Process: 446/2015-T

Date: February 28, 2016

Tax Type: IMT

Source: Original CAAD Decision

Summary

This arbitral decision addresses whether Real Estate Transfer Tax (IMT) exemption applies to properties acquired from insolvency estates under Article 270(2) of the Portuguese Insolvency Code (CIRE). The claimant acquired two fuel service stations from an insolvent estate through liquidation proceedings and was assessed IMT of €11,375.00, despite claiming exemption under CIRE. The Tax Authority granted Stamp Tax exemption but denied IMT exemption, arguing that the exemption only applies when transferring an entire enterprise or establishment, not individual assets. The Authority also raised a jurisdictional objection, claiming CAAD arbitral tribunals lack competence to rule on tax exemption matters under Article 2 of RJAT. The claimant argued that two service stations constitute establishments and that Article 270(2) CIRE should be interpreted broadly to cover all liquidation transfers, consistent with legislative intent to facilitate insolvency proceedings. The claimant contended that even isolated asset sales from insolvency estates should qualify for exemption. Central issues include whether CAAD has jurisdiction over exemption disputes arising from insolvency proceedings, whether the transferred assets constitute 'establishments' eligible for exemption, and how broadly Article 270(2) CIRE should be interpreted. The case also involves entitlement to refund with compensatory interest under Article 43 LGT if the IMT assessment is annulled. This decision impacts how insolvency asset transfers are taxed and the scope of arbitral jurisdiction in Portuguese tax law.

Full Decision

ARBITRAL DECISION

I. REPORT

A…, S.A., NIPC…, with registered office at Rua…, n.º … –… floor, in Lisbon (hereinafter referred to simply as the Claimant), filed, on 16-07-2015, a request for constitution of a sole arbitral tribunal, pursuant to articles 2.º and 10.º of Decree-Law n.º 10/2011, of 20 January (Legal Framework for Arbitration in Tax Matters, hereinafter referred to simply as RJAT), in conjunction with art. 102.º of the Tax Procedural Code (CPPT), against which the Tax Authority (hereinafter referred to simply as the Respondent) is named.

The Claimant requests the annulment of the Real Estate Transfer Tax (IMT) assessment n.º…, of 24-04-2015, in the amount of € 11,375.00, on the grounds of its illegality, with consequent reimbursement of the tax improperly paid plus compensatory interest, in accordance with legal provisions.

The request for constitution of the arbitral tribunal was accepted by the President of CAAD on 20-07-2015 and notified to the Tax Authority on that same date.

Pursuant to the provisions of item a) of n.º 2 of article 6.º and item b) of n.º 1 of article 11.º of the RJAT, the Ethics Council appointed the undersigned as arbitrator of the sole arbitral tribunal, who communicated acceptance of the appointment within the applicable time limit.

On 16-09-2015 the Parties were duly notified of this appointment, and neither manifested an intention to refuse the appointment of the arbitrators, in accordance with the combined provisions of article 11.º n.º 1, items a) and b) of the RJAT and articles 6.º and 7.º of the Ethics Code.

In accordance with the provisions of item c) of n.º 1 of article 11.º of the RJAT, the sole arbitral tribunal was constituted on 01-10-2015.

Notified to respond to the claim filed by the Claimant, the Respondent submitted a reply, raising the exception of lack of jurisdiction of this tribunal and arguing for the dismissal of the claim filed by the Claimant.

In due course, the Claimant commented on the exception invoked, sustaining its lack of merit.

On 12-01-2016 the examination of the witnesses called by the Claimant took place.

The Parties submitted arguments within their respective time limits.

II. THE CLAIMANT'S CLAIM

In the present proceedings, the Claimant requests the annulment of the Real Estate Transfer Tax (IMT) assessment n.º…, in the amount of € 11,375.00, made on 24-04-2015 with payment due date of 27-04-2015, on the ground that the exemption provided for in n.º 2 of art. 270.º of the Insolvency Code (CIRE) was not granted.

To this end, it alleges that, within the scope of the insolvency proceedings that took place before the 1st Civil Court of the Judicial Court of Leiria under case n.º …/11… TBLRA, the Claimant acquired from the insolvent estate of "B…, S.A.", with registered office in Leiria, two fuel service stations, one installed in the urban property registered under article … of the parish of…, municipality of Abrantes, and the other installed in the urban property registered under article … of the union of parishes of…, … and …, municipality of Santarém.

The real properties in question were acquired by public deed executed on 27-04-2015, at the Notarial Office of…, and on the same date, the licenses for operation of the said service stations were transferred to the Claimant.

Prior to the execution of the public deed, the Claimant submitted the appropriate declaration for purposes of Real Estate Transfer Tax and Stamp Tax assessment, expressly indicating that it concerned the acquisition of goods from the insolvent estate, within the scope of an insolvency proceeding.

Notwithstanding the declaration made, the Tax Authority assessed Real Estate Transfer Tax in the amount of € 11,375.00, while for purposes of Stamp Tax, it issued a declaration with no value to be paid, under article 269.º of the CIRE.

Although not in agreement with the Real Estate Transfer Tax assessment, the Claimant proceeded to pay it.

In the understanding of the Claimant, the aforementioned Real Estate Transfer Tax assessment is illegal by violation of n.º 2 of art. 270.º of the CIRE, which expressly recognizes the exemption of this tax on transfers of the enterprise or of establishments thereof within the scope of insolvency plans, payment plans or recovery plans or carried out within the scope of the liquidation of the insolvent estate. Now, in the case at hand, we are faced with the transfer of two establishments, corresponding to the two fuel service stations identified, within the scope of a liquidation process of the insolvent estate of the former owner.

In the understanding of the Claimant, even if there had not been a transfer of establishment, but only an isolated sale of real property assets owned by the insolvent entity, such exemption would still be applicable. Indeed, n.º 2 of art. 270.º of the CIRE should be interpreted in a broad manner, and not restrictively, having as its guiding principle the legislative authorization granted by Law n.º 39/2003, of 22 August, and the purpose of the legislator embodied in the preamble of the CIRE, in particular point 49 thereof, under penalty of unconstitutionality of the norm in question.

Given that the requirements for the exemption provided for in n.º 2 of art. 270.º of the CIRE are met, the Claimant concludes that the contested assessment is illegal and should therefore be annulled, with consequent reimbursement to the Claimant of the tax improperly paid, plus compensatory interest, in accordance with art. 43.º of the General Tax Law (LGT).

III. THE RESPONDENT'S REPLY

In its reply, the Respondent raised the exception of lack of jurisdiction of this tribunal on the grounds that, pursuant to art. 2.º of the RJAT, the review of matters relating to the recognition of exemptions and benefits are not within the material jurisdiction of the Arbitral Tribunal.

According to the Respondent's interpretation, it would result "(...) from the claim and the cause of action filed that the Claimant's claim consists of the recognition that it met the requirements to benefit from the exemption provided for in article 8.º n.º 1 of the Municipal Tax Code on Onerous Transfer of Real Property (CIMT), given that another exemption previously granted was annulled to it" – cfr. art. 5.º of the Respondent's reply.

In that respect, the matter in question in the present proceedings is reduced to the recognition of a tax exemption which, being a distinguishable act of the tax procedure, shall be directly challengeable by the taxpayer. And as a distinguishable act, it cannot be questioned and reviewed in the context of contesting the tax assessment that gave rise to it. Furthermore, arbitral jurisdiction does not cover the review of matters related to benefits and exemptions, and therefore this tribunal is not authorized to rule on this type of matters. It concludes, therefore, that this tribunal lacks jurisdiction to review the claim filed by the Claimant.

Without prejudice to the exception invoked, the Respondent argues for the dismissal of the request for annulment of the Real Estate Transfer Tax assessment identified, on the grounds that, in the case at hand, the exemption provided for in n.º 2 of art. 270.º of the CIRE would not be applicable.

Indeed, the Respondent argues that the exemption provided for in the said normative provision covers all acts integrated within the scope of insolvency plans, or payment plans, or liquidation of the insolvent estate, provided that the object of the transfer is the enterprise or the establishment and not one or two assets of its assets. That is, the tax benefit in question is only recognized for the transfer of the totality of goods associated with the exercise of the economic activity of the enterprise. This is, in the understanding of the Respondent, the only interpretation consistent with the letter and spirit of the law and which conforms to the principle of the prevalence of the sale of the enterprise as a whole, as described in the preamble of the CIRE.

Against this understanding, the allegation that the legislative authorization granted by Law n.º 39/2003, of 22 August, is broader and expressly provides for the isolated sale of assets held by the insolvent estate, imposing itself on the legislator and the interpreter, under penalty of unconstitutionality of the norm invoked, would not be appropriate.

First of all, because the authorization to the Government to legislate on certain matters, in a certain direction, is not an absolute mandate to legislate. Should the Government decide to legislate, it shall be up to the Government to decide the terms and limits of the norms to be approved, provided it does not distort or exceed the sense and scope of the authorization granted.

Furthermore, the current wording of n.º 2 of art. 270.º of the CIRE was introduced by art. 234.º of Law n.º 66-B/2012, of 31 December, so any judgment of organic unconstitutionality (resulting from a supposed violation of the enabling law) would no longer be sustainable after the approval by the Parliament itself of the current version of the said normative provision.

Accordingly, and taking into account the scope of the tax benefit provided for in n.º 2 of art. 270.º of the CIRE, the Respondent concludes that it is not applicable in the present case, since the Claimant did not acquire the totality of the assets of the insolvent estate, having merely acquired two real properties that formed part of the assets of B…, S.A. within the scope of the insolvency proceeding instituted against that company.

It concludes, therefore, that the Respondent believes in the legality of the Real Estate Transfer Tax assessment contested by the Claimant, which should thus be maintained.

IV. RESPONSE TO THE EXCEPTION INVOKED

As to the exception invoked by the Respondent, the Claimant considers that arbitral tribunals have jurisdiction to review the illegality of tax assessment acts, and this may be precisely reduced to the disregard of an applicable tax benefit. This was expressly recognized in CAAD decisions, particularly those handed down in cases 809/2014-T and 98/2015-T.

Furthermore, in the case at hand and contrary to what the Respondent alleges, there is no autonomous procedure for recognition of the tax benefit invoked, there being only the procedure for tax assessment, in general terms, within which it shall be incumbent on the Tax Authority to apply or not apply the exemption provided, similar to what occurred with Stamp Tax. In that respect, in addition to the assessment act, there would be no other administrative act performed by the Tax Authority susceptible to administrative review or judicial challenge.

The claim made is therefore lawful and legal, and the exception invoked should be considered entirely without merit.

V. INTERLOCUTORY DECISION

The Arbitral Tribunal was duly constituted and is competent.

The parties have tax and judicial capacity and are legitimate (arts. 4.º and 10.º, n.º 2, of the same statute and art. 1.º of Ordinance n.º 112-A/2011, of 22 March).

The proceedings are not affected by nullities.

VI. FACTUAL MATTERS

A. Facts Deemed Proven

The following facts are deemed proven:

  1. The company B…, S.A., NIPC…, was declared insolvent within the scope of the insolvency proceeding that took place before the 1st Civil Court of the Judicial Court of Leiria under n.º …/11… TBLRA (cfr. doc. n.º 2 of the file).

  2. The company B…, S.A. was the holder of the fuel service station located on the E.N. … at Km…, installed in the urban property registered in the property registry under article … of the parish of…, municipality of Abrantes, with a license for operation on a provisional basis valid until 30-06-2015 (cfr. docs. n.º 2, 4 and 5 of the file).

  3. The company B…, S.A. was the holder of the fuel service station located on the E.N. … at Km…, installed in the urban property registered in the property registry under article … of the union of parishes of…, … and …, municipality of Santarém, with license n.º L/…, valid until 30-08-2018 (cfr. docs. n.º 2, 4 and 5 of the file).

  4. On 23-04-2015, C…, administrator of the insolvent estate of B…, S.A., issued a declaration, for purposes of filing the Real Estate Transfer Tax and Stamp Tax declaration, in which he informed that the establishments identified in points 2 and 3 above would be sold to the Claimant, for the prices of € 130,000 and € 45,000, respectively.

  5. On 24-04-2015, the Claimant submitted the Real Estate Transfer Tax and Stamp Tax declaration relating to the real properties described in points 2 and 3 above, requesting the exemption from arts. 269.º and 270.º of the CIRE.

  6. The Tax Authority recognized only the Stamp Tax exemption, issuing the assessment with no tax value to be paid (cfr. doc. n.º 6 of the file).

  7. With respect to the real properties identified, the Tax Authority issued the Real Estate Transfer Tax assessment n.º…, dated 24-04-2015, in the amount of € 11,375.00 (cfr. doc. n.º 1 of the file).

  8. The Claimant paid the Real Estate Transfer Tax assessment on 24-04-2015 (cfr. doc. n.º 7 of the file).

  9. By deed executed on 27-04-2015, the Claimant acquired from the insolvent estate the urban properties described in points 2 and 3 above (cfr. doc. n.º 2 of the file).

  10. On the same date, C…, administrator of the insolvent estate of B…, S.A., transferred to the Claimant the operating licenses for the fuel service stations referred to in points 2 and 3 above (cfr. docs. n.º 4 and 5 of the file).

  11. The fuel service stations acquired by the Claimant were in operation at the date of acquisition, with no interruption of operations having occurred.

B. Facts Not Proven

No other facts with relevance to the arbitral decision were proven.

C. Foundation of Factual Matters

The factual matters deemed proven are based on documentary evidence presented and not contested. With respect to the testimonial evidence produced, it should be noted that the statements given were assumed to be serious and impartial in the eyes of the Tribunal, in that, alongside the characteristics of spontaneity thereof, they proved to be logically structured and coherent.

VII. LEGAL MATTERS

A) On the Exception of Lack of Jurisdiction

The Respondent invokes that the claim and cause of action filed by the Claimant consist of the recognition of the exemption from Real Estate Transfer Tax under article 8.º of the CIMT, by virtue of having had another exemption previously granted annulled. In that respect, what would effectively be intended with the present request for arbitral ruling would be the recognition of a tax benefit. Now, in procedural terms, the recognition or refusal to recognize a tax benefit shall be a distinguishable act, autonomously challengeable by means of its own remedy. In that respect, it cannot, in the context of challenging an assessment act, be analyzed the legality or illegality of the act of refusal to recognize a certain tax benefit.

Furthermore, given that the jurisdiction of arbitral tribunals is limited, pursuant to art. 2.º of the RJAT, to the review of the legality of tax assessment acts, this tribunal cannot know of the claim presented by the Claimant which, as mentioned, is reduced to the recognition of a tax benefit. The decision on the legality of the refusal of the tax benefit invoked by the Claimant should be reviewed by means of its own procedural process other than the tax assessment made by the Tax Authority and never through a request for arbitral ruling such as that filed by the Claimant.

Before addressing the matter in question, there must be made a correction to what the Tax Authority has alleged, since the Claimant does not contest the legality of any administrative act that revoked an exemption previously granted to the Claimant. And even less does the Claimant invoke the exemption of art. 8.º of the CIMT ("Exemption for the acquisition of real property by credit institutions"), whose application in the present case seems, moreover, ill-suited. In truth, it results from the evidence that, on the matter in question in the proceedings, the Tax Authority made only one Real Estate Transfer Tax assessment, on 24-04-2015, in which it refused to apply to the acquisitions declared by the Claimant the tax exemption provided for in n.º 2 of art. 270.º of the CIRE. Such assessment was not preceded by any administrative act of recognition or refusal to recognize any exemption, nor was there any subsequent administrative act that revised, corrected or called into question the assessment now contested.

These points clarified, it is then necessary to analyze the alleged exception of lack of jurisdiction.

And on this matter, it is necessary, first of all, to note that, contrary to what appears to underlie the position of the Respondent, the exemption under the CIRE operates automatically, without need for any prior special procedure for this purpose – cfr. item d) of n.º 8 of art. 10.º of the CIMT – being at the moment of making the Real Estate Transfer Tax assessment act that the Tax Authority takes a position on the applicability of the tax benefit: if it understands that the same is applicable, it issues a collection document at zero (similar to what occurred with Stamp Tax); if it concludes that the benefit is not applicable, it proceeds to assess the tax owed in general terms. In that respect, there is no separate, distinguishable act, susceptible to challenge by means of its own remedy. The injurious act, in itself, is the tax assessment which may be challenged with recourse to the general remedies available to the taxpayer on the grounds of illegality resulting from the refusal to apply an exemption provided for in the law.

Pursuant to art. 2.º of the RJAT, arbitral tribunals have jurisdiction to declare the illegality of any and all taxes, with any of the grounds listed in art. 99.º of the CPPT, by reference from item a) of n.º 1 of art. 29.º of the RJAT. This shall not be the case only when the law provides for the autonomous challengeability of administrative acts that are prerequisites of assessment acts (for example, acts fixing tax property values or acts recognizing non-automatic tax benefits). This means that the limitation to the challengeability of a tax assessment depends on the prior issuance of an administrative act that is a prerequisite of the assessment act, which has not occurred in the present case. Indeed, and as mentioned above, the Real Estate Transfer Tax assessment contested by the Claimant was not preceded by any administrative act of refusal to recognize the tax benefit invoked, autonomously challengeable, as the Respondent alleges.

For all this, we follow the decision handed down on 01-09-2015 in arbitral case n.º 123/2015-T, in which it was concluded that "Therefore, the assessment act being injurious to the interests of the Claimant and being the only one performed by the tax administration on the situation, its contentious challengeability on the grounds of any illegality must be ensured, as follows from the principle of effective judicial protection, enshrined in articles 20.º, n.º 1, and 268.º, n.º 4, of the Constitution of the Portuguese Republic."

Accordingly, the exception of lack of jurisdiction invoked by the Respondent does not prevail, this tribunal considering that the question of the applicability of the exemption provided for in n.º 2 of art. 270.º of the CIRE may be reviewed in the context of challenging the Real Estate Transfer Tax assessment made, with this matter being within the scope of the powers and jurisdiction of arbitral tribunals, under art. 2.º of the RJAT and Ordinance n.º 112-A/2011, of 12 March.

B) On the Merits of the Law

The matter in question in the present proceedings is reduced to the interpretation of n.º 2 of art. 270.º of the CIRE, in particular the scope of the tax exemption provided therein, and its applicability to the present case.

It results from the evidence that the Claimant acquired, on 27-04-2015, two fuel service stations that were property of B…, S.A., within the scope of the liquidation of the insolvent estate of that company. The Claimant did not acquire the totality of the assets associated with the exercise of the economic activity of the insolvent company, but only the portion corresponding to the two establishments identified.

Now, it results from the wording of n.º 2 of art. 270.º of the CIRE, that the exemption provided therein is applicable to the transfer of the enterprise or of establishments thereof, being unquestionable that the legislator included in this provision not only the global transfer of the assets of the insolvent enterprise, but also the partial transfer of such assets, provided that it corresponds to one or more establishments of the insolvent enterprise. In that respect, the case at hand falls within the legal provision, without need for any broad or extensive interpretation. The acquisition made by the Claimant benefits, therefore, from the Real Estate Transfer Tax exemption provided for in said legal norm, so the Real Estate Transfer Tax assessment made is illegal.

It should also be noted that even if there were doubts as to the applicability of said exemption to the partial acquisition of assets of the insolvent enterprise, by means of individual acquisition of one or more of the establishments that comprise it, as is the present case, the fact is that the unanimous jurisprudence of the Supreme Administrative Court has been defending an extensive interpretation of n.º 2 of art. 270.º of the CIRE, considering that this applies "(…) not only to sales or exchanges of enterprises or establishments as a totality of goods, but also to sales or exchanges of real property (as elements of its assets) provided that they are included within the scope of an insolvency or payment plan, or carried out within the scope of the liquidation of the insolvent estate". This very result derives from the recent court decisions of 20-01-2016, handed down in case n.º 01350/15, of 16-12-2015, handed down in case n.º 01345/15, of 18-11-2015, handed down in cases n.º 01067/15, n.º 0575/15, and of 11-11-2015, handed down in case n.º 0968/13.

And as is stated, and correctly so, in the court decision of 16-12-2015, handed down in case n.º 01345/15, in the passage we transcribe below as we agree with it entirely, notwithstanding the allegations of the Respondent, there is no "(…) reason to postpone the understanding that has been adopted and which is hereby reaffirmed, inasmuch as it constitutes what best adapts the legal text to the sense and scope of the legislative authorization under which the norm was issued by the Government in a matter reserved to Parliament and because that interpretation is the one that best serves the purpose of n.º 2 of article 270.º of the CIRE - «to promote and support the rapid sale of the goods that form part of the insolvent estate for obvious reasons in the interest of creditors, but also in the interest of the public recovery of the normal functioning of the business world in which each insolvency proceeding presents itself as a disturbing element», giving tax incentives to those who acquire the real property that forms part of the insolvent estate and which will be sold in the liquidation phase – there being, in that light, no reason to distinguish situations in which the enterprise is being sold globally with all its assets and liabilities, from situations in which one or more of the commercial establishments that comprised it are being sold, or situations in which real property that formed part of its assets are being sold (cfr. the Supreme Administrative Court Decision of 18 November last, case n.º 01067/15)."

For all the foregoing, this Tribunal concludes that the assessment made by the Respondent and here contested by the Claimant is illegal by violation of the provisions of n.º 2 of art. 270.º of the CIRE and should therefore be annulled, with the other legal consequences. Indeed, the acquisition of the business establishments by the Claimant within the scope of the liquidation of the insolvent estate of B…, S.A. is an operation expressly provided for in said legal provision in that it constitutes the acquisition of establishments of the insolvent enterprise. Even if it were not understood in this way, and considering the extensive interpretation defended by the Supreme Administrative Court and subscribed to by this tribunal, it would always be said that any acquisition of real property within the scope of operations of liquidation of the insolvent estate shall be covered by the exemption of n.º 2 of art. 270.º of the CIRE so that, also on this ground, the assessment made would be illegal.

The claim filed by the Claimant is therefore entirely upheld.

C) On Compensatory Interest

It results from the facts deemed proven that the Real Estate Transfer Tax assessed, in the amount of € 11,375.00, was paid by the Claimant on 24-04-2015.

Pursuant to n.º 1 of art. 43.º of the General Tax Law (LGT) "Compensatory interest is due when it is determined, in administrative review or judicial challenge, that there was error attributable to the services from which results payment of the tax debt in an amount greater than that legally owed."

As stated by Diogo Leite de Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, General Tax Law - Annotated and Commented, Encontro da Escrita Publisher, 4th Edition, 2012, page 342, note 2 "The error attributable to the services that made the assessment is demonstrated when administrative review or challenge of that same assessment is carried out and the error is not attributable to the taxpayer (for example, annulment due to error attributable to the taxpayer would occur when the assessment is based on incorrect factual premises, but the error has as its basis an incorrect indication in the declaration presented by the taxpayer)".

Now, in the concrete case, the request for payment of compensatory interest on the part of the Claimant is unequivocally justified since the contested tax assessment proves to be affected by illegality and should therefore be annulled. In addition to reimbursement, the Claimant is further entitled to payment of compensatory interest, at the legal rate in force, on the amount of € 11,375.00, calculated from the date of payment until the date of processing of the respective credit note, in which they shall be included – cfr. art. 43.º of the LGT and n.º 4 of art. 61.º of the CPPT.

VIII. DECISION

In accordance with the foregoing, this Arbitral Tribunal decides:

a) To uphold the request for arbitral ruling on the claim for annulment of the Real Estate Transfer Tax assessment made on 24-04-2015, in the amount of € 11,375.00, declaring it illegal by violation of n.º 2 of art. 270.º of the CIRE, annulling it and ordering the Respondent to reimburse the amount paid by the Claimant;

b) To order the Respondent to pay compensatory interest, on the amount of € 11,375.00, at the legal rate in force, calculated from the date of payment until the date of processing of the respective credit note, in which they shall be included, pursuant to arts. 43.º of the LGT and 61.º of the CPPT.

Value of the Proceedings: In accordance with the provisions of article 306.º, n.º 2, of the Code of Civil Procedure and 97.º-A, n.º 1, item a), of the CPPT and 3.º, n.º 2, of the Regulation of Costs in Tax Arbitration Proceedings, the value of € 11,375.00 is fixed for the proceedings.

Costs: Pursuant to n.º 4 of art. 22.º of the RJAT, the amount of costs is fixed at € 918.00, in accordance with Table I appended to the Regulation of Costs in Tax Arbitration Proceedings, at the expense of the Respondent.

Let this arbitral decision be registered and notified to the parties.

Lisbon, 28-02-2016

The Sole Arbitrator

(Maria Forte Vaz)

Frequently Asked Questions

Automatically Created

Is IMT (property transfer tax) exempt when purchasing real estate from an insolvency estate under Article 270 of the CIRE?
Article 270(2) of the CIRE provides IMT exemption for transfers of enterprises or establishments within insolvency plans, payment plans, recovery plans, or liquidation of insolvent estates. However, the Tax Authority interprets this exemption restrictively, applying it only when the entire enterprise or establishment is transferred as a functional unit, not to isolated asset sales. The claimant argues for a broader interpretation covering all insolvency liquidation transfers, including individual properties that constitute establishments like fuel service stations. The exemption's applicability depends on whether the transferred assets constitute an 'establishment' and whether Article 270(2) should be interpreted broadly consistent with legislative intent to facilitate insolvency proceedings.
Can the CAAD arbitral tribunal rule on IMT exemption disputes related to insolvency proceedings?
The Tax Authority challenged CAAD's jurisdiction, arguing that Article 2 of RJAT excludes matters relating to recognition of exemptions and benefits from arbitral jurisdiction. According to this view, exemption recognition is a distinguishable administrative act that must be directly challenged separately from the tax assessment. However, the claimant contests this interpretation, maintaining that the arbitral tribunal has jurisdiction to review the legality of IMT assessments where exemptions under CIRE were improperly denied. The jurisdictional question turns on whether challenging an IMT assessment for failure to apply a statutory exemption constitutes reviewing the 'tax assessment' (within CAAD jurisdiction) or 'recognition of exemptions' (potentially excluded).
What are the requirements to obtain an IMT exemption for properties acquired in Portuguese insolvency processes?
To obtain IMT exemption under Article 270(2) CIRE for insolvency acquisitions, the transfer must occur within an insolvency plan, payment plan, recovery plan, or liquidation of the insolvent estate. The Tax Authority requires that the object transferred be the enterprise or establishment as a whole—the totality of goods associated with exercising economic activity—not merely individual assets. The claimant must demonstrate that what was acquired constitutes an 'establishment' (a functional business unit like an operating fuel service station with licenses transferred) rather than isolated real estate. The taxpayer should declare the insolvency context when filing IMT declarations and provide evidence of the acquisition's nature within insolvency proceedings, including court documentation and operational license transfers.
How can a taxpayer challenge an IMT liquidation when the exemption under the CIRE insolvency code was not granted?
When the Tax Authority assesses IMT without granting CIRE exemption, taxpayers can challenge the assessment through arbitral proceedings under the RJAT framework by filing a request for constitution of an arbitral tribunal pursuant to Articles 2 and 10 RJAT in conjunction with Article 102 CPPT. The challenge should argue the assessment's illegality based on improper denial of Article 270(2) CIRE exemption. Even if the taxpayer paid the contested IMT under protest, they can seek annulment of the assessment with consequent reimbursement. The request should detail the insolvency proceedings, evidence that establishments or the enterprise were transferred, and argue for broad interpretation of Article 270(2) consistent with legislative intent, addressing any jurisdictional objections the Tax Authority may raise regarding arbitral competence over exemption matters.
Is the taxpayer entitled to a refund with compensatory interest after annulment of an unlawful IMT assessment?
Under Article 43 of the General Tax Law (LGT), taxpayers are entitled to compensatory interest when tax amounts are refunded following annulment of unlawful assessments. If the arbitral tribunal annuls the IMT assessment for improper denial of CIRE exemption, the claimant is entitled not only to reimbursement of the improperly paid tax but also to compensatory interest calculated from the payment date until reimbursement. This compensatory interest compensates for the taxpayer's loss of use of funds during the period the Tax Authority retained amounts not legally due. The entitlement arises automatically upon annulment of the assessment as a legal consequence of the improper collection, without requiring separate application beyond including the request in the arbitral claim.