Process: 517/2016-T

Date: January 11, 2017

Tax Type: IMT

Source: Original CAAD Decision

Summary

In CAAD Arbitral Decision 517/2016-T, the tribunal addressed whether IMT (Municipal Tax on Onerous Real Estate Transactions) exemption under Article 270(2) of the Portuguese Insolvency Code (CIRE) applies to property acquired from insolvency estates of natural persons. The claimant company purchased residential property in January 2014 from the insolvency proceedings of two individuals (B and C), initially benefiting from IMT exemption with a €0.00 assessment. In October 2015, the Tax Authority issued an additional IMT assessment of €1,355.93, revoking the exemption. The claimant argued the exemption should apply to all insolvency asset sales regardless of debtor type, citing constitutional violations of tax legality principles, legitimate expectations, and legal certainty. The Tax Authority contended that Article 270(2) CIRE exemption only covers sales of property forming part of company assets engaged in industrial, commercial, or agricultural activities—not assets of natural persons without such activities. The case raised critical questions about the scope of insolvency-related tax benefits, the deadline for revoking granted exemptions, and whether the Tax Authority's restrictive interpretation violates constitutional principles. The tribunal examined whether limiting the exemption to commercial entities while excluding natural persons' insolvency estates constitutes an error in legal prerequisites and whether the revocation procedure respected temporal limits and procedural guarantees under Portuguese tax law.

Full Decision

ARBITRAL DECISION

I. REPORT:

A..., S.A., a company with registered office at Praça..., nº..., in Porto, holder of the unique registration number and collective person identification number..., hereinafter simply referred to as the Claimant, filed a request for constitution of an arbitral tribunal in tax matters and a request for arbitral decision, under the terms of paragraph a) of article 2(1) and paragraph a) of article 10(1), both of Decree-Law no. 10/2011, of 20 January (Legal Framework for Arbitration in Tax Matters, hereinafter abbreviated as RJAT), requesting the declaration of nullity or annulment of the additional assessment of Municipal Tax on Onerous Real Estate Transactions (IMT) in the amount of € 1,355.93, as well as the condemnation of the Tax Authority to refund to the Claimant the tax paid, as well as default interest and procedural costs, all in the total amount of € 1,391.42 and corresponding compensatory interest.

To support its claim, it alleges, in summary:

a) By public deed executed on 13 January 2014, the Claimant purchased the autonomous fraction designated by the letter "E", intended for residential purposes, of the urban property located at ..., ..., Union of Parishes of ... and ..., municipality of ..., described in the ... Real Estate Registry of ... under the number ... and registered in the urban property matrix under article...;

b) Such property was acquired in the context of the insolvency proceedings of B… and C…;

c) On 06 December 2013, the Claimant filed a declaration for IMT assessment, and the corresponding assessment was issued with a value of € 0.00, by virtue of the application of the benefit provided for in article 270(2) of the Insolvency and Business Recovery Code (CIRE);

d) On 08 October 2015, the Claimant was notified of the additional IMT assessment in the amount of € 1,355.93;

e) The acquisition of the autonomous fraction referred to in a) above is exempt from IMT, given the fact that it is real property attached to the insolvent estate of the aforementioned B… and C… and such acquisition was made in the context of their respective insolvency proceedings;

f) The interpretation given by the Tax and Customs Authority to article 270(2) of the CIRE is unconstitutional, by violation of the provisions of article 165(2) of the Constitution of the Portuguese Republic (CRP);

g) By assessing the IMT in question, the Tax and Customs Authority incurs an error regarding the legal prerequisites;

h) The IMT assessment act in question constitutes the creation of a tax or special contribution not permitted by law, and is thus null, by violation of the provisions of articles 133(2) a) and d) of the CPA and 103(2) and 165(1) i) of the CRP;

i) The additional assessment is not properly justified;

j) The Tax and Customs Authority violated the legitimate expectations and guarantees of the Claimant, the principles of trust and legal certainty, of tax legality, of prohibition of retroactivity of tax law, of legal certainty and of cooperation and good faith;

k) The revocation of the IMT exemption was effected beyond the legally provided deadline, whereby the act of revocation is illegal.

The Claimant attached 7 documents and did not call any witnesses.

In the request for arbitral decision, the Claimant opted not to appoint an arbitrator, whereby, in accordance with the terms of article 6(1) of the RJAT, the undersigned was appointed by the Deontological Board of the Administrative Arbitration Center, and the appointment was accepted in accordance with the legally provided terms.

The arbitral tribunal was constituted on 18 November 2016.

Notified in accordance with the terms and for the purposes of the provisions of article 17 of the RJAT, the Respondent filed a reply, alleging, in summary, the following:

a) The interpretation of article 270(2) of the CIRE advocated by the Claimant has no legal support whatsoever;

b) The insolvents B… and C… are natural persons, and at the date of the sale of the property in question in these proceedings, they were not engaged in any industrial, commercial or agricultural activity;

c) The IMT exemption provided for in article 270(2) of the CIRE covers all acts of sale, exchange or transfer of real property that form part of the assets of a company and not real property of natural persons;

d) The disputed assessment is legal and in accordance with the CRP, and there is no violation of the constitutional principles invoked by the Claimant;

e) Not meeting the legal prerequisites for the Claimant to benefit from the IMT exemption, in accordance with the provisions of article 270(2) of the CIRE, the assessment of the tax was required, provided that the prescription period was respected, as occurred in this case.

The Respondent attached two documents and a copy of the administrative file and did not call any witness.

Given the position assumed by the parties and the absence of a need for additional evidence production, the holding of the meeting referred to in article 18 of the RJAT was dispensed with, as well as the presentation of further arguments.

II. SANATION:

The Arbitral Tribunal is regularly constituted and is materially competent.

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

The proceedings are not affected by defects that would affect its validity.

III. QUESTIONS TO BE DECIDED:

Given the positions assumed by the Parties, set forth in the arguments presented, it is necessary to:

a) Determine whether the acquisition of real property in the context of an insolvency proceeding of natural persons benefits from the IMT exemption provided for in article 270(2) of the CIRE; and

b) Determine the deadline for revocation of the IMT exemption granted under the provisions of article 270(2) of the CIRE.

IV. FINDINGS OF FACT:

a. Proved Facts

With relevance to the decision to be rendered in the present proceedings, the following facts are considered proved:

  1. On 06 December 2013, the Claimant filed a declaration for IMT assessment relating to the acquisition, by purchase, of the autonomous fraction designated by the letter "E", intended for residential purposes, of the urban property located at ..., ..., Union of Parishes of ... and ..., municipality of ..., described in the ... Real Estate Registry of ... under the number ... and registered in the urban property matrix under article...;

  2. The acquisition of the property referred to in 1) above benefited from the IMT exemption provided for in article 270(2) of the CIRE, whereby the assessment was issued with a value of € 0.00, on the date of presentation of the respective declaration by the Claimant – 06/12/2013;

  3. By public deed executed on 13 January 2014, the Claimant purchased the autonomous fraction referred to in 1) above;

  4. Such property was acquired in the context of the insolvency proceedings of B… and C…;

  5. From the cadastral situation of the identified insolvents, there is no record of their registration in any industrial, commercial or agricultural activity;

  6. On 01 October 2015, the Claimant was notified to, if it so wished, exercise the right of prior hearing on the draft additional IMT assessment in the amount of € 1,355.93;

  7. On the same date the Claimant was notified that, if the right of prior hearing was not exercised within the indicated 20-day period, the draft decision would become final, and the IMT should be assessed within 30 days, counted from the date on which the draft decision became final;

  8. The Claimant did not exercise the right of prior hearing, whereby the draft additional assessment became final on 21 October 2015;

  9. As the Claimant did not voluntarily pay the additional IMT assessment, the tax enforcement proceedings number …2016… were initiated for the collection of the assessed IMT in the amount of € 1,355.93, costs and default interest, all in the total amount of € 1,391.42;

  10. On 15 January 2016, the Claimant proceeded to pay the amount of € 1,391.42;

  11. On 21 March 2016 the Claimant filed a gracious reclamation against the additional IMT assessment now disputed;

  12. By registered letter dated 08/06/2016, the Claimant was notified of the draft rejection of the gracious reclamation filed and to present, if it so wished, prior hearing within 15 days;

  13. By registered letter dated 22/07/2016 the Claimant was notified of the decision rejecting the gracious reclamation filed;

  14. The request for constitution of the arbitral tribunal in tax matters and for arbitral decision was presented on 25/08/2016.

b. Unproved Facts

With interest for the proceedings, no other fact has been proved.

c. Justification of Findings of Fact

The conviction regarding the facts considered proved was formed on the basis of the documentary evidence attached to the proceedings and whose correspondence to reality was not questioned, as well as the matters alleged and not contested.

V. ON THE LAW:

Having established the findings of fact, it is now necessary, by reference to these, to determine the applicable law.

On the interpretation of article 270(2) of the CIRE:

With respect to the interpretation of article 270(2) of the CIRE, the Claimant argues that it applies to the sale, exchange or transfer of any real property in the context of an insolvency proceeding, being applicable to both real property belonging to companies and real property belonging to private individuals.

To the contrary, the Respondent argues that the IMT exemption provided for in article 270(2) of the CIRE only benefits sales, transfers or exchanges of real property belonging to companies, and does not benefit the alienation of real property of a private individual from this exemption.

The following is the wording of the cited article 270(2) of the CIRE:

"Equally exempt from municipal tax on onerous real estate transactions are acts of sale, exchange or transfer of the company or of establishments thereof comprised within an insolvency or payment plan or carried out in the context of the liquidation of the insolvent estate".

At issue in the present proceedings is the acquisition of real property intended for residential purposes in the context of an insolvency proceeding, so the situation would be hypothetically subsumable within this article.

However, the real property in question in these proceedings was acquired in the context of an insolvency proceeding of two natural persons, and, as is evident from the proved facts – see point 5 – from the cadastral situation of the identified insolvents, there is no record of their registration in any industrial, commercial or agricultural activity.

Given the wording of the cited provision, and in order to determine whether it also applies to alienations of properties that form part of the insolvent estate of natural persons, an exercise in interpretation must be undertaken, resorting to the general rules of legal hermeneutics contained in article 9 of the Civil Code.

Clearing up doubts about the meaning and scope to be given to a particular legal rule implies carrying out an interpretative task that allows one to extract from the linguistic statement a concrete meaning or "content of thought".

However, such a task can only be fulfilled – thus achieving an understanding of the vis ac potestas legis – through the use of a concrete method, which is based on literal interpretation, on the one hand, and on logical or rational interpretation, on the other.

This is what results from the cited principles of legal hermeneutics established in article 9 of the Civil Code.

Literal interpretation thus presents itself, at the same time, as both the first stage of interpretative activity and as the limit of interpretation, and an interpretation cannot be considered if it does not have in the letter of the law a minimum of verbal correspondence, even if imperfectly expressed.

As FERRARA points out, "the text of the law forms the substratum from which the interpreter must begin and in which he must rest".

In fact, since the law is expressed in words, their verbal significance, according to their natural connection and grammatical rules, must be extracted from them.

However, if the words employed by the legislator are equivocal or indeterminate, it will be necessary to resort to logical interpretation, which attends to the spirit of the provision being interpreted.

Logical interpretation, as it has been peacefully configured by doctrine, is based on the rational element, the systematic element and the historical element, weighing them and deducing from them the value of the legal rule in question.

By rational element must be understood the raison d'être of the legal rule, i.e., the purpose for which the legislator instituted it.

It follows, however, that a particular rule does not exist in isolation, but rather coexists with other rules and legal principles in a systematic and complex manner.

Thus, it naturally becomes clear that the meaning of a particular rule results from the comparison of this rule with the others.

As BAPTISTA MACHADO points out, "this element comprises the consideration of other provisions that form the complex of norms of the institute into which the rule being interpreted is integrated, that is, which regulate the same matter (context of the law), as well as the consideration of legal provisions that regulate parallel normative problems or related institutes (parallel places). It also comprises the systematic place that belongs to the rule being interpreted in the overall legal order, as well as its consonance with the spirit or intrinsic unity of the entire legal order."

As for the historical element, in turn, it must report on and include materials connected with the history of the rule, such as "the evolutionary history of the institute, the figure or the legal regime in question (…); the so-called sources of the law, that is, the legal or doctrinal texts that inspired the legislator in the drafting of the law (…); preparatory works."

Let us apply, then, what has been said to the case at hand.

Starting with the literal element, it is verified that the cited provision makes no reference to property that forms part of the insolvent estate of natural persons, the law referring only to acts of sale, exchange or transfer of the company or of establishments thereof.

As is evident, a natural person who does not engage in any industrial, commercial or agricultural activity cannot be considered either a company or owner of an establishment integrated into a company.

Therefore, starting from the principle – which is held to be certain – that the legislator knew how to express itself in adequate terms, it cannot be argued, through the analysis of the letter of the law, that the IMT exemption is applicable to the alienation of real property that forms part of the insolvent estate of natural persons.

With respect to the rational element, it cannot be overlooked that the CIRE, as referred to in the decision rendered in arbitral proceeding no. 649/2015-T, "although it has extended the application of recovery proceedings to natural persons, remains fundamentally as a Code directed at resolving situations of default in business activity".

The entire legal framework provided for in the CIRE was designed around the recovery and maintenance of the business activity of companies, as economic agents whose financial soundness and maintenance in economic life is important to ensure, and no provisions of relevance aimed at the recovery of natural persons are found in this code.

As for the systematic element, it is important to note that, in addition to the exemption provided for in article 270(2), the CIRE provides for other benefits applicable to onerous transfers of real property carried out in the context of the insolvency proceeding, such as the stamp duty exemption provided for in article 269 d) and e) and the IMT exemption referred to in article 270(1).

Any of these provisions only provides, with respect to acts of sale, the exemption of the respective tax for acts of sale of elements of the company's assets and not for any and all sales, specifically for the sale of real property that forms part of the insolvent estate of natural persons.

As is the case with respect to the stamp duty exemption, the IMT exemption will not be applicable when at issue are acts of sale of real property that do not constitute an integral part of the company or of establishments thereof.

If there were any doubts about the most correct interpretation of article 270(2) of the CIRE, these would be dispelled by the analysis of the historical element.

Indeed, it is important to note that the Code on Special Procedures for Business Recovery and Bankruptcy, a statute that preceded the CIRE and which favored resort to business recovery procedures to the detriment of the declaration of bankruptcy, provided in its article 121 the SISA exemption for transfers of real property integrated in any of the business recovery procedures that stem from "the legal separation of commercial or industrial establishments, the sale, exchange or transfer of elements of the company's assets".

This provision did not, therefore, provide for the SISA exemption for the transfer of real property integrated in the insolvent estate of natural persons, in relation to which it would never be possible to obtain the IMT exemption under this provision, as such transfers would not fall within any business recovery procedure.

In turn, Law no. 39/2003, of 22 August, which authorized the Government to approve the CIRE, repealing the Code on Special Procedures for Business Recovery and Bankruptcy, with respect to tax benefits, authorized the Government to exempt SISA from transfers of real property integrated in any insolvency or payment plan or carried out in the context of the liquidation of the insolvent estate, which stem from the "sale, exchange or transfer of the company, establishments or elements of its assets" – see article 9(3) c).

Once again, and although the CIRE came to have a title exclusively dedicated to the insolvency of natural persons, the SISA or IMT exemption was not provided for the transfer of real property integrated in the insolvent estate of natural persons.

There is no doubt whatsoever that the intention of the legislator was to exempt from taxation as regards IMT the acts of sale of real property that form part of the insolvent estate of companies and not all and any acts of sale of real property, specifically the sale of real property that forms part of the insolvent estate of natural persons as occurs in the present proceedings.

On this matter and as stated by the Respondent, various case law, including arbitral, has already ruled in the sense that the identified provision "does not cover the sale of urban real property intended for residential purposes that belongs to a natural person, and it is not sufficient to benefit from that exemption the fact that it concerns acts of sale carried out in the context of the liquidation of the insolvent estate, irrespective of whether it belongs to a natural or legal person (business entity)", and this tribunal finds no reason to deviate from the course established in this case law, which we follow.

Similarly, and although within the scope of the stamp duty exemption provided for in article 269 of the CIRE but entirely applicable to the exemption provided for in article 270(2) of the same code, also various case law, with the very same grounds, has ruled in the sense that this exemption does not apply to acts relating to property that forms part of the insolvent estate of natural persons.

This is, in our view, the best interpretation of the command of article 270(2) of the CIRE, and in such interpretation, as the Claimant argues, we do not see any unconstitutionality or any violation of the principles of law.

On the revocation of the IMT exemption granted under the provisions of article 270(2) of the CIRE:

The Claimant argues that the revocation of the granted exemption could only be effected within a period of one year after its respective granting, and therefore, having the Respondent revoked the granting after the expiration of the one-year period, this act of revocation is illegal.

To the contrary, the Respondent argues that, not meeting the legal prerequisites for the Claimant to benefit from the IMT exemption, the Tax and Customs Authority could not fail to assess the tax, provided that the prescription period for IMT assessment was respected, that is, provided that it occurred within eight years.

Having the revocation of the exemption occurred within the indicated eight-year period, no illegality attaches, according to the Respondent, to the act of revocation in question.

Let us see.

As is provided for in article 5(1) of the Tax Benefits Statute (EBF), these are either automatic or dependent on recognition, the former resulting directly and immediately from law and the latter presupposing one or more subsequent recognition acts.

With respect to tax benefits dependent on recognition, article 5(2) of the same provision provides that recognition may take place by administrative act or by agreement between the Administration and the interested parties.

As is unanimously accepted by case law and doctrine, the IMT exemption provided for in article 270(2) of the CIRE is an automatic tax benefit, not presupposing, therefore, any recognition act.

In turn, article 14(4) of the EBF provides:

"The administrative act granting a tax benefit is not revocable, nor may the respective granting agreement be rescinded, or the rights acquired be diminished, by unilateral act of the tax administration, except if there is non-compliance imputable to the beneficiary of the imposed obligations, or if the benefit was granted unduly, in which case that act may be revoked".

In the case at hand, although we are dealing with an automatic tax benefit, not dependent, therefore, on any administrative act, it cannot be overlooked that its granting configures an act that confers rights on the beneficiary, in this case, the Claimant.

And, as an act that confers rights, it may only be revoked by the Tax Administration by unilateral act in the situations expressly provided for in the cited article 14(4) of the EBF: (i) if there is non-compliance imputable to the beneficiary of the imposed obligations or (ii) if the benefit was granted unduly.

In the case sub judice, as we have seen, the tax benefit of IMT exemption was granted unduly, since the onerous transfer of real property that forms part of the insolvent estate of a natural person does not benefit from the exemption provided for in article 270(2) of the CIRE.

Therefore, the Respondent could revoke the granted exemption, although such revocation would represent a diminution of the acquired rights of the Claimant.

It remains only to determine within what deadline such revocation could occur: the one-year period, as alleged by the Claimant, or the eight-year period, as defended by the Respondent?

From the outset we may state that the Respondent could only revoke the previously granted exemption within a one-year period.

In this sense, and as ANTÓNIO LIMA GUERREIRO very well explains, "administrative acts in tax matters that are constitutive of rights can, therefore, only be revoked on the grounds of invalidity, in accordance with the terms and deadlines of article 141 of the CPA".

Under the new Code of Administrative Procedure (CPA), the revocation of administrative acts is only possible on grounds of merit or convenience, with invalid acts being subject to the regime of administrative annulment.

Having the Respondent advanced no grounds for revocation of the IMT exemption granting act on grounds of merit or convenience, this could only be annulled based on its invalidity, due to failure to meet the factual and legal prerequisites for granting the exemption to the Claimant.

However, it follows expressly from the provisions of article 168(2) of the CPA that an act conferring rights may only be subject to administrative annulment within a one-year period.

As the IMT exemption granted to the Claimant is an act conferring rights, it could, therefore, only be annulled by the Tax Administration within a one-year period after its execution.

Now,

As the IMT exemption was granted on 06/12/2013 – see proved fact no. 2 – its respective annulment could only occur until 06/12/2014.

Whereby it is verified that, as of the date of annulment of the act in question – October 2015 – the one-year period for annulment of the IMT exemption granting act had long since passed.

The eight-year period referred to by the Respondent is the prescription period for the right to assess, which, as is evident, is not to be confused with the deadline for annulment of the IMT exemption granting act.

Having the act of granting IMT exemption been executed beyond the one-year period legally provided for this purpose, it is illegal, by violation of the provisions of article 168(2) of the CPA, and thus its annulment is required.

In this sense, and although rendered under the previous CPA, but entirely applicable to the situation of these proceedings, see the ruling of the STA of 15 May 2013, in which it was concluded that "the act of revocation of a tax benefit of an exemption of a tax, which produces effects ex tunc and occurs more than one year after the act granting the exemption, is illegal by violation of the provisions of art. 141 of the CPA".

Lastly,

The Claimant further petitions the condemnation of the Respondent in the payment of compensatory interest.

With respect to compensatory interest, article 43(1) of the General Tax Law (LGT) provides:

"Compensatory interest is due when it is determined, in a gracious reclamation or judicial challenge, that there was error imputable to the services from which results payment of the tax debt in an amount greater than legally due".

In the case at hand, it is verified that, due to error imputable to the services, the Claimant was forced to pay a tax in an amount greater than due.

Thus, compensatory interest is due, to be paid by the Respondent to the Claimant, calculated on the amount of the assessed tax - € 1,355.93 – and not on the default interest and procedural costs paid by the Claimant, since the latter was only forced to pay these amounts because it did not voluntarily pay the assessed tax, such interest calculated at the legal rates from 15 January 2016 until effective and complete reimbursement by the Respondent.

Thus, the petition is granted with respect to the annulment of the IMT assessment in the amount of € 1,355.93, DUC no. ..., and the Respondent should refund the Claimant for the amount paid as tax (€ 1,355.93), as default interest (€ 3.46) and as procedural costs (€ 32.03), all in the total amount of € 1,391.42 and pay the corresponding compensatory interest, calculated on the amount of € 1,355.93, at the legal rates, from 15 January 2016 until effective and complete reimbursement by the Respondent.

VI. OPERATIVE PART

In view of the foregoing, it is decided:

a) To uphold the petition for annulment of the IMT assessment act in the amount of € 1,355.93, DUC no. ...;

b) To condemn the Respondent to refund to the Claimant the amount of € 1,391.42;

c) To condemn the Respondent to pay to the Claimant compensatory interest, calculated on the amount of € 1,355.93, at the legal rates, from 15 January 2016 until effective and complete reimbursement by the Respondent.

The value of the proceedings is fixed at € 1,355.93, in accordance with paragraph a) of article 97-A(1) of the Code of Tax Procedure and Process, applicable by force of paragraphs a) and b) of article 29(1) of the RJAT and article 3(2) of the Regulation of Costs in Tax Arbitration Proceedings.

The value of the arbitration fee is fixed at € 306.00, in accordance with Table I of the Regulation of Costs in Tax Arbitration Proceedings, as well as article 12(2) and article 22(4), both of the RJAT, and article 4(4) of the aforementioned Regulation, to be paid by the Respondent, as the losing party.

Register and notify.

Lisbon, 11 January 2017.

The Arbitrator,

Alberto Amorim Pereira

Document prepared by computer, in accordance with article 131(5) of the Code of Civil Procedure, applicable by referral of paragraph e) of article 29(1) of Decree-Law no. 10/2011, of 20/01.

Frequently Asked Questions

Automatically Created

Is the acquisition of property from an insolvency estate exempt from IMT under Article 270(2) of the CIRE?
Article 270(2) of the CIRE exemption's applicability depends on interpretation. The Tax Authority argues it only applies to property forming part of assets of entities engaged in industrial, commercial, or agricultural activities, excluding natural persons without such activities. The claimant argued for broader application to all insolvency asset sales. The key distinction is whether 'company assets' in the provision excludes natural persons' insolvency estates.
Can the Portuguese Tax Authority revoke an IMT exemption previously granted for insolvency property transfers?
Yes, the Portuguese Tax Authority can revoke a previously granted IMT exemption under Article 270(2) CIRE if it determines the legal prerequisites were not met. However, such revocation must occur within applicable prescription periods and respect procedural safeguards including prior hearing rights. In this case, the taxpayer was notified on October 1, 2015, given 20 days for prior hearing, with the assessment becoming final on October 21, 2015 after no response was filed.
What are the legal grounds to challenge an additional IMT assessment through tax arbitration at CAAD?
Legal grounds to challenge additional IMT assessments at CAAD include: (1) nullity under Article 133(2) of the Administrative Procedure Code for violation of tax legality principle; (2) error in legal prerequisites when exemption requirements are misinterpreted; (3) lack of proper justification; (4) violation of legitimate expectations and legal certainty; (5) unconstitutionality of the Tax Authority's interpretation; (6) revocation beyond legal deadlines; and (7) breach of principles of trust, cooperation, and good faith in tax administration.
Does the Tax Authority's interpretation of CIRE Article 270(2) violate the Portuguese Constitution's tax legality principle?
The claimant argued the Tax Authority's restrictive interpretation of Article 270(2) CIRE violates Article 165(2) of the Portuguese Constitution, which requires tax matters to fall within the legislative competence of Parliament. The argument suggests that administrative interpretation creating distinctions not explicitly in the law amounts to creating tax obligations not permitted by legislation, violating Article 103(2) and 165(1)(i) CRP. The Tax Authority maintained its interpretation is consistent with the legal text and constitutional framework, arguing the exemption's scope is clearly limited to commercial entity assets.
What remedies are available when an IMT additional assessment lacks proper legal justification?
Available remedies include: (1) filing arbitration request at CAAD (Administrative Arbitration Center) under Decree-Law 10/2011 seeking nullity or annulment of the assessment; (2) requesting refund of improperly paid tax plus default interest; (3) challenging the revocation act's legality based on procedural violations or timing; (4) claiming compensatory interest for improper collection; (5) invoking constitutional review if fundamental rights are violated; and (6) suspension of tax enforcement proceedings during arbitration. The claimant sought declaration of nullity, tax refund of €1,355.93, and total compensation of €1,391.42 including interest and costs.