Summary
Full Decision
ARBITRAL DECISION
1. REPORT
1.1. The Applicant A…– Investment Fund Management Company, S.A. (Applicant), taxpayer no. … in its capacity as management company of the real estate investment fund B…– Closed Real Estate Investment Fund for Residential Rental, taxpayer no.…, with registered office at…, …, in Lisbon, filed on 14/10/2016 a request for arbitral pronouncement for the purpose of examining and declaring the illegality of the acts assessing Real Property Transfer Tax (IMT) and Stamp Tax, in the total amount of € 1,350.00 (one thousand three hundred and fifty euros) on a property of which it is the owner.
1.2. The Honourable President of the Ethics Council of the Administrative Arbitration Center (CAAD) designated, on 22/11/2016, the signatory of this decision as sole arbitrator.
1.3. On 30/12/2016 the arbitral tribunal was constituted.
1.4. In compliance with the provisions of No. 1 of Article 17 of the Legal Regime of Tax Arbitration (RJAT), the Tax and Customs Authority (AT) was notified on 30/12/2016 to, if it wished, submit a reply and request the production of additional evidence.
1.5. On 01/02/2017 the AT submitted its reply, defending itself by exception and by challenge, and also proposing the waiver of the meeting referred to in Article 18 of the RJAT.
1.6. On 03/02/2017 the arbitral tribunal decided to waive the holding of the meeting referred to in No. 1 of Article 18 of the RJAT, on the basis of the principle of autonomy of the arbitral tribunal in the conduct of the proceedings, inviting both parties to, if they wished, submit optional written submissions and scheduled the date for rendering the final decision.
1.7. On 13/02/2017 the AT came to submit, in the absence of indication of successive submissions by the Applicant, and there being nothing new in the proceedings on which the AT could pronounce, remit and render fully reproduced what was raised and petitioned in its reply.
1.8. On 14/02/2017 the Applicant submitted written submissions, maintaining the arguments raised in the request for arbitral pronouncement.
2. SANITATION OF THE PROCEEDINGS
The arbitral tribunal was regularly constituted and is materially competent.
The parties have legal personality and capacity and are legitimate, with no defects in representation.
The proceedings do not suffer from defects affecting its validity.
Consequently, the conditions are met for the final decision to be rendered.
3. POSITIONS OF THE PARTIES
There are two positions in confrontation, that of the Applicant, set out in the request for arbitral pronouncement and that of the AT in its reply (and subsequent written submissions).
According to the Applicant, the assessments at issue in this petition are illegal because it considers to be unconstitutional, by violation of the provisions of No. 3 of Article 103 of the Constitution of the Portuguese Republic, Article 236 of Law No. 83-C/2013, of 31 December, which approved the State Budget for 2014.
To support its request, the Applicant also presents a legal opinion from Professors Dr. C… and D…, on the constitutionality of No. 2 of Article 236 (Transitional Provision within the Special Regime Applicable to FIIAH and SIIAH) of Law No. 83-C/2013, of 31 December corroborating the thesis of unconstitutionality defended by it, and whose conclusions are transcribed:
"CONCLUSIONS
(…)
1) The State Budget Law for 2009 approved the legal regime of Real Estate Investment Funds for Residential Rental (FIIAH) and, within it, a special tax regime in its Article 8, including, insofar as relevant here, exemptions from IMT and Stamp Tax for acquisitions by FIIAH of properties and autonomous fractions intended for permanent residential rental and related acts and contracts.
2) The aforementioned exemptions, of taxes due at the time of acquisition, were sufficient upon acquisition by FIIAH intended for residential rental, not depending on the completion of actual rental within a certain period nor on non-alienation of the property within that same period, the legislator not having imposed on FIIAH the risk of non-completion of the rental.
3) Article 235 of the State Budget Law for 2014 introduced new Nos. 14 to 16 in Article 8 of the FIIAH regime, which came to restrict the exemptions from IMT and Stamp Tax introduced by the State Budget Law for 2009, as they subordinated the qualification of the property as intended for permanent residential rental to it being effectively subject to a contract for permanent residential rental within three years from the time they became part of the fund's assets, and provided that the aforementioned exemptions "are voided" if the properties have not been subject to a rental contract within that three-year period, the same occurring if the properties are alienated before that three-year period (unless in the exercise of a purchase option by the tenant who previously alienated the property to the FIIAH).
4) The requirement introduced in the State Budget Law for 2014 was not provided for in the original regime of 2008, not resulting, in particular, from the assumption that these were acquisitions of urban properties or autonomous fractions "intended exclusively for residential rental", as such intended use is compatible, in particular in periods of crisis in the rental market, with difficulties and delays in the completion of rental, nothing preventing, according to the original provision of the exemption, that the property be acquired as intended exclusively for residential rental despite being rented, for example, 3 and a half years or 4 years after acquisition.
5) Similarly, the alienation, within the period of 3 years from acquisition, of property that had been acquired to be intended exclusively for rental also did not prevent the application of the exemption according to its original provision – being certain, moreover, that only 75% of FIIAH's assets were required to be comprised of properties intended for rental (Article 4, No. 1, of the respective regime).
6) The provision of a deadline for completion of rental is not merely a form of proof of an already foreseen requirement – in which case a new law would obviously be unnecessary – but rather represents the introduction, with the three-year deadline, of a new requirement for the exemption from IMT and Stamp Tax, with the effect of delimiting more restrictively the exception to the scope resulting from the exemption, providing that it "is voided".
7) The special transitional provision contained in Article 236, No. 2, of the State Budget Law for 2014, in ordering the application of the rules that restricted the exemption to acquisitions prior to its entry into force, effected at a time when the exemption was provided without such limitations, restricts the exemption from IMT and Stamp Tax with respect to tax facts previously completed, which are, for IMT and Stamp Tax, respectively, the onerous transfer of property and the act or contract connected with the acquisition.
8) The tax facts that give rise to the obligation of IMT and Stamp Tax are exhausted at the moment of their occurrence, and that is also the moment when the respective tax obligations arise (Articles 5, No. 2, and Article 5, subparagraph a), respectively of the IMT Code and the Stamp Tax Code).
9) The rule of No. 2 of Article 236 of the State Budget Law for 2014 altered an essential element of the taxes in question (the exemptions, and, consequently, the scope of their applicability, or field of application), as this is an element on which the very existence of the tax obligation depends (the "if" of the tax).
10) Article 103, No. 3, of the Constitution of the Portuguese Republic prohibits taxes with a retroactive nature, and such prohibition, introduced in 1997, came to make clear that the legislator is not permitted to provide or alter in their essential elements taxes that apply to facts already completed at the time the law enters into force – that is, which are authentically retroactive.
11) The wording of Article 103, No. 3, introduced in 1997 led to the fact that, subsequent to 1997, and applying the new constitutional parameter, the Constitutional Court came to decide in the sense of the unconstitutionality of rules that create or alter in their essential elements taxes for facts that were completed prior to their entry into force (authentic retroactivity, as opposed to mere retrospectivity or inauthentic retroactivity).
12) As can be read in Court Decision Nos. 128/2009, of the Constitutional Court, "given the principle of non-retroactivity of tax law, the mere retroactive nature of a tax law disadvantageous to individuals is sanctioned, automatically, by the Constitution, whatever may have been, in concrete terms, the conduct of the tax administration or the taxpayer. In other words, the judgment of unconstitutionality results only from the mere analysis of the regulatory data, never depending on the verification of any circumstantial elements resulting from the condition, in concrete, of a certain tax legal relationship".
13) The rule of Article 236, No. 2, of the State Budget Law for 2014 is an authentically retroactive rule, as it orders the application of the new requirements for the exemptions – rental and non-alienation within a 3-year period, under penalty of these being "voided" – to acquisitions and acts (that is, to tax facts) prior to its entry into force and which were completed before this.
14) This does not preclude the argument that the aforementioned restriction of the exemption by the provision of deadlines was merely intended to prove the purpose of rental of the acquisitions, since such a requirement for the exemption was not previously implemented and set forth in law at the moment when the relevant tax facts (the acquisition of the properties and the related acts and contracts) were completed.
15) For this same reason, the qualification of the rule of Article 236, No. 2, of the State Budget Law for 2014 as an interpretative rule would be improper, as the requirements it added to the exemptions were not previously provided for.
16) It is irrelevant that Article 236, No. 2, of the State Budget Law for 2014 provides that the three-year period is counted only from its entry into force, as such a requirement for the exemption (the deadline) was not even required at the moment when the relevant tax facts were performed.
17) Article 236, No. 2, of the State Budget Law for 2014 is unconstitutional, by violation of Article 103, No. 3, of the Constitution of the Republic, in providing that the provisions of the new Nos. 14 to 16 of Article 8 of the legal regime of FIIAH, which alter and restrict the exemptions previously provided in Nos. 7 and 8 of that same article, are "equally applicable to properties that have been acquired by FIIAH before 1 January 2014"."
The Applicant also understands that the assessments challenged are null under the provisions of subparagraph d), of No. 2, of Article 133 of the Code of Administrative Procedure (CPA) because they offend the essential content of a fundamental right, and as such are challengeable at all times.
In a different manner, the AT, defending itself by exception and by challenge, argues that the request for declaration of nullity of the disputed assessments should be judged unfounded.
By exception, the AT argues that the arbitral tribunal is not materially competent to assess or declare the constitutionality or unconstitutionality of Article 236 of Law 83-C/2013, of 31 December.
The AT further adds that the competence for abstract review of legality and constitutionality is reserved to the Constitutional Court, whereby the arbitral tribunal is materially incompetent to assess, in abstract, the constitutionality of Article 236 of Law No. 83-C/2013, of 31 December.
On the other hand, and still by exception, the AT argues that within the scope of the assessment of abstract review of constitutionality, it would always be a party with standing.
Now, in accordance with the provisions of Article 4, No. 1, subparagraph b), first part of the Statute of Administrative and Tax Courts (ETAF), it falls within the scope of administrative jurisdiction the examination of disputes having as their object the review of the legality of legal acts emanating from the AT in the exercise of its administrative function, and subparagraph a) of No. 2 of the aforementioned Article 4 of the ETAF expressly removes from the scope of administrative and tax jurisdiction the examination of disputes having as their object the challenge of acts performed in the exercise of the political and legislative function.
Thus, in the same way as what justifies the absolute incompetence of the arbitral tribunal, ratione materiae, applies in full to support the lack of standing of the Applicant.
By challenge the AT argues invoking that in the Portuguese administrative legal system, the general regime of invalidity of acts is, for reasons of legal certainty, mere voidability, including for those performed on the basis of illegal or unconstitutional decisions, the Supreme Administrative Court having come to pronounce itself in that same sense.
The AT further argues that the law in question is not affected by retroactivity, since the alienation of the property has as a necessary consequence the lapse of the tax benefit granted for application to rental.
Thus, and contrary to what the Applicant argues, there is no introduction ex novo of a regime of lapse of the benefit, and even less is there any frustration of the expectations of taxpayers or violation of the principle of non-retroactivity of tax law.
In light of the above, the AT understands that this request for arbitral pronouncement should be judged unfounded.
4. QUESTIONS TO BE DECIDED
In the present proceedings the questions to be decided are:
a) To decide the exception of incompetence of the arbitral tribunal;
b) To decide the exception of lack of standing;
c) To determine whether or not the assessments of IMT and IS effected under Article 236 of Law No. 83-C/2013, of 31 December (State Budget for 2014) are illegal.
5. FACTUAL MATTERS
5.1. FACTS CONSIDERED PROVEN
In light of the documents entered into the proceedings, the following is considered proven:
5.1.1. The fund B…– Closed Real Estate Investment Fund for Residential Rental was, at the date of the assessments at issue, the owner of the property located in the Neighbourhood…, lot…, registered in the urban property matrix of the union of parishes of … and … under the property registry number …, fraction "I";
5.1.2. The property in question was acquired on 30/08/2012, benefiting from the exemption from IMT under subparagraph a) of No. 7 of Article 8 of the special regime applicable to real estate investment funds for residential rental (FIIAH), and was alienated on 21/07/2016;
5.1.3. In conformity with what is mentioned in the request for arbitral pronouncement and in the reply given by the AT, an assessment of IMT, …, in the amount of € 750.00 (seven hundred and fifty euros) and of Stamp Tax No.…, in the amount of € 600.00 (six hundred euros) was effected, which were paid;
5.1.4. These assessments were made under Article 236 of Law No. 83-C/2013, of 31 December (State Budget for 2014).
5.2. FACTS NOT CONSIDERED PROVEN
There are no facts with relevance to the decision that have not been considered proven.
6. THE LAW
6.1. INCOMPETENCE OF THE ARBITRAL TRIBUNAL
Prior to the examination of the merits of the case, it is necessary, first and foremost, to decide the exception of incompetence of the arbitral tribunal invoked by the AT.
As previously mentioned, the AT defends itself by exception arguing that, since the Applicant alleges the unconstitutionality of the norm applied in the assessments at issue, the arbitral tribunal is not competent to decide on the constitutionality or unconstitutionality of the rules.
Now, the arbitral tribunal will not obviously declare the (un)constitutionality of the rule in question, but only pronounce itself on its concrete application to the concrete facts, assessing whether or not its application is legal, whereby the arbitral tribunal is materially competent.
The argument invoked by the AT as to the incompetence of the arbitral tribunal thus fails, and the exception at issue is judged unfounded.
6.2. LACK OF STANDING
The argument invoked by the AT as to the incompetence of the arbitral tribunal failing, the exception at issue is equally judged unfounded.
6.3. (IL)LEGALITY OF THE ACTS OF ASSESSMENT OF IMT AND STAMP TAX
It is thus necessary to decide on the merits of the request for arbitral decision on the assessments of IMT and Stamp Tax at issue.
As is well known, Law No. 64-A/2008, of 31 December, approved the special regime applicable to real estate investment funds for residential rental (FIIAH).
Under the provisions of No. 7 of Article 8, the following were exempt from IMT:
a) Acquisitions of urban properties or autonomous fractions of urban properties intended exclusively for permanent residential rental by the investment funds referred to in No. 1;
b) Acquisitions of urban properties or autonomous fractions of urban properties intended for permanent own and residential use, as a result of the exercise of the purchase option referred to in No. 3 of Article 5 by the tenants of the properties that are part of the assets of the investment funds referred to in No. 1.
Already the State Budget Law for 2014 came to alter the aforementioned Article 8 in the following manner:
"14 - For the purposes of the provisions of Nos. 6 to 8, it is considered that urban properties are intended for permanent residential rental whenever they are subject to a contract for permanent residential rental within three years counted from the moment they became part of the fund's assets, and the taxpayer must communicate and provide proof to the AT of the actual rental, within 30 days following the end of the aforementioned period.
15 - When properties have not been subject to a rental contract within the three-year period provided in the preceding number, the exemptions provided in Nos. 6 to 8 are voided, and in such case the taxpayer must request from the AT, within 30 days following the end of the aforementioned period, the assessment of the respective tax.
16 - If the properties are alienated, with the exception of the cases provided in Article 5, or if the FIIAH is subject to liquidation, before the expiration of the period provided in No. 14, the taxpayer must equally request from the AT, prior to the alienation of the property or the liquidation of the FIIAH, the assessment of the tax due in accordance with the preceding number." [emphasis added].
As previously mentioned, the property in question was acquired by the real estate investment fund B…– Closed Real Estate Investment Fund for Residential Rental in 2012, benefiting from the exemption from IMT under subparagraph a) of No. 7 of Article 8 of the special regime applicable to real estate investment funds for residential rental (FIIAH).
This rule requires that the property be intended for permanent residential rental in order to benefit from the aforementioned exemption.
In this respect, the obligation to allocate the property to residential rental is not a requirement of the amendments introduced by the State Budget Law for 2014, but rather a requirement of the special regime applicable to real estate investment funds for residential rental (FIIAH) ab initio, indeed a natural consequence of the objectives and motivations that presided over the creation of these funds.
The State Budget for 2014 comes, it is true, to establish a new requirement for the exemption: if the allocation to permanent residential rental does not occur within the period of 3 years after the property enters the fund, the fund must request the assessment of the IMT that was not assessed.
However, this was not the case at issue, contrary to what appears to follow from the argument of the Applicant, as follows.
The assessments of IMT and Stamp Tax in question were not based on their retention in the fund for a period equal to or exceeding 3 years without there having been allocation to permanent residential rental.
In fact, the assessments at issue, as appears from the assessment notes attached to the proceedings, were based on the fact that the properties were given "a purpose different from that which supported the benefit".
On this matter, there is already abundant arbitral case law to the effect that the acts challenged are legal, in proceedings No. 398/2015-T, No. 688/2015-T, No. 689/2015-T, No. 709/2015-T, No. 710/2015-T, No. 729/2015-T, No. 735/2015-T, No. 76/2016-T, No. 93/2016-T, No. 241/2016-T and No. 269/2016-T, as follows.
Arbitral Decision No. 398/2015-T
"Now, it is necessary to assess the legality of the IMT assessments sub judice.
As mentioned above, both properties subject to assessment were acquired by the Applicant in early 2014, benefiting from exemption from IMT under subparagraph a) of No. 7 of Article 8 of the legal regime of FIIAH. Such rule requires that the property be intended for permanent residential rental in order to benefit from such exemption.
Now, the obligation to allocate the property to residential rental is not a requirement of the amendments introduced by the State Budget for 2014, but rather a requirement of the tax regime of FIIAH ab initio, indeed a natural consequence of the motivations that led to the creation of these funds.
[…] The assessments of IMT effected with respect to the properties described above were not based on their retention in the fund for a period equal to or exceeding 3 years without there having been allocation to permanent residential rental. Indeed, as appears from the documentation attached to the proceedings, both properties were in the fund for only a few months. The assessments at issue, moreover as appears from the assessment notes attached to the proceedings, were based on the fact that the properties were given "a purpose different from that which supported the benefit". Now, to this statement made by the AT that a different purpose was given to the properties, that is, that they were not allocated to permanent residential rental, the Applicant responds only in its submissions that "It does not understand, however, where the Tax Authority obtained such an idea", nothing more being said about what is the essential requirement for the application of the exemption.
Therefore, we understand that what is not in question is the retroactivity or not of the rule applied, which would be the case if, by way of example, the property remained in the fund for a period of 3 years without yet having been allocated to permanent residential rental and, for that fact, there had been an assessment of IMT.
In the case at issue, this is not what is in question. The properties in question are alienated without having fulfilled their purpose – allocation to permanent residential rental. This is not, therefore, a matter of deadline. Once alienated, that purpose can no longer be fulfilled, whereby the requirement established for the exemption from IMT to be applicable was not met.
To comply with the provisions of subparagraph a) of 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 permanent residential rental. Now, the Applicant does not prove in any way in this proceeding, nor in the previous administrative procedure the fulfillment of that requirement.
We therefore understand that what is not in question is the retroactivity or not of the law, nor is there any injury to expectations of the Applicant or worsening of his tax position. The rationale for the grant of a tax benefit in the context of IMT to FIIAH was established clearly from the start – "Acquisitions of urban properties or autonomous fractions of urban properties intended exclusively for permanent residential rental by the investment funds...";
Now, we therefore understand that the assessment of IMT at issue is legal under subparagraph a) of No. 7 of Article 8. Let us now examine the rationale for the assessment of IMT under Article 235, No. 16 of Law 83/2013 of 31 December." [emphasis added].
Arbitral Decision No. 688/2015-T
"Now, in consideration of the alienation of the property identified in point 5.2.2., above, for purposes different from those for which the tax benefits described above were granted, this would determine (and did determine in the case at issue), the automatic restoration of regular taxation.
Thus, in light of the above, this Arbitral Tribunal understands that what is provided in No. 16 of Article 236 of the Transitional Regime, applied in conjunction with the provisions of No. 15 of that same article in no way alters the substance or requirements for the application of the exemptions established by Article 8, Nos. 7 and 8 of the special regime applicable to FIIAH and SIIAH, with respect to the assessments at issue.
In these terms, in consideration of the conclusions resulting from the analysis above presented, this Court understands that the answer to be given to the question raised in point 6.1., above, will be negative, that is, that the assessments of IMT and Stamp Tax subject to the request for arbitral pronouncement are not affected by any illegality, whereby the request for arbitral pronouncement should be considered unfounded.".
Arbitral Decision No. 689/2015-T
"The fact that the Applicant proceeded to alienate the property which, upon acquiring, it declared it would allocate for the purpose which permitted it to be recognized – as it was – the exemption from IMT and IS, would always determine, even if the aforementioned number 16 did not expressly provide for it, the lapse of such exemptions, by effect of the provisions of Article 12 and No. 3 of Article 14 of the Statute of Tax Benefits (previous No. 12, No. 3, in the wording of the EBF that was in force prior to the republication of the same by Decree-Law No. 108/2008, of 26/06), according to which "When the tax benefit relates to the acquisition of goods intended for the direct realization of the ends of the acquirers, it is voided if those are alienated or given another purpose without authorization of the Minister of Finance, without prejudice to other penalties or different regimes established by law.".
The Applicant did not allege and, even less so, demonstrate having obtained the authorization provided for there, or any other circumstance that would prevent the granted exemptions from being voided as a consequence of the alienation.
It is for this reason that, as we have already stated above, we understand that the question raised by the Applicant regarding the alleged unconstitutionality of the added provisions does not arise in the case at issue, insofar as, in the part corresponding to the alienation of the property, No. 16 of Article 8 of the Legal Regime of FIIAH merely reiterates what already resulted from the provisions of the Statute of Tax Benefits.
Which, moreover, makes sense, given the rationale for the grant of tax benefits.
The rationale for the grant of the tax benefit in the context of IMT and IS to FIIAH is, clearly, its allocation to permanent residential rental - "Acquisitions of urban properties or autonomous fractions of urban properties intended exclusively for permanent residential rental by the investment funds..." – whereby the consequence of its being given a different purpose is that the exemption could not have been granted, and there must be a restoration of legality, by assessing the taxes that, were it not for the declaration of intention made at the time of acquisition, would have been assessed.
Which the Applicant recognized, all the more so as that is precisely what appears in the declarations made by the Applicant itself for assessment of the IMT and IS.".
Arbitral Decision No. 709/2015-T
"To comply with the provisions of subparagraph a) of 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 permanent residential rental.
Now, the Applicant does not prove in any way in this proceeding the fulfillment of that requirement.
[…] We therefore understand that what is not in question is the retroactivity or not of the law, nor is there any injury to expectations of the Applicant or worsening of his tax position. The rationale for the grant of a tax benefit in the context of IMT to FIIAH was established clearly from the start - "Acquisitions of urban properties or autonomous fractions of urban properties intended exclusively for permanent residential rental by the investment funds...".
Arbitral Decision No. 710/2015-T
"And, thus being and in this decision segment, we again adhere to the position expressed in the decision of CAAD in proceeding No. 398/2005 - T, to the effect that it is not even a question of a test of retroactivity of the rule applied, but rather the fact that the fraction at issue has been alienated «without having fulfilled its purpose – allocation to permanent residential rental» and that «once alienated, that purpose can no longer be fulfilled, whereby the requirement established for the exemption from IMT to be applicable was not met» (cited., p. 10).
[...] Thus being, and once the assessments at issue resulted from a declaration of the Applicant, it is not even necessary for us to dwell on the correctness of the assessments with respect to their timeliness. In any case, recall that No. 15 of the Special Regime, as added by the State Budget Law for 2009 provides that when properties have not been subject to a rental contract within the three-year period the benefits are voided, and it is incumbent on the taxpayer to request from the AT, within thirty days following the end of the aforementioned period, the assessment of the respective tax. Now, as we have seen, in the case at issue there was acquisition and alienation of a fraction which was never allocated to permanent residential rental by the Applicant, whereby it – as indeed it did – was incumbent on it to request the assessment of the respective tax." [emphasis added].
Arbitral Decision No. 729/2015-T
"The rationale for the grant of the tax benefit in the context of IMT and IS to FIIAH is, clearly, its allocation to permanent residential rental - "Acquisitions of urban properties or autonomous fractions of urban properties intended exclusively for permanent residential rental by the investment funds..." - whereby the consequence of its being given a different purpose is that the exemption could not have been granted, and there must be a restoration of legality, by assessing the taxes that, were it not for the declaration of intention made at the time of acquisition, would have been assessed.
Which the Applicant recognized, all the more so as that is precisely what appears in the declarations made by the Applicant itself for assessment of the IMT and IS.
In conclusion, the alienation of the fraction would always determine the lapse of the exemption by application of the provisions of No. 3 of Article 14 of the Statute of Tax Benefits, thus not being in question, in the situation sub judice, any retroactive application of a rule that comes to introduce a new regime of lapse of the exemptions, nor is there any injury to expectations of the Applicant or worsening of his tax position, whereby we thus understand that the assessments of IMT and Stamp Tax at issue are legal.
Thus, the analysis of the question raised by the Applicant as to the alleged retroactivity of the regime provided by Article 236 of the State Budget Law for 2014 is moot, insofar as, as above was demonstrated, the conditionalities that gave rise to the assessments of tax at issue have nothing to do with the aforementioned rule, only with the alienation of the property and consequent allocation to a purpose different from that for which the exemptions from IMT and Stamp Tax were granted." [emphasis added].
Arbitral Decision No. 735/2015-T
"Now, in consideration of the alienation of the property identified (…), above, for purposes different from those for which the tax benefits described above were granted, this would determine (and did determine in the case at issue), the automatic restoration of regular taxation.
Thus, in light of the above, this Arbitral Tribunal understands that what is provided in No. 16 of Article 236 of the Transitional Regime, applied in conjunction with the provisions of No. 15 of that same article in no way alters the substance or requirements for the application of the exemptions established by Article 8, Nos. 7 and 8 of the special regime applicable to FIIAH and SIIAH, with respect to the assessments at issue.
In these terms, in consideration of the conclusions resulting from the analysis above presented, the Court understands that the answer to be given to the question raised in (…), that is, that the assessments of IMT and Stamp Tax subject to the request for arbitral pronouncement are not affected by any illegality, whereby the request for arbitral pronouncement should be considered unfounded.
As a consequence of the conclusion referred to (…), above, the analysis of the question raised by the Applicant as to the alleged retroactivity of the regime provided by Article 236 of the State Budget Law for 2014 is moot, since, as above demonstrated, the conditionalities that gave rise to the assessments of tax at issue derive from the fact that the property (…) was given a purpose different from that for which the exemptions from IMT and Stamp Tax were granted."
Arbitral Decision No. 76/2016-T
"In this parameter, it is our understanding that No. 16 of Article 8 of the special regime applicable to FIIAH and SIIAH, applied in conjunction with the provisions of No. 15 of that same article, does not produce any alteration in the substance and/or in the requirements for the application of the exemptions established by Nos. 7 and 8 of that same Article 8, with respect to the assessments of IMT and Stamp Tax in dispute.
In fact, contrary to what is argued by the Applicant, it is not correct to say that the facts or circumstances on which the respective lapse depended were not already legally provided for at the time the exemption was recognized, at least with respect to the circumstance that occurred in this case: the alienation of the property."
Arbitral Decision No. 93/2016-T
"The rationale for the grant of the tax benefit in the context of IMT and IS to FIIAH is, clearly, its allocation to permanent residential rental - «Acquisitions of urban properties or autonomous fractions of urban properties intended exclusively for permanent residential rental by the investment funds...» - whereby the consequence of its being given a different purpose is that the exemption could not have been granted, and there must be a restoration of legality, by assessing the taxes that, were it not for the declaration of intention made at the time of acquisition, would have been assessed.
In conclusion, the alienation of the property would always determine the lapse of the exemption by application of the provisions of No. 3 of Article 14 of the Statute of Tax Benefits, thus not being in question, in the situation sub judice, any retroactive application of a rule that comes to introduce a new regime of lapse of the exemptions, nor is there any injury to expectations of the Applicant or worsening of his tax position, whereby we thus understand that the assessments of IMT and Stamp Tax at issue are legal." [underlined].
Arbitral Decision No. 241/2016-T
"It is not a question of the retroactivity or not of the normative provisions introduced by the SOL for 2014, nor does it appear that there is any injury to expectations of the Applicant or worsening of his tax position, inasmuch as he well knew that the requirement for the operation of the exemptions from IMT and IS, established since the 2008 version, was that acquisitions of urban properties or autonomous fractions of urban properties were allocated, exclusively, to permanent residential rental. Finally, the new regime established by the transitional provision contained in Article 236 of the SOL for 2014 bears no causal relationship to the reason for the assessments at issue, it being the case that the normative provisions introduced do not alter the requirements for the exemption established by the special regime of taxation applicable to SIIAH and FIIAH, in force since 01-01-2009." [underlined].
Arbitral Decision No. 269/2016-T
"As to the retroactive application of the rule of Article 236 of Law 83-C/2013, we do not perceive, in the concrete case, the reason to invoke such a basis, insofar as the assessments at issue, from the tribunal's point of view, had nothing to do with the aforementioned rule, but only with the fact that at the time of acquisition it was declared that the property was intended for permanent residential rental and it came to be exchanged, thus not fulfilling the requirements of the granted exemption, it being the case that it is not enough to have the intention declared in the acquisition document, but rather its effective implementation, which did not occur.
From the above, the tribunal considers that the assessments of IMT and IS at issue result from the fact that the applicant did not observe what is prescribed in subparagraph a) of No. 7 of Article 8 of the special regime applicable to real estate investment funds for residential rental, approved by Law No. 64-A/2008 of 31 December and not from the amendments introduced by Law No. 83-C/2013, as it claims, whereby there is no retroactive application here, what occurred was a purpose different from that declared at the time of acquisition of the property, and therefore the assessments are legal, thus without interest the assessment of the question of punitive interest requested." [underlined].
Having reached this point, we understand that what is not in question is the retroactivity, or not, of the rule applied, which would be the case if, by way of example, the property remained in the fund for a period of 3 years without yet having been allocated to permanent residential rental and, for that fact, there had been an assessment of IMT.
In the case at issue, this is not what is in question.
The property in question was alienated without having fulfilled its purpose – allocation to permanent residential rental. This is not, therefore, a matter of deadline. Once alienated, that purpose can no longer be fulfilled, whereby the requirement established for the exemption from IMT to be applicable was not met.
To comply with the provisions of subparagraph a) of 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 permanent residential rental.
Now, the Applicant does not prove in any way in this proceeding the fulfillment of that requirement.
We therefore understand that what is not in question is the retroactivity, or not, of the law, nor is there any injury to expectations of the Applicant or worsening of his tax position.
In fact, the rationale for the grant of a tax benefit in the context of IMT to FIIAH was established clearly from the start – "acquisitions of urban properties or autonomous fractions of urban properties intended exclusively for permanent residential rental by the investment funds (…)".
For all of the above, it is to be concluded that the assessments of IMT and Stamp Tax at issue are legal under subparagraph a) of No. 7 of Article 8 of the special regime applicable to real estate investment funds for residential rental (FIIAH).
7. DECISION
With the grounds set out above, the arbitral tribunal decides to judge the request for arbitral pronouncement to be totally unfounded, with all legal consequences.
8. VALUE OF THE PROCEEDINGS
The value of the proceedings is fixed at € 1,350.00 (one thousand three hundred and fifty euros), in accordance with Article 97-A of the Code of Procedure and Tax Proceedings (CPPT), applicable by force of subparagraphs a) and b) of No. 1 of Article 29 of the RJAT and No. 2 of Article 3 of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT).
9. COSTS
Costs to be borne by the Applicant, in the amount of € 306.00 (three hundred and six euros), in accordance with Table I of the Regulation of Costs of Tax Arbitration Proceedings, in accordance with No. 2 of Article 22 of the RJAT.
Notify.
Lisbon, 23 February 2017
The Arbitrator,
(Hélder Filipe Faustino)
Text prepared by computer, in accordance with the provisions of No. 5 of Article 131 of the Code of Civil Procedure, applicable by referral of subparagraph e) of No. 1 of Article 29 of the RJAT. The wording of this decision is governed by the orthography prior to the Orthographic Agreement of 1990.
Frequently Asked Questions
Automatically Created