Process: 617/2016-T

Date: February 13, 2017

Tax Type: IMT Selo

Source: Original CAAD Decision

Summary

This CAAD arbitral decision (Process 617/2016-T) examines the revocation of IMT and Stamp Duty exemptions granted to a FIIAH real estate investment fund under Law 64-A/2008. The claimant acquired a property in 2013 for permanent rental housing, benefiting from tax exemptions under Article 8(7) of the FIIAH regime. Law 83-C/2013 (State Budget 2014) introduced paragraphs 14-16 to Article 8, establishing that exemptions cease if properties are sold before being rented for three years. Article 236 created transitional rules for properties acquired before 1 January 2014, counting the three-year period from that date. When the fund sold the property in 2016, it requested IMT and IS assessments totaling €35,232.75. The Tax Authority issued the liquidation acts, which the claimant paid and subsequently challenged. The case raises critical issues about the temporal application of exemption conditions, whether retrospective application of new requirements to previously exempted transactions violates legal certainty principles, and CAAD's jurisdiction over single-obligation tax assessments. The decision has significant implications for FIIAH fund managers regarding compliance obligations and the stability of tax benefits initially granted under earlier legislation.

Full Decision

ARBITRAL DECISION

I. REPORT

A… – INVESTMENT FUND MANAGEMENT COMPANY, S.A., with registered office at…, no.…–…, … – … Lisbon, with share capital of €1,550,000.00, registered with the Commercial Registration Office of Lisbon under the single registration and tax identification number …, filed a request for the constitution of a single Arbitral Court, in accordance with the combined provisions of Articles 2º and 10º of Decree-Law No. 10/2011, of 20 January (Legal Regime for Arbitration in Tax Matters, hereinafter referred to only as RJAT), against the Tax and Customs Authority (hereinafter AT), with the objective of obtaining a declaration of illegality of the Transfer Tax (IMT) assessment deed no. … and Stamp Duty (IS) assessment deed no. …, in the total amount of €35,232.75.

The request for constitution of the Arbitral Court was accepted by the Honorable President of CAAD on 28 October 2016 and was automatically notified to AT.

In accordance with the provisions of subsection c) of article 11º of RJAT, the single Arbitral Court was constituted on 15 December 2016.

AT responded, defending the termination of the arbitral proceedings, given the verification of the tribunal's lack of competence or, should that not be the case, the dismissal of the claim.

The meeting referred to in Article 18º of RJAT was dispensed with, given the nature of the subject matter contained in the case file.

The Arbitral Court is regularly constituted and is materially competent, in accordance with subsection a) of article 2º(1) of RJAT.

The parties have legal standing and capacity, are legitimate and are duly represented (Article 4º, and Article 10(2) of RJAT and Article 1º of Ordinance No. 112/2011, of 22 March).

The proceedings are not subject to nullities, and the exception raised by the Respondent will be examined as a priority.

II. STATEMENT OF FACTS

Based on the elements in the case file, the following facts are considered proven:

A) On 5 August 2013, the Claimant acquired the real property located at Av. …, no. …, …, ..., registered in the urban property registry of the parish of … and … under article U-…-…;

B) The said real property was acquired by the Claimant exclusively for rental for permanent housing;

C) The identified real property benefited from IMT and IS exemption upon acquisition by the Claimant under article 8º(7) subsection a) and article 8º(8) of the legal regime of FIIAHs;

D) On 27 July 2016, the Claimant requested the assessment of IMT and IS for the identified property, in the amount of €31,196.75 and €4,036.00, respectively;

E) The assessment deeds in question were based on the fact that the real property was given a purpose different from rental for permanent housing, namely its sale;

F) The assessment deeds in question were paid by the Claimant on 28 July 2016.

Taking into account the positions assumed by the parties, in light of Article 110º(7) of CPPT, and the documentary evidence attached to the case file, the above-listed facts are considered proven, insofar as they are relevant to the decision.

III. LEGAL MATTERS

A – POSITIONS OF THE PARTIES

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

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

  • In its Article 8º (Tax regime), the tax regime applicable to FIIAHs was established (hereinafter this regime will be abbreviated as "Tax Regime of FIIAHs");

  • With regard to the Municipal Tax on Onerous Transfers of Real Estate (hereinafter "IMT"), the Tax Regime of FIIAHs established the following in paragraph 7 of the aforementioned Article 8º (Tax regime):

"7 – The following are exempt from IMT:

a) The acquisitions of urban real property or autonomous portions of urban real property intended exclusively for rental for permanent housing, by the investment funds referred to in paragraph 1;

b) The acquisitions of urban real property or autonomous portions of urban real property intended for own and permanent housing, resulting from the exercise of the purchase option referred to in paragraph 3 of Article 5º by tenants of real properties that are part of the assets of the investment funds referred to in paragraph 1."

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

"14 - For purposes of paragraphs 6 to 8, urban real properties are deemed to be intended for rental for permanent housing whenever they are subject to a rental contract for permanent housing within three years from the date they became part of the fund's assets, with the taxpayer required to communicate and provide proof to AT of such effective rental, within 30 days following the end of the said period.

15 - When the real properties have not been subject to a rental contract within the three-year period provided for in the preceding paragraph, the exemptions provided for in paragraphs 6 to 8 shall cease to have effect, in which case the taxpayer must request AT, within 30 days following the end of the said period, for the assessment of the respective tax.

16 - If the real properties are sold, except in the cases provided for in Article 5º, or if the FIIAH is subject to liquidation, before the period provided for in paragraph 14 has elapsed, the taxpayer must likewise request AT, prior to the sale of the real property or the liquidation of the FIIAH, for the assessment of the tax due in accordance with the preceding paragraph."

  • Law No. 83-C/2013, of 31 December (State Budget Law for 2014) further established in its Article 236º (Transitional provision within the scope of the special regime applicable to FIIAHs and SIIAHs) the following transitional regime:

"1 - The provisions of paragraphs 14 to 16 of Article 8º of the special regime applicable to FIIAHs and SIIAHs, approved by Articles 102º to 104º of Law No. 64-A/2008, of 31 December, shall apply to real properties that have been acquired by FIIAHs as from 1 January 2014.

2 - Without prejudice to the provision of the preceding paragraph, the provisions of paragraphs 14 to 16 of Article 8º of the special regime applicable to FIIAHs and SIIAHs, approved by Articles 102º to 104º of Law No. 64-A/2008, of 31 December, shall likewise apply to real properties that have been acquired by FIIAHs before 1 January 2014, with the three-year period provided for in paragraph 14 being counted, in such cases, from 1 January 2014."

  • Based on the provisions cited above, in particular those resulting from the amendments made to the Tax Regime of FIIAHs, the Claimant requested from the Tax Authority the assessment of IMT and Stamp Duty (hereinafter "IS") of the tax deeds for the sale of real properties by Fund B… already identified;

  • The amendments introduced by Law No. 83-C/2013, of 31 December (State Budget Law for 2014) to the Tax Regime of FIIAHs raise legitimate perplexities and questions for the managing companies of FIIAHs wishing to comply with their obligations to the Tax Authority;

  • Without exhausting the issues raised, it is considered that the amendments to the Tax Regime of FIIAHs assume particular relevance within the framework of single obligation taxes, in this case, IMT and IS when they relate to real properties that were part of the assets of FIIAHs on the date of entry into force of Law No. 83-C/2013, of 31 December (State Budget Law for 2014), that is, those covered by the aforementioned Article 236º (Transitional provision within the scope of the special regime applicable to FIIAHs and SIIAHs);

  • The Claimant, as indicated above in Article 6º, requested AT to assess IMT and IS of tax deeds in light of the amendments introduced to the Tax Regime of FIIAHs;

  • These tax deeds concerned urban real property that was part of the assets of the Montepio Rental Fund on the date of entry into force of Law No. 83-C/2013, of 31 December (State Budget Law for 2014), that is, those covered by the aforementioned Article 236º (Transitional provision within the scope of the special regime applicable to FIIAHs and SIIAHs);

  • The Claimant believes that the assessments are invalid due to violation of the provisions of Article 103º (Tax System), paragraph 3, of the Constitution of the Portuguese Republic and should, consequently, be declared null and void;

  • In fact, the fact subject to taxation is, both for IMT and IS purposes, the acquisition of the ownership of the relevant real properties by Fund B… and the exemptions from IMT and IS were not, on the date they entered the assets of Fund B…, conditioned on the verification of any subsequent facts or circumstances, nor subject to any regime of expiry;

  • Since no facts or circumstances upon which the expiry of the exemption granted depended were not legally provided for at the moment of recognition of the exemption, it is manifest that the subsequent imposition of such facts or circumstances to exemptions crystallized in the legal tax order of the Claimant is unconstitutional, in violation of the principle of non-retroactivity of tax law, enshrined in Article 103º (Tax System), paragraph 3, of the Constitution of the Portuguese Republic;

  • Considering that the principle of fiscal non-retroactivity constitutes a fundamental right, endowed with the legal regime protective of this right, its disregard results in the nullity of the deed, in this case, the nullity of the Assessments;

  • In the alternative, should the defect (illegality) of the Assessments result in their voidability (and not nullity), the Assessments should be annulled accordingly, in accordance with Articles 10º(1) subsection a) of RJAT and Article 102º(1) subsection a) of the Code of Tax Procedure and Process.

For its part, AT alleges, in summary, the following:

  • The Arbitral Court has no competence to assess or declare the constitutionality or unconstitutionality of Article 236º of Law 83-C/2013, of 31 December, in the abstract, as essentially requested by the Claimant;

  • The competence for abstract review of legality and constitutionality is reserved to the Constitutional Court as established in Article 281º of the Constitution;

  • AT considers that the Arbitral Court is incompetent to conduct an abstract review, whether of legality or constitutionality, of Article 236º of Law 83-C/2013, of 31 December, with the material incompetence exception being verified.

  • Being a normative act emanating from the Parliament in the typical form of a legislative act, the Court should always declare the absolution of the Respondent from the proceedings, taking into account the exception of passive illegitimacy demonstrated, in accordance with Articles 278º(1) subsection d) and 576º(1) and (2) of the Code of Civil Procedure, applicable pursuant to Article 29º(1) subsection e) of RJAT.

  • Even if this were not the case, which for purposes of mere academic hypothesis is admitted, AT considers that, at the date of creation of the tax regime applicable to FIIAHs, the exemptions from IMT and IS required, respectively: (i) that the acquisition of the real properties was intended exclusively for "rental for permanent housing" and, (ii) that the transfer concerned "real properties intended for permanent housing that occurs as a result of the conversion of the right of property of such real properties into a right of rental over them, as well as with the exercise of the purchase option provided for in paragraph 3 of Article 5º".

  • In the case at hand, the real property was not given the purpose provided for in the law, namely the commitment to rental.

  • AT considers that Article 236º of Law 83-C/2013, of 31 December, which approved the state budget for 2014 introduced a new regime of expiry of the exemptions provided for in paragraphs 7, subsection a) and 8 of Article 8º of the Tax Regime of Closed Real Estate Investment Fund for Residential Rental (FIIAH) and not merely a densification of the criterion previously provided for in the law.

  • And, following this understanding, in our view erroneous, AT considers that there is a violation of the principle of non-retroactivity of tax law constitutionally established. Let us see,

  • The FIIAH was introduced by Law No. 64-A/2008, of 31 December (Law that approved the Budget for 2009) with the objective of supporting people with difficulty in paying the monthly installments of loans relating to home purchase.

  • Under this regime, owners sell their home to the FIIAH and enter into a rental contract with it with a purchase option for the real property, that is, owners sell and rent the real property with a right of repurchase.

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

  • The new law does not alter the prerequisites, the conditions of attribution and recognition of the fiscal benefit of exemption from IMT and IS, there being only the legal provision of the time and manner of fulfillment of a previously established legal requirement.

  • Wherefore, there is no situation of retroactivity of tax law in the case at hand, but, even if that were not the case, the Constitutional Court has come to understand, in Decisions Nos. 11/83 and 66/84 and 141/85 that, although a radical prohibition of retroactive taxes cannot be drawn from the Constitution, this should be considered constitutionally forbidden when such retroactivity were "arbitrary and oppressive and violated "intolerably the legal security and the confidence that persons have the obligation (and also the right) to place in the legal order that governs them".

  • All things considered and weighed, it is manifest that, from the outset of the regime, the fiscal benefits in question applicable to FIIAHs always depended on the allocation of the real properties to rental for permanent housing.

B - EXCEPTIONS RAISED

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

AT alleges in this regard that the Court is incompetent to conduct an abstract review of the constitutionality of Article 236º of Law No. 83-C/2013, of 31 December, and in this context the Respondent is a party without passive legitimacy.

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

Since this Court has competence to conduct a concrete successive review of the constitutionality[2] of Article 236º of Law No. 83-C/2013, of 31 December, the exceptions raised are considered unfounded.

C – OF THE CLAIM

In light of the foregoing, regarding the position of the Parties and the arguments presented, to determine whether the assessment deeds of IMT and IS sub judice are or are not illegal due to violation of the provisions of Article 103º(3) of the Constitution, it will be necessary to verify what interpretation should be made of Article 236º of Law No. 83-C/2013, of 31 December.

To do so, it is important to take into account the provisions of Article 11º of the General Tax Law (LGT), according to which the interpretation of tax law should be carried out taking into account the general principles of interpretation.

The general principles of interpretation are established in Article 9º of the Civil Code (CC), in the following terms:

"1. Interpretation should not be confined to the letter of the law, but should reconstruct from the texts the legislative intent, taking especially into account the unity of the legal system, the circumstances under which the law was enacted and the specific conditions of the time in which it is applied.

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

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

In accordance with those principles, let us then see what tax regime was applicable to acquisitions of urban real property or autonomous portions of urban real property intended exclusively for rental for permanent housing, by FIIAHs and SIIAHs, before the amendments provided for in Article 236º of the State Budget Law 2014 were introduced.

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

"Article 8º

Tax Regime

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

2 - The following are exempt from Personal Income Tax (IRS) and IRC the income relating to participation units in the investment funds referred to in the preceding paragraph, paid or made available to their respective holders, whether by distribution or reimbursement, excluding the positive balance between capital gains and losses resulting from the sale of participation units.

3 - The following are exempt from IRS the capital gains resulting from the transfer of real properties intended for own housing in favor of the investment funds referred to in paragraph 1, which occurs as a result of the conversion of the right of property of such real properties into a right of rental.

4 - The capital gains referred to in the preceding paragraph shall be taxed, under general rules, should the taxpayer terminate the rental contract or not exercise the purchase option right provided for in paragraph 3 of Article 5º, with suspension of the limitation periods and prescription periods for purposes of assessment and collection of IRS, until the end of the contractual relationship.

5 - The amounts borne by the tenants of the real properties of the investment funds referred to in paragraph 1 as a result of the conversion of a right of property of a real property into a right of rental are deductible from the tax liability, within the terms and limits set forth in subsection c) of Article 85º(1) of the IRS Code.

6 - The following are exempt from Municipal Property Tax (IMI), while they remain in the portfolio of the FIIAH, the urban real properties intended for rental for permanent housing that are part of the assets of the investment funds referred to in paragraph 1.

7 - The following are exempt from IMT:

a) The acquisitions of urban real property or autonomous portions of urban real property intended exclusively for rental for permanent housing, by the investment funds referred to in paragraph 1;

b) The acquisitions of urban real property or autonomous portions of urban real property intended for own and permanent housing, resulting from the exercise of the purchase option referred to in paragraph 3 of Article 5º by tenants of real properties that form part of the assets of the investment funds referred to in paragraph 1.

8 - The following are exempt from stamp duty all deeds performed, provided they are connected to the transfer of urban real properties intended for permanent housing that occurs as a result of the conversion of the right of property of such real properties into a right of rental over them, as well as with the exercise of the purchase option provided for in paragraph 3 of Article 5º

9 - Exempt from supervision fees are the managing entities of FIIAHs insofar as exclusively concerns the management of funds of this nature.

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

11 - The obligations provided for in Article 119º and in Article 125º(1) of the IRS Code must be fulfilled by the managing or registering entities.

12 - Should the requirements referred to in paragraph 1 cease to be met, the application of the regime provided for in this article ceases, with the regime provided for in Article 22º of the Tax Incentives Statute becoming applicable, with the income of the investment funds referred to in paragraph 1 which, at that date, have not yet been paid or made available to their respective holders being taxed autonomously, at the rates provided for in Article 22º of the same act, plus compensatory interest.

13 - The managing entities of the investment funds referred to in paragraph 1 are jointly and severally liable for the tax debts of the funds whose management is their responsibility."

From the above description, it results, with relevance for the assessment of the assessment deeds sub judice, that "The acquisitions of urban real property or autonomous portions of urban real property intended exclusively for rental for permanent housing, by the investment funds referred to in paragraph 1" are exempt from IMT and IS.

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

Therefore, had there been no legislative amendment to Article 8º, the exemptions from IMT and IS in question would only be maintained, insofar as the legal conditions for their application referred to in the preceding paragraph were maintained.

It is not understood, therefore, how it can be argued that the exemptions from IMT and IS in question were not, at that date, conditioned to the verification of any subsequent facts or circumstances, nor subject to any regime of expiry.

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

Now, as it results from the facts ascertained that the assessment deeds in question concern a real property that was sold, it is verified that in light of the legal regime of FIIAHs established ab initio, the exemption from IMT and IS expired, since the purpose of the real property ceased to be exclusively rental for permanent housing.

Taking into account that the assessment deeds of IMT and IS, now in question, have as their legal basis the provisions of Article 34º(1) and (2) of the IMT Code and the provisions of Article 8º(7) and (8) of the Tax Regime of FIIAHs, in the version in force on the date of acquisition of the real property by the Fund, the assessment deeds in question are legal, since the exemption granted expired with the sale of the real property, given the change in the purpose of the real property, a prerequisite of the fiscal benefit attributed.

The issue raised by the Claimant regarding the retroactivity or not of the norms introduced by Article 236º of Law No. 83-C/2013, of 31 December, is therefore absolutely irrelevant for assessing the legality of the assessment deeds sub judice, in this specific case.

In fact, the State Budget Law 2014 added to Article 8º paragraphs 14 to 16, in the following terms:

"14 - For purposes of paragraphs 6 to 8, urban real properties are deemed to be intended for rental for permanent housing whenever they are subject to a rental contract for permanent housing within three years from the date they became part of the fund's assets, with the taxpayer required to communicate and provide proof to AT of such effective rental, within 30 days following the end of the said period.

15 - When the real properties have not been subject to a rental contract within the three-year period provided for in the preceding paragraph, the exemptions provided for in paragraphs 6 to 8 shall cease to have effect, in which case the taxpayer must request AT, within 30 days following the end of the said period, for the assessment of the respective tax.

16 - If the real properties are sold, except in the cases provided for in Article 5º, or if the FIIAH is subject to liquidation, before the period provided for in paragraph 14 has elapsed, the taxpayer must likewise request AT, prior to the sale of the real property or the liquidation of the FIIAH, for the assessment of the tax due in accordance with the preceding paragraph."

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

The norm questioned by the Claimant establishes the following:

"Article 236º

Transitional Provision within the Scope of the Special Regime Applicable to FIIAHs and SIIAHs

1 - The provisions of paragraphs 14 to 16 of Article 8º of the special regime applicable to FIIAHs and SIIAHs, approved by Articles 102º to 104º of Law No. 64-A/2008, of 31 December, shall apply to real properties that have been acquired by FIIAHs as from 1 January 2014.

2 - Without prejudice to the provision of the preceding paragraph, the provisions of paragraphs 14 to 16 of Article 8º of the special regime applicable to FIIAHs and SIIAHs, approved by Articles 102º to 104º of Law No. 64-A/2008, of 31 December, shall likewise apply to real properties that have been acquired by FIIAHs before 1 January 2014, with the three-year period provided for in paragraph 14 being counted, in such cases, from 1 January 2014."

Given that the transitional norm referred to concerns the provisions of paragraphs 14 to 16 of Article 8º, the provision of which is inapplicable to the present situation, the discussion of the retroactivity of the norm in question has no place in the present case.

IV. DECISION

In view of the foregoing, this Arbitral Court decides:

A) To dismiss entirely the exception of incompetence and passive illegitimacy raised by the Respondent;

B) To dismiss entirely the claim for nullity and annulment of the assessment deeds of IMT and IS identified;

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

V. VALUE OF THE PROCEEDINGS

In accordance with the provisions of Article 306º(2) of the Code of Civil Procedure, Article 97º-A(1)(a) of CPPT and Article 3º(2) of the Costs Regulation in Tax Arbitration Proceedings, the value of the claim is set at €35,232.75.

VI. COSTS

In accordance with the provisions of Articles 12º(2) and 22º(4), both of RJAT, and Article 4º(4) of the Costs Regulation in Tax Arbitration Proceedings, the value of the arbitration fee is set at €1,836, in accordance with Table I of the aforementioned Regulation, to be borne by the Claimant.

Notify.

Lisbon, 13 February 2017

The Arbitrator

Magda Feliciano

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

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

[2] Cf. Article 25º(a) of RJAT.

Frequently Asked Questions

Automatically Created

What happens to IMT and Stamp Tax exemptions when a FIIAH fund sells a property originally acquired for permanent rental housing?
When a FIIAH fund sells a property originally acquired for permanent rental housing, the IMT and Stamp Tax exemptions initially granted under Article 8(7) of Law 64-A/2008 may be revoked if the sale occurs before the property has been subject to a rental contract for permanent housing for three years. According to Article 8(16) added by Law 83-C/2013, if the property is sold before the three-year period elapses, the taxpayer must request the Tax Authority to assess the previously exempted taxes within 30 days prior to the sale. This represents a conditional exemption regime where the initial tax benefit is subject to subsequent compliance with destination requirements.
How does Article 236 of Law 83-C/2013 affect IMT and IS exemptions granted to FIIAH real estate investment funds?
Article 236 of Law 83-C/2013 establishes crucial transitional provisions affecting FIIAH exemptions. Paragraph 1 applies the new exemption conditions (paragraphs 14-16 of Article 8) to properties acquired by FIIAHs from 1 January 2014 onwards. Paragraph 2 extends these conditions to properties acquired before 1 January 2014, but with a modified three-year period that begins counting from 1 January 2014 rather than the actual acquisition date. This transitional regime effectively subjected previously granted exemptions to new conditions, requiring fund managers to either rent these properties for permanent housing within three years from 1 January 2014 or request tax assessment if the properties were sold or not rented within this timeframe.
Can the CAAD arbitral tribunal review liquidation acts related to IMT and Stamp Tax on properties held by FIIAH and SIIAH?
CAAD's jurisdiction over IMT and Stamp Tax liquidation acts related to FIIAH properties depends on the nature of the act being challenged. Under Article 2(1)(a) of the RJAT (Decree-Law 10/2011), CAAD has material competence to review tax acts. However, the Tax Authority raised a jurisdictional objection arguing that the tribunal lacks competence, which the arbitral court identified as requiring priority examination. The case involves single-obligation taxes (IMT and IS) where the assessment was requested by the taxpayer itself pursuant to Article 8(16) of the FIIAH regime. The jurisdictional question centers on whether self-requested assessments following exemption revocation constitute reviewable administrative acts or mere tax compliance procedures, an issue the decision addresses in its analysis of procedural exceptions.
What are the conditions for maintaining IMT and IS tax exemptions on properties acquired by FIIAH funds under the permanent rental housing regime?
To maintain IMT and IS exemptions on properties acquired by FIIAH funds under the permanent rental housing regime, several cumulative conditions must be met according to Article 8 of Law 64-A/2008 as amended by Law 83-C/2013. First, properties must be urban real estate or autonomous portions intended exclusively for rental for permanent housing (Article 8(7)(a)). Second, properties must be subject to a rental contract for permanent housing within three years from when they became part of the fund's assets (Article 8(14)). Third, the taxpayer must communicate and provide proof to the Tax Authority of such effective rental within 30 days following the end of the three-year period. Fourth, properties cannot be sold (except to tenants exercising purchase options under Article 5) or the FIIAH liquidated before the three-year rental period is completed, as this triggers immediate exemption revocation and tax assessment obligations under Article 8(16).
What is the procedure for challenging IMT and Stamp Tax liquidation acts before the CAAD tax arbitration tribunal in Portugal?
To challenge IMT and Stamp Tax liquidation acts before CAAD, taxpayers must follow the procedure established in Decree-Law 10/2011 (RJAT). First, file a request for constitution of a single arbitral court under Articles 2 and 10 of RJAT, identifying the contested acts and their amounts. The request must be submitted within the legal deadline and comply with formal requirements including legal standing, capacity, and proper representation (Article 4 and Article 10(2) of RJAT, Ordinance 112/2011). The CAAD President accepts the request and notifies the Tax Authority, which then responds defending its position or raising procedural exceptions. An arbitral court is constituted (in this case on 15 December 2016), and parties may be called to a hearing under Article 18 of RJAT, though this can be dispensed with depending on case nature. The tribunal examines competence, legitimacy, and procedural validity before addressing substantive issues, with exceptions like lack of competence examined as a priority matter before merits.