Process: 582/2015-T

Date: February 15, 2016

Tax Type: IMT

Source: Original CAAD Decision

Summary

This CAAD arbitration case (Process 582/2015-T) addresses whether a higher education cooperative qualifies for IMT (Municipal Property Transfer Tax) exemption under Article 10 of the Cooperative Tax Statute when acquiring rural land for educational infrastructure. The claimant cooperative, operating a higher education institution, purchased land classified as rural/agricultural (within the National Agricultural Reserve) to construct sports facilities essential for teaching its Physical Education and Sports degree program. The Tax Authority assessed IMT totaling €30,287.50, which the cooperative paid under protest. The cooperative argued it qualified for automatic exemption under Article 10 of the EFC (Law 85/98 of 16/12), which exempts cooperatives from transfer taxes on property intended for their headquarters or activities constituting their corporate purpose. The cooperative obtained ministerial authorization to convert the land for non-agricultural use due to 'considerable public interest,' and the property was subsequently reclassified as urban sports facilities. Significantly, the Tax Authority later granted IMI (Municipal Property Tax) exemption for the same property, recognizing its connection to the cooperative's statutory activities. However, the Tax Authority rejected the IMT exemption claim, arguing that two requirements must be met: subjective (cooperative status) and objective (property allocated directly and immediately to statutory purposes). The AT contended that at the acquisition date, the rural land lacked immediate connection to the cooperative's primary purpose of maintaining higher education institutions. The AT distinguished between IMT (instantaneous tax assessed at acquisition) and IMI (periodic tax based on actual use), arguing different assessment criteria apply. The cooperative sought annulment of the assessments, refund of amounts paid, and default interest, supported by witness evidence demonstrating the land's intended educational use.

Full Decision

Arbitration Decision

  1. REPORT

A… – …, CRL, with Tax Identification Number … and headquarters at Avenue …, …, …-…, …, ..., within the jurisdiction of the Tax Services Office of … (hereinafter referred to as the Claimant), hereby, pursuant to article 10 of Decree-Law No. 10/2011 of 20 January, which approved the Legal Framework for Tax Arbitration (RJAT), requests the establishment of an Arbitral Tribunal, with intervention of a sole arbitrator, in which the Tax and Customs Authority (AT) is the Respondent, with a view to the declaration of illegality and consequent annulment of the assessments of Municipal Property Transfer Tax (IMT) issued under receipts No. …, in the amount of €3,028.75 and …, in the amount of €27,258.75, both issued on 25 February 2011 and paid on the same date, for a total amount of €30,287.50.

Cumulatively, the Claimant requests the condemnation of the Respondent to refund the amounts improperly paid, plus default interest.

To this effect, it alleges, in summary, the following:

a. In pursuit of its corporate purpose, as a cooperative for higher education establishing B… (B…), it acquired a real property with a view to constructing a set of infrastructures absolutely necessary for teaching the subjects of the Bachelor's Degree course in Physical Education and Sports offered thereat;

b. On the date of acquisition, the property was covered by the National Agricultural Reserve (RAN), and the Claimant submitted, with the Ministries of Agriculture, Maritime Affairs, Environment and Territorial Planning and Education and Science, a request for authorization for its non-agricultural use, in accordance with article 25 of Decree-Law No. 73/2009;

c. The request was approved by the Secretaries of State for Higher Education and for Forests and Rural Development, given the "considerable public interest of the claimed request (…)", with authorization granted for the use of 11,872.21 m², for the construction of sports facilities;

d. The property was then classified as an urban property "Other – Other sports fields", being assigned provisional article number …;

e. On the date of acquisition, the Cooperative Tax Statute (EFC), approved by Law No. 85/98 of 16/12, was in effect, and its article 10 provided that "cooperatives are exempt from transfer tax and from any duties on immovable property intended for their headquarters and for the exercise of activities that constitute their respective corporate purpose";

f. This is an automatic exemption, but the AT dismissed the request for official review of those assessments, as well as the subsequent hierarchical appeal;

g. According to the AT, the exemptions provided for in article 10 of the EFC cannot be applied to the acquisitions made by the Claimant, as it concerns a rural property, which would not have an immediate and direct relationship with its corporate purpose;

h. However, the purpose underlying the aforementioned acquisition is evident from Minutes No. 129 of the Claimant's General Assembly, demonstrating that the land was acquired for the construction of a set of sports infrastructures absolutely essential to the teaching of the Bachelor's Degree in Physical Education and Sports, whose first phase had already commenced;

i. The AT granted exemption from Municipal Property Tax (IMI) to the urban property "Other – Other sports fields", pursuant to section 9 of article 66-A of the Tax Incentives Statute (EBF) (former article 10 of the EFC), by recognizing that the land was acquired for the exercise of activities that constitute the Claimant's corporate purpose;

j. Accordingly, the Claimant requests the annulment of the disputed tax acts, as well as the decisions dismissing the request for official review and the hierarchical appeal, with the consequent refund of the improperly paid tax.

The Claimant concludes by requesting the condemnation of the AT to pay default interest, pursuant to section 1 of article 43 of the General Tax Law (LGT), assigning the claim the value of €30,287.50, offering witness evidence and requesting a party declaration.

Notified in accordance with the terms and for the purposes provided for in article 17 of the RJAT, the AT submitted its Response and Statement of Defense, in which it defends the maintenance of the disputed IMT assessments and the decision dismissing the hierarchical appeal, which it considers legal, on the following grounds:

a. There are no disputed facts or subject matter of litigation, because they are documentally proven: it is the integration of facts into applicable law that divides the parties;

b. Both the Claimant's claim and the hierarchical appeal decision turn on the analysis of article 10 of the Cooperative Tax Statute (EFC), introduced by Law No. 85/98 of 16/12, in effect on the date of the facts;

c. According to Information No. …/2015 of 11/03/2015, which formed the basis for the hierarchical appeal decision, "(…) it is concluded that the granting of this exemption depended on the verification of two requirements, one of a subjective nature and another of an objective nature, (…) and such exemption presupposed the verification of a condition – the allocation of the goods 'to the direct and immediate realization of its objectives (…)'";

d. It is further stated therein that "(…) we doubt that the acquisition of a rural property for the construction of sports equipment meets the requirement of allocation of the immovable property in a direct and immediate manner to the realization of the objectives of the beneficiary entity, since from a careful reading of the Respondent's Bylaws no reference is found in that regard", (…)"It does not follow from any of these statutory provisions, neither implicitly, that the construction of the sports infrastructures in question falls within the corporate purpose of the Respondent, which, in the first place and fundamentally, is the creation and maintenance of higher education institutions";

e. And "the application of the provisions of article 10 EFC depends on the verification of two requirements, and the requirement of an objective nature, according to which the exemption is only applicable to immovable property intended for the headquarters or for the exercise of the activity that constitutes the cooperative's respective corporate purpose, was not satisfied on the date of the tax facts, which is the moment when the deed of sale and purchase was executed";

f. "It is not relevant, in this seat of IMT, the fact that in the seat of Municipal Property Tax, the AT adopted a different position, since these are taxes with a different structure: while IMT is an instantaneous obligation tax, IMI is a periodic tax, therefore the requirements for the exemption from IMT must be verified on the date of transmission of the immovable property actually acquired"; "[i]n contrast, the exemption from IMI was assessed having as its object the urban property and not the rural one, as well as the destination or use that is actually being given to the urban property";

g. "Consequently (…), the moment for the analysis and assessment of the legality of the IMT assessments refers, equally, to the date of acquisition, the moment when the tax event occurs, and since the exemption rule cannot eliminate the taxation, for the reasons stated, the taxation that occurred is legal by application of the general rules for assessment".

The request for establishment of the Arbitral Tribunal was filed with CAAD on 3 September 2015, having been accepted by the Honorable President of CAAD and automatically notified to the AT on 23 September 2015.

The Claimant informed that it did not intend to designate an arbitrator, wherefore, pursuant to section 1 of article 6 of the RJAT, the undersigned was appointed arbitrator by the Honorable President of the Deontological Council of CAAD, a task which she accepted within the legally prescribed period, without opposition from the Parties.

The Sole Arbitral Tribunal was regularly constituted on 20 November 2015 and is materially competent to assess and decide the dispute subject to the present proceedings.

The Parties have legal personality and capacity, are legitimate and are properly represented (articles 4 and 10, section 2, of the RJAT and article 1 of Ordinance No. 112-A/2011 of 22 March).

The proceedings do not suffer from any nullities and no exceptions were invoked.

No disputed facts existing, the holding of the meeting referred to in article 18 of the RJAT was dispensed with, having been determined that the proceedings continue with successive written submissions, for a period of 10 days, commencing with the Claimant's submissions.

The Claimant presented its written submissions within the prescribed period, in which it reiterates the arguments raised in the initial petition, adding that article 10 of the EFC did not require "that the acquired immovable property have a 'direct' and 'immediate' relationship with its corporate purpose", and it cannot be concluded that "the property was not immediately intended for the realization of statutory objectives".

The Respondent did not submit any submissions.

  1. FACTS

2.1. Facts established as proven:

2.1.1. The Claimant is a cooperative for higher education establishing B… (B…);

2.1.2. B…, recognized by Ordinance No. …/91 of 2 October, was authorized to offer the higher education course in Physical Education and Sports (Ordinance No. …/92 of 11 December), whose curriculum includes subjects such as "Racquet Sports" and "Track and Field";

2.1.3. In accordance with the Bylaws of B…, contained in notice No. …/98 (2nd Series) published in the Official Journal No. …, II Series, of …/04/1998, it is the responsibility of the establishing entity, in particular, to "Allocate to the educational institution a specific assets in facilities and equipment" (article 2, section 1, subsection b);

2.1.4. In an extraordinary session of the Claimant's General Assembly on 06/12/2010, it was resolved to "acquire a parcel of land that borders the property of A… up to the metro line", given the "manifest necessity of infrastructures invoked by the Board of Directors of B…" and "the urgency in proceeding, not only to the construction of a Sports Pavilion, but also to other equipment" (Minutes No. 129);

2.1.5. On 25/02/2011, the Claimant proceeded to pay, at the Tax Services Office of ... … (Code …), the IMT assessments identified by the following receipt numbers:

2.1.5.1. No. …, in the amount of €3,028.75, concerning the acquisition of the usufruct for life on the rural property registered under article … of the parish of … (…), municipality of ..., located in …, with a total area of 14,470.00 m²;

2.1.5.2. No. …, in the amount of €27,258.75, for the acquisition of the naked ownership of the same property;

2.1.6. On the same preceding date, the public deed of sale and purchase of the fractional components of ownership rights of the identified property was executed, at the Notary Office of C…, in ..., to which were attached, among others, the aforementioned IMT receipts and a certified copy of Minutes No. … of the Claimant's General Assembly, mentioned above;

2.1.7. By petition addressed to the Minister of Agriculture, Rural Development and Fisheries on 21 July 2011, authorization was requested for the "recognition of considerable public interest of the claim filed in accordance with the characteristics and objectives contained in the Descriptive Report (…), pursuant to article 25 of Decree-Law No. 73/2009 of 31 March (…) for non-agricultural use of 11,872.21 m² of land, located in the place of … or …, Parish of … (…), municipality of ..., registered in the property register(s) (rural, urban or mixed) No.(s) …, under article(s) …, with an area of 11,872.21 m² (…)";

2.1.8. Through Joint Order No. …/2012 of 11 July by the Secretary of State for Higher Education and the Secretary of State for Forests and Rural Development, published in the Official Journal, 2nd Series, of … July 2012, it was declared that there is "considerable public interest of the claimed request (…)" in accordance with section 1 of article 25 of Decree-Law No. 73/2009 of 31 March, for use of 11,872.21 m² for the construction of sports facilities, consisting of a playing field, athletics track and tennis courts on land adjacent to the facilities of B… – … included in the RAN (…)";

2.1.9. On 22 February 2012, the Claimant submitted a request for official review of the IMT assessments previously identified, invoking the exemption provided by section 1 of article 10 of the Cooperative Tax Statute (EFC), approved by Law No. 85/98 of 16 December, corresponding to current section 8 of article 66-A of the Tax Incentives Statute (EBF), according to which "cooperatives are exempt from transfer tax on the acquisition of any rights over immovable property intended for their headquarters and for the exercise of activities that constitute their respective corporate purpose";

2.1.10. By order of the Head of the Tax Services Office of … dated 29 January 2013, notified to the Claimant by notice No. … of the aforementioned Tax Services Office on 30 January 2013, registered with proof of receipt, the request was dismissed on the ground that the requirements for exemption were not met, since, as it concerns a rural property, "it cannot be intended for the exercise of activities that constitute the respective corporate purpose established in article 3 of the bylaws, namely, 'the creation and maintenance of higher education institutions…'";

2.1.11. On 13 February 2013, the Claimant submitted IMI Model Declaration 1 for registration on the tax roll of a new urban property, deriving from the rural property previously registered on the tax roll of the parish of … (…), municipality of ..., under article …, to which was assigned provisional article number …, with the classification of "Other sports fields", with a total area of 11,872.0000 m², and date of occupation on 19/07/2012;

2.1.12. On 8 March 2013, the Claimant filed a hierarchical appeal of the decision dismissing the request for official review, reiterating the argument that "Regardless of whether the property in question falls into a rural or urban property, it is unquestionable that it is allocated to the exercise of activities that constitute the corporate purpose of the Appellant";

2.1.13. From the reasoning of the decision dismissing the hierarchical appeal (Information No. …/2015, which supported the order of the Director of IMT Services dated 17 March 2015), notified to the Claimant through notice No. …/…-… of the Tax Services Office of … on 16 June 2015, registered with proof of receipt, it contains, in particular, that "From the reading of section 1 of article 10 of the EFC, it is concluded that the granting of this exemption depended on the verification of two requirements, one of a subjective nature and another of an objective nature, insofar as only certain beneficiaries could benefit from it, namely cooperatives, and such exemption presupposed the verification of a condition – the allocation of the goods 'to the direct and immediate realization of its objectives'. (…) In the case at hand (…) we doubt that the acquisition of a rural property for the construction of sports equipment meets the requirement of allocation of the immovable property in a direct and immediate manner to the realization of the objectives of the beneficiary entity (…)";

2.1.14. By the City Council of …, a Construction Work Permit No. …/15 – File No. …/12 was issued on 8 January 2015, in accordance with article 74 of the Regulation on Buildings and Facilities (RJEU), with the licensing period commencing on 8 January 2015 and ending on 8 July 2016.

2.2. Reasoning regarding the established facts:

The tribunal's conviction regarding the facts established as proven resulted from critical analysis of the documentary evidence attached to the request for arbitral decision, expressly accepted by the Respondent.

2.3. Facts not established

There are no facts relevant to the decision of the case that should be considered as not established.

  1. LEGAL MATTERS – REASONING

3.1. Issue to be decided

The sole issue to be decided in the present proceedings is whether the Claimant, a Cooperative for Higher Education, whose corporate purpose consists of "the creation and maintenance of higher education institutions", having the obligation to "provide the educational institution [B…] with the facilities and equipment necessary for the development of its educational and research activities", could benefit from the exemption from IMT, pursuant to section 1 of article 10 of the Cooperative Tax Statute (EFC), in the acquisition of a rural property for the construction of supporting infrastructure for the subjects of the Bachelor's Degree course in Physical Education and Sports offered thereat.

In accordance with section 1 of article 124 of the Code of Tax Procedure (CPPT), applicable subsidiarily to the tax arbitration proceedings, pursuant to article 29, section 1, subsection a) of the RJAT, where there are no defects leading to a declaration of non-existence or nullity of the disputed act, the tribunal should assess the alleged defects that determine its voidability.

In the situation under analysis, no facts or legal grounds being invoked that determine the nullity of the acts of assessment disputed, but only their voidability, for error in the application of section 1 of article 10 of the EFC, we shall proceed immediately to its assessment.

3.2. On the merits of the disputed assessments. On the defect of violation of law, by error regarding the legal requirements.

As results from the evidence above, the acts of IMT assessment now disputed were issued by the AT and paid by the Claimant on 25 February 2011, the date on which the Cooperative Tax Statute approved by Law No. 85/98 of 16 December was in effect, subsequently repealed by article 148 of Law No. 64-B/2011 of 30 December, and whose article 10, section 1, provided that Cooperatives were exempt from transfer tax (current IMT) "on the acquisition of any rights over immovable property intended for their headquarters and for the exercise of activities that constitute their respective corporate purpose", without specifying whether such allocation should be direct or immediate, as the AT contends in the decision dismissing the hierarchical appeal filed by the Claimant, stating that "(…) since the property in question is a rural property, even if later its classification was changed, it is concluded that its acquisition does not have an immediate and direct relationship with the objectives and corporate purpose of the Appellant, thus contradicting what is provided for in section 1 of article 10 of the EFC".

However, the question that arises is not so much whether the allocation of the property to the exercise of activities that constitute the corporate purpose of the Claimant (construction of support infrastructures for the bachelor's degree offered by B…) should be, or should not be, immediate and direct, but rather whether such allocation was possible and what was the relevant moment to assess such possibility.

IMT falls upon onerous title transfers of the right of ownership or of fractional components of that right over immovable property situated in the national territory (section 1 of article 2 of the IMT Code); the passive subject of the tax is, as a rule, the natural or legal person "to whom the immovable property is transferred" (article 4 of the IMT Code) and the IMT tax obligation is constituted "at the moment when the transfer occurs", as provided for in section 2 of article 5 of the same Code.

Now, taking into account the definition of tax benefit contained in section 1 of article 2 of the EBF and its characterization as a fact preventing the constitution of the tax obligation, the relevant moment for the verification of the respective requirements and consequent birth of the right to the tax benefit in the seat of IMT shall be the moment of occurrence of the tax event, that is, of the transfer, unless this is a conditional exemption, dependent on the verification of an accessory fact or situation, without which the exemption should not commence.

On the date of acquisition of the property by the Claimant, there was a legal impossibility of its allocation to the purpose for which it was intended, that is, to proceed thereon with the construction of sports equipment or any other type of construction, because it was a property included in the National Agricultural Reserve (RAN), governed by Decree-Law No. 73/2009 of 31 March, which defines it as being "a restriction of public utility, to which a special territorial regime applies, establishing a set of constraints on non-agricultural use of the soil" (article 2, section 2), only derogable upon request by interested parties, for the realization of "actions of considerable public interest that are recognized as such by joint order of the Government member responsible for the area of rural development and the Government member responsible by subject matter, provided that they cannot be adequately carried out in areas not integrated in the RAN." (article 25, section 1, in the original wording, in effect on the date of the facts).

However, the recognition of "considerable public interest" referred to in section 1 of article 25 of Decree-Law No. 73/2009 of 31 March is only relevant for purposes of non-agricultural use of the soil of properties integrated in the RAN, not constituting a constitutive fact of the right to the tax benefit of exemption from IMT, not least due to the lack of competence of the Government members mentioned therein in tax matters.

Accordingly, having the acquisition of the property by the Claimant and the consequent payment of the disputed IMT assessments occurred on a date prior to the possibility of its allocation to the social purposes for which it was intended, and there being no rule attributing suspensive effect to the approval of the request for "non-agricultural use of the soil" of properties integrated in the RAN, by joint order of the competent Government members in the matter, it is concluded that the requirements upon which the birth of the right to the tax benefit depended were not met at that date and that would prevent the application of the "standard taxation" regime.

The exemption referred to in section 1 of article 10 of the EFC was not automatic, but of official (or automatic) recognition, not requiring to be requested (article 3 of the EFC); however, the filing of the declaration referred to in section 1 of article 19 of the IMT Code must precede the transfer of the goods, even in situations of exemption (section 3 of the same article, added by Law No. 64-A/2008 of 31/12), and should contain the "other clarifications essential to the exact assessment of the tax", including the elements necessary to verify the exemption of automatic recognition, by the tax services office where it is submitted (article 10, section 8, subsection d) of the IMT Code).

In view of the foregoing, it is concluded that no judgment of censure should be rendered regarding the issuance of the IMT assessments subject to the present request for arbitral decision, just as the decisions dismissing the request for official review and the subsequent hierarchical appeal do not merit censure, as the necessary requirements for recognition of the exemption were not met at the relevant moment.

  1. DECISION

Based on the factual and legal grounds set forth above, this arbitral tribunal decides:

a) To hold the request for annulment of the disputed IMT assessments to be unfounded, which should be maintained in the legal order;

b) To condemn the Claimant to payment of costs, as the unsuccessful party.

CASE VALUE: In accordance with the provisions of article 306, sections 1 and 2, of the Code of Civil Procedure, article 97-A, section 1, subsection a) of the Code of Tax Procedure and section 2 of article 3 of the Regulation on Costs in Tax Arbitration Proceedings, the case is assigned the value of €30,287.50 (thirty thousand, two hundred eighty-seven euros and fifty cents).

COSTS: Calculated in accordance with article 4 of the Regulation on Costs in Tax Arbitration Proceedings and Table I attached thereto, in the amount of €1,836.00 (one thousand eight hundred thirty-six euros), to be borne by the Claimant.

Let notification be made.

Lisbon, 15 February 2016

The Arbitrator,

/Mariana Vargas/

Text prepared by computer, pursuant to section 5 of article 131 of the Code of Civil Procedure, applicable by cross-reference of subsection e) of section 1 of article 29 of Decree-Law 10/2011 of 20 January.

The wording of this decision is governed by the 1990 Orthographic Agreement.

[1] Saldanha Sanches, "Manual of Tax Law", 3rd Edition, Coimbra Editora, 2007, p. 456.

[2] Op. cited, p. 449.

[3] Guilherme W. d'Oliveira Martins, "Tax Benefits: System and Regime", IDEFF Notebooks, Almedina, Coimbra, 2006, p. 32.

[4] Regarding the distinction between pure or absolute exemptions and conditional exemptions, see PEREIRA, Manuel Henrique de Freitas, "Taxation", 5th Edition, Almedina, Coimbra, 2014, p. 430.

Frequently Asked Questions

Automatically Created

Are cooperatives exempt from IMT (Property Transfer Tax) on acquisitions related to their statutory purpose?
Yes, cooperatives can be exempt from IMT on property acquisitions related to their statutory purpose under Article 10 of the Cooperative Tax Statute (Law 85/98). However, this exemption requires meeting both subjective requirements (cooperative legal status) and objective requirements (the property must be intended for the cooperative's headquarters or for exercising activities that constitute its corporate purpose). The exemption is automatic when these conditions are met, but disputes may arise regarding whether the property is sufficiently connected to the cooperative's statutory activities, particularly when the intended use requires future development or construction.
What does Article 10 of the Cooperative Tax Statute (Estatuto Fiscal Cooperativo) establish regarding property tax exemptions?
Article 10 of the Cooperative Tax Statute (Estatuto Fiscal Cooperativo), approved by Law No. 85/98 of 16 December, establishes that cooperatives are exempt from transfer tax and any duties on immovable property intended for their headquarters and for the exercise of activities that constitute their respective corporate purpose. This provision creates an automatic exemption that does not require prior application or authorization. The exemption applies to both the acquisition of property (IMT exemption) and ownership (IMI exemption), provided the property is allocated directly and immediately to achieving the cooperative's statutory objectives as defined in its bylaws.
Can a cooperative claim IMT exemption for acquiring rural land intended for construction of educational facilities?
The Tax Authority's position is that IMT exemption for rural land intended for future construction presents challenges. The AT argues that the exemption's objective requirement—that property be allocated directly and immediately to the cooperative's corporate purpose—must be verified at the moment of acquisition when the IMT taxable event occurs. If land is classified as rural at acquisition, even with plans for construction, the AT may deny exemption on grounds that construction of facilities does not occur immediately. However, cooperatives can argue that acquiring land specifically for constructing facilities essential to their educational mission (such as sports infrastructure for Physical Education programs) constitutes direct pursuit of statutory purposes. Obtaining ministerial authorization for land use conversion and demonstrating the facility's necessity through corporate resolutions strengthens such claims. The distinction between IMT (assessed at acquisition) and IMI (assessed based on actual use) becomes critical in these disputes.
How does the CAAD arbitral tribunal handle disputes over automatic IMT exemptions for cooperatives?
The CAAD (Centro de Arbitragem Administrativa) arbitral tribunal handles IMT exemption disputes for cooperatives through a formal arbitration process initiated under the Legal Framework for Tax Arbitration (RJAT - Decree-Law 10/2011). Cooperatives challenging IMT assessments file requests for arbitral tribunal establishment, specifying the contested tax acts and legal grounds. The process involves: (1) submission of the arbitration request with supporting documentation; (2) notification to the Tax Authority to file a response and statement of defense; (3) appointment of a sole arbitrator or arbitral panel; (4) exchange of arguments, evidence, and witness testimony; (5) legal analysis of whether statutory exemption requirements are met; and (6) issuance of a binding arbitral decision. CAAD tribunals analyze both the subjective requirement (cooperative legal status) and objective requirement (property allocation to statutory purposes), examining corporate bylaws, property classification, intended use documentation, and the timing of when exemption conditions must be verified relative to the taxable event.
Is a cooperative entitled to reimbursement and compensatory interest after an unlawful IMT assessment is annulled?
Yes, when an IMT assessment is declared illegal and annulled by an arbitral tribunal, the cooperative is entitled to reimbursement of amounts improperly paid plus default interest (juros de mora). This right derives from Article 43(1) of the General Tax Law (Lei Geral Tributária), which establishes that taxpayers are entitled to compensatory interest on refunds of taxes paid in excess or unduly collected. Default interest accrues from the date of payment until the date of reimbursement, compensating the taxpayer for the loss of use of funds during the period the Tax Authority improperly retained the payment. The annulment of the tax assessment creates a legal obligation for the Tax Authority to refund the full amount paid (€30,287.50 in this case) together with calculated interest, restoring the taxpayer to the financial position they would have occupied had the unlawful assessment not occurred.