Process: 513/2014-T

Date: March 17, 2015

Tax Type: IMI

Source: Original CAAD Decision

Summary

This arbitration case (Process 513/2014-T) addresses duplicate IMI (Municipal Property Tax) collection resulting from administrative errors following a parish merger in Lisbon. The taxpayer owned an urban property that was registered under two different matrix numbers: the original matrix from an extinguished parish and a new matrix from the successor parish created through merger. Despite both matrices referring to the same physical property located on Av. ... in Lisbon, the 2013 IMI assessment erroneously included charges for both entries, resulting in an overcharge of €1,847.78. The taxpayer paid the first installment on April 30, 2014, including the excess amount of €615.90. The Tax Authority subsequently recognized the error and issued a corrected assessment on April 26, 2014 (No. 2013...), eliminating the duplicate charge by setting the taxable value and assessment for the extinguished matrix to zero. The corrected assessment reduced the total IMI from €6,907.37 to €5,059.67, with the remaining instalments adjusted accordingly. The taxpayer filed for arbitration on July 24, 2014, seeking reimbursement of the overpayment plus compensatory interest. The Tax Authority argued that the proceedings should be terminated due to original impossibility of dispute, since the challenged assessment had already been annulled and replaced before the arbitration request was filed. The Authority contended that the amount overpaid was credited toward subsequent instalments and that compensatory interest was not due. This case illustrates the procedural complexities that arise when administrative territorial reorganizations create duplicate property registrations, the mechanisms for correcting such errors, and the conditions under which taxpayers may seek arbitration for reimbursement even after administrative correction has occurred.

Full Decision

ARBITRAL DECISION

  1. Report

A widow, NIF ..., resident in Lisbon, legally represented by B, NIF ..., resident at Av. ..., in Lisbon, came to request the constitution of an Arbitral Tribunal under the terms of the corresponding Legal Framework of Tax Arbitration, for assessment of the legality of the assessment of Municipal Property Tax, with no. 2013 ..., dated 2-3-13, relating to the year 2013, with payment deadline (of the first instalment, in the amount of € 615.90) on 30/04/2014, with respect to an urban property now registered in the corresponding property matrix under article ..., located in the Municipality of Lisbon, parish ....

The Tax and Customs Authority is the Respondent.

The request for constitution of the arbitral tribunal was submitted on 24-07-2014, accepted by the President of CAAD on the 28th of that month and notified to the Tax and Customs Authority on the 29th of the same month.

Pursuant to the provisions of article 6, section 2, paragraph (a) and article 11, section 1, paragraph (b) of the RJAT (Legal Framework of Tax Arbitration), the Ethics Council designated the undersigned as sole arbitrator, who communicated acceptance of the office within the applicable deadline.

In conformity with the provisions of article 11, section 1, paragraph (c) of the RJAT, the sole arbitral tribunal was constituted on 29-09-2014.

The Tax and Customs Authority submitted its answer.

By order of 9 January of the current year, the holding of the hearing provided for in article 18 of the RJAT was waived, as well as the parties' arguments.

Subsequently, the Petitioner submitted a motion which, being out of time, was disregarded and was not attached to the case file.

The arbitral tribunal was regularly constituted and is competent.

The parties have legal personality and capacity, are properly represented and have legal standing. (articles 4 and 10, section 2, of the same statute and article 1 of Order no. 112-A/2011, of 22 March).

The proceedings are not affected by any nullities.

  1. Object of the Dispute

The issue in the case corresponds to a portion of the 2013 Municipal Property Tax assessment relating to an urban property located in Lisbon. This is because the assessment, in that part, concerns two property matrices when, allegedly, only one property exists, as one of those property matrices is understood to have succeeded the other. That is, 2013 Municipal Property Tax is assessed as to two urban properties when only one exists, because one of the property matrices was extinguished.

More specifically, the Petitioner contends that the urban property matrix no. ... of the parish of ... in Lisbon succeeded to matrix no. ... of the extinguished parish of ..., which was subsequently merged with the parish of ..., giving rise to the said parish of .... Thus, both matrices on which Municipal Property Tax was assessed correspond to the same urban property, now registered in the Land Registry Office of Lisbon, parish of ..., under number ....

Despite this identity, the Petitioner alleges that the Tax Authority assessed 2013 Municipal Property Tax on both matrices, whereby the 2013 Municipal Property Tax assessment would be excessive. She adds that, as it was not possible to obtain the corresponding rectification before payment of the first instalment, she overpaid the amount of € 615.90 (corresponding to one-third of the excess, i.e., the amount included in the first instalment), on 30/04/14. She seeks reimbursement of that amount, plus compensatory interest. She further seeks a condemnation of the Tax and Customs Authority (AT) for costs.

The Authority answered acknowledging the facts alleged but adding that the defect pointed out (duplicate assessment) was already recognized, and a new assessment was issued on 26 April 2014, no. ..., in which article no. ... of the extinguished parish of ... was no longer considered. And she adds that the amount previously and actually paid pursuant to the first collection notice was considered as already paid, and that subsequently the remaining amount owed (i.e., the annual amount actually due, less the entire amount in excess already paid with the first instalment) was divided into two instalments of equal value (corresponding to the second and third instalments of Municipal Property Tax). She further alleges that the collection notice was notified to the Petitioner on the first day of July 2014.

Accordingly, she contends that the challenged assessment no longer had effect in the legal order when the arbitration request was filed, as it had been annulled, concluding that there is no subject matter for the present action, and therefore that the proceedings should be terminated due to original impossibility of the dispute. Moreover, she contends that compensatory interest is not due as its prerequisites do not obtain and that the Petitioner should be condemned for costs for having caused the action.

Alternatively, she invokes that if it is considered that the corrected and current assessment is the object of the request, the action should be judged unfounded because the alleged defect does not obtain (as to the previous assessment, it is understood).

  1. Matter of Fact

3.1. Proven Facts

a) In the year 2013 the Petitioner was the owner of the urban property registered in the corresponding matrix under article ... and located in the new parish of ..., in Lisbon and which is included in the 2013 Municipal Property Tax assessment, no. 2013..., in the total amount of € 6,907.37;

b) That Municipal Property Tax assessment also included a Municipal Property Tax assessment on the property allegedly shown in matrix no. ... of the extinguished parish of ..., in the municipality of Lisbon;

c) The Municipal Property Tax corresponding to that assessment amounted to € 1,847.78;

d) This second matrix had been extinguished, now corresponding to the first urban property matrix indicated above;

e) This is because both matrices correspond to the property located at Av. ... in Lisbon, and the second of said matrices was extinguished upon and because of the merger of two parishes with the creation of the new parish ...;

f) Nevertheless, the 2013 assessment included the Municipal Property Tax allegedly due by reference to the above-mentioned second property matrix;

g) And the corresponding collection notice for the first instalment, no. 2013 ..., dated 2-3-2014, in the total amount of € 2,302.46, included the Municipal Property Tax allegedly due by reference to the above-mentioned second property matrix;

h) The entire first instalment was paid within the legal deadline by the Petitioner, specifically on the 30th of that month of April;

i) Subsequently, a new assessment was issued by the Authority, no. 2013 ..., dated 26-4-2014, in which the taxable property value and the assessment relating to said matrix ... appear indicated as zero, and other matrices are still listed leading to a total assessment of € 5,059.67;

j) The collection notice for the second instalment, payable in July 2014, no. 2013 ..., dated 26-4-2014, totalled the amount of € 1,378.61, thus being lower than the amount of the first instalment;

k) The collection notice for the third instalment totalled the amount of € 1,378.60, thus being equally lower than the first instalment;

l) From the records in the Authority's computer system it appears that the first instalment corresponding to the first assessment is paid and the two subsequent instalments are cancelled (all with creation date of 5-3-2014);

m) From the same records it also results that the first of the two collection notices relating to the second assessment issued is paid, both with creation date of 10-5-2014 and relating to the second and third instalments of the Municipal Property Tax for the year in question;

n) The Petitioner was notified of the second collection notice on 1-7-2014;

o) On 24-07-2014 the Petitioner filed the request for arbitral determination which gave rise to the present proceedings.

3.2. Unproven Facts

There are no unproven facts relevant to the decision of the case.

3.3. Justification for the Finding of Fact

The proven facts are based on the parties' allegations and the documents produced, whose correspondence to reality is not disputed.

  1. Matter of Law

4.1 Municipal Property Tax

The parties acknowledge that the 2013 Municipal Property Tax assessment is affected by a defect of duplicate assessment as to one of the properties considered. The issue which is the object of the present action is therefore whether the manifest defect of duplicate assessment by the Authority relating to an urban property owned by the Petitioner can still be invoked by her, notwithstanding the subsequent rectification of that defect by the Authority and the impact of that rectification on the claim for compensatory interest and liability for costs.

As stated, it is manifest that the Authority erroneously assessed 2013 Municipal Property Tax twice on the same property and that such error was due to the simultaneous consideration of the new matrix of the property, relating to the new parish of ..., and also of the preceding matrix, corresponding to the extinguished parish of .... That error therefore corresponds to a manifest defect of duplicate assessment, which would make the tax act voidable.

However, in compliance with the principle of legality, the Authority proceeded ex officio to partially annul that tax act, in the part in which it was affected by duplicate assessment. And as the portion corresponding to that duplication included in the first instalment was excessively assessed and paid, the Authority deducted that amount from the amount payable in the two subsequent instalments (having naturally disregarded the portion of the improper assessment still unpaid by the Petitioner).

This means that the Petitioner has already been compensated for the amount paid in excess. And that the reimbursement of that excess was implicitly effected by the Authority in two equal instalments: the first portion of the reimbursement occurred with the second instalment and the second portion of the reimbursement of the amount improperly paid occurred with the third instalment of the 2013 Municipal Property Tax.

The useful effect sought by the action, in that part, is thus already obtained. But, at the same time, the obtaining of this useful effect is only achieved with the present action! This is because a normal recipient of the second assessment notice and the collection document for the second instalment, at least the latter received by the Petitioner, would not conclude that the previous assessment had been partially annulled due to the said defect of duplicate assessment and that the amount paid in excess, because improper, would be regularized by offsetting in the two subsequent instalments of the tax.

Moreover, there is no statement from the Authority in which the defect, the annulment and the offsetting are acknowledged. That is, until the present proceedings there was no statement from the Authority that would give the taxpayer a minimum of certainty and security regarding its understanding of the assessment in question and that would protect it from a subsequent different interpretation. Such declaration, beginning with the acknowledgment of the illegality of the initial tax act, was only obtained in the course of the present action.

This is sufficient to conclude that the request and action have procedural interest, which has a concrete and legitimate object: the annulment of the tax act whose knowledge had not been brought to the attention of the Petitioner.

4.2 Compensatory Interest

Now, being so, it is also concluded that the Petitioner made an excessive payment, which was only implicitly reimbursed to her with the second and third instalments of the tax, with the deduction of the excess improperly paid due to the erroneous tax assessment. Accordingly, in the case at hand, there is no way to avoid attributing to the Authority the error of duplicate assessment, by virtue of which improper tax was assessed and paid. It is therefore evident that compensatory interest is due as stated.

For that reason, the Authority must be condemned to pay compensatory interest, calculated from the date of the improper payment.

4.3 Costs

As seen, the Petitioner seeks the annulment of the 2013 Municipal Property Tax assessment relating to the property matrix article number ... of the parish of ..., which was subsequently replaced by another article, due to the extinction of that parish.

Now, the parties seem to understand that the value of the case should be calculated based on the first instalment of the Municipal Property Tax for the year in question, as this is how the Petitioner calculated the corresponding value, without objection from the Respondent.

However, by force of the provisions of article 3, section 4 of the Rules on Costs in Tax Arbitration Proceedings "the value of the case is determined according to article 97-A of the Code of Procedure and Tax Procedure". And according to article 97-A, section 1, paragraph (a) of the CPPT (Code of Tax Procedure and Process), the value to be considered for costs purposes when an assessment is challenged is the amount whose annulment is sought.

In these terms, the value of the case should be that of the assessment whose declaration of illegality is sought and not the value of the first instalment of the tax, as it is the illegality of the annual assessment that the Petitioner seeks (in this sense see the CAAD Decision of 6/11/14, Case 442/14-T and here followed closely in this part). Furthermore, as already seen, the fact that the Authority corrected the improper assessment (even if without giving notice thereof to the Petitioner in a manner intelligible to a normal recipient) does not make the Petitioner's claim time-barred or irrelevant and, by parity of reasoning, is also irrelevant for purposes of fixing the value of the case.

Now, the jurisdiction of the arbitral tribunals functioning in CAAD covers requests for a declaration of the illegality of assessment acts and not of the instalments through which the collection of the assessed amounts is made. And as seen, the annual assessment in question (property matrix article no. ...) is € 1,847.78 and not € 615.90. Thus, the value of the case amounts to € 1,847.78, as this is the economic value of the proceeding.

Considering the attribution of the error that led to the duplicate assessment and the intelligent explanation only in the present proceedings of the corresponding partial revocation of the act and rectification of the assessment, with inherent reimbursement (by offsetting) of the improperly paid amount, it is manifest the interest of the action, who caused it and who failed in it. The responsibility for costs should therefore be imputed to the Authority.

  1. Dispositive

In accordance with the above, the partial annulment of the assessment act identified above is not granted since it no longer has effect in the legal order, a fact which was brought to the attention of the Petitioner in the present proceedings, declaring the right to compensatory interest calculated on the amount paid in excess, from the date of such payment, according to the law.

  1. Value of the Case

In accordance with the provisions of article 306, sections 1 and 2, of the CPC and article 97-A, section 1, paragraph (a), of the CPPT and article 3, section 2, of the Rules on Costs in Tax Arbitration Proceedings, the value of the case is fixed at € 1,847.78.

  1. Costs

Pursuant to article 22, section 4, of the RJAT, the amount of costs is fixed at € 306.00 (three hundred and six euros), according to Schedule I attached to the Rules on Costs in Tax Arbitration Proceedings, entirely borne by the Tax and Customs Authority.

Text prepared by computer, pursuant to the Civil Procedure Code (CPC), applicable by reference of article 29, section 1, paragraph (e) of the RJAT, governed by the orthography prior to the Orthographic Agreement of 1990, with blank lines and reviewed by the signing arbitrators.

Lisbon, 17-03-2015

The Sole Arbitrator

(Jaime Carvalho Esteves)

Frequently Asked Questions

Automatically Created

What happens when IMI is charged twice on the same property due to a parish merger in Portugal?
When IMI is charged twice on the same property due to a parish merger in Portugal, the Tax Authority has the obligation to correct the error administratively. In this case, following the merger that created a new parish in Lisbon, the property was inadvertently maintained under both the old extinguished matrix and the new successor matrix. Upon recognition of the duplicate, the Tax Authority issued a corrected assessment eliminating the charge on the extinguished matrix by setting its taxable value to zero. The overpaid amounts are typically credited toward future installments, with the remaining annual liability redistributed across subsequent payment periods. Taxpayers who pay before correction occurs have the right to reimbursement of excess amounts paid.
Can a taxpayer challenge a duplicate IMI tax assessment through arbitration at CAAD?
Yes, taxpayers can challenge duplicate IMI tax assessments through arbitration at CAAD (Centro de Arbitragem Administrativa). In Process 513/2014-T, the taxpayer successfully invoked the Legal Framework of Tax Arbitration (RJAT) to contest a duplicate collection arising from parish merger errors. The arbitration request was submitted on July 24, 2014, accepted by CAAD's President, and an arbitral tribunal was constituted on September 29, 2014. However, the Tax Authority may argue that if the assessment has already been administratively corrected before the arbitration request is filed, there is no longer a subject matter for dispute (original impossibility). The taxpayer's standing to pursue arbitration even after administrative correction depends on whether unresolved issues remain, such as claims for compensatory interest on overpayments.
How does the extinction of a property matrix affect IMI tax liability in Portugal?
The extinction of a property matrix directly affects IMI tax liability by eliminating the tax obligation associated with that specific matrix entry. When parishes merge or undergo territorial reorganization, old matrices are typically extinguished and succeeded by new matrix numbers in the reorganized administrative units. In this case, matrix no. ... from the extinguished parish was succeeded by matrix no. ... in the new merged parish. Legally, only one matrix should remain active for each distinct property. When a matrix is extinguished, any IMI assessment based on that matrix number becomes invalid. If the extinction is not properly reflected in the tax system, resulting in duplicate assessments, the Tax Authority must issue corrected assessments setting the taxable value and IMI charge for the extinguished matrix to zero, as occurred with the April 26, 2014 corrected assessment in this proceeding.
What is duplicate tax collection (duplicação da coleta) in Portuguese municipal property tax law?
Duplicate tax collection (duplicação da coleta) in Portuguese municipal property tax law occurs when the same property is subject to multiple IMI assessments through different matrix entries, resulting in the taxpayer being charged twice for the same tax obligation. This typically arises from administrative errors such as: (1) failure to properly update cadastral records following parish mergers or territorial reorganizations; (2) maintaining both old and successor matrix entries as active; or (3) system errors that create redundant property registrations. Duplicate collection violates the principle that each distinct property should bear only one IMI obligation per tax year. The legal remedy involves annulment or correction of the excessive assessment, reimbursement of overpaid amounts, and potentially compensatory interest. The duplicação da coleta theme is specifically identified in this decision as the central legal issue requiring resolution through arbitration.
What are the legal grounds for annulling an IMI assessment when two matrix entries refer to the same property?
The legal grounds for annulling an IMI assessment when two matrix entries refer to the same property are based on the principle that only one tax obligation should exist per distinct property. When matrices incorrectly duplicate the same property—whether due to parish mergers, administrative errors, or cadastral system failures—the assessment violates fundamental tax law principles including prohibition of double taxation for the same taxable matter. In this case, the petitioner demonstrated that: (1) both matrix no. ... (extinguished parish) and matrix no. ... (new parish) corresponded to the identical property located at Av. ... in Lisbon; (2) the first matrix was legally extinguished upon parish merger; (3) both matrices were included in the 2013 assessment despite representing a single property; and (4) this resulted in excess collection of €1,847.78. The legal basis for annulment is the objective illegality of assessing IMI on a non-existent or extinguished matrix entry, constituting an undue charge that exceeds the taxpayer's actual legal obligation.