Process: 512/2016-T

Date: April 6, 2017

Tax Type: IMT

Source: Original CAAD Decision

Summary

CAAD Process 512/2016-T addresses a critical interpretation issue regarding IMT exemption under Article 270(2) of the Portuguese Insolvency and Business Recovery Code (CIRE). The claimant company challenged an additional IMT assessment of €1,293.93 after purchasing residential property from an individual's insolvent estate, arguing the exemption applies to all property transfers within insolvency liquidation proceedings. The Tax Authority contended the exemption exclusively covers transfers of businesses or establishments, not individual real property, supported by consistent case law. The claimant's arguments included: (1) improper legal interpretation by the Tax Authority; (2) lack of proper grounds for the assessment violating Articles 268(3) CRP, 124-125 CPA, and 77 LGT; (3) violation of legitimate expectations and legal certainty principles, as the exemption was initially recognized then revoked; (4) untimely revocation exceeding the one-year limit under Articles 136 and 141 CPA; and (5) breach of the good faith principle enshrined in Article 59(2) LGT and Article 266(2) CRP. The Tax Authority defended that the 2012 legislative amendment to Article 270(2) CIRE merely added recovery plans to the exemption scope but maintained the fundamental requirement that transfers involve a business or establishment, not residential property from natural persons' insolvencies. This arbitral decision carries significant implications for determining whether insolvency-related IMT exemptions extend beyond commercial entities to individual debtor property liquidations, affecting both insolvency practitioners and real estate purchasers acquiring assets from insolvent estates.

Full Decision

ARBITRAL DECISION

I – Report

1. On 25.08.2016, the Claimant A…, S.A., NIPC …, with head office at …, no.…, parish of …, Porto, requested the CAAD to constitute an arbitral tribunal, pursuant to article 10 of Decree-Law no. 10/2011, of 20 January (Legal Framework for Arbitration in Tax Matters, hereinafter referred to as "LFATM"), in which the Tax and Customs Authority is the Respondent, with a view to the declaration of nullity or annulment of the assessment of the Municipal Tax on Onerous Transfers of Real Property (hereinafter "IMT"), dated 16.12.2015, in the amount of €1,293.93, relating to the purchase effected of the urban property, intended for housing, located on "…" Street, no.…, parish of … and Municipality of …, described in the Property Registry Office of … under no. … .

The Claimant, alleging that it has paid the tax in question, further petitions for the reimbursement of such amount, increased by compensatory interest.

2. The request for constitution of the arbitral tribunal was accepted by His Excellency the President of the CAAD and notified to the Tax and Customs Authority.

Pursuant to the terms and for the purposes of the provisions of no. 1, of art. 6, of the LFATM, by decision of the Deontological Council President, duly communicated to the parties, within the legally applicable time limits, the undersigned was appointed as arbitrator, who communicated to the Deontological Council and to the Administrative Arbitration Centre the acceptance of the task within the regularly applicable time limit.

The Arbitral Tribunal was constituted on 18-11-2016.

3. The grounds presented by the Claimant, in support of its claim, were, in summary, as follows:

- The additional assessment in question results from the allegedly improper application to the Defendant of the IMT exemption benefit, provided for in no. 2, of article 270, of the Insolvency and Business Recovery Code (hereinafter "IBRC").

- However, the various interpretative elements of the provision in question converge towards the conclusion that, in the context of an insolvency plan or payments plan or the liquidation of the insolvent estate, the IMT exemption enshrined in no. 2 of art. 270 of the IBRC covers real property transferred by sale or exchange, even when such transfer is not integrated into the transfer of a business or establishment.

- Being quite evident that the act of additional assessment of IMT that is now being claimed results, as we have demonstrated, from an erroneous interpretation of the provisions of no. 2 of article 270 of the IBRC, suffering, therefore, from the defect of error regarding the legal prerequisites.

- On the other hand, the act in question does not indicate and there is no legal provision applicable that grounds and legitimizes the quantification of the amounts determined and the assessment of the tax in question, nor were any reasons provided justifying the assessment now being challenged.

- The impugned act thus suffers from manifest lack of factual and legal grounds, or, at least, this is insufficient, obscure and incongruous, whereby the provisions of art. 268/3 of the CRP, arts. 124 and 125 of the CPA and art. 77 of the LGT were frontally violated.

- The Tax Administration violated the legitimate expectations and guarantees of the Defendant previously constituted, and the principle of trust and legal certainty inherent to the principle of the Rule of Law, in addition to having violated the principles of tax legality, the prohibition of retroactivity of tax law and the certainty and legal security provided for, among others, in articles 12 of the LGT, 12 of the CC and 103, no. 3, of the CRP.

- In fact, the interpretation of the Tax Administration applied to a past tax fact, entirely conducted under the protection of old law, constitutes a violation of the principle of protection of trust, in the aspect of legal security.

- In this measure, it is clearly evident an error of law on the part of the Tax Authority, since it induced the Defendant in error when it recognized the IMT exemption to be assessed prior to the execution of the public deed.

- Furthermore, the principle of good faith enshrined in no. 2, of article 59, of the General Tax Law, presupposes on the part of the Tax Administration a duty of action according to good faith.

- In truth, the presumption of acting in good faith is a corollary of that duty of action according to the principle of good faith, which is constitutionally imposed on all Administration, pursuant to the provisions of no. 2, of art. 266, of the C.R.P.

- Moreover, the revocation of the exemption could only be materialized within the period of 1 year after it was granted, being an act constitutive of rights, by the joint application of the provisions of arts. 141, no. 1, of the CPA and 58 of the CPPT.

- Thus, the revocation of such administrative act was materially made beyond the period of one year in which it was legally possible, pursuant to articles 136 and 141 of the CPA applicable ex vi art. 2, letter c), of the LGT and art. 2, letter d), of the CPPT.

- In this measure, the illegality of the revocation is evident, since the revocatory act, with ex tunc effects, occurred more than one year after the act granting the reduction to one fifth of the Stamp Tax to be assessed, in clear violation of the provisions of art. 141 of the CPA.

4. The ATA – Tax and Customs Authority, called to state its position, contested the Claimant's claim, defending itself by impugnation, in summary, with the following grounds:

- At issue, in the present proceedings, is the existence of the prerequisites for the IMT exemption provided for in no. 2, of art. 270, of the IBRC.

- The Claimant alleges that, having the acquisition of the property been effected within the scope of the liquidation of a certain insolvent estate, it is covered by the IMT exemption provided for in no. 2, of art. 270 of the IBRC, but such interpretation has no legal support whatsoever, as will be demonstrated below.

- Current no. 2, of article 270, of the Insolvency and Business Recovery Code provides that "Are also exempt from municipal tax on onerous transfers of real property the acts of sale, exchange or transfer of the business or of establishments thereof, integrated within the scope of insolvency plans, payment plans or recovery plans or carried out within the scope of the liquidation of the insolvent estate. (Amendment of Art. 234 of Law no. 66-B/2012, of 31 December).

- This exemption, already previously provided for, covers all acts integrated within the scope of insolvency plans, or payment plans, or liquidation of the insolvent estate, with the reservation that the insolvent is a business or establishment.

- The previous wording of no. 2 of article 270 of the Insolvency and Business Recovery Code was as follows: "2 - Are also exempt from municipal tax on onerous transfers of real property the acts of sale, exchange or transfer of the business or of establishments thereof integrated within the scope of an insolvency plan or payment plan or carried out within the scope of the liquidation of the insolvent estate."

- Within the scope of the interpretation of the previous wording, the case-law understanding has been uniform in the sense that it must be real property that forms part of the patrimony of a business and not real property of natural persons, with the sole justification of being part of an insolvency process.

- From the comparison of the two wordings of no. 2 of the aforementioned article, it is found that the legislator only added the exemption regarding the transfers of the business or of establishments thereof, integrated within the scope of business recovery plans.

- The impugned assessment is legal and in accordance with the Constitution, with the multiple constitutional principles that the Claimant invoked not being violated.

- In the case in question, we are faced with the acquisition of a real property, although in an insolvency process, but that does not belong to a business nor was intended for the exercise of any business activity whatsoever, but was owned by a natural person with destination for housing.

- Therefore, the legal prerequisites for IMT exemption are not met by reason of its transfer having been effected in an insolvency process of a natural person.

- Finally, the Claimant alleges that the revocation of the tax benefit is illegal due to violation of articles 140 and 141 of the CPA.

- However, also here the grounds invoked are unfounded since, not verifying the legal prerequisites for the Claimant to be able to benefit from the IMT exemption, pursuant to no. 2 of art. 270 of the IBRC, the tax administration could not fail to assess the tax due, as long as the statute of limitations period is respected, which, pursuant to art. 35 of the CIMT, combined with art. 45, no. 1, at the end, of the LGT, is eight years from the transfer or from the date on which the exemption ceased to have effect.

5. Verifying the non-existence of any situation provided for in art. 18, no. 1, of the LFATM, which would make necessary the arbitral meeting provided for therein, its holding was dispensed with, on the grounds of the prohibition of the practice of useless acts.

The holding of submissions was also dispensed with, pursuant to art. 18, no. 2, of the LFATM, "a contrario".

6. The tribunal is materially competent and is regularly constituted pursuant to the LFATM.

The parties have legal personality and capacity, are legitimate and are legally represented.

The proceedings do not suffer from defects that would invalidate them.

7. It is necessary to assess and decide whether the following illegalities are verified:

a) Illegality of the Assessment by violation of the provisions of article 270, no. 2, of the IBRC.

b) Illegality of the Assessment by the same constituting the illegal revocation of the act of granting a tax benefit effected beyond the period of one year.

c) Illegality of the assessment by violation of the principles of legal security, protection of trust and good faith and the prohibition of retroactivity of tax law.

d) Illegality of the assessment based on the defect of lack of grounds.

II – The Relevant Matter of Fact

8. The following facts are deemed proven:

- On 5 March 2014, the defendant acquired by purchase and for the price of €110,900.00 (one hundred and ten thousand nine hundred euros) the urban property, intended for housing, located on Street …, no.…, parish of … and Municipality of …, described in the Property Registry Office of … under no.…, within the scope of the insolvency process of B…, which took place in … Civil Court of the Court of Évora, under no. …/11…TBEVR.

- Prior to the aforementioned acquisition, the Claimant presented before the competent Tax Service the declaration for assessment of the Municipal Tax on Onerous Transfers of Real Property (IMT), the assessment having been issued with the value of €0.00, containing the following:

"Benefits (…) Insolvency and Business Recovery Code – Transfers integrated within the scope of the liquidation of the insolvent estate (art. 270, no. 2 of D-L 53/04)"

- On 8 October 2015, the Defendant was notified by official letter no.…, of 06.10.2015, sent by the Tax Service of Amadora -…, to, if willing, exercise the right to prior hearing regarding the draft additional assessment of IMT, in the amount of €1,293.93.

- From the same notification it appears that, if the right to prior hearing is not exercised within the indicated period of 20 days, the draft decision would become final, and the IMT should be assessed within 30 days, counted from the date on which the draft decision would become final.

- From this notification it further appears the reference to instruction IMT/… /2015, the tax rate of 2%, the amount to be deducted (€924.07) and the collection of €1,293.93.

- On 16.12.2015 the Respondent proceeded to the additional assessment of IMT, converting the draft assessment into final, with a value of €1,293.93 to be paid by 27.12.2015, containing in the same, in the field "Description", in particular, the following:

"Additional corrective assessment of IMT, registration no. …/2014 of 13.02.2014, since exemption was granted improperly, relating to the transfer effected of art. No. …, intended for housing, of the Union of parishes of … and …, municipality of Évora.

For the purposes of the IMT exemption, provided for in no. 2 of art. 270 of the IBRC, only the acts of sale, exchange or transfer of the business or of establishments thereof integrated within the scope of insolvency plans, payment plans or recovery plans or carried out within the scope of the liquidation of the insolvent estate.

In this way those insolvents who are natural persons and do not exercise an industrial, commercial or agricultural activity are not covered by this legal provision"

- On 15 January 2016, the Claimant proceeded to pay the mentioned tax to the Tax and Customs Authority and respective interest.

- On 23 March 2016 the Claimant presented a gracious complaint against the additional assessment of IMT now being challenged.

- On 22 June 2016, the Defendant was notified, by official letter sent by the Tax Service of Amadora - …, to exercise the right to prior hearing and to be aware of the draft decision and its grounds concluding by the rejection of the gracious complaint submitted.

- On 23 July 2016, the Defendant was notified, by official letter sent by the Tax Service of Amadora - …, of the decision to reject the gracious complaint submitted.

With interest for the decision of the case, within the scope of the matter of fact alleged, there are no unproven facts, and it should be noted that it does not result from the proceedings that the property transferred had formed part of the patrimony of a business, which, moreover, was not even alleged.

9. The Tribunal's conviction regarding the decision of the matter of fact was based on the documents contained in the proceedings, which were not subject to impugnation as well as the pleadings presented, and it should be noted that there is no disagreement between the parties regarding the matter of fact, the disagreement being limited to the matter of law.

III – The Applicable Law

10. Illegality of the Assessment by violation of the provisions of article 270, no. 2, of the IBRC.

The Claimant understands that the acquisition effected fulfills the legal prerequisites of the exemption provided for in art. 270, no. 2, of the IBRC, to the contrary of what is understood by the Respondent.

This article 270 of the IBRC establishes, in the current wording, the following:

"1 - The following transfers of real property, integrated in any insolvency plan, payment plan or recovery plan, are exempt from municipal tax on onerous transfers:

a) Those intended for the constitution of new company or companies and the realization of its capital;

b) Those intended for the realization of the increase of the capital of the debtor company;

c) Those arising from the dation in payment of business property and the transfer of property to creditors.

2 - Are also exempt from municipal tax on onerous transfers of real property the acts of sale, exchange or transfer of the business or of establishments thereof integrated within the scope of insolvency plans, payment plans or recovery plans or carried out within the scope of the liquidation of the insolvent estate."

The Supreme Administrative Court decided in the judgment rendered in process 0949/11, of 30.05.2012 that "it should be understood that exempt from IMT are not only the sales of the business or establishments thereof, as universalities of property, but also the sales of elements of its assets, as long as they are integrated within the scope of an insolvency plan or payment plan or carried out within the scope of the liquidation of the insolvent estate".[1]

This understanding has been followed by subsequent Supreme Administrative Court case-law.[2]

In the specific case of acquisition of real property, not forming part of the assets of a business, the judgment of the Supreme Administrative Court, of 03-07-2013, proc. 0765/13, concretized this understanding, understanding that "it must be real property that forms part of the patrimony of a business and not real property of natural persons, with the sole justification of being part of an insolvency process", a position which is endorsed, in accordance with the terms exposed by the learned judgment and whose understanding has also been followed by arbitral case-law.[3]

Thus, it is concluded that the exemption provided for in art. 270, no. 2, of the IBRC, is not applicable to the acquisition of the property in question in the present proceedings, the alleged illegality by violation of the provision in question being unfounded.

11. Illegality of the Assessment by the same constituting the illegal revocation of the act of granting a tax benefit effected beyond the period of one year.

The Claimant further understands that the assessment embodies the illegal revocation of a tax benefit constituted in its legal sphere and that art. 141 of the Code of Administrative Procedure prohibits the possibility of revocation[4]

However, it happens that the tax benefit in question is automatic, not depending on any administrative act of recognition by the administration. In truth, there is no legal provision for an administrative act of recognition of the exemption in question [5] [6]

Thus, as can be seen, the assessment in question does not constitute revocation of a prior administrative act, and neither article 141 of the Code of Administrative Procedure nor art. 14, no. 4, of the Statute of Tax Benefits are applicable to the case in the proceedings, whose application also presupposes the existence of an administrative act of recognition of the tax benefit.[7]

In our understanding, the situation sub judice is subject to art. 31, no. 2, of the Code of Municipal Tax on Onerous Transfers of Real Property, which provides that:

"- When it is verified that in assessments an error of fact or law was committed, from which resulted prejudice to the State, as well as in cases where there is grounds for evaluation, the head of the tax service where the assessment was made or where the declaration was delivered for the purposes of the provision in no. 3 of article 19, promotes the competent additional assessment."

In turn no. 3 of the same article provides that "The assessment can only be made until four years have elapsed counted from the assessment to be corrected(…)"

This is the specific regime that the CIMT[8] provides for the alteration of assessment in which an error of fact or law was committed with prejudice to the State in the initial assessment, with safeguard, naturally, of the cases of tax benefits dependent on recognition in which, by prior administrative act there was recognition thereof, which, as we have already seen, is not the case in the proceedings.

In such terms, it is concluded that the assessment in question does not embody the illegal revocation of a tax benefit.

12. Illegality of the assessment by violation of the principles of legal security, protection of trust and good faith and the prohibition of retroactivity of tax law.

On this topic Sérgio Vasques writes:

"(…) if this principle of legal security, rooted in art. 2 of the Constitution of the Republic, is directed at all areas of legislative intervention and administrative practice, it is evident that in the tax field it takes on heightened acuity, not least because taxes represent a coercive deprivation of property. When planning their activity and managing their day-to-day operations, families and businesses need to be able to trust in tax law and in the orientations of the administration, basing on these many of the decisions whose economic effects extend over time"( Manual Tax Law, Almedina, 2011, p. 290).

For his part, Casalta Nabais tells us that "A consideration which will still have to be made in case the administration or the legislator itself, through the retroactive imposition of a correct interpretation of tax law, intends to recover taxes not collected by virtue of the previous illegal interpretation of the administration excluding them from the scope of incidence or throwing them into the tax benefits. Also to such a venire contra factum proprium the principle of protection of trust imposes limits" (Tax Law, Almedina, 3rd Edition, 2005, p. 150).

It appears to us that the violation of the principle of legal security by the administration, in cases in which it is embodied in contradictory conduct, harmful to the trust aroused in the taxpayer, ends up resulting in the violation of the principle of good faith recognized in arts. 59, no. 1, and 68 of the LGT and constitutionally enshrined in art. 266, no. 2, of the Constitution of the Portuguese Republic.

In this regard, the STA considered in the judgment of 28-01-2009, rendered in process 0699/08[9]:

"Although it has its primary sphere of application with regard to acts carried out in the exercise of discretionary powers, the truth is that it has come to be suggested the possibility, in particular, of the principle of good faith being applied in the case of acts carried out in the exercise of binding powers, since the text of article 266 of the CRP does not reveal any restriction to its application to any type of administrative activity –(…).

However, in the confrontation between the principles of legality and good faith each specific situation must be weighed so as to be able to conclude whether from the prevalence of the first, in the strict sense, there results a flagrant injustice for the taxpayer, causing him a disproportionate and intolerable prejudice.

Only in this latter case, the violation of the principle of good faith, in its dimension of protection of the trust of individuals and as an integral part of the block of legality, in the broad sense, should have invalidating effects on the tax act carried out."

In the concrete case, it must be observed that the mention in the assessment that the transfer in question was exempt from IMT is likely to create in the taxpayer the conviction that such exemption existed and that it would not have the obligation to bear the tax in question but it is also true, as we have seen, that the law itself provides for the existence of errors of law committed in assessments to the prejudice of the State, and the possibility of such error being rectified through additional assessment.

On the other hand, the law provides in arts. 59, no. 1, letter e) and 68, of the General Tax Law, the mechanism, which the Claimant did not use, adequate to provoke the binding statement of the tax administration before the occurrence of the tax fact.[10]

In these circumstances, the principles in question cannot be considered violated.

It should be added that it would always be to be considered that from the taxation in question there does not result for the Claimant, in the words of the judgment of the STA of 28-01-2009, rendered in process 0699/08 above cited, "a flagrant injustice" nor a "disproportionate and intolerable prejudice", in that it results only from the correct application of the law to the concrete case, in respect for the principles of legality and equality.

In fact, as was considered in this judgment:

"(…) in the case "sub judicio", being to note that default interest was not assessed, the assessment (…), being justified by reasons of public interest and in accordance with rules of tax incidence that are uniformly applicable to all taxpayers in equal circumstances.

In this way, far from being able to constitute a flagrant injustice for the claimants, the tax act of assessment carried out had a contribution of restoration of equality among those taxpayers."

For the reasons exposed, the Tribunal understands that the tax act impugned is not violative of the principles of security and legal certainty and good faith.

It is further manifest that there has been no violation of the principle of prohibition of retroactivity of tax law, since it only results from the proceedings that, in the case, in the initial assessment an error of law was committed to the detriment of the Respondent, with no retroactive application of any legal provision whatsoever.

In such terms it is decided that the assessment in question did not violate the said constitutional principles.

13. Illegality of the assessment based on the defect of lack of grounds.

The Claimant further alleges that the act in question does not indicate any applicable legal provision that grounds and legitimizes the quantification of the amounts determined and the assessment of the tax in question, nor were any reasons provided justifying the assessment now being challenged and that the impugned act thus suffers from manifest lack of factual and legal grounds, or, at least, this is insufficient, obscure and incongruous.

However, this defect is also not verified.

In fact it was the claimant itself who, aware of the objective incidence and the tax fact presented the competent declaration for the purposes of the tax in question, it being considered, erroneously, in that first assessment to occur the exemption provided for in art. 270, no. 2, of the IBRC, which presupposes the occurrence of the objective incidence.

In the second assessment it appears from the same, in a succinct but sufficient manner, congruous and clear, the reasons why the Respondent considered non-existent the right to the mentioned exemption and, in consequence, proceeded to the assessment.

Thus, it is also judged to be unfounded the alleged defect of lack of grounds of the tax assessment act.

14. Thus, the request for declaration of nullity or annulment of the tax act is unfounded, and, in consequence, the request for restitution of the tax paid, as well as compensatory interest.

IV – Decision

Thus, the arbitral tribunal decides to judge the claim totally unfounded, the assessment remaining in the legal order.

Value of the action: €1,293.93 (one thousand two hundred ninety-three euros and ninety-three cents) pursuant to the provisions of art. 306, no. 2, of the CPC and 97-A, no. 1, letter a), of the CPPT and 3, no. 2, of the Costs Regulations in Arbitration Proceedings.

Costs to the Claimant, in the amount of €306.00 (three hundred and six euros) pursuant to no. 4 of art. 22 of the LFATM.

Notify.

Lisbon, CAAD, 6.04.2017

The Arbitrator

Marcolino Pisão Pedreiro

[1] Available at http://www.dgsi.pt, underlined by us.

[2] Cfr. judgment of the STA of 15 February 2017, rendered in process 0793/16 and other judgments of this court referred to therein. (also available at http://www.dgsi.pt)

[3] Cfr, in particular, the arbitral decisions rendered in processes 649/2015-T of 26 September 2016, 517/2016-T of 11.01.2017, 514/2015-T of 15 February 2017.(available at https://www.caad.org.pt/jurisprudencia/tributario/)

[4] In the numbering at the date of the tax fact. Current article 14, no. 4 of this statute.

[5] As Jorge Lopes de Sousa writes "As results from the provision in no. 1 of this art. 65, in the absence of legal provision providing for the automatic benefit, its recognition is necessary. However, as results from the definition of automatic tax benefit contained in art. 4, no. 1, of the EBF, it is not necessary that this legal provision expressly refer to this automatism, it being sufficient that it results from the law attributing directly and immediately the benefit, without making its relevance dependent on prior recognition, which means that, in practice, it will be the case of an automatic benefit, whenever the law does not provide for the need for recognition" (Code of Tax Procedure and Process annotated and commented, Áreas Publishing, 2006, pp. 508-509)

[6] Also in the sense that it is an automatic recognition tax benefit see the arbitral decision rendered in process 517/2016-T of 11.01.2017.

[7] In this point the decision in the scope of arbitral process 517/2016-T of 11.01.2017 is not followed.

[8] Similarly to what is established for other taxes (Cfr. arts. 89, no. 2, b) and 92, no. 1 of the CIRS, 99, no. 2, letter c) and 101 of the CIRC, 115, no. 1, letter c) 1 116, no. 1, of the CIMI.)

[9] Which can be consulted on the website "www.dgsi.pt".

[10] In the words of Saldanha Sanches "when the taxpayer obtains a binding information according to which to the fact applies the regime x, the Administration cannot, even if it subsequently becomes convinced that the decision is wrong(…)" (Manual of Tax Law, Coimbra Publishing, 3rd Edition, 2007, p. 205).

Frequently Asked Questions

Automatically Created

Is the IMT tax exemption under Article 270(2) of CIRE applicable to individual property sales in insolvency proceedings?
The Tax Authority argues that Article 270(2) CIRE exemption applies exclusively to transfers of businesses or establishments within insolvency proceedings, not individual residential property sales. However, the claimant contends that literal, systematic, and teleological interpretation supports exempting all property transfers in insolvency liquidation, regardless of business context. The dispute centers on whether the phrase 'sale, exchange or transfer of the business or establishments thereof' modifies all subsequent clauses or only applies to recovery plans, with case law historically supporting the restrictive interpretation for natural person insolvencies.
Can a company claim an IMT exemption when purchasing real estate from an insolvent estate outside a business transfer?
A company can claim IMT exemption under Article 270(2) CIRE only if the property transfer constitutes part of a business or establishment sale within insolvency proceedings. The Tax Authority maintains that purchasing isolated residential property from an individual debtor's insolvent estate, even within official liquidation procedures, does not qualify for exemption. The claimant must demonstrate the acquisition forms part of a business transfer rather than merely occurring during insolvency liquidation. The 2012 amendment adding 'recovery plans' did not expand exemption eligibility beyond business-related transfers to include individual residential properties.
What are the grounds for annulling an additional IMT tax assessment related to insolvency property transactions in Portugal?
Grounds for annulling additional IMT assessments in insolvency transactions include: (1) error regarding legal prerequisites through misinterpretation of Article 270(2) CIRE; (2) lack of factual and legal grounds violating Articles 268(3) CRP, 124-125 CPA, and 77 LGT; (3) violation of legitimate expectations and legal certainty principles under Articles 12 LGT and 103(3) CRP; (4) breach of good faith duty under Article 59(2) LGT; (5) untimely revocation of exemption recognition beyond one-year limit per Articles 136 and 141 CPA applied via Articles 2(c) LGT and 2(d) CPPT; and (6) retroactive application of tax interpretation violating legal security and non-retroactivity principles.
How does CAAD arbitration work for challenging IMT tax assessments issued by the Portuguese Tax Authority?
CAAD (Centro de Arbitragem Administrativa) arbitration for IMT challenges operates under Decree-Law 10/2011 (RJAT). Taxpayers file constitution requests under Article 10 RJAT; the CAAD President accepts and notifies the Tax Authority; the Deontological Council appoints an arbitrator within legal deadlines; parties receive appointment notifications and arbitrators accept formally; the tribunal constitutes upon acceptance (here, 18-11-2016); parties submit written arguments with the claimant presenting grounds and requesting relief (nullity/annulment plus reimbursement with compensatory interest); the Tax Authority contests by impugnation; the arbitrator examines legality, issues a binding decision; and proceedings offer faster, specialized resolution compared to administrative courts.
Are compensatory interest payments available when an IMT exemption is wrongfully denied by the Tax Authority?
Compensatory interest payments are available under Article 43 LGT when the Tax Authority unduly collects taxes later deemed illegal or unconstitutional. If an IMT exemption is wrongfully denied and the taxpayer paid the assessment, successful annulment entitles reimbursement of principal plus compensatory interest calculated from payment date until restitution. The claimant specifically requested such interest here. Interest compensates for the State's improper retention of funds, applying automatically upon determining the collection lacked legal basis, whether through administrative review, arbitration, or judicial proceedings. The rate and calculation method follow Article 43 LGT and implementing regulations.