RJAT and articles 6 and 7 of the Deontological Code.

n) The Singular Arbitral Tribunal (TAS) has been, since 04-10-2016, duly constituted to assess and decide the subject matter of this dispute (articles 2, no. 1, paragraph a) and 30, no. 1, of the RJAT).

o) All these acts are documented in the communication of constitution of the Singular Arbitral Tribunal dated 04-10-2016, which is hereby reproduced.

p) On 04-10-2016, the AT was notified pursuant to and for the purposes of article 17-1 of the RJAT. It responded on 04.11.2016.

q) The AT, together with the Response, did not attach the PA. It requested a waiver of its presentation. The TAS considers its attachment to be unnecessary, and may even be considered redundant and futile in this regard, once the Claimant attached documentation supporting the assessments in question, documents whose authenticity in reproduction did not merit any objection from the opposing party, in the implicit analysis made of the facts they report, as can be gleaned from the Respondent's response.

r) By order of 04.11.2016, the TAS questioned the parties as to whether they waived the meeting of article 18 of the RJAT and once exceptions were raised in the response, whether they consented to the subsequent procedural processing only with the production of successive written submissions, stating in the final part of the order: "the TAS understanding, in the absence of response, that they give their consent to this procedural processing".

s) On 21.11.2016, the TAS, faced with the silence of the parties, set a period of 10 days for successive written submissions by the parties.

t) On 23.11.2016, the Claimant submitted written submissions. On 02.12.2016, the Respondent also submitted written submissions, adhering in full to what it had previously stated in its response.

u) The parties' meeting of article 18 of the RJAT was not held, as described above.

PROCEDURAL REQUIREMENTS

v) Legitimacy, capacity and representation – The parties enjoy legal personality, court capacity, are legitimate parties and are represented (articles 4 and 10, no. 2, of the RJAT and article 1 of Ordinance no. 112-A/2011, of 22 March).

w) Principle of due process – The AT was notified pursuant to item p) of this Report. All procedural documents and all documents attached to the proceeding were made available to the respective opposing party in the CAAD Case Management System. Both parties were always notified of their attachment. Likewise, as to the subsequent procedural processing, the TAS followed what results from the express or tacit position of the parties as written in paragraphs r) to u) above.

x) Dilatory exceptions – The arbitral proceeding does not suffer from nullities and the request for arbitral pronouncement is timely since it was presented within the prescribed period in paragraph a) of no. 1 of article 10 of the RJAT, as results from the fact that the Claimant presented the request for pronouncement on 11.07.2016 and the challenged assessments date from 18.04.2016.

SUMMARY OF THE CLAIMANT'S POSITION

y) The Claimant disagrees with the IMT assessment, which it paid in anticipation of execution of the title transferring ownership, once it acquired the fraction of urban property in horizontal property ownership, as an "asset of the insolvent company B… Lda. NIPC …, and was acquired … within the scope of the liquidation of the insolvent estate of said company".

z) And because it presented Form 1 of the IMT where it expressed in part II – identification of the taxable event, in field 10 "code 31" "DESCRIPTION: Acquisition insolvency proc." and in part III – holder of the transferred asset or right, in field 13 "…" and in field 14 "Insolvent Estate B… Lda.", a situation that the AT identified as a taxable event by placing in the DUC "acquisition of property by judicial or administrative auction or pursuant to legal regimes of financial support for housing", understands that the DUC assessing IMT in the amount of 2,894.84 euros should not have been issued, but rather a DUC with IMT assessed at zero rate, by way of consideration of the IMT exemption that, implicitly, it understands it invoked.

aa) Understands that the factual situation is classifiable under the provision of the exemption norm contained in no. 2 of article 270 of the CIRE.

bb) Invokes in favor of its reading of the law the decisions of the STA: of 17.12.2014 – case 01085/13 – Rapporteur Ana Paula Lobo; of 30.05.2012 – case 0949/11 – Rapporteur Isabel Marques da Silva.

cc) Given the voluntary revocation by the AT, pending this proceeding, pursuant to no. 1 of article 13 of the RJAT, of the stamp duty assessment act, the Claimant amended the request in the following terms: "given the position assumed by the AT regarding the stamp duty assessment act, there exists an objective futility (subsequent to the request for constitution of the Arbitral Tribunal formulated by the Claimant) in the continuation of the present proceeding regarding the challenge to the stamp duty assessment act, whereby it withdraws that request".

dd) Adding that "it maintains interest in the continuation of the present proceeding…" regarding the "IMT assessment act", concluding that "the value of the … proceeding should be reduced to the value of the IMT assessment act".

ee) Given that the AT, in the Response, invoked that the present request for pronouncement has as its "thema decidendum" the granting of the tax benefit contained in no. 2 of article 270 of the CIRE and that, for that reason, the proper means of challenge would be administrative action and not the request for arbitral pronouncement (in view of article 87-2 of the CPPT and article 2-1 of the RJAT), the Claimant, in its submissions, advocates for its rejection since it merely requests the declaration of illegality of the IMT assessment act, which has already been assessed in CAAD decisions: in case 73/2012 and in case 123/2015.

ff) Likewise, as to the invoked exceptions of lack of jurisdiction of the TAS, on the grounds of subject matter, either because this dispute could only be resolved in the TAF through administrative action presupposing that verification of an act was at issue that denied a tax benefit; or because the benefit in question – of no. 2 of article 270 of the CIRE – could only be recognized by the Court (by parallelism with the IMT exemption that banking institutions enjoy that acquire assets that were given to it as collateral, in defense of their credits), invokes the Claimant in its submissions, advocating for its rejection, the above-mentioned CAAD decisions, in addition to the STA decisions.

SUMMARY OF THE RESPONDENT'S POSITION

gg) The Respondent through the Finance Service … adopted, facing the dispute, the following position in the information it attached to the case on 14.09.2016, at the time of communication of the revocation of the stamp duty assessment act: "On 2016-04-15, the taxpayer … submitted an IMT assessment declaration filed 2016…, at this finance service. By the DUC … of 2016-04-15, IMT was assessed in the amount of € 2,894.84 and by the DUC … the respective stamp duty. The taxpayer challenged the assessment to the CAAD requesting the annulment of that assessment and respective reimbursement of the amount paid, in stamp duty, plus compensatory interest, under article 270 of the CIRE. As stated in circular 10/2015, the application of the benefit provided for in article 270 of the CIRE … "depends on whether the real property transferred is part of the universality of the company or establishments sold. Thus, the isolated transmission of company assets is not exempt, requiring that the thing sold, exchanged or transferred comprises the universality of the insolvent company" … Therefore, the IMT assessment must be maintained. As for stamp duty, for having been assessed incorrectly, this FS will proceed to annul it and to reimburse the same to the SP". This information was approved by the Head of the Finance Service in an interim capacity.

Exceptions

hh) At the level of the response to the request for pronouncement, the Respondent invokes, first, a preliminary matter raising that the value of the economic utility of the proceeding, given the revocation of the stamp duty assessment act, would be only 2,894.84 euros, corresponding to the amount of the IMT assessment here challenged.

Impropriety of the Procedural Means

ii) The Respondent understands that the "thema decidendum" in this proceeding concerns the granting of the tax benefit provided for in article 270.2 of the CIRE. It states: "…essentially the Claimant wants the Singular Arbitral Tribunal to issue a decision for the recognition of IMT exemption".

jj) And concludes: "… in light of this claim, it is Administrative Action (special, in the earlier version of the CPTA) that constitutes the appropriate procedural means to assess the matter (since that constitutes the means of challenge intended to assess acts in tax matters – article 97.2 of the CPPT), and not the request for arbitral pronouncement (since that constitutes one of the means of challenge intended to assess tax acts – article 2.1 of the RJAT)".

Lack of Jurisdiction of the Singular Arbitral Tribunal on Grounds of Subject Matter

kk) In consequence of the exception mentioned above, the AT defends, based on article 2, no. 1 of the RJAT, the following: "In light of that article, it clearly results that assessment of any questions regarding the recognition of tax exemptions is outside the jurisdiction of tax arbitration, under penalty of violation of law". And adds: "In reality, the question of recognition of tax exemptions is a matter reserved to the jurisdiction of administrative and tax courts".

ll) It further argues on another ground to conclude lack of jurisdiction of the TAS on grounds of subject matter. It states: "Without prejudice to what has just been stated, it is equally important to raise the lack of jurisdiction of the Singular Arbitral Tribunal for the assessment of the recognition of a tax exemption related to the transfer of real property integrated in an insolvency proceeding".

mm) And for the reason that the "tax exemption provided for in article 270.2 of the CIRE rests on the verification of two requirements: 1st That the transfer of real property operate by (i) sale, (ii) exchange or (iii) transfer of the company or of establishments thereof; and 2nd That the (i) transfer of real property is integrated in an insolvency plan or in a payment plan or (ii) the transfer is carried out in the scope of the liquidation of the insolvent estate". Concluding: "… the verification of those legal requirements falls exclusively on the judicial body where the insolvency proceeding took place". "And this is because only the judge in charge of the insolvency proceeding is in a position to proceed with the verification of the legal requirements demanded in article 270.2 of the CIRE".

nn) To support the reasoning expounded, the AT invokes the regime of the tax benefit of IMT exemption enshrined in article 8 of the CIMT (exemption for the acquisition of real property by credit institutions in proceedings where they claim their credits resulting from credit granting acts), understanding that the situation in these proceedings should be considered identical.

oo) Given that "… only the insolvency proceedings (which the judicial officer directs and knows) contain the necessary elements to assess that verification", "… verification is carried out by means of a judicial order or a judgment approving the settlement", "with it being one of these two documents that will constitute the document that will serve as the basis for the recognition of the exemption here in question when the Form 1 declaration is submitted, by the taxpayer, in the competent finance service of the Respondent".

pp) And adds "…the present Singular Arbitral Tribunal was not the judicial body where the insolvency proceeding took place" and "… does not even have the minimum elements to assess the verification of the legal requirements demanded in article 270.2 of the CIRE - elements that the Claimant does not even allege and, much less, prove".

qq) Concludes: "The recognition of the exemption of article 270.2 of the CIRE constitutes a matter subject to judicial jurisdiction".

Challenge

rr) The AT disagrees with the reading of the law advocated by the Claimant, stating the following: "In the case sub judice, the confrontation between the letter of article 121 of the CPEREF and what is established in the letter of article 270.2 of the CIRE is relevant". "Confronting the tenor of those two norms, two conclusions are drawn: - on the one hand, the IMT exemption resulting from performance and transfer of assets to creditors that was contained in article 121-b) of the CPEREF passed exactly to article 270.1-c) of the CIRE; - on the other hand, the same did not occur regarding acts of sale, exchange or transfer, because the legislator did not limit itself to a task of reorganization [as it did regarding article 270.1-c) of the CIRE], but rather to a fundamental change".

ss) And concludes: "Indeed, the IMT exemption resulting from acts of sale, exchange or transfer of the company ceased to refer to the "elements of the company's assets" and to "long-term leases" [article 121.2-c) of the CPEREF], but only and solely to the "company" or "establishments thereof" [article 270.2) of the CIRE]". "In summary, the IMT exemption contained in article 270.2 of the CIRE covers acts of sale, exchange or transfer integrated in the scope of insolvency plans, payment plans, recovery plans or carried out in the scope of the liquidation of the insolvent estate, however (now) with a reservation regarding what the (then) article 121.2-c) of the CPEREF provided: that the object of the transfer be the company or establishment(s) thereof, and not merely elements of the company's assets".

tt) And states: "The legislator intending, unequivocally, to privilege, and to that extent exempt from tax burden, the transfer of the universality of assets associated with the exercise of the economic activity of the company", "precisely because, only this, the transfer of the universality, guarantees the maintenance of economic activity", "the exemption does not include the individualized sale of elements of the assets".

Regarding Reimbursement of Amount Paid and Compensatory Interest

uu) The AT advocates the following: "Since there is no illegality of the assessment act nor legal basis supporting the Claimant's claim, the request for reimbursement of the sums paid by the Respondent and the request for compensatory interest is therefore unfounded".

vv) It concludes by reiterating the merit of the exceptions invoked with absolution of the instance or if not so understood, it defends the rejection of the requests for condemnation, with absolution thereof.

II - QUESTIONS FOR THE TRIBUNAL TO RESOLVE

Following the order indicated above, with respect to the AT's response (and because the TAS must assess, first and foremost, the exceptions as facts preventing, modifying or extinguishing the Claimant's request), the questions to be resolved are as follows:

  1. The value of the economic utility involved in this proceeding, given the voluntary revocation of the stamp duty assessment act, through the mechanism of no. 1 of article 13 of the RJAT.

  2. The futility of the dispute or withdrawal of the Claimant's request and the consequence regarding responsibility for procedural costs.

  3. The invoked impropriety of the present procedural means.

  4. The invoked lack of jurisdiction of the TAS on grounds of subject matter.

  5. If none of the exceptions invoked should be judged as merited, it will be assessed whether the IMT assessment act here challenged is affected by any non-compliance with law, which should lead to its removal from the legal order.

  6. Finally, in the hypothesis referred to in the previous point, if the request for annulment of the challenged act should be considered merited, the request for condemnation of the AT regarding compensatory interest will be assessed.

III. PROVEN AND UNPROVEN MATTERS OF FACT.
GROUNDS

Regarding matters of fact, the Tribunal does not have to rule on everything that was alleged by the parties, with it instead having the duty to select the facts that matter for the decision and discriminate between proven and unproven matters (as per article 123, no. 2, of the CPPT and article 607, no. 3 of the CPC, applicable ex vi article 29, no. 1, paragraphs a) and e), of the RJAT).

Thus, the facts relevant to the judgment of the case are chosen and delineated according to their legal relevance, which is established in view of the various plausible solutions to the question(s) of law (as per the previous article 511, no. 1, of the CPC, corresponding to the current article 596, applicable ex vi article 29, no. 1, paragraph e), of the RJAT).

Thus, taking into account the positions assumed by the parties and the documentary evidence attached, the following facts were considered proven, with relevance for the decision, being uncontested by the parties, and the respective documents are indicated (proof by documents), as substantiation.

Proven Facts

  1. The Claimant, with a view to acquiring fraction "E" of the urban property in horizontal property ownership registered in the tax roll with the no. …-E – parish of…, submitted to the Finance Service of ...-…, on 2016-04-15, a Form 1 declaration of IMT, filed 2016…, where it expressed in part II – identification of the taxable event, in field 10 "code 31" "DESCRIPTION: Acquisition insolvency proc." and in part III – holder of the transferred asset or right, in field 13 "…" and in field 14 "Insolvent Estate B… Lda." – as shown in the second and third pages of the document attached by the AT in the CAAD Case Management System on 14.09.2016 and document no. 8 attached with the request for pronouncement.

  2. On 18.04.2016, the Finance Service of ...-… issued the Single Collection Document (DUC) for IMT "document identification"…, in the amount of 2,894.94 euros, therein containing in Taxable Event: 31- … acquisition of real property by judicial or administrative auction or pursuant to legal regimes of financial support for housing" and in Property Observations 1: "Insolvency Proc. ....3TBSJM J2 2nd Section Commerce/..." and in Seller of Property 1: "Declaration: € 152.220.00 Benefits: Housing. Taxable Matter: € 152.220,00 Rate 5.00%, Amount to Deduct € 4,716.16 Tax € 2,894.84" – as shown in document no. 1 attached with the request for pronouncement and second page of the document attached by the AT in the CAAD Case Management System on 14.09.2016.

  3. The Claimant paid on 18.04.2016 the amount contained in the aforementioned DUC – as shown in document no. 9 attached with the request for pronouncement.

  4. By public deed of 21.04.2016, the Claimant acquired the autonomous fraction of real property in horizontal property ownership indicated in 1), from the insolvent estate of "B… Lda." NIPC…, represented by the insolvency administrator in the proceeding ....3TBSJM (J2 2nd Section, Commerce Court of ...), for the price of 152,200.00 euros, with the filing of the DUC referred to in 2) appearing in the final part of the deed – As shown in document no. 4 attached with the request for pronouncement.

  5. On 11-07-2016, the Claimant submitted to the CAAD the present request for pronouncement whose acceptance was notified to the AT on 04.08.2016 – record of entry in the Case Management System of the request for pronouncement and communication of constitution of the TAS.

  6. The AT in the information of 07.09.2016, states the following: "By our DUC … of 2016-04-15, IMT was assessed in the amount of € 2,894.84 …". "As stated in circular 10/2015, the application of the benefit provided for in article 270 of the CIRE …" "depends on whether the real property transferred is part of the universality of the company or establishments sold … Thus, the isolated transmission of company assets is not exempt, requiring that the thing sold, exchanged or transferred comprises the universality of the insolvent company" …Therefore, the IMT assessment must be maintained. As for stamp duty, for having been assessed incorrectly, this FS will proceed to annul it and to reimburse the same to the SP", information that was approved by the Head of the Finance Service in an interim capacity. – As shown in the tenor of the second page of the document attached by the AT in the CAAD Case Management System on 14.09.2016.

  7. The AT delivered to the CAAD on 14.09.2016 the information referred to in the previous number and on 15.09.2016 a petition by which it communicates "that the tax act assessing stamp duty, underlying the request for arbitral pronouncement was revoked by the entity that committed it, as per attached information" – Petition registered in the CAAD Case Management System on 15.09.2016 and information registered in the CAAD Case Management System on 14.09.2016.

  8. On 03.11.2016, the Claimant filed a petition in the CAAD Case Management System stating: "given the position assumed by the AT regarding the stamp duty assessment act, there exists an objective futility (subsequent to the request for constitution of the Arbitral Tribunal formulated by the Claimant) in the continuation of the present proceeding regarding the challenge to the stamp duty assessment act, whereby it withdraws that request" – Petition filed by the Claimant in the CAAD Case Management System on 03.11.2016.

Unproven Facts

There is no other factuality alleged that has not been considered proven and that is relevant for the composition of the procedural dispute.

IV. ASSESSMENT OF THE QUESTIONS FOR THE SINGULAR ARBITRAL TRIBUNAL (TAS) TO RESOLVE

The Value of the Economic Utility

According to paragraph a) of no. 1 of article 97-A of the CPPT (applicable to tax arbitral proceedings by force of paragraph a) of no. 1 of article 29 of the RJAT) "when an assessment is challenged" the attributable value of the case is that of the amount whose annulment is sought.

The Claimant formulated a request for annulment of two assessments, filed with the CAAD on 11.07.2016, in the global amount of 4,112.60 euros.

According to no. 5 of article 13 of the RJAT, the effects of filing of judicial challenge are attributed to the presentation of the request for constitution of the arbitral tribunal.

In this conformity, it is established that, the fact that, after entry in the CAAD Case Management System, there has occurred an alteration of the request and cause of action, does not affect the value of the economic utility, as configured in the Claimant's initial request.

Moreover, in the case, whether considering that the value of the utility is 4,112.60 euros (initial value corresponding to the sum of the assessments challenged: stamp duty + IMT), or considering the value of the utility that both parties defend of 2,894.84 euros (value of only the IMT assessment), according to the table in article 4 of the Regulation of Costs of Tax Arbitration, the costs will always be of the same value, that is, 612.00 euros.

In this line of thinking, the request for reduction of the value of economic utility is unfounded, especially because the substantive question then results in the attribution of responsibility for procedural costs, particularly in its possible allocation, according to the principle of causation, assessed according to the rules of the CPC.

The Futility of the Dispute or Partial Withdrawal of the Request by the Claimant. Responsibility for Procedural Costs

The Code of Civil Procedure applies subsidiarily to tax arbitral proceedings, by force of paragraph e) of article 2 of the CPPT and no. 1 of article 29 of the RJAT.

Under paragraphs e) and d) of article 277 of the CPC, causes of extinction of the instance are "the impossibility or subsequent futility of the dispute" and "withdrawal".

"The Code of Civil Procedure maintained, in matters of costs, the principle of causation: the party that caused them pays the costs" … (Decision of the STJ of 18.11.76 BMJ 261-153). This principle continues to be expressed in the various provisions of the current CPC that address this matter.

The AT took no position on whether there is futility of the dispute or whether there occurred partial withdrawal of the request by the Claimant, in the part relating to the challenge to the stamp duty assessment act.

The Claimant, as proven in 8) of the established matters of fact, states that "there exists an objective futility (subsequent to the request for constitution of the Arbitral Tribunal formulated by the Claimant) in the continuation of the present proceeding regarding the challenge to the stamp duty assessment act, whereby it withdraws that request".

No. 1 of article 537 of the current CPC (which reproduces article 451 of the 1961 CPC) states that "When the case terminates by withdrawal or confession, the costs are paid by the party withdrawing or confessing; and, if the withdrawal or confession is partial, the responsibility for costs is proportional to the part of which withdrawal or confession was made."

In this conformity, the responsibility for costs, in the part in which withdrawal occurred, falls on the Claimant.

Impropriety of the Present Procedural Means

The Respondent states that the "thema decidendum" in this proceeding concerns the granting of the tax benefit provided for in article 270.2 of the CIRE. It states: "…essentially the Claimant wants the Singular Arbitral Tribunal to issue a decision for the recognition of IMT exemption".

And concludes: "… in light of this claim, it is administrative action (special, in the earlier version of the CPTA) that constitutes the appropriate procedural means to assess the matter (since that constitutes the means of challenge intended to assess acts in tax matters – article 97.2 of the CPPT), and not the request for arbitral pronouncement (since that constitutes one of the means of challenge intended to assess tax acts – article 2.1 of the RJAT)".

But that does not appear to be the case.

The Claimant objects to the IMT assessment act, albeit invoking as the ground for its illegality, the existence of an exemption. Whether in stamp duty or in IMT.

The existence or non-existence in the tax legal order of a tax exemption, as a fact interrupting taxation, may be assessed in the context of a proceeding challenging an assessment, with procedural coexistence between the moment of taxation and that of verification (or non-verification) of the grounds for the application of the exemption norm. This is the case.

Moreover, the AT's position is not without contradiction, in altering its action regarding stamp duty (see nos. 6) and 7) of the established matters), recognizing, implicitly, that the taxpayer benefits from the IS exemption of item 1.1 of the TGIS that is conferred on it by the exemption norm of article 269, paragraph e) of the CIRE, recognizing the acquisition of the asset in the scope of a judicial bankruptcy proceeding, but not recognizing, what would be a logical corollary, the IMT exemption, enshrined in no. 2 of article 270 of the CIRE, given that, it appears to be the legislator's intent to confer both tax benefits on the same factual realities, although it is possible to discuss that there are some divergences in the drafting of the exemption norms.

In stamp duty matters, after being notified of the request for pronouncement, the AT adopted an action accepting, implicitly, the validity, at least of the tax arbitral procedure. Hence its reliance on the provision of no. 1 of article 13 of the RJAT.

Therefore, this exception is unfounded. As can be gleaned from the request and cause of action, what is discussed in this proceeding is the legality of the assessment, only of IMT after the AT has implicitly recognized the IS exemption, a situation perfectly classifiable under paragraph a) of no. 1 of article 2 of the RJAT.

Lack of Jurisdiction of the TAS on Grounds of Subject Matter

The AT raises this exception based on two grounds:

  • That the TAS, in light of paragraph a) of no. 2 of the RJAT, has no jurisdiction to assess any questions regarding the recognition of tax exemptions, under penalty of violation of law". And adds: "In reality, the question of recognition of tax exemptions is a matter reserved to the jurisdiction of administrative and tax courts".

  • That the TAS has no arbitral jurisdiction to assess the recognition of a tax exemption related to the transfer of real property integrated in an insolvency proceeding, for the reason that the tax exemption provided for in article 270.2 of the CIRE rests on the verification of two requirements that fall exclusively on the judicial body where the insolvency proceeding took place, because only the judge in charge of the insolvency proceeding is in a position to proceed with the verification of the legal requirements demanded in article 270.2 of the CIRE.

As to the first ground raised, what has already been expressed regarding the assessment of the previous exception is reiterated.

What is submitted by the Claimant to this Tribunal is the assessment of the legality of the tax act assessing IMT and not an act that falls directly under paragraph p) of no. 1 of article 97 of the CPPT or no. 2 of article 97 of the CPPT.

This does not invalidate the possibility of the TAS assessing whether in the tax procedure underlying the assessment there exists or not a fact interrupting taxation, in this case a tax exemption conferred by law.

Therefore, the invoked exception can only be unfounded, based on this ground.

As to the second ground, it should be stated, first of all, that this indication appears to be contradictory in light of the factual reality established in this proceeding.

Let us examine the reality of the facts with which the Respondent showed no disagreement (facts of paragraphs 1) and 2) of the established matters):

  • The Claimant, with a view to acquiring fraction "E" of the urban property in horizontal property ownership registered in the tax roll with the no.…– parish of…, submitted to the Finance Service of ...-…, on 2016-04-15, a Form 1 declaration of IMT, filed 2016…, where it expressed in part II – identification of the taxable event, in field 10 "code 31" "DESCRIPTION: Acquisition insolvency proc." and in part III – holder of the transferred asset or right, in field 13 "…" and in field 14 "Insolvent Estate B… Lda".

  • On 18.04.2016, the Finance Service of ...-… issued the Single Collection Document (DUC) for IMT "document identification"…, in the amount of 2,894.94 euros, therein containing in Taxable Event: 31- … acquisition of real property by judicial or administrative auction or pursuant to legal regimes of financial support for housing" and in Property Observations 1: "Insolvency Proc. ....3TBSJM J2 2nd Section Commerce/..." and in Seller of Property 1: "Declaration: € 152.220.00 Benefits: Housing. Taxable Matter: € 152.220,00 Rate 5.00%, Amount to Deduct € 4,716.16 Tax € 2,894.84".

Now, what happened was that the AT perfectly accepted the functioning of the IMT assessment mechanism and the eventual verification (in procedural coexistence) of the requirements for the IMT exemption demanded, provided for in article 10, no. 8, paragraph d), article 19, nos. 1 and 3, article 20, and article 21, no. 1, all of the CIMT. It was the Finance Service of ...-… that issued the DUC and not the Court.

That is, to state that this tax benefit is recognized by the Courts where the proceeding takes place (in this case bankruptcy), is the same as saying that the Court has the jurisdiction that was here concretely exercised by the AT, in this case the finance service, which even came to consider the assessment of Stamp Duty unlawful, after the Respondent was notified of the presentation of the request for arbitral pronouncement.

It does not appear that the functioning of the IMT exemption of article 8 of the CIMT should be indicated as a similar situation (acquisition of assets by banking institutions, in defense of their banking credits). This exemption of article 8 of the CIMT is grounded in the principle of tax equality, given that banking institutions, upon receiving in substitution for their credits, real property (something different from what they lent) do not increase their assets (which is the reason for taxation), they merely substitute the element of money lent, for the element of real property (which they will have to dispose of as soon as possible). In the case of banks, technically, there should be no exemption, but rather a non-incidence of IMT. This is not the case in the present proceedings.

Therefore, this exception is unfounded on this ground, given that there is no legal support for stating that the tax benefit of no. 2 of article 270 of the CIRE is to be recognized (verification of requirements) by the judge in charge of the bankruptcy proceeding.

The Substantive Question: Does the IMT Assessment Here Challenged Suffer from Any Non-Compliance with Law, Which Should Lead to Its Removal from the Legal Order?

The position defended by the AT for the maintenance of the IMT assessment is expressed in the information it attached to the case on 14.09.2016, at the time of communication of the revocation of the stamp duty assessment act: "As stated in circular 10/2015, the application of the benefit provided for in article 270 of the CIRE … "depends on whether the real property transferred is part of the universality of the company or establishments sold … Thus, the isolated transmission of company assets is not exempt, requiring that the thing sold, exchanged or transferred comprises the universality of the insolvent company" …Therefore, the IMT assessment must be maintained."

The question that must be assessed and decided is whether the acquisition in question was exempt from IMT under the provision of no. 2 of article 270 of the Insolvency and Company Recovery Code (CIRE), approved by Decree-Law no. 53/2004, of 18 March, which involves enquiring whether said exemption operates only regarding sales, exchanges or transfer of companies or establishments as a universality of assets, as the AT defends, or also regarding sales, exchanges or transfer of real property (as elements of its assets), provided they are framed in the scope of an insolvency or payment plan, or carried out in the scope of the liquidation of the insolvent estate, as the Claimants contend.

As results from the proven matters of fact, there is no doubt that the acquisition here in question was carried out in the scope of the liquidation of the insolvent estate.

We reproduce what was stated to this effect in the collective CAAD decision Case no. 664/2016-T regarding a situation identical to that in this proceeding:

"Within the scope of judicial courts, the question is not new and has been dealt with repeatedly and uniformly in the Supreme Administrative Court as cited by the Decision of the STA of 01/20/2016 in case no. 01350/15 (see the following decisions: 1 - of 17 December 2014, handed down in case no. 1085/13, published in the Appendix to the Official Journal of 15 January 2016 (http://www.dre.pt/pdfgratisac/2014/32240.pdf), pp. 4249 to 4252, also available at http://www.dgsi.pt/jsta.nsf/35fbbbf22e1bb1e680256f8e003ea931/bdbf686acbd6970380257dc6005569fb; 2 - of 11 November 2015, handed down in case no. 0968/13, not yet published in the official journal, available at http://www.dgsi.pt/jsta.nsf/35fbbbf22e1bb1e680256f8e003ea931/8641778b75f387b380257efc005b1e99; 3 - of 18 November 2015, handed down in case no. 0575/15, not yet published in the official journal, available at http://www.dgsi.pt/jsta.nsf/35fbbbf22e1bb1e680256f8e003ea931/dfc2214b865a8eb680257f07003bc47d; 4 - of 18 November 2015, handed down in case no. 1076/15, not yet published in the official journal, available at http://www.dgsi.pt/jsta.nsf/35fbbbf22e1bb1e680256f8e003ea931/6584532b3466938c80257f07004e7be1).

This Decision fundamentally follows what was decided in the Decision of the STA of 30 May 2012, case no. 0949/11, referring to it and proceeding with the respective transcription as follows:

"The Public Treasury disagrees with what was decided, alleging that the requirements for the fulfillment of the conditions that determine obtaining the benefit of exemption were not satisfied by the purchaser, given that it did not acquire the company or establishment thereof and that the provision of article 270, no. 2 of the CIRE, even by way of an extensive interpretation, does not contemplate the pure and simple sale of elements of the company's assets.

However, the appellant does not provide any reason that would shake our conviction that the challenged sentence well ruled by adopting the interpretation of article 270, no. 2 of the CIRE that has been peacefully and repeatedly adopted by this STA since the Decision mentioned in the challenged sentence – cf. in addition to the decisions already cited in the opinion of the Most Excellent Deputy General Prosecutor attached to this STA above transcribed, the recent Decisions of 11 November 2015, appeal no. 0968/13 and of 18 November 2015, appeals nos. 0575/15 and 1067/15 –, it not being the fact that the AT had of the provision an interpretation inconsistent with the jurisprudence of the STA – which will have, moreover, provided in a recent information 1/2014 of the DSIMT and given to the Bar Association of Notaries (as per claims of appeal at pp. 67, verso and 68 of the case) -, a reason to overlook the understanding that has been adopted and that is here reaffirmed, because it constitutes what best adapts the legal text to the sense and scope of the legislative authorization under which the norm was emanated by the Government in matters reserved to the Parliament and because that interpretation is the one that best serves the teleology of no. 2 of article 270 of the CIRE - «to promote and support the quick sale of assets that integrate the insolvent estate for obvious reasons of creditors' interest, but also of the public interest in resuming the normal operation of the business world in which each insolvency proceeding presents itself as a disturbing element», giving fiscal incentives to those who acquire the real property that integrate the insolvent estate and that will be sold in the liquidation phase – there being, to that extent, no reason to distinguish situations in which the company is being sold globally with all its assets and liabilities, from situations in which one or more of the commercial establishments that comprised it are being sold, or in which real property that comprised its assets is being sold (cf. the Decision of the STA of 18 November last, appeal no. 01067/15).

It is concluded, therefore, that there is nothing to censure in the challenged sentence, which well ruled, the appeal of the Public Treasury being doomed to failure».

No. 2 of article 270 of the CIRE is a norm of a tax nature that enshrines a tax benefit.

As already stated, to the interpretation of tax norms are applicable the general rules and principles of interpretation of laws, particularly article 9 of the Civil Code (no. 1 of article 11 of the General Tax Law).

Consequently, to establish the meaning of no. 2 of article 270 of the CIRE, the interpreter must seek to "reconstruct from the texts the legislative thought, taking especially into account the unity of the legal system, the circumstances in which the law was drafted and the specific conditions of the time in which it is applied". Let us see then.

As to the literal element, it should be considered whether, when the Legislator, in article 270, no. 2 of the CIRE, refers to "acts of sale, exchange or transfer of the company or of establishments thereof", intends that the expressions "sale", "exchange" and "transfer" all say respect to the company or establishment? Will the Legislator intend to exempt from IMT only (i) the acts of sale of the company or of establishments thereof, (ii) the acts of exchange of the company or of establishments thereof, and (iii) the acts of transfer of the company or of establishments thereof?

Or, on the contrary, does the law establish no relationship between the expressions "sale" and "exchange" and the expressions "company" and "establishments thereof"? Will the Legislator intend that the acts of "sale" and "exchange" to which article 270, no. 2 of the CIRE alludes relate to the sales and exchanges of any real property and not only to sales and exchanges of companies or establishments?

Indeed, if "sale", "exchange" and "transfer" all referred to the company or establishments thereof, then the Legislator would have incurred in a manifest repetition, in that, at least, it would be redundant to use in the same sentence the expressions "sale" and "transfer".

In this respect, it should be recalled that, in the context of an insolvency proceeding, acts cannot be performed by the insolvent estate without such prejudicing the patrimonial interests of the creditors).

Thus, when the law speaks of transfer of the company or of the establishment, it is, by definition, referring to an onerous transfer of a right (more accurately, of the ownership of the company or of the establishment).

Furthermore, as is known, the rules of interpretation require that a useful meaning be found for the words of the Legislator, it being presumed, moreover, that the latter knew how to express itself adequately (article 9, no. 3 of the Civil Code).

Therefore, it can be inferred from the text of the law that the expression "sale" has a certain useful meaning, quite distinct from the expression "transfer". Both expressions apply to distinct realities, ceasing to exist any redundancy or overlap.

Historical Element — The Origin of the IMT Exemption Provided for in No. 2 of Article 270 of the CIRE

The Code of Special Procedures for Business Recovery and Bankruptcy (hereinafter, "CPEREF"), a diploma that preceded the CIRE, was guided by the principle of the primacy of recovery of the indebted company, and it could be read in its preamble that "this diploma states, in categorical terms, the priority of the recovery regime over the bankruptcy proceeding leading to the definitive extinction of the insolvent company". Bankruptcy should only be decreed when the insolvent company was shown to be "economically unviable" or it was not considered possible "its financial recovery" (article 1, no. 2, of the CPEREF).

By Law no. 39/2003, of 22 August, the Government was authorized to legislate on the insolvency of individuals and entities, repealing the CPEREF. The new law should place emphasis on the satisfaction of creditors, either by the route of liquidation of assets, either by the route of an insolvency plan (article 1, no. 2, of Law no. 39/2003).

In matters of tax benefits, no. 3 of article 9 of Law no. 39/2003 authorized the Government "to exempt from municipal transfer tax the following transfers of real property, integrated in any insolvency or payment plan or carried out in the scope of liquidation of the insolvent estate: (…) those resulting from (…) the sale, exchange or transfer of the company, establishments or elements of its assets (…)".

Law no. 39/2003 — apparently more generous than the CPEREF, precisely by deeming the route of insolvency plan and the route of liquidation of the insolvent estate as valid alternatives to ensure creditor satisfaction — did not restrict the exemption from taxation to transfers of real property that could take place in a context of company recovery. On the contrary, that exemption was extended to transfers that took place in a context of liquidation of the insolvent company or of its establishments, or elements of its assets.

The tax benefits provided for in the CPEREF were transposed to the CIRE, with the important difference that they ceased to apply only in the context of company recovery procedures and began to apply also in the context of liquidation of assets, following the provision of the enabling law - Law no. 39/2003.

Therefore, there is no foreseen ground for defending that the tax benefit provided for in no. 2 of article 270 of the CIRE only covers the transfer of real property together with the company or with the establishment of which they form part, when the CPEREF admitted that exemption to the transfer also of elements of the assets of the company or establishment, and the new regime intends to be more advantageous in the possibilities offered for the recovery of insolvent companies.

Teleological Element — The Ratio of the IMT Exemption Provided for in No. 2 of Article 270 of the CIRE

The legislator recognizes that, in the insolvency proceeding, it is not only the insolvent company that is at stake. The financial soundness and, at the limit, the very survival of the creditor companies is also at risk, because their capacity to accommodate the losses resulting from the debtor's insolvency is far from being unlimited.

It is the need to minimize the repercussion of the debtor's insolvency on the patrimonial and financial situation of the creditors — avoiding, at the limit, situations of chain insolvencies — that leads the Legislator to elect creditor satisfaction as the primary objective of the insolvency proceeding. It is, in essence, about protecting sound economic agents from the contagion of disease, in the interest not only of the economic agents themselves but also of the community in general.

Thus, given that — always — at stake is the maximization of creditor satisfaction, the tax benefit provided for in no. 2 of article 270 of the CIRE should apply indifferently to all onerous transfers of real property, whether the same take place together or separately from the company or establishment that the aforementioned real property comprises.

Moreover, it behooves the interpreter to presume that the Legislator is consistent in the solutions it adopts for similar problems and that they obey unitary thinking (19).

Now, in addition to the IMT exemption provided for in no. 2 of article 270 of the CIRE, this diploma also enshrines other tax benefits applicable to onerous transfers of real property that take place in the scope of the insolvency proceeding. This is the case, in particular, of the exemption from stamp duty provided for in paragraphs d) and e) of article 269 of the CIRE and the exemption from IMT provided for in no. 1 of article 270 of the same diploma.

It so happens that both the exemption from stamp duty and the exemption from IMT provided for in no. 1 of article 270 of the CIRE encompass (unquestionably) both the transfer of real property effected together with the company or the establishment of which they form part, and the isolated transfer of real property, separately from the company or establishment that they integrate.

Being thus, the interpretation according to which the IMT exemption provided for in no. 2 of article 270 of the CIRE only covers the transfer of real property when effected together with the company or establishment of which they form part also does not withstand the test of coherence or harmony of the legal order.

Therefore, it is to be concluded that the interpretative elements available, including the «circumstances in which the law was drafted and the specific conditions of the time in which it is applied», clearly point to the intention to encompass within the scope of exemption of no. 2 of article 270 of the CIRE, both the transfer of real property effected together with the company or the establishment of which they form part, and the isolated transfer of real property, separately from the company or establishment that they integrate.

This solution, supported and widely accompanied by jurisprudence of the STA and also more recently of the CAAD is the one we follow, and should equally be adopted in the present proceedings, by constituting a correct interpretation of the law, …".

Therefore, the request for arbitral pronouncement can only proceed. The assessment is not in accordance with the law (no. 2 of article 270 of the CIRE).

In fact, although the AT withdrew from the instructions for filling out Form 1 of the IMT declaration available at the time of assessment, the code of the tax benefit in question, the taxpayer, in this case, invoked it materially in the declaration for assessment, as results from the proven facts in 1) and 2) of the matters of fact.

In the challenged IMT assessment, the AT recognized the tax benefit relating to the destination of the asset (housing), but what was invoked was another: it was that of the acquisition of the asset from the insolvent estate of an entity, in a bankruptcy proceeding. A proceeding which even appears in the respective DUC.

On the other hand, the reasoning that the AT carried out, with the annulment of the DUC relating to stamp duty, implicitly recognizing the exemption of article 269, paragraph e) of the CIRE, would have to be equally carried out regarding the IMT exemption of no. 2 of article 270 of the CIRE, it not being possible to consider that in one tax the assessment is non-compliant with law and in another not to consider it, given that it is the same factual situation and the exemption norms have identical normative provisions.

Request for Compensatory Interest

It was proven that the Claimant paid on 18.04.2016 the amount assessed for IMT.

Article 43, no. 1, of the LGT establishes that "compensatory interest is due when it is determined, in a gracious claim or judicial challenge, that there was an error attributable to the services that results in payment of the tax debt in an amount exceeding what is legally due".

As results from the literal tenor of this norm, the right to compensatory interest depends on "payment of the tax debt in an amount exceeding what is legally due".

In the case, the Claimant paid the assessed tax, whereby the annulment of the assessment, beyond the duty to reimburse, may entail the payment of compensatory interest, if an error attributable to the AT's services occurred in the assessment.

The error in the assessment is attributable to the Respondent as results from the circumstance of having assessed the tax in dissonance with the request of the Claimant contained in Form 1 of the IMT, having moreover, subsequently, fulfilled the Claimant's burden of challenge in this proceeding regarding stamp duty, annulled the IS assessment, implicitly recognizing the exemption of the tax item 1.1 of the TGIS, provided for in paragraph e) of article 269 of the CIRE, but maintaining the IMT assessment based on an interpretation of the law that the jurisprudence that we adopt here does not support.

The taxpayer paid the assessed debt, without which it would not have been possible to execute the deed of transfer of ownership.

Consequently, the Claimant has the right to compensatory interest, pursuant to article 43, no. 1, of the LGT and article 61 of the CPPT, counted from the date on which it made the payment in question (18-04-2016), until effective reimbursement.

V. OPERATIVE PART

In the terms and with the grounds set out above:

  1. The exceptions of impropriety of the present procedural means and of lack of jurisdiction of the TAS on grounds of subject matter are judged unfounded, with both grounds invoked.

  2. The AT is absolved in part of the request, in the part relating to the stamp duty assessment to which the Claimant's withdrawal of the request relates (amount of 1,217.76 euros) (paragraph d) of article 277 of the CPC and no. 1 of article 537 of the CPC).

  3. The request for annulment of the IMT assessment contained in the Single Collection Document (DUC) "document identification" … of 18.04.2016, in the amount of 2,894.94 euros, is judged merited, given that it is not in accordance with the norm contained in no. 2 of article 270 of the CIRE in the interpretation advocated here.

  4. The request for condemnation of the AT to reimburse the amount paid and to pay compensatory interest, counted from the date of payment of the IMT assessment here annulled, until the date of restitution, is judged merited.

Value of the proceeding: in accordance with the provision of article 3, no. 2, of the Regulation of Costs in Tax Arbitration Proceedings (and paragraph a) of no. 1 of article 97A of the CPPT), the proceeding is set at the value of 4,112.60 euros.

Costs: pursuant to the provision of article 22, no. 4, of the RJAT, the amount of costs is fixed at 612.00 € according to Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, for account of the Claimant and the Respondent, in the proportion of 29.61% and 70.39% respectively, that is, 181.21 euros for account of the Claimant and 430.79 euros for account of the Respondent.

Notify.

Lisbon, 13 December 2016

Singular Arbitral Tribunal (TAS),

Augusto Vieira

Text prepared by computer pursuant to the provision of article 131, no. 5, of the CPC, applicable by reference of article 29 of the RJAT.

The drafting of this decision is governed by the spelling prior to the Orthographic Agreement of 1990.

Frequently Asked Questions

Automatically Created

Is the acquisition of property in insolvency proceedings exempt from IMT under Article 270 of the CIRE?
Article 270(2) of the CIRE provides exemptions for acts performed in the context of liquidation of insolvent estates. Whether property acquisitions qualify depends on if they constitute acts of sale of assets forming part of the insolvent estate carried out during liquidation. The claimant argued that acquiring property from an insolvent estate during insolvency proceedings falls within this exemption, as it represents a liquidation act. The application of this exemption to IMT assessments requires analyzing whether the statutory language encompasses transfers subject to IMT.
Can the CAAD arbitral tribunal rule on IMT exemptions related to insolvency sales?
The decision theme references potential issues of impropriety of procedural means and tribunal incompetence, suggesting jurisdictional questions were raised. CAAD arbitral tribunals generally have jurisdiction over tax disputes under the RJAT (Legal Regime for Arbitration in Tax Matters), but challenges may arise when the dispute involves interpreting insolvency law exemptions rather than purely tax law provisions. The tribunal must determine whether ruling on CIRE Article 270(2) exemptions falls within its tax arbitration competence or requires insolvency court jurisdiction.
What happens when the Tax Authority revokes a Stamp Duty assessment during CAAD arbitration proceedings?
When the Tax Authority revoked the Stamp Duty assessment during proceedings, the claimant properly withdrew that portion of the request pursuant to Article 13(1) of the RJAT due to supervening objective futility. The claimant amended the request to continue only regarding the IMT assessment, and the case value was reduced accordingly. This demonstrates the procedural mechanism for partial withdrawal when the administration voluntarily revokes challenged acts, avoiding unnecessary litigation on resolved issues while preserving claims on remaining disputed assessments.
How does Article 270(2) of the Portuguese Insolvency Code (CIRE) apply to property transfers from an insolvent estate?
Article 270(2) CIRE exempts acts performed in the context of liquidation of insolvent estates from various taxes. Its application to property transfers requires establishing that: (1) the property formed part of the insolvent estate, (2) the sale occurred within insolvency proceedings, and (3) the transfer constituted a liquidation act. The claimant argued all elements were met as the property was acquired from insolvent B... Lda. during court-supervised insolvency liquidation, making it an act carried out in the context of insolvent estate liquidation covered by the statutory exemption.
What are the procedural requirements to challenge an IMT assessment on property acquired at judicial auction in Portugal?
To challenge an IMT assessment on property acquired at judicial auction, the taxpayer must file a request with CAAD within the statutory deadline under Article 10(1)(a) RJAT. The claimant properly filed within the prescribed period, submitted IMT Form 1 identifying the acquisition type (code 31 for insolvency acquisition), paid the assessed tax, and presented legal grounds for exemption under CIRE Article 270(2). Procedural requirements include proper identification of the taxable event, payment documentation, and specific legal basis for the exemption claim, with supporting documentation from the insolvency proceedings.