Process: 703/2016-T

Date: June 14, 2017

Tax Type: IMI

Source: Original CAAD Decision

Summary

This CAAD arbitral decision (Process 703/2016-T) addresses the critical issue of procedural defects in IMI (Municipal Property Tax) assessments involving rate surcharges. The claimant challenged 2015 IMI liquidations that applied surcharges of 30% and 200% to different units within a single property, arguing two fundamental defects: (1) absolute lack of reasoning, as the assessments failed to explain why specific surcharges were applied to each unit, and (2) failure to provide prior hearing as required under Article 60 of the General Tax Law (LGT). The Tax Authority defended the assessments, contending they contained all legally required elements including tax identification, taxable value, rate, and surcharge percentages. The TA argued that since IMI rates are fixed by Municipal Assembly resolutions under Article 112 of CIMI, and the assessments clearly showed the calculations, they were sufficiently justified. Regarding prior hearing, the TA invoked the exception in Article 60(2) of LGT, which permits waiving this requirement when assessments are based on objective legal values. This case highlights the ongoing tension between administrative efficiency and taxpayer procedural rights, particularly concerning the duty to provide adequate reasoning (fundamentação) in tax assessments. The decision has significant implications for municipal tax administration, as it addresses whether simply citing the applicable surcharge percentage satisfies the constitutional duty to justify administrative acts, or whether tax authorities must explain the factual and legal grounds warranting surcharge application to specific property units. The outcome affects property owners' ability to challenge discriminatory or erroneous surcharge applications and establishes important precedent for CAAD arbitration standards regarding IMI assessment validity.

Full Decision

ARBITRAL DECISION

I – REPORT

A) The Parties and Constitution of the Arbitral Tribunal

A..., taxpayer no. ..., with tax domicile at Rua ..., no. ..., ...-..., Estoril (hereinafter designated "Claimant"), filed a request for constitution of an Arbitral Tribunal, pursuant to article 2, no. 1, subparagraph a) and 10, nos. 1 and 2 of Decree-Law no. 10/2011, of 20 January, hereinafter designated "RJAT" and Ordinance no. 112-A/2011, of 22 March, to challenge and declare the illegality of the Municipal Property Tax (IMI) assessments, with nos. ..., ... and ..., relating to the year 2015, corresponding to three instalments of IMI payable in April, July and November, seeking their annulment and reimbursement of the amount of €5,904.57, corresponding to the tax overpaid.

The request for constitution of the Arbitral Tribunal was filed by the Claimant on 28-11-2016, was accepted by His Excellency the President of CAAD on 29-11-2016 and was immediately notified to the Tax and Customs Authority. The Claimant chose not to appoint an arbitrator, therefore, pursuant to article 6, no. 1 of RJAT, the undersigned was appointed as arbitrator by the Deontological Council of the Administrative Arbitration Centre on 25-01-2017. Thus, in accordance with the provision of subparagraph c), no. 1, article 11 of RJAT, as amended by article 228 of Law no. 66-B/2012, of 31 December, the single Arbitral Tribunal was constituted on 09-02-2017.

On 09-02-2017 an arbitral order was issued for the Tax and Customs Authority (TA) to submit a response within the legal timeframe, in accordance with articles 17, nos. 1 and 2 of RJAT. On 15-03-2017, the Respondent submitted its response, which is deemed fully reproduced herein.

After analysing the arbitral request and the response submitted by the Respondent, an arbitral order was issued on 30-03-2017 for the parties to pronounce themselves on the possibility of dispensing with the holding of the meeting provided for in article 18 of RJAT. Both parties pronounced themselves in favour of dispensing with it, therefore, by arbitral order of 6-04-2017, its holding was dispensed with, a period of fifteen days was fixed for each party to submit their written arguments in succession, with a warning to the claimant to pay the subsequent arbitration fee and the date of 15-06-2017 was set for pronouncement of the arbitral decision. The parties were invited to send their respective procedural documents to the case file in Word format.

The parties submitted arguments, reiterating everything they alleged in their respective pleadings.

B) THE REQUEST FILED BY THE CLAIMANT:

The Claimant files the present request for arbitral pronouncement, seeking the declaration of illegality of the IMI assessments relating to the year 2015, invoking the following grounds:

a) Defect of form, due to absolute lack of reasoning, since neither in any prior collection note nor in the assessments issued are stated the grounds on which the TA applied the legally fixed IMI rate with an increase of 30% and 200%, in relation to the units forming part of the property located at Rua ..., no. ..., in the Parish of ..., in Lisbon.

b) Defect of form due to failure to observe the essential formality of prior hearing of the taxpayer.

Accordingly, it concludes that the assessments challenged are illegal, requesting their annulment, and further, the reimbursement of the amount of the excess paid improperly, with the legal consequences.

C – THE RESPONDENT'S RESPONSE

In its response, the Respondent, in defence of the assessments challenged, invokes that the assessment contains all the legally required elements, such as the identification of the tax (IMI); the taxpayer's tax identification; the year to which the tax relates (2015); the document number and its date, as well as the description of the property; the assessed value; the tax, the rate and the increased rate, further identifying the payment month indicating whether it is the 1st, 2nd or 3rd instalment. From the TA's perspective, such elements constitute sufficient reasoning for the assessments in question. It further alleges that IMI is a municipal revenue and that the rates are fixed by resolution of the Municipal Assembly, pursuant to article 112 of CIMI, as a result it is clear that the increase applied to urban properties was fixed by resolution of the respective Municipal Assembly. As regards the operation of quantifying the tax to be paid, the reasoning of the assessment does not raise any objection, since it clearly results therefrom that the tax to be paid derives from the application of the applicable rate to the assessed taxable value of the property register indicated therein, increased by 20 and 30%, in accordance with article 112 of CIMI. The TA further alleges that the competent Finance Services make available all the information containing the elements referred to in the preceding paragraph, which can be consulted there, but that the Claimant did not consult them. The law further obligates taxpayers, in this case the taxpayer, to request a second copy of that document from any finance service if they do not receive the collection note. Nevertheless, the collection notes were properly issued and notified to the Claimant and are timely. To this extent, it considers that the alleged defect of lack of reasoning should fail.

Regarding the defect of lack of prior hearing by virtue of the provision of article 60, no. 1 of LGT, the respondent alleges that this right can be dispensed with, in accordance with no. 2 of article 60 of LGT: (i) in the case where the assessment is made on the basis of the taxpayer's declaration or the decision on the claim, complaint or petition is favourable to him; and (ii) in the case where the assessment is made officially on the basis of objective values provided for by law, provided that the taxpayer has been notified to submit a missing declaration, without having done so. From the TA's perspective, the assessment challenged falls within the scope of the exception provided for in no. 2 of article 60 of LGT, considering that the Respondent was relieved of the obligation to notify the Claimant to exercise the right of prior hearing. Nevertheless, the omission of such duty would constitute a mere non-invalidating irregularity of the assessment, since it cannot be seen that the Tax Administration had any room for discretion that would enable it to act in a manner different from that which it undertook, being unable to practise either a different act nor this same act in a different manner. It seeks the total dismissal of the arbitral request.

The Claimant and Respondent thus differ as to the questions raised, which are exclusively matters of law and with which this Tribunal must rule.

II - PROCEDURAL REQUIREMENTS

The Arbitral Tribunal is regularly constituted.

The Parties have legal capacity and standing, are legitimate and are legally represented (see articles 4 and 10, no. 2 of RJAT and article 1 of Ordinance no. 112/2011, of 22 March).

The case is free from defects that would invalidate it.

III – FACTUAL MATTERS

A) Proven Facts

As relevant factual matters, this Tribunal considers the following facts established:

a. The claimant is the owner of the urban property located at Rua ..., no. ..., in the Parish of ..., registered in the property matrix under no. ..., of the Parish of ..., Lisbon;

b. With reference to this property and the year 2015, IMI was assessed at the rate fixed, with an increase of 30% and 200%. As follows:

i. Units B and I were taxed with an increase of 30% over the fixed rate;

ii. Units A, C, D, E, F, G, H were taxed with an increase of 200% over the base IMI rate.

c. From the assessment attached to the case file, with the description of the units and their respective tax values, it is possible to understand the rate and the respective increase, without any additional justification for why the increase was applied to each of the units described.

d. The taxpayer was notified of the assessments without any prior notification relating to the decision to apply the mentioned increases;

e. The taxpayer was not notified to exercise his right of hearing regarding the application of the mentioned increases.

f. The taxpayer paid the amounts corresponding to the three IMI instalments, with payment deadlines in April, July and November, determined as stated above;

g. He paid, with reference to the units of this property, the amount of €10,042.44, whereas without the increase he would have paid only €4,137.70.

h. The present arbitral request, for annulment of the tax assessments, was filed on 28-11-2016.

UNPROVEN FACTS

With relevance to the decision, there are no facts to be considered as unproven.

REASONING FOR THE PROVEN FACTS

The facts described above were established on the basis of the documentary evidence that the parties submitted in this case, the Claimant together with the arbitral request filed and were not challenged by the Respondent.

Taking into account the positions adopted by the parties and the documentary evidence attached to the case file, the facts listed above were considered proven, with relevance to the decision, being consensually recognised and accepted by the parties.

IV – ON THE LAW

Having established the factual matters as stated above, it is necessary to address the legal questions raised by the parties, beginning necessarily with the formal defects invoked by the Claimant, namely: a) lack of reasoning; b) lack of prior hearing.

Article 124 of CPPT, applicable under article 29, no. 1, subparagraph a) of RJAT, provides as follows:

"1. In the judgment, the tribunal shall give priority consideration to the defects that lead to a declaration of non-existence or nullity of the contested act and then to the defects alleged that lead to its annulment.

2. Within the said groups, consideration of the defects shall be made in the following order:

a) In the first group, that of the defects whose merit determines, in the prudent judgment of the judge, more stable or effective protection of the interests harmed;

b) In the second group, that indicated by the challenger, whenever he establishes between them a relation of subsidiarity and other defects are not alleged by the Public Prosecutor or, in all other cases, that fixed in the preceding subparagraph."

In the case under consideration, the Claimant invoked first the defect of lack of reasoning and second the defect of lack of prior hearing, both formal defects that invalidate the final act (tax assessment). Thus, we shall follow the order corresponding to the course followed by the claimant in the arbitral request.

A) Regarding the alleged defect of lack of reasoning:

The Claimant alleges that he was not previously notified of the decision to apply the increase. Furthermore, from the respective assessments there does not result any explicit reasoning that would allow the taxpayer to understand the reasons underlying the application of the 30% increase to some units and 200% to others. In fact, from the TA's response there is nothing alleged that puts into question this allegation of the claimant. From the analysis of the content of the documents and assessments attached to the case file it is evident that the assessment act suffers from an absolute lack of reasoning, since it should have, at a minimum, justified (albeit summarily) the reason for the increased rates applicable, as well as the reason for applying such a disparate increase to different units of the same property. The taxpayer should have been informed of the reasons and applicable legislation on the basis of which the decision to increase was made.

Now, having analysed the documents attached to the case file and the assessments challenged, this Tribunal cannot discern the reasons, the why of the application of the increase, the different increased rates, what law in force allowed its application and what interpretation thereof by the author of the act.

There was no prior notification containing the reasons for the application of the said increased rates, therefore their application is entirely lacking in reasoning.

The arguments introduced by the respondent TA in its response do not contradict this conclusion, since the reference to the decision of the Municipal Assembly regarding the rates annually applied, by virtue of the competence attributed to it by article 112 of CIMI, does not relieve the author of the tax act (TA) of the obligation to provide proper reasoning therefor. Knowing that reasoning can be expressed by reference to a prior decision or opinion to the assessment, provided that it is attached to the act of notification of the act, it is certain that in the present case this did not occur. Neither at the moment of notification of the assessments nor at any earlier moment.

In the case at hand, there is a complete failure of reasoning relating to the application of the IMI rate increases, with the taxpayer having been confronted with the tax assessments and amounts to be paid, without it being possible to extract therefrom the reason for the application of each of the increases in question.

In the tax assessments there is no reference to the factual and legal requirements on which the TA's decision was based, but only that the amounts to be paid were determined by the application of the legally fixed rate increased by 30% and 200%. This Tribunal cannot comprehend the reason for the application of the increases, and from the TA's arguments it is concluded that it also does not have this information. Suffice it to ask a simple question that any normal recipient would ask in the same situation: in such a disparate range that goes from an increase of 30% to 200%, what factors determined the concrete application, unit by unit, of each of these increases?

Knowing that all units belong to the same property it was essential to clarify the taxpayer as to the reasons for the application to each unit in particular of the increase owed and what the legal basis is that permits the application of the increase.

Now, the taxpayer finds no answer in the tax act that was notified to him, nor can this Tribunal ascertain what the objective and concrete reasons underlying it might be. Even if those reasons exist, the truth is that the act is completely silent and clarifies nothing in this regard.

This alone would suffice to conclude the final decision, but it is necessary, albeit summarily, to supplement this assessment, substantiating it with the main legal, doctrinal and case law references.

It is uncontroversial that reasoning is a legal requirement that is imposed for any administrative or tax act, with a tax assessment being a type of tax act in relation to which this requirement is imposed with maximum rigour, given the effects it produces on the legal sphere of the taxpayer. It is further worth recalling that it is a constitutional imperative by virtue of the provision of article 268, no. 3 of the Constitution of the Portuguese Republic (CRP), reaffirmed in article 77 of the General Tax Law (LGT).[1] From this latter provision it follows that, although the duty of reasoning is not restricted only to acts unfavourable to the taxpayer, in relation to these a greater density is required. It is today uncontroversial in Portuguese doctrine and case law, including arbitral,[2] that the legally required reasoning must have the following characteristics:

a. Officiousness: must always stem from the Administration's own initiative, provisional reasoning being inadmissible;

b. Contemporaneity: must be contemporaneous with the performance of the act, provisional or requested reasoning being inadmissible;

c. Clarity: must be understandable by an average recipient, avoiding polysemic concepts or deeply technical ones;

d. Completeness: must contain all the essential elements that were determinative of the decision taken, with this characteristic unfolding into the duty of justification (legal norms and factuality – domain of legality) and the duty of motivation (domain of discretion or opportunity, when an appraisal is required).

The duty of reasoning aims to allow interested parties to know the reasons that led the administrative or tax authority to act or decide, in order to convince its recipient of the legality underlying it, allowing him to understand its reason for being and be able conscientiously to assess its acceptance or its contestation. This has been asserted continuously by the case law of the higher courts, reiterating that the reasoning should provide the recipient of the act with a reconstruction of the cognitive and evaluative itinerary followed by the entity that performed the act, so as to clearly reveal the reasons that led it to that concrete decision.

It has likewise been recognised, both by doctrine and case law, that this requirement of reasoning must be balanced and moderated, being considered fulfilled by the concise and clear exposition of the factual and legal grounds that motivated the decision, and can consist of a declaration of agreement with the grounds of prior opinions, information or proposals (reasoning per relationem or per remissionem), provided that these form part of the final decision, duly notified to the recipient.[3]

Non-compliance with this requirement (absolute lack of reasoning) or with the requirements stated (incongruous, confused or contradictory reasoning, incomplete, obscure or merely referential) constitutes illegality, capable of leading to the annulment of the act.[4]

Returning to the concrete case, the reasoning required always reports to a concrete tax act, it is drawn that the legally due reasoning must be that which functionally proves necessary and adequate so that an ordinary taxpayer, with common knowledge and normally diligent, understands the sense of it (although he may disagree with its sense) and perceives that he is not faced with a mere demonstration of arbitrariness.

It is thus necessary to assess whether in the present case the Administration made known the reasons that led it to apply the said increased rates, and for what reason to two units this increase was 30% and to the others it reached 200%.

The TA's allegation regarding the essential elements which it says are properly referenced in the assessments (identification of the property, units, rates, values, guarantees of complaint and/or challenge) does not hold for the answer to the essential question. All such information is merely circumstantial and generic, without any reasoning reference to the application of IMI rate increases. Now, this is the essential question that is under discussion here in relation to which the reasoning is non-existent.

Examining the case file it is found that the assessments are completely silent on these questions, therefore it is not even a situation of insufficient reasoning, but rather of total absence of reasoning. But even if it were understood only as insufficient reasoning, it is certain that the consequences are identical, since this is equivalent to lack of reasoning if its content is not sufficient to explain the reasons why the decision was taken. In other words, the reasoning must be sufficient, and it is only so if from the decision it can be understood which the facts and legal norms that explain and support the final decision.[5]

Furthermore, the reasons of fact and the grounds of law of the decision must be perceptible, clear and understandable in light of the legal precepts mentioned and/or the principles invoked. The understanding of the STA regarding the reasoning of law is that it is considered sufficient with the reference to the concrete legally applicable rules, the pertinent principles, the legal regime or the well-determined legal framework. Even admitting, exceptionally and in very atypical cases (hardly compatible with the nature of the tax obligation of strictly legal origin), that in the reasoning of the act the concrete legal rules underlying the decision are not mentioned, the legal framework that led to the act or decision must always be indicated, and this must be perfectly cognizable from the perspective of a normal recipient, so that the legal reasons that determined it are perfectly intelligible.

Now, in the concrete case, given that it is an assessment issued by the competent Finance Service, covering all the properties belonging to the claimant, the truth is that it is not understood why the increase was applied to the IMI rate, in particular the 30% increase with reference to units "B" and "I" and 200% to the others. There is not a single legal norm mentioned, a principle or interpretation extracted from the law that supports such application. The TA could even have good reasons for concluding in this way, but it had to evidence them, concretely, clearly and sufficiently, so that we would understand the factual and legal reasons that led it to the concrete decision of applying the said increases.

On this question, the STA Judgment of 26-03-2014,[6] is very enlightening, referring to a question identical to that being decided in the present case, making it clear that: "if the taxpayer has not been notified of the manner in which the taxable matter was determined, then he must be so notified when notified of the assessment, under penalty of, in ignorance of the reasons why the taxable value (in this case, 30% and 200% increase) was arrived at, he will not be in a position to know the reasons underlying the assessment, and consequently, cannot consciously choose between acceptance of the act or reaction, voluntary or contentious, against it."

Given the elements attached to the case file, such reasoning is clearly non-existent, which constitutes a situation of absolute lack of reasoning. Furthermore, the TA's allegation to dismiss the defect of lack of reasoning does not hold. For it cannot come to hold the taxpayer responsible or burden him with the fact that he did not raise further clarifications (art. 37 LGT). This would be to permit and subvert the entire framework of legal and constitutional binding in force. The recipient has the right to request clarifications if and when he deems fit. Besides, it is not incumbent on the taxpayer to overcome the (grave) failures in compliance with the burden of reasoning imposed on the Administration. He should not and cannot replace the author of the act, nor can the exercise of his rights of challenge prejudice him. Reasoning is a requirement of the act itself, falling to its author to comply with the law and the functional obligations to which he is bound, among which the obligation to reason it, in fact and in law, in a clear and sufficient manner.

There is no doubt that the recipient has the right to know what the legal framework was taken into consideration, under what legal regime the author of the act understood to practice it, what the legal rules were and what interpretation led him to conclude as he did. In fact, the TA itself, by the position expressed in the case file, clearly reveals the awareness that the tax act demonstrates, with considerable evidence, the absence of reasoning for the assessment challenged.

Furthermore, the Tax Administration is bound by law, being able to act only in cases where the law permits it, nor in a manner other than that which it imposes, therefore reasoning is essential for understanding the factual and legal reasons underlying the act performed. It would be necessary for the documentation attached to be critically analysed and the recipient of the act duly informed as to what factual situation was weighed, what law was interpreted and applied. For this very reason, neither is it sufficient merely to indicate a legal norm (which in this case did not even occur), adding that the factual situation does not fall within its provision.

For all the reasons set out above, it is concluded that the assessment challenged suffers from the defect of lack of reasoning, therefore it is illegal and must be annulled.

In view of what is set out and the decision as to the defect of form due to lack of reasoning, the consideration of other defects is rendered moot, in particular that arising from the violation of the right of hearing. It should be said, however, that the failure to give the taxpayer prior hearing regarding the increases (30% and 200%) decided and applied, results in the annulment of the act without further ado. The argument extracted from article 60, no. 2 of LGT does not hold. As the TA itself rightly states, in article 35 of its response, "This right is only dispensed with, in accordance with no. 2 of article 60 of LGT (i) in the case where the assessment is made on the basis of the taxpayer's declaration or the decision on the claim, complaint or petition is favourable to him; and (ii) in the case where the assessment is made officially on the basis of objective values provided for by law, provided that the taxpayer has been notified to submit a missing declaration, without having done so."

In the case at hand, as results from all that has been set out, none of the exceptional circumstances that would permit such dispensation are present.

For all the reasons set out above, the IMI assessments object of the present arbitral process are illegal, must be annulled, with the consequent refund to the claimant of the excess tax paid, that is, €5,904.67, plus interest at the legal rate.

V. DECISION

Based on the foregoing, this Arbitral Tribunal decides:

a) To uphold the request for arbitral pronouncement and declare the illegality of the assessments challenged, due to the defect of form of lack of reasoning;

b) To declare the annulment of the contested act with the legal consequences;

c) To order the Respondent TA to reimburse and pay the difference of the tax paid in excess, plus interest at the legal rate, calculated until the date of actual reimbursement;

d) To order the Tax and Customs Authority to pay the costs of the case.

VALUE OF THE CASE

The value of the case is fixed at €5,904.67 in accordance with article 97-A, no. 1, a) of CPPT, applicable by virtue of subparagraphs a) and b) of no. 1 of article 29 of RJAT and no. 2 of article 3 of the Regulations on Costs in Tax Arbitration Cases.

COSTS

The arbitration fee is fixed at €612.00, in accordance with Table I of the Regulations on Costs in Tax Arbitration Cases, to be paid by the losing party, in accordance with articles 12, no. 2, and 22, no. 4, both of RJAT, and article 4, no. 4, of the said Regulations.

Notify.

Lisbon, 14 June 2017

The Arbitral Tribunal,

___________________________

(Maria do Rosário Anjos)

[1] In this sense see Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa (2012) General Tax Law, Annotated and Commented, 4th Edition, Editora Encontro da Escrita, Lisbon, pp. 675 et seq.

[2] In this regard, see, among others, the arbitral decisions rendered in cases nos. 30/2012-T and 109/2013 rendered on 1-08-2012 and 07-01-2014, respectively.

[3] In this sense, see, among others, Joaquim Freitas da Rocha (2009) Lessons of Tax Procedure and Process, 3rd edition, Coimbra Editora, Coimbra, pp. 113 et seq.

[4] Also in this sense, see Court of Appeal (TCAS) Judgment of 04-12-2012, in case no. 06134/12; with identical sense, see also STA Judgment of 13/7/2011, in appeal no. 656/11 and TCAS Judgment of 19/6/2012, in case no. 3096/09, all available at www.dgsi.pt.

[5] In this sense, see Diogo Leite de Campos et al., op. cit., p. 381 et seq.; also in this sense, see, among others, TCAS Judgment of 19-06-2012, case no. 3096/09, available at www.dgsi.pt.

[6] See STA Judgment of 26-03-2014, at www.dgsi.pt.

Frequently Asked Questions

Automatically Created

What is the IMI tax rate surcharge (majoração de taxa) and when does it apply to property owners in Portugal?
The IMI tax rate surcharge (majoração de taxa) is an additional percentage applied to the base IMI rate as authorized by Article 112 of the Municipal Property Tax Code (CIMI). Municipal Assemblies can establish surcharges for various situations, commonly including vacant or deteriorated urban properties, properties in urban redevelopment areas, or buildings not meeting habitability standards. In this case, surcharges of 30% and 200% were applied to different units within the same property. These surcharges serve policy objectives such as encouraging property maintenance, combating urban decay, and promoting housing availability. The legal basis requires Municipal Assembly deliberation establishing the surcharge categories and applicable percentages, which must be published and applied uniformly to properties meeting the specified criteria.
What constitutes lack of justification (falta de fundamentação) in Portuguese municipal property tax assessments?
Lack of justification (falta de fundamentação) in Portuguese tax law constitutes a formal defect (vício de forma) that can invalidate administrative acts, including IMI assessments. Under Article 77 of the General Tax Law (LGT), tax authorities must state the legal and factual grounds supporting their decisions. For IMI surcharge assessments, mere indication of the increased rate percentage is insufficient—the assessment must identify: (1) the specific legal provision authorizing the surcharge, (2) the factual circumstances justifying its application (e.g., property vacant for specific period, deteriorated condition), and (3) why these circumstances apply to each particular property unit. The reasoning must be sufficient to enable taxpayers to understand the assessment basis and exercise their defense rights effectively. In this case, the assessments showed only the surcharge percentages without explaining why different units within the same property received different treatment (30% vs. 200%), creating a fundamentação defect.
How can taxpayers challenge IMI tax assessments through CAAD arbitration proceedings?
Taxpayers can challenge IMI assessments through CAAD (Administrative Arbitration Centre) by filing a request for constitution of an arbitral tribunal under the RJAT (Decree-Law 10/2011). The process begins with submitting the arbitration request within the legal deadline (generally within 90 days of notification or knowledge of the challenged act), identifying the contested assessments and grounds for illegality. The CAAD President accepts the request and notifies the Tax Authority, which must respond within the legal timeframe. The claimant may choose to appoint an arbitrator or have one appointed by the CAAD Deontological Council. After tribunal constitution, parties submit arguments and may participate in a hearing (which can be waived by agreement). The arbitral decision is binding and has the same effects as a judicial sentence. This alternative dispute resolution mechanism offers taxpayers a faster, more specialized forum than traditional administrative courts for resolving tax disputes, with decisions typically issued within 6 months.
What are the legal grounds for annulling IMI liquidations issued without proper administrative reasoning?
Legal grounds for annulling IMI liquidations issued without proper administrative reasoning include: (1) Formal defect (vício de forma) due to violation of Article 77 of LGT, which mandates that tax acts be reasoned with statement of legal and factual grounds; (2) Violation of constitutional principles requiring transparent and reviewable administrative action; (3) Infringement of taxpayer defense rights, as inadequate reasoning prevents effective challenge of the assessment; (4) Non-compliance with Article 268(3) of the Portuguese Constitution requiring administrative acts to be notified with indication of grounds and available remedies. The reasoning requirement serves essential functions: enabling taxpayers to understand why they were taxed, facilitating judicial/arbitral review, and ensuring tax authorities exercise their powers based on law rather than arbitrariness. When assessments apply discretionary elements like property-specific surcharges without explaining the factual predicate, they fail this fundamental requirement. Additionally, failure to provide prior hearing under Article 60 of LGT, when not covered by legal exceptions, constitutes another annulment ground, though courts disagree whether this is always invalidating or merely an irregularity when the outcome would necessarily be identical.
Can property owners claim a refund of excess IMI tax paid after a successful CAAD arbitral decision?
Yes, property owners can claim refunds of excess IMI tax paid following a successful CAAD arbitral decision that annuls the challenged assessments. Under Article 24(5) of RJAT and Article 100 of the Tax Procedure Code (CPPT), annulment of tax assessments entitles taxpayers to reimbursement of amounts paid in excess, plus compensatory interest calculated from the payment date until actual refund. In this case, the claimant seeks reimbursement of €5,904.57 corresponding to overpaid tax from the three 2015 installments. The arbitral decision ordering annulment triggers the Tax Authority's duty to refund within the legal timeframe. If surcharges are eliminated, the taxpayer receives the difference between what was paid (with surcharges) and what should have been paid (base rate only). Compensatory interest accrues automatically under Article 43 of LGT at the legal rate established annually by ministerial order. Taxpayers should ensure the arbitration request explicitly seeks both annulment and reimbursement with interest. The CAAD decision is enforceable like a court judgment, and if the TA fails to refund voluntarily, enforcement proceedings can be initiated.