Process: 59/2016-T

Date: May 30, 2016

Tax Type: IMT Selo

Source: Original CAAD Decision

Summary

This arbitral decision addresses the revocation of IMT (Municipal Tax on Onerous Transfers) and Stamp Duty exemptions for a property acquired by a real estate investment fund for residential rental (FIIAH). The claimant company acquired a property in December 2013 exclusively for permanent residential leasing, benefiting from tax exemptions under article 8 of Law 64-A/2008. However, in December 2015, the Tax Authority assessed IMT of €32,564.75 and Stamp Duty of €4,360.00 after the property was given a different purpose than permanent residential leasing. The dispute centers on amendments introduced by Law 83-C/2013 (State Budget 2014), which added new conditions to maintain FIIAH exemptions: properties must be leased for permanent housing within three years of acquisition, and failure to do so requires the taxpayer to request tax assessment within 30 days. The transitional provision in article 236 applies these rules to properties acquired before January 1, 2014, with the three-year period counting from that date. The claimant challenged the assessment before the CAAD arbitral tribunal under Decree-Law 10/2011 (RJAT), which establishes the legal framework for tax arbitration in Portugal. The case raises important questions about retroactive application of tax conditions, the interpretation of 'intended exclusively for permanent housing,' and whether the Tax Authority properly applied the transitional regime. The tribunal must determine whether the exemption revocation was legal and whether the claimant properly complied with notification and timing requirements under the amended FIIAH regime.

Full Decision

ARBITRAL DECISION

I. REPORT

A… – …, S.A., with registered office at …, no. … – … … – … …, with share capital of €1,550,000.00, registered with the Commercial Registry of … under the sole registration and tax identification number …, filed a request for the constitution of a single arbitral tribunal, pursuant to the combined provisions of articles 2 and 10 of Decree-Law no. 10/2011, of January 20 (Legal Framework for Arbitration in Tax Matters, hereinafter designated only as RJAT), in which the Tax and Customs Authority (hereinafter AT) is summoned, with the objective of obtaining a declaration of illegality of the assessment act for the Transfer Tax on Onerous Transfers (IMT) no. … and of the assessment act for Stamp Duty (IS) no. …, in the amount of €36,924.75.

The request for constitution of the Arbitral Tribunal was accepted by the Honorable President of CAAD on February 19, 2016 and automatically notified to the AT.

In accordance with the provisions of article 11, subparagraph c), no. 1 of the RJAT, the single arbitral tribunal was constituted on April 20, 2016.

The AT responded, arguing for the dismissal of the arbitral proceedings, given the lack of jurisdiction of the tribunal or, should this not be accepted, the dismissal of the claim.

The meeting referred to in article 18 of the RJAT was dispensed with, given the nature of the matters contained in the file, and the parties were notified to submit optional written arguments.

The Arbitral Tribunal is regularly constituted and materially competent, pursuant to article 2, no. 1, subparagraph a) of the RJAT.

The parties have legal personality and capacity, are legitimately constituted and are duly represented (article 4, and article 10, no. 2 of the RJAT and article 1 of Ordinance no. 112/2011, of March 22).

The case is not vitiated by nullities, and the exception invoked by the Respondent will be examined as a priority.

II. STATEMENT OF FACTS

Based on the evidence contained in the file, the following facts are considered proven:

A) On December 13, 2013, the Claimant acquired the real property located at …Avenue, …, Block …, … Apt., registered in the urban land registry of the Parish of … and …;

B) The said property was acquired by the Claimant exclusively for the purpose of leasing for permanent housing; having benefited

C) The aforementioned property benefited, upon acquisition by the Claimant, from exemption from IMT and IS under no. 7 of subparagraph a) and no. 8 of article 8 of the legal framework of FIIAHs;

D) On December 16, 2015, the Claimant proceeded with the assessment of IMT and IS with respect to the property U-…-CV located at …Avenue, …, Block …, … Apt., registered in the urban land registry of the Parish of … and …, in the amount of €32,564.75 and €4,360.00, respectively;

E) The assessments identified were based on the fact that the property was given a different purpose than leasing for permanent housing;

F) The assessment acts identified were paid by the Claimant on December 17, 2015.

Taking into account the positions adopted by the parties, in light of article 110, no. 7 of the CPPT and the documentary evidence attached to the file, the above-listed facts are considered proven, and relevant for the decision.

III. LEGAL ISSUES

A – POSITIONS OF THE PARTIES

The Claimant alleges in its request for arbitral decision the following:

  1. Law no. 64-A/2008, of December 31 (State Budget for 2009), approved the special regime applicable to real estate investment funds for residential rental (hereinafter "FIIAHs") and real estate investment companies for residential rental;

  2. In its article 8 (Tax regime), the tax regime applicable to FIIAHs was established (hereinafter this regime will be briefly designated as "Tax Regime of the FIIAHs");

  3. With regard to the Municipal Tax on Onerous Transfers of Real Property (hereinafter "IMT"), the Tax Regime of the FIIAHs defined the following in number 7 of the said article 8 (Tax regime):

"7 — Are exempt from IMT:

a) The acquisitions of urban real property or autonomous fractions of urban real property intended exclusively for leasing for permanent housing, by the investment funds referred to in no. 1;

b) The acquisitions of urban real property or autonomous fractions of urban real property intended for own and permanent housing, as a result of the exercise of the purchase option referred to in no. 3 of article 5 by the lessees of the properties that form part of the assets of the investment funds referred to in no. 1."

  1. Law no. 83-C/2013, of December 31 (State Budget for 2014) added to article 8 (Tax regime) of the Tax Regime of the FIIAHs numbers 14 to 16, with the following text ([1]):

"14 - For the purposes of the provisions in nos. 6 to 8, urban real property is considered to be intended for leasing for permanent housing whenever it is the subject of a lease contract for permanent housing within three years from the date on which it became part of the fund's assets, and the taxpayer must communicate and provide proof to the AT of the respective effective lease, within 30 days following the end of the said period.

15 - When the properties have not been the subject of a lease contract within the three-year period provided for in the previous number, the exemptions provided for in nos. 6 to 8 cease to have effect, and in that case the taxpayer must request from the AT, within 30 days following the end of the said period, the assessment of the respective tax.

16 - If the properties are sold, with the exception of the cases provided for in article 5, or if the FIIAH is subject to liquidation, before the period provided for in no. 14 has elapsed, the taxpayer must also request from the AT, before the sale of the property or the liquidation of the FIIAH, the assessment of the tax owed in accordance with the previous number."

  1. Law no. 83-C/2013, of December 31 (State Budget for 2014) further established in its article 236 (Transitional provision in the framework of the special regime applicable to FIIAHs and SIIAHs) the following transitional regime:

"1 - The provisions in nos. 14 to 16 of article 8 of the special regime applicable to FIIAHs and SIIAHs, approved by articles 102 to 104 of Law no. 64-A/2008, of December 31, apply to properties that have been acquired by FIIAHs from January 1, 2014.

2 - Without prejudice to the provisions of the previous number, the provisions in nos. 14 to 16 of article 8 of the special regime applicable to FIIAHs and SIIAHs, approved by articles 102 to 104 of Law no. 64-A/2008, of December 31, apply equally to properties that have been acquired by FIIAHs before January 1, 2014, in which cases the three-year period provided for in no. 14 being counted from January 1, 2014."

  1. Based on the above-cited provisions, in particular those resulting from the amendments made to the Tax Regime of the FIIAHs, the Claimant requested from the Tax Authority the assessment of IMT and Stamp Duty (hereinafter "IS") of the tax acts of sale of properties by the aforementioned Fund;

  2. The amendments introduced by Law no. 83-C/2013, of December 31 (State Budget for 2014) to the Tax Regime of the FIIAHs raise legitimate perplexities and questions for the management companies of FIIAHs that wish to comply with their obligations before the Tax Authority;

  3. Without exhausting the issues raised, it is understood that the amendments to the Tax Regime of the FIIAHs assume particular relevance in the context of taxes of single obligation, in this case, the IMT and the IS when they concern the properties that formed part of the assets of the FIIAHs at the date of entry into force of Law no. 83-C/2013, of December 31 (State Budget for 2014), that is, those covered by the above-mentioned article 236 (Transitional provision in the framework of the special regime applicable to FIIAHs and SIIAHs);

  4. The Claimant, as indicated above in article 6, requested from the Tax Authority the assessment of IMT and IS of tax acts in light of the amendments introduced in the Tax Regime of the FIIAHs;

  5. Those tax acts referred to properties that formed part of the assets of Fund B…, at the date of entry into force of Law no. 83-C/2013, of December 31 (State Budget for 2014), that is, those covered by the above-mentioned article 236 (Transitional provision in the framework of the special regime applicable to FIIAHs and SIIAHs);

  6. The Claimant contends that the Assessments are vitiated by illegality due to violation of article 103, no. 3 of the Constitution of the Portuguese Republic and should, consequently, be declared null;

  7. In fact, the fact subject to taxation is, both with respect to IMT and with respect to IS, the acquisition of ownership of the relevant properties by Fund B…, and the exemptions from IMT and IS were not, at the date they entered the Fund B…'s assets, conditioned upon the subsequent verification of any facts or circumstances nor, moreover, subject to any regime of lapse;

  8. Since no facts or circumstances on which the lapse of the recognized exemption depended were not legally provided for at the moment of recognition of the exemption, it is manifest that the subsequent imposition of such facts or circumstances upon exemptions crystallized in the Claimant's tax legal order suffers from unconstitutionality, due to violation of the principle of non-retroactivity of tax law, enshrined in article 103, no. 3 of the Constitution of the Portuguese Republic;

  9. Considering that the principle of fiscal non-retroactivity bears the character of a fundamental right, endowed with the legal regime protective of this right, its disrespect gives rise to the nullity of the act, in this case, the nullity of the Assessments;

  10. Admitting, subsidiarily, that the defect (illegality) of the Assessments determines their voidability (and not nullity), the Assessments should be voided accordingly, pursuant to articles 10, no. 1, subparagraph a), of the RJAT and article 102, no. 1, subparagraph a) of the Code of Tax Procedure and Process.

For its part, the AT argues, in summary, as follows:

  1. The Arbitral Tribunal has no jurisdiction to assess or declare the constitutionality or unconstitutionality of article 236 of Law 83-C/2013, of December 31, as is essentially what the Claimant intends;

  2. The jurisdiction to conduct abstract judicial review of legality and constitutionality is reserved to the Constitutional Court as established in article 281 of the CRP;

  3. The Respondent contends that the Arbitral Tribunal lacks jurisdiction to conduct an abstract judicial review either of the legality or of the constitutionality of article 236 of Law 83-C/2013, of December 31.

  4. Even if this is not the case, which is admitted merely as an academic hypothesis, the Respondent contends that, at the date of creation of the tax regime applicable to FIIAHs, the exemptions from IMT and IS required, respectively: (i) that the acquisition of the properties was intended exclusively for "leasing for permanent housing" and, (ii) that the transfer concerned "properties intended for permanent housing that occurs as a result of the conversion of the right of ownership of those properties into a right of lease over them, as well as with the exercise of the purchase option provided for in no. 3 of article 5".

  5. In the case at issue, the property was not given the purpose provided for by law, the allocation to lease.

  6. The Respondent considers that article 236 of Law no. 83-C/2013, of December 31, which approved the state budget for 2014, introduced a new regime of lapse of the exemptions provided for in nos. 7, subparagraph a) and 8 of article 8 of the Tax Regime of the Closed Real Estate Investment Fund for Residential Rental (FIIAH) and not a mere clarification of the criterion previously provided for by law.

  7. And, following this understanding, in our view incorrect, the Respondent considers that there is a violation of the principle of non-retroactivity of tax law constitutionally enshrined. Let us see,

  8. The FIIAH was introduced by Law no. 64-A/2008, of December 31 [Law that approved the Budget for 2009] with the objective of supporting people with difficulty in paying the monthly installments of loans related to the purchase of a home.

  9. Under this regime, property owners sell their home to the FIIAH and enter into a lease contract with it with an option to repurchase the property, that is, owners sell and lease the property with a right to repurchase.

  10. "In conclusion, the present regime intends to achieve two fundamental objectives: the first, to address situations of difficulty, the second, to encourage leasing for one's own and permanent housing." In Real Estate Investment Funds for Residential Rental, Amândio Fernandes Silva, Journal of Business of 19.01.2009.

  11. The new law does not alter the assumptions, the conditions of attribution and recognition of the tax benefit of exemption from IMT and IS, with only the legal provision of the time and manner of compliance with a previously established legal requirement.

  12. Hence, there is no situation of retroactivity of tax law in the case at issue, but even if this were not the case, the Constitutional Court has understood, in Rulings no. 11/83 and 66/84 and 141/85 that, although one cannot derive from the Constitution a radical prohibition of retroactive taxes, such should be considered constitutionally prohibited when such retroactivity were "arbitrary and oppressive and violated "intolerably the legal certainty and the confidence that persons have the obligation (and also the right) to place in the legal order that governs them".

  13. All things considered, it is manifest that, from the beginning of the regime, the tax benefits in question applicable to FIIAHs always depended on the allocation of the properties to leasing for permanent housing.

B – THE EXCEPTION INVOKED

In the response presented, the AT defends itself by exception that, if verified, leads to the dismissal of the proceedings.

The AT argues in this regard that the Tribunal lacks jurisdiction to conduct an abstract judicial review of the constitutionality of article 236 of Law no. 83-C/2013, of December 31.

It happens that the Claimant does not ask this Tribunal to conduct an abstract judicial review of the constitutionality of the norm in question, but rather a concrete subsequent judicial review of the constitutionality thereof.

Since this Tribunal has jurisdiction to conduct a concrete subsequent judicial review of the constitutionality[2] of article 236 of Law no. 83-C/2013, of December 31, the exception invoked is considered unfounded.

C – THE CLAIM

Given the foregoing, relative to the positions of the Parties and the arguments presented, to determine whether the assessment acts for IMT and IS sub judice are or are not illegal due to violation of the provisions of article 103, no. 3 of the CRP, it will be necessary to verify what interpretation should be made of article 236 of Law no. 83-C/2013, of December 31.

For this purpose, it is important to pay attention to the provisions of article 11 of the General Tax Law (LGT), according to which the interpretation of tax law should be conducted in accordance with the general principles of interpretation.

The general principles of interpretation are established in article 9 of the Civil Code (CC), as follows:

"1. The interpretation should not be limited to the letter of the law, but should reconstruct from the texts the legislative intent, paying special attention to the unity of the legal system, the circumstances in which the law was drafted, and the specific conditions of the time in which it is applied.

  1. However, the interpreter cannot consider the legislative intent that does not have in the letter of the law a minimum of verbal correspondence, even if imperfectly expressed.

  2. In determining the meaning and scope of the law, the interpreter will presume that the legislator adopted the most appropriate solutions and knew how to express his intent in adequate terms."

Paying attention to those principles, let us then see what the tax regime applicable to acquisitions of urban real property or autonomous fractions of urban real property intended exclusively for leasing for permanent housing by FIIAHs and SIIAHs was before the amendments provided for by article 236 of the State Budget Law 2014 were introduced.

Article 8 of the legal framework of FIIAHs and SIIAHs provided as follows:

"Article 8

Tax regime

1 - Are exempt from Corporate Income Tax (IRC) income of any nature obtained by FIIAHs constituted between January 1, 2009 and December 31, 2013, which operate in accordance with national legislation and in compliance with the conditions provided for in the previous articles.

2 - Are exempt from Personal Income Tax (IRS) and IRC the income relating to units of participation in the investment funds referred to in the previous number, paid or placed at the disposal of their respective holders, whether by distribution or reimbursement, excluding the positive balance between the gains and losses resulting from the transfer of units of participation.

3 - Are exempt from IRS the gains resulting from the transfer of property intended for own housing in favor of the investment funds referred to in no. 1, which occurs as a result of the conversion of the right of ownership of those properties into a right of lease.

4 - The gains referred to in the previous number become subject to taxation, under the general regime, if the taxpayer terminates the lease contract or does not exercise the purchase option right provided for in no. 3 of article 5, with the statutes of limitations and prescription being suspended for the purposes of assessment and collection of IRS, until the end of the contractual relationship.

5 - Are deductible from the tax due, in accordance with the terms and limits contained in subparagraph c) of no. 1 of article 85 of the IRS Code, the amounts borne by the lessees of the properties of the investment funds referred to in no. 1 as a result of the conversion of a right of ownership of a property into a right of lease.

6 - Are exempt from Real Estate Tax (IMI), while they remain in the portfolio of the FIIAH, the urban real property intended for leasing for permanent housing that form part of the assets of the investment funds referred to in no. 1.

7 - Are exempt from IMT:

a) The acquisitions of urban real property or autonomous fractions of urban real property intended exclusively for leasing for permanent housing, by the investment funds referred to in no. 1;

b) The acquisitions of urban real property or autonomous fractions of urban real property intended for own and permanent housing, as a result of the exercise of the purchase option referred to in no. 3 of article 5 by the lessees of the properties that form part of the assets of the investment funds referred to in no. 1.

8 - Are exempt from stamp duty all acts performed, insofar as they are connected with the transfer of urban real property intended for permanent housing that occurs as a result of the conversion of the right of ownership of those properties into a right of lease over them, as well as with the exercise of the purchase option provided for in no. 3 of article 5

9 - Are exempt from supervision fees the management entities of FIIAHs insofar as they relate exclusively to the management of funds of this nature.

10 - Are excluded from the exemptions contained in this article the entities that are resident in a country, territory or region subject to a clearly more favorable tax regime, contained in a list approved by ordinance of the Minister of Finance.

11 - The obligations provided for in article 119 and in no. 1 of article 125 of the IRS Code must be fulfilled by the managing or recording entities.

12 - If the requirements referred to in no. 1 cease to be met, the application of the regime provided for in this article ceases, and the regime provided for in article 22 of the Tax Benefits Statute applies, with the income of the investment funds referred to in no. 1 that, at that date, have not yet been paid or placed at the disposal of their respective holders being taxed autonomously, at the rates provided for in article 22 of the same diploma, plus the corresponding compensatory interest.

13 - The management entities of the investment funds referred to in no. 1 are jointly and severally liable for the tax debts of the funds whose management is their responsibility."

From the above, it results, with interest for the assessment of the assessment acts sub judice, that "The acquisitions of urban real property or autonomous fractions of urban real property intended exclusively for leasing for permanent housing, by the investment funds referred to in no. 1" are exempt from IMT and IS.

Thus, are covered by the exemption from IMT and IS i) "the acquisitions of urban real property or autonomous fractions of urban real property", ii) whose purpose is exclusively leasing for permanent housing, iii) carried out by eligible FIIAHs.

Accordingly, if no legislative amendment to article 8 had occurred, the exemptions from IMT and IS in question would only have been maintained, as long as the legal conditions for their application referred to in the previous paragraph were maintained.

It is not understood, therefore, why it is argued that the exemptions from IMT and IS in question were not at the time conditioned upon the subsequent verification of any facts or circumstances, nor subject to any regime of lapse.

However, the exemption itself is conditioned upon the facts and circumstances for which it is granted and which result from its provision and normative enactment.

Now, resulting from the facts established that the assessment acts in question concern property that was sold on December 17, 2015, it is verified that in light of the legal regime of the FIIAHs established ab initio, the exemption from IMT and IS lapsed, since the purpose of the property ceased to be exclusively leasing for permanent housing.

Bearing in mind that the assessment acts for IMT and IS, now in question, are based on the legal provisions of article 34, nos. 1 and 2 of the IMT Code and the provisions of article 8, nos. 7 and 8 of the Tax Regime of the FIIAHs, in the wording in force at the date of the property's acquisition by the Fund, the assessment acts in question are legal, since the exemption granted lapsed with the sale of the property, since a different purpose was given to the property than that on which the benefit was based.

The question raised by the Claimant regarding whether or not the norms introduced by article 236 of Law no. 83-C/2013, of December 31 are retroactive is, therefore, absolutely irrelevant for assessing the legality of the assessment acts sub judice, in this specific case.

In fact, the State Budget Law 2014 added to article 8, numbers 14 to 16, as follows:

"14 - For the purposes of the provisions in nos. 6 to 8, urban real property is considered to be intended for leasing for permanent housing whenever it is the subject of a lease contract for permanent housing within three years from the date on which it became part of the fund's assets, and the taxpayer must communicate and provide proof to the AT of the respective effective lease, within 30 days following the end of the said period.

15 - When the properties have not been the subject of a lease contract within the three-year period provided for in the previous number, the exemptions provided for in nos. 6 to 8 cease to have effect, and in that case the taxpayer must request from the AT, within 30 days following the end of the said period, the assessment of the respective tax.

16 - If the properties are sold, with the exception of the cases provided for in article 5, or if the FIIAH is subject to liquidation, before the period provided for in no. 14 has elapsed, the taxpayer must also request from the AT, before the sale of the property or the liquidation of the FIIAH, the assessment of the tax owed in accordance with the previous number."

In the situation sub judice, none of the situations specifically provided for in the above transcribed norms is in question, or at least, no facts were alleged in that regard.

The norm questioned by the Claimant establishes the following:

"Article 236

Transitional provision in the framework of the special regime applicable to FIIAHs and SIIAHs

1 - The provisions in nos. 14 to 16 of article 8 of the special regime applicable to FIIAHs and SIIAHs, approved by articles 102 to 104 of Law no. 64-A/2008, of December 31, apply to properties that have been acquired by FIIAHs from January 1, 2014.

2 - Without prejudice to the provisions of the previous number, the provisions in nos. 14 to 16 of article 8 of the special regime applicable to FIIAHs and SIIAHs, approved by articles 102 to 104 of Law no. 64-A/2008, of December 31, apply equally to properties that have been acquired by FIIAHs before January 1, 2014, in which cases the three-year period provided for in no. 14 being counted from January 1, 2014."

Since the transitional norm referred to concerns the provisions in nos. 14 to 16 of article 8, whose provision is inapplicable to the present situation, the discussion of the retroactivity of the norm in question has no place in the present case.

IV. DECISION

Wherefore, this Arbitral Tribunal decides:

A) To find the exception of lack of jurisdiction invoked by the Respondent to be entirely unfounded;

B) To find the claim for nullity and avoidance of the assessment act for IMT and IS identified to be entirely unfounded;

C) To condemn the Claimant to bear the costs of the present proceedings, as the unsuccessful party.

V. VALUE OF THE PROCEEDINGS

In accordance with the provisions of article 306, no. 2 of the Code of Civil Procedure, 97-A, no. 1 a) of the CPPT and article 3, no. 2 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the claim is set at €36,924.75.

VI. COSTS

Pursuant to the provisions of articles 12, no. 2 and 22, no. 4, both of the RJAT, and article 4, no. 4 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the arbitration fee is set at €1,836, in accordance with Table I of the said Regulation, to be borne by the Claimant.

Notify accordingly.

Lisbon, May 30, 2016

The Arbitrator

Magda Feliciano

(The text of this decision was drawn up by computer, in accordance with article 131, no. 5, of the Code of Civil Procedure, applicable by reference to article 29, no. 1, subparagraph e) of Decree-Law no. 10/2011, of January 20 (RJAT), with its drafting governed by the spelling prior to the Orthographic Agreement of 1990.)

[1] Cf. Article 235 of Law no. 83-C/2013, of December 31 (State Budget for 2014).

[2] Cf. Article 25, subparagraph a) of the RJAT.

Frequently Asked Questions

Automatically Created

What are the IMT and Stamp Tax exemption conditions for properties acquired by FIIAH funds in Portugal?
IMT and Stamp Duty exemptions for properties acquired by FIIAH funds in Portugal require that urban real properties or autonomous fractions be intended exclusively for leasing for permanent housing. Under Law 64-A/2008 article 8(7), these exemptions apply to acquisitions by investment funds specifically for residential rental purposes. Following amendments by Law 83-C/2013, properties must be subject to a lease contract for permanent housing within three years from the date they became part of the fund's assets. The taxpayer must communicate and provide proof to the Tax Authority of the effective lease within 30 days following the end of the three-year period. For properties acquired before January 1, 2014, the transitional regime in article 236 applies, with the three-year period counting from January 1, 2014.
Can the Tax Authority revoke IMT and Stamp Tax exemptions if a FIIAH property is not used for permanent rental housing?
Yes, the Tax Authority can revoke IMT and Stamp Duty exemptions if a FIIAH property is not used for permanent rental housing. Under article 8, numbers 15 and 16, added by Law 83-C/2013, when properties have not been leased within the three-year mandatory period, the exemptions cease to have effect. In such cases, the taxpayer must request assessment of the respective tax from the Tax Authority within 30 days following the end of the three-year period. Similarly, if properties are sold (except in cases provided for in article 5) or if the FIIAH is liquidated before the three-year period elapses, the taxpayer must request tax assessment before the sale or liquidation. The Tax Authority then issues assessment acts for the previously exempted IMT and Stamp Duty amounts.
What happens when a FIIAH-acquired property is given a different purpose than permanent residential leasing?
When a FIIAH-acquired property is given a different purpose than permanent residential leasing, the tax exemptions originally granted cease to have effect, and the Tax Authority proceeds with the assessment of IMT and Stamp Duty that would have been due at acquisition. The taxpayer is required to proactively request this assessment within 30 days following the end of the three-year period if the property was not leased, or before disposal if the property is sold or the fund liquidated prematurely. Failure to comply with these notification and timing requirements may result in penalties. In the case analyzed (Process 59/2016-T), the Tax Authority assessed €32,564.75 in IMT and €4,360.00 in Stamp Duty after determining the property acquired in 2013 was not used for its intended permanent housing rental purpose, triggering the revocation of the initial exemptions.
How does the CAAD arbitral tribunal handle disputes over IMT and Stamp Tax liquidation on real estate transactions?
The CAAD (Administrative Arbitration Center) arbitral tribunal handles disputes over IMT and Stamp Tax liquidation on real estate transactions through a formal arbitration process established under Decree-Law 10/2011 (RJAT). Taxpayers can file a request for constitution of an arbitral tribunal challenging the legality of assessment acts. The process includes: (1) submission of the arbitration request, which is accepted by the CAAD President and notified to the Tax Authority; (2) constitution of a single arbitral tribunal within specified timeframes; (3) response from the Tax Authority, which may raise preliminary objections or substantive defenses; (4) optional dispensation of the oral hearing if the matters are suitable for written proceedings; (5) opportunity for parties to submit written arguments; and (6) issuance of an arbitral decision examining exceptions and merits. The tribunal verifies its jurisdiction, party legitimacy, representation, and procedural regularity before analyzing the substantive tax issues and rendering a binding decision on the legality of the contested assessment.
What is the legal framework under Decree-Law 10/2011 (RJAT) for challenging IMT and Stamp Tax assessments in Portugal?
Decree-Law 10/2011 (RJAT - Legal Framework for Arbitration in Tax Matters) establishes the comprehensive legal framework for challenging IMT and Stamp Tax assessments in Portugal through arbitration. Article 2(1)(a) grants arbitral tribunals material competence over disputes concerning the legality of tax assessment acts. Articles 2 and 10 govern the request for constitution of arbitral tribunals, requiring proper identification of the contested acts and legal grounds. Article 4 addresses party legitimacy and capacity, while article 10(2) covers representation requirements. Article 11(1)(c) establishes timelines for tribunal constitution. Article 18 provides for optional oral hearings that may be dispensed with depending on case nature. Article 110(7) of the Tax Procedure Code (CPPT), applied in conjunction with RJAT, governs the establishment of facts based on party positions and documentary evidence. This framework provides taxpayers an alternative to judicial courts for resolving tax disputes efficiently, with specialized arbitrators deciding on assessment legality, procedural compliance, and substantive tax law interpretation.