Process: 548/2016-T

Date: June 26, 2017

Tax Type: IMT

Source: Original CAAD Decision

Summary

CAAD Process 548/2016-T addresses whether Portuguese tax authorities can retroactively assess IMT (Municipal Property Transfer Tax) after initially granting exemptions for tourist developments under Decree-Law 423/83. The taxpayer challenged IMT assessments of €15,600 and €10,189.01, arguing that the tax authority illegally revoked an acquired tax benefit outside the one-year limitation period established in Article 141 of the Administrative Procedure Code (CPA). The claimant contended that administrative acts granting tax benefits become consolidated rights after one year, and subsequent assessments violate this crystallized legal position. Additionally, the taxpayer argued the assessments occurred beyond the four-year statute of limitations (caducidade) under the General Tax Law (LGT), making them time-barred. The Tax Authority countered that IMT exemptions for tourist ventures under DL 423/83 are automatic and binding by operation of law, requiring no administrative recognition act. Therefore, no revocation occurred—rather, the Authority made a first correct assessment after discovering the exemption conditions were not met. The AT argued this constitutes an initial assessment, not an additional one, triggering different limitation periods. A key substantive dispute concerned whether land parcels transferred to unit purchasers qualify for exemption under Article 20 of DL 423/83. The taxpayer maintained these acquisitions form part of the tourist venture's installation process and should benefit from the same exemption as the developer. The Authority disputed this interpretation, asserting the exemption applies only to property destined for venture installation, not operational units. This case highlights critical tensions between administrative law principles governing revocation of rights-conferring acts and tax law doctrines concerning automatic exemptions, limitation periods, and the scope of tourism-related tax benefits in Portuguese fiscal legislation.

Full Decision

ARBITRAL DECISION

· REPORT

· A…, taxpayer no. …, resident at …, no. …, … - … Lisbon, in his capacity as responsible for the cessation of the commercial company B…, Lda., hereinafter referred to as Claimant, submitted on 05/09/2016 a request for arbitral pronouncement with a view to challenging and annulling the orders of express dismissal of gracious complaints numbered … and … – Finance Directorate of … which have as their object the assessments of Municipal Tax on Onerous Transfers of Real Estate (IMT), levied by the Finance Service of … and in the amounts of € 15,600 and € 10,189.01, respectively.

· His Excellency the President of the Deontological Council of the Administrative Arbitration Center (CAAD) appointed on 10/11/2016 as arbitrator, Francisco Nicolau Domingos.

· On 25/11/2016 the arbitral tribunal was constituted.

· In compliance with the provision of art. 17, nos. 1 and 2 of Decree-Law no. 10/2011, of 20 January (RJAT), the Respondent was notified on 28/11/2016 to, if it so wished, submit a reply, request the production of additional evidence and return the administrative proceeding (PA).

· On 17/01/2017 the Respondent submitted its reply in which it argued for the complete dismissal of the request for arbitral pronouncement.

· The tribunal on 17/04/2017 invited the Claimant to indicate the matter of fact contained in its request for arbitral pronouncement on which it intended to produce witness evidence.

· The Claimant on 20/04/2017 came before the record to waive such examination.

· The tribunal on 24/04/2017, by order, determined the non-production of witness evidence and decided to dispense with the holding of the meeting to which art. 18, no. 1 of the RJAT refers, on the ground of the principle of autonomy of the arbitral tribunal in the conduct of the proceeding and in the determination of the rules to be observed with a view to obtaining, within a reasonable time, a substantive pronouncement on the claims made, see art. 16, paragraph c) of the RJAT, granted a period for the parties, if they so wished, to submit written final arguments and set the date for issuing the arbitral decision.

· The parties on 03/05/2017 and 16/05/2017 submitted written final arguments, not modifying their initial positions.

· POSITION OF THE PARTIES

The Claimant argues that the revocations of administrative acts in tax matters embodied in the tax benefit of IMT exemption are illegal. It states that administrative acts in tax matters that are constitutive of rights may only be revoked on the grounds of invalidity, within a period of 1 year and that this prevails over the period of expiration of the right to assessment provided for in the General Tax Law (LGT), which applies only to tax acts and not to prejudicial assessment acts, such as the granting of tax benefits.

If the granting of IMT exemption is not revoked within that period, it becomes consolidated in the legal order as a decided or resolved case, which the subsequent assessment act cannot violate, under pain of incurring the vice of violation of law.

Secondly, it argues that the "additional" assessments of IMT occurred at a time when the expiration period had long since passed, and therefore will always be illegal. In its words: "Given that the assessments, supposedly deficient, were made on 17/12/2009 and 14/12/2009 and the deeds of purchase and sale executed on 21/12/2009, it is evident that the period for the Tax Authority to proceed with the intended additional assessments has already expired" which is 4 and not 8 years, as the Tax and Customs Authority (AT) argues.

Thirdly, it alleges that there is bad faith by the AT in converting hierarchical appeals into gracious complaints, having revoked a tax benefit that was crystallized in the legal order. In its judgment: "… having the Tax Administration found that the revocation of the granting of a benefit would be untimely in view of article 141 of the CPA…" it decided to convert a remedy that aims to attack the legality of an administrative act in tax matters, into a form of administrative impugnation that aims to attack a non-existent assessment. Such circumstance prevents the Claimant from discussing the illegality of the revocations by the legal means which, in the event of dismissal, would allow administrative action to be brought, because it concerns an administrative act in tax matters.

In this way, it alleges that the AT's action is fraught with abuse of rights, in the modality of venire contra factum proprium.

Fourthly, it argues that the assessment suffers from error in the factual and legal assumptions when it underlies the interpretation that the parcels of land acquired are not intended for the installation of a tourist venture, but rather for its operation.

The correct interpretation of art. 20, no. 1 of Decree-Law no. 423/83 of 5 December incorporates within its scope the transfers effected for the acquirers of the units upon the first transfer, benefiting them from the same status that the legislator intended to confer on the real estate developer, since the units, as functional elements of the venture as a whole, fall within the installation process.

The acquisition of the parcels of land by the represented party of the Claimant does not constitute a real estate legal transaction, but rather a tourism investment, with the property, although full, being limited as to the use to be given to the real estate and the possibility of exploiting them, since the acquirer cannot do so, but rather the entity operating the tourist village.

It concludes by requesting the condemnation of the Respondent to pay compensation for undue provision of security, since a voluntary mortgage was constituted to suspend the tax execution proceeding no. …2016…

i) Illegality of the revocation of the administrative act

The Respondent argues that the exemption in question is of an automatic and binding nature, and therefore, there could never be any revocation of an act that did not exist. That is, if the tax benefit is conferred directly by law, without need for recognition, art. 141 of the Code of Administrative Procedure (CPA) in the wording in force at the date of the facts does not apply to this case.

ii) Expiration of the right to assessment

As regards the alleged violation of the expiration period, the Respondent contends that the Claimant's argument is unfounded, since it is based on an incorrect premise, that we are dealing with an additional assessment and not with a first assessment, as it argues is the case in the present circumstance. That is, there is no correction of any previous assessment, but rather of the assumptions that lead to taxation: non-existence of automatic and binding exemption.

iii) Violation of the principle of legal certainty

With regard to the alleged violation of the principle of legal certainty, the Respondent argues that there is no violation, but rather the AT's action within the scope of binding powers and in compliance with legal norms. That is, the AT merely exercised its prerogative of supervising the passive subjects to whom a tax benefit was granted, although of an automatic nature.

In this context, it also contends that the conversion of the hierarchical appeal into a gracious complaint aimed to take advantage of the complainant's petition to initiate the correct remedy – gracious complaint – and therefore the cancellation/revocation of the tax benefit that never existed could never be subjected to administrative review and, consequently, the legal period for the revocation of an administrative act could not be discussed.

For this reason, it also argues that the fact that there is an automatic exemption prevents the assessment of the tax and, therefore, the DUC no. … and the DUC no. … do not contain any assessment, since the DUCS were generated by the taxpayer's declaration. In fact, we are dealing with a subject tax matter (rules of subjection), but totally exempt from tax (rules of exemption), and therefore there will be no calculation of tax (rules of assessment) and, thus, the assessment was made within the expiration period.

iv) Error in the factual and legal assumptions

As to error in the factual and legal assumptions, the Respondent argues that art. 20, no. 1 of Decree-Law no. 423/83 of 5 December indicates that two requirements result from it: i) the properties or autonomous units must be intended for the installation of ventures qualified as of tourist utility and ii) the period set for opening to the public of the venture be observed.

The first requirement should be interpreted as the acquisition of properties (or autonomous units) for the construction of tourist ventures, provided that the respective urban planning operations are duly licensed, aiming to benefit companies engaged in the activity of promoting/creating the same and not the acquirers of autonomous units in ventures constructed/installed under the plural property regime, since this relates to the operation and not to the installation.

In this way, the company here represented by the Claimant acquired an already finished product in terms of installation, that is, it purchased parcels of land with a project (to obtain tourist utility on a provisional basis there must be an approved preliminary draft of the venture, the benefit being conditional on the approval of the draft, article 10 of Decree-Law no. 423/83 of 5 December) of villas located in a venture already licensed and, thus, with a certificate of use issued. In summary, it cannot benefit from the tax benefit.

v) Compensation for undue provision of security

As to compensation for undue provision of security, the Respondent argues that, in the present case, no error attributable to the services was verified and the duty to indemnify does not result immediately and automatically from the annulment of the act.

Consequently, the tribunal must know the following issues:

a) Whether the illegal revocation of administrative acts in tax matters embodied in the tax benefit of IMT exemption is verified;

b) Whether the expiration of the right to assessment was verified;

c) Whether the conversion of hierarchical appeals into gracious complaints embodies the violation of the principles of security, legal certainty and good faith;

d) Whether the assessments suffer from the vice of error in the factual and legal assumptions, insofar as they consider that the benefit in question applies only to "installation";

e) Whether the Claimant is entitled to compensation for undue provision of security.

· CASE MANAGEMENT

The cumulation of claims underlying the present case is admissible, since there is identity between the matter of fact and the admissibility of those depends on the interpretation of the same principles and rules of law, see art. 3, no. 1 of the RJAT. Furthermore, the object of the case includes the same tax, IMT.

The proceeding is not affected by nullities, no issues were raised that would prevent the assessment of the merits of the case, the arbitral tribunal is regularly constituted and is materially competent to know and decide the claim, and consequently the conditions exist for a final decision to be issued.

4. FACTUAL MATTER

4.1. Facts considered proved

4.1.1. By public deed executed on 21/12/2009, B…, Lda. acquired from C…, S.A., the properties registered in the urban property matrix of the parish of … under articles … and …, described in the Real Estate Registry Office of …, with numbers … and … and which are part of the subdivision titled by permit no. …, issued on 05/08/2004 by the Municipal Council of … under numbers … and …, respectively.

4.1.2. The properties identified in 4.1.1. are incorporated in the "5-star Tourist Village …" which in turn is part of the tourist complex called: "…".

4.1.3. In such act it was stated that: "…the villa to be constructed (…) is intended for tourist operation".

4.1.4. By order no. 15830/2008, dated 30/04/2008, from the Secretary of State for Tourism, published in the Official Journal on 09/06/2008, provisional tourist utility was granted to the tourist village "…" for a period of 3 years.

4.1.5. One of the conditions set in the said order consists of the obligation of the tourist venture to open to the public before the expiration of the validity period of the provisional tourist utility.

4.1.6. By public deed executed on 21/12/2009, B…, Lda. acquired from C…, S.A., the property registered in the urban property matrix of the parish of … under article …, described in the Real Estate Registry Office of … with no. … and which is part of the subdivision titled by permit no. …, issued on 05/08/2004 by the Municipal Council of … under number … .

4.1.7. The property identified in 4.1.6. is incorporated in the "5-star Tourist Village …" which in turn is part of the tourist complex called: "…".

4.1.8. In such act it was stated in clause four denominated – Allocation for Tourist Operation that: "The Second Grantor on behalf of its represented party undertakes to cede for tourist operation to the Entity Operating the Tourist Village …, C…, S.A., the villa that is to be built on the parcel that is the subject of the present purchase and sale, whose construction must be completed within one year from today. By the Second it was stated in the invoked capacity: - That it accepts this purchase and sale on the terms stated and that the villa to be built on the parcel is intended for tourist operation".

4.1.9. By order no. 15830/2008, dated 30/04/2008, from the Secretary of State for Tourism, published in the Official Journal on 09/06/2008, provisional tourist utility was granted to the 5-star tourist village "…" for a period of 3 years.

4.1.10. One of the conditions set in the said order consists of the obligation of the tourist venture to open to the public before the expiration of the validity period of the provisional tourist utility.

4.1.11. The Claimant was notified of the order of the Head of the Finance Service of …, dated 28/01/2015, in which he gave notice of the proposal for an administrative decision to assess IMT, with respect to the properties identified in 4.1.1. and granted a period for the exercise of the right to a hearing.

4.1.12. The Claimant was notified of the order of the Head of the Finance Service of …, dated 28/01/2015, in which he gave notice of the proposal for an administrative decision to assess IMT, with respect to the property identified in 4.1.6. and granted a period for the exercise of the right to a hearing.

4.1.13. The Claimant exercised the right to a prior hearing on 05/03/2015 in the respective proceedings.

4.1.14. By order of the Head of the Finance Service of …, dated 11/05/2015, the Claimant was notified of the dismissal of the requests for prior hearing, noting in the notifications that: "From this order, it is possible for the SP (Passive Subject) to lodge, if it so wishes, a hierarchical appeal…".

4.1.15. The Claimant filed two hierarchical appeals.

4.1.16. The orders deciding the hierarchical appeals dated 28/08/2015 and 31/08/2015 determined the conversion of these into gracious complaints, despite the fact that up to those dates no IMT assessments had yet been made.

4.1.17. The Finance Service of … notified the Claimant, by order of 30/09/2015, of the IMT assessment in the amount of € 15,600.

4.1.18. The Finance Service of … notified the Claimant, by order of 30/09/2015, of the IMT assessment in the amount of € 10,189.01.

4.1.19. The Claimant filed a gracious complaint on 01/03/2016 of the IMT assessment no. 2016/…, of € 15,600.

4.1.20. The Claimant filed a gracious complaint on 01/03/2016 of the IMT assessment no. 2016/…, of € 10,189.01.

4.1.21. The Claimant was notified of the order of express dismissal of the gracious complaint no. …2016…, dated 01/06/2016, which upheld the IMT assessment act in the amount of € 15,600.

4.1.22. The Claimant was notified of the order of express dismissal of the gracious complaint no. …2016…, dated 31/05/2016, which upheld the IMT assessment act in the amount of € 10,189.01.

4.1.23. The Claimant constituted a voluntary mortgage on the property registered in the urban property matrix under article … of the parish of …, described in the Real Estate Registry Office of … with no. … to suspend the tax execution proceedings no. …2016… and …2016… .

4.1.24. The request for arbitral pronouncement was submitted on 05/09/2016.

4.2. Facts not considered proved

There are no facts with relevance to the arbitral decision that have not been considered proved.

4.3. Justification of the factual matter considered proved

The factual matter considered proved has its origin in the documents used for each of the alleged facts and whose authenticity was not called into question.

5. LEGAL MATTER

5.1. Question of illegal revocation of administrative acts granting tax benefits

The Claimant contends that the IMT assessment acts, subject to the express dismissal of the gracious complaints are illegal, since they presuppose the revocation of an administrative act granting a tax benefit, which, according to its understanding, violates the provisions of articles 140 and 141 of the CPA, in the wording prior to Decree-Law no. 4/2015, of 7 January. Or, put another way, in its judgment the "revocation" could only be carried out within a period of 1 year.

The existence of a prior invalid administrative act is an essential condition for administrative revocation, and it is necessary to ascertain whether the IMT assessments embody the revocation of any prior act of the AT. The answer to the question requires determining whether the tax benefit is automatic or depends on recognition.

Article 20, no. 1 of Decree-Law no. 423/83 of 5 December provides that: "Acquisitions of properties or autonomous units intended for the installation of ventures qualified as of tourist utility are exempt from transfer tax and inheritance and donation taxes, being the stamp tax reduced to one fifth, even if such qualification is granted on a provisional basis, provided that it remains valid and the deadline set for opening to the public of the venture is observed".

In this way, access to the benefit results directly and immediately from the law, that is, once the conditions described in the regulation are verified, there is the right to enjoy the exemption from IMT in acquisitions of properties and autonomous units intended for the installation of ventures qualified as of tourist utility. Consequently, the effectiveness of the tax benefit is not dependent on the issuance of any administrative act of recognition, that is, it is of an automatic nature. And, not being any prior invalid administrative act in existence, it is not clear how administrative revocation would be possible.

This is the position of the courts when it states that: "…from the analysis of DL 423/83 it results that in none of its norms is the granting of the exemption from IMT or reduction of IS, these indeed expressly provided for in no. 1 of article 20, conditioned on its express reference and provision in the order granting tourist utility itself. The only tax benefits on which this order must pronounce are only those provided for in art. 16, whose no. 4, in the wording introduced by DL 38/94, of 8/2, establishes that "for the purposes of subparagraph b) of number 1 (exemption or reduction of fees due, for licenses, to the civil governments and to the Directorate-General of Entertainment), the order granting tourist utility shall define, at the proposal of the Commission for Tourist Utility, the extent and period of the benefits to be granted". And if it were otherwise the legislator's intention it is evident that it would have provided for it. And, thus, being, the tax benefits in question here result immediately and directly from the law (no. 1 of article 20 of DL 423/83, of 5/12), that is, they are automatic, once the application assumptions are verified that do not comprise acts of recognition except the qualification of tourist utility, even if granted on a provisional basis. (…) Having such benefits, thus, automatic nature, it is obvious that the same are of automatic application once the legally imposed conditions are met.", judgment of the Supreme Administrative Court of 20/01/2010, rendered in proceeding no. 0937/09 and in which Advisor ISABEL MARQUES DA SILVA was the reporter.

And how should we frame the participation of the AT when its services issued the documents with the following reference: "Benefits: 33 – Tourist Utility (art. 20 of D.L. 423/83), 100% on the taxable matter…"?

The intervention of the AT can be traced back to that of a mere recipient of the passive subject's declaration with its insertion into the exemption computer system. That is, the issued documents do not embody any decisions to recognize the right to exemption.

Thus, the Claimant's claim regarding the recognition of illegal revocation fails.

5.2. Question of the expiration of the right to assess IMT

The knowledge of this alleged vice requires, from the outset, that we determine whether we are dealing with an initial assessment or an additional assessment?

Article 45, no. 1 of the LGT provides that: "The right to assess taxes expires if the assessment is not validly notified to the taxpayer within a period of 4 years, when the law does not set another".

Now, an exception to this rule is found precisely in the Code of the Municipal Tax on Onerous Transfers of Real Estate (CIMT), with art. 35, no. 1 providing that: "Tax may only be assessed in the eight years following the transfer or the date on which the exemption became ineffective, without prejudice to the provisions of the following number and, as to the remainder, article 46 of the General Tax Law".

Thus, in the field of IMT there is a special period for expiration of the right to assess whose commencement date occurs after the onerous transfer or the date the exemption became ineffective.

However, if it is considered that we are dealing with an additional assessment, the period is 4 years, as provided by art. 31, no. 3 of the CIMT, which states that: "Assessment may only be made up to four years counted from the assessment to be corrected, except if it is due to omission of goods or values, in which case it may still be made afterwards, being reserved, in all cases, the provisions of article 35".

Thus it is necessary to determine whether we are dealing with a first assessment or an additional assessment.

As to the concept of additional assessment, the doctrine argues that it is only legitimate to practice it: "…when the Administration has proceeded incorrectly in the determination or valuation of the taxable matter, has incorrectly applied the law or failed to perform any act whose omission would cause damage to the passive subject…" and "…the original act remains untouched…". That is, additional assessment presupposes the existence of a prior assessment and that there is a connection between passive subject, tax fact and period of time. As well as, its objective consists in correcting the original assessment which, as a result of an error of fact or law, determined the collection of tax of a value lower than that which the substantive norms impose.

Reverting such interpretation to the present case, we conclude that we are not dealing with additional assessments, since the tax acts were not practiced with the objective of correcting or rectifying a prior declaration vitiated by error of fact or law or even by omissions or inaccuracies made in the declarations given for purposes of assessment. Thus, if it is true that the tax fact occurred, this does not mean that there was an IMT assessment from which no tax to pay would have resulted because it was considered exempt therefrom; rather, by virtue of the declared exemption, no assessment was made.

If we are dealing with a first assessment of tax, the IMT assessments were practiced and validly notified to the Claimant within a period of 8 years, as established by art. 35, no. 1 of the CIMT.

For this sum of reasons, the alleged vice of expiration of the right to assess cannot therefore be upheld here either.

5.3. Question of whether the conversion of hierarchical appeals into gracious complaints embodies the violation of the principles of security, legal certainty and good faith

The Claimant alleges that the AT, by converting hierarchical appeals into gracious complaints, violated the principles of security, legal certainty and good faith, since, in its judgment, it revoked a tax benefit that was crystallized in the legal order. Would this be so?

The AT merely applied the legal norms in force at the date of the onerous transfers in question and it does not appear to result that a different interpretation occurred at the time of conversion or at the time of the practice of the IMT assessments identified above from that which was undertaken in relation to similar situations.

Furthermore, as already stated, the exemption from IMT operates without need for any administrative act of recognition, that is, it reveals automaticity. Such, naturally, does not mean that the AT, within the scope of its power-duty to control the assumptions of tax benefits, does not practice an assessment when it finds that these are not verified.

In this way it is evident that the claim that the conversion and the assessments are violative of the principles of legal security, legal certainty and good faith is groundless.

5.4. Question of determining whether the assessments suffer from the vice of error in the factual and legal assumptions, insofar as they consider that the benefit in question applies only to "installation"

The questions to be resolved in this area are the following: which acquisitions does art. 20, no. 1 of Decree-Law no. 423/83 of 5 December refer to? Acquisitions of properties or autonomous units by developers with a view to constructing and installing tourist ventures or acquisitions of accommodation units belonging to tourist ventures already constructed and installed?

To answer the questions, it is necessary to interpret Decree-Law no. 423/83 of 5 December, although art. 3, 22) of Decree-Law no. 485/88 of 30 December revoked the tax benefit relating to industrial contribution and complementary tax – sections A and B, however that relating to IMT and Stamp Tax was maintained.

The institute of tourist utility emerged in the 1950s of the twentieth century in an embryonic phase of tourist activity and the doctrine in 2010 prognosticated, with the publication of the last full revocation of the legal regime (of installation, operation and functioning) of tourist ventures, Decree-Law no. 39/2008 of 7 March, the revision of the decree that regulates the granting of tourist utility. And to emphasize the importance of the initiative to be undertaken the author argues that: "…to the fact that more than a mere nomen iuris, the qualification of tourist utility embodies a true pass of access to the universe of tax benefits…".

Tourist utility is thus a qualification granted to ventures of a tourist character that meet a list of requirements relating to location, installations, equipment, services and adequacy to national tourism policy.

In Decree-Law no. 423/83 of 5 December we identify a range of tax benefits relating to the "installation" of the tourist venture - exemption from IMT and reduction to one fifth of Stamp Tax.

But what is the concept of installation relevant in this field? The question is answered by the courts as follows: "I - When the legislator uses the expression acquisition of properties or autonomous units intended for "installation", for the purposes of the benefit to which no. 1 of art. 20 of Decree-Law no. 423/83 of 5 December refers, one cannot fail to understand it as precisely referring to the acquisition of properties (or autonomous units) for the construction of tourist ventures, after the respective urban planning operations are duly licensed, aiming to benefit companies engaged in the activity of promoting/creating the same. II - This concept of "installation" is the one that proves adequate for all types of tourist ventures and is not called into question by the fact that the ventures may be constructed/installed under a plural property regime, since this relates to "operation" and not to "installation". III - In tourist ventures constituted in plural property (which comprise parcels and or autonomous units of one or more buildings, pursuant to art. 52, no. 1 of Decree-Law no. 39/2008 of 7 March), two distinct procedures stand out, although they may occur simultaneously: one relating to the practice of operations necessary to install the venture; another, relating to operations necessary to put it into operation and exploit it, being that the sale of the projected or constructed units necessarily forms part of the second (emphasis ours)", judgment of the Supreme Administrative Court of 05/02/2014, rendered in proceeding no. 01917/13 and in which Advisor VALENTE TORRÃO was the reporter.

Thus, the exemption from IMT will exist with respect to the acquisition of real estate for installation of tourist ventures and will be applicable exclusively to that phase and not to the transfer of properties integrated in tourist ventures.

In truth, the tribunal finds no reason to diverge from such a position, starting with the teleology underlying the said art. 20 of Decree-Law no. 423/83 of 5 December, that is, the legislative purpose underlying the provision of the exemption from IMT is aimed at implementing a quality tourist offer. Thus, exemptions will exist with respect to developers who intend to construct ventures or proceed with the renovation of existing ones and not when it comes to mere acquisition of units or accommodation.

Secondly, within the scope of Decree-Law no. 39/2008 of 7 March, in the wording currently in force, "installation" is regulated as the procedure that encompasses a sequence of legal acts that will lead to the licensing of urban planning operations tending to the construction of the tourist venture and which thus make its operation and subsequent tourist exploitation legitimate.

Finally, the doctrine in its lesson observes that: "Following the installation of tourist ventures", the following moments exist "I. The submission to plural property of ventures that comprise parcels and/or autonomous units of one or more buildings..." and "II. Determination of situations in which the constitution of plural property is convenient to be preceded by subdivision".

In all propriety, such interpretation is today unanimous following the rendering of the jurisprudence-standardizing judgment no. 3/2013 of the Supreme Administrative Court, rendered in proceeding no. 0968/12, of 23/01/2013 and in which Advisor FERNANDA MAÇÃS was the reporter, who refers to the following: "…the concept of "installation", for the purposes of the benefits to which no. 1 of art. 20 of Decree-Law no. 423/83 of 5 December refers, relates to the acquisition of properties (or autonomous units) for the construction of tourist ventures, after the respective urban planning operations are duly licensed, aiming to benefit companies engaged in the activity of promoting/creating the same and not the acquirers of autonomous units in ventures constructed/installed under plural property regime, since this relates to "operation" and not to "installation"…".

Now, if in the present case we are dealing with the acquisition of parcels of land integrated in a tourist venture, whose installation and promotion belonged to the transferring company, having the latter submitted the venture project to the competent entities for its approval, obtained the classification of tourist utility on a provisional basis and the certificate of use (of the venture), no legal ground is found to argue that the Claimant's participation falls under installation. In short, the exemption from IMT is not applicable to the case sub judice.

5.5. Question of determining whether the Claimant is entitled to compensation for undue provision of security

Given the above, the knowledge of this question is prejudiced.

6. DECISION

In these terms it is decided to judge the request for arbitral pronouncement totally groundless, with all legal consequences.

7. VALUE OF THE PROCEEDING

The value of the proceeding is set at € 25,789.01, pursuant to art. 97-A of the Code of Tax Procedure and Process (CPPT), applicable by virtue of the provisions of art. 29, no. 1, subparagraph a) of the RJAT and art. 3, no. 2 of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT).

8. COSTS

Costs to be borne by the Claimant, in the amount of € 1,530, see art. 22, no. 4 of the RJAT and Table I annexed to the RCPAT.

Give notice.

Lisbon, 26 June 2017

The arbitrator,

(Francisco Nicolau Domingos)

[1] ANTÓNIO BRAZ TEIXEIRA, Principles of Tax Law – Volume I, 3rd edition, Almedina, 1993, p. 294.

[2] ANTÓNIO BRAZ TEIXEIRA, Principles of Tax Law – Volume I, 3rd edition, Almedina, 1993, p. 294.

[3] In this sense, see arbitral decision no. 435/2015-T, of 19/02/2016 and in which Advisor FERNANDA MAÇÃS assumed the function of arbitrator-president.

[4] SARA BLANCO MORAIS, Tourist Utility and Interest for Tourism – of their Respective Legal Regimes, Tourist Ventures (collective work), CEDOUA, FDUC, IGAT, Almedina, 2010, p. 30.

[5] PAULA QUINTAS, Tourism Law, Almedina, 2003, p. 87.

[6] DULCE LOPES, Concretization of Tourist Ventures Legislation and Application, Tourist Ventures (collective work), CEDOUA, FDUC, IGAT, Almedina, 2010, p. 154.

Frequently Asked Questions

Automatically Created

Can the Portuguese tax authority revoke an IMT exemption granted for a tourist development under Decree-Law 423/83?
Under Portuguese law, there is a fundamental distinction between revoking an administrative act and making a correct initial assessment. The Tax Authority argues that IMT exemptions under Decree-Law 423/83 are automatic and binding—conferred directly by law without requiring an administrative recognition act. Therefore, when conditions for exemption are not met, the Authority is not 'revoking' a granted benefit but rather making the first correct assessment. No revocation occurs because no constitutive administrative act existed. However, if an administrative act granting the exemption had been issued, Article 141 of the Administrative Procedure Code would require revocation within one year for invalidity, after which the act becomes a consolidated right.
What is the legal time limit for revoking a tax benefit that constitutes an acquired right under Portuguese law?
Portuguese law distinguishes between the one-year period for revoking rights-conferring administrative acts (Article 141 CPA) and tax assessment limitation periods. The one-year revocation period applies to administrative acts that create subjective rights, protecting legal certainty and acquired rights. However, the Tax Authority contends this does not apply to automatic tax exemptions conferred directly by statute without administrative recognition. For tax benefits requiring administrative recognition, the one-year revocation period would protect taxpayers from late revocation of validly granted benefits. Once this period expires without revocation, the administrative act becomes definitive (caso decidido), immune from challenge except through extraordinary means. This period is distinct from and does not override general tax limitation rules, but applies specifically to the administrative dimension of tax benefit grants.
How does the statute of limitations for tax assessments (caducidade) apply to IMT liquidations on tourism properties?
The statute of limitations (caducidade do direito à liquidação) for IMT assessments depends on whether the assessment is classified as 'initial' or 'additional.' Under Article 45 of the General Tax Law (LGT), the standard limitation period is four years from the date the tax became due. The taxpayer argued these IMT assessments occurred beyond the four-year period following the 2009 acquisitions and deeds, making them time-barred. However, the Tax Authority contended these were first assessments, not additional assessments correcting prior liquidations. According to the AT, when automatic exemptions are incorrectly applied, correcting the error constitutes an initial assessment of tax that was never properly assessed, potentially triggering the eight-year period for cases involving concealment or fraud under Article 46 LGT, or restarting the limitation period entirely as a first assessment event.
What are the legal grounds for challenging an IMT assessment through arbitration (CAAD) in Portugal?
Portuguese taxpayers may challenge IMT assessments through CAAD arbitration under the Legal Regime of Tax Arbitration (RJAT - Decree-Law 10/2011). Legal grounds include: (1) illegality of the assessment for violating substantive tax law, such as incorrect application of exemptions; (2) procedural irregularities in the assessment process; (3) violation of the statute of limitations (caducidade); (4) errors in factual or legal assumptions underlying the assessment; (5) violation of fundamental principles such as legal certainty, legitimate expectations, and proportionality; (6) illegal revocation of tax benefits constituting acquired rights; and (7) abuse of rights by the tax authority, including venire contra factum proprium. In this case, the claimant invoked multiple grounds: illegal revocation of exemption, expiration of assessment rights, bad faith in converting appeals, and error regarding the legal qualification of the tourist property acquisitions.
Does the one-year revocation period for administrative tax acts override the general four-year limitation period in the Portuguese General Tax Law (LGT)?
The relationship between these periods is complex and depends on the legal characterization of the situation. The one-year period in Article 141 CPA for revoking rights-conferring administrative acts does not override the four-year tax assessment limitation in Article 45 LGT because they govern different legal phenomena. The one-year revocation period applies to the administrative act dimension—whether a formal decision granting a tax benefit can be withdrawn. The four-year assessment limitation applies to the tax obligation dimension—when the right to assess tax expires. If a tax benefit is granted through an administrative act that becomes consolidated after one year, the Authority cannot revoke it, but this does not prevent initial assessment if no valid assessment ever occurred. However, any assessment must still comply with LGT limitation periods. The crucial question is whether an 'assessment' occurred initially: if yes, corrections face four-year limits; if no valid assessment occurred due to automatic exemption misapplication, the Authority may argue it can make a first assessment within applicable limitation periods.