Process: 417/2017-T

Date: November 17, 2017

Tax Type: IMI

Source: Original CAAD Decision

Summary

CAAD Process 417/2017-T addresses the contentious classification of fuel service stations for IMI (Municipal Property Tax) purposes. The claimant, a fuel station operator, challenged the Tax Authority's classification of three properties as 'Other' rather than 'Commercial', arguing this misclassification resulted in inflated patrimonial values totaling €3,988.51. The core dispute centers on whether fuel stations, where commercial activities like selling fuel, food, and beverages occur, should be classified as 'Commercial' properties under Article 6 of the IMI Code, or as 'Other' properties based on the Tax Authority's internal 'Manual for Valuation of Urban Properties'. The claimant contended that the assessment commissions uncritically applied the Manual's criteria without proper legal basis under Article 6 CIMI, and that even if classified as 'Other', the valuation should follow Article 38 CIMI's formula method rather than the cost method. Critically, the claimant argued the cost method improperly included equipment items like metal roofs and fuel storage tanks that do not constitute taxable property. The Tax Authority countered that fuel stations' primary purpose is fuel supply, not commerce, making them 'Other' properties under the residual category in Article 6 CIMI. The AT emphasized that licensing specifically for fuel station operations, rather than commercial purposes, supports this classification. This arbitration highlights fundamental questions about property classification methodology, the hierarchy between statutory law and administrative guidance, and the proper valuation approach for specialized properties. The case reflects broader tensions in Portuguese tax law regarding whether functional economic activity or formal licensing determines property classification for IMI purposes.

Full Decision

ARBITRATION DECISION

1. REPORT

1.1. A…, S.A., taxpayer no. …, with registered address at Avenida …, no.…, …, in Lisbon (hereinafter referred to as "Claimant"), filed on 07/07/2017 a request for arbitration pronouncement with a view to annulling the acts of fixing the taxable patrimonial value of Municipal Property Tax ("IMI") of properties no.…, no. … and no.…, in the amount of € 3,988.51 (three thousand, nine hundred and eighty-eight euros and fifty-one cents).

1.2. The Honourable President of the Ethics Council of the Administrative Arbitration Center (CAAD) appointed, on 01/08/2017, as sole arbitrator the signatory of this decision.

1.3. On 18/09/2017 the arbitral tribunal was constituted.

1.4. In compliance with the provisions of article 17, paragraph 1 of the Legal Regime of Tax Arbitration (RJAT), the Tax and Customs Authority (AT) was notified on 18/09/2017 to, if it so wished, file a response and request additional evidence production.

1.5. On 17/10/2017 the AT filed its response.

1.6. As this concerned a question exclusively of law, the arbitral tribunal on 19/10/2017 decided to dispense with the holding of the meeting referred to in article 18, paragraph 1 of the RJAT, on the grounds of the principle of autonomy of the arbitral tribunal in the conduct of proceedings, inviting both parties to, if they so wished, submit optional written submissions and scheduled the date for pronouncement of the final decision.

1.7. Neither the Claimant nor the AT submitted optional written submissions.

2. SANITATION

The arbitral tribunal was duly constituted and is materially competent.

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

The proceedings suffer from no defects that affect their validity.

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

3. POSITIONS OF THE PARTIES

As the basis for the claim, the Claimant alleges, in summary, that:

a) As results from the notifications of the evaluations carried out, the properties in question were evaluated considering their classification as "Other";

b) In fact, both commissions complied uncritically and without reading article 6 of the IMI Code, with the criterion contained in the "Manual for Valuation of Urban Properties, by the Assessment Services Directorate dated May 2011";

c) That is, the classification of these urban properties as "Other" is based on the said "Manual", but it contains no single ground for – under the terms of article 6 of the IMI Code – departing from the classification of this property as "Commercial";

d) Even if the properties in question were capable of being classified as "Other", the preferential assessment method would still be the formula provided for in article 38 of the IMI Code;

e) Now, the assessment commissions classified the properties as "Other", assigning them patrimonial values calculated on the basis of the market value of the land added by construction costs;

f) First, regarding the valuation of the urban property no.…, the assessment commissions itemized a construction cost for the following realities:

i. Fueling area;
ii. Convenience store / kiosk;
iii. Excavation / storage tank construction;
iv. Bituminous pavement.

g) Still, no criterion was identified capable of, in any way, substantiating such alleged construction costs;

h) It seems, therefore, obvious that service stations constitute a location that has as its normal purpose the carrying out of acts of commerce (sale of fuels, beverages and foodstuffs);

i) It is unequivocal that the purpose given to the buildings is for the installation of a fueling station which is a location where commercial acts of sale of fuel are practiced. In the same terms as beverages and foodstuffs are bought and sold;

j) For its part, the "Manual" does not supersede the IMI Code;

k) Continuing, "Commercial" or "Services" properties are valued under the terms of article 38 of the IMI Code;

l) Even if these are "Other" properties, the criterion of article 38 of the IMI Code must be applied, with such modifications as may be deemed necessary. And only when such is not possible should recourse be had to the cost method;

m) Now, the assessment commissions considered that the construction of these buildings implied costs, hence:

i. The service station configures an "Other" property;
ii. It is valued by the cost method added to the market value of the land;
iii. All costs – regardless of whether referring to equipment goods – incurred in construction are included in the taxable patrimonial value;
iv. Resulting in the subjection of such equipment to IMI.

n) In fact, the "metal roof" is not a property for purposes of IMI, in that it does not constitute a building or construction nor perform similar utility;

o) By which means the assessment commission used to subject these equipment to IMI stems from the perversion of the legal-tax structure of the IMI Code, classifying the property as "Other", in compliance with the "Manual" and applying the cost method to all goods, whether or not properties within the meaning of IMI;

p) It concludes, with reference to arbitral case law and also the case law of the South Central Administrative Court which decided favorably to the Claimant in various identical proceedings.

Otherwise, the AT pronounces itself for the rejection of the claim and, consequently, for the maintenance of the acts of fixing the patrimonial value, on the grounds that:

a) The primary purpose of a fueling station or service station is to supply vehicles with fuel, using the appropriate equipment for such purpose;

b) Of the other activities carried out there, in some cases, the convenience store stands out, and the vehicle washing center, stating that it is not the principal activity of the Claimant, nor is it the main purpose of the properties. It is an accessory activity, supporting customers who fuel themselves with fuel, being, therefore, the principal activity, the supply of fuel to its customers;

c) In accordance with the photographs contained in the assessment report and the common sense that each of us has of this reality, the AT concludes that we are faced with a fuel fueling station, to which the Claimant annexed, in the space of the leftover grounds, a convenience store, among other services linked to fuel supply such as air/gas and vehicle washing, but which does not distort the legal definition of a fuel fueling station;

d) Now the law exhaustively describes what "Other" urban properties are. One could even state that it is a residual category of all realities that are considered properties by article 2 of the IMI Code, and which have no place in the types of urban properties listed in the preceding subparagraphs of article 6 of the IMI Code;

e) Thus, without any interpretative effort beyond the literal, and taking into account the highlighted legal text, it could be said that a fuel fueling station comprises buildings and constructions licensed for that purpose, which is the operation of fueling stations, and which are not residential, commercial, industrial or services purposes, this from the perspective of the property's purpose;

f) There is no doubt that the Claimant practices acts of commerce while selling retail fuel, and that in the concrete cases, the licenses refer only to a fuel fueling station; but it is not this that determines that the properties - fuel fueling station - have commerce as their purpose;

g) As the Claimant has complied with all the rules to develop its activity (e.g. general rules of implantation and construction, rules on equipment for gasoline and diesel, rules on security and protection zones, as well as rules for operation of fueling stations), licensing to build and operate fuel stations, one cannot assert that the property has a commercial or services purpose, as the Claimant wishes;

h) With respect to the "Manual for Valuation of Urban Properties", this is an internal document that conveys guidelines, so that all expert appraisers may value following the same rules. It is, therefore, effectively an internal document, guiding the activity of experts, with a view to the standardization of procedures;

i) It is not, therefore, a document with definitions and guidelines that depart from the law, nor indeed a document covered by fiscal secrecy;

j) Well then, the assessment reports state that the option was made to apply the cost method added to the value of the land, provided for in article 36, paragraph 2 of the IMI Code, to the detriment of the assessment method provided for in article 38 of the IMI Code, for the reason that it is an "Other" property, whose intrinsic characteristics prevent the use of the formula contained in article 38 of the IMI Code;

k) The description of the Claimant's properties subsumes itself to a land, where the fueling units, access areas, protection zones are located, and, in some cases, the convenience store, car wash spaces and air/water supply spaces, with their respective accesses;

l) It is difficult to accept that a quality and comfort coefficient and a deterioration coefficient could be applied to this property;

m) And that is why the assessment commissions opted, and correctly so, to follow the cost method added to the value of the land, as permitted by article 46, paragraphs 2 and 3 of the IMI Code;

n) But a property where acts of commerce are practiced does not automatically become, before tax law, an urban property destined for commerce;

o) In conclusion, in the application of the cost method, the land price is obtained by comparison, that is by the use of the comparative method. That was indeed what occurred – the assessment commission assigned a price to the land based on prices of land with similar constructive aptitude as well as similar location, whose justification, according to the AT, is sufficient and is correct;

p) Further, from the experience of assessment acts carried out after the approval of Decree-Law no. 287/2003 of 12 November, which approved a system of property valuation in total rupture with the past, it was verified that the general assessment formula provided for in article 38 of the IMI Code was conceived to address the determination of the taxable patrimonial value of the generality of urban properties;

q) In fact, through Ordinance no. 11/2017 of 9 January, the option was made to, while maintaining the objective character of the assessment rules, apply to them the assessment method provided for in article 46, paragraph 2 of the IMI Code;

r) Already with Law no. 7-A/2016 of 30 March (State Budget for 2016), article 38 of the IMI Code underwent amendments, specifically paragraph 4, with the new wording allowing the expansion of the application of the "cost method added to the value of the land", provided for in article 46, paragraph 2 of the IMI Code, to some types of properties of the commercial, industrial or services species, for which the application of the assessment formula of the said paragraph 1 of article 38 had proven inadequate;

s) The said Ordinance thus came to define the typology of urban properties to which the method provided for in article 46, paragraph 2 of the IMI Code is applicable, and it was verified that fuel fueling stations are now valued according to the "cost method added to the value of the land";

t) In fact, Ordinance no. 11/2017 of 9 January came into force on the day following its publication, with respect to Model 1 declarations submitted from 10 January 2017 and which, consequently, imply an assessment act;

u) But this does not prevent that, after the legal period for conducting a new valuation has elapsed, these should not be promoted with a view to applying the "cost method added to the value of the land" to fuel fueling stations, if only for the simple reason of harmonizing old valuations with new ones, so that identical properties are not taxed based on taxable patrimonial values obtained using different methods.

4. FACTS

4.1. FACTS DEEMED PROVEN

Based on the documents brought into the proceedings, the following is deemed proven:

4.1.1. By reference to the property registered under article no.…, of the Union of parishes of … and …, in the first valuation, a taxable patrimonial value of € 370,990.00 was established, with the property classified as urban "Other", in that, as appears in the respective evaluation sheet, with respect to the description of the evaluation "this is a fuel fueling station, which has an associated convenience store and a building for vehicle washing";

4.1.2. Disagreeing with the rules followed by the AT, the Claimant requested the carrying out of a second valuation;

4.1.3. The AT came to confirm the assumptions of the first valuation, with the indicated values being appropriate for construction, whereby the value was maintained.

4.1.4. The license issued by the Regional Directorate of Economy of the North, in February 2011, refers to the issuance of a license "(…) for installation of fuel storage constituted by a fueling station for sale to the public, (…) with total capacity of 215,000 liters (…)";

4.1.5. As for the properties registered under articles no. … and no.…, of the parish of …, municipality of …, in the first valuations, when the taxable patrimonial value of the properties was established at € 333,160.00 and € 436,010.00, respectively, the properties were classified as urban - "Other" -, and the assessment act was carried out and justified under the terms of article 46, paragraph 2 of the IMI Code;

4.1.6. Not having agreed with the values, nor with the classification of the property, the Claimant requested second valuations, under the terms of article 76, paragraph 2 of the IMI Code, and argued for its reclassification as urban properties intended for commerce;

4.1.7. From this second valuation resulted the maintenance of the taxable patrimonial value of the said properties, appearing from the assessment reports that this is a fueling station with a building supporting the sale of fuel, with remaining services of an ancillary and minor representative character.

4.1.8. The respective certificate of use no. …/2013 issued by the Municipal Chamber of…, refers as use of the property "dual fuel fueling station with support space with convenience store".

4.1.9. The Claimant filed, on 07/07/2017, the request for arbitration pronouncement in question.

4.2. FACTS NOT DEEMED PROVEN

There are no facts with relevance to the decision that have not been deemed proven.

5. THE LAW

The request for arbitration pronouncement in question is based on the Claimant's disagreement with the classification of the property under review in the species "Other", the application of the cost method added to the land in determining the respective taxable patrimonial value and the consideration of the metal roof.

To this extent, the first question under review in the present proceedings concerns the classification assigned to the property whose valuation is contested, with the Claimant understanding that it should be qualified as a commercial property or for services, consequently refusing the qualification that served as the basis for the contested valuation, as an urban property integrated in the species "Other".

As provided for in article 6, paragraph 1 of the IMI Code, with regard to the classification of urban properties, which we now transcribe:

"Species of urban properties

1 - Urban properties are divided into:

a) Residential;

b) Commercial, industrial or for services;

c) Land for construction;

d) Other.

2 - Residential, commercial, industrial or for services are buildings or constructions licensed for such or, in the absence of a license, which have as their normal purpose each of these purposes.

3 - Land for construction is deemed to be land situated within or outside an urban agglomeration, for which a license or authorization has been granted, prior notification admitted or favorable prior information issued for a division or construction operation, and also those which have been declared as such in the acquisition title, except for land in which the competent entities prohibit any of those operations, namely those located in green areas, protected areas or which, in accordance with municipal land planning plans, are allocated to public spaces, infrastructure or facilities.

4 - Those falling within the provision of subparagraph d) of paragraph 1 are land situated within an urban agglomeration which are not land for construction nor are covered by the provision in paragraph 2 of article 3 and also buildings and constructions licensed or, in the absence of a license, which have as their normal purpose other purposes than those referred to in paragraph 2 and also those of the exception in paragraph 3."

The classifications of article 6 of the IMI Code are made by the legislator based on the economic purpose assigned to the properties. [1]

With regard to the present case, it is important to determine whether a fuel fueling station with support building (convenience store and kiosk) should be qualified for purposes of article 6 of the IMI Code as a property for "Commerce" or for "Services" or in the category "Other".

In fact, from said article 6, paragraph 1 of the IMI Code results a segmentation of urban properties but no definition of the concept of each of the types of properties provided for therein is offered.

With regard to the first of the identified categories, the IMI Code determines that they are residential, commercial, industrial or for services "buildings or constructions licensed for such or, in the absence of a license, which have as their normal purpose each of these purposes" (see article 6, paragraph 2 of the IMI Code).

It follows immediately that the IMI Code, for purposes of qualification of properties as residential, commercial, industrial or for services, refers to the use attributed by licensing and, in the absence of a license, to the criterion of normal affectation.

The classification of urban properties depends, as a rule, "(…) on a requirement of a formal nature which is its licensing (…)". [2]

In fact, "Only in the case where there is no certificate of use issued with reference to a given property, is it possible, that is, should it be, with a view to its classification in one of the various types of urban properties, assessed the effective affectation thereof". [3]

Adding further, the authors that "(…) any urban property that is duly licensed for the exercise of commerce, even if it is, in reality, affected, for example, to housing, should be framed – and valued – by the rules pertaining to properties of the type "Commercial". [4]

This understanding also appears to be established in case law, as according to the Judgment given by the South Central Administrative Court, in Case no. 08035/14, on 4 June 2006, in accordance with which "(…) it is by reference to the purpose of the building or construction resulting from its licensing or the normal purpose, if that licensing does not exist, that urban properties should be classified as residential, commercial, industrial or for services.". [5]

In sum, the content of the respective certificate of use is relevant in the first place. In cases of lack of a license, the normal purpose is relevant.

The category "Other" includes, in turn, "(…) land situated within an urban agglomeration which is not land for construction nor covered by the provision in paragraph 2 of article 3 and also buildings and constructions licensed or, in the absence of a license, which have as their normal purpose purposes other than those referred to in paragraph 2 and also those of the exception in paragraph 3." (see article 6, paragraph 4 of the IMI Code).

This is, therefore, a residual category where properties that cannot be classified as urban properties of one of the remaining categories are integrated, namely, residential, commercial, industrial, for services or land for construction.

In this sense, see also the already cited Judgment of the South Central Administrative Court, in Case no. 08035/14 according to which "(...) with respect to the classification of the urban property as belonging to the species "other" the legislator adopted a criterion of "residual" purpose by reference to the purposes stated in paragraph 2. In fact, the criterion of "residual" purpose of the species "other" results clearly from the provision of paragraph 4 of art. 6 of the IMI Code by excluding from this species all buildings and constructions which have as their normal purpose the purposes referred to in paragraph 2 ("buildings and constructions licensed or, in the absence of a license, which have as their normal purpose purposes other than those referred to in paragraph 2"). In this way, it must be concluded, with relevance to the decision in the proceedings, that a property can only be classified in the urban species "other" provided for in subparagraph d) of paragraph 1 of art. 6 of the IMI Code when the building or construction cannot be classified in the species commercial, industrial or for services. Put differently, whenever an urban property can be classified in the species of urban properties "commercial, industrial or for services", in accordance with the criteria set out in paragraph 2 of art. 6 of the IMI Code, then the possibility of it being classified in the species "other" is excluded (…)".

For the purposes of the present analysis, should therefore be considered urban properties of the type "Other" buildings and constructions licensed for purposes other than residential, commercial or services and buildings and constructions not licensed but affected to purposes other than residential, commercial or services.

Before proceeding, it is important to note that, as fuel fueling stations are in question, the rule will be the existence of a certificate of use, whereby properties should be classified based on what results from that same license.

Now, in the case in question, and in accordance with the respective certificate of use, the property is licensed for "Commerce" and "Other", with the latter type of use referring to the fuel fueling station.

As the first thing to be considered is what results from the license, it is clear with respect to the fuel fueling station, that it was classified as "Other".

And the classification for purposes of IMI is determined by article 6 of the IMI Code, in accordance with which urban properties of the species "Other" are buildings and constructions licensed for purposes other than residential, commercial, industrial or services, as is the case in what specifically concerns the fueling station, since from the respective certificate of use under review does not result the licensing for any of these purposes (notwithstanding being identified in the license as possible types of use).

Recall that it is classifying an urban property in the species "Other" when the building or construction cannot be classified in the species commercial, industrial or for services.

And, to be classified as an urban property commercial, industrial or for services, it must be licensed for one of these purposes or, in the absence of a license, have as its normal purpose each of these purposes.

In the present case, there is no need to look for the normal purpose because these are licensed properties, whose license issued by the Regional Directorate of Economy of the North, in February 2011, refers to being a "(…) fueling station for sale to the public (…)" and certificate of use no.…/2013 issued by the Municipal Chamber of …, refers to being a "(…) dual fuel fueling station with support space with convenience store (…)".

In fact, it appears to be clear that a fueling station has as its principal purpose the purchase and sale of fuel at retail, thus constituting a commercial establishment, whereby the properties should be classified for purposes of IMI as being "Commercial" (see Article 6, paragraph 1, subparagraph b) of the IMI Code).

In conclusion, both properties (property registered under article no.…, of the Union of parishes of … and … and the properties registered under articles no. … and no. …, of the parish of …, municipality of …) should be classified as commercial.

The valuations now challenged are illegal, for considering the properties as integrating the classification of "Other", the present arbitration request proceeding with the consequent annulment of the acts whose legality is contested.

Thus, the examination of the other defects is prejudiced.

6. DECISION

With the grounds set out above, it is decided to uphold the request for arbitration pronouncement, determining the annulment of the acts of fixing the contested patrimonial value, issued with reference to the property registered under article no.…, of the Union of parishes of … and … and to the properties registered under articles no. … and no.…, of the parish of …, municipality of ….

7. VALUE OF THE CASE

The value of the case is fixed at € 3,988.51 (three thousand, nine hundred and eighty-eight euros and fifty-one cents), under the terms of article 97-A of the Code of Tax Procedure and Process (CPPT), applicable by virtue of subparagraphs a) and b) of paragraph 1 of article 29 of the RJAT and of paragraph 2 of article 3 of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT).

8. COSTS

Costs to be borne by the AT, in the amount of € 612 (six hundred and twelve euros), under the terms of Table I of the Regulation of Costs in Tax Arbitration Proceedings, under the terms of paragraph 2 of article 22 of the RJAT.

Notify.

Lisbon, 17 November 2017

The Arbitrator,

(Hélder Filipe Faustino)

Text prepared on computer, under the terms of the provision in paragraph 5 of article 131 of the CPC, applicable by cross-reference of subparagraph e) of paragraph 1 of article 29 of the RJAT. The drafting of the present decision is governed by the spelling prior to the 1990 Orthographic Agreement.

[1] In this sense J. Silvério Mateus, L. Corvelo Freitas, "Taxes on Immovable Property", Engifisco, 2005, p. 113.

[2] See J. Silvério Mateus, L. Corvelo Freitas, "Taxes on Immovable Property", Engifisco, 2005, p. 116.

[3] See António Santos Rocha and Eduardo José Martins Brás, "Taxation of Property IMI-IMT and Stamp Tax (Annotated and Commented)", Almedina, 2015, p. 43.

[4] See Op. cit., p. 43.

[5] Available at http://www.dgsi.pt/.

Frequently Asked Questions

Automatically Created

How are urban properties classified for IMI purposes under Article 6 of the Portuguese IMI Code?
Article 6 of the Portuguese IMI Code establishes a typology for urban properties: residential, commercial, industrial, services, and 'Other'. 'Other' properties constitute a residual category encompassing buildings and constructions that do not fit the preceding categories. Commercial properties are those whose purpose is the practice of commercial acts. The classification must be based on the property's actual purpose as defined by law, not merely on licensing or administrative manuals. Fuel service stations present classification challenges because while commercial transactions occur there, their primary licensed purpose is fuel supply, creating interpretative disputes about whether they constitute 'Commercial' or 'Other' properties under the statutory framework.
Can the tax authority classify a property as 'Other' instead of 'Commercial' based solely on an internal valuation manual?
No. Internal administrative manuals, including the 'Manual for Valuation of Urban Properties' issued by the Assessment Services Directorate, cannot supersede or override the statutory provisions of the IMI Code. Article 6 CIMI provides the legal framework for property classification, and any administrative guidance must conform to these statutory requirements. Tax authorities must apply the law as written in the IMI Code, and classification decisions based solely on internal manuals without proper legal grounding under Article 6 constitute an unlawful exercise of administrative discretion. Taxpayers can challenge such classifications through CAAD arbitration, where tribunals have consistently held that administrative manuals lack binding legal force over explicit statutory provisions governing property classification.
What valuation method applies under Article 38 CIMI when a property is classified as 'Other'?
Article 38 CIMI establishes the general valuation method for commercial and services properties through a formula considering location coefficient, construction quality, comfort, and other factors. For properties classified as 'Other', Article 45 CIMI stipulates that valuation should follow Article 38's method 'with necessary modifications' whenever possible. Only when the Article 38 formula method proves inapplicable should the cost method (construction costs plus land market value) be employed as a secondary alternative. Crucially, the cost method must only include actual property elements (buildings and constructions permanently incorporated into the land), not movable equipment or machinery. Improper application of the cost method to 'Other' properties, particularly including equipment costs, can result in inflated patrimonial values subject to challenge through tax arbitration proceedings.
How can taxpayers challenge IMI property tax valuations through CAAD tax arbitration?
Taxpayers can challenge IMI property valuations by filing a request for arbitration with CAAD (Centro de Arbitragem Administrativa) within legally prescribed timeframes. The process involves: (1) submitting a written request identifying the contested valuation acts and legal grounds; (2) appointment of an arbitrator by CAAD's Ethics Council; (3) constitution of the arbitral tribunal; (4) notification to the Tax Authority to file a response; (5) possible evidence production and hearings, though purely legal questions may proceed without hearings under the arbitral tribunal's discretion; (6) optional written submissions by parties; and (7) issuance of a binding arbitral decision. CAAD arbitration offers an efficient alternative to traditional court appeals, with specialized tax law expertise and faster resolution timelines, making it increasingly popular for contesting IMI valuations and property classifications.
What are the legal consequences of an incorrect property classification on the IMI patrimonial tax value?
Incorrect property classification directly impacts the IMI patrimonial tax value calculation through application of different valuation methodologies. Misclassification as 'Other' instead of 'Commercial' typically results in applying the cost method rather than the Article 38 formula, potentially inflating values by improperly including equipment costs and construction elements not legally considered taxable property. This artificially elevated patrimonial value increases annual IMI liability throughout the property's existence. Legal consequences include: taxpayers' right to annulment of the valuation acts through administrative or arbitral proceedings; potential refund of excess IMI paid based on incorrect valuations; and correction of the property's classification in tax records. Successful challenges establish precedent for similar properties and may trigger systematic reviews of comparable misclassifications affecting multiple taxpayers in the same economic sector.