CAAD Ruling on IMT and Stamp Tax Exemptions for FIIAH Real Estate Investment Funds

Arbitral Decision

1. Report

1.1 A…, S.A., NIPC…, in its capacity as managing entity of the real estate investment fund "B… – Closed Real Estate Investment Fund for Residential Rental", hereinafter referred to as the "Claimant", NIPC…, with headquarters at…, n.º…–…, in Lisbon, has requested the establishment of a sole arbitral tribunal, pursuant to the combined provisions of articles 2, no. 1, subsection a), and article 10, both of Decree-Law no. 10/2011, of 20 January (Legal Regime of Arbitration in Tax Matters, hereinafter referred to only as "RJAT") and articles 1 and 2 of Order no. 112-A/2011, of 22 March, in which the Tax and Customs Authority (AT) is the respondent.

1.2 The request for arbitral determination, presented on 30 September 2016, has as its object the declaration of nullity or, alternatively, the annulment of the assessment notices nos. … of municipal tax on transfers of real estate (IMT), of 01-07-2016, in the amount of 565.00 € and … of stamp duty, of the same date, in the amount of 452.00 €, in the total amount of 1,017.00 € (one thousand and seventeen euros), better identified in the said request for arbitral determination, relating to the acquisition, which occurred on 30-08-2012, of the urban property located at Rua …, n.º…, parish and municipality of …, registered in the respective municipal property records under article… .

1.3 It further requests that the Respondent be condemned to refund the amounts paid, increased by the respective compensatory interest, in accordance with article 43 of the General Tax Law (LGT).

1.4 To the request for arbitral determination three documents were attached (assessment notices under challenge; proof of payment; and legal opinion of Professors C… and D…).

1.5 The Claimant chose not to designate an arbitrator.

1.6 The request for establishment of the arbitral tribunal was accepted by the President of CAAD and notified to AT on 17 October 2016.

1.7 The undersigned was designated by the President of the Deontological Council of CAAD as arbitrator of a sole arbitral tribunal, in accordance with the provisions of article 6 of the RJAT, and acceptance of the appointment was communicated within the applicable deadline.

1.8 On 30 November 2016, the Parties were notified of this designation and did not object to it, in accordance with the combined provisions of article 11, no. 1, subsections a) and b) of the RJAT and articles 6 and 7 of the Deontological Code of CAAD.

1.9 Thus, in conformity with the provisions of article 11, no. 1, subsection c) of the RJAT, the sole arbitral tribunal was constituted on 19 December 2016.

1.10 By arbitral order of 19 December 2016, it was determined that the Respondent be notified to, in accordance with article 17, no. 1 of the RJAT and within a period of 30 days, submit a reply and, if it so wished, request the production of additional evidence.

1.11 It was further notified to, within the same deadline, submit the administrative proceedings referred to in article 111 of the Code of Tax Procedure and Process (CPPT), having informed of its non-existence.

1.12 On 01 February 2017, the Respondent submitted its reply, defending itself by exception (dilatory exceptions of material incompetence, absolute incompetence of the Arbitral Tribunal to assess the abstract illegality of the assessments and passive illegitimacy of the Respondent, provided for, respectively, in subsections a) and e) of article 577 of the Code of Civil Procedure (CPC), applicable ex vi article 29, no. 1, subsection e) of the RJAT) and by contestation, arguing, respectively, for dismissal of the claim, or, alternatively, for the dismissal of the request for arbitral determination.

1.13 It further requests that, if not thus understood, the notification of the Public Prosecutor be determined for the purposes of article 280, no. 3, of the Constitution of the Portuguese Republic (CRP) and article 72, no. 3, of the Law on the Organization, Functioning and Procedure of the Constitutional Court, provided for in Law no. 28/82, of 15 November.

1.14 Considering that the Parties did not request the production of any evidence beyond that which the Claimant attached to the request for arbitral determination, the Arbitral Tribunal, in light of the principles of autonomy in the conduct of proceedings, celerity, simplification and procedural informality, inherent in no. 2 of articles 19 and 29 of the RJAT, by order of 01 February 2017, dispensed with the holding of the hearing provided for in article 18 of the same statute, having further decided that the proceedings would continue with optional written submissions, successively for the Respondent.

1.15 The date of 27 March 2017 was further designated for the delivery of the respective final arbitral decision.

1.16 The Parties were notified of this order on 01 February 2017, having duly submitted their submissions.

2. Procedural Matters

2.1 Because the dilatory exceptions invoked may constitute an obstacle to the knowledge of the merits of the case, giving rise to dismissal of the claim, see articles 576, no. 2, and 278, no. 1, subsections a) and d) of the CPC, they should be known ex officio and as a priority matter – articles 578 and 608, no. 1, of the same code.

2.2 Thus:

a) On the material incompetence of the Arbitral Tribunal to assess the "abstract illegality of the assessments"

According to the Respondent, the Claimant seeks the non-application of article 236 of Law no. 83-C/2013, of 31 December (State Budget for 2014) on the grounds of its alleged illegality/unconstitutionality and not for any illegality occurring in its application to specific facts.

Thus, the Constitutional Court is the competent forum to know of both the illegality and unconstitutionality of legal norms [articles 280, no. 2, subsections a) and d) and 281, no. 1, subsections a) and b) and no. 3 of the CRP and articles 6 and 66 of the Law on the Organization, Functioning and Procedure of the Constitutional Court, provided for in Law no. 28/82, of 15 November].

Given that the Arbitral Tribunal does not have jurisdiction to assess this issue, since what is sought is abstract review of the constitutionality of the norms.

However, it is not the purpose of the Arbitral Tribunal to declare the (un)constitutionality of the norm in question, as is obvious, but only to rule on its application to specific facts, assessing the legality or otherwise of that application, a competence that derives from subsection a), no. 1, article 2 of the RJAT.

Whereupon the invoked exception of material incompetence of the Arbitral Tribunal is deemed unfounded.

b) On the passive illegitimacy of the Respondent

In light of what we have just stated regarding the invoked preceding exception, the one relating to passive illegitimacy of the Respondent shall also be deemed unfounded, since what is at issue is not the assessment of abstract review of the constitutionality of the norm referred to, but only its application to specific facts, that is, to the contested acts.

2.3 In conformity with the foregoing, the Arbitral Tribunal is declared to be duly constituted and materially competent to determine the present action, in the declaratory forum.

2.4 The Parties have legal personality and capacity, show themselves to be legitimate and are duly represented (articles 4 and 10, no. 2, of the RJAT and article 1 of Order no. 112-A/2011, of 22 March).

2.5 The proceedings do not suffer from any nullities.

2.6 There are no other circumstances that prevent the determination of the merits of the case.

3. Position of the Parties

3.1 Of the Claimant

It alleges that the assessments are illegal, since: "not being (…) legally provided for, at the moment of recognition of the exemption, any facts or circumstances on which the lapse of the recognized exemption depended, it is manifest that the subsequent imposition of those facts or circumstances on exemptions crystallized in the tax legal order of the Claimant suffers from unconstitutionality, by violation of the principle of non-retroactivity of tax law, enshrined in article 103 (Tax System), no. 3, of the Constitution of the Portuguese Republic".

It further states that article 236 (transitional norm in the scope of the special regime applicable to FIIAH and SIIAH) of Law no. 83-C/2013 of 31 December (Law of the State Budget for 2014), by extending the application of the current Tax Regime of FIIAH to properties that were acquired before 01-01-2014, in which cases the three-year period provided for in no. 14 is counted from 01-01-2014, "is directly and unequivocally violating the principle of non-retroactivity of tax law constitutionally enshrined".

It attaches an opinion signed by Professors C… and D…, which corroborates the thesis of unconstitutionality defended by the Claimant.

It further understands that the contested assessments are null under the provisions of article 133, no. 2, subsection d), of the Code of Administrative Procedure (CPA), in force at the date of the assessments, inasmuch as they offend the essential content of a fundamental right and as such are challengeable at any time.

It concludes by arguing for the full acceptance of the request for arbitral determination.

3.2 Of the Respondent

In defending itself by contestation, the AT invokes that in the Portuguese administrative legal order, the general regime of invalidity of acts is, for reasons of legal certainty, mere voidability, including for those practiced on the basis of illegal or unconstitutional deliberations, with the Supreme Administrative Court having pronounced itself in that same sense.

That the declaration of nullity appears reserved for those acts that offend the essential content of a fundamental right, contending with the rights, freedoms and guarantees of citizens, but not those that contend with the principle of legality, as is the case in the present case.

That the acts in question, if they were violators of the principle of tax legality, would be voidable and not null.

It further sustains that the law in question is not affected by retroactivity, not having established any new requirement for application of the exemption provided for in the special regime applicable to real estate investment funds for residential rental (FIIAH), but only having granted a period for compliance with a requirement already underlying the regime itself, a period that only begins after the entry into force of the new law.

Thus, it is not a matter of altering the assumptions, conditions for attribution or recognition of a tax benefit, but only and solely regulating the period of time for the purposes of proving compliance with a previously established requirement.

In light of the foregoing, it understands that the norm in question is not unconstitutional and the present request for arbitral determination should be declared unfounded.

4. Grounds

4.1 Proven Facts

With relevance for the assessment and decision of the questions raised, prior and on the merits, the following facts are considered established and proven:

4.1.1 On 30 August 2012, the Claimant acquired the urban property located at Rua…, n.º…, parish and municipality of…, registered in the respective municipal property records under article….

4.1.2 This acquisition was exempt from IMT, under subsection a), no. 7, article 8 of the Special Regime applicable to Real Estate Investment Funds for Residential Rental (FIIAH), approved by article 102 of Law no. 64-A/2008, of 31 December, because the said property was intended exclusively for rental for permanent housing.

4.1.3 It also benefited from stamp duty exemption, provided for in item 1.1 of the General Table of Stamp Duty, under no. 8 of article 8 of the said special regime.

4.1.4 On 01 July 2016, assessment notice no. … of IMT was made, in the amount of 565.00 €.

4.1.5 On the same date, assessment notice no. … of stamp duty was made, in the amount of 452.00 €.

4.1.6 These assessments were based on the provisions of no. 2 of article 236 of Law no. 83-C/2013, of 31 December, combined with no. 16 of article 8 of the said regime, added by article 235 of the same law, by virtue of the fact that, with the disposal of the said property, the aforementioned exemptions ceased to have effect.

4.1.7 Indeed, in document no. 1 attached, relating to the IMT assessment, it states: "The taxpayer requested the assessment of IMT, in accordance with no. 16 of article 8 of the special regime applicable to FIIAH and SIIAH, approved by articles 102 to 104 of Law no. 64-A/2008, 31/12, as amended by article 235 of Law no. 83-C/2013, of 31/12, applicable by virtue of article 236 of Law no. 83-C, of 31/12, relating to article… of the parish of…; Initial IMT 2012/…, with benefit 92 FIIAH/SIIAH (article 87 of OE/09) at the price of € 56,500.00".

4.1.8 The reference contained in the above document that the assessment was made in accordance with no. 16 of article 8 of the special regime applicable to FIIAH and SIIAH can only refer to the disposal of the property in question, and not to rental, as follows from the literal reading of the said provision.

4.1.9 The IMT and Stamp Duty assessed were paid on 04 July 2016.

4.2 Unproven Facts

4.2.1 There are no facts relevant to the decision of the case that have not been proven.

4.3 Motivation

With regard to the facts, the Tribunal does not have the duty to rule on all the facts alleged, but rather the duty to select those that matter for the decision, taking into account the cause (or causes) of action that grounds the claim formulated by the plaintiff [(see articles 596, no. 1 and 607, nos. 2 to 4 of the CPC, applicable ex vi article 29, no. 1, subsections a) and e) of the RJAT)] and to state whether it considers it proven or unproven (see article 123, no. 2 of the CPPT).

With regard to the proven facts, the conviction of the Arbitral Tribunal was based on the body of documents attached.

5. Legal Matters (Grounds)

The question that constitutes the thema decidendum consists in assessing the legality of the assessments made under article 8 of the Tax Regime of FIIAH, amended by Law no. 83-C/2013, of 31 December (State Budget for 2014) and article 236, no. 2, of the same law (transitional norm in the scope of the special regime applicable to FIIAH and SIIAH).

The following are the questions to be addressed:

• On the unconstitutionality of article 236, no. 2, of Law no. 83-C/2013, of 31 December;

• On the (il)legality of the contested assessments; and

• On the request for payment of compensatory interest.

5.1 On the unconstitutionality of article 236, no. 2 of Law no. 83-C/2013 of 31 December -

Because we subscribe entirely to the decision in Case no. 288/2016-T, of 21-12-2016, regarding the question of the possible unconstitutionality of no. 2 of article 236 of Law no. 83-C/2013 of 31 December, we now transcribe the following excerpt:

"The Claimant further states that article 236 (transitional norm in the scope of the special regime applicable to FIIAH and SIIAH) of Law no. 83-C/2013 of 31 December (Law of the State Budget for 2014), by extending the application of the current Tax Regime of FIIAH to properties that were acquired before 01-01-2014, in which cases the three-year period provided for in no. 14 is counted from 01-01-2014, 'is directly and unequivocally violating the principle of non-retroactivity of tax law constitutionally enshrined'.

The Claimant also invokes the unconstitutionality of the article on which the assessments in question are based, article 236, no. 2 of the said Law no. 83-C/2013 of 31 December. And it attaches an opinion signed by Professors C… and D…, which corroborates the thesis of unconstitutionality defended by the Claimant.

No. 2 of article 236 (transitional norm in the scope of the special regime applicable to FIIAH and SIIAH) of the said Law no. 83-C/2013 of 31 December, provides: '2 – Without prejudice to the provisions of the preceding number, the provisions of nos. 14 to 16 of article 8 of the special regime applicable to FIIAH and SIIAH, approved by articles 102 to 104 of Law no. 64-A/2008, of 31 December, is equally applicable to properties that were acquired by FIIAH before 1 January 2014, in which cases the three-year period provided for in no. 14 shall be counted from 1 January 2014.'

The authors of the attached opinion conclude that 'the norm of article 236, no. 2, of the Law of the State Budget for 2014 is an authentically retroactive norm, since it orders the application of the new assumptions of exemptions – rental and not disposal within a 3-year period, under penalty of these becoming "ineffective" – to acquisition and acts (that is, to tax facts) prior to its entry into force and which were completed before this'.

However, we cannot adhere to the learned position therein defended, and adhering to the position of previous CAAD decisions, in the sense that the assumptions for the exemption of IMT are found in article 8, no. 7, subsection a) of the legal regime of FIIAH approved by Law no. 64-A/2008 of 31 December, which states that there are exempt from IMT 'the acquisitions of urban properties or of autonomous fractions of urban properties intended exclusively for rental for permanent housing, by the investment funds referred to in no. 1'.

And it was not the Law of the State Budget for 2014, by adding article 236, no. 2 to the said legal regime, that came to create new assumptions. This no. 2 only came to mention that the provisions of numbers 14 to 16 of article 8 (lapse of exemptions) is equally applicable to properties that were acquired by FIIAH before 1 January 2014, in which cases the three-year period provided for in no. 14 shall be counted from 1 January 2014.

Indeed, this article only came to make concrete that the lapse of exemptions contained in numbers 14 to 16 of article 8 also applies to properties acquired before 1 January 2014.

But the assumption for the exemption of IMT urban properties intended exclusively for rental for permanent housing was already enshrined in law at the time of acquisition of the property.

See that in the present case, the property was not intended for rental for permanent housing within the three-year period, but rather was disposed of. And for that reason, the Claimant submitted a verbal statement to AT for the purposes of issuing the assessment of IMT and Stamp Duty, given that the destination given to the property was not residential rental, and the lapse of the exemption of which it had benefited at the time of acquisition of the said property occurred.

Indeed, we understand as in the decision of CAAD delivered in case no. 164/2016-T, that 'it is not possible to conclude that the obligation to destine the property to rental for permanent housing constitutes a requirement introduced by Law no. 83-C/2013 of 31 December. Such obligation was already expressly and concretely contained in article 8, nos. 7 and 8 of the legal regime of FIIAH in its initial version'.

Thus, we conclude as in the CAAD decision referred to above, that there is no violation of the principle of non-retroactivity of tax law or worsening of the tax position of the Claimant, and the unconstitutionality of the said norm is not at issue".

5.2 On the (il)legality of the contested assessments -

Articles 102 to 104 of Law no. 64-A/2008, of 31 December (State Budget for 2009) approved a special regime applicable to real estate investment funds for residential rental (FIIAH) and real estate investment companies for residential rental (SIIAH), established during the five years following the entry into force of the said law, that is, until 31-12-2013[1] and to properties acquired by them in the same period.

This regime was intended to create an additional stimulus to the urban rental market in Portugal, providing for a specially favorable tax regime applicable until 31 December 2020.

On pages 16/17 of the Report of the Bill no. 226/X[2] (State Budget for 2009) can be read: "Creation of Real Estate Investment Funds for Residential Rental - This initiative also deserves mention regarding the creation of real estate investment funds and companies specifically dedicated to investment in properties intended for residential rental. With this initiative it is intended to create an additional stimulus to the urban rental market in Portugal, providing for a specially favorable tax regime applicable until 31 December 2020. The present regime is applicable to funds and companies established during the five years following the entry into force of the law and to properties acquired by them in that period.

Essentially, it provides for the creation of real estate investment funds and companies whose total assets consist, in a percentage of not less than 75%, of properties located in Portugal intended for rental for permanent housing. In this way, it is intended to create the necessary conditions for placing properties on the rental market and also to allow families burdened with housing loan payments to dispose of the respective property to the fund or company, with reduction of the respective charges, replacing them with a rent of a value lower than that payment and maintaining a purchase option on the property they rent from the fund.

It is proposed that the tax regime of these funds include:

'(…) Exemption from IMT in acquisitions of urban properties or autonomous fractions of urban properties intended exclusively for rental for permanent housing or of urban properties or autonomous fractions of urban properties intended for own and permanent housing, as a result of the exercise of the purchase option by tenants of properties that form part of the assets of investment funds.

• Exemption from Stamp Duty in all acts connected with the transfer of urban properties intended for permanent housing, which occurs as a result of the conversion of the right of ownership of those properties into a right of rental, as well as with the exercise of the purchase option (…)' (underline and emphasis, ours).

This Bill was approved on 28 November 2008, with the tax regime now appearing in article 8, no. 1 of article 104 of Law no. 64-A/2008, of 31-12, in the following terms:

"Article 8

Tax Regime

1 — There are exempt from Corporate Income Tax (IRC) the income of any nature obtained by FIIAH established between 1 January 2009 and 31 December 2013, which operate in accordance with national legislation and in observance of the conditions provided for in the preceding articles.

2 — There are exempt from Personal Income Tax (IRS) and IRC the income relating to units of participation in investment funds referred to in the preceding number, paid or made available to their holders, whether by distribution or redemption, excluding the positive balance between gains and losses resulting from the disposal of units of participation.

3 — Gains resulting from the transfer of properties intended for own housing in favor of investment funds referred to in no. 1 are exempt from IRS, which occurs as a result of the conversion of the right of ownership of those properties into a right of rental.

4 — The gains referred to in the preceding number shall be taxed under general rules if the taxpayer ceases the rental contract or does not exercise the option right provided for in no. 3 of article 5, with the periods of lapse and prescription being suspended for the purposes of assessment and collection of IRS until the end of the contractual relationship.

5 — The amounts borne by tenants of properties of 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 rental are deductible from the collection, in accordance with the terms and limits contained in subsection c) of no. 1 of article 85 of the Personal Income Tax Code, in the amounts borne.

6 — Urban properties intended for rental for permanent housing that form part of the assets of investment funds referred to in no. 1 are exempt from Real Estate Tax (IMI), while they remain in the portfolio of the FIIAH.

7 — There are exempt from IMT:

a) Acquisitions of urban properties or autonomous fractions of urban properties intended exclusively for rental for permanent housing, by investment funds referred to in no. 1;

b) Acquisitions of urban properties or autonomous fractions of urban properties 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 tenants of properties that form part of the assets of investment funds referred to in no. 1.

8 — All acts performed are exempt from stamp duty, provided they are connected with the transfer of urban properties intended for permanent housing which occurs as a result of the conversion of the right of ownership of those properties into a right of rental on the same, as well as with the exercise of the purchase option provided for in no. 3 of article 5.

9 — The managing entities of FIIAH are exempt from supervisory fees with respect exclusively to the management of funds of this nature.

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

11 — The obligations provided for in article 119 and in no. 1 of article 125 of the Personal Income Tax Code shall be fulfilled by the managing entities or registering 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, with the regime provided for in article 22 of the Tax Exemptions Statute being applied, with the income of the investment funds referred to in no. 1 which, on that date, have not yet been paid or made available to their holders to be taxed autonomously, at the rates provided for in article 22 of the same statute, with compensatory interest being added.

13 — The managing entities of the investment funds referred to in no. 1 are jointly and severally liable for the tax debts of the funds for whose management they are responsible" (emphasis ours).

It is thus verified that it is a prerequisite of the exemption from IMT and Stamp Duty, provided for in nos. 7, subsection a) and 8 of article 8 above, that urban properties or autonomous fractions of urban properties are intended exclusively for rental for permanent housing.

To this extent, the obligation to destine the property to residential rental is not a requirement of the amendments introduced by the Law of the State Budget for 2014, but rather a requirement ab initio of the special regime applicable to real estate investment funds for residential rental (FIIAH), indeed, a natural consequence of the objectives and motivations that presided over the creation of these funds.

For compliance with the provisions of subsection a), no. 7, of article 8 of the special regime applicable to real estate investment funds for residential rental (FIIAH) it is not enough to have a declared intention at the time of acquisition of the property but rather an actual allocation to rental for permanent housing.

Now, the Claimant does not prove in any way in this case the fulfillment of that requirement.

Thus, whenever those properties or autonomous fractions are given another destination or the disposal of the same occurs (because in this case the assumption on which the exemption was based – rental for permanent housing – can no longer be fulfilled), the exemption ceases to have effect, as follows from no. 3 of article 14 of the Tax Exemptions Statute (EBF), which provides:

"When the tax benefit relates to the acquisition of property intended for the direct realization of the purposes of the acquirers, it ceases to have effect if they are disposed of or given another destination without authorization from the Minister of Finance, without prejudice to the remaining sanctions or different regimes established by law".

In these cases, the taxpayer had the duty to request the assessment of IMT within 30 days from the date of lapse of the exemption and, within the same period, to effect its payment, see no. 1 of article 34 and no. 6 of article 36 of the IMT Code, respectively.

Under penalty of the Tax and Customs Authority (the head of finances) promoting its official assessment and notifying the taxpayer to effect payment within 30 days, without prejudice to compensatory interest and the corresponding penalty, as provided, respectively, in article 38, no. 1, of the IMT Code and article 114, no. 5, subsection c), of the General Regime of Tax Violations (RGIT), approved by article 1, no. 1, of Law no. 15/2001, of 5 June.

As for stamp duty provided for in item 1.1 of the respective general table, the same burden applies to the taxpayer by virtue of the provisions of no. 4 of article 23 and no. 4 of article 44 of the Stamp Duty Code.

It is true that article 235 of Law no. 83-C/2013, of 31 December (State Budget for 2014) gave new wording to the said article 8 of that special regime applicable to FIIAH, adding for this purpose numbers 14 to 16, with the following wording:

"14 — For the purposes of the provisions of nos. 6 to 8, it is considered that urban properties are intended for rental for permanent housing whenever they are the subject of a rental contract for permanent housing within three years from the moment they were added to the assets of the fund, with the taxpayer being required to communicate and provide proof to the AT of the respective actual rental within 30 days following the end of the said period.

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

16 — If the properties are disposed of, with the exception of the cases provided for in article 5, or if the FIIAH is the subject of liquidation, before the period provided for in no. 14 has elapsed, the taxpayer shall equally request from AT, before the disposal of the property or the liquidation of the FIIAH, the assessment of the tax owed in accordance with the preceding number" (underline and emphasis, ours).

As a transitional norm within the same regime, article 236 of the said law provides:

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

2 — Without prejudice to the provisions of the preceding number, the provisions of nos. 14 to 16 of article 8 of the special regime applicable to FIIAH and SIIAH, approved by articles 102 to 104 of Law no. 64-A/2008, of 31 December, are equally applicable to properties that were acquired by FIIAH before 1 January 2014, in which cases the three-year period provided for in no. 14 shall be counted from 1 January 2014" (underline ours).

Thus, whenever the properties or autonomous fractions are disposed of, the taxpayer should request from AT, before the disposal, the assessment of the tax owed in accordance with no. 15 of article 8 of the tax regime applicable to FIIAH.

Thus, with no. 16 of this article 8, added by article 235 of Law no. 83-C/2013, of 31 December, the deadline for requesting the assessment of taxes owed (IMT and Stamp Duty) was altered, this being the only consequence of the addition of that provision.

Indeed, before, the assessment of taxes was requested from AT by the taxpayer within 30 days from the date of lapse of the exemption, under penalty of AT promoting its official assessment.

However, with the new wording, the taxpayer came to request the assessment equally from AT, but always before the disposal of the property or autonomous fraction.

Thus, the said no. 16, combined with no. 15 of article 8 of the tax regime, does not alter the substance or requirement of the exemptions established by subsection a) of no. 7 and no. 8 (IMT and Stamp Duty, respectively), having a more procedural/operative nature – reading that if there is disposal of properties that have not been the subject of a rental contract, the exemptions cease, with the taxpayer being required to request the assessment of the respective tax.

We thus understand that what is at issue is not the retroactivity or otherwise of the law, nor is there any injury to the expectations of the Claimant or worsening of its tax position. The rationale for granting a tax benefit in the context of IMT and Stamp Duty to FIIAH was clearly established from the beginning – "Acquisitions of urban properties or autonomous fractions of urban properties intended exclusively for rental for permanent housing, by investment funds...".

Regarding the question of nullity or voidability of the taxable acts in question, for alleged violation of no. 3 of article 103 of the CRP (no one may be required to pay taxes that have not been created in accordance with the Constitution, that have a retroactive nature or whose assessment and collection are not carried out in accordance with the law), the Arbitral Tribunal understands that the same would be voidable and not null, if they were violators of the principle of tax legality.

Indeed, in accordance with article 133 of the [former] Code of Administrative Procedure (CPA), only acts shall be null if they lack any of the essential elements or for which the law expressly provides that form of invalidity.

Already administrative acts practiced in violation of the principles or legal norms applicable for whose violation no other sanction is provided are voidable, see article 135 of the [former] CPA.

In this sense, among others, the following judgments available at www.dgsi.pt:

"I - The sanction that generally falls on an invalid administrative act is its voidability (art. 135 of the CPA), and the law only determines its nullity when it lacks any of its essential elements or when it expressly sanctions it with that form of invalidity - art. 133 of the same statute. In this way, only those administrative acts specifically indicated in the law are null - this is the case of those enumerated in no. 2 of that article 133 - and those lacking one of its essential elements.

II - By essential elements of the administrative act for the purposes of art. 133, no. 1, of the CPA, should be understood the elements that are part of the administrative act itself contained in art. 120 of the same code and, therefore, they are related to its densification, which follows from the types of acts in question or the severity of the defects that affect them[3]".

"When what is at issue is the violation of fundamental rights that do not fill the 'hard core', nor can be framed in the so-called analogous rights, nor does the possible violation thereof generate nullity, but rather mere voidability[4]".

Indeed, in the Portuguese administrative legal order, the general regime of invalidity of acts is, for reasons of legal certainty, mere voidability, including for those practiced on the basis of illegal or unconstitutional deliberations, with the Supreme Administrative Court having pronounced itself in that same sense.

Thus, the declaration of nullity appears reserved for those acts that offend the essential content of a fundamental right, contending with the rights, freedoms and guarantees of citizens, but not those that contend with the principle of legality, as is the case in this matter.

However, for the present case, it matters little what the category of invalidity of the acts is – if null or voidable – since the request for arbitral determination is timely, in light of the provisions of subsection a), no. 1, article 10 of the RJAT, combined with subsection a), no. 1, of article 102 of the CPPT, no. 1 of article 43 of the IMT Code and no. 2 of article 49 of the Stamp Duty Code.

On this question and in the same sense as decided here, CAAD decisions have already been delivered in cases nos. 419/2016-T, of 26-01-2017; 331/2016-T, of 21-11-2016; 288/2016-T, of 21-12-2016; 269/2016-T, of 02-11-2016; 241/2016-T, of 19-12-2016; 232/2016-T, of 23-12-2016; 231/2016-T, of 13-10-2016; 165/2016-T, of 15-07-2016; 164/2016-T, of 14-09-2016; 163/2016-T, of 14-09-2016; 162/2016-T, of 13-10-2016; 133/2016-T, of 12-09-2016; 126/2016-T, of 08-07-2016; 125/2016-T, of 25-08-2016; 737/2015-T, of 19-05-2016; 735/2015-T, of 20-05-2016; 730/2015-T, of 23-06-2015; 729/2015-T, of 02-05-2016; 720/2015-T, of 18-10-2016; 717/2015-T, of 17-06-2016; 709/2015-T, of 19-05-2016; 708/2015-T, of 20-05-2016; 694/2015-T, of 01-08-2016; and 690/2015-T, of 14-07-2016.

For all the foregoing, we understand that the assessments of IMT and Stamp Duty in question do not suffer from any defect, and should therefore be maintained in the legal order.

5.3 On the request for compensatory interest -

This request being dependent on the acceptance of the preceding request, with that one being unfounded, this one is also unfounded, with no condemnation of AT for the payment of compensatory interest.

6. Decision

In light of the foregoing, it is decided:

a) To declare unfounded the dilatory exceptions invoked of material incompetence of the Arbitral Tribunal to assess the abstract illegality of the assessments and passive illegitimacy of the Respondent, provided for, respectively, in subsections a) and e) of article 577 of the Code of Civil Procedure (CPC), applicable ex vi article 29, no. 1, subsection e) of the RJAT;

b) To declare unfounded the request for declaration of illegality of assessment notices nos. … of municipal tax on transfers of real estate (IMT), in the amount of 565.00 € and … of stamp duty, in the amount of 452.00 €, both of 01-07-2016, relating to the acquisition, which occurred on 30-08-2012, of the urban property located at Rua …, n.º…, parish and municipality of …, registered in the respective municipal property records under article…, maintaining the said tax acts in the legal order;

c) To declare unfounded the request for recognition of the Claimant's right to reimbursement of the amount of 1,017.00 € (one thousand and seventeen euros) and, consequently, prejudiced the right to compensatory interest; and

d) To condemn the Claimant to the payment of the costs of the arbitral proceedings, in the amount of 306.00 €, see no. 1 of article 527 of the Code of Civil Procedure and article 4 of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT).

7. Value of the Case

In accordance with the provisions of articles 306, no. 2, of the CPC, 97-A, no. 1, subsection a) of the CPPT and 3, no. 2 of the RCPAT, the value of the case is fixed at 1,017.00 €.

8. Costs

In accordance with article 22, no. 4 of the RJAT, the amount of costs is fixed at 306.00 €, in accordance with Table I, attached to the RCPAT, at the charge of the Claimant.

Notify.

Lisbon, 24 March 2017.

The Arbitrator,

(Rui Ferreira Rodrigues)

Text prepared by computer, in accordance with the provisions of article 131, no. 5, of the CPC, applicable by reference from article 29, no. 1, subsection e), of the RJAT.

[1] Extended until 31-12-2015, see article 234 of Law no. 83-C/2013, of 31-12

[2] Available at https://www.parlamento.pt/OrcamentoEstado/Documents/oe/2009/RelatorioOE2009.pdf

[3] Judgment of the Supreme Administrative Court of 03-03-2004 (Case no. 01938/03)

[4] Judgment of the Administrative Court of Appeals of 03-07-2013 (Case no. 01795/10.9BEBRG)