Process: 604/2015-T

Date: February 23, 2016

Tax Type: IMI

Source: Original CAAD Decision

Summary

This CAAD arbitration case (Process 604/2015-T) addresses the critical issue of how fuel stations should be classified for Municipal Property Tax (IMI) purposes in Portugal. The claimant, a company operating fuel stations, contested the Tax Authority's classification of three service stations in Guimarães and Olhão as 'other' urban properties under Article 6(1)(d) of the IMI Code. The company argued these properties should be classified as 'commercial' under Article 6(1)(b), given that municipal authorities had issued use licenses specifically for 'Liquid Fuel Filling Stations.' The classification dispute has significant financial implications because it determines which valuation methodology applies under Article 38 of the IMI Code. The claimant challenged the Tax Property Values (TPV) assigned to the three properties (€272,500, €347,190, and €327,400 respectively), which resulted from IMI Form 1 submissions in late 2014 and assessments in 2015. Central to the dispute was whether the nature of the licensed use should govern the property classification, and whether fuel station equipment (storage tanks, pumps, canopies) should be included in calculating gross private or dependent areas. The claimant also alleged inconsistency in how the Tax Authority applied Article 38's mathematical formula, presenting evidence of different evaluation outcomes for materially identical properties. The case proceeded as a singular arbitral tribunal without witness testimony, as both parties agreed the matter involved purely legal questions with sufficient documentary evidence. The arbitral tribunal accepted jurisdiction, finding the claim timely filed within the statutory deadline after the August 2015 TPV notifications.

Full Decision

ARBITRAL DECISION

Parties

Claimant – A…, S.A., Tax ID PT…, with registered office at Avenue…, no. …, … Floor, …-… Lisbon.

Respondent – TAX AND CUSTOMS AUTHORITY (AT).

I. REPORT

a) On 17-09-2015, the Claimant submitted to CAAD a request seeking, pursuant to the Legal Framework for Arbitration in Tax Matters (RJAT), the constitution of a Singular Arbitral Tribunal (TAS).

THE REQUEST

b) The Claimant contests three acts fixing the tax property value of Municipal Property Tax (IMI) relating to three urban properties registered, respectively, in the property matrices …º - Guimarães –…– … (former article …º); …º - Guimarães –…- former article …º and …º - Olhão (former …º).

c) Acts resulting from the submission by the Claimant of IMI Form 1 in accordance with the following table:

Property Matrix Article Form 1 IMI Number Submission Date Assessment Sheet No. Assessment Date TPV Assigned
…º - Guimarães – … … 2014.12.22 … 2015.03.26 272,500.00
…º - Guimarães – … … 2014.12.22 … 2015.03.26 347,190.00
…º - Olhão … 2014.12.31 … 2015.08.05 327,400.00

d) It objects to the integration of the real estate properties in the category "others" (sub-paragraph d) of no. 1 of article 6º of the IMI Code) carried out by the AT and the resulting evaluation accordingly, seeking their integration in the category of urban property "commercial" (sub-paragraph b) of no. 1 of article 6º of the IMI Code) and resulting evaluation pursuant to article 38º of the IMI Code;

e) Given that these are properties for which the respective municipal authorities issued use licensing permits for "Liquid Fuel Filling Station".

f) It concludes by requesting the annulment of the acts fixing the TPV, declaring that the service stations constitute properties of the "commercial" type and as such should be evaluated pursuant to no. 1 of article 38º of the IMI Code and that "equipment assets" do not fall within the concept of property, not being relevant to the calculation of gross private area or gross dependent area;

g) Ordering the consequent repetition of the evaluation procedures.

OF THE SINGULAR ARBITRAL TRIBUNAL (TAS)

h) The request for constitution of the TAS was accepted by the President of CAAD and automatically notified to the AT on 01-10-2015.

i) By the Deontological Board of CAAD, the signatory of this decision was designated as arbitrator, and the parties were notified thereof on 16-11-2015. The parties did not manifest any intention to challenge the designation, pursuant to article 11.º no. 1 sub-paragraphs a) and b) of the RJAT and articles 6.º and 7.º of the Deontological Code.

j) Therefore, the Singular Arbitral Tribunal (TAS) has been, since 01-12-2015, properly constituted to hear and decide on the subject matter of this dispute (articles 2.º, no. 1, sub-paragraph a) and 30.º, no. 1, of the RJAT).

k) All of these acts are documented in the communication of constitution of the Singular Arbitral Tribunal dated 01-12-2015, which is hereby reproduced.

l) On 01-12-2015, the AT was notified pursuant to article 17º-1 of the RJAT. It responded on 13.01.2016, submitting the Administrative Record (PA), composed of 5 computerized files designated as PAT 1 to PAT 5.

m) The AT requested at the end of its response "production of additional evidence, of expert nature, with the hearing of an engineering technician, specialist in the matter". By order of 14.01.2016, the Tribunal considered that this request would be for the production of witness evidence and invited the Respondent to indicate the points of the material facts on which such evidence should focus, within a period of 10 days. In that same order, the meeting of parties pursuant to article 18º of the RJAT was scheduled to, among other things, hear the witness.

n) The AT was notified on 14.01.2016 and made no submissions until 25.01.2016.

o) Meanwhile, the Claimant, by petition of 21.01.2016, disagreed with the production of witness (and expert) evidence, since it argues that the matter under discussion in this proceeding concerns only questions of law and the file contains sufficient factual elements for the decision of the questions raised.

p) It concluded by requesting the dispensation of witness evidence production, the meeting of parties pursuant to article 18º of the RJAT, and proposing the production of written submissions and optional ones.

q) Since the AT did not comply with the Tribunal's invitation and in accordance with the principles of autonomy of the TAS in conducting the proceedings, celerity, simplification and procedural informality (articles 19.º, no. 2, and 29.º, no. 2, of the RJAT), the TAS, by order of 26.01.2016, dismissed the production of additional evidence, dispensed with the holding of the meeting of parties provided for in article 18.º of the RJAT, cancelled the scheduled meeting of parties and granted a period for written submissions, optional and successive, for a period of 10 days for each party.

r) The Claimant did not submit written submissions and the Respondent also did not submit them.

PROCEDURAL REQUIREMENTS

a) Legitimacy, capacity and representation - The parties possess legal personality, judicial capacity, are legitimate and are properly represented (articles 4.º and 10.º, no. 2, of the RJAT and article 1.º of Ordinance no. 112-A/2011, of 22 March).

b) Adversarial principle - The AT was notified as described in point l) above. All procedural documents and all documents attached to the file were made available to the respective counterparty in the CAAD Procedural Management System. Both parties were always notified of their attachment.

c) Dilatory exceptions - The arbitral procedure does not suffer from nullities and the request for arbitral decision is timely since it was submitted within the time limit prescribed in sub-paragraph a) of no. 1 of article 10.º of the RJAT. In fact,

The Claimant was notified of the TPV fixations resulting from the requests for second evaluations on 20 August 2015 (article 13º of the request for decision) and the AT did not contest this fact, nor does it result otherwise from the documents attached to the file. The present request was received by CAAD on 17.09.2015. There being no other element in the file that would allow concluding that the submission of the request for decision to CAAD on the date indicated was untimely, the TAS considers this procedural requirement to be met.

d) Joinder of claims – The request for decision encompassing the 3 properties complies with the requirements of no. 1 of article 3º of the RJAT.

SUMMARY OF THE CLAIMANT'S POSITION

e) The Claimant centers the dispute with the Respondent on the legal-tax characterization made by the latter, in the context of evaluation, of the three real estate properties as "others", arguing that they should be considered as "commercial" or for "services" since these are properties with use licensing permits for "liquid fuel filling stations" and "service areas".

f) It objects to what it considers to be arbitrariness, disorder or inconsistency in the application of the "mathematical and objective" formula contained in no. 1 of article 38º of the IMI Code and to substantiate this claim presents a table that purports to demonstrate the different conclusions reached by the Evaluation Committees faced with materially identical situations (article 49º of the request for decision):

g) It expresses that even if the 3 properties were considered "others", their evaluation should be made pursuant to article 38º of the IMI Code.

h) It concludes by requesting the annulment of the acts fixing the TPV, declaring that the service stations constitute properties of the "commercial" type and as such should be evaluated pursuant to no. 1 of article 38º of the IMI Code and that "equipment assets" (storage tanks, fuel pumps, metal canopies where the lighting fixtures and company logo are located and electric lighting poles and price-fixing equipment) do not fall within the concept of property and are not relevant to the calculation of gross private area or gross dependent area, and that the consequent repetition of the evaluation procedures be ordered.

SUMMARY OF THE RESPONDENT'S POSITION

i) The Respondent disputes the Claimant regarding the evaluation method and its calculation (to determine the TPV), not agreeing with the manner in which the claimant presented this argument: "either it does not identify the property, or when it does, it refers to 'service station', when the designation used in the terms of evaluation, as well as in the use licensing permits, which justify the evaluation carried out is 'Fuel Filling Station' or simply 'filling station'".

a) It argues regarding the three properties to the effect that "taking into account the legal-statutory nature of the activity of A…, and considering the structural configuration of the property that was evaluated, we exclude this property from being commercial or for services".

b) Regarding the metal canopies of the fuel supply units of the "Fuel Filling Stations" based on article 4.º of the General Rules for Installation and Construction and Installation Conditions of Fuel Filling Stations, with the following content: "Fuel filling stations must be located outdoors or in a location with simple shelter, guaranteeing a clear height of not less than 5 m above the pavement", it concludes, based on its reading of article 2.º - 1 of the IMI Code, that they constitute a property.

c) And that pursuant to article 2º no. 1 of the IMI Code, buildings or constructions, although movable by nature, are considered to have the character of permanence when dedicated to non-transitory purposes, with no. 3 presuming the character of permanence when the buildings or constructions are situated in the same location for a period exceeding one year.

d) And it concludes that once that structure, which is a canopy, is integrated in real estate property, with the consequent fulfillment of its economic purpose, the movable property is to be considered an integral part of that property, without the economic autonomy that would permit its independent qualification as real estate property. And that is what was taken into account when evaluating the "Canopy" as a metal construction, fixed to the ground, to which a value integrated in the value of the fuel supply area was assigned.

e) It concludes by requesting the dismissal of the request because the evaluation acts do not suffer from non-conformities with the law.

II - MATTERS FOR THE TRIBUNAL TO RESOLVE

On this specific matter, CAAD has already pronounced itself in proceedings 62/2013-T, 271/2015-T and 348/2015-T, with the final decisions being identical.

What is at issue is to determine whether the real estate properties identified above that were evaluated as being of the type "others" (sub-paragraph d) of no. 1 of article 6º of the IMI Code) pursuant to articles 46º- 1 and 2 of the IMI Code, should be so considered as the Respondent argues, or, conversely, should be considered of the type "commercial or for services" (sub-paragraph b) of no. 1 of article 6º of the IMI Code) and consequently should be evaluated pursuant to article 38º of the IMI Code, as the Claimant argues.

III. PROVEN AND UNPROVEN FACTS AND GROUNDS FOR DECISION

The following facts are considered proven as relevant to the decision to be rendered, indicating the respective documents (proof by documents) as grounds:

Proven Facts

  1. The Claimant submitted, regarding three urban properties, IMI Form 1 (aiming at their evaluations) with the numbers and on the dates indicated below, with the evaluations resulting as per the sheets, dates and TPV, all according to the following table:
Property Matrix Article Form 1 IMI Number Submission Date Assessment Sheet No. Date of 1st Evaluation TPV Assigned
…º - Guimarães – … … 2014.12.22 … 2015.03.26 272,500.00
…º - Guimarães – … … 2014.12.22 … 2015.03.26 347,190.00
…º - Olhão … 2014.12.31 ... 2015.08.05 327,400.00

Pursuant to nos. 1 and 3 of the request for decision and documents nos. 1 to 5 attached with the request for decision.

  1. Not agreeing with the property values assigned and with the classification of the properties in the type "others", the Claimant submitted requests for 2nd evaluation dated 23.01.2015 regarding the properties located in the municipality of Guimarães and dated 18.06.2015 regarding the one located in the municipality of Olhão – Pursuant to no. 4 of the request for decision and documents 6, 7 and 8 attached with the request for decision.

  2. With the second evaluations carried out in all cases, the classification of the properties as being of the type "others" was maintained and likewise the property values fixed in the first evaluation as set out in 1) were maintained – pursuant to no. 7 of the request for decision, content of the Administrative Record submitted by the AT (regarding the property located in the municipality of Olhão) and documents nos. 9, 10 and 11 attached as annex to the request for decision.

  3. By the Municipal Chamber of Guimarães, a use licensing permit no. …/98, dated 07 August 1998, was issued to the Claimant regarding the urban property current article …º - Guimarães –…, stating: "By order of 6 July 1998, the following use was authorized: a liquid fuel filling station, with an area of 326 m2" – as per document no. 13 attached with the request for decision.

  4. By the Municipal Chamber of Guimarães, a use licensing permit no. …/2000, dated 19 July 2000, was issued to the Claimant regarding the urban property current …º - Guimarães –…, stating: "By order of 31 May 2000, the following use was authorized: a liquid fuel filling station, with an area of 181 m2" – as per document no. 13 attached with the request for decision.

  5. By the Municipal Chamber of Olhão, a use licensing permit no. …2005, dated 03 August 2005, was issued to the Claimant regarding the urban property current …º - Olhão, stating: "By order of 02 August 2005, the following use was authorized: liquid fuel service station 'A…' with sale of various food products" – as per document no. 14 attached with the request for decision.

  6. On 17-09-2015, the Claimant submitted to CAAD the present request for decision – entry registration in the Procedural Management System of the request for decision.

Unproven Facts

There is no other factual matter alleged that has not been considered proven and that is relevant to the composition of the dispute.

IV. EXAMINATION OF THE MATTERS FOR THE TAS TO RESOLVE

First, it is appropriate to address the equivalence between what constitutes a "liquid fuel filling station" and a "liquid fuel service station", commonly known as a "service area", since the use licensing permits referred to above present this divergence in their literal wording.

As the Respondent states in article 25º of its response, "filling station" is defined by sub-paragraph q) of article 2º of Ordinance 131/2002 of 09.02 as "…the installation intended for the supply, for own, public or cooperative consumption, of gasolines, diesel and LPG for motor vehicles, corresponding to the area of the place where the fuel supply units, their respective reservoirs and safety and protection zones are located, as well as integrated buildings and roads necessary for the circulation of motor vehicles to be fueled".

In turn, as the Respondent also states, the term "service area" is defined by sub-paragraph e) of article 2º of Ordinance 131/2002 of 09.02 as "the usual designation of fuel filling stations on main routes and complementary routes containing equipment and means intended to provide support to users and motor vehicles".

From the reading of this regulation and moving to the literal wording of the three use licensing permits referred to in the facts established as proven, we conclude that the term used in the use licensing permit no. …/2005, dated 03 August 2005, regarding the urban property current …º - Olhão, issued by the municipality of Olhão: "liquid fuel service station" is equivalent to the terminology used in the other permits issued by the municipality of Guimarães: "liquid fuel filling station", differing only in the addition of the expression: "with sale of various food products", which is consistent with the legal definition of "service area".

Let us now address the substantive matter: whether the real estate properties identified above that were evaluated as being of the type "others" (sub-paragraph d) of no. 1 of article 6º of the IMI Code) pursuant to articles 46º- 1 and 2 of the IMI Code, should be so considered as the Respondent argues, or, conversely, should be considered of the type "commercial" (sub-paragraph b) of no. 1 of article 6º of the IMI Code) and consequently should be evaluated pursuant to article 38º of the IMI Code, as the Claimant argues?

It must be verified that both parties, in general terms, agree that the set of buildings and constructions and other elements incorporated and placed with the character of permanence, which embody the "fuel filling stations" and the "service station" integrate the concept of "property" within the meaning of article 2º of the IMI Code. What the Respondent then proceeds to isolate is the "metal canopy" (in the Claimant's understanding) or the "canopy" (in the Respondent's understanding), but only because it defends the application of the evaluation method of no. 2 of article 46º of the IMI Code.

That is, even the "storage tanks, fuel pumps, metal canopies where the lighting fixtures and company logo are located and electric lighting poles and price-fixing equipment" are considered, by the parties, as immovable property because they consider them integral parts of the "fuel filling stations" and the "service station", as would always result from article 204º of the Civil Code.

Therefore, the matter to be decided is only to determine whether these three properties, in light of the content of the use licensing permits, should be considered of the type "others" (sub-paragraph d) of no. 1 of article 6º of the IMI Code) – as the AT argues – or should be considered of the type "commercial" (sub-paragraph b) of no. 1 of article 6º of the IMI Code) as the Claimant argues. Once this determination is made, the evaluation method will flow automatically.

We shall closely follow the decision adopted in CAAD Proceeding no. 348/2015-T, to which we adhere and which concerns an identical situation.

According to article 6.º of the IMI Code: "1 - Urban properties are divided into:

a) Residential;

b) Commercial, industrial or for services;

c) Land for construction;

d) Others".

It further states in no. 2 of the same article that: "2 - Residential, commercial, industrial or for services are buildings or constructions licensed for such purposes or, in the absence of a license, that have as their normal purpose each of these uses".

In turn, and according to no. 4 of the same article: "4 - Included in the provision of sub-paragraph d) of no. 1 are lands located within an urban agglomeration that are not land for construction nor are covered by the provision of no. 2 of article 3.º and also buildings and constructions licensed or, in the absence of a license, that have as their normal purpose other uses than those referred to in no. 2 and also those of the exception in no. 3."

That is, by legal definition, properties that are commercial or properties intended for services are buildings or constructions licensed for such purposes.

Now, as per the proven facts stated in items 4), 5) and 6) of Part III of this decision, both the liquid fuel filling stations and a service station are commercial properties by virtue of the content of the use licensing permits combined with the literal wording of no. 2 of article 6º of the IMI Code.

By virtue of no. 2 of article 6º of the IMI Code, the fuel filling stations and the service station at issue in this proceeding, as a set of buildings and constructions (with their respective integral parts) integrating, as they do, the concept of commercial establishments where objective and subjective acts of commerce are carried out, must be considered urban commercial properties (sub-paragraph b) of no. 1 of article 6º of the IMI Code).

That is, these urban properties constitute the installations where the Claimant carries out its commercial activity of retail sale of fuel. And in the case of the Olhão service station, also the sale of various food products.

An activity that generates business income (subject to Corporate Income Tax pursuant to sub-paragraphs a) of nos. 1 of articles 2º and 3º of the Corporate Income Tax Code) and which is in itself commercial, lucrative, as per the classification of economic activities – CAE, of the National Institute of Statistics (article 142º of the Corporate Income Tax Code).

It is sufficient to note the manner in which in the CAE Rev-3, with code 47 300, this activity is defined: "retail trade in motor vehicle fuels in specialized establishments". The same applies to the definition of the activities of product sales and food service that occur in "service areas".

It would make no sense to consider that these installations, which are fundamentally the place par excellence where the Claimant carries out its profit-generating activity - lucrative commercial activity - subject to the Corporate Income Tax regime and then, in the context of Municipal Property Tax, not to consider these installations or buildings, in overall terms, as constituting an urban commercial property.

We do not find legal support that would permit the qualification of the properties in question as "others" for purposes of evaluation and determination of their tax property value.

In these terms, the second evaluations carried out, here contested, suffer from non-conformity with the law, according to the interpretation set forth herein, with error as to both factual and legal presuppositions, since the properties were considered as falling within the type "others", when they should have been considered as urban commercial properties, which affected the evaluation criteria.

That is, the choice of the evaluation method was not the most appropriate since urban commercial properties must be evaluated in accordance with the rules of article 38.º of the IMI Code.

Given the foregoing, the present arbitral request is well-founded with the consequent annulment of the contested acts.

The examination of any other matter raised by the parties is precluded.

V. OPERATIVE PART

In accordance with and on the grounds set forth above, the request for arbitral decision is hereby granted and consequently:

  • The evaluation acts contested are declared to be in non-conformity with the law (article 6º no. 1 sub-paragraph b) and no. 2 and article 38º of the IMI Code) with the consequent annulment of the fixations of the property values.

  • The repetition of the evaluation procedures is ordered in conformity with the qualification of the property as described above and with all legal consequences, namely regarding the application of the evaluation criteria, such as that provided for in article 38º, no. 1 of the IMI Code.

Value of the case: in accordance with the provision of article 3.º, no. 2, of the Regulation of Costs in Tax Arbitration Proceedings (and sub-paragraph a) of no. 1 of article 97ºA of the Code of Administrative Court Procedure), the value of the case is fixed at 3,633.44 euros.

Costs: pursuant to article 22.º, no. 4, of the RJAT, the amount of costs is fixed at € 612.00, according to Table I annexed to the Regulation of Costs in Tax Arbitration Proceedings, to be borne by the Respondent.

Notify.

Lisbon, 23 February 2016

Singular Arbitral Tribunal (TAS),

(Augusto Vieira)

Document prepared by computer pursuant to article 131.º, no. 5, of the Code of Civil Procedure, applicable by reference in article 29.º of the RJAT.

The wording of this decision is governed by the spelling rules prior to the 1990 Orthographic Agreement.

Frequently Asked Questions

Automatically Created

How are fuel stations classified for IMI property tax purposes in Portugal?
Fuel stations in Portugal present a classification challenge for IMI purposes. The Tax Authority in this case classified them as 'other' urban properties under Article 6(1)(d) of the IMI Code, while the taxpayer argued they should be classified as 'commercial' properties under Article 6(1)(b). The dispute centers on whether the licensed use as 'Liquid Fuel Filling Stations' should determine the classification. The classification significantly impacts valuation methodology and the resulting tax burden, as different property categories follow different assessment rules under Article 38 of the IMI Code.
What is the difference between 'commercial' and 'other' urban property classifications under Article 6 of the IMI Code?
Under Article 6(1) of the IMI Code, urban properties are categorized into distinct types. 'Commercial' properties under subparagraph (b) are those intended for commercial or service activities and are evaluated according to specific methodological rules in Article 38(1) of the IMI Code. 'Other' properties under subparagraph (d) represent a residual category for urban properties that don't fit into residential, commercial, or industrial classifications. This distinction is crucial because it determines the applicable valuation formula, assessment criteria, and ultimately the tax property value assigned. The classification affects how elements like gross private area, dependent area, and equipment assets are treated in the valuation calculation.
Can taxpayers challenge IMI property valuation acts through CAAD tax arbitration?
Yes, taxpayers can challenge IMI property valuation acts through the CAAD (Administrative Arbitration Center) under the Legal Framework for Arbitration in Tax Matters (RJAT). This case demonstrates the process: the claimant submitted a request for constitution of a Singular Arbitral Tribunal on September 17, 2015, within the statutory deadline under Article 10(1)(a) of RJAT after being notified of the Tax Property Value assessments in August 2015. CAAD arbitration provides an alternative to judicial courts for tax disputes, offering a faster, specialized forum. The arbitral tribunal has jurisdiction to review both the legal classification of properties and the resulting valuation, including ordering repetition of evaluation procedures if warranted.
How does the license of use issued by local authorities affect IMI property classification?
Use licenses issued by municipal authorities are central to determining IMI property classification. In this case, the claimant argued that municipal use licensing permits specifically for 'Liquid Fuel Filling Station' should govern how the Tax Authority classifies the properties. The licensed use demonstrates the intended and authorized purpose of the property, which the taxpayer contended should align with the 'commercial' or 'services' category rather than the residual 'others' category. This argument suggests that administrative licenses reflecting commercial activities should be determinative of tax classification, ensuring consistency between municipal licensing frameworks and tax treatment. However, the Tax Authority's position (classifying them as 'others' despite the licenses) indicates potential divergence between licensed use and tax classification criteria.
What are the IMI valuation rules under Article 38 of the CIMI for commercial urban properties?
Article 38 of the IMI Code (CIMI) establishes the valuation methodology for urban properties. For commercial properties under Article 38(1), a specific mathematical and objective formula applies to determine the Tax Property Value (TPV). The claimant in this case specifically sought evaluation under Article 38(1) applicable to commercial properties, arguing this methodology should govern fuel station assessments. The case also raised concerns about the treatment of 'equipment assets' (such as storage tanks, fuel pumps, and metal canopies) in calculating gross private area or gross dependent area. The claimant contended that such equipment should not be considered 'property' for valuation purposes and should not factor into area calculations. The taxpayer additionally alleged inconsistent application of Article 38's formula across materially identical properties, suggesting the Tax Authority reached different valuation conclusions for similar fuel stations.