Process: 682/2017-T

Date: July 20, 2018

Tax Type: IMI

Source: Original CAAD Decision

Summary

CAAD Process 682/2017-T addressed a challenge to an AIMI (Additional Tax on Municipal Property) assessment of €41,264.35 issued to A... Investments, S.A. for the 2017 tax year. The claimant, a real estate company owning multiple urban properties in its portfolio, contested the assessment on three grounds: error in factual and legal assumptions, partial miscalculation regarding a specific property valued at €399.84, and constitutional violation. The company argued that Articles 135-A and 135-B of the IMI Code violated the constitutional principle of equality. The case involved properties registered in the urban property matrix as allocated to housing, including properties under an exploitation concession contract with a tourism company for hotel and restaurant operations, plus a plot designated for construction support facilities. The arbitral tribunal, constituted as a singular tribunal under RJAT (Decree-Law 10/2011), established jurisdiction over the matter despite the constitutional question raised. The claimant had paid the contested amount in September 2017 before filing the arbitration request in December 2017. The case proceeded without an evidentiary hearing, as both parties consented to waive the oral proceedings, with the tribunal determining the matter involved exclusively questions of law. This decision is significant for corporate real estate holders subject to AIMI, as it addresses both the calculation methodology for companies holding urban property assets and the constitutional challenges that can be raised through administrative arbitration regarding this additional municipal tax.

Full Decision

ARBITRAL DECISION

Claimant: A... INVESTMENTS, S.A.

Respondent: Tax and Customs Authority

I – REPORT

The Parties and Constitution of the Arbitral Tribunal

A..., S.A., with the NIPC ..., with registered office in ..., site of ..., ..., …, …-… ... (hereinafter referred to as the "Claimant"), requested the constitution of a singular Arbitral Tribunal, pursuant to the provisions of Article 2, No. 1, subparagraph a) and Article 10, Nos. 1 and 2 of Decree-Law No. 10/2011, of 20 January, hereinafter referred to as "RJAT", and Regulatory Order No. 112-A/2011, of 22 March, for the purpose of challenging assessment No. 2017 ..., for the additional municipal property tax (AIMI), relating to the year 2017, in the amount of €41,264.35, with payment date in September 2017, seeking its annulment.

The request for constitution of the Arbitral Tribunal was submitted by the Claimant on 27-12-2017, was accepted by the Honorable President of CAAD on 28-12-2017, and notified to the Tax and Customs Authority on 29-12-2017. The Claimant opted not to appoint an arbitrator, whereupon, pursuant to the provisions of No. 1 of Article 6 of the RJAT, the undersigned was appointed by the Deontological Council of the Administrative Arbitration Centre on 14-02-2018 as arbitrator to constitute the singular Arbitral Tribunal. Thus, in accordance with the provisions of subparagraph c), No. 1 of Article 11 of the RJAT, as amended by Article 228 of Law No. 66-B/2012, of 31 December, the Arbitral Tribunal was constituted on 06-03-2018. On the same date, an arbitral order was issued requiring the Tax and Customs Authority (AT) to submit a response within the legal period, in accordance with the provisions of Nos. 1 and 2 of Article 17 of the RJAT.

The Respondent AT submitted its response on 16-04-2018. On 25-04-2018, the arbitral tribunal issued an arbitral order requiring the parties to pronounce on the possible waiver of holding the meeting provided for in Article 18 of the RJAT, considering that the disputed issue appears to be exclusively a matter of law. In the absence of a response from the parties within the fixed deadline, the arbitral tribunal issued the following order: "Considering that the silence of the parties regarding the content of the arbitral order of 25-04-2018 implies their consent to the waiver of holding the meeting provided for in Article 18 of the RJAT; considering that no witness evidence is required and that the matter in question in the proceedings is exclusively one of law, no utility is seen in holding the meeting provided for in Article 18 of the RJAT.

Accordingly, pursuant to the principles of autonomy of the Arbitral Tribunal in the conduct of proceedings, speed, simplification, and procedural informality (Articles 19, No. 2 and 29, No. 2 of the RJAT), the holding of the meeting provided for in Article 18 is waived, and it is determined that the proceedings shall continue with optional written pleadings for a period of 10 days, with the period for the Claimant's pleadings commencing upon notification of this order and with the period for the AT's pleadings commencing upon notification of the submission of the Claimant's pleadings.

The date of 29-06-2018 is set for the rendering of the arbitral decision.

The Taxpayer shall pay the subsequent arbitral fee up to the deadline for submission of written pleadings.

The parties are notified to send their procedural documents in Word format to CAAD."

The parties did not submit written pleadings. On 18-06-2018, the Claimant, in compliance with the arbitral order previously issued, submitted proof of payment of the subsequent arbitral fee. On 28-06-2018, an arbitral order was issued setting a new date for the rendering of the arbitral decision, to be issued by 20-06-2018, still within the deadline provided for in Article 21 of the RJAT, given that the date of constitution of the arbitral tribunal was on 06-03-2018.

B) THE REQUEST FORMULATED BY THE CLAIMANT

The Claimant files the present request for arbitral pronouncement, contending for the illegality of the AIMI assessment attached to the proceedings, based on error regarding the factual and legal assumptions, with the consequent condemnation of AT to restitution of the amount of tax paid plus compensatory interest.

Subsidiarily, it requests the partial annulment of the assessment and restitution of the amount of €399.84 relating to the challenged assessment, with the consequent refund of this amount plus compensatory interest. Further subsidiarily, it requests that Articles 135-A and 135-B of the IMI Code be disapplied due to manifest unconstitutionality for violation of the constitutional principle of equality.

C – THE RESPONSE OF THE RESPONDENT

The respondent AT, duly notified for this purpose, submitted a response, which is given as reproduced, contending for the legality of the challenged assessment. It did not attach the administrative file to the proceedings as it does not exist.

II - PROCEDURAL REQUIREMENTS

The Arbitral Tribunal is properly constituted and is materially competent, pursuant to Article 2, No. 1, subparagraph a) of the RJAT.

The Parties enjoy legal personality and capacity, are legitimate, and are legally represented (cf. Articles 4 and 10, No. 2 of the RJAT and Article 1 of Regulatory Order No. 112/2011, of 22 March).

The proceedings do not suffer from defects that would invalidate them.

In view of the documentary evidence submitted to the proceedings by the claimant, it is necessary to establish the material facts relevant to understanding the decision, which is set out as follows.

III – Factual Matter

Proven Facts

As relevant factual matter, this tribunal accepts the following facts as established:

  • The Claimant is a real estate company whose corporate purpose includes the purchase and sale of real property;

  • The Claimant is the owner of a set of properties that constitute its real estate portfolio;

  • The Claimant was notified of the AIMI assessment, issued in June 2017, with payment date in September 2017, in the total amount of €41,264.35;

  • At issue is an assessment relating to the Additional Municipal Property Tax (AIMI), issued with number 2017 ..., relating to the year 2017 and to urban properties Matrix Article No. …, …, …, …, …, …, …, …, …, … of the Parish of ..., municipality of ..., registered in the urban property matrix as allocated to housing;

  • At issue is also the assessment made on the property described in the property matrix with number ..., designated as "Land for Construction - Plot of land intended for support facility", located in ...;

  • As evidenced by document No. 3 attached to the arbitral request, the requesting company entered into an Exploitation Concession Contract with Company B… (Portugal), by which it ceded to this company the tourism and hotel exploitation of the urban properties designated as "Village B2...", "Hotel B1..." and the restaurant "C...", identified in the contract as corresponding to properties owned by A..., located in ..., ..., ... (all with omitted registration in the matrix at the time of execution of the contract);

  • The Claimant made payment of the AIMI amount in question on 19-09-2017, as shown in the proof attached to the proceedings together with the tax assessment (doc1 attached to the arbitral request);

  • On 27-12-2017, the Claimant filed the present arbitral request.

FACTS NOT PROVEN

With relevance to the decision, there are no facts that should be considered as not proven.

GROUNDS FOR THE PROVEN FACTS

The facts described were taken as proven based on the documentary evidence that the claimant submitted with the arbitral request, as well as that contained in the attachment to the AT's Response submitted to the proceedings.

IV – ON THE LAW: grounds for the decision on the merits

Having established the factual matter, it is necessary to address the legal question raised by the Claimant.

In summary, the legal questions raised by the Claimant are as follows:

1st) The meaning and scope of the legal regime introduced by Law No. 42/2016 of 28 December, whose legislative intent, according to the claimant, clearly exempts properties allocated to economic activities of owners; thus, real estate companies and the real property that forms the basis of their economic activity of exploitation are not covered by the incidence of AIMI, regardless of the housing purpose or other purposes to which the properties are destined;

2nd) Subsidiarily, the assessment regarding the property described as land for construction would in any case be improper and illegal;

3rd) Further subsidiarily, the claimant alleges the unconstitutionality of the legal regime of AIMI.

Given this, it should be noted that, as the Claimant indicates an order of subsidiarity in the attribution of defects to the challenged assessment, this order must be observed in its appraisal, as required by subparagraph b) of No. 2 of Article 124 of the CPPT, applicable to arbitral tax proceedings by virtue of the provisions of Article 29, No. 1, subparagraph c), of the RJAT.

It is necessary to decide.

1st Question: ON THE SCOPE OF INCIDENCE OF AIMI

The Additional Municipal Property Tax (AIMI) was created by Article 219 of Law No. 42/2016, of 28 December, which approved the State Budget for 2017, which resulted in Articles 135-A to 135-K, added to the IMI Code. These are therefore the provisions that establish its respective legal regime of AIMI.

Article 135-A of the IMI Code defines the subjective scope of incidence of AIMI as follows:

Article 135-A

Subjective incidence

1 – Passive subjects of the additional municipal property tax are natural or legal persons who are owners, usufructuaries, or surface rights holders of urban properties situated in Portuguese territory.

2 – For the purposes of No. 1, any structures or centers of collective interests without legal personality that appear in the matrices as passive subjects of the municipal property tax are treated as legal persons.

3 – The status of passive subject is determined in accordance with the criteria established in Article 8 of this Code, with the necessary adaptations, taking as reference the date of 1 January of the year to which the additional municipal property tax relates.

4 – Municipal enterprises are not passive subjects of the additional municipal property tax.

For its part, Article 135-B defines the objective incidence of AIMI, establishing the following:

Article 135-B

Objective incidence

1 - The additional municipal property tax is levied on the sum of the fiscal property values of urban properties situated in Portuguese territory of which the passive subject is the owner.

2 - Excluded from the additional municipal property tax are urban properties classified as "commercial, industrial or for services" and "other" in accordance with subparagraphs b) and d) of No. 1 of Article 6 of this Code.

There is no doubt, given the letter of the law, that the provision of No. 2 of this Article 135-B excludes from the incidence of AIMI "urban properties classified as 'commercial, industrial or for services' and 'other'" in accordance with subparagraphs b) and d) of No. 1 of Article 6 of the IMI Code. This means that urban properties allocated to housing purposes and land for construction are covered by the additional IMI, as defined in Article 6.

Article 6 of the IMI Code classifies the types of urban properties, establishing the following:

Article 6

Types of urban properties

1 – Urban properties are divided into:

 a) Residential;

 b) Commercial, industrial or for services;

c) Land for construction;

d) Other.

2 – Residential, commercial, industrial or for services are buildings or constructions, for such purpose, licensed or, in the absence of a license, which have as their normal destination each of these purposes.

3 – Land for construction shall be understood as land situated within or outside an urban settlement, for which a license or authorization has been granted, prior notice admitted, or favorable prior information issued for a subdivision or construction operation, and also those that have been so declared in the title of acquisition, except for land in which the competent entities prohibit any of those operations, namely those located in green zones, protected areas or which, in accordance with municipal spatial planning plans, are allocated to public spaces, infrastructure, or equipment.

4 – The provision of subparagraph d) of No. 1 encompasses land situated within an urban settlement that is neither land for construction nor covered by the provision of No. 2 of Article 3, and also buildings and constructions licensed or, in the absence of a license, which have as their normal destination other purposes than those referred to in No. 2, and also those of the exception in No. 3."

From the delimitation of incidence of AIMI contained in Articles 135-A and 135-B of the IMI Code, the following conclusions are drawn:

  • Passive subjects of the additional municipal property tax (AIMI) are natural or legal persons who are owners, usufructuaries, or surface rights holders of urban properties situated in Portuguese territory. (Cf.: Article 135-A, No. 1, IMI Code);

  • Corroborating the provision of Article 135-A, No. 1, the legislator establishes in Article 135-B and No. 2 of Article 135-B, both of the IMI Code, that excluded from the additional municipal property tax are urban properties classified as "commercial, industrial or for services" and "other" in accordance with subparagraphs b) and d) of No. 1 of Article 6 of this Code.

In the case of the present proceedings, it was proven that the properties identified in the AIMI assessment appeared, at the time of the tax event, in the urban property matrix as urban and residential, with the exception of the property corresponding to Article ..., described as "Land for Construction - Plot of land intended for support facility". Therefore, we are not, at least according to the letter of the law, within the scope of exclusion from objective incidence, since none of the properties is characterized as an urban property classified as "commercial, industrial or for services", nor falls within the classification of "other". Thus, insofar as the legislator's thinking expressed in the letter of the law allows us to ascertain, where urban properties allocated to housing and land for construction are in question, these are not excluded from AIMI taxation.

Nevertheless, following what has been alleged in the proceedings by the claimant, proper account must be taken, beyond the letter of the law, of the legislator's purpose in introducing AIMI into our legal fiscal system. The legislator intended to create a tax on real estate wealth, excepting rural properties, due to their low economic return, and urban properties allocated to economic activities of relevance for the development of the country's economy (properties allocated to commercial, industrial, and service purposes). For this reason, he did not subject them to AIMI taxation.

The legislative concern to "avoid the impact of this tax on economic activity" is evident in the preambles of the State Budget Bill for 2017. The reasons stated there are quite clear to support the exclusion from the scope of incidence of urban properties classified as "industrial", or licensed for tourism activity (provided that its purpose is properly declared and proven), as well as by the deduction from the taxable amount of "€600,000.00, when the passive subject is a legal person with agricultural, industrial or commercial activity, for real property directly allocated to its operation."

Given this, it is observed that in the version that came to be approved, non-incidence was defined solely and exclusively based on the types of properties indicated in Article 6 of the IMI Code, without any reference to whether or not allocated to the operation of legal persons. In other words, it was not based on the activity to which the properties are allocated that the exclusion of incidence came to be defined, since in the approved version non-incidence was determined solely based on the types of properties indicated in Article 6 of the IMI Code, without any reference to whether or not allocated to the operation of legal persons. The legislator's choice must therefore be respected. Therefore, the claimant's argument on this matter is not valid, as there is no legal support for concluding that residential properties and land for construction allocated to the operation of legal persons are not relevant to the incidence of AIMI.

Moreover, there is no reason to conclude that the legislator did not know how to express its thinking in adequate terms, as must be presumed by virtue of the provision of Article 9, No. 3, of the Civil Code. On the contrary, the matter was deliberated, as results from the change of position from the initial moment to the moment of approval of the law.

In the absence of other elements, "the interpreter should in principle choose that meaning which best and most immediately corresponds to the natural meaning of the verbal expressions used, and in particular to their technical-legal meaning, in the supposition (not always exact) that the legislator knew how to express correctly its thinking."

Therefore, the argument that all real property in question is allocated to the activity of the claimant, even though through an exploitation concession contract, while true, does not preclude the incidence of AIMI, because the legislator so determined. Therefore, the subsidiary request, according to which the holding of real property allocated to economic activities would not be subject to AIMI, is not valid. In fact, as with the claimant itself, we are dealing with a tax on real estate wealth from which only properties with commercial, industrial, service, and other purposes were excluded.

In the case of the present proceedings, given that the residential nature of the properties is proven and in light of what has been stated, it cannot be concluded, without more, that residential urban properties subject to AIMI are excluded from taxation, therefore the claimant's request on this matter is not valid.

2nd Question: Subsidiary request relating to the alleged illegality of AIMI taxation regarding land for construction

The Claimant essentially understands that Article 135-B of the IMI Code should be interpreted in the sense that the fiscal value of land for construction not intended for housing is not relevant for AIMI purposes, in keeping with the legislative choice to exclude from incidence properties classified as "commercial, industrial or for services". It further argues that the application of AIMI to land for construction is incompatible with the constitutional and legal principle of equality, deriving from Articles 13 and 104, No. 3, of the CRP.

In the case of the proceedings, the land for construction, corresponding to Matrix Article No. ..., of the Parish of ..., is described as "Land for Construction - Plot of land intended for support facility". Given this description and the matter established as proven, it is concluded that this land is intended for construction and support to the confining urban properties, which are in turn allocated to housing.

Now, in light of what has been stated, and given that the tax fact chosen as an index of contributive capacity is the ownership of real estate property of value considered high, no reason is perceived that would justify this tax being excluded regarding land for construction, whether for housing or for support to confining housing. It is therefore not apparent that the subjection of this land for construction, in the concrete circumstances of the case under appraisal in the present proceedings, entails discriminatory treatment, reflected in the imposition of a duty or burden in violation of the principle of equality.

Different would be the appraisal if we were dealing with land for construction intended for commerce, industry, or services, a question that has already been appraised in arbitral tribunal proceedings constituted at CAAD, in the course of process No. 668/2017-T, cited above. Therefore, it is not concluded that the taxation of this land for construction is illegal, in the manner stated.

In light of what has been stated, it is necessary to conclude that the arbitral request is not valid, both as regards the taxation levied on residential urban properties and as regards the land for construction for support to the latter.

3rd Question: The alleged unconstitutionality of the legal regime of AIMI

Subsidiarily, the Claimant finally invokes the unconstitutionality of AIMI, on the one hand by citing the indiscriminate taxation of all land for construction, and on the other hand, the (illegal) disregard of the legal criterion of the property's allocation and the jurisprudence of the Constitutional Court regarding the taxation of land for construction under the now-defunct item 28.1 of the General Table of Stamp Tax.

The Claimant essentially argues that the AIMI taxation regime is contrary to the fundamental principle of equality, enshrined in Article 13 of the CRP, and the principle of fiscal equality and contributive capacity enshrined in Article 104, No. 3, of the CRP.

Now, as regards the question of possible unconstitutionality of the taxation of land for construction, this arbitral tribunal can only pronounce on the concrete circumstances of the case under appraisal. As we have seen, in light of all that was stated in the previous point, in the concrete case of the proceedings, no unconstitutionality is apparent. This is the question that has already been appraised in the previous point, therefore we refer to what was stated there.

As for the question of unconstitutionality due to the taxation of the substrate of an economic activity, we have also referred above to the legislator's choices in this matter. Nevertheless, in addition to what was already stated above, it must be taken into account that Article 13 of the Constitution of the Portuguese Republic proclaims the principle of equality of citizens before the law, and Article 104, No. 3, of the CRP establishes that "the taxation of property must contribute to equality among citizens." Now, being a tax on fortune or real estate property, it would be discriminatory to permit evasion of the tax through recourse to property held by legal persons specifically constituted for this purpose, under the guise of real estate companies. A different matter would result from the allocation of real property to commercial, industrial, service, or other purposes, which was deliberated by the legislator and therefore excluded from taxation. In other words, the holding of real estate property, whether by a natural person or a legal person, became subject to AIMI, under the same conditions of taxation, therefore no discriminatory, unjust, or disproportionate purpose is apparent in the current legal regime of AIMI.

Citing the jurisprudence of the Constitutional Court itself, as well stated in the arbitral decision rendered in process 668/2017-T: "the principle of equality has been uniformly understood by the Constitutional Court, as a limit on legislative discretion, does not require equal treatment of all situations, but rather implies that those in equal situations be treated equally and those in unequal situations be treated unequally, in such a way as not to create arbitrary and unreasonable discriminations, because lacking sufficient material foundation. The principle of equality does not prohibit distinctions from being established, but rather distinctions devoid of objective and rational justification."

The creation of AIMI, as a complementary tax on real estate property, aimed to introduce into taxation "a progressive element of personal basis, taxing more heavily larger property portfolios" (Report of the State Budget for 2017, page 60), is compatible with the objective that the taxation of property should contribute to equality among citizens, affirmed in No. 3 of Article 104 of the CRP, since progressivity has as a corollary, generally speaking, to impose higher taxation on those with greater contributive capacity.

On the other hand, the exclusion of taxation of properties especially suited to productive activity, namely "commercial, industrial or for services", finds constitutionally acceptable foundation in the obligation of the State to promote the increase of economic welfare, which presupposes the proper functioning of productive activities and constitutes one of its priority incumbencies within the economic sphere [Article 81, subparagraph a), of the CRP]. Furthermore, in line with what was understood in the arbitral decision of 17-03-2016, rendered in process No. 507/2015-T, it should be understood that, while the ownership of real estate property intended for housing of high value is a fairly secure index of economic comfort, superior to that of the generality of citizens, it cannot be considered that there exists a secure index of superior contributive capacity when there is ownership of rights over real property intended for the exercise of economic activities (commercial, industrial, provision of services, or similar), because they must be adequate to the functioning of the respective enterprises, and their size and correlative value are not an index of comfort. Thus, there will be constitutionally acceptable foundation for the restriction of the incidence of AIMI to residential properties and land for construction of residential properties, which came to be established in the version approved for No. 2 of Article 135-B of the IMI Code, in the interpretation adopted above."

In accordance with the cited jurisprudence, to which full adherence is given, it is concluded, in harmony, that the ownership of real estate property of high value by a natural person or by a legal person (whether real estate company, real estate fund, or other) evidences, as in relation to any owner of real property intended for housing, a special economic capacity to be able to contribute additionally to the Financial Stabilization Fund of Social Security, to which the revenue from AIMI is assigned, and which "corresponds to the objective of the government program to broaden the financing base of Social Security".

Therefore, were one to consider, as the Claimant wishes, the non-incidence of AIMI on the values of residential properties or land for construction of housing belonging to real estate companies or similar would constitute, this instead, an unjustified privileged tax treatment in relation to the generality of other owners of properties with identical characteristics, would be materially unconstitutional. Therefore, no violation of the principles of equality and contributive capacity is perceived.

In conclusion, the alleged arguments by the Claimant do not proceed, also as regards the unconstitutionality of the legal regime of AIMI, applied specifically to the passive subject and to the properties subject to the present arbitral request.

In this regard, the arbitral request as to the illegality of the AIMI assessment challenged here does not proceed, and consequently, the remaining requests formulated by the Claimant regarding the restitution of tax and payment of compensatory interest are prejudiced.

V - DECISION

In these terms, this Arbitral Tribunal decides:

  • To judge totally not valid all requests formulated by the Claimant;

  • To condemn the Claimant to payment of the costs of the proceedings.

VALUE OF THE PROCESS

The value of the process is set at €41,264.35, in accordance with Article 97-A, No. 1, a), of the CPPT, applicable by virtue 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.

COSTS

The amount of the arbitral fee is set at €2,142.00, in accordance with Table I of the Regulation of Costs in Tax Arbitration Proceedings, to be paid by the losing party, in accordance with Articles 12, No. 2, and 22, No. 4, both of the RJAT, and Article 4, No. 4, of the aforementioned Regulation.

Notify.

Lisbon, 20 July 2018

The Arbitral Tribunal,

(Maria do Rosário Anjos)

[1] In this sense, see Arbitral Decision rendered in process No. 668/2017, at www.caad.pt

[2] In this sense, see BAPTISTA MACHADO, Introduction to Law and Legitimizing Discourse, page 182.

[3] In this same sense, see Decisions of the Constitutional Court:

Frequently Asked Questions

Automatically Created

What is AIMI (Adicional ao Imposto Municipal sobre Imóveis) and how does it apply to corporate property owners in Portugal?
AIMI (Adicional ao Imposto Municipal sobre Imóveis) is an additional tax levied on municipal property in Portugal, supplementing the base IMI tax. For corporate property owners, AIMI applies to the total taxable value of urban properties owned by companies, with different rates and exemption thresholds than those applicable to individuals. Companies holding real estate portfolios are subject to AIMI regardless of whether properties are used for operational purposes, investment, or are under exploitation concession contracts. The tax is calculated based on the aggregate taxable patrimonial value (VPT) of all urban properties owned by the legal entity on January 1st of the relevant tax year, as registered in the property matrix.
Can the constitutionality of AIMI be challenged through tax arbitration at CAAD?
Yes, constitutionality challenges to AIMI can be raised through tax arbitration at CAAD (Centro de Arbitragem Administrativa), though with limitations. While arbitral tribunals cannot directly declare laws unconstitutional (this power being reserved to the Constitutional Court), they can disapply allegedly unconstitutional provisions to specific cases under Article 204 of the Portuguese Constitution. In Process 682/2017-T, the claimant subsidiarily requested disapplication of Articles 135-A and 135-B of the IMI Code for violation of the constitutional principle of equality. This approach allows taxpayers to seek relief from unconstitutional tax provisions within the arbitration framework, though the effects are limited to the specific case and do not establish binding precedent for constitutional invalidity.
What were the grounds for claiming AIMI unconstitutionality in CAAD process 682/2017-T?
The constitutionality challenge in CAAD Process 682/2017-T was based on alleged violation of the constitutional principle of equality (enshrined in Article 13 of the Portuguese Constitution) by Articles 135-A and 135-B of the IMI Code, which govern AIMI taxation. The claimant argued these provisions create unjustified differential treatment, though the specific grounds were raised as a subsidiary claim after primary arguments concerning calculation errors. The case demonstrates that while constitutional challenges are not the primary focus of tax arbitration, they can be incorporated as alternative legal grounds when challenging AIMI assessments, particularly regarding horizontal equity concerns between different categories of taxpayers or different treatment of similar property holdings.
How is AIMI calculated for companies holding real estate assets classified as urban property in Portugal?
For companies holding real estate assets classified as urban property in Portugal, AIMI is calculated by aggregating the taxable patrimonial value (valor patrimonial tributário - VPT) of all urban properties owned on January 1st of the tax year. Corporate owners face different rates than individuals: companies are subject to a 0.4% rate on the aggregate VPT exceeding €600,000, without the exemption thresholds available to individual taxpayers. The calculation includes all urban properties registered in the matrix as owned by the company, regardless of their use (residential, commercial, under concession, or designated for construction). Properties registered as 'allocated to housing' or designated as 'land for construction' are both included in the aggregate calculation base, as demonstrated in Process 682/2017-T where the assessment covered hotel properties under exploitation concession and construction support facilities.
What is the procedure for challenging an AIMI tax assessment through the CAAD arbitral tribunal?
The procedure for challenging an AIMI assessment through CAAD arbitral tribunal follows the framework established in RJAT (Decree-Law 10/2011). The taxpayer must submit a request for constitution of an arbitral tribunal, which can be a singular tribunal (single arbitrator) or collective tribunal. The challenge must be filed within the legal deadlines for administrative challenges. Upon acceptance, the CAAD President notifies the Tax Authority (AT), and an arbitrator is appointed if the claimant doesn't designate one. The tribunal is formally constituted, and AT must submit a response within the legal period. For purely legal matters, parties may waive oral hearings. The taxpayer must pay both initial and subsequent arbitral fees. In Process 682/2017-T, the timeline from request submission (December 27, 2017) to scheduled decision (July 20, 2018) illustrates the typical arbitration duration, with the tribunal enjoying procedural autonomy under principles of speed, simplification, and informality.