Process: 428/2018-T

Date: May 6, 2019

Tax Type: IMI

Source: Original CAAD Decision

Summary

This CAAD arbitration case (428/2018-T) addresses the proper calculation of patrimonial tax value (VPT) for land designated for construction under Portuguese IMI law. The taxpayer, a hotel development company, challenged the IMI assessment of land valued at €9,454,620, arguing it should be €2,772,620. The dispute centers on whether the affectation coefficient (1.1 for services) and location coefficient (3.1) can be applied when valuing construction land under Article 45 of the IMI Code. The claimant argued that Article 45 provides a specific assessment regime for construction land that excludes coefficients applicable to built properties under Article 38. The Tax Authority countered that Article 45 requires calculating the value based on buildings authorized or planned for construction, necessarily incorporating Article 38 coefficients including affectation and location. The case reflects settled jurisprudence from superior courts favoring the taxpayer's interpretation that construction land assessment follows strict Article 45 parameters without analogical application of Article 38 coefficients. The taxpayer had previously submitted Form 1 of IMI electronically and requested a second assessment after the initial evaluation maintained the disputed coefficients. The tribunal must determine whether construction land valuation constitutes a distinct assessment methodology or whether it incorporates the comprehensive coefficient system applicable to completed buildings, a distinction with significant fiscal implications for property development projects.

Full Decision

ARBITRAL DECISION

Agree in arbitral tribunal

I – Report

  1. A..., S.A., taxpayer number..., with registered office at Av. ..., no. ..., ...-... Lisbon, requests the constitution of an arbitral tribunal, pursuant to the provisions of articles 2.º, no. 1, paragraph a), and 10.º of Decree-Law no. 10/2011, of 20 January, to assess the legality of the act fixing the taxable patrimonial value relating to the urban property registered in the urban property roll under article ... of the parish of ..., in the municipality of Lisbon, further requesting the condemnation of the Tax Authority to pay indemnity interest.

The request is founded as follows.

The Claimant is a joint-stock company whose corporate purpose is the operation of the hotel industry, in owned or leased hotels, as well as the tourism industry, purchase and sale of properties and resale of those acquired for that purpose, and is the owner of the land for construction where a hotel will be built with an estimated final construction completion date of April 2021.

On 31 August 2017, it electronically submitted Form 1 of the IMI, based on an alteration of areas, and presented a request in which it requested the update of the taxable patrimonial value of the land for construction by disregarding the allocation coefficient of 1.1 in the formula for calculating the land assessment.

As a consequence, it was notified of the result of the land assessment in which the allocation coefficient for services (corresponding to 1.1) was taken into account, as well as the location coefficient (corresponding to 3.1), which led to the submission of a request for a second assessment in which it expressly requested the disregarding of said assessment coefficients.

The assessment committee maintained the parameters of the first assessment, fixing a taxable patrimonial value of €9,454,620, corresponding to the base value of built properties (603), gross construction area plus the area exceeding the implantation area (4,598.0337), location coefficient (3.10), allocation coefficient (1.10), quality and comfort coefficient (1), when the correct taxable patrimonial value would be €2,772,620, corresponding to the base value of built properties (603), gross construction area plus the area exceeding the implantation area (4,598.0337).

In this context, the Claimant understands that the challenged tax act suffers from breach of law, since, contrary to what occurs in the case of assessment of properties of the "Other" type, referred to in article 46.º of the IMI Code, in which there is an express reference to the general rules of article 38.º, in the case of land for construction, the assessment is made in the strict terms of article 45.º of that Code, with the consequent exclusion of the allocation, location and quality and comfort coefficients, according to the understanding that has been upheld by the settled jurisprudence of the superior courts.

Concluding that the consideration of the allocation and location coefficients resulting from the analogical application of article 38.º of the IMI Code and the undue consideration of the base value of built properties (602), instead of the average construction value per square meter (482.40), resulting in an excess of the taxable patrimonial value of the property, is illegal by breach of the provisions of articles 38.º and 45.º of the IMI Code and 11.º, no. 4, of the LGT.

Subsidiarily, the Claimant invokes the defect of lack of reasoning, in application of the combined provisions of articles 77.º of the LGT, 153.º of the CPA and 268.º, no. 3, of the CRP.

The Tax Authority, in its reply, maintains that the taxable patrimonial value of construction land, established in article 45º of the IMI Code, results from the sum of the value of the implantation area of the building to be constructed and the value of the land adjacent to the implantation, varying the value of the implantation area between 15% and 45% of the value of the buildings authorized or provided for therein as provided in no. 2 of that article 45.º

And, thus, the formula for calculating the taxable patrimonial value of land for construction must contain all the coefficients considered in the assessment of built urban properties, for determining the value of properties to be constructed, in application of the provision of article 38º of the same Code.

From that article 45.º it thus follows that the methodology for assessing urban properties in general should be applied, including the coefficients mentioned in article 38.º and, among these, the allocation coefficient referred to in article 41º of the CIMI. And, for that very reason, the law provides for the implantation area of the building to be constructed a variable percentage between 15% and 45% of the value of the buildings authorized or provided for, and, for the location coefficient, a variable percentage between 0.4% and 3.5%, and which, in the present case, was fixed at 35% and 3.10%, respectively.

And, in these terms, in the assessment of land for construction, account must be taken of the characteristics of the urban property to be built therein, taking into account the allocation and location coefficients of the building in accordance with what is established by said article 38º. This is because the value of land for construction corresponds fundamentally to a legal expectancy embodied in a right to build therein a property with certain characteristics and with a certain value that must be considered in calculating the taxable patrimonial value of the immovable.

It should further be noted that the Claimant does not impute to the challenged act any specific defect in the assessment, questioning only the taxable patrimonial value, as a distinguishable act, so that, should the challenger's position be upheld in the challenge proceedings, there is no place for condemnation to indemnity interest.

  1. Following the proceedings, the meeting referred to in article 18.º of the RJAT was dispensed with and the proceedings were ordered to continue for successive pleadings.

In pleadings the parties maintained their previous positions.

  1. The request for constitution of the arbitral tribunal was accepted by the President of the CAAD and notified to the Tax and Customs Authority in accordance with the regulatory provisions.

Pursuant to the provision of paragraph a) of no. 2 of article 6.º and paragraph b) of no. 1 of article 11.º of the RJAT, as worded by article 228.° of Law no. 66-B/2012, of 31 December, the Deontological Council appointed the signatories as arbiters of the collective arbitral tribunal, who communicated acceptance of the appointment within the applicable time frame.

The parties were duly and timely notified of that appointment and did not express the intention to refuse it, in accordance with the combined provisions of article 11.º, no. 1, paragraphs a) and b), of the RJAT and articles 6.° and 7.º of the Deontological Code.

Thus, in accordance with the provision of paragraph c) of no. 1 of article 11.º of the RJAT, as worded by article 228.° of Law no. 66-B/2012, of 31 December, the collective arbitral tribunal was constituted on 20 December 2018.

The arbitral tribunal was regularly constituted and is materially competent in accordance with the provision of articles 2.º, no. 1, paragraph a), and 30.º, no. 1, of Decree-Law no. 10/2011, of 20 January.

The parties enjoy legal personality and capacity, are legitimate and are represented (articles 4.º and 10.º, no. 2, of the same statute and 1.º of Portaria no. 112-A/2011, of 22 March).

The proceedings suffer from no nullities and no exceptions were raised.

It falls to us to assess and decide.

Factual Matter

  1. The facts relevant to the decision of the case that may be regarded as established are as follows.

A) The Claimant is a joint-stock company whose corporate purpose is the operation of the hotel industry, in owned or leased hotels, as well as the tourism industry, purchase and sale of properties and resale of those acquired for that purpose;

B) The Claimant is the owner of the land for construction registered in the urban property roll under article ... of the parish of ..., in the municipality of Lisbon, with the identification data contained in the property notebook which constitutes document no. 3 attached with the petition and which is reproduced herein;

C) The land in question was the subject of a prior information request for the construction of a hotel establishment, under Process no. .../…/2014, which was revalidated by order of the Municipal Director of Urban Planning of Lisbon, of 29 March 2018, issued in the course of Process no. .../…/2018;

D) On 31 August 2017, the Claimant submitted Form 1 Declaration of IMI on the basis of rectification of areas, declaring the following elements: Total Land Area: 1,428.6000 m²; Building Implantation Area: 1,428.6000 m²; Gross Construction Area: 23,087.0500 m²; Gross Dependent Area: 9,673.9300 m²;

E) On the same date, the Claimant filed a complaint regarding the property roll of the land for construction, requesting validation of form 1 of the IMI and the update of the taxable patrimonial value by disregarding the services allocation coefficient of 1.1;

F) On 25 February 2018, the Claimant was notified of a first assessment carried out on the land for construction, containing the following elements:

Declared elements: Total Land Area: 1,428.6000 m²; Building Implantation Area: 1,428.6000 m²; Gross Construction Area: 23,087.0500 m²; Gross Dependent Area: 9,673.9300 m²

Taxable Patrimonial Value

VT = VC x A x CL x CA x CQ

9,454,620.00 = 603.00 x 4,598.0337 x 3.10 x 1.10 x 1.000;

G) On 28 March 2018, the Claimant requested a second assessment of said land for construction, requesting the disregarding of the allocation and location coefficients in the formula for calculating the taxable patrimonial value;

H) On 6 July 2018, the Claimant was notified of the result of the second assessment containing the following data:

Total Land Area: 1,428.6000 m²; Building Implantation Area: 1,428.6000 m²; Gross Construction Area: 23,087.0500 m²; Gross Dependent Area: 9,673.9300 m²

Taxable Patrimonial Value

VT = VC x A x CL x CA x CQ

9,454,620.00 = 603.00 x 4,598.0337 x 3.10 x 1.10 x 1.000

I) On 20 June 2018, the IMI assessment for the year 2017 was issued in the amount of €28,363.86, calculated at the rate of 0.3% on the TPV of €9,454,620.00;

J) On 10 August 2018, the assessment act for the IMI surcharge, referring to the period 2018, was issued in the amount of €37,818.48, calculated at the rate of 0.4% on the TPV of €9,454,620.00.

The Tribunal formed its conviction regarding the established facts on the basis of the documents attached to the petition and the administrative proceedings attached by the Tax Authority with the reply.

Legal Matter

  1. The issue under debate consists in determining whether, in determining the taxable patrimonial value of land for construction, the allocation and location coefficients referred to in article 38.º of the IMI Code should be taken into account.

The Claimant defends the understanding that the assessment of land for construction is governed exclusively by the provision of article 45.º of the IMI Code, with no rule referring to the general rules of article 38.º, so that the adoption of allocation, quality and comfort, and location coefficients corresponds to an analogical application of that provision which is legally prohibited.

In contrast, the Tax Authority considers that the determination of the taxable patrimonial value of land for construction follows the methodology for assessing urban properties in general, including the coefficients mentioned in article 38.º, thus understanding that article 45.º of the IMI Code stipulates that the value of the implantation of the building to be constructed varies between 15% and 45% of the value of the buildings authorized or provided for.

However, the settled jurisprudence of the STA points in the direction that in determining the taxable patrimonial value of land for construction, the provision of article 45.º of the IMI Code must be observed, which constitutes the specific rule governing this matter, so that there is no place for consideration of the allocation, location and quality and comfort coefficients referred to in article 38.º

And there is no reason to change that approach now.

As results from article 1.º of the IMI Code, the municipal tax on real property (IMI) applies to the taxable patrimonial value of rural and urban properties situated in Portuguese territory, with the subsequent articles defining, for purposes of the tax, the concepts of property, rural properties, urban properties and mixed properties (articles 2.º to 5.º).

Article 6.º, in turn, establishes the types of urban properties, as follows:

"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 license, which have as their normal purpose each of these uses.

3 - Land for construction is considered to be land situated inside or outside an urban settlement, for which a license or authorization for a subdivision or construction operation has been granted, prior communication has been admitted or favorable prior information has been issued, and also land that has 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, in accordance with municipal land planning plans, are intended for public spaces, infrastructures or facilities.

4 - The provision of paragraph d) of no. 1 encompasses land situated within an urban settlement that is neither land for construction nor covered by the provision of no. 2 of article 3.º and also buildings and constructions licensed or, in the absence of license, which have as their normal purpose other uses than those referred to in no. 2 and also those of the exception of no. 3.

With regard to assessment operations, the law distinguishes between urban properties intended for housing, commerce, industry and services, whose parameters are set out in articles 38.º to 44.º, and land for construction and properties of the "other" type, whose taxable patrimonial value is determined, respectively, in accordance with articles 45.º and 46.º.

That article 38.º, under the heading "Determination of taxable value", in the part that is most relevant to consider, provides as follows:

1 - The determination of the taxable patrimonial value of urban properties for housing, commerce, industry and services results from the following expression:

Vt = Vc x A x Ca x Cl x Cq x Cv

where:

Vt = taxable patrimonial value;

Vc = base value of built properties;

A = gross construction area plus the area exceeding the implantation area;

Ca = allocation coefficient;

Cl = location coefficient;

Cq = quality and comfort coefficient;

Cv = age depreciation coefficient.

(…).

In turn, the provisions that regulate the fixing of the patrimonial value of land for construction and urban properties of the "other" type provide as follows:

Article 45.º

Taxable patrimonial value of land for construction

1 - The taxable patrimonial value of land for construction is the sum of the value of the implantation area of the building to be constructed, which is that situated within the perimeter of fixing the building to the ground, measured by the outer part, added to the value of the land adjacent to the implantation.

2 - The value of the implantation area varies between 15% and 45% of the value of the buildings authorized or provided for.

3 - In fixing the percentage value of the implantation land, the characteristics referred to in no. 3 of article 42.º are taken into account.

4 - The value of the area adjacent to the construction is calculated in accordance with no. 4 of article 40.º.

(…).

Article 46.º

Taxable patrimonial value of properties of the "Other" type

1 - In the case of buildings, the taxable patrimonial value is determined in accordance with article 38º, with the necessary adaptations.

2 - In the event that it is not possible to use the rules of article 38º, the expert must use the cost plus land value method.

3 - In the case of land, its unit value corresponds to what results from the application of the coefficient of 0.005, referred to in no. 4 of article 40º, to the product of the base value of built properties by the location coefficient.

4 - The taxable patrimonial value of urban properties in ruins is determined as if it were land for construction, in accordance with a resolution of the municipal council.

It is evident in all respects that the legislator, in defining the criteria for determining the taxable value by reference to urban properties classified as "residential," "commercial, industrial or for services," "land for construction" and "other," is precisely referring to that typology of properties in accordance with the characterization that the Code assigns to it in accordance with paragraphs a) to d) of no. 1 of article 6.º of the IMI Code.

Since the matter concerns land for construction, the taxable patrimonial value is based on the criteria defined in that article 45.º, which refers to the value of the implantation area of the building to be constructed plus the value of the land adjacent to the implantation. Moreover, the rule defines the terms in which the value of the implantation area of the building to be constructed (nos. 2 and 3) and the value of the area adjacent to the construction (no. 4) are calculated, the sum of which allows the patrimonial value of the land for construction to be fixed.

The value of the implantation area varies in a percentage between 15% and 45% of the value of the buildings authorized or provided for and which is fixed taking into account the characteristics mentioned in no. 3 of article 42.º, that is, characteristics relating to accessibility, proximity to social facilities and location in areas of high real estate market value. In turn, the value of the area adjacent to the construction is calculated by reference to article 40.º, no. 4, which stipulates the formula for calculating the free land area of built properties.

By determining the law the terms in which the value of the implantation area of the building to be constructed and the value of the area adjacent to the construction are calculated, the sum of which allows the patrimonial value of the land for construction to be fixed, those are the specific criteria to which attention must be paid for purposes of assessment. By establishing that the value of the implantation area varies between 15% and 45% of the value of the buildings authorized or provided for, the law does not mandate the application of the location coefficient defined in article 42.º for urban properties intended for commerce, industry or services, but merely intends to make explicit that, for purposes of assessing construction land, a percentage value between those two limits should be considered, weighted according to the characteristics relating to the location of the land. By using the formula for calculating the free land area of built properties, for determining the value of the area adjacent to the construction, the legislator does not intend to equate land for construction to built properties, but solely to apply a calculation mechanism that is provided for in another provision of the same legal instrument.

As can be seen, the references made in article 45.º to the specific regime of no. 3 of article 42.º and no. 4 of article 40.º do not represent a blanket referral to the assessment criteria applicable to built properties, but only the integration into the specific regime for assessing land for construction, through the effect of an intra-systemic referral mechanism, of certain factors that are also considered in the assessment of other urban properties.

Furthermore, it is noteworthy, within the framework of a systematic interpretation of the law, that said article 45.º does not contain a provision similar to that provided in article 46.º, which for determining the taxable patrimonial value of properties of the "other" type, mandates the application, with the necessary adaptations, in the case of buildings, of the criteria defined in article 38º. In the case of land for construction, not only is such a generic referral to the provision of that precept not made, but also specific criteria are stipulated for calculating the taxable patrimonial value of properties.

On the other hand, an interpretation of article 45.º based on the similarity of situation between land for construction and built buildings has the minimum support in the letter of the law and recourse to analogy is not even admissible, not only because there is no normative gap susceptible to analogical integration, but also because integration by means of analogy is prohibited regarding matters covered by the parliamentary law reserve (article 11.º, no. 4, of the LGT).

The jurisprudence of the STA also points in the direction set out, which has considered that the allocation and quality and comfort coefficients are not applicable in the assessment of land for construction, based on the understanding that these factors can only be assessed in relation to already built properties (see STA judgments of 11 November 2009, Process no. 0765/09, 20 April 2016, Process no. 0824/15, and 16 May 2018, Process no. 0986/16). It has also ruled out the location coefficient, insofar as it is understood that this factor is already contemplated in the percentage established in no. 2 of article 45.º (see STA judgments of 5 April 2017, Process no. 01107/16, and 28 June 2017, Process no. 0897/16).

It should finally be noted that this jurisprudential understanding was upheld by the Plenary of the Tax Litigation Section of the STA, in an appeal against conflicting judgments, through the judgment of 21 September 2016, in Process no. 01083/13.

In these terms, the fixing of the taxable patrimonial value of land for construction on the basis of the application of allocation, quality and comfort, and location coefficients proves to be illegal by breach of article 45.º of the IMI Code.

Issues Whose Review is Precluded

  1. Given the legal solution of the case, which provides more effective protection to the position of the taxpayer, the review of the defect of lack of reasoning which was also alleged is precluded.

Indemnity Interest

  1. The Claimant further requests the condemnation of the Tax Authority to pay indemnity interest, arguing that the unlawful fixing of the taxable patrimonial value determined that it had to pay excess tax for the year 2017, and furthermore there will still be new IMI assessments for the years 2018 and 2019.

In accordance with the provision of paragraph b) of article 24.º of the RJAT, the arbitral decision on the merits of the claim from which no appeal or challenge may be brought binds the Tax Administration, in the exact terms of the viability of the arbitral decision in favor of the taxpayer, whereby it is obliged to "restore the situation that would have existed if the tax act subject of the arbitral decision had not been performed, adopting the acts and operations necessary for that purpose." This is in keeping with the provision of article 100.º of the LGT, applicable by virtue of the provision of paragraph a) of no. 1 of article 29.º of the RJAT.

Furthermore, in accordance with no. 5 of article 24.º of the RJAT, "payment of interest, regardless of its nature, is due in accordance with the terms provided for in the General Tax Law and the Tax Procedure and Process Code," which refers to the provision of articles 43.º, no. 1, and 61.º, no. 5, of one and the other of those statutes, implying the payment of indemnity interest from the date of the improper payment of the tax until the date of processing of the respective tax credit note.

However, in the present case, the Claimant merely challenged the act of fixing the taxable patrimonial value, which should be understood as a distinguishable act in relation to the subsequent acts of tax assessment. And, as a result of the contentious annulment of that act, it falls solely to the Administration to re-examine the framework of the legal relationships arising from the act declared unlawful, and, in particular, to annul, replace or modify the consequent acts performed in the meantime so as to restore the situation that would have existed if the unlawfulness had not been committed (articles 172.º, no. 2, of the CPA and 173.º, no. 2, of the CPTA).

And, thus, only as a consequence of the annulment or replacement of the consequent acts can the situation of improper payment of tax due to an error attributable to the services be considered as having occurred, which would make it justifiable, in accordance with the aforementioned provisions of articles 43.º, no. 1, of the LGT and 61.º, no. 5, of the CPPT, the payment of indemnity interest, which can necessarily only occur in the implementation of the judgment.

The request for condemnation to indemnity interest is therefore dismissed.

III – Decision

Accordingly, it is decided:

a) To find the arbitral request well-founded and to annul the act of fixing the challenged taxable patrimonial value;

b) To find the request for condemnation to indemnity interest not well-founded.

Value of the Case

The Claimant indicated as the value of the case the amount of €224,332.00, which the Tax Authority did not question and corresponds to the value of the tax assessments to which it was intended to object, in accordance with the provision of no. 3 of article 3.º of the Regulation of Costs in Tax Arbitration Proceedings, whereby the value of the case is fixed at that amount.

Costs

In accordance with articles 12.º, no. 2, and 24.º, no. 4, of the RJAT, and 3.º, no. 2, of the Regulation of Costs in Tax Arbitration Proceedings and Table I attached to that Regulation, the amount of costs is fixed at €4,284.00, which is charged to the Respondent.

Notify.

Lisbon, 6 May 2019

The President of the Arbitral Tribunal

Carlos Fernandes Cadilha

The Arbitral Tribunal Member

Rui Rodrigues

The Arbitral Tribunal Member

Marcolino Pisão Pedreiro

Frequently Asked Questions

Automatically Created

How is the patrimonial tax value (VPT) of land for construction calculated under Portuguese IMI law?
Under Article 45 of the IMI Code, the patrimonial tax value (VPT) of land for construction is calculated as the sum of: (1) the value of the implantation area of the building to be constructed (between 15-45% of the value of authorized or planned buildings), and (2) the value of land adjacent to the implantation area. The base calculation uses the base value of built properties (Vc) multiplied by the gross construction area plus any area exceeding the implantation area. The central legal controversy is whether this calculation must incorporate coefficients from Article 38 (affectation, location, quality and comfort) or whether Article 45 establishes an autonomous assessment regime.
Can the affectation coefficient (coeficiente de afetação) be applied when evaluating land for construction under Article 45 of the IMI Code?
This is the core dispute in the case. The taxpayer argues that the affectation coefficient (coeficiente de afetação) cannot be applied to construction land because Article 45 of the IMI Code establishes a specific assessment regime that does not reference Article 38's general rules, unlike Article 46 for 'Other' type properties which expressly incorporates Article 38. Settled jurisprudence from superior courts supports excluding the affectation coefficient. The Tax Authority maintains that since Article 45 requires calculating value based on 'buildings authorized or provided for,' all Article 38 coefficients must apply to determine the value of those prospective buildings, making the affectation coefficient legally required.
Does the location coefficient apply to the valuation of land for construction for IMI purposes?
Yes, according to the Tax Authority's position, but contested by the taxpayer. The Tax Authority argues that the location coefficient applies because Article 45 references 'the value of buildings authorized or provided for' which must be calculated using Article 38's methodology, including the location coefficient (which ranges from 0.4 to 3.5, applied as 3.10 in this case). The taxpayer maintains that construction land assessment under Article 45 excludes location coefficients, supported by superior court precedent. The distinction is critical: the location coefficient of 3.10 significantly increases the assessed value from the taxpayer's calculated €2,772,620 to the Tax Authority's €9,454,620.
What is the difference between property valuation under Article 45 and Article 38 of the Portuguese IMI Code?
Article 38 of the IMI Code establishes the general methodology for valuing built urban properties, incorporating multiple coefficients: affectation (ca), location (cl), quality and comfort (cq), and age (cv). Article 45 specifically addresses land for construction (terrenos para construção) and calculates value based on implantation area plus adjacent land, with reference to 'buildings authorized or provided for.' The fundamental legal question is whether Article 45 creates an autonomous assessment regime using only the parameters explicitly mentioned (base value, construction area, implantation percentage of 15-45%) or whether it implicitly incorporates Article 38's comprehensive coefficient system. Unlike Article 46 ('Other' properties) which expressly references Article 38's general rules, Article 45 contains no such explicit cross-reference.
Can taxpayers request a second evaluation of a property's patrimonial tax value and challenge the applied coefficients at CAAD?
Yes, Portuguese tax law allows taxpayers to request a second evaluation (segunda avaliação) of a property's patrimonial tax value and subsequently challenge the assessment at CAAD (Centro de Arbitragem Administrativa). In this case, the taxpayer electronically submitted Form 1 of IMI requesting update of the VPT by excluding the affectation coefficient. After the initial assessment maintained the disputed coefficients, the taxpayer expressly requested a second assessment specifically challenging the affectation and location coefficients. When the assessment committee maintained the €9,454,620 valuation with all coefficients, the taxpayer initiated arbitration proceedings under Articles 2(1)(a) and 10 of Decree-Law 10/2011. Taxpayers can also request condemnation of the Tax Authority to pay compensatory interest (juros indemnizatórios) for illegal assessments.