Process: 434/2014-T

Date: October 31, 2016

Tax Type: IMI

Source: Original CAAD Decision

Summary

This CAAD arbitral case (Process 434/2014-T) addresses whether IMI (Municipal Property Tax) assessments for 2008-2011 can be annulled due to procedural defects in notification. The claimant challenged IMI charges totaling over €22,000 on 31 properties, contesting approximately €17,800 in excess assessments. The core issue involved the Tax Authority's failure to notify the property owner of changes to taxable patrimonial values (VPT) before issuing assessment notices. The claimant argued this violated Article 77-6 of the General Tax Law (LGT) and Article 36-1 of the Tax Procedure Code (CPPT), constituting lack of substantiation (fundamentação) of the tax acts. After the Tax Authority rejected revision requests filed in November 2012, the taxpayer initiated arbitral proceedings in June 2014. The claimant invoked the principle of unitary challenge, arguing that IMI assessments must be preceded by proper notification of VPT changes to allow taxpayers to understand how property values were determined. The case demonstrates the strict procedural requirements Portuguese tax law imposes on the Autoridade Tributária regarding notification and substantiation of property tax assessments. The tribunal's analysis focused on whether notification defects invalidate the underlying assessments and whether revision requests under Article 78 LGT were properly denied. This decision highlights the importance of procedural compliance in Portuguese tax administration and taxpayer rights to adequate notification of changes affecting their tax obligations across multiple properties and tax years.

Full Decision

ARBITRAL DECISION

PARTIES

Claimant: A…, Tax Identification Number …, resident at …, … Street, No. …, Tower …, …-… Lisbon.

Respondent: Tax and Customs Authority (AT).

REPORT

a) On 19.06.2014, A…, Tax Identification Number …, filed a request for the constitution of a Singular Arbitral Tribunal (TAS), pursuant to the combined provisions of Articles 2 and 10 of Decree-Law No. 10/2011, of 20 January (Legal Framework for Tax Arbitration), hereinafter referred to only as RJAT.

b) The request was submitted by an attorney whose power of attorney was attached.

THE REQUEST

c) The Claimant petitions for the annulment of IMI assessments, with reference to the year

  • 2008, identified as documents 2008 …, 2008 …, 2008 … with assessment dates of 05.03.2009 for the first two and 19.12.2009 for the third, generating a total collection of 5,859.87 euros (challenging the excess assessment of 4,972.61 euros), relating to 31 properties of which he is the owner, duly listed in the collection documents attached as Document No. 1.

  • 2009, identified as documents 2009 … and 2009 … with assessment date of 13.02.2010, generating a total collection of 5,295.96 euros (challenging the excess assessment of 4,312.89 euros), relating to 31 properties of which he is the owner, duly listed in the collection documents.

  • 2010, identified as documents 2010 … and 2010 … with assessment date of 12.02.2011, generating a total collection of 6,077.49 euros (challenging the excess assessment of 4,256.55 euros), relating to 31 properties of which he is the owner, duly listed in the collection documents.

  • 2011, identified as documents 2011 … and 2011 … with assessment date of 20.02.2012, generating a total collection of 5,250.99 euros (challenging the excess assessment of 4,256.55 euros), relating to 31 properties of which he is the owner, duly listed in the collection documents.

d) He claims that the AT only notified him of the IMI assessment for the various years, for payment, but without first communicating to him the change in the tax-assessed property values (VPT) of the following real properties:

[Property listings with Parish and Article numbers - specific identifiers redacted with …]

e) Dissatisfied with this situation, on 26 November 2012, he filed requests for official revision of the tax acts, petitioning for the annulment of the excess assessment, alleging "lack of knowledge of the operations performed to determine the VPT," since the notifications themselves do not permit "determining the manner in which the VPT of the properties was determined."

f) On 8 April 2014, he was notified of the rejection of those requests.

g) Dissatisfied with such rejections, he seeks in this proceeding that the AT should grant him the requests for official revision pursuant to Article 78-1 of the LGT, as its requirements are met.

h) Based on the principle of unitary challenge of assessment acts (VPT vs. assessment), he invokes the lack of notification of the change in VPT of the properties listed in d), occurring from 2008 onwards, which he understands constitutes a violation of the norms contained in Article 77-6 of the LGT and Article 36-1 of the CPPT.

i) He concludes by requesting partial annulment of the assessments (collections) indicated above, in the part in which they were based on the difference in VPT of the properties resulting from increases in the tax base that were not communicated to him, on grounds of illegality.

OF THE ARBITRAL TRIBUNAL

j) The request for arbitral ruling was accepted by the President of CAAD and immediately notified to the AT on 23.06.2014.

k) The Deontological Council of CAAD designated the signatory of this decision as arbitrator, and the parties were notified thereof on 06.08.2014.

l) Accordingly, the Singular Arbitral Tribunal (TAS) has been duly constituted as of 22.08.2014 to examine and decide this dispute.

m) All such acts are documented in the communication of constitution of the TAS dated 22.08.2014, which is hereby reproduced.

n) The AT did not submit a response, but attached on 22.10.2014 the PA (1 and 2) containing the position taken in the proceedings for rejection referred to in e) above, resulting from the tenor of the opinions and decisions adopted by the AT in those proceedings that, in substance, exercise the right to respond to the position learned in defense by the Claimant in those proceedings and in this process.

o) Following a request from the Respondent dated 16.10.2014, the TAS by order dated 17.10.2014 dispensed itself from holding the parties' meeting referred to in Article 18 of the RJAT, but since it was not waived in terms of arguments, that order allowed a period of 10 days for the parties to submit written and successive arguments.

p) On 28.10.2014, the Claimant submitted written arguments supporting the thesis defended in the request for arbitral ruling.

q) The AT submitted written arguments on 22.10.2014 and also submitted information obtained from Tax Services (documents Nos. 1 to 3), entities entrusted with the performance of VPT change notifications.

r) Accordingly, the Respondent and the AT gave their express or tacit consent to the non-holding of the parties' meeting referred to in Article 18 of the RJAT.

s) On 31.08.2016, as a result of the annulment of the TAS decision of 19.11.2014 by the judgment of TCAS of 17.03.2016, the Claimant was notified of the documents that according to the annulling decision motivated the annulment. He pronounced himself by request dated 12.09.2016.

t) In light of the Claimant's response, the Respondent was also heard.

PROCEDURAL REQUIREMENTS

u) Capacity, legitimacy, and representation—the parties enjoy legal personality and capacity, are legitimate, and are duly represented.

v) Contradictory—the AT exercised the right to respond in accordance with paragraphs o), p), and s) of this Report. All TAS orders and all requests and documents submitted by the parties were regularly notified to the respective counterparty and are available to the parties on the CAAD website.

w) Dilatory exceptions—the process does not suffer from nullities, and the request for arbitral ruling is timely, as it was filed within the period prescribed in subparagraph a) of Article 10(1) of the RJAT.

SUMMARY OF THE CLAIMANT'S POSITION

As to the illegality embodied in the lack of notification of VPT changes—by violation of the norms contained in Article 77-6 of the LGT and Article 36-1 of the CPPT

x) The Claimant argues that the AT only notified him of the IMI assessment for the years 2008 to 2011 for payment, but without previously communicating to him the change in the tax-assessed property values (VPT) that served as the tax base of the following real properties:

[Property listings with Parish and Article numbers - specific identifiers redacted with …]

y) Dissatisfied with this situation, on 26 November 2012, he filed requests for official revision of the tax acts, pursuant to Article 78 of the LGT, petitioning for the annulment of the excess assessment, alleging "lack of knowledge of the operations performed to determine the VPT," since the notifications themselves do not permit "determining the manner in which the VPT of the properties was determined," requests which on 8 April 2014, he was notified of their rejection.

z) He seeks that the AT should grant him the requests for official revision pursuant to Article 78-1 of the LGT, as its requirements are met.

aa) He invokes the lack of notification of the change in VPT of the properties listed in d), occurring from 2008 onwards, which he understands constitutes a violation of the norms contained in Article 77-6 of the LGT and Article 36-1 of the CPPT.

bb) He argues that, because he was not notified of the increase in the VPT of the properties, at least with the notification of the assessments, this results in "lack of substantiation of those acts."

cc) And even if this were not understood, "the maintenance in the legal order of tax acts improperly substantiated constitutes a situation of grave and notorious injustice."

dd) In his arguments, the Claimant maintained, in substance, the position defended in the request for arbitral ruling and again invokes in his favor the jurisprudence of the STA—Decision of 19.09.2012—Case 659/12, which states as follows: "whatever the manner by which the VPT was obtained—by appraisal or by updating under the transitional regime—it must always be notified to the taxpayer of the IMI before the tax assessment."(1)

ee) He seeks partial annulment of the assessments (collections) in the part of the excess indicated in c), that is, in the part in which they were based on the difference in VPT of the properties resulting from increases in the tax base that were not communicated to him.

ff) In the request referred to in s) above, the Claimant argues that the AT must demonstrate the perfection of the notifications, considering it impossible to prove that he was not made notifications of the changes in VPT of the properties.

gg) He understands that illegality occurs in that part of the assessments that entails partial annulment of the assessments.

SUMMARY OF THE TAX AUTHORITY'S POSITION

As to the illegality embodied in the lack of notification of VPT changes—by violation of the norms contained in Article 77-6 of the LGT and Article 36-1 of the CPPT

hh) The AT, in its arguments, argues first that the TAS cannot examine the formal defect of lack of substantiation of the VPT fixing act, since the Claimant, even in the request for arbitral ruling, alleged no non-conformity with the law.

(1) It is noted that the text of the decision reproduced by the Claimant in the request for arbitral ruling and in the arguments does not coincide with what is found in the database www.dgsi.pt, namely: "I - Tax acts are subject to substantiation (Art. 268(3), Art. 77 of the LGT, and Art. 125 of the CPA). II - The substantiation of the VPT fixing act, whether resulting from appraisal or from updating, must be communicated to the taxpayer of the IMI to be assessed on that tax base. III - If it has not been, and also the IMI assessment does not indicate the manner in which the VPT was determined, that assessment cannot be deemed sufficiently substantiated, all the more so as Article 77(2) of the LGT requires that substantiation of tax acts be integrated, inter alia, by the operations of determining the tax base."

ii) Concluding that "the invoked formal defect of lack of substantiation of the VPT fixing acts will not be capable of determining, ipso facto, the illegality of the determination of those VPT nor of the IMI assessments on which they were based."

jj) Argues, second, that the exceptional procedure of official revision is only admissible "after exhausting the remedies and contentious means provided for in the CPPT and the various Tax Codes."

kk) And that, concerning the situation presented by the Claimant, for the reason that he did not timely use the common remedies and contentious means, as he himself acknowledges in his request, since "only on 26.11.2012, the date of the official revision requests," he came to raise the partial annulment of the assessments, not only did the barring of the use of such means occur, but the AT "could only admit the revision requests if an error attributable to the services had occurred."

ll) And that in this case there is no "error attributable to the services" for the reason that, as stated in the orders rejecting the official revision requests, the VPT updates were performed "by operation of law" in accordance with Decree-Law No. 287/2003 of 12.11 (transitional regime of Articles 16 to 20).

mm) And that such error does not exist because, according to information from the Tax Service of … dated 27.10.2014, as to rural properties, no VPT updates were performed for the years 2008 to 2011.

nn) And that also according to information from that Tax Service, as to urban properties …, …, …, …, …, …, the VPT changes resulted from the periodic updates referred to in Article 138 of the CIMI.

oo) Further informing that Tax Service referred to in ll) that as to properties … and …, they were appraised within the initiative of the taxpayer, of whose result he was notified and did not raise a second appraisal.

pp) As to urban properties …, …, …, and …, the Tax Service of … states that "the appraisals were performed within the general appraisal and all are properly notified."

qq) As to the urban property … - …, the Tax Service of … informed on 23.10.2014 that the notification of the VPT "was notified by official document No. …, notified by registered letter …, received on 08.02.2013."

rr) The Claimant did not use the means of Article 37 of the CPPT, regarding the situations referred to in ll) and nn), and did not use the means of Article 20 of Decree-Law No. 287/2003 of 12.11, regarding the other properties, particularly when he was notified to pay the IMI for the years 2008 to 2011.

ss) Even if it were concluded that the IMI assessment acts were insufficient or inadequately substantiated, such would be a formal requirement that does not confuse with its content, leading to voidability.

tt) Considers that the requirements of Article 78(4) of the LGT are not met in this case, which would allow the granting of the official revision requests, insofar as there does not occur a "manifestly excessive and disproportionate taxation with reality," nor is there "notorious ostensive or unequivocal and grave injustice."

uu) Concludes with the legality of the acts that rejected the official revision requests, by untimeliness and because they constitute a correct application of law to the facts.

II - ISSUES FOR THE TRIBUNAL TO RESOLVE

The Claimant constructs his line of reasoning, reflected in the request for arbitral ruling and in the arguments, in the STA Decision of 19.09.2012—Case 659/12, Rapporteur Mr. Councilor Francisco Rhotes.

  • Based on the STA jurisprudence cited above, namely: "The substantiation of the VPT fixing act, whether resulting from appraisal or from updating, must be communicated to the taxpayer of the IMI to be assessed on that tax base," the first issue that arises concerns the factual determination of whether the taxpayer was or was not notified of "appraisals" or "updates" of the VPT, even under the transitional regime and as to any periodic appraisals, before the assessment or with the assessment.

  • Should the answer to the previous question be negative, then what must be determined is whether, even if such formality was omitted, as to "updates" of the VPT under the transitional regime, the taxpayer used the means of Article 20 of Decree-Law No. 287/2003 of 12.11, and if he did not use them, what are the consequences.

  • Also, in the event that it is concluded that the VPT changes were not communicated to the taxpayer, it will be necessary to determine the regime of Article 138 of the CIMI, periodic VPT updating, in the aspect of taxpayers' reaction, in light of Article 134 of the CPPT and Article 86 of the LGT.

The AT submitted two PA containing the substantiation of the rejections of official revision and information from Tax Services (…, … and …) regarding the question of VPT changes and the possible performance of notifications of changed VPT.

The TAS is subordinate to "constituted law" (Article 2(2) of the RJAT). We are faced with the application of public law norms, where indeed "lack of contestation does not represent admission of the facts alleged by the challenger" (Article 110(6) of the CPPT).

One of the principles governing tax arbitration, alongside the right to respond, is that the Arbitral Tribunal must ensure material equality of the parties. The search for material and factual truth is required, and recourse to equity is not permitted.

It will not, therefore, be surprising the extent of the "power-duty" of the TAS contained in Article 19(2) of the RJAT, aimed at obtaining the broadest set of documentation and facts that permit, in light of material and factual truth, a decision as subordinate as possible to "constituted law."

It is in this line of thinking that the TAS considers relevant to the correct resolution of the case the three items submitted by the AT with the arguments and also the content of the appraisal record of the urban property …, since this expresses, in the operation history, the date of notification of the appraisal to the taxpayers.

The TAS cannot ignore that the act that the Claimant directly attacks is the decision rejecting the official revision, and mediately the IMI assessment acts of 2008, 2009, 2010, and 2011.

And that he only filed the revision request of the assessment acts in 2012 (26.11.2012), that is, after the taxpayer had received the IMI assessment notices for 2008, 2009, 2010, and 2011 and had paid the tax for 4 years.

And he did not exercise the right of complaint through the ordinary remedies in that time period.

III. PROVEN AND UNPROVEN FACTS.

SUBSTANTIATION

With relevance to the decision to be adopted, the following facts are considered proven, indicating the respective documents and/or the articles of the Claimant's request and the AT's intervention as to any facts that may also be considered admitted by agreement (given the AT's implicit position adopted in the arguments), as substantiation:

Proven Facts

  1. The Claimant is listed as holder of full ownership of the following urban and rural properties (indicating the parish code and the matrix article): … urban and rural; [list of 31 properties] – Documents Nos. 1 to 4 attached with the request for arbitral ruling—IMI collection notices for the years 2008, 2009, 2010, and 2011.

  2. On 26 November 2012, the Claimant filed, for each year, requests for revision of the IMI assessment acts for the properties referred to in the previous paragraph for 2008, 2009, 2010, and 2011, which were rejected by the AT according to notifications made on 08.04.2014—Articles 7 and 8 of the request for arbitral ruling, Documents submitted by the Claimant on 17.10.2014, and PA submitted by the AT.

  3. The Tax Service of …, on 27.10.2014, sent to the esteemed representative of the AT in this process the following information: "In response to the request, I inform you that following analysis of IMI assessments for the years 2008, 2009, 2010, and 2011 in the name of Taxpayer A, Tax ID No. …, the following was verified:

  • With respect to all rural properties, there was no VPT change for the referenced years;

  • Regarding urban properties …, …, …, …, …, …, the VPT changes resulted from periodic updates in accordance with Article 138 of the CIMI;

  • As to urban properties … and …, they were appraised within the CIMI scope, by taxpayer initiative. The taxpayer was notified of the results of these appraisals and did not submit any request for a second appraisal in accordance with Article 76 of the CIMI." – Document No. 1 submitted with the AT's arguments.

  1. The Tax Service of …, on 23.10.2014, sent to the esteemed representative of the AT in this process the following information: "2 – Regarding fractions N, P, R, and T of Article … of the parish of …, the appraisals were performed within the General Appraisal, and all are properly notified." – Document No. 2 submitted by the AT with the arguments.

  2. The Tax Service of …, on 23.10.2014, sent to the esteemed representative of the AT in this process the following information: "As to the notifications, both of the general appraisal and of the IMI assessments, it should be added that these notifications are not performed with proof of receipt, so this service does not have proof thereof, with receipt registration performed by CTT, as can be verified by consulting the computer system." – Document No. 3 submitted by the AT with the arguments.

  3. In the Document submitted to this process by the AT on 24.10.2014, with PA 2, designated "Appraisals—Appraisal Record," regarding the urban property … – Article …, in the second page under "Operation History," it states in the column "notification of taxpayers" "date": 2012-04-02 …", "user": … and "Tax Service": ….

Facts Added by the TCA Sul under Article 662-1 of the CPC

A) By order dated 17.10.2014, the singular arbitral tribunal (TAS) determined the following: a) granting the request of the challenged party to attach the PA to the file within 10 days, ending on 23.10.2014; b) dispensing with the meeting provided for in Article 18 of the RJAT; c) the parties are invited to submit written and successive arguments (first the claimant and then the respondent), with the counting of the period for the claimant to begin after the PA is attached—page 58 of the file and document in the attached arbitral process.

B) By office dated 24.10.2014, the TAS notified the representative of the claimant of the attachment of the PA to the file—Document in the attached arbitral process.

C) The claimant and respondent submitted written arguments—Documents in the attached arbitral process.

D) With the written arguments, the respondent attached three documents, corresponding to emails sent by the tax services on the subject matter in the case—ibid.

Unproven Facts

The matter submitted to "proven facts" in paragraphs 3), 4), and 5) consists of documents issued by entities that deal directly with the subject matter in the case. There is no other alleged factuality that is relevant to the correct resolution of the dispute. The evidentiary assessment of the documents submitted to the process was not challenged, either by the Claimant or by the Respondent.

IV. EXAMINATION OF THE ISSUES FOR THE TAS TO RESOLVE

As explained above, the essential issue that must be determined is the following:

  • Based on the STA jurisprudence resulting from the decision cited above, namely: "The substantiation of the VPT fixing act, whether resulting from appraisal or from updating, must be communicated to the taxpayer of the IMI to be assessed on that tax base," the first issue that arises concerns the factual determination of whether the taxpayer was or was not notified of "appraisals" or "updates" of the VPT, even under the transitional regime and as to any periodic appraisals, before the assessment or with the assessment. This issue is reduced to the determination of who bears the burden of proof of the alleged absence of notification.

As to rural properties listed in paragraphs d) and v) of the Report

The Claimant, as to the 13 rural properties he listed, proceeds from the assumption that VPT changes occurred in the years 2008, 2009, 2010, and 2011.

But from the information of the Tax Service stated in paragraph 3) of the proven facts, the opposite results, namely, the information is categorical: "with respect to all rural properties, there was no VPT change for the referenced years."

The TAS sees no reason to doubt the information provided by the local tax authority.

Moreover, in this case, it would be incumbent upon the Claimant to prove this essential fact—that VPT changes occurred—in accordance with Article 341(1) of the Civil Code, which he did not do.

We conclude, therefore, that in this regard it is not possible to grant the Claimant's request.

As to the urban property …

As to this urban property, the local Tax Service states that "they were appraised within the CIMI scope, by taxpayer initiative. The taxpayer was notified of the results of these appraisals and did not submit any request for a second appraisal in accordance with Article 76 of the CIMI."

This is what was established as fact—paragraph 3).

It should be noted that the reference to the urban property … will be irrelevant here, since the Claimant, as to the same, did not file a request for official revision of IMI assessment, nor a request for arbitral ruling.

Now, also here the Claimant lacks any reason, since he was notified of the VPT and it was even he who raised the appraisal.

As to urban properties …, P, N, T, and R

As to these autonomous units of urban property, as results from paragraph 4) of the proven facts: "2 – Regarding fractions N, P, R, and T of Article … of the parish of …, the appraisals were performed within the General Appraisal, and all are properly notified."

Also here the TAS cannot but consider the information of this Tax Service to be true, to the effect that notification of the VPT change occurred, before the first IMI assessment or with the first IMI assessment where the new tax base was applied.

Accordingly, the Claimant's allegation that he was not notified of the changes in the VPT of the autonomous units in question cannot be granted.

As to the urban property … EK

Also here the document whose content was established as fact in paragraph 6) appears to us clear when it is stated in "Operation History," in the column "notification of taxpayers," "date": 2012-04-02 …", "user": … and "Tax Service": ….

The TAS cannot proceed on the assumption that such indication does not correspond to material truth, so also here it is not possible to grant the Claimant's allegation regarding the lack of notification of the VPT change.

From what has been examined above, we have, therefore, that of the 31 properties or fractions of urban properties that were the object of the request for official revision and the request for arbitral ruling, as to the 19 referred to above, it is not possible to favorably grant the request raised before the TAS. There remain 12 properties.

As to the remaining 12 urban properties, as listed in paragraphs d) and v) of the Report

As is apparent from the assessment notices submitted by the Claimant together with the request for arbitral ruling—Documents Nos. 1 to 4—he owns properties in 4 municipalities, namely:

… – Municipality of Albufeira;

… – Municipality of Cascais;

… – Municipality of Lisbon;

… – Municipality of Sintra.

At least as to properties … and …, the Tax Service of …, on 23.10.2014, attests in the communication established as proven—paragraph 5) that: "As to the notifications, both of the general appraisal and of the IMI assessments, it should be added that these notifications are not performed with proof of receipt, so this service does not have proof thereof, with receipt registration performed by CTT, as can be verified by consulting the computer system."

That is, from this, in the logic of the discourse used, it can be inferred that the notifications will have been carried out, but that the Tax Service merely did not have proof of their performance, because they were not made by registered letter with proof of receipt.

From everything referred to above concerning the notifications that the Claimant alleged were not made to him, but which it turns out they were, the conviction of any adjudicator can only be in the sense that the taxpayer, by equivocation or manifest lapse, comes to allege facts that do not correspond to material truth, certainly by reason of some complexity that the understanding of tax law norms entails.

From the information of the Tax Service of … referred to above, it will be permissible to infer, on the general level (because certainly the peripheral services of the AT all function in harmony with procedural rules), that the performance of notifications of VPT changes, whether under the transitional regime of Articles 16 to 20 of Decree-Law No. 287/2003, of 12.11, or under Article 138 of the CIMI, are and were carried out before taxpayers by legal means.

On the other hand, in a decisive manner, it should be stated that it was upon the Claimant that the burden of proof rested for the most elementary factual framework: that notifications were not made to him, in the time and with the content that would permit him to exercise his rights. This is what results from the general and elementary rule on burden of proof—Article 342(1) of the Civil Code.

And as the AT demonstrated with the attachment of the document referred to in paragraph 6) of the proven facts, it would be possible by documentary form at the level of AT records. In that document, reference is made to the date of notification of the taxpayers, and it will not be prohibited for the Claimant to obtain identical documents, to be able to conclude affirmatively or negatively, concerning the verification of whether or not notification of VPT changes to the taxpayer occurred.

The fact that a CTT record that is now not available for verification of the receipt date exists will certainly relate to the elapsed time and the company having a "cap" limiting that information.

The time elapsed between the date on which the notifications of VPT changes occurred (or should have occurred) and the date on which the taxpayer came to react (26.11.2012) is an element that cannot be disregarded here.

Given what has just been referred to, it will not make sense, by futility, for the TAS to pronounce on the subsequent issues that could arise if it were concluded that the AT omitted the notification before the assessment or with the assessment of the VPT involving the operations leading to the determination of the tax base.

In light of and based on what has been stated above, it is not possible, given the evidentiary record brought to this process, to grant the Claimant's request.

As a consequence of everything stated above, the request filed by the Claimant must be deemed unfounded, since the factual framework that he alleged in the official revision requests did not materialize, in terms of material truth (lack of notification of VPT changes of properties).

V. DECISION

Based on and with the substantiation set out above, the request of the Respondent seeking the annulment of the assessments referred to in paragraph c) of the Report is deemed unfounded.

Case value: in accordance with the provisions of Article 3(2) of the Regulation of Costs in Tax Arbitration Proceedings (and Article 97-A(1)(a) of the CPPT), the case value is fixed at 17,798.60 euros.

Costs: in accordance with Article 22(4) of the RJAT, the amount of costs is fixed at 1,224.00 €, according to Table I annexed to the Regulation of Costs in Tax Arbitration Proceedings, to be borne by the Claimant.

Notify.

Lisbon, 19 November 2014

Singular Arbitral Tribunal,

Augusto Vieira

Text prepared by computer in accordance with Article 131(5) of the CPC, applicable by reference to Article 29 of the RJAT.

This decision's wording is governed by the spelling prior to the Orthographic Agreement of 1990.

[Arbitral Decision annulled by the judgment of TCA-Sul rendered in Case No. 08272/14, of 17-03-2016.]

Frequently Asked Questions

Automatically Created

What happens when the Portuguese Tax Authority fails to notify property owners of changes to taxable patrimonial values (VPT) before issuing IMI assessments?
When the Portuguese Tax Authority fails to notify property owners of changes to taxable patrimonial values (VPT) before issuing IMI assessments, it constitutes a violation of Article 77-6 of the General Tax Law (LGT) and Article 36-1 of the Tax Procedure Code (CPPT). This procedural defect can result in lack of substantiation (fundamentação) of the tax acts, as taxpayers cannot determine how the VPT was calculated. The failure to provide prior notification of VPT changes may render the subsequent IMI assessments invalid and subject to annulment through revision requests under Article 78 of LGT or through arbitral proceedings at CAAD. Taxpayers have the right to understand the basis for property valuations before being charged IMI, and notification defects undermine this fundamental procedural guarantee.
Can IMI property tax liquidations be annulled due to notification defects under Portuguese tax law?
Yes, IMI property tax liquidations can be annulled due to notification defects under Portuguese tax law. This case demonstrates that procedural violations, specifically the failure to notify taxpayers of changes to taxable patrimonial values (VPT) prior to issuing assessment notices, can constitute grounds for annulment. The legal basis includes Article 77-6 of the General Tax Law, which requires proper notification procedures, and Article 36-1 of the Tax Procedure Code. When the Tax Authority fails to comply with notification requirements, the resulting assessments may lack proper substantiation (fundamentação), making them legally defective. Taxpayers can challenge such defective assessments through official revision requests under Article 78 of LGT or, if those are rejected, through arbitral proceedings at the Administrative Arbitration Center (CAAD), which has jurisdiction to annul partially or fully the contested IMI charges.
What is the legal requirement for substantiation (fundamentação) in IMI tax assessment notices issued by the Autoridade Tributária?
The legal requirement for substantiation (fundamentação) in IMI tax assessment notices requires that the Autoridade Tributária provide sufficient information to allow taxpayers to understand how the taxable patrimonial value (VPT) was determined. According to this case, mere notification of the IMI amount due for payment is insufficient if it does not disclose the VPT calculation methodology or prior changes to property valuations. The assessment notice must contain or be preceded by communication of VPT changes so taxpayers can comprehend 'the operations performed to determine the VPT.' This requirement flows from Article 77-6 of the General Tax Law and general administrative law principles requiring tax authorities to substantiate their decisions. Without adequate substantiation showing how property values were calculated or modified, IMI assessments violate fundamental taxpayer rights and procedural guarantees, potentially rendering the tax acts invalid and subject to annulment through administrative or arbitral challenge.
How does the CAAD arbitral tribunal handle requests for revision of IMI assessments covering multiple tax years (2008-2011)?
The CAAD arbitral tribunal handles requests for revision of IMI assessments covering multiple tax years through a unitary challenge approach that examines procedural and substantive defects across all contested periods. In this case, the tribunal accepted jurisdiction over IMI assessments from 2008-2011 covering 31 properties after the Tax Authority rejected the taxpayer's revision requests filed under Article 78 of the General Tax Law. The tribunal analyzes whether common defects (such as lack of VPT notification) affected all years systematically. The process involves constitution of a Singular Arbitral Tribunal, allowing the Tax Authority to respond (often by submitting the administrative file), conducting written arguments when parties waive the hearing, and issuing a decision that can annul assessments across multiple years based on shared legal violations. This consolidation promotes judicial economy and consistent treatment of recurring procedural defects rather than requiring separate challenges for each tax year.
What are the grounds for challenging excess IMI property tax charges on multiple urban and rural properties in Portugal?
Grounds for challenging excess IMI property tax charges on multiple properties in Portugal include: (1) lack of notification of changes to taxable patrimonial values (VPT) in violation of Article 77-6 of the General Tax Law and Article 36-1 of the Tax Procedure Code; (2) lack of substantiation (fundamentação) in assessment notices that fail to explain how VPT was determined; (3) procedural defects in the notification process that prevent taxpayers from understanding the basis for increased charges; (4) violations of taxpayer rights to prior communication of changes affecting their tax obligations; and (5) improper rejection of revision requests under Article 78 of LGT. Taxpayers can invoke the principle of unitary challenge to contest both the VPT determination and resulting IMI assessments together. Challenges can be pursued through official revision requests to the Tax Authority and, if rejected, through arbitral proceedings at CAAD, seeking partial or full annulment of excess assessments and associated interest charges.