Process: 440/2014-T

Date: April 17, 2015

Tax Type: IMT

Source: Original CAAD Decision

Summary

CAAD arbitration case 440/2014-T addresses a fundamental dispute over IMT (Municipal Tax on Onerous Transfers of Immovable Property) exemption for tourist enterprise properties under Decree-Law 423/83. The taxpayer acquired half of an apartment unit (fraction BK) in a tourist complex in Loulé in December 2005, initially benefiting from IMT exemption under Article 20 of DL 423/83. Years later, the Tax Authority challenged this exemption and issued an IMT assessment of €16,595.74, arguing the exemption was improperly applied.

The central legal question concerns the scope of Article 20's exemption: whether it applies only to acquisitions for 'installation' of tourist enterprises or extends to purchases of individual units in already-operating complexes. The Tax Authority contends the exemption exclusively covers the installation phase, not exploitation activities. Supporting this interpretation, they note the tourist enterprise already held a provisional operating license issued in June 2005, confirmed in May 2007, meaning the facility was installed and operational at the acquisition date. The AT emphasizes that Article 20(2) explicitly distinguishes 'installation' from 'operation' and 'exploitation', with the exemption intentionally limited to installation activities.

The taxpayer argues the exemption should extend to fraction purchasers who bear investment costs, essential to promoting tourism development. They invoke principles of legal certainty and legitimate expectations, noting a notary confirmed the exemption at the time of purchase. The taxpayer contends the Tax Authority violated these principles by retroactively demanding payment after the notary's prior legality control.

This case exemplifies common disputes in Portuguese tax law where initial administrative decisions (notary acceptance of exemption) are subsequently challenged by tax authorities during inspection actions, raising critical questions about temporal limits on tax reassessments and the scope of tax benefits for tourism sector investments.

Full Decision

ARBITRAL DECISION

The arbitrator Guilherme W. d'Oliveira Martins, appointed by the Deontological Council of the Administrative Arbitration Center (CAAD) to form the present Single Arbitral Tribunal, constituted on 25.08.2014, decides as follows:

I. Report

  1. Taxpayer A, NIPC..., submitted a request for constitution of a single arbitral tribunal, pursuant to the combined provisions of articles 2nd and 10th of Decree-Law no. 10/2011, of 20 January (Legal Framework for Arbitration in Tax Matters, hereinafter referred to only as RJAT), in which the Tax and Customs Authority (AT) is the Respondent, with a view to annulling the tax act of assessment of Municipal Tax on Onerous Transfers of Immovable Property (IMT) in the amount of € 16,595.74 (Document Identification no. ...).

The referred assessment was based on the purchase made by the Petitioner from the company "B – Real Estate Investments, Ltd., with NIPC..., by public deed executed on 28.12.2005, of ½ of fraction BK of the property registered in the urban real property register of the parish of..., municipality of Loulé, under no...., integrated in the Tourist Enterprise...., located on Avenue..., in..., parish of... and municipality of Loulé.

The assessment was made based on the price corresponding to the right acquired, in the amount of € 225,319.00 at the rate of 6.5%.

  1. The request for constitution of the Arbitral Tribunal was accepted by the Esteemed President of CAAD and automatically notified to AT on 25.06.2014.

  2. Pursuant to the provisions of subparagraph a) of no. 2 of article 6th and subparagraph b) of no. 1 of article 11th of Decree-Law no. 10/2011, of 20 January, in the wording introduced by article 228th of Law no. 66-B/2012, of 31 December, the Deontological Council appointed as arbitrator of the single arbitral tribunal the present undersigned, who communicated acceptance of the corresponding assignment within the applicable time limit.

  3. On 07.08.2014 the parties were duly notified of this appointment, and did not manifest their will to refuse the arbitrator's appointment pursuant to the combined terms of article 11th, no. 1, subparagraphs a) and b) of RJAT and articles 6th and 7th of the Deontological Code.

  4. Thus, pursuant to the provisions of subparagraph c) of no. 1 of article 11th of Decree-Law no. 10/2011, of 20 January, in the wording introduced by Law no. 66-B/2012, of 31 December, the Arbitral Tribunal was constituted on 25.08.2014.

  5. The Tribunal set 17.04.2015 as the date for the arbitral decision.

I2. The grounds of the Petitioner's request are as follows:

  • The Petitioner acquired by public deed from the company "B – Real Estate Investments, Ltd., with NIPC..., by public deed executed on 28.12.2005, ½ of fraction BK of the property registered in the urban real property register of the parish of..., municipality of Loulé, under no...., integrated in the Tourist Enterprise...., located on Avenue..., in..., parish of... and municipality of Loulé.

  • The referred acquisition benefited from the exemption provided for in article 20th of Decree-Law no. 423/83, of 5 December, with the amendments introduced by Decree-Law no. 38/94 of 8 February, pursuant to which, "acquisitions of properties or autonomous fractions intended for the installation of qualified tourist enterprises are exempt from transfer tax (...), even if such qualification is granted on a provisional basis (...)."

  • The IMT assessment now in dispute is thus based on the Petitioner's disagreement with the Tax Authority, in that the latter understands that there was an improper application of the exemption provided for in article 20th of Decree-Law no. 423/83, of 5 December.

  • In this way, the Petitioner proceeded to the IMT assessment based on the price corresponding to the right acquired, in the amount of € 225,319.00 at the rate of 6.5% (subparagraph d) of article 17th of the IMT Code), which it now contests.

  • The Petitioner invokes that the granting of the exemption was fundamental to the decision to acquire the fraction, and that it has always acted as the promoter of the enterprise in which the fraction is integrated.

  • It further emphasizes the fact that the notary confirmed and assented to the application of the referred exemption rule.

  • The Petitioner now contests the IMT assessment act relating to the acquisition of the Fraction identified above, in the value of € 16,595.74.

  • According to the Inspection Report resulting from the inspection action carried out by Service Order no. OI2013..., the AT concludes that the prerequisites for the application of the IMT exemption in question are not met, requesting accordingly the regularization of the respective tax. In this way, the recognition made by the notary would have been improperly made, since the acquisition by the taxpayer was not intended for the installation of the referred enterprise, because the same was already installed.

  • Now, the Petitioner considers that if the legislator's intention was to promote tourist activity, in pursuit of such objective it only makes sense to extend the tax benefit, both to the promoter and to the purchasers of the fraction, who bear the burden of the investment.

  • In light of the above, and considering the IMT assessment to be manifestly illegal, it requests the allowance of the request, and that the illegality of the tax act of assessment relating to the acquisition of the fraction and ½ of fraction BK of the property registered in the urban real property register of the parish of..., municipality of Loulé, under no...., integrated in the Tourist Enterprise.... should be declared.

  • The Petitioner further alleges that the principles of legal certainty and legal security were violated by disregarding the prior control of legality that the notary and the registrar were obliged to carry out, and by the AT, only now, demanding the reposition of the taxation that it alleges was omitted.

I3. In response to the Petitioner's request, the AT:

  • The AT emphasizes that the acquisition of ½ of fraction BK of the property registered in the urban real property register of the parish of..., municipality of Loulé, under no...., integrated in the Tourist Enterprise...., located on Avenue..., in..., parish of... and municipality of Loulé, was not exempt from IMT pursuant to the provisions of article 20th of Decree-Law no. 423/83, of 5 December, with the amendments introduced by Decree-Law no. 38/94, of 8 February.

  • The referred fraction was part of the tourist complex designated "..." and the tourist use license was issued, on a provisional basis, in June 2005 and confirmed by Dispatch of May 2007, so at the date of acquisition, the tourist enterprise was already installed and in the phase of operation.

  • What is at issue is whether that exemption rule benefits only acquisitions of properties or autonomous fractions by promoters with a view to constructing and installing tourist enterprises, or also autonomous acquisitions (accommodation units) belonging to or integrated in already constructed and installed enterprises, with a view to their exploitation.

  • The AT argues that the legislator intended, with the rule of no. of article 20th of Decree-Law no. 423/83, of 12 May, acquisitions intended for the "installation" of facilities.

  • If the legislator had wanted to cover both the installation activity and the exploitation of tourist enterprises, it would have been as clear as it was in art. 16th of the same statute.

  • The AT underlines that the wording of no. 2 of article 20th of the statute in question leaves no room for doubt: by exceptionally extending the exemption provided for in no. 1 to acquisitions by the operating company, in the restrictive circumstances it describes, the legislator is clear in excluding from that benefit all other transfers.

  • Indeed, the legislator clearly distinguished the concept of "installation" from the concepts of "operation" and "exploitation", as can be derived from the Preamble of Decree-Law no. 39/2008, as was properly explained in the Decision of the Supreme Administrative Court no. 3/2013 (Case no. 968/12 – 2nd Section).

  • In this sense, and to support its argument, the AT relies on the understanding set forth in the above-identified Decision: «In summary, the promoters of enterprises are solely responsible for the real estate investment, with the risk thereof incumbent upon them, as well as for obtaining the necessary licenses to make them capable of operation and exploitation. It appears, thus, that the recurrent's argument to the effect that the benefit enshrined in no. 1 of art. 20th of Decree-Law no. 423/83 is aimed at tourist exploitation and that the beneficiaries are the purchasers of fractions or accommodation units, has no basis whatsoever neither in the letter nor in the raison d'être of the provision. The benefit is only justified with respect to those who carry out the installation of the enterprise and place it on the market and not with respect to all those who use and exploit it, even if through the purchase of its units.»

  • It further states that the same line of interpretation was adopted in the arbitral decisions rendered in similar situations, in cases no. 102/2014-T, 103/2014-T, 104/2014-T, 110/2014-T, 342/2014-T.

  • The AT adds that, if the granting of the exemption was fundamental to the decision to acquire the fraction, the Petitioner should have requested the AT, pursuant to article 68th of the General Tax Law, to pronounce itself previously and bindingly.

  • Now, not having done so in the legally admissible terms, the Petitioner cannot invoke the understanding of the Notary or the Registrar, as interpreters and appliers of the rule in question.

  • The AT further states that it would be the Petitioner herself who would recognize that the acquisition of the referred fraction was intended, precisely, for commercial exploitation, further mentioning that she transferred to "C – Hotel Construction and Management, Ltd.", the exclusive right of exploitation of the fraction through a "tourist exploitation contract".

  • In conclusion, the impugned IMT assessment act did not violate any legal or constitutional provision, and should be maintained in the legal order.

  • In these terms, the AT requests that the request for arbitral pronouncement be considered unfounded as not proven, and, consequently, the Respondent entity be absolved of all requests, all with the due and legal consequences.

II. LEGAL PROCEEDINGS

  1. The Tribunal is competent and is regularly constituted, pursuant to the provisions of articles 2nd, no. 1, subparagraph a), 5th and 6th, all of RJAT.

  2. The parties have legal personality and capacity, are legitimate parties and are legally represented, pursuant to articles 4th and 10th of RJAT and article 1st of Regulation no. 112-A/2011, of 22 March.

  3. The case does not suffer from nullities and no preliminary questions have been raised that warrant analysis.

  4. Thus, the conditions are met to analyze the merits of the request.

III. GROUNDS

III.A PROVEN FACTS

Before proceeding to analyze the substantive issues, it is necessary to present the factual matter relevant to its understanding and decision, which, having examined the documentary evidence and the tax administrative process attached to the file and also taking into account the facts alleged, is established as follows:

  1. The Petitioner acquired by public deed the fraction designated to the company "B – Real Estate Investments, Ltd., with NIPC..., by public deed executed on 28.12.2005, of ½ of fraction BK of the property registered in the urban real property register of the parish of..., municipality of Loulé, under no...., integrated in the Tourist Enterprise...., located on Avenue..., in..., parish of... and municipality of Loulé.

  2. Through the inspection action carried out by Service Order no. OI2013..., the AT concludes that the prerequisites for the application of the IMT exemption in question are not met, requesting accordingly the regularization of the respective tax.

  3. Based on the referred inspection report, the competent services proceeded to the additional IMT assessment, based on the declared price and at the rate of 6.5%, provided for in subparagraph d) of article 17 of the IMT Code, determining the tax owed in the amount of € 16,595.74.

  4. The assessment was notified to the Petitioner through Document no...., in accordance with office no...., of 26-08-2013, containing the notification of the inspection result, by the Tax Inspection Services of the Finance Directorate of Faro.

No other facts with relevance to the decision of the case were proven.

III.B FACTS NOT PROVEN

There are no facts, alleged or to the official knowledge, relevant to the decision that have not been given as proven.

III.C REASONING

The establishment of the factual matter was based on the administrative process, on the documents attached to the initial petition or during the course of the present process.

III.D OF LAW

At issue is thus the IMT assessment to the Petitioner, relating to the acquisition from the company "B – Real Estate Investments, Ltd., with NIPC..., by public deed executed on 28.12.2005, of ½ of fraction BK of the property registered in the urban real property register of the parish of..., municipality of Loulé, under no...., integrated in the Tourist Enterprise...., located on Avenue..., in..., parish of... and municipality of Loulé, of € 16,595.74.

Let us see, then.

The essential question to be decided in this case centers on the understanding of the beneficiary of the exemption provided for in no. 1 of article 20th of Decree-Law no. 423/83, of 05-12, specifically, whether the purchase made by the Petitioner would have the right to benefit from the referred exemption.

According to this rule in the wording in force at the time of the transfer "acquisitions of properties or autonomous fractions intended for the installation of qualified tourist enterprises are exempt from transfer tax (...), even if such qualification is granted on a provisional basis".

Now, in accordance with the understanding already set forth, within the scope of the analysis of similar situations, it is clear from the literal element of the interpretation that the legislator intended to cover with that rule only acquisitions intended for the "installation" of enterprises, in the sense that was established by the Supreme Administrative Court in the decision of 23-01-2013, handed down in case no. 968/12, in expanded judgment, pursuant to the provisions of article 148 of the Code of Administrative Procedure. The latter gave rise to the jurisprudence-standardizing decision no. 3/2013, published in the Official Journal, 1st Series, of 04-11-2013.

The essential question to be decided in this case is whether the purchase made by the Petitioner would have the right to benefit from the exemption provided for in no. 1 of article 20th of Decree-Law no. 423/83, of 05-12.

Indeed, the Supreme Court standardized the jurisprudence as follows:

"The concept of «installation», for the purposes of the benefits to which no. 1 of art. 20th of Decree-Law no. 423/83, of 5 December, refers, refers to the acquisition of properties (or autonomous fractions) for the construction of tourist enterprises, after the respective urban planning operations have been duly licensed, aiming to benefit enterprises engaged in the activity of promotion/creation of the same and not the purchasers of autonomous fractions in constructed/installed enterprises in a plural property regime, since this concerns «exploitation» and not «installation".

We conclude in the same sense as the referred decision, which is also express in the following decisions of the STA: Decs. of 23.1.2013, Cases 01001/12, 01005/12 and 01069/12, of 30.1.2013, Cases 0970/12, 0971/12, 0972/12, 0999/12, 01003/12 and 01193/12, of 6.2.2013, Case 01000/12, of 8.2.2013, Case 01004/12, of 17.4.2013, Cases 01023/12 and 01002/12, of 23.4.2013, Case 01195/12, of 11.9.2013, Case 01049/13, of 25.9.2013, Case 01038/13, of 9.10.2013, Cases 01050/13, 1040/13 and 01015/13, of 18.10.2013, Case 01048/13, of 30.10.2013, Case 01052/13, of 13.11.2013, Case 01054/13, of 4.12.2013, Case 0824/13, of 29.1.2014, Case 01043/13, of 5.2.2014, Cases 01041/13, 01047/13 and 01917/13, of 26.2.2014, Cases 0860/13 and 08763, of 2.4.2014, Case 01914/13, of 9.4.2014, Case 0859/13, of 28.5.2014, Case 0291/14 and of 18.6.2014, Case 01527/13.

In the same way and for situations with factual matter identical to that underlying the present case, the CAAD decided, in the decision rendered in case no. 104/2014-T.

This jurisprudential orientation is solidly grounded in the referred STA decision, from which we transcribe the principal conclusions:

"I – In determining the meaning and scope of tax rules and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed", and "Whenever tax rules use terms specific to other branches of law, the same should be interpreted in the same sense as they have there, unless otherwise derives directly from the law" (art. 11th, nos. 1 and 2, of the General Tax Law).

II – Within the scope of the legal framework for installation, operation and functioning of tourist enterprises, established by Decree-Law no. 39/2008, of 7 March [currently with the wording updated by Decree-Law no. 15/2014 of 23 January], the concept of installation of a tourist enterprise comprises the set of legal acts and the procedures necessary for licensing (in the broad sense, comprising prior communications or authorizations, as the case may be) of the urban planning operations necessary for the construction of a tourist enterprise, as well as obtaining the titles that make it capable of operating and being exploited for tourist purposes (cfr. Chapter IV, arts. 23 et seq.).

III – When the legislator uses the expression acquisition of properties or autonomous fractions intended for «installation», for the purposes of the benefit to which no. 1 of art. 20th of Decree-Law no. 423/83, of 5 December, refers, it cannot but be understood as referring precisely to the acquisition of properties (or autonomous fractions) for the construction of tourist enterprises, after the respective urban planning operations have been duly licensed, aiming to benefit enterprises engaged in the activity of promotion/creation of the same.

IV – This concept of «installation» is the one that appears adequate for all types of tourist enterprises and is not called into question by the fact that enterprises can be constructed/installed in a plural property regime, since this concerns «exploitation» and not «installation».

V – In tourist enterprises constituted in plural property (which comprise plots and or autonomous fractions of one or more buildings, pursuant to the provisions of art. 52nd, no. 1, of Decree-Law no. 39/2008, of 7 March), two distinct procedures stand out, although they may occur simultaneously: one relating to the practice of operations necessary to install the enterprise; another, relating to the operations necessary to put it into operation and to exploit it, being that the sale of the units planned or constructed necessarily forms part of the second.

VI – The legislator intended to boost tourist activity by providing for the exemption/reduction of payment of Transfer Tax/Stamp Duty for promoters who intend to construct/create establishments (or readapt and remodel existing fractions) and not when it comes to mere acquisition of fractions (or accommodation units) integrated in enterprises and intended for exploitation, even if acquired on a date prior to the very installation/licensing of the enterprise.

VII – Those who acquire the fractions do not become co-financiers of the enterprise, with responsibility for its installation, since they are acquiring a tourist product that was placed on the market by the promoter, whether the acquisition is made on paper or after the enterprise is installed, as any final consumer, especially since the fractions can be acquired for its exclusive use and without any temporal limit (in the case of tourist enterprises constituted in plural property).

VIII – Not being at issue the acquisition of properties or autonomous fractions intended for the construction/installation of tourist enterprises, but rather the acquisition of accommodation units by final consumers, even if because integrated in the enterprise in question they are affected to tourist exploitation, the same cannot benefit from the exemptions enshrined in art. 20th, no. 1, of Decree-Law no. 423/83.

IX – This interpretative result is what results from the historical, rational/teleological and also literal element of the legal rules in question.

X – Tax benefits are measures of an exceptional character instituted for the protection of relevant extra-fiscal public interests and that are superior to those of the taxation they prevent (article 2nd/1 of the Tax Benefits Framework) (...)" and although admitting extensive interpretation (article 10 of the Tax Benefits Framework), the interpreter cannot consider the legislative thought that does not have in the letter of the law a minimum of correspondence, even if imperfectly expressed (article 9/2 of the Civil Code), in addition to which because they represent a derogation of the rule of equality and the principle of contributive capacity that materially grounds taxes, tax benefits must be justified by a relevant public interest".

Regarding the concept of "installation", it is clear from the legislation a clear distinction between the concepts of "installation", on the one hand, and "operation" and "exploitation", on the other, a distinction that is also mentioned in the preamble of Decree-Law no. 39/2008.

The referred Decision states that, "(…) from the reading of the regime contained in arts. 5 to 6 and 23 to 40 of Decree-Law no. 39/2008 it is verified that the concept of «installation» has nothing to do with «operation» and «exploitation» and that in that concept fall only, as referred to by the Public Treasury, the acts, operations and procedures aimed at the construction/creation of tourist enterprises. (…) The concept of installation that was arrived at is the one that appears adequate for all types of tourist enterprises and is not called into question by the fact that enterprises can be constructed/installed in a plural property regime."

If the legislator had intended to cover both the installation activity and the exploitation of tourist enterprises, it would have used the same terms as it used in art. 16 of the same statute (Decree-Law no. 423/83, of 5 December).

Regarding no. 2 of article 20 of the cited statute, the letter of the law leaves no room for doubt when extending exceptionally the exemption of no. 1 to acquisitions by the operating company, in the restrictive circumstances it describes, with the legislator being clear in excluding from that benefit all other transfers.

Tax benefits are covered by the principle of legality, as stipulated in art. 103rd, no. 2 of the Constitution. It is thus not permissible that by analogy or by extensive application the benefit be attributed to entities or facts that are not expressly provided for in the law.

On this principle, see CASALTA NABAIS, Tax Law, Almedina, 6th edition, 2010, p. 137 and ANA PAULA DOURADO, The Principle of Tax Legality, Almedina, 2007, pp. 125 to 143. According to the first of the authors: the law must cover the matters of art. 103rd, no. 2 CRP "whether it is the creation or increase of taxes or their extinction or reduction, because, as the Constitutional Court affirmed, the reservation of competence of the Assembly of the Republic in tax matters cannot be interpreted restrictively, in a way that does not consider encompassed by it the rules that benefit taxpayers". For Ana Paula Dourado "the reservation of parliamentary law is the instrument that formally legitimizes the deviation from the principles of contributive capacity and, possibly, of progressivity. In sum, the reference to tax benefits in art. 103rd, no. 2 of the Constitution reflects the conviction that the reservation of parliamentary law is one of the instruments to ensure, simultaneously, the legitimate departure from the principles of material fiscal law of the Tax State and the observance of the principles to which tax benefits are subject" – p. 131.

As for the fact that the notary assented to the IMT exemption, this is not opposable to the Tax Authority, in light notably of art. 36th, no. 4 of the General Tax Law, according to which "the qualification of the legal act made by the parties, even in an authentic document, does not bind the tax administration".

In these terms and in the other terms of law, it is decided in favor of the legality of the tax act of assessment of Municipal Tax on Onerous Transfers of Immovable Property, in the amount of € 16,595.74. Thus, the assessment act in question should be maintained.

IV. Decision

In these terms, and with the grounds set forth, the Arbitral Tribunal decides to judge unfounded the request for arbitral pronouncement, as far as concerns the IMT assessment relating to the assessment of ½ of fraction BK of the property registered in the urban real property register of the parish of..., municipality of Loulé, under no...., integrated in the Tourist Enterprise...., located on Avenue..., in..., parish of... and municipality of Loulé, maintaining the assessment in question.

The value of the case is fixed at € 16,595.74, pursuant to subparagraph a) of no. 1 of article 97-A of the Code of Tax Procedure, applicable by virtue of subparagraphs a) and b) of no. 1 of article 29 of RJAT and no. 2 of article 3 of the Regulation of Costs in Tax Arbitration Proceedings.

The payment of the arbitration fee, pursuant to Table I of the Regulation of Costs in Tax Arbitration Proceedings, is fixed at the amount of € 1,224.00, incumbent upon the Petitioner, pursuant to articles 12th, no. 2, and 22nd, no. 4, both of RJAT, and article 4th, no. 4, of the cited Regulation.

Lisbon, 17 April 2015

The arbitrator,

Guilherme W. d'Oliveira Martins

Frequently Asked Questions

Automatically Created

What is the IMT tax exemption for tourist developments under Decreto-Lei 423/83?
The IMT exemption under Article 20 of Decreto-Lei 423/83 (as amended by DL 38/94) applies to acquisitions of properties or autonomous fractions intended for the installation of qualified tourist enterprises, including provisional qualifications. The key requirement is that the property must be acquired for 'installation' purposes. The Tax Authority interprets this strictly to mean the construction and initial setup phase, not subsequent acquisitions of units in already-operating enterprises. The exemption aims to incentivize tourism infrastructure development by eliminating transfer taxes during the installation phase, but does not extend to the exploitation or operational phases of tourist enterprises.
Can the Tax Authority revoke an IMT exemption previously granted for a tourism property?
Yes, the Tax Authority can challenge and effectively revoke an IMT exemption previously recognized during property acquisition, even when a notary initially accepted the exemption. This occurs through inspection actions where the AT reviews the proper application of tax exemptions. In this case, the Tax Authority conducted an inspection (Order OI2013...) and concluded the exemption prerequisites were not met because the tourist enterprise was already installed and operating at the acquisition date. However, taxpayers can contest such retroactive assessments by invoking principles of legal certainty and legitimate expectations, arguing that prior administrative controls (notary and registrar review) should be respected. The final determination of whether the revocation is lawful falls to arbitration tribunals or courts.
How does CAAD arbitration work for disputes over IMT tax assessments in Portugal?
CAAD (Centro de Arbitragem Administrativa) arbitration for IMT disputes follows the Legal Framework for Arbitration in Tax Matters (RJAT - Decree-Law 10/2011). The process begins when a taxpayer submits a request for arbitration contesting a tax assessment. The CAAD President accepts the request and notifies the Tax Authority. The Deontological Council appoints an arbitrator (or panel), who has defined timeframes to issue a decision. Parties can object to arbitrator appointments. The tribunal is constituted once appointments are finalized (in this case, August 25, 2014), and a deadline for the arbitral decision is set (here, April 17, 2015). Both parties submit written arguments - the taxpayer's initial petition and the AT's response. The arbitrator reviews legal arguments, evidence, and applicable law to issue a binding decision on the tax assessment's legality.
What are the requirements to qualify for IMT exemption on properties in tourist developments?
To qualify for IMT exemption under Article 20 of DL 423/83 for tourist development properties, the acquisition must be: (1) of properties or autonomous fractions; (2) intended for installation of tourist enterprises; (3) involving qualified or provisionally qualified tourist enterprises. The critical requirement is 'installation' - the Tax Authority interprets this as the construction and initial setup phase before operations begin. Acquisitions after the enterprise is already installed, licensed, and operating do not qualify. The timing is crucial: if the tourist enterprise already has an operating license and is functioning when the property is purchased, the exemption likely does not apply. The exemption targets promoters developing new tourism infrastructure, not secondary purchasers of units in established complexes. Additionally, Article 20(2) contains specific exceptions for operating company acquisitions under restrictive circumstances.
What happens when a property integrated in a tourism enterprise is reassessed for IMT?
When a property integrated in a tourism enterprise is reassessed for IMT, the Tax Authority conducts an inspection to verify whether exemptions were properly applied. If the AT concludes the exemption was improper (as in this case, where the enterprise was already installed when purchased), it issues an IMT assessment for the originally exempt amount plus applicable interest. The taxpayer receives notice of the assessment and can contest it through administrative procedures or arbitration. The reassessment considers factors like: the enterprise's operational status at acquisition date, whether the purchase was for installation versus exploitation, and whether exemption prerequisites were genuinely met. Taxpayers can defend against reassessments by arguing legal certainty principles, reliance on notary determinations, and proper exemption qualification. The outcome depends on whether the tribunal accepts the taxpayer's interpretation of the exemption scope or the Tax Authority's stricter reading limiting benefits to the installation phase only.