Summary
Full Decision
ARBITRAL DECISION
Case No. 419/2018-T
Decision Date: 12 September 2019
Tax: IMI (Municipal Property Tax)
Amount of Claim: € 57,416.44
Subject Matter: Additional IMI – Single Court Jurisdiction – Value of Action; Timeliness; Unconstitutionality of Article 135.º of the IMI Code.
ARBITRAL DECISION (consult full version in PDF)
The Arbitrator António Pragal Colaço, designated by the Deontological Council of the Administrative Arbitration Centre to form the Arbitral Court, decides as follows:
I. REPORT
III.2.11 The Claimant A..., S.A., Legal Entity No. ..., with registered office at ..., (hereinafter referred to as "Claimant"), presented on 3/9/2018, pursuant to the terms and purposes set out in subparagraph a) of Article 2(1) and Article 10, both of Decree-Law No. 10/2011, of 20 January, the constitution of an Arbitral Court by the Deontological Council of the Administrative Arbitration Centre, pursuant to the terms set out in subparagraph a), Article 6(2) of the aforementioned diploma, a request for arbitral pronouncement with a view to the annulment of the assessment of Additional Municipal Property Tax ("AIMI") No. 2017... for the year 2017, in the amount of €57,416.44 (fifty-seven thousand, four hundred and sixteen euros and forty-four cents).
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The claim object of the request for arbitral pronouncement consists of the annulment of the assessment of Additional Municipal Property Tax ("AIMI") No. 2017... for the year 2017, in the amount of €57,416.44 (fifty-seven thousand, four hundred and sixteen euros and forty-four cents), to whose payment the Claimant had proceeded.
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The request for constitution of the arbitral court was accepted by the President of CAAD and automatically notified to the Tax and Customs Authority on 3/9/2018.
3.1. The Claimant did not proceed to appoint an arbitrator, whereupon, under the terms set out in subparagraph a) of Article 6(2) and subparagraph b) of Article 11(1) of the RJAT, the President of the Deontological Council designated the undersigned as arbitrator of the Single Arbitral Court, who communicated acceptance of the designation within the prescribed period.
3.2. On 23/10/2018, the parties were notified of the arbitrator's designation and raised no impediment.
3.2. In accordance with the precepts set out in subparagraph c) of Article 11 RJAT, the Single Arbitral Court was constituted on 13/11/2018.
3.3. Accordingly, the Arbitral Court is regularly constituted to examine and decide the subject matter of the case.
- To substantiate the request for arbitral pronouncement, the Claimant alleges, in summary, the following:
The Claimant is a commercial company that carries out its activity in the real estate sector, being the owner of an urban property, land for construction, located in the Parish of ... and registered in the respective matrix under No. U -... .
The Claimant acquired the land in question with the aim of promoting constructions thereon according to its financial capacity and according to market circumstances, being thus intended exclusively and solely for the Claimant's exploitation within the scope of its economic activity - namely for construction and subsequent sale or lease.
With reference to the additional AIMI assessment, a tax that was created with the entry into force of the State Budget Law for 2017, provided for in Article 135.ºA and following of the IMI Code, the Claimant understands that the regime suffers from illegality – more specifically, due to violation of the Fundamental Law, especially because, with respect to properties that are essential in obtaining income within the scope of economic activity, it lacks material support on the tax level.
The AIMI regime violates the principle of equality, concretized in its aspect of contributive capacity.
The AIMI regime also violates the most fundamental canons of proportionality.
- The Tax and Customs Authority submitted a lengthy response, consisting of 338 articles and attached the administrative file, invoking in summary the following:
As a preliminary matter, it invokes that the value of the claim object of the arbitral request examined here, is embodied in the AIMI assessment referring to the year 2017, identified by No. 2017..., in the amount of € 82,988.48 and not in the value of € 57,416.44, as the Claimant erroneously indicates.
Thus, the value of the case should correspond to the value of the impugned act, not being the value indicated at the end of € 91,615.39, which should be corrected accordingly, with the consequence of the relative incompetence of the Single Court, pursuant to Article 5(3) of the RJAT.
From Article 12 of its response it again discusses the matter raised as a preliminary issue, qualifying what it raised as an exception.
It asserts that, with respect to the first assessment No. 2017..., of 30/06/2017, in the amount of € 25,572.04, would have as its initial term the last day of September 2017 – cf. Article 135.º-H of the Municipal Property Tax Code, whereby it should have been impugned by 29/12/2018, which did not occur;
As for the corrective assessment No. 2017..., of 18/01/2018, which corresponds to the act now in question, would have as its initial term the last day of the voluntary payment period – 30 days after notification for payment, cf. Article 85(2) of the CPPT.
Thus, having the Claimant been notified on 26/02/2018, the voluntary payment period (30 days) would terminate on 28/03/2018 and the 90 days would be counted from that date, whereby the deadline for challenging expired on 26/06/2018.
The request for constitution of the Arbitral Court was presented on 31/08/2018, whereby the same is untimely and the Court cannot take cognizance of it.
The request formulated (leading to the declaration of illegality of the act and, consequently to its proportional annulment) should be declared unfounded, as untimely, and consequently, the Defendant Entity should be absolved of the claim – cf. Article 576(1) and (3) of the current Civil Procedure Code, applicable ex vi Article 29(1)(e) of Decree-Law No. 10/2011, of 20 January.
As to the factual question, the Defendant responds that the assessment No. 2017..., of 18/01/2018, in the amount of € 82,988.48 fell upon the property - Matrix Article U ... – Land for construction.
The impugned assessment is a corrective assessment, issued as a result of the update of the TPV of the property in question, having replaced the assessment No. 2017..., in the value of € 25,572.04, the amount paid by the Claimant was subsequently taken into account in determining the amount of tax payable which amounted to € 57,416.44.
On 01-01-2017, in accordance with Article 8(4), by reference to Article 135.º-A(3) IMI Code, the Claimant was the owner of the identified property, the TPV determination having been carried out in accordance with what was recorded in the matrix, as per Articles 135.º-C(1) and (2) of the IMI Code.
The property was not covered by the exclusions provided for in Article 135.º-B(2), nor by Article 135.º-C(3) of the IMI Code.
As to the substantive legal matter, it explains the introduction of AIMI into the Portuguese legal system, with special emphasis on Article 135.º-B(2) of the IMI Code, defending that
"…the legislator excluded from the scope of application urban properties classified as 'industrial, commercial or for services' and 'other' but explicitly chose to maintain other properties that also form part of the assets of companies, such as those classified as residential or land for construction, by not including them in the negative delimitation enshrined."
Furthermore, it argues with regard to the parallel invocation of the unconstitutionality of item 28.1 (already repealed) of the General Stamp Tax Table that, "the decisions on unconstitutionality of Item 28.1 TGIS reported by the distinguished Counselor Jorge de Sousa, as president of the jury, were all revoked by the Constitutional Court..." and that "the decisions cited, notwithstanding having been published, inexplicably and indescribably, on the CAAD website, when they had not yet become final, and were pending appeals to the Constitutional Court filed both by the Public Ministry and by the now Claimant."
Were all revoked, having been decided in the Constitutional Court Plenary Decision No. 378/2018 a) Not to find unconstitutional the rule contained in Item 28.1 of the TGIS (Budget Law 2014 wording), insofar as it imposes annual taxation on the property of land for construction whose construction, authorized or planned, is for housing, whose tax property value is equal to or greater than € 1,000,000.00. b) To grant relief to the appeal filed by the Tax and Customs Authority. c) To revoke Decision 250/2017. (underlined by us).
It concludes that, "…nothing in the letter of the law authorizes the conclusion that the intention of the AIMI legislator was to exclude from taxation 'urban properties that are devoted to the exercise of an economic activity, since the only criterion relevant to delimiting the scope of the objective scope of application is, solely, the typology of classification of urban properties provided for in Article 6(1) of the IMI Code, to which Article 135.º-B(2) expressly refers."
As to the question of unconstitutionality, no such defect occurs.
It concludes its procedural document, (i) The constitution of the present Court should be rectified, pursuant to and for the purposes of Article 5(3) of the RJAT, the value of the case being in reality € 91,615.39, (ii) That Court should absolve the AT of the claim since it should find the above-mentioned peremptory exception of timeliness well-founded, or, if not understood thus, (iii) This request for arbitral pronouncement should be found unfounded as not proven, and, consequently, the Defendant absolved of all claims, pursuant to the above petitioned, all with the due and legal consequences.
Or, if not understood thus: (iv) It is requested, by reference to Article 280(3) of the CRP and Article 72(3) of the Constitutional Court Law, that notification of the learned arbitral decision be determined to the Public Ministry.
- The present case ended up having several vicissitudes, which are listed for better knowledge and transparency.
By arbitral order of 14/12/2018, it was decided to notify the Claimant as to the matter of the exception regarding the value of the claim invoked, as well as the exception of timeliness of the arbitral action, all under the principle of adversariality and equality of the parties.
The Claimant responded stating that "…what is at issue is an additional tax assessment (AIMI) identified right at the beginning of the initial petition – with No. 2017..., to which corresponds the settlement No. 2018... – and relating to the year 2017, with payment deadline of 30.04.2018, in the value to be paid of €57,416.44, constituting this the economic value of the case and constitutes 'the amount whose annulment is sought', pursuant to Article 97.º-A(1)(a) of the CPPT."
Furthermore, it stated that "by manifest clerical error, the Impugning party made mention of the 'annulment of administrative decision' – however, as is official knowledge of the Public Treasury itself, there is no administrative decision that has fallen upon the referred additional assessment. Furthermore, a gracious complaint was filed against the AIMI assessment for the year 2017, with No. 2017..., of 30.06.2017 – which was subject to dismissal, and the respective deadline for challenging is still ongoing (which terminates on 16.01.2019)."
Furthermore, it states that and contrary to what the Public Treasury intends, "the challenge is perfectly timely insofar as, as emerges from the records, the payment deadline for the tax obligation in question terminated on 30.04.2018 – whereby the 90-day period provided for in Article 10(1)(a) of the RJAT, terminating in judicial recess (on 29.07.2018) would transition to the first business day following (03.09.2018), the present case having been initiated on 31.08.2018, it is clearly timely."
It invokes in conclusion that "the material error (calculation or clerical error) revealed in the very context of the statement, is rectifiable at any time – as is now requested insofar as the divergence between the expressed will and what was intended to be expressed is manifest, and the exception invoked by the Public Treasury should be judged unfounded; requesting the rectification of the manifest material error identified above."
Examined by the Court with fruitful detail, as is believed, all the matter alleged as to such question, namely the administrative file attached, the Arbitral Court decided to issue an order on 27/1/2019, where, "Having analyzed in greater depth the elements contained in the file, and considering that at pages 56 of the administrative file attached by the ATA, there are three AIMI assessments for the year 2017, assessment ..., (pages 57 and 58) which was replaced due to the change in TPV, assessment ..., (page 64) and assessment .../pages 59 and 60), the latter being issued on 11/5/2018, which is mentioned as active, but with emission status of collection note to be sent (page 59), being rather the assessment ... the one here 'impugned', under the principle of cooperation of the parties with the Court and the principle of seeking material truth and of the inquisitorial nature, avoiding useless and contradictory decisions, the ATA should, within 10 days, inform the Court if the assessment ..., whose details are contained in pages 59 and 60, being the same classified as active and which replaced the previous assessment, is active in the system and if affirmative whether it was notified to the taxpayer and also if affirmative whether it replaced the assessment ... . Furthermore, the ATA should inform the reason why the mentioned assessment did not give rise to a collection note, attaching all relevant documents and providing any other information it considers relevant and which do not emerge from the attached documents."
The Defendant then came, by petition introduced in the records on 8/2/2019, to inform the Arbitral Court that –
"1. The AIMI Assessment No. ... of 2018-01-16, was replaced by the Assessment ... of 2018-05-11, the latter being active in the information system of the Additional IMI.
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The value of the collection ascertained in the assessment ... of 2018-05-11 is equal to the value ascertained in the assessment ..., that is, in both the assessment and in the one that replaces it, the value of the collection is € 82,988.48.
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The value of AIMI ascertained in assessment No. ... of 2018-01-16, was paid on 30-4-2018.
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Thus, the Assessment ... of 2018-05-11, did not produce any collection note, because the total value of the collection was found to be paid as of its preparation."
By arbitral order of 20/2/2019, it was decided that, as there were no reasons justifying it, the Court would not dispense with holding the first meeting provided for in Article 18 of the RJAT, which it did under the principles of the Court's autonomy in conducting the case, relegating the decision on the preliminary issue raised to the moment of issuing the final decision.
The parties were also notified to submit written arguments and the date of 9/5/2019 was set for the issuance and notification of the final decision.
- The Defendant submitted arguments pursuant to a petition introduced in the records on 14/3/2019, reiterating the arguments presented in the previous procedural documents.
By arbitral orders of 8/5/2019 and 10/7/2019, the deadline for issuing the final decision was extended, under the terms set out in Article 21(2) of the RJAT.
II. CASE MANAGEMENT
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- The parties have legal personality and capacity, are shown to be legitimate and are regularly represented (Articles 4 and 10(2) of the RJAT and Article 1 of Ordinance No. 112-A/2011, of 22 March).
8.2. The court is competent and is regularly constituted.
8.3. The case does not suffer from any nullities.
8.4. The Defendant raised the exception regarding the value of the case, as well as the exception of timeliness of the arbitral action.
8.5. There are no other circumstances that prevent examination of the merits of the case.
III. MERITS
III.1. Factual Matter
9. Facts Proven and Not Proven
With relevance for the examination and decision of the issues raised, both preliminary and on the merits, the following facts are taken as established and proven:
A. Facts Given as Proven
9.1 The Claimant is a commercial company that carries out its activity in the real estate sector, being the owner of an urban property, land for construction, located in the Parish of ... and registered in the respective matrix under No. U -... .
9.2 The Claimant acquired the land in question with the aim of promoting constructions thereon according to its financial capacity and according to market circumstances, being thus intended exclusively and solely for the Claimant's exploitation within the scope of its economic activity.
9.3 The Claimant was notified of the AIMI assessment with No. 2017..., to which corresponds the settlement No. 2018..., with offset of assessment ... – and relating to the year 2017, with payment deadline of 30.04.2018, in the value payable of €57,416.44, whose assessment note is as follows:
[Assessment table]
And whose settlement statement is as follows:
[Settlement table]
9.4 The Claimant proceeded to pay the mentioned assessment on 30/4/2018, with the details reproduced:
[Payment table]
9.5 The AIMI Assessment No. ... of 2018-01-16, was replaced by the Assessment ... of 2018-05-11, the latter being active in the information system of the Additional IMI.
9.6 The Assessment ... of 2018-05-11, did not produce any collection note, nor was it notified to the taxpayer, because the total value of the collection was found to be paid as of its preparation."
B. Facts Given as Not Proven
9.7 That the assessment No. 2017..., of 18/01/2018, be in the amount of € 82,988.48 to be paid.
C. Substantiation of the Factual Matter Given as Proven and Not Proven
With respect to the factual matter, the Court does not have the duty to pronounce on all the matter alleged, but rather has the duty to select that which is relevant to the decision, taking into account the grounds (or grounds) for action that substantiate the claim formulated by the plaintiff [(cf. Articles 596(1) and 607(2) to (4) of the CPC, applicable ex vi Article 29(1)(a) and (e) of the RJAT)] and to state whether it considers it proven or not proven (cf. Article 123(2) of the CPPT).
According to the principle of free assessment of evidence, the Court bases its decision, in relation to the evidence produced, on its intimate conviction, formed from the examination and evaluation it makes of the means of proof brought to the case and in accordance with its life experience and knowledge of persons (cf. Article 607(5) of the CPC). Only when the probative force of certain means is pre-established by law (e.g. full probative force of authentic documents, cf. Article 371 of the Civil Code) does the principle of free assessment of evidence not prevail in the assessment of the evidence produced.
Thus, taking into account the positions taken by the parties, in light of Article 110(7) of the CPPT, and the documentary evidence attached to the case, the above-listed facts were considered proven, with relevance to the decision.
The fact given as not proven is based on the assertive reading of the assessment and settlement
Assessment No. 2017..., of 18/01/2018, whose amount payable is unequivocally €57,416.44, according to documents numbers 1 and 2 attached by the Claimant and documents of the PAT, as well as, this being the amount paid, this also being the amount that the Claimant "demanded" of this Court to be annulled.
III.2. Legal Matter
III.2.1 PRELIMINARY ISSUES
In accordance with Article 13 of the Code of Administrative Court Procedure (CPTA), ex vi Article 29(1)(c) of the RJAT, "The scope of administrative jurisdiction and the competence of administrative courts, in any of their forms, is a matter of public order and its examination precedes that of any other matter." (emphasis ours).
Mário Aroso de Almeida and Carlos Alberto Fernandes Cadilha state that "The attribution of absolute priority to the examination of the competence issue is justified by the consideration that the only issue for which an incompetent Court is competent is to examine its incompetence. Once that incompetence is verified, it becomes naturally prevented from entering into the examination, either of the remaining procedural requirements, or, obviously, of the merits of the case." (cf. in Commentary to the Code of Administrative Court Procedure, 4th edition, Almedina, Coimbra, 2017, p. 147).
It is true that we are not faced with any invocation by the Defendant of any absolute incompetence of the Court, but rather with the invocation of a relative incompetence. However, the requirements and consequences are exactly the same, and therefore, the exception of relative incompetence emerging from the value of the case raised by the Defendant will be examined forthwith, and it is certain that if this issue is well-founded, the examination of the remaining exceptions raised will be prejudiced, by becoming useless, as well as the examination of the merits of the case.
a) RELATIVE INCOMPETENCE OF THE SINGLE COURT
The Defendant argues in its response that the claim which is the subject of arbitral pronouncement is for 2017, identified by No. 2017..., is in the amount of € 82,988.48 and not in the value of € 57,416.44, as the Claimant erroneously indicates.
Furthermore, it argues that, given that the value of the case is in reality €91,615.39, which corresponded to the value attributed by the applicant in its request for arbitral pronouncement, the constitution of the Court should be rectified in accordance with the precepts set out in Article 5(3) of the RJAT, since in the event the value of the action exceeds twice the value of the jurisdiction of the Central Administrative Court, the constitution of the Court should be collective.
The Claimant, when notified to pronounce on the invoked exception, came to reiterate that it seeks the annulment of the tax amount demanded from the Claimant – which materializes the economic value of the case and constitutes "the amount whose annulment is sought", pursuant to Article 97.º-A(1)(a) of the CPPT, in the amount of the tax value it paid, that is, €57,416.44.
It must decide:
In the case under examination, and as mentioned above and detailed in the "Factual Matter" section, the annulment of a tax assessment act is requested in the total amount of €57,416.44. This is the amount that the Claimant paid, that requested this Court's pronouncement, being this the value of the economic utility of the claim.
Because important for the substantiation of the present Arbitral Decision, here is reproduced part of the Decision of the Central Administrative Court of the South, dated 13 March 2014, in case No. 07125/13: Pursuant to Article 296(1) of the CPC, "[every] case must be assigned a certain value, expressed in legal currency, which represents the immediate economic utility of the claim". Article 297(1) of the CPC provides that "[if] by the action one seeks to obtain any certain sum of money, that is the value of the case, with no challenge being admissible nor agreement to the contrary; if by the action one seeks to obtain a benefit other than that, the value of the case is the sum of money equivalent to that benefit". In turn, Article 32(1) of the CPTA provides, "[w]hen by the action one seeks to obtain the payment of a certain sum, that is the value of the case"; pursuant to Article 32(2) of the precept, "[w]hen by the action one seeks to obtain a benefit other than the payment of a sum, the value of the case is the sum equivalent to that benefit".
In general terms, the rules for determining the value of the case, i.e., the rules for fixing the value of the case in tax proceedings, are those contained in Article 97.º-A of the Tax Procedure and Process Code (hereinafter designated only as CPPT). Pursuant to subparagraphs a) and b) of Article 97.º-A(1) of the CPPT, the values to be considered, for purposes of costs or others provided for in the law, for actions that proceed in the tax courts, are the following: a) When the assessment is impugned, that of the amount whose annulment is sought; b) When the act of determination of taxable matter is impugned, the contested value; [...]. (in. Ibidem)
As Jorge Lopes de Sousa teaches, in tax arbitration proceedings there is no jurisdiction limit, and therefore the determination of the value of the case is only relevant for purposes of costs and to determine whether the case is heard by a Single Arbitral Court or a Collective one. The value of the case should be indicated by the taxpayer in the request for constitution of the Arbitral Court, corresponding to the economic utility of the claim. Thus, when acts of assessment [...] are impugned, the value of the case is that of the amount whose annulment is sought, which corresponds to the economic utility of the claim [...]. But the practical viability of application of a norm to a given legal situation constitutes, naturally, an indispensable requirement of its use, since natural impossibility is an insurmountable obstacle to everything, including the application of any norm. For this reason, subparagraph e) of Article 10(2) must be interpreted restrictively, with the natural and forced limitation that the value of arbitral cases will be the economic utility of the claim, when it is possible to determine that utility. There are disputes [...] that do not have a determinable economic utility, since their definition depends on factors that are not known at the time of submission of the request for constitution of the Arbitral Court, nor will they even be until the end of the case. Similar impossibility of determining the economic utility of the dispute occurs in requests for declaration of illegality of acts determining taxable matter when they do not give rise to the assessment of any tax, namely when the taxable matter is negative (tax losses), since the losses ascertained may never even be relevant for the practice of any assessment act, since that relevance will depend on whether in any or some of the tax periods in which it will be legally permitted to carry forward the losses [...]. In these situations in which the utility of the claim is not determinable, and the RJAT does not contain any criterion for determining the value of disputes, one must have regard to subsidiary legislation, namely Article 97.º-A of the CPPT, which contains express rules for determining the value of the case, potentially applicable to all the situations referred to in Article 2(1) of the RJAT. In subparagraphs b) and [...] it is established that the value to be considered when the act determining taxable matter is impugned is the contested value.
We are not "sub judicio" before any request to impugn acts determining taxable matter, or of analogous nature, but rather a concrete request for annulment.
There is no doubt that the economic value of the case is the amount whose annulment is sought, pursuant to Article 97.º-A(1)(a) of the CPPT, in the amount of the tax value paid, that is, €57,416.44.
Whence it follows that this last amount corresponds to the economic benefit to be obtained with the success of this action, whereby the claim is centered on the annulment of the assessment, being this the value of the action, pursuant to Article 97.º-A(1)(a) of the CPPT.
As mentioned above, pursuant to subparagraph a) of Article 5(2) of the RJAT, arbitral courts function with a single arbitrator when: a) the value of the request for pronouncement does not exceed twice the value of the jurisdiction of the Central Administrative Court, i.e., when the value of the request for pronouncement does not exceed € 60,000.00.
The present Single Court is therefore competent to examine the request for arbitral pronouncement.
b) TIMELINESS OF THE ARBITRAL ACTION
From Article 12 onwards of its response, the Defendant invokes another preliminary issue which it qualified as an exception.
It asserts that, with respect to the first assessment No. 2017..., of 30/06/2017, in the amount of € 25,572.04, would have as its initial term the last day of September 2017 – cf. Article 135.º-H of the IMI Code, whereby it should have been impugned by 29/12/2018, which did not occur.
As for the corrective assessment No. 2017..., of 18/01/2018, which corresponds to the act now impugned, would have as its initial term the last day of the voluntary payment period – 30 days after notification for payment, cf. Article 85(2) of the CPPT.
Thus, having the Claimant been notified on 26/02/2018, the voluntary payment period (30 days) would terminate on 28/03/2018 and the 90 days would be counted from that date, whereby the deadline for challenging expired on 26/06/2018.
The request for constitution of the Arbitral Court was presented on 31/08/2018, whereby the same is untimely and the Court cannot take cognizance of it.
The Claimant responded that the challenge is perfectly timely insofar as, as emerges from the records, the final payment deadline for the tax obligation in question terminated on 30.04.2018 – whereby the 90-day period provided for in Article 10(1)(a) of the RJAT, terminating in judicial recess (on 29.07.2018), would transition to the first business day following (03.09.2018).
Now, as appears from the factual matter given as proven in 9.3, "The Claimant was notified of the AIMI assessment with No. 2017..., to which corresponds the settlement No. 2018..., with offset of assessment ... – and relating to the year 2017, with payment deadline of 30.04.2018, in the amount payable of €57,416.44."
Payment was made until that "terminus" of the voluntary payment period, whereby the 90-day period terminating on 29/7/2018 (judicial recess), the deadline extends to the first business day, "in casu" 3/9/2018.
Having the request for arbitral pronouncement been filed on 31/8/2018, it is timely.
c) OTHER POSSIBLE PRELIMINARY ISSUE
A final word on a possible preliminary issue.
The Defendant asserts that the Claimant came to demand the intervention of the present Arbitral Court, with a view to annulling the administrative decision and the AIMI assessment, whereby, having not been mentioned anywhere a hypothetical administrative decision, it would not be understood for what the Claimant ultimately came.
It happens that immediately in its response the Defendant, in Article 16 thereof, asserts and writes "The Claimant, at the beginning of the initial petition, is blunt and direct and refers right away to what it comes for: it comes to lodge a challenge against the tax act assessment of Additional Municipal Property Tax No. 2017... of the year 2017, in the amount it indicates as € 57,416.44 but which is understood to be the amount of € 82,988.00"
In truth, it is precisely because understanding fully what the Claimant seeks that it ends up raising the exception of relative incompetence of the Court and the exception of timeliness of the arbitral action, which were examined above.
Understanding all in unison, parties and Court, what the clear objective of the Claimant is with the present request for arbitral pronouncement, it will not even be necessary to resort to what was invoked by the Claimant when "It is true that, by manifest clerical error, the Impugning party made mention of the 'annulment of administrative decision'."
The present Arbitral Court is therefore competent to take cognizance of the request for arbitral pronouncement.
III.2.2 The central question to be decided is whether the norm of the scope of the legal regime of the Additional Municipal Property Tax – specifically, Article 135.º-B(2) of the IMI Code, the norm that determines the objective scope of this Additional to the IMI, is unconstitutional, when applied to companies whose activity is the economic activity of buying and selling real estate.
As demonstrated in the arbitral claim, the legal regime of AIMI, specifically its Article 135.º-B of the IMI Code – when interpreted in the sense of including, in the subjective scope of application of the tax, entities that hold real estate property as an inevitable consequence of the economic activity they carry out – promotes differentiated treatment and unjustified inequality among taxpayers, in manifest violation of the principle of equality, enshrined in Article 13 of the CRP, and of the principle of fiscal equality and contributive capacity, enshrined in Article 104(3) of the same diploma, if well those latter ones "refracted" by the former.
Moreover, specifically, in two violations.
One, the assessment now under examination violates the principle of fiscal equality provided for in Article 13 of the CRP and the principle of contributive capacity provided for in Article 104 of the CRP, insofar as:
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it is based on a norm that treats very differently taxpayers who are in identical situations, the measure of the difference not being gauged by their real contributive capacity;
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it is based on an arbitrary legal solution devoid of any perceptible or rational material foundation;
Another, due to the intended purpose of the norm, particularly when it points to the configuration of a complementary tax to the IMI with the aim of taxing "the accumulation of residential real estate property of very high value", through "a tax that falls upon the holders of larger real estate properties, strengthening the overall progressivity of the system, implies a violation of the principle of proportionality.
It must examine and decide.
The Claimant first asserts that there is a violation of the principle of fiscal equality, provided for in Article 13 of the C.R.P., in the aspect of the principle of contributive capacity, provided for in Article 104 of the same Fundamental Law, because Article 135.º-B of the IMI Code, as it was interpreted, is based on a norm (interpretation) that treats very differently taxpayers who are in identical situations, the measure of the difference not being gauged by their real contributive capacity (parenthesis ours);
It is also based on an arbitrary legal solution devoid of any perceptible or rational material foundation.
Because these foundations are umbilically linked, they will be treated together.
It may be said from the outset that one reality is a company having as its economic activity the holding of real estate for resale in the abstract, and another different reality, is in the concrete case, the real estate having a certain temporally proven and fixed characteristic. But as will be seen, this distinction which the Claimant did not make, will end up not being relevant.
It is therefore important to make a small historical foray into what was designated as Additional to the IMI.
We can say that the taxation of real estate property that we have today effectively dates back to 1641, with the creation of the famous "military tithe", in the old and tired times of the Restoration of Portugal.
This tax was a general tax on income which, although of an extraordinary nature, was created with the objective of financing expenses related to the War of Restoration, and was maintained well beyond the end of the conflict in 1668.
In fact, the military tithe fell, at the rate of 10%, on the various parcels or schedules of income, namely: the parcel of property income (property tithe), the parcel of income from loans of capital (interest tithe), and the parcel of income from commercial, industrial or professional activities (commercial tithe). (2)
The "tithes" were replaced in 1845 by contributions, having been instituted the commercial contribution, the personal contribution, and the property contribution, and created in 1860 the industrial contribution in replacement of the two former, we can say that the structure of the tithes will be maintained until the reform of the 1960s and even surprise it in the present income categories of the Personal Income Tax (IRS).
What interests us here, however, is the property tithe, later called the property contribution, which was of all the tithes the one that most faithfully remained to the original model, it being therefore not strange that until the mentioned reform of the past sixties it was simply known by the designation of "tithe".
Now, from 1641 to the fiscal reform of 1988/89, taxation relating to real estate had as its object the income of rural and urban properties, although from the mentioned fiscal reform of the sixties, alongside the property contribution, there was created, in 1963, the tax on agricultural industry, due to the needs of collecting tax revenue and taxation of profit on that activity. (3) (4)
Whereby, from that reform on, the taxation of real estate income was based on two taxes: the property contribution and the newly created tax on agricultural industry.
The property contribution had the following configuration:
‒ Rural property contribution, which fell on land rent, the latter being defined as the value attributable to the productive use of the land and its improvements, this not including the profit from the operation, as the profits of agricultural, forestry or livestock operations were excluded from the property contribution;
‒ And urban property contribution which fell on the income of urban properties, being this, when the properties were leased, the value of the respective rent expressed in current money, and, when not leased, equivalent to the benefit obtained or that could be obtained by the person who could use or enjoy the properties.
For this reason, urban property contribution was based on real income with respect to leased properties and a normal income – the income imputed to the corresponding property – with respect to non-leased properties.
We can say that there coexisted principles of real income with presumed income and that real estate property was always taxed in two ways, static and dynamic, the determination of the taxable value of which determined the taxable value of the latter. (5)
The tax on agricultural industry fell on the profits of agricultural, forestry or livestock operations, provided these did not fall within the scope of the industrial contribution.
It was a tax that, although considered necessary in the fiscal reform of 1929, due to various vicissitudes, did not come to have practical application. In fact, created in 1963, it was suspended in 1965, modified and reinstated on 31 December 1975, being again suspended in May 1976.
Authorized by the 1979 Budget Law to reinstate it, the Government did not use the legislative authorization, and reinstated, once more, in force by the 1981 Budget Law, it was suspended for that year and following years.
With the fiscal reform of income taxation in 1988, an end was put to the traditional system of parcel or schedule-based taxation, instituting a unique taxation on income with the creation of the Personal Income Tax (IRS) and the Corporate Income Tax (IRC).
With respect to the taxation previously contained in the property contribution, it was the same divided into two, in which we have, on one hand, the taxation of property income in the IRS (category F) or in the IRC with respect to property income of legal entities, and, on the other hand, the taxation of properties as assets in the also newly created Municipal Contribution.
Whereby properties became the subject of a tax on income – the IRS or IRC - which falls only on leased properties, there being no place, as we saw happen in the property contribution, for the taxation of income imputed to leased or unleased urban or rural properties.
There is thus here a removal so as to exclude from taxation the imputed incomes, although that option was not carried to its logical consequences, since there is the taxation, as accessory remuneration in category A of the IRS, pursuant to Article 2(3)(b)(4) of the IRS Code, of income imputed to the use by the worker of the dwelling provided by the employer entity. An exception to the exclusion of taxation of imputed income that does not fail, in its own way, to surprise, since the same refers to the dwelling and to a worker's dwelling, which immediately convokes relevant fundamental rights, such as the right to housing and the right to work with very clear and incisive formulation, respectively, in Article 65 and Article 58 of the Constitution.
On the other hand, properties became the subject of the new tax called Municipal Contribution which remained in force until the creation of the IMI in 2003, and which was nothing more than the property contribution with a new name, if well this tells us nothing about its nature as a tax on assets, since the asset value that became the basis of the new tax was nothing more than the land rent of the property contribution capitalized.
In fact, pursuant to Article 6(1) and Article 7(1) of Decree-Law No. 442-C/1988, of 30 November, which approved the Municipal Contribution Code, the taxable value of urban properties was the result of capitalizing the collectable income through the application of the factor 15, and the taxable value of rural properties was the result of capitalizing the collectable income through the application of the factor 20.
It should be noted that during the validity of the municipal contribution, the extremely unjust system that came from the property contribution was maintained and aggravated, due to the enormous lack of updating of the property matrices that awaited the approval of the Valuation Code which was never to be approved.
This non-conformity was particularly verified with respect to urban properties, since this lack of updating, in a context of high inflation such as that which occurred in the seventies, eighties, and even nineties of the past century, led to an abyssal difference between the value of old properties and the value of new properties. To which was added the fact that the fixing of the value of new properties was based practically on unknown and, consequently, subjective and arbitrary criteria, which often led to fractions of properties that were effectively equal having completely different tax values.
It was, however, a solution integrated in a perspective of unification that came to be adopted by the reform of asset taxation carried out by Decree-Law No. 287/2003, of 12 November, a diploma that approved the new Municipal Property Tax Codes and Municipal Transfer Tax and made changes to various related tax legislation with the same reform.
Among these stands out, above all, the elimination of the tax on successions and donations with the consequent taxation in a new stamp duty tax on transfers by gratuitous title in favor of natural persons and in IRC the asset increases resulting from transfers by gratuitous title in favor of legal entities, that is, the "old" succession and donations code was divided by the always receptive stamp tax and also by the IRC.
It was, however, the creation of a new system of determining the asset value of real estate, more precisely urban properties, and its application in principle to all taxes in which it would be relevant, the actually essential aspect of the asset taxation reform of 2003.
In fact, the figure of tax property value (TPV) was created.
Thus, the tax property value of urban properties for housing, commerce, industry and services results, according to Article 38 of the IMI Code, from the following expression: Vt = Vc × A × Ca × Cl × Cq × Cv, in which: Vt - tax property value; Vc - base value of built properties; A - gross construction area plus the area exceeding the area of implantation; Ca - scope coefficient; Cl - location coefficient; Cq - quality and comfort coefficient; Cv - age coefficient.
It should be noted that several of these coefficients are created by legislative nature in a dynamic way, as is the case with location coefficients.
A revaluation was carried out of all urban properties that had not yet been revalued in light of the tax property value calculated in accordance with the formula we have just stated, which took place in the years 2012 and 2013, as a result of the commitments undertaken by the Portuguese State in the Program of Economic and Financial Assistance, concretized in the Memorandum of Understanding on the Conditions of Economic Policy signed with the Troika (EC, ECB and IMF) on 17 May 2011.
In fact, up to that point, the property was only subject to (re)valuation upon the first transfer after the start of the asset taxation reform. It can be said that the European Union and the International Monetary Fund forced the Portuguese State to (re)value hastily all real estate property.
Beyond the specific characteristics of this tax on real estate property, such as its municipal and periodic character, it is worth mentioning some manifestations of personalization that have been taken with respect to certain properties as well as to account for expressions of its extra-fiscal mobilization. Among the former, we can point out those referring to urban properties intended for own housing and non-own housing as well as deductions from the tax by dependents.
Thus, pursuant to Article 46 of the Statute of Tax Benefits, urban properties whose tax property value does not exceed € 125,000 are exempt from IMI for three years, if they are properties or parts of residential urban properties built, enlarged, improved or acquired for consideration, intended for the own and permanent housing of the taxpayer or his family group, whose collectable income, for purposes of the IRS, in the previous year, does not exceed € 153,300, and which are effectively devoted to such purposes, within six months after the acquisition or completion of construction, enlargement or improvements.
An exemption that also applies to properties or parts of properties built anew, enlarged, improved or acquired for consideration, when it is the first transfer, in the part intended for lease for housing.
In turn, pursuant to Article 112.º-A of the IMI Code, municipalities may set a deduction from the collection of the municipal tax on real estate to be in effect in the year to which the tax applies, to be applied to the property or part of urban property intended for own and permanent housing of the taxpayer or his family group, of € 20, € 40, or € 70, depending on whether there is one dependent, two dependents, or three or more dependents in charge.
In the seat of the extra-fiscal manifestations of the IMI, we can refer to the mitigation relating to certain properties and the aggravation of the tax with respect to other properties. Among the former, we find: the reduction of the rate by 50% or 25% as a benefit of an environmental nature related to property with high energy efficiency, pursuant to Articles 44.º-A and 44.º-B of the EBF; exemption for three years of properties subject to urban rehabilitation operations, pursuant to Articles 45 and 46 of the EBF; the reduction, to be decided by the respective municipal assembly, of the rate up to 20%, 30%, or 50%, respectively, for properties subject to rehabilitation operations, lease, or classification as properties of public interest, municipal value, or cultural heritage, as provided for in numbers 6, 7, and 12 of Article 112 of the IMI Code.
As for the aggravations, we have the increase to be decided by the corresponding municipal assembly, up to 30% of the rate applicable to degraded urban properties, considering as such those which, given their state of conservation, do not satisfactorily fulfill their function or endanger the safety of persons and property, or up to double the rate applicable to rural properties with forest areas that are in a situation of abandonment, not being able to result from the application of this increase a tax collection of less than € 20 for each property covered, as provided for in numbers 8 and 9 of Article 112 of the IMI Code.
These aggravations had more recent echo in Decree Law 67/2019, of 21 May, which, adding Article 112.º-B to the IMI Code; came to introduce the concept of Vacant Properties located in areas of urban pressure, as properties, or autonomous units that have been vacant for more than 2 years when located in areas of urban pressure, as so defined in a specific diploma, becoming subject to the aggravation, in substitution of that provided for in Article 112(3), with a rate that is increased six-fold, aggravated, in each subsequent year, by a further 10%.
The aforementioned aggravation has as its maximum limit the value of 12 times the rate provided for in Article 112(1)(c).
Its extra-fiscal nature is expressed through the revenues obtained from the aggravation being allocated by municipalities to the financing of municipal housing policies.»
Tax penalties these which, as is easy to see, are related to the non-fulfillment of duties on the part of their owners.
There have been then striking lines of the evolution of asset taxation, the manifestations of personalization, and, on the other hand, its use with extra-fiscal purposes in the domains of environmental protection and urban rehabilitation and of municipal policies.
We should not forget that the "decentralization" of sources of revenue ends up excluding the need for recourse to budget revenues, which is also equivalent to asserting that there are always financing needs of the State at stake, if well dressed linguistically by other names.
The Additional to the Municipal Property Tax
And thus we arrive at the Additional to the IMI.
"De jure condito" the Additional to the IMI was inserted in Chapter XV of the IMI Code, divided by 6 sections, with headings, respectively, Scope, Taxable Value, Rate, Assessment and Payment, Provisions relating to Income Taxes and Other Provisions, by Article 219 of the budget diploma, which added Articles 135.º-A to 135.º-K.
By concatenating with Chapters I, X, XI and XII of the IMI Code, we easily note that we have two scopes in the same code, two types of rate, two types of assessment and payment. All this would not be confusing, if there were never placed interpretative needs of filling gaps or hermeneutic interpretation, where such is possible in Tax Law, in matters that are excluded from the principle of tax legality.
As to this "Additional," it should be noted from the outset that this new static tax on urban properties is nothing more than one of many manifestations of what we can designate as "necessity taxation," in systems of a centrally directed economic matrix, concretized in the creation by the legislator of diverse taxes that should have an extraordinary nature, but end up having an ordinary nature.
In fact, by force of the financial rescue request made by the XVIII Government and the consequent commitments undertaken by Portugal in the referred Program of Economic and Financial Assistance, whose execution was to be carried out by the XIX Government, implementing and this one a set of austerity measures, in which, in addition to various and significant cuts in public expenditure, there was an imperative necessity to increase tax revenue, aggravating the generality of taxes and creating diverse new taxes with varied names.
Aggravations and new taxes that were presented as having an eminent extraordinary character, which with respect to some of the taxes in question was contained (and still is) in the name itself, which would, consequently, be subject to elimination as soon as the situation that was at the basis of the financial rescue request ceased. What, however, as is known by own experience of the generality of taxpayers, did not occur, having practically all of those aggravations and new taxes been maintained. (6)
We are naturally referring to the known as "brutal tax increase" which was translated, with respect to natural persons, in the very significant increase of the generality of the IRS rates and the creation, namely, of a surcharge, (two) and, as for legal entities, of the institution of what we have been designating as "parallel IRC".
But the Additional which will have a permanent character, constitutes revenue of the Financial Stabilization Fund of Social Security, Article 1(2) of the IMI Code tells us.
The Additional was created by the 2017 Budget Law, Law 42/2016, of 28/12, in substitution of a special "IMI" created by Decree-Law No. 55-A/2012, of 29 October, and subject to alterations by the 2014 Budget Law, which was integrated in the Stamp Tax (item 28 of the General Stamp Tax Table), which fell at the rate of 1% on urban properties whose tax property value was equal to or greater than € 1,000,000.
This Additional has already undergone several changes despite its short period of "life", by Law 114/2017 of 29/12, Law 85/2017 of 18/8, and Law 71/2018, of 31/12.
Then, it is important to note that, from the point of view of tax technique, we are not, strictly speaking, faced with a true Additional to the IMI, since it does not fall on the collection thereof, but rather in the face of an addition, since it falls on the tax property value of the IMI, which is, however, the subject of an important deduction with respect to natural and legal entities.
Let us then see in more detail the legal outline of this new tax.
Pursuant to Chapter XV (Articles 135.º-A to 135.º-K) of the IMI Code, the passive subjects of the Additional to the IMI are, pursuant to Article 135.º-A, natural or legal persons who are owners, usufructuaries, or surface rights holders of urban properties situated in Portuguese territory, being equated to legal entities any structures or centers of collective interests without legal personality that appear in the matrices as passive subjects of the IMI, as well as the undivided estate represented by the head of household. They are not, however, passive subjects of the Additional to the IMI municipal companies (original wording) the State, Autonomous Regions, local authorities and their associations and federations of municipalities of public law, as well as any of their services, establishments and organisms, even if with legal personality, including public institutes. (Wording of Law No. 51/2018, of 16 August).
From the objective point of view, as provided for in Article 135.º-B, the Additional to the IMI falls on the sum of the tax property values of urban properties situated in Portuguese territory of which the passive subject is the holder. Excluded, however, are urban properties classified as "commercial, industrial or for services" and "other" pursuant to subparagraphs b) and d) of Article 6(1) of the IMI Code.
Pursuant to Articles 135.º-C and 135.º-D, the taxable value corresponds to the sum of the tax property values, as of 1 January of the year to which the Additional to the IMI relates, of the properties that appear in the property matrices in the ownership of the passive subject, not counting for this purpose the value of properties that in the previous year were exempt or not subject to taxation in IMI. From that taxable value the following amounts are deducted:
a) € 600,000, when the passive subject is a natural person; and
b) € 600,000, when the passive subject is an undivided estate.
When passive subjects are married or in a common law union for purposes of Article 14 of the IRS Code, they may opt for joint taxation of this Additional, the tax property values of the properties in their ownership being summed and the aforementioned deduction value being multiplied by two.
Initially the option lacked being "chosen" year by year which was not understood and in the wording given by Law 114/2017, of 29/12 this state of affairs was altered, determining that, in addition to the option having immediate consequences of registration in the ownership of the matrix (matrices only admit one owner), remain in effect until such time as the waiver thereof is exercised in express form.
With respect to the rate, pursuant to Article 135.º-F, to the taxable value and after application of the aforementioned deductions, the rate of 0.4% is applied to legal entities, and 0.7% to natural persons and undivided estates.
To the taxable value, determined pursuant to Article 135.º-C(1), exceeding € 1,000,000, or € 2,000,000 when the option for joint taxation is exercised, the marginal rate of 1% is applied, when the passive subject is a natural person.
By the wording of Law 71/2018, of 31st December, to the taxable value, determined pursuant to Article 135.º-C(1), exceeding €2,000,000, or €4,000,000 when the option for joint taxation is exercised, the marginal rate of 1.5% is applied, when the passive subject is a natural person.
When it comes to properties held by legal entities devoted to personal use of the holders of the respective capital, members of the governing bodies or of any organs of administration, management, direction or oversight or of their respective spouses, ascendants and descendants, are subject to the rate of 0.7%, being subject to the marginal rate of 1% for the parcel of the value exceeding € 1,000,000 and equal to or less than €2,000,000, and to the marginal rate of 1.5% for the parcel exceeding €2,000,000.
Whenever properties are owned by entities subject to a more favorable tax regime, to which Article 63.º-D(1) of the General Tax Law refers, the rate is 7.5%, not being such an increase applicable to natural persons.
Finally, as to assessment and payment, as provided for in Articles 135.º-G and 135.º-H, the Additional to the IMI is assessed annually, by the AT, based on the tax property values of the properties and in relation to the passive subjects who appear in the matrices on 1 January of the year to which the tax relates, there being a single assessment when the option for joint taxation is exercised.
The assessment of the Additional to the IMI is made in the month of June and its payment in the month of September of the year to which the tax relates.
Describing summarily the moments of the dynamics of the Additional to the IMI, we find that it is a kind of "general tax on urban real estate wealth", with a progressive rate with respect to natural persons according to the tax property value (with a rate of 0 up to € 600,000, the rate of 0.7% from over € 600,000 to € 1,000,000, the rate of 1% for over € 1,000,000 to €2,000,000, and the rate of 1.5% for over €2,000,000.
It is a tax that reveals some autonomy with respect to the IMI, with respect to which it presents itself as an Additional, being a state tax (and not a municipal tax) and a tax with dedicated revenue, since, pursuant to Article 1(2) of the IMI Code, the Additional to the IMI, minus collection costs and the forecast of deductions from the collection of IRS and IRC, constitutes revenue of the Financial Stabilization Fund of Social Security.
To which is added the circumstance that the quality of passive subject, although determined in conformity with the criteria established in the IMI Code, is made by reference to 1 January of the year to which the Additional relates, and not 31 December, as occurs in the IMI.
Also its payment, as we saw, must be made in full in the month of September, differently from what occurs in the IMI.
The most obvious question faced with this entire scenario is whether the Additional to the IMI, in itself, would not be unconstitutional?
What is particularly relevant to the present arbitral action is what is prescribed in Articles 6 and 135.º-B of the IMI Code, since the latter expressly refers to the normative typology of urban properties, established in the former.
For greater understanding, it is also important to take into account the scope of the subjective scope of the AIMI, outlined in Article 135.º-A, as well as the rules for determining the taxable value (Article 135.º-C). (7)
The text of the referred precepts is as follows:
"Article 6
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 purpose or, in the absence of a license, that have as their normal destination each of these purposes.
3 - Land for construction is considered to be land situated within or outside an urban agglomeration, for which a license or authorization has been granted, an application has been admitted or favorable prior information has been issued for a subdivision or construction operation, and also those that have been declared as such in the acquisition title, excepting land in which the competent entities prohibit any of those operations, namely those located in green areas, protected areas or which, according to municipal territory planning plans, are devoted to spaces, infrastructure or public facilities.
4 - The provision of subparagraph d) of number 1 includes land situated within an urban agglomeration that is neither land for construction nor is covered by the provision of Article 3(2), and also buildings and constructions licensed or, in the absence of a license, that have as their normal destination other purposes than those referred to in number 2 and also those of the exception of number 3."
Article 135.º-A
Subjective scope
1 - The passive subjects of the Additional Municipal Property Tax are natural or legal persons who are owners, usufructuaries or surface rights holders of urban properties situated in Portuguese territory.
2 - For purposes of number 1, any structures or centers of collective interests without legal personality that appear in the matrices as passive subjects of the Municipal Property Tax are equated to legal entities, as is the undivided estate represented by the head of household.
3 - The quality of passive subject is determined in conformity with the criteria established in Article 8 of this Code, with the necessary adaptations, having as reference the date of 1 January of the year to which the Additional Municipal Property Tax relates.
4 - The State, the Autonomous Regions, the local authorities and their associations and federations of municipalities of public law are not passive subjects of the Additional Municipal Property Tax, nor any of its services, establishments and organisms, even if with legal personality, including public institutes. (Wording of Law No. 51/2018, of 16 August)
Article 135.º-B
Objective scope
1 - The Additional Municipal Property Tax falls on the sum of the tax property values of urban properties situated in Portuguese territory of which the passive subject is the holder.
2 - The following are excluded from the Additional Municipal Property Tax: urban properties classified as "commercial, industrial or for services" and "other" pursuant to subparagraphs b) and d) of Article 6(1) of this Code.
3 - Passive subjects legally authorized to carry out financial leasing activities cannot pass on to financial lessees, in whole or in part, the Additional Municipal Property Tax when the tax property value of the properties that are the subject of a financial leasing contract does not exceed the deduction provided for in Article 135.º-C(2). (Added by Law No. 71/2018, of 31 December)
Article 135.º-C
Rules for determining the taxable value
1 - The taxable value corresponds to the sum of the tax property values, as of 1 January of the year to which the Additional Municipal Property Tax relates, of the properties that appear in the property matrices in the ownership of the passive subject.
2 - From the taxable value determined pursuant to the previous number, the following amounts are deducted:
a) €600,000, when the passive subject is a natural person;
b) €600,000, when the passive subject is an undivided estate.
3 - The following are not included in the sum referred to in Article 135.º-B(1): (Wording of Law No. 114/2017, of 29 December, having an interpretative nature)
a) The value of properties that in the previous year were exempt or not subject to taxation in IMI; (Wording of Law No. 114/2017, of 29 December, having an interpretative nature)
b) The value of properties intended exclusively for the construction of social or controlled cost housing whose holders are housing and construction cooperatives or residents' associations; (Wording of Law No. 114/2017, of 29 December, having an interpretative nature)
c) The value of properties or parts of urban properties whose holders are condominiums, when the tax property value of each property or part of property does not exceed 20 times the value of the annual social support index; (Wording of Law No. 114/2017, of 29 December, having an interpretative nature)
d) The value of properties or parts of urban properties whose holders are housing and construction cooperatives and residents' associations. (Wording of Law No. 114/2017, of 29 December, having an interpretative nature).
The diplomas enshrining the present wording were expressly transcribed to give an idea of the temporal, and thus political-legislative, nature of the changes verified.
The Additional to the IMI was introduced into the tax system by the 2017 State Budget Law (Law No. 42/2016, of 28 December), succeeding the Stamp Tax on High-Value Urban Properties (ISPUEV), provided for in item 28.1 of the General Stamp Tax Table, repealed by Article 210 of the budget diploma (on this tax, cf., among many, Decisions Nos. 590/2015, 620/2015, 586/2016, and 378/2018).
It has at its origin Bill No. 37/XIII/2nd, being the measure characterized in the Report of the 2017 State Budget as motivated by the promotion of fiscal equity in the taxation of real estate property, with an element of personal-based progressivity, through an exemption threshold and the exclusion of scope on various property typologies, thus justified: (underlined by us)
"C – Fiscal Equity Measures
In 2017 the distribution of the tax burden will fall less on labor income by way of the gradual elimination of the surcharge – with the loss of revenue partially offset by fiscal measures that seek to strengthen the progressivity of the system (with progressive taxation of property) and improve the prevention of tax evasion and aggressive tax planning.
Progressive taxation of real estate property
The Additional Municipal Property Tax introduces into the taxation of real estate property a progressive element with a personal base, taxing in a more elevated manner the larger assets, with a marginal rate of 0.3% applied to assets exceeding €600,000 per passive subject. To avoid the impact of this tax on economic activity, rural, mixed, industrial properties and those devoted to tourist activity are excluded from the scope, also allowing companies the exemption of properties devoted to their productive activity up to €600,000. The possibility of deducting the amount of tax paid from the collection relating to property income constitutes additionally an incentive to the lease and productive use of property. This tax replaces the previous stamp tax of
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