Process: 683/2015-T

Date: May 20, 2016

Tax Type: IMT Selo

Source: Original CAAD Decision

Summary

This CAAD arbitration decision (Process 683/2015-T) addresses whether Article 236 of Law 83-C/2013 violates the constitutional principle of prohibition of fiscal retroactivity when imposing new conditions on previously granted IMT and Stamp Tax exemptions for real estate investment funds. The applicant, a real estate investment fund, challenged IMT and Stamp Tax assessments totaling €1,791.93 on a property already in its portfolio before Law 83-C/2013 entered into force on January 1, 2014. The fund argued that exemptions recognized prior to the law's enactment could not be retroactively conditioned on new requirements, specifically the proof of permanent residential rental contracts. The Tax Authority contended that the law merely established procedural proof requirements applicable to the future, not substantive changes to exemption conditions, thus avoiding retroactivity issues. The central legal question involves interpreting Article 103(3) of the Portuguese Constitution, which prohibits retroactive application of tax laws, and determining whether imposing additional evidentiary requirements on completed taxable events constitutes impermissible retroactivity. The tribunal ruled on the competence exception raised by the Tax Authority, finding itself competent to hear the case despite constitutional law questions. This decision has significant implications for real estate investment funds that obtained IMT and Stamp Tax exemptions under the previous regime and highlights the tension between legislative changes to tax benefits and constitutional protections against fiscal retroactivity.

Full Decision

ARBITRAL DECISION

I – Report

  1. On 18.11.2015, the Applicant, A... S.A., with registered office at avenue of..., number ..., ..., Lisbon, with the tax identification number..., requested the CAAD to establish an arbitral tribunal, pursuant to Article 10 of Decree-Law No. 10/2011, of 20 January (Legal Regime for Arbitration in Tax Matters, hereinafter referred to only as "LRAT"), in which the Tax and Customs Authority is the Respondent, for the purposes of declaring null and void or, if that is not upheld, annulling the following assessments relating to the acquisition of the urban property registered in the matrix under article U-...-... located at street... , ..., ... to..., of the parish of ... :

a) Assessment of IMT, in the amount of € 1,015.93, to which corresponds the document no... .

B) Assessments of Stamp Tax, in the amount of € 776.00 to which corresponds the document no... .

The Applicant further petitions for reimbursement of the amount of the assessments, which it considers to have paid unduly, as well as the respective compensatory interest.

  1. The application for establishment of the arbitral tribunal was accepted by the Honorable President of the CAAD and notified to the Tax and Customs Authority.

Pursuant to the terms and for the purposes provided in paragraph 1, Article 6, of the LRAT, by decision of the President of the Deontological Council, duly communicated to the parties within the legally applicable time limits, the undersigned was appointed as arbitrator, and communicated to the Deontological Council and to the Center for Administrative Arbitration the acceptance of the mandate within the regularly applicable time limit.

The Arbitral Tribunal was established on 22.01.2016.

  1. Given the non-existence of any situation provided for in Article 18, paragraph 1, of the LRAT, which would have made necessary the arbitral meeting provided therein, the holding of the same was dispensed with, on the grounds of the prohibition of performing futile acts.

  2. The grounds presented by the Applicant, in support of its claim, were, in summary, as follows:

a. The property U-...-... located at street..., ..., ... to ..., registered in the urban matrix of the parish of ..., to which the tax acts in question refer, formed part of the Applicant's assets as of the date of entry into force of Law No. 83-C/2013, of 31 December.

b. The exemptions from IMT and Stamp Tax, contained, respectively, in numbers 7, subparagraph a), and 8 of Article 8 of the Tax Regime of Real Estate Investment Funds for Residential Rental, had been recognized at the request of the Applicant pursuant to Article 10 of the IMT Code, at a time prior to the entry of the property into Fund B... .

c. The taxable event is, both in the case of IMT and in the case of Stamp Tax, the acquisition of ownership of the relevant properties by Fund B..., and the exemptions from IMT and Stamp Tax, as of the date when they entered the assets of Fund B..., are not conditioned upon the subsequent occurrence of any facts or circumstances nor, likewise, subject to any regime of lapse.

d. Thus it is manifest that the imposition, subsequent to the taxable event, of any facts or circumstances conditioning the exemption is unconstitutional by violation of the principle of non-retroactivity of tax law, enshrined in Article 103, paragraph 3, of the Constitution of the Portuguese Republic.

  1. The ATA – Tax and Customs Administration, called upon to respond, contested the Applicant's claim, defending itself, in summary, with the following grounds:

By way of exception,

a. The Respondent contends that the Arbitral Tribunal is incompetent to conduct an abstract review either of the legality or of the constitutionality of Article 236 of Law 83-C/2013, of 31 December.

b. The incompetence of the Arbitral Tribunal to proceed with the abstract review of constitutionality constitutes a dilatory exception that prevents the continuation of the proceedings, leading to dismissal of the instance as to the claim at issue, in accordance with that provided in Article 576, paragraphs 1 and 2, and in Article 577-a) of the CPC, applicable by virtue of Article 29, paragraph 1-e) of the LRAT.

BY WAY OF SUBSTANTIVE REPLY

c. It is evident that from 1 January 2014 the exemption from IMT for properties integrated into the Fund for the purposes of rental was extended until 2015, however for the purposes of meeting the requirement of dedicating the properties to housing it began to be required proof of the existence of a contract for permanent residential rental.

d. It is important first to note that the law did not establish any new requirement, but merely granted a time period for compliance with that requirement, a time period which only begins after the entry into force of the new law.

e. This is not, therefore, a matter of altering the prerequisites, conditions for granting or recognition of a tax benefit, but solely and only of regulating the period of time for the purposes of proving compliance with a previously established requirement.

f. We are not in a situation of recognition of rights, but only of procedures for proving rights whose allocation is previously regulated.

g. In compliance with the constitutional principle of non-retroactivity of taxes, tax provisions apply to facts subsequent to their entry into force, in accordance with the general principle of the application of laws over time, according to which, in the absence of express assignment of retroactive effect, the law only applies to the future (Article 103, paragraph 3, of the CRP; Article 12, paragraph 1, of the LGT; Article 12, paragraph 1, of the Civil Code).

h. In fact, the legislative amendment in question does not alter the tax legal relationship, but only establishes the conditions of proof, conditions which only apply to the future.

i. Thus, there is no situation of retroactivity of tax law in the case at hand.

j. The conduct of the Respondent entity is always guided by its subordination to law, and cannot disapply a provision on the basis of its unconstitutionality, should that unconstitutionality be found to exist, which by mere academic hypothesis is conceded.

k. The application for payment of compensatory interest is therefore unfounded, as there is no error in the conduct of the respondent entity, much less an error attributable to the services, and thus the application of Article 43 of the LGT is excluded.

  1. By order of 14.04.2016, duly notified to the parties, the exception of incompetence of the arbitral tribunal raised by the Respondent was ruled unfounded.

  2. The parties submitted written arguments, having, in essence, sustained the positions already set out in their pleadings.

  3. The tribunal is materially competent and is regularly established in accordance with the LRAT.

The parties have personality and judicial capacity, are legitimate and are legally represented.

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

  1. It is necessary to resolve the following questions:

a) Whether the assessments that are the subject of these proceedings are illegal.

b) If so, whether the Applicant should be recognized as having the right to reimbursement of the taxes allegedly paid, as well as compensatory interest on such sums.

II – Relevant Factual Matter

  1. The following facts are considered proven:

  2. The Respondent proceeded, on 19.08.2015, to the following assessments relating to the acquisition by the Applicant of the urban property registered in the real property matrix under article ...-... located at street..., ..., ... to..., of the parish of...:

a) Assessment of Municipal Tax on Onerous Transfers of Real Property, in the amount of € 1,015.93, to which corresponds the document no... .

B) Assessments of Stamp Tax, in the amount of € 776.00 to which corresponds the document no ... .

  1. The property U-...-... located at street..., ..., ... to..., registered in the urban matrix of the parish of..., to which the tax acts in question refer, formed part of the Applicant's assets as of the date of entry into force of Law No. 83-C/2013, of 31 December, having been acquired for valuable consideration at a date prior thereto.

  2. The exemptions from IMT and Stamp Tax, contained, respectively, in numbers 7, subparagraph a), and 8 of Article 8 of the Tax Regime of Real Estate Investment Funds for Residential Rental, had been recognized at the request of the Applicant pursuant to Article 10 of the IMT Code, at a time prior to the entry of the property into Fund B..., as a Real Estate Investment Fund for Residential Rental.

  3. The assessments in question state that:

e

e

  1. The assessments were paid on 20 August 2015, the deadline for this purpose stated in the documents issued by the Respondent.

With relevance to the decision of the case, there are no unproven facts.

  1. The Tribunal's conviction regarding the decision of the factual matter was based on the documents in the proceedings, as well as the pleadings presented, and also on the fact that there is complete agreement between the parties regarding the factual matter, with disagreement limited to the legal matter.

-III- Applicable Law

  1. Law No. 64-A/2008, of 31 December, approved the special regime applicable to real estate investment funds for residential rental and to real estate investment companies for residential rental.

In its Article 8, the tax regime applicable to real estate investment funds was established. With regard to Municipal Tax on onerous transfers of real property, it was established in paragraph 7 of the aforementioned Article 8, the following:

"7 — The following are exempt from IMT:

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

b) Acquisitions of urban properties or autonomous portions of urban properties intended for permanent and own occupation, as a result of the exercise of the purchase option referred to in paragraph 3 of Article 5, by the tenants of the properties that form part of the assets of the investment funds referred to in paragraph 1."

In turn, Law 83-C/2013, of 31 December, added to the aforementioned Article 8, paragraphs 14 to 16 with the following wording:

"14 — For the purposes of the provisions of paragraphs 6 to 8, urban properties are considered to be intended for rental for permanent housing whenever they are the subject of a contract for rental for permanent housing within the period of three years counted from the moment they began to form part of the assets of the fund, and the liable subject must communicate and provide proof to the TA of the respective effective rental, within 30 days following the end of the said period.

15 — When the properties have not been the subject of a rental contract within the period of three years provided in the preceding number, the exemptions provided for in paragraphs 6 to 8 shall cease to have effect, and in that case the liable subject must request from the TA, within 30 days following the end of the said period, the assessment of the respective tax.

16 — If the properties are disposed of, with the exception of cases provided for in Article 5, or if the REIF is subject to liquidation, before the end of the period provided for in paragraph 14, the liable subject must likewise request from the TA, before the disposal of the property or the liquidation of the REIF, the assessment of the tax due in accordance with the preceding number."

Law 83-C/2013, of 31 December, also established in its Article 236, the following transitional regime:

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

2 — Notwithstanding the provision in the preceding number, the provisions of paragraphs 14 to 16 of Article 8 of the special regime applicable to REIF and REIS, approved by Articles 102 to 104 of Law No. 64-A/2008, of 31 December, equally apply to properties that have been acquired by REIF before 1 January 2014, counting in such cases the period of three years provided for in paragraph 14 from 1 January 2014."

  1. In light of this legislative framework, the legal question that must be resolved is whether, in light of paragraph 2, Article 236, of Law 83-C/2013, of 31 December, and paragraphs 14, 15 and 16 of Law No. 64-A/2008, of 31 December, as worded in that other statute, the acquisition of the property in question, which occurred before 1 January 2014, can be taxed because the property was sold before the three-year period counted from 1 January 2014 had elapsed. And, on the other hand, if so, whether such legal solution is in accordance with Article 103, paragraph 3, of the Constitution of the Portuguese Republic, which provides that "No one may be required to pay taxes (…) that have a retroactive nature (…)"

  2. It is indubitable that, in light of the ordinary provisions transcribed, a Real Estate Investment Fund for Residential Rental, which from 1.01.2014 sells a property acquired in a prior year, which has benefited from an exemption because the property is intended for housing and which sells it before three years have elapsed since 1.01.2014, becomes subject to tax by virtue of Law 83-C/2013, of 31 December.[1]

It should be noted that, in the case "sub judice", the taxable event in question (the acquisition of ownership by the Applicant) occurred entirely under the old law.

It is also indubitable that the taxable event in question is subject to taxation under Law 83-C/2013, of 31 December, but was not subject to taxation under Law No. 64-A/2008, of 31 December, in its original wording.

  1. Sérgio Vasques writes that "The express recognition of the prohibition of Article 103, paragraph 3, of the Constitution of the Portuguese Republic, serves essentially to make clear that retroactivity, strong or weak, is in principle prohibited to the tax legislator, who may only resort to it on an exceptional basis. In light of Article 103, paragraph 3, of the CRP, a retroactive tax law will always appear, prima facie, to be unconstitutional, and no case-by-case balancing is necessary to reach this initial conclusion. But this does not prevent us from, in a second stage, concluding that legal certainty should [be] sacrificed to other constitutional values which in the particular case prove to be more relevant and that in exceptional circumstances the retroactive tax law may be considered legitimate, as can happen in cases of war, natural catastrophe, epidemic or serious financial crisis".[2]

Also in the doctrine, Ana Paula Dourado tells us that "In the cases of taxes with a single obligation (for example, the purchase and sale of a property, subject to IMT) the prohibition of retroactivity implies respect for past taxable events, that is, the non-application of the new law to those facts, because the tax obligation arose and is concluded."[3]

  1. In line with the qualified doctrine just referred to, it can be read in decision No. 617/2012, of 19 December 2012, Case No. 150/12, of the Constitutional Court:

"Indeed, the tax liability generating fact (….) indisputably occurs before the publication of the new law, and it is not possible to understand that we are dealing with a complex tax legal fact of successive formation.

The application of the new law to this fact which occurred prior to its approval thus involves authentic retroactivity.

What is relevant, in light of the constitutional principles enunciated, is not the moment of assessment of a tax, but rather the moment when the act occurs that determines the payment of that tax. It is that act which gives rise to the constitution of a tax obligation, and it is at that time, in compliance with the principle of legality, in the aspect grounded on the principle of protection of legitimate expectations, that it is required, as a preventive measure, that the law which provides for the creation or aggravation of that tax is already in force, so that the citizen can assess the consequences of his or her conduct.

(…)

Now, having the fact which gave rise to the tax obligation that was subsequently aggravated by new law already occurred, the reasons which presided over the establishment of the rule prohibiting retroactivity in this domain are entirely present, since it is important to prevent the abstract risk that a law published with retroactive effect causes unreasonable financial harm, by virtue of the impossibility in which taxpayers affected and bound to such facts already occurred found themselves, of foreseeing and providing for the consequences of their tax obligations, determined by future law."

  1. In accordance with the foregoing, and in line with the cited doctrine and case law, it is unequivocal that paragraph 2, Article 236 of Law 83-C/2013, of 31 December, in conjunction with paragraph 16 of Article 8 of Law No. 64-A/2008, of 31 December, as worded in Law 83-C/2013, establishes a retroactive taxation (authentic retroactivity), violating Article 103, paragraph 3, of the Constitution of the Portuguese Republic, such that the tribunal cannot fail to disapply the same, in compliance with the norm enshrined in Article 204 of the CRP, with the result that the tax assessments in question are without legal basis, having as a consequence the annulment of the same.[4]

  2. The Applicant further requested that the Respondent be condemned to reimburse the sums paid corresponding to the assessment that is the subject of these proceedings, as well as the respective compensatory interest.

Let us consider this.

In accordance with the provision in subparagraph b) of Article 24 of the LRAT, the arbitral decision on the merits of the claim against which no appeal or challenge is possible binds the tax administration from the end of the period provided for appeal or challenge, and the tax administration must, in the exact terms of the granting of the arbitral decision in favor of the liable subject and up to the end of the period provided for spontaneous execution of the decisions of the tax courts, "restore the situation that would exist if the tax act that is the subject of the arbitral decision had not been performed, adopting the necessary acts and operations for this purpose", which is in harmony with the provision in Article 100 of the LGT [applicable by virtue of the provision in subparagraph a) of paragraph 1 of Article 29 of the LRAT] which establishes that "the Tax Administration is obligated, in case of total or partial granting of a complaint, judicial challenge or appeal in favor of the liable subject, to immediate and full restoration of the legality of the act or situation that is the subject of the litigation, comprising the payment of compensatory interest, if applicable, from the end of the period for execution of the decision".

Although Article 2, paragraph 1, subparagraphs a) and b), of the LRAT uses the expression "declaration of illegality" to define the competence of arbitral tribunals functioning in the CAAD, making no reference to condemnatory decisions, it should be understood that the competencies include the powers that in judicial challenge proceedings are attributed to tax courts, and this is the interpretation that is in harmony with the sense of the legislative authorization on which the Government relied to approve the LRAT, in which it proclaims, as a first directive, that "the tax arbitration process must constitute an alternative procedural means to the judicial challenge process and to the action for recognition of a right or legitimate interest in tax matters".[5]

The judicial challenge process, although essentially a process of annulment of tax acts, admits the condemnation of the Tax Administration to payment of compensatory interest, as can be seen from Article 43, paragraph 1, of the LGT, which establishes that "compensatory interest is due when it is determined, in a gracious complaint or judicial challenge, that there was error attributable to the services from which results payment of the tax debt in an amount exceeding the legally due", and from Article 61, paragraph 4 of the TCPC (as worded by Law No. 55-A/2010, of 31 December, to which corresponds paragraph 2 in the initial wording), which provides that "if the decision recognizing the right to compensatory interest is judicial, the payment period is counted from the beginning of the spontaneous execution period thereof".

Thus, paragraph 5 of Article 24 of the LRAT in stating that "payment of interest is due, regardless of its nature, under the terms provided in the general tax law and in the Code of Tax Procedure and Process" should be understood as permitting recognition of the right to compensatory interest in the arbitration process.

In the case at hand, it is manifest that, as a consequence of the illegality of the assessment acts, reimbursement of the tax is due, by virtue of the aforementioned Articles 24, paragraph 1, subparagraph b), of the LRAT and 100 of the LGT, as this is essential to "restore the situation that would exist if the tax act that is the subject of the arbitral decision had not been performed".

With regard to compensatory interest, this claim must also be assessed in light of Article 43 of the General Tax Law.

Paragraph 1 of that article provides that "Compensatory interest is due when it is determined, in a gracious complaint or judicial challenge, that there was error attributable to the services from which results payment of the tax debt in an amount exceeding the legally due".

We agree with the understanding of Diogo Leite de Campos, Benjamin Silva Rodrigues and Jorge Lopes de Sousa who hold that "The error attributable to the services that performed the assessment is demonstrated when a gracious complaint or judicial challenge of that same assessment is proceeded with and the error is not attributable to the taxpayer" (GENERAL TAX LAW, Annotated and Commented, 4th Edition, 2012, p. 342).

In the case "sub judice", since the error which gave rise to the assessments, now annulled, is not attributable to the Applicant, the application for condemnation of the Respondent as to compensatory interest cannot fail to proceed.

Thus, the Tax and Customs Authority must execute this decision, in accordance with Article 24, paragraph 1, of the LRAT, reimbursing the amounts paid by the Applicant relating to the annulled assessments, with compensatory interest at the legal rate.

Compensatory interest is due from the date of payment until the date of processing of the credit note, in which they are included (Article 61, paragraph 5, of the TCPC).

-IV- Decision

Thus, the arbitral tribunal decides, granting the application for arbitral ruling:

a) To decree the annulment of the assessments that are the subject of these proceedings.

b) To condemn the Respondent to reimburse to the Applicant the amounts paid with compensatory interest at the legal rate, counted from the date of payment by the Applicant until the date of processing of the credit note.

Value of the action: € 1,791.93 (one thousand seven hundred ninety-one euros and ninety-three cents) in accordance with the provision in Article 306, paragraph 2, of the CPC and 97-A, paragraph 1, subparagraph a), of the TCPC and 3, paragraph 2, of the Regulation of Costs in Arbitration Proceedings.

Costs borne by the Respondent, in the amount of € 306 (three hundred six euros), in accordance with paragraph 4 of Article 22 of the LRAT.

Let notification be made.

Lisbon, CAAD, 20 May 2016

The Arbitrator

Marcolino Pisão Pedreiro

[1] And this is so, moreover, independently of whether three years have already elapsed counted from the date on which the property had been acquired by the fund.

[2] MANUAL OF TAX LAW, Almedina, 2011, p. 295.

[3] TAX LAW, Lessons, Almedina, 2015, p. 175

[4] And not declaration of nullity, given that, in the case "sub judice", there is no indication of the occurrence of a violation "of the essential content of a fundamental right".

As can be read in the summary of the decision of 23.10.2013, delivered in case 0579/13 (Reporting Judge Isabel Marques da Silva) "The assessment act performed in application of an annulable, non-existent or unconstitutional municipal assembly decision suffers from abstract illegality – Articles 286, paragraph 1, subparagraph a) of the CPT and 204, paragraph 1 of the TCPC -, which, in cases of coercive collection, may be invoked until the end of the period for opposition to tax execution, even if subsequently to the period for challenging annulable acts but never, consequently, at any time." (emphasis ours).

On this issue Jorge Lopes de Sousa also tells us that "There are, however, grounds which are invocable both as grounds for opposition to tax execution and for judicial challenge.

(…)

Cases of norms that violate norms of higher hierarchy such as constitutional norms fall here (…).

The illegality is abstract because, affecting the law itself, it does not depend on the act which applies it in concrete terms.

Being provided as a ground for opposition to tax execution, this abstract illegality also constitutes a defect of violation of law, as the assessment will have made application of a norm that is not valid in the face of a rule of higher hierarchy." (CODE OF TAX PROCEDURE AND PROCESS Annotated, 4th Edition, Vislis, 2003, p. 443-444, emphasis ours).

[5] On this issue, see Jorge Lopes de Sousa, Commentary on the Legal Regime for Tax Arbitration, in GUIDE TO TAX ARBITRATION, Coord. Nuno Villa-Lobos and Mónica Brito Vieira, 2013, Almedina, p. 110-116).

Frequently Asked Questions

Automatically Created

What is the principle of prohibition of fiscal retroactivity in Portuguese tax law?
The principle of prohibition of fiscal retroactivity in Portuguese tax law is enshrined in Article 103, paragraph 3, of the Portuguese Constitution and Article 12 of the General Tax Law (LGT). This constitutional principle establishes that tax laws cannot be applied retroactively to facts that occurred before their entry into force. Tax provisions apply only to facts subsequent to their enactment, protecting taxpayers from unexpected tax liabilities on past transactions. The principle ensures legal certainty and protects legitimate expectations in tax matters. In the context of this case, the applicant argued that Article 236 of Law 83-C/2013 violated this principle by imposing new conditions on IMT and Stamp Tax exemptions that had already been granted for properties acquired before the law's effective date of January 1, 2014.
How does Article 236 of Law 83-C/2013 affect IMT and Stamp Tax exemptions for real estate investment funds?
Article 236 of Law 83-C/2013, effective January 1, 2014, modified the regime for IMT and Stamp Tax exemptions applicable to real estate investment funds for residential rental. While the exemptions were extended until 2015, the law introduced a new requirement for proving compliance with the residential rental purpose: funds had to demonstrate the existence of permanent residential rental contracts. Previously, exemptions under Article 8, numbers 7(a) and 8, of the Tax Regime for Real Estate Investment Funds for Residential Rental were granted without this specific evidentiary requirement. The controversy arose because properties already integrated into funds before 2014 with recognized exemptions were subjected to this new proof requirement. The Tax Authority argued this was merely a procedural change affecting future compliance verification, while taxpayers contended it impermissibly altered substantive conditions for previously granted exemptions.
Can previously granted IMT and Stamp Tax exemptions be revoked retroactively in Portugal?
Under Portuguese tax law, the retroactive revocation of previously granted IMT and Stamp Tax exemptions faces significant constitutional constraints. Article 103(3) of the Portuguese Constitution prohibits the retroactive application of tax laws, protecting taxpayers who acquired rights under prior legislation. In this case, the applicant argued that once IMT and Stamp Tax exemptions were recognized for properties entering Fund B before Law 83-C/2013, these exemptions could not be retroactively conditioned on new requirements. The taxable events (property acquisitions) occurred before the new law, and the exemptions were not subject to lapse or conditional on future circumstances under the original regime. The Tax Authority's position was that imposing proof requirements for compliance did not constitute substantive revocation but rather procedural regulation. However, if such requirements effectively nullify previously granted exemptions by making them impossible to maintain, this could violate the constitutional prohibition on fiscal retroactivity.
What is the CAAD arbitration procedure for challenging IMT and Stamp Tax assessments?
The CAAD (Centro de Arbitragem Administrativa) arbitration procedure for challenging IMT and Stamp Tax assessments is governed by Decree-Law 10/2011 (RJAT - Legal Regime for Arbitration in Tax Matters). Taxpayers can request the establishment of an arbitral tribunal under Article 10 of RJAT to challenge tax assessments. The process begins with a written application identifying the contested acts and grounds for challenge. The CAAD President accepts the request and appoints an arbitrator, who is communicated to both parties. The arbitral tribunal is formally established once the arbitrator accepts the mandate. In this case, the tribunal was established on January 22, 2016, following the application filed on November 18, 2015. The respondent Tax Authority can raise preliminary exceptions, such as competence issues. The tribunal may dispense with arbitral hearings if no situations under Article 18(1) of RJAT require them. Parties submit written pleadings and arguments, and the tribunal issues a binding arbitral decision on the legality of the assessments and any claims for reimbursement and compensatory interest.
Are real estate investment funds for residential leasing entitled to IMT and Stamp Tax exemptions under Portuguese law?
Yes, real estate investment funds for residential leasing are entitled to IMT and Stamp Tax exemptions under Portuguese law, subject to specific conditions. The Tax Regime for Real Estate Investment Funds for Residential Rental provides exemptions in Article 8, number 7(a) for IMT and number 8 for Stamp Tax, applicable to properties acquired by such funds and dedicated to residential rental purposes. These exemptions aim to incentivize investment in residential rental housing. However, Law 83-C/2013 (State Budget for 2014) modified the regime effective January 1, 2014, extending exemptions until 2015 but introducing stricter proof requirements, specifically requiring evidence of permanent residential rental contracts. The exemptions are recognized upon request under Article 10 of the IMT Code. The controversy in this case centered on whether properties that entered funds before 2014 with recognized exemptions could be subjected to new compliance requirements imposed by the 2014 law, raising constitutional questions about fiscal retroactivity and the protection of vested tax rights.