Process: 688/2015-T

Date: April 11, 2016

Tax Type: IMT Selo

Source: Original CAAD Decision

Summary

Process 688/2015-T addresses the tax benefit regime applicable to FIIAH (Fundos de Investimento Imobiliário para Arrendamento Habitacional - Real Estate Investment Funds for Residential Leasing) and SIIAH under Article 236 of Law 83-C/2013. The decision analyzes fundamental principles governing tax benefits in Portuguese law, establishing that tax benefits are exceptional measures protecting extrafiscal public interests superior to taxation interests. The tribunal examined whether IMT (Municipal Property Transfer Tax) and Stamp Tax exemptions granted to FIIAH funds could be retroactively revoked by the Portuguese Tax Authority. Central to the analysis is the constitutional principle of non-retroactivity under Article 103(3) of the Portuguese Constitution, which prohibits retroactive application of tax laws. The decision explores the legal framework of tax benefits under the Estatuto dos Benefícios Fiscais (EBF), distinguishing between automatic benefits (arising directly from law) and recognition-dependent benefits (requiring administrative acts). Article 12 of the EBF establishes that the right to tax benefits is constituted upon verification of legal requirements. The tribunal considered whether FIIAH exemptions are conditional benefits whose effectiveness depends on ongoing compliance with accessory requirements, or whether once granted, they cannot be retroactively withdrawn. The principle of contributive capacity, which demands taxation based on economic manifestations of wealth, was analyzed alongside the exceptional nature of tax benefit regimes. The CAAD (Centro de Arbitragem Administrativa) arbitral procedure provides taxpayers with mechanisms to challenge tax assessments. When tax liquidations are annulled, Article 100 of the CPPT generally entitles taxpayers to reimbursement of unduly paid amounts plus compensatory interest. The decision reinforces that tax benefits, while exceptional, must respect constitutional guarantees including legal certainty and protection of legitimate expectations.

Full Decision

general rules of taxation;

b) Secondly, they pursue a relevant social and economic objective that determines the derogation of the general rule referred to in the previous point;

c) And, finally, they confer, in consequence, an advantage on the taxpayers who benefit from them.

6.36. Thus, in accordance with the provisions of article 2 of the EBF, "tax benefits are considered to be measures of an exceptional nature instituted for the protection of relevant extrafiscal public interests that are superior to those of taxation that they prevent", being considered as tax benefits, in particular, "(…) exemptions (…)" (underlined by us).[19]

6.37. In this sense, article 2 of the EBF considers the concept of tax benefit as being a preventive fact of the constitution of the tax relationship, whereby the norms that govern its creation and that legitimize its grant are:

6.37.1. Legally special and,

6.37.2. Factually exceptional, in that they are founded on public interests, extrafiscal, but constitutionally relevant.

6.38. In this context, the breaking of the essential nucleus of taxation passes, primarily, through a derogation from the principle of contributive capacity ([20]) in that, in accordance with this principle, taxation would be practiced in accordance with the subjective situation of each taxpayer, that is, just taxation is that which guarantees material equality in the distribution of tax burdens.

6.39. Contributive capacity demands not only the individualization of taxation but also that the legislature direct taxation towards the three manifestations of wealth relevant to indicating the economic capacity of the taxpayer and which constitute the tax base, that is, the wealth that is earned (income), the wealth that is possessed (assets) and the wealth that is spent (consumption).[21]

6.40. In these terms, the principle of contributive capacity comprises two dimensions, which are those of presupposition and limit of taxation:

6.40.1. As presupposition or source of taxation, the principle of contributive capacity is founded on the economic force of the taxpayer expressed in the ownership or use of wealth;

6.40.2. As limit or measure of the value of the tax, it prevents the legislature from adopting elements of ordering affecting the constitutive elements of the tax, contrary to the requirements of tax justice enunciated by the same principle.

6.41. On the other hand, tax benefits can be distinguished as conditional benefits, temporary benefits and permanent benefits.[22]

6.42. Conditional tax benefits are those whose effectiveness depends on the verification of certain secondary accessory requirements (which are its "conditio juris"), thus distinguishing themselves from so-called pure benefits whose effectiveness is not dependent on the verification of any accessory requirement.[23]

6.43. In conditional benefits, the condition may take one of two forms, either suspensive or resolutive:

6.43.1. The condition is said to be suspensive when the benefit is granted after verification of certain accessory requirements and,

6.43.2. It is considered resolutive when the benefit is granted but its effectiveness depends on the verification of the benefit's requirements, non-verification of which determines the lapse of the same.

6.44. Regarding temporary benefits, as the name indicates, are granted for a limited period fixed in law, as opposed to permanent benefits granted for the future without predetermined duration.[24][25]

6.45. Being temporary benefits created with the objective of producing certain results of relevant public interest, permanent benefits, given their long duration, have the disadvantage of the possibility that, once the public interest pursued with their grant has been superseded, they may be transformed into favors or fiscal privileges.

6.46. As established by article 12 of the EBF, "the right to tax benefits must be reported to the date of verification of the respective requirements, even though it is dependent on recognition (…)" whereby it is understood that, as a general rule, the right to tax benefits is constituted with the verification of the respective requirements (underlined by us).

6.47. In this matter, in accordance with the provisions of article 5 of the EBF, tax benefits can be "automatic and dependent on recognition", being that "the former result directly and immediately from law, the latter presuppose one or more subsequent acts of recognition" (underlined by us).

6.48. In fact, as regards the grant of tax benefits, the law distinguishes two types of recognition:

6.48.1. In automatic tax benefits, recognition results directly and immediately from law, operating by the simple verification of the respective facts requirements, requiring no act by the tax administration;

6.48.2. In tax benefits dependent on recognition, this may be carried out by administrative act (in which case we have tax benefits dependent on unilateral recognition) or through contract (in which case we have tax benefits dependent on bilateral recognition).

6.49. For the purposes of the above described, article 65 of the Code of Tax Procedure and Process (CPPT) provides that "the recognition of tax benefits depends on the initiative of the interested parties, by means of a request specifically directed to that end, the calculation, when obligatory, of the requested benefit and the proof of verification of the recognition requirements pursuant to law".

6.50. In accordance with the provisions of article 7 of the EBF, "all persons, singular or collective, of public or private law, to whom automatic or recognition-dependent tax benefits are granted, are subject to supervision by the Tax and Customs Authority (…) for control of the verification of the requirements of the respective tax benefits and of compliance with the obligations imposed on holders of the right to benefits" (underlined by us).[26]

6.51. As to the form of extinction of tax benefits, in general terms, in accordance with the provisions of article 14 of the EBF, the same may be caused by lapse, by alienation of assets for purposes different from those for which the benefit was granted, by revocation of the administrative act granting it and by waiver of benefits.

6.52. In any case, in accordance with the provision referred to in the previous point, "the extinction of tax benefits has as consequence the automatic restoration of rule taxation", being that, pursuant to the provisions of article 9 of the EBF, "persons holding the right to tax benefits are obliged to declare, within a period of 30 days, that the situation of fact or law on which the benefit was based has ceased, except when such cessation is of official knowledge" (underlined by us).

6.53. On the other hand, pursuant to the provisions of article 15 of the EBF, "the right to tax benefits (…) is non-transferable inter vivos, being, however, transferable mortis causa if the requirements of the benefit are verified in the transferee, except if this is of a strictly personal nature".[27]

From the interpretation of norms

6.54. Additionally, and with the purpose of better understanding the tax benefits attributed to FIIAH and SIIAH, it will be important to pay attention to the basic principles of interpretation and application of tax laws.

6.55. Indeed, and in accordance with what is established in article 11 of the General Tax Law (LGT), "in determining the meaning of tax norms and in qualifying the facts to which they apply are observed the rules and general principles of interpretation and application of laws", being that "whenever tax norms use terms of other branches of law, they must be interpreted in the same sense they have there, unless otherwise results directly from the law" (underlined by us).

6.56. "If doubt persists as to the meaning of the incidence norms to be applied, attention shall be paid to the economic substance of the tax facts", being that "gaps resulting from tax norms covered by the legislative assembly reserve of law are not susceptible to analogical integration" (underlined by us).[28]

6.57. That is, in accordance with the provision referred to above, in the interpretation of tax norms the principles and rules of general interpretation and application of any legal norm are used, except when, as a result of applying these principles and rules, the interpreter is confronted with any insurmountable doubt – an event in which it is permitted to pay attention to the economic substance of tax facts.

6.58. And these general rules are, as is the law, those drawn from what is established in article 9 of the Civil Code, pursuant to which it is provided that:[29]

"Interpretation should not be limited to the letter of the law, but should reconstruct from the texts the legislative thought, taking especially into account the unity of the legal system, the circumstances in which the law was drafted and the specific conditions of the time in which it is applied" (underlined by us).

"The interpreter cannot, however, consider the legislative thought that does not have in the letter of the law a minimum of verbal correspondence, even if imperfectly expressed"(underlined by us).

"In fixing the meaning and scope of the law, the interpreter shall presume that the legislature enshrined the most appropriate solutions and knew how to express its thought in appropriate terms" (underlined by us).

6.59. That is, the letter of the law is the starting point and limit for its interpretation and the role of any applicator/interpreter is to pay attention to what the law says, to its objective meaning, and not to what the legislature putatively would wish to say.

6.60. It is true that it cannot fail to be borne in mind the teleology of the provision, a word that translates one of the logical elements of interpretation of laws, which is its purpose or social justification but such cannot contend with what is established in No. 2 of article 9 of the Civil Code, i.e., even if it is understood that the purpose of the provision does not accord with its letter, it is the latter that must prevail (in that it is the legislature that has the responsibility to change the law, it being the interpreter's responsibility only to understand and apply it).

6.61. In these terms, and within the scope of the interpretive exercise, it must be taken into account that the applicability of the exemptions from IMT and Stamp Tax provided for in the special regime applicable to FIIAH, as defined by the State Budget Law for 2009 (as we saw above in point 6.15.), were dependent on the fulfillment of the following requirements:

6.61.1. Existence of FIIAH, constituted between 1 January 2009 and 31 December 2013, pursuant to the applicable legislation, being that at least 75% of its total assets are constituted by real property, intended for letting for permanent housing.

6.61.2. Existence of real property, intended for letting for permanent housing, whose acquisition occurred between 1 January 2009 and 31 December 2013.[30]

6.61.3. Existence of borrowers of housing loan contracts who proceed to the sale of real property object of the contract to a FIIAH (within the period referred to in the previous point), who may enter into a lease contract with the fund management entity, constituting themselves in a right of purchase option of the real property (to the FIIAH) capable of being exercised until 31 December 2020.

6.62. Thus, with the requirements referred to in the previous point verified, were exempted(ed):

6.62.1. From IMT acquisitions of urban buildings or autonomous fractions of urban buildings, intended exclusively for letting for permanent housing, by investment funds, as well as acquisitions of urban buildings or autonomous fractions of urban buildings, intended for own and permanent housing, as a result of the exercise of the purchase option by tenants of the real property making up the assets of the investment funds;

6.62.2. From Stamp Tax acts connected with the transfer of urban buildings intended for permanent housing which occurs by force of the conversion of the right of ownership of such real property into a right of lease on the same, as well as with the exercise of the purchase option provided for in the previous point.[31]

6.63. Should these conditions not be verified, in accordance with the provisions of article 14 of the EBF, the extinction of the aforementioned tax benefits (exemptions from IMT and Stamp Tax) would always occur.

6.64. Now, taking into account the sale of the real property identified in point 5.2.2., above, for purposes different from those for which the aforementioned tax benefits were granted, this would determine (and did determine in the case under analysis), the automatic restoration of rule taxation.[32]

6.65. Thus, in light of what is set out above, this Arbitral Tribunal understands that what is provided for in No. 16 of article 236 of the Transitional Regime, applied in conjunction with what is provided for in No. 15 of the same article in no way alters the substance or applicability requirements of the exemptions established by article 8, No. 7 and No. 8 of the special regime applicable to FIIAH and SIIAH, with respect to the assessments at issue.

6.66. In these terms, having regard to the conclusions deriving from the analysis presented above, the Tribunal understands that the answer to be given to the question posed in point 6.1., above, will be negative, that is, that the assessments for IMT and Stamp Tax object of the request for arbitral decision do not suffer from any illegality, whereby the request for arbitral decision should be considered devoid of merit.

6.67. As a consequence of the conclusion referred to in point 6.65., above, the analysis of the question raised by the Claimant regarding the alleged retroactivity of the regime provided for by article 236 of the State Budget Law for 2014 is rendered moot, in that, as demonstrated above, the circumstances that gave rise to the tax assessments at issue bear no relation whatsoever to the additions resulting from the said article but solely to the sale of the real property (identified in point 5.2.2., above), for purposes different from those for which the exemptions from IMT and Stamp Tax were granted.

6.68. Additionally, the analysis of the question of whether the assessments at issue are null or voidable is also rendered moot for the same reasons.

From the reimbursement of tax paid with indemnity interest

6.69. In these terms, having regard to the conclusion presented in point 6.66., above, being the request for arbitral decision considered devoid of merit, there will be no reimbursement of the tax (IMT and Stamp Tax) paid, nor will there, in consequence, be payment of indemnity interest on that amount.

From responsibility for payment of arbitral costs

6.70. In accordance with the provisions of article 22, No. 4, of RJAT, "the arbitral decision issued by the arbitral tribunal contains the fixation of the amount and the apportionment among the parties of the costs directly resulting from the arbitration proceedings".

6.71. In consonance with the previous point, and pursuant to the provisions of article 527, No. 1 of CPC (ex vi 29, No. 1, subparagraph e) of RJAT), it must be established that the Party that caused the costs or, absent success in the action, the party who profited from the proceedings shall be condemned in costs.

6.72. In this context, No. 2 of the referred article makes concrete the expression "caused the costs", according to the principle of defeat, understanding that the defeated party causes the costs of the proceedings, in proportion as it is defeated.

6.73. In these terms, having regard to what was analyzed above, responsibility in matters of arbitral costs should be attributed solely to the Claimant.

  1. DECISION

7.1. In the case under analysis, having regard to what is set out in the previous chapter, the principle of proportionality imposes that responsibility for arbitral costs be attributed to the Claimant, in accordance with the provisions of article 12, No. 2 of RJAT and article 4, No. 4 of the Regulation of Costs in Arbitration Proceedings.

7.2. In these terms, having regard to the analysis made, this Arbitral Tribunal decided:

7.2.1. To judge the request for arbitral decision submitted by the Claimant devoid of merit, the acts of assessment of IMT and Stamp Tax object of the request remaining in the legal order, with the consequences deriving therefrom;

7.2.2. To condemn the Claimant to payment of the costs of the present proceedings.

Value of the proceedings: Having regard to the provisions of articles 306, No. 2 of CPC, article 97-A, No. 1 of CPPT and article 3, No. 2 of the Regulation of Costs in Tax Arbitration Proceedings the value of the proceedings is fixed at EUR 23,284.75.

Costs of the proceedings: Pursuant to the provisions of Table I of the Regulation of Costs of Tax Arbitration Proceedings, the value of the costs of the Arbitration Proceedings is fixed at EUR 1,224.00, to be borne by the Claimant, in accordance with article 22, No. 4 of RJAT.

Let it be notified.

Lisbon, 11 April 2016

The Arbiter,

Sílvia Oliveira

[1] The drafting of this decision is governed by the orthography prior to the Orthographic Agreement of 1990, except as regards transcriptions carried out.

[2] Real property located at Av…, …, Block…, 4th Floor Right and inscribed in the urban property register of the Parish of … and…, in accordance with that identified by the Claimant in article 6 of the Petition.

[3] In this context, the Claimant refers to Decisions of the Constitutional Court No. 128/2009, 85/2010 and 399/2010, all accessible at www.tribunalconstitucional.pt.

[4] In this context, the Respondent cites the Decision of the SAC of 3 March 2004, issued in the course of case No. 01938/03, pursuant to which "(…) using the doctrine stated above and the exemplificative indication found in No. 2 of cited art. 133 of the CPA, we can state that the sanction of nullity must be applied to administrative acts that, by lacking their constitutive elements, only formally have this appearance and to all those that are offensive to rights, freedoms and guarantees constitutionally enshrined (…)" (emphasis of the Respondent).

[5] As per copy attached to the file with the request (doc. No. 1).

[6] As per copy attached to the file with the request (doc. No. 1).

[7] The competencies of the Constitutional Court are multiple and varied, being fixed in the Constitution, in the Law of the Constitutional Court (Law No. 28/82, of 15 November), in the Law of Political Parties (Organic Law No. 2/2003, of 22 August) and in the Law on Financing of Political Parties and Electoral Campaigns (Law No. 19/2003, of 20 June).

[8] And amended by Decrees-Law Nos. 252/2003, of 17 October, 13/2005, of 7 January, and 357-A/2007, of 31 October, and subsidiarily, by the provisions of the Code of Securities, approved by Decree-Law No. 486/99, of 13 November, amended by Decrees-Law Nos. 61/2002, of 20 March, 38/2003, of 8 March, 107/2003, of 4 June, 183/2003, of 19 August, 66/2004, of 24 March, 52/2006, of 15 March, 219/2006, of 2 November, and 357-A/2007, of 31 October.

[9] The percentage limit defined "is assessed in relation to the average of the values verified at the end of each of the last six months, being respected within a two-year period from the date of constitution of the FIIAH, and one year from the date of the capital increase, regarding the amount of the increase".

[10] This constitution of its assets made it possible for FIIAH (at the time of their creation) to be an instrument that could enhance the residential rental market in Portugal, combating speculation in new rental prices and the decay of urban centers.

[11] "The purchase option right provided for (…) ceases if the tenant breaches the obligation to pay rent to the FIIAH for a period exceeding three months".

[12] The capital gains referred to begin to be taxed, under general terms, if the taxpayer ceases the lease contract or does not exercise the purchase option provided for in No. 3 of article 5 of the regime provided for, with the periods of lapse and prescription being suspended for the purposes of assessment and collection of IRS, until the end of the contractual relationship.

[13] In this sense, see Decision of TCAS No. 06588/13, of 25 June.

[14] See the Decision referred to in the previous footnote.

[15] In accordance with what is provided for, if the buildings are sold, even before the period provided for has elapsed, pursuant to article 5 of the regime (that is, in the event of exercise of the purchase option by tenants, capable of being exercised until 31 December 2020, or by their legal heirs), there will be no assessment of the tax due.

[16] In accordance with Costa A., Rainha J. and Pereira M. [in "Tax Benefits in Portugal: Economic-social Objectives - systematization by activities, legislation", Coimbra, Livraria Almedina (1977)], tax benefits are policy instruments aimed at certain economic and social objectives, it being stated that the tax benefit exists whenever an entity or activity covered by the incidence of a tax finds itself in a more favorable situation relative to those subject to the general tax regime.

[17] The principle of contributive capacity is characterized consensually by doctrine and by jurisprudence of the Constitutional Court as a structuring principle of the fiscal system that expresses and makes concrete the principle of tax equality and that has implicit seat in the "Fiscal Constitution", by force of the combination of the provisions of articles No. 103° and 104° of the CRP.

[18] In this sense, Freitas, M. [in "Tax incentives and the financing of private investment, influence of tax on the form of financing of enterprises", Lisbon, Center for Tax Studies, (1980)], recognizes that there are three requirements in tax benefits: (i) that they be a derogation from the rules of taxation, (ii) that they constitute an advantage for the taxpayers and (iii) that they have a relevant economic or social objective.

[19] Note that the EBF published by Decree-Law No. 215/89 of 1 July (diploma which has undergone various updates) provides in its preamble that "the multiplicity and dispersion of tax benefits, abolished with the entry into force of the new taxes on income on 1 January 1989, constituted one of the most criticizable aspects of the Portuguese tax system, given its manifestly lack of coherence, the negative consequences it caused in the equity plane and the foregone revenue it implied". In the revision of the regime that was materialized with the approval of Decree-Law No. 215/89 of 1 July (Statute of Tax Benefits), "relating especially to taxes on income, the Government understood to adopt principles which pass through the attribution to tax benefits of an obligatorily exceptional character, should only be granted in cases of recognized public interest; by stability, in order to guarantee taxpayers a clear and secure situation; by moderation, given that revenues are put into question with the grant of benefits, when the Country has to reduce the weight of public deficit and, simultaneously, make investments in infrastructures and public services". In that line, "(…) are included in the Statute of Tax Benefits those that are characterized by a less structural character, but which still have relative stability. Benefits with markedly conjunctural purposes or requiring relatively frequent regulation will, in turn, be included in future State Budgets" (underlined by us). "In these terms, the Statute of Tax Benefits contains the general principles to which the creation of benefit situations must obey, the rules of their attribution and administrative recognition and the list of these same benefits, with the dual objective of, on the one hand, guaranteeing greater stability to the diploma regulating the new species of taxes and, on the other, conferring a more systematic character to the set of tax benefits" (underlined by us).

[20] In accordance with Azevedo, R. (in "Statute of Tax Benefits, III Course of Post-Graduation in Tax Law", Faculty of Law of the University of Porto), there is implicitly contained in the concept of tax benefit an exceptional nature, and that exception constitutes, however, an advantage (or tax reduction) in favor of a certain entity, activity or situation.

[21] In this sense, see Decision of the Constitutional Court issued in the course of Case No. 1067/06, of 29 December.

[22] In this matter, see the Decision referred to in the previous footnote.

[23] Citing Alberto Xavier (in "Tax Law, FDL Manuals", Lisbon, 1974), "(…) conditional benefits translate themselves into subordinating the right to the benefit to counterparts of public interest in the form of duties or burdens imposed on the beneficiaries (…)".

[24] For Alberto Xavier, in "Tax Law, FDL Manuals", Lisbon, 1974, "(…) the grant of a temporary exemption generates for the subject who benefits from it an expectation of maintenance of the benefit throughout the period to which it relates – which must be protected in the name of the principle of legal certainty – by the recognition of the right that this benefit is not suppressed or suspended during the time of validity of the exemption (…)". Thus, according to the same author, "(…) it is a case of necessary recognition of acquired rights, which must lead to the possibility that any hypotheses of derogation of the norms in which the exemption was granted not involve the loss of those rights, which may be invoked against the state as long as the period of validity initially provided endures" (underlined by us).

[25] In this sense, as Nuno Sá Gomes states (in "General Theory of Tax Benefits", Notebooks of Science and Tax Technique No. 165, Lisbon, Center for Tax Studies, 1991, p. 145) "tax benefits are said to be permanent when they are established for the future, without predetermined duration; they are said to be temporary when the law sets a temporal limit to the duration of the benefit".

[26] Wording given by Law No. 64/2015, of 1 July (in the previous wording, the reference to the "Tax and Customs Authority" was made for the "General Directorate of Taxes").

[27] In fact, because the tax benefit is granted "intuitu personae" it should be considered non-transferable, whether "inter vivos" or "mortis causa". However, this rule of non-transferability has two exceptions, provided for in article 15, No. 2 and No. 3 of the EBF, the first of automatic application and the second dependent on authorization from the Minister of Finance.

Frequently Asked Questions

Automatically Created

What is the special IMT and Stamp Tax exemption regime for FIIAH closed-end real estate investment funds for residential leasing in Portugal?
Article 236 of Law 83-C/2013 (2014 State Budget Law) established a special IMT and Stamp Tax exemption regime for FIIAH (closed-end real estate investment funds for residential leasing) and SIIAH. Under this regime, FIIAH funds benefit from exemptions on property acquisitions and related transactions to promote residential rental housing. These exemptions constitute conditional tax benefits granted to encourage real estate investment serving relevant public policy objectives. According to the Estatuto dos Benefícios Fiscais, such benefits are exceptional measures protecting extrafiscal public interests. The exemptions apply automatically upon verification of legal requirements, including the fund's structure as a FIIAH, compliance with investment restrictions, and dedication to residential leasing purposes. These benefits represent a derogation from general taxation principles, justified by housing policy objectives.
Can the Portuguese Tax Authority retroactively revoke IMT and Stamp Tax exemptions granted to FIIAH funds under Article 236 of Law 83-C/2013?
The Portuguese Tax Authority's ability to retroactively revoke IMT and Stamp Tax exemptions granted to FIIAH funds under Article 236 is constrained by constitutional and statutory limitations. Article 12 of the Estatuto dos Benefícios Fiscais establishes that the right to tax benefits is constituted upon verification of requirements, even if dependent on recognition. Once automatic tax benefits arise directly from law upon satisfaction of legal conditions, retroactive revocation conflicts with principles of legal certainty and protection of legitimate expectations. Revocation is generally limited to prospective application or cases where initial requirements were never met. According to Article 14 of the EBF, extinction of tax benefits occurs through lapse, asset alienation for different purposes, revocation of administrative acts, or waiver—but retroactive withdrawal without legal basis violates taxpayer rights. The Tax Authority must demonstrate that initial requirements were not verified or that supervening circumstances justify prospective termination.
Does Article 236 of the 2014 State Budget Law violate the constitutional principle of non-retroactivity of tax law under Article 103(3) of the Portuguese Constitution?
Article 236 of Law 83-C/2013 raises significant constitutional concerns regarding Article 103(3) of the Portuguese Constitution, which prohibits retroactive application of tax laws. This constitutional provision protects taxpayers from retroactive changes that increase tax burdens or eliminate previously granted benefits. If Article 236 or its interpretation permits retroactive withdrawal of FIIAH exemptions for transactions completed before legislative changes, it would violate constitutional non-retroactivity guarantees. The principle of protection of legitimate expectations reinforces that taxpayers who structured transactions relying on existing tax benefit regimes cannot be subjected to retroactive taxation. Tax benefits, once validly granted under automatic application provisions, create acquired rights that constitutional principles protect. Any legislative modification affecting FIIAH exemptions must respect temporal application limits, applying only to future transactions. Retroactive denial of exemptions for completed property acquisitions would constitute unconstitutional retrospective taxation.
What is the CAAD arbitral procedure for challenging IMT and Stamp Tax assessments issued by the Portuguese Tax Authority?
The CAAD (Centro de Arbitragem Administrativa - Administrative Arbitration Center) provides taxpayers with an alternative dispute resolution mechanism for challenging IMT and Stamp Tax assessments issued by the Portuguese Tax Authority. Taxpayers may submit arbitration requests within legally prescribed deadlines following notification of tax liquidations. The arbitral procedure offers advantages including specialized tax law arbitrators, faster resolution than judicial courts, and binding decisions. To challenge assessments, taxpayers must file detailed submissions demonstrating legal grounds for annulment, such as incorrect application of exemption regimes, constitutional violations, or factual errors. The CAAD tribunal examines whether the Tax Authority properly applied Article 236 exemptions, whether legal requirements were satisfied, and whether constitutional principles were respected. Arbitral decisions may annul unlawful liquidations, confirming taxpayers' entitlement to exemptions. The procedure follows rules established in the Regime Jurídico da Arbitragem em Matéria Tributária, providing procedural guarantees and legal certainty.
Are FIIAH fund management companies entitled to reimbursement and compensatory interest when IMT and Stamp Tax liquidations are annulled by the CAAD?
When IMT and Stamp Tax liquidations are annulled by the CAAD, FIIAH fund management companies are entitled to full reimbursement of amounts unduly paid plus compensatory interest. Article 100 of the Código de Procedimento e de Processo Tributário (CPPT) establishes that annulment of tax acts generates automatic reimbursement obligations. The Tax Authority must refund principal amounts within legally prescribed timeframes. Additionally, compensatory interest accrues from the date of undue payment until actual reimbursement, compensating taxpayers for financial losses from erroneous taxation. The interest rate and calculation methodology follow statutory provisions designed to restore taxpayers to their original economic position. Management companies acting on behalf of FIIAH funds have standing to claim reimbursement as legal representatives. Failure to reimburse promptly may justify additional enforcement measures. This reimbursement regime reflects the principle that unlawful tax collection creates State enrichment obligations requiring full restitution with time-value compensation.