Process: 709/2015-T

Date: May 19, 2016

Tax Type: IMT Selo

Source: Original CAAD Decision

Summary

This CAAD arbitral decision (Process 709/2015-T) addresses the tax treatment of real estate investment funds (FIIAH) under Portugal's special tax regime. A FIIAH management company challenged IMT assessments of €33,004.75 and Stamp Duty of €4,404.00 on a property acquisition, claiming Article 236 of Law 83-C/2013 (2014 State Budget) was unconstitutional and violated Article 103(3) of the Portuguese Constitution. The fund argued the assessments were null under Article 133(2)(d) of the Administrative Procedure Code as they violated fundamental rights. The Tax Authority raised preliminary objections, arguing the arbitral tribunal lacked material jurisdiction since the challenge concerned abstract constitutional review rather than concrete application of the law, and that the Authority lacked passive standing. The tribunal rejected both objections, ruling it had jurisdiction to assess the legality of applying Article 236 to specific facts, not to declare abstract unconstitutionality—a power reserved for the Constitutional Court. The tribunal distinguished between abstract constitutional review (Constitutional Court jurisdiction) and examining whether a law's application to concrete facts was lawful (arbitral tribunal competence under Article 2(1)(a) of RJAT). The decision confirms FIIAH funds can challenge IMT and Stamp Duty assessments through CAAD arbitration when disputing the application of tax laws to their property acquisitions. The claimant also requested restitution of amounts paid plus compensatory interest under Article 43 of the General Tax Law. This case clarifies the procedural framework for FIIAH funds to contest property acquisition taxes and establishes that CAAD tribunals have jurisdiction over such disputes when they involve applying tax legislation to concrete situations rather than abstract constitutional challenges.

Full Decision

ARBITRAL DECISION

1. Report

1.1 A..., S.A., NIPC..., in its capacity as management company of the real estate investment fund "B...", hereinafter referred to as the "Claimant", NIPC..., with registered office at Avenue of ..., no.... in Lisbon, requested the constitution of a singular arbitral tribunal, under the combined provisions of articles 2, no. 1, paragraph a), and article 10, both of Decree-Law no. 10/2011, of January 20 (Legal Regime for Arbitration in Tax Matters, hereinafter referred to only as "RJAT") and articles 1 and 2 of Order no. 112-A/2011, of March 22, in which the Tax and Customs Authority (AT) is the respondent.

1.2 The request for arbitral pronouncement, presented on November 27, 2015, concerns the declaration of nullity or, subsidiarily, the annulment of the assessment notices no.s ... of the municipal tax on onerous transfers of real estate (IMT), of 06-10-2015, in the amount of €33,004.75 and ... of stamp duty, of the same date, in the amount of €4,404.00, in the total amount of €37,408.75 (thirty-seven thousand, four hundred and eight euros and seventy-five cents), more specifically identified in the aforementioned request for arbitral pronouncement, concerning the acquisition of the autonomous unit identified by the letter "V" of the urban property constituted under the horizontal property regime, located at Avenue..., no..., Block..., ..., registered in the urban property register of the parish of ... and ... under article....

1.3 The Claimant further requests condemnation of the Respondent to restitution of the amounts paid, increased by the respective compensatory interest, in accordance with article 43 of the General Tax Law (LGT).

1.4 The Claimant chose not to appoint an arbitrator.

1.5 The request for constitution of the arbitral tribunal was accepted by the President of CAAD and notified to the AT on December 4, 2015.

1.6 The Signatory was designated by the President of the Deontological Council of CAAD as arbitrator of the singular arbitral tribunal, in accordance with the provisions of article 6 of the RJAT, and acceptance of the appointment was communicated within the applicable period.

1.7 On January 21, 2016, the parties were notified of this designation and did not object to it, in accordance with the combined provisions of article 11, no. 1, paragraphs a) and b) of the RJAT and articles 6 and 7 of the CAAD Deontological Code.

1.8 Thus, in accordance with the provisions in paragraph c) of no. 1 of article 11 of the RJAT, the singular arbitral tribunal was constituted on February 5, 2016.

1.9 The Respondent was notified, by arbitral order of February 5, 2016, to, in accordance with article 17, no. 1, of the RJAT and within a period of 30 days, present its response and, if desired, request the production of additional evidence.

1.10 It was further notified to, within the same period, submit the administrative file referred to in article 111 of the Code of Tax Procedure and Process (CPPT), though it chose not to do so.

1.11 On March 7, 2016, the Respondent presented its response, defending itself by objection and arguing for the dismissal of the request for arbitral pronouncement.

1.12 Or, if this is not understood to be the case, that notification be made to the Public Prosecutor's Office, for purposes of the provisions of article 280, no. 3 of the Constitution of the Portuguese Republic (CRP) and article 72, no. 3 of the Constitutional Court Law.

1.13 Considering that the parties did not request the production of any evidence beyond what the Claimant attached to the request for arbitral pronouncement, the Arbitral Tribunal, given the principles of autonomy in the conduct of proceedings, expedition, simplification and procedural informality, inherent in no. 2 of articles 19 and 29 of the RJAT, by order of December 17, 2015, dispensed with the holding of the meeting provided for in article 18 of the same statute, and further decided that the proceedings proceed with optional written submissions, in successive form for the Respondent.

1.14 The date of May 26, 2016 was further set for the pronouncement of the respective final arbitral decision.

1.15 The parties were notified of this order on March 9, 2016, and duly presented their submissions.

1.16 In these, the Respondent invokes the dilatory exceptions of lack of material jurisdiction, absolute, of the Arbitral Tribunal to assess the abstract illegality of the assessments and that of passive lack of standing of the Respondent, provided, respectively, in paragraphs a) and e) of article 577 of the Civil Procedure Code (CPC), applicable ex vi article 29, no. 1, paragraph e) of the RJAT.

1.17 It further attaches a document (arbitral decision of March 14, 2016, handed down in Case no. 398/2015-T).

2. Preliminary Issues

2.1 Because the dilatory exceptions invoked could constitute an obstacle to consideration of the merits of the case, giving rise to dismissal of the instance, cf. articles 576, no. 2, and article 278, no. 1, paragraphs a) and d) of the CPC, they must be known ex officio and with priority – articles 578 and 608, no. 1, of the same code.

2.2 Thus:

a) Regarding the lack of material jurisdiction of the Arbitral Tribunal

For the Respondent, the Claimant seeks the non-application of article 236 of Law no. 83-C/2013, of December 31 (State Budget Law for 2014) for its alleged illegality/unconstitutionality and not for any illegality occurring in its application to concrete facts.

Thus, the Constitutional Court is the competent forum to know either the illegality or unconstitutionality of legal norms [arts. 280, no. 2, paragraphs a) and d) and 281, no. 1, paragraphs a) and b) and no. 3 of the CRP and arts. 6 and 66 of the Constitutional Court Law].

The Arbitral Tribunal not having jurisdiction to assess this question, given that what is sought is abstract review of the constitutionality of the norms.

However, it is not the purpose of the arbitral tribunal to declare the (un)constitutionality of the norm in question, as is obvious, but solely to pronounce itself on its application to concrete facts, evaluating the legality or otherwise of that application, a competence that emanates from paragraph a), no. 1, article 2 of the RJAT.

Whereby, it is judged that the invoked exception of lack of material jurisdiction of the Arbitral Tribunal is unfounded.

b) Regarding the passive lack of standing of the Respondent

In light of what we have just stated regarding the invoked preceding exception, the one relating to the passive lack of standing of the Respondent must also be judged unfounded, since what is at issue is not the assessment of abstract review of the constitutionality of the aforementioned norm, but solely its application to concrete facts, that is to the contested acts.

2.3 In accordance with the foregoing, the tribunal declares itself regularly constituted and materially competent to know of the present action, in declarative proceedings.

2.4 The parties have judicial personality and capacity, show themselves to be legitimate and are regularly represented (articles 4 and 10, no. 2, of the RJAT and article 1 of Order no. 112-A/2011, of March 22).

2.5 The proceedings do not suffer from any nullities.

2.6 There are no other circumstances that prevent consideration of the merits of the case.

3. Position of the Parties

3.1 Of the Claimant

It alleges that the assessments are illegal due to unconstitutionality of article 236 of Law no. 83-C/2013, of December 31, which approved the State Budget for 2014, by violation of the provisions in no. 3 of article 103 of the Constitution of the Portuguese Republic.

It further considers that they are null under the provisions of paragraph d) of no. 2 of article 133 of the Code of Administrative Procedure (CPA), inasmuch as they offend the essential content of a fundamental right, and as such are contestable at any time.

It concludes by arguing for the full acceptance of the request for arbitral pronouncement.

3.2 Of the Respondent

Defending itself, by objection, the AT invokes that in the Portuguese legal-administrative order, the rule regime of invalidity of acts is, for reasons of legal certainty, mere voidability, including for those undertaken on the basis of illegal or unconstitutional deliberations, with the Supreme Administrative Court having pronounced itself in that same sense.

That declaration of nullity appears reserved for those acts that offend the essential content of a fundamental right, in conflict with the rights, freedoms and guarantees of citizens, but not those that conflict with the principle of legality, as is the case herein.

That the acts in question, if they were violators of the principle of tax legality, would be voidable, but not null.

It further contends that the law in question is not marred by retroactivity, having established no new requirement for application of the exemption provided for in the special regime applicable to real estate investment funds for residential rental (FIIAH), but only having granted a period for compliance with a requirement already underlying the regime itself, a period that only begins after the entry into force of the new law.

Thus, it is not a matter of altering the assumptions, conditions of allocation or recognition of a tax benefit, but solely and only regulating the period of time for purposes of demonstrating compliance with a previously established requirement.

In light of the foregoing, it considers that the norm in question is not unconstitutional, and the present request for arbitral pronouncement should be declared unfounded.

4. Subject Matter of the Dispute

The question that constitutes the thema decidendum consists in assessing the legality of the IMT and IS assessments, contained in the request for arbitral pronouncement, effected under article 236 of Law no. 83-C/2013, of December 31 (State Budget Law for 2014).

5. Reasoning

5.1 Proven Facts

With relevance for the assessment and decision of the questions raised, both preliminary and substantive, the following facts are established as proven:

5.1.1 On December 12, 2013, the claimant acquired an autonomous unit identified by the letter "V" of the urban property constituted under the horizontal property regime, located at Avenue..., no..., Block..., ..., registered in the urban property register of the parish of ... and ... under article....

5.1.2 This acquisition was exempt from IMT, under paragraph a), no. 7, article 8 of the Special Regime applicable to Real Estate Investment Funds for Residential Rental (FIIAH), approved by article 102 of Law no. 64-A/2008, of December 31, because the aforementioned autonomous unit was destined exclusively for rental for permanent residence.

5.1.3 It further benefited from exemption from Stamp Duty, provided in item 1.1 of the General Table of Stamp Duty, under no. 8 of article 8 of the aforementioned special regime.

5.1.4 On October 6, 2015, assessment no. ... of the municipal tax on onerous transfers of real estate (IMT) was effected, in the amount of €33,004.75.

5.1.5 On the same date, assessment no. ... of stamp duty was effected, in the amount of €4,404.00.

5.1.6 These assessments were based on the provisions of no. 2 of article 236 of Law no. 83-C/2013, of December 31, combined with no. 16 of article 8 of the aforementioned regime, amended by article 235 of the same law, by virtue of, with the sale of the aforementioned autonomous unit, the aforementioned exemptions ceased to have effect.

5.1.7 The IMT and Stamp Duty assessed were paid on October 7, 2015.

5.2 Unproven Facts

5.2.1 There are no facts relevant to the decision of the case that have not been proven.

5.3 Motivation

5.3.1 With regard to the proven facts, the conviction of the Arbitral Tribunal was based on the body of documents submitted.

5.4 Matter of Law

Articles 102 to 104 of Law no. 64-A/2008, of December 31 (State Budget Law for 2009) approved a special regime applicable to real estate investment funds for residential rental (FIIAH), constituted during the five years following the entry into force of the aforementioned law, that is until 31-12-2013[1] and to the properties acquired by them in the same period.

This regime was intended to create an additional stimulus to the urban rental market in Portugal, providing for a tax regime specially favorable applicable until December 31, 2020.

At pages 16/17 of the Report of the Bill no. 226/X[2] (State Budget Law for 2009) one can read: "Creation of Real Estate Investment Funds for Residential Rental - This also merits reference to the initiative regarding the creation of real estate investment funds and companies specifically designed for investment in properties intended for residential rental. With this initiative, it is intended to create an additional stimulus to the urban rental market in Portugal, providing for a specially favorable tax regime applicable until December 31, 2020. The present regime is applicable to funds and companies constituted in the five years following the entry into force of the law and to properties acquired by them in that period.

Essentially, it provides for the creation of real estate investment funds and companies whose total assets are constituted, in a percentage not less than 75%, by properties located in Portugal intended for rental for permanent residence. In this way, it is intended to create the necessary conditions for the placement of properties on the rental market and to allow, furthermore, families burdened with payments of housing loans to alienate their respective property to the fund or company, with reduction of their respective charges, replacing them with a rental of lower value than that payment and maintaining a purchase option over the property they rent from the fund.

It is proposed that the tax regime of these funds contemplate:

"(...) Exemption from IMT in the acquisitions of urban properties or autonomous fractions of urban properties intended exclusively for rental for permanent residence or of urban properties or autonomous fractions of urban properties intended for own and permanent residence, as a result of the exercise of the purchase option by lessees of the properties that make up the assets of the investment funds.

• Exemption from Stamp Duty on all acts connected with the transfer of urban properties intended for permanent residence, which occurs as a result of the conversion of the right of ownership of these properties into a right of rental, as well as with the exercise of the purchase option (...)" (underlining and bold, ours).

This Bill was approved on November 28, 2008, and came to be contained in Law no. 64-A/2008, of 31-12 (article 8 of the aforementioned special regime) in the following terms:

"Article 8

Tax Regime

1— Exemptions from Corporate Income Tax (IRC) are granted to income of any kind obtained by FIIAH constituted between January 1, 2009 and December 31, 2013, operating in accordance with national legislation and in observance of the conditions provided for in the preceding articles.

2— Exemptions from Personal Income Tax (IRS) and IRC are granted to income relating to units of participation in the investment funds referred to in the preceding number, paid or made available to their respective holders, whether by distribution or redemption, excluding the positive balance between capital gains and capital losses resulting from the alienation of units of participation.

3— Exemptions from IRS are granted to capital gains resulting from the transfer of properties intended for own residence in favor of the investment funds referred to in no. 1, which occurs as a result of the conversion of the right of ownership of these properties into a right of rental.

4— The capital gains referred to in the preceding number shall be taxed, under general rules, if the taxpayer ceases the rental contract or does not exercise the option right provided for in no. 3 of article 5, with the periods of expiration and prescription being suspended for purposes of assessment and collection of IRS, until the end of the contractual relationship.

5— The amounts borne by the lessees of the properties of the investment funds referred to in no. 1 as a result of the conversion of a right of ownership of a property into a right of rental are deductible from the collection, in the terms and limits contained in paragraph c) of no. 1 of article 85 of the IRS Code.

6— Exemptions from Municipal Real Estate Tax (IMI) are granted, as long as they remain in the portfolio of the FIIAH, to urban properties intended for rental for permanent residence that make up the assets of the investment funds referred to in no. 1.

7— Exemptions from IMT are granted to:

a) The acquisitions of urban properties or autonomous fractions of urban properties intended exclusively for rental for permanent residence by the investment funds referred to in no. 1;

b) The acquisitions of urban properties or autonomous fractions of urban properties intended for own and permanent residence, as a result of the exercise of the purchase option referred to in no. 3 of article 5 by lessees of the properties that make up the assets of the investment funds referred to in no. 1.

8— Exemptions from Stamp Duty are granted to all acts undertaken, insofar as they are connected with the transfer of urban properties intended for permanent residence which occurs as a result of the conversion of the right of ownership of these properties into a right of rental over the same, as well as with the exercise of the purchase option provided for in no. 3 of article 5.

9— Supervisory fees are exempt for management entities of FIIAH with respect exclusively to the management of funds of this nature.

10— Excluded from the exemptions contained in the present article are entities that are residents in a country, territory or region subject to a clearly more favorable tax regime, contained in a list approved by order of the Minister of Finance.

11— The obligations provided for in article 119 and in no. 1 of article 125 of the IRS Code must be fulfilled by the management or registering entities.

12— If the requirements referred to in no. 1 cease to be met, the regime provided for in the present article ceases to apply, and the regime provided for in article 22 of the Tax Benefits Statute begins to apply, with the income of the investment funds referred to in no. 1 which, at that date, have not yet been paid or made available to their respective holders being taxed autonomously, at the rates provided for in article 22 of the same statute, with the addition of compensatory interest.

13— The management entities of the investment funds referred to in no. 1 are jointly and severally liable for the tax debts of the funds whose management falls to them" (bold, ours).

It is thus verified that it is a prerequisite of the IMT and Stamp Duty exemption, provided for in nos. 7, paragraph a) and 8 above, that urban properties or autonomous fractions of urban properties are intended exclusively for rental for permanent residence.

To that extent, the obligation to destine the property to residential rental is not a requirement of the amendments introduced by the State Budget Law for 2014, but rather a prerequisite ab initio of the special regime applicable to real estate investment funds for residential rental (FIIAH), indeed a natural consequence of the objectives and motivations that presided over the creation of these funds.

For compliance with the provisions of paragraph a) of no. 7 of article 8 of the special regime applicable to real estate investment funds for residential rental (FIIAH), it is not sufficient to have a declared intention in the acquisition of the property but rather an actual dedication to rental for permanent residence.

Now, the Claimant does not prove in any way in these proceedings the fulfillment of this requirement.

Thus, whenever those properties or autonomous fractions are destined to another purpose or their alienation occurs (because in this case the assumption on which the exemption was based – rental for permanent residence – can no longer be fulfilled), the exemption ceases to have effect, as follows from no. 3 of article 14 of the Tax Benefits Statute (EBF), which provides:

"When the tax benefit relates to the acquisition of goods destined for the direct accomplishment of the acquirers' purposes, it ceases to have effect if they are alienated or given another purpose without authorization of the Minister of Finance, without prejudice to other sanctions or different regimes established by law".

In these cases, the obligation lay with the taxpayer to request assessment of the IMT, within the period of 30 days from the expiration of the exemption and, in the same period, to effect its payment, cf. no. 1 of article 34 and no. 6 of article 36 of the IMT Code, respectively.

Under penalty of the Tax and Customs Authority (the financial chief) promoting its official assessment and notifying the taxpayer to effect payment, within a period of 30 days, without prejudice to compensatory interest and the corresponding penalty, cf. no. 1 of article 38 of the IMT Code.

As for the Stamp Duty provided for in item 1.1 of the respective general table, the same burden falls upon the taxpayer by virtue of the provisions of no. 4 of article 23 and no. 4 of article 44 of the Stamp Duty Code.

It is certain that article 235 of Law no. 83-C/2013, of December 31 (State Budget Law for 2014) gave new wording to the aforementioned article 8 of that special regime applicable to FIIAH, adding thereto nos. 14 to 16, with the following wording:

"14— For purposes of the provisions of nos. 6 to 8, urban properties are considered to be intended for rental for permanent residence whenever they are the subject of a rental contract for permanent residence within three years from the moment they came to make up the assets of the fund, the taxpayer being required to communicate and provide proof to the AT of the respective actual rental, within 30 days following the end of the aforementioned period.

15— When properties have not been the subject of a rental contract within the three-year period provided for in the preceding number, the exemptions provided for in nos. 6 to 8 cease to have effect, the taxpayer being required in that case to request from the AT, within 30 days following the end of the aforementioned period, assessment of the respective tax.

16— If properties are alienated, with the exception of cases provided for in article 5, or if the FIIAH is subject to liquidation, before the period provided for in no. 14 has elapsed, the taxpayer must also request from the AT, before the alienation of the property or the liquidation of the FIIAH, assessment of the tax due in accordance with the preceding number" (underlining and bold, ours).

As a transitional norm within the scope of the same regime, article 236 of the aforementioned law provides:

"1— The provisions of nos. 14 to 16 of article 8 of the special regime applicable to FIIAH and SIIAH, approved by articles 102 to 104 of Law no. 64-A/2008, of December 31, are applicable to properties that have been acquired by FIIAH as from January 1, 2014.

2— Without prejudice to the provisions of the preceding number, the provisions of nos. 14 to 16 of article 8 of the special regime applicable to FIIAH and SIIAH, approved by articles 102 to 104 of Law no. 64-A/2008, of December 31, are equally applicable to properties that have been acquired by FIIAH before January 1, 2014, in which cases the three-year period provided for in no. 14 shall be counted as from January 1, 2014" (underlining, ours).

Thus, whenever properties or autonomous fractions come to be alienated, the taxpayer shall request from the AT, before the alienation, assessment of the tax due in accordance with no. 15 of article 8 of the special regime applicable to FIIAH.

What no. 16 brought new was only the alteration of the period for requesting assessment of the taxes and payment thereof.

In effect, before the amendment of this provision, assessment of the taxes was requested from the AT by the taxpayer, within the period of 30 days from the expiration of the exemption, under penalty of the AT promoting its official assessment.

However, with the new wording, the taxpayer came to request assessment equally from the AT, but before the alienation of the property or autonomous fraction.

Thus, the aforementioned no. 16, combined with no. 15 of article 8 of the special regime, does not alter the substance or requirements of the exemption established by paragraph a), having a more procedural/operative nature – reading that if there is alienation of properties that have not been the subject of a rental contract, the exemptions cease (namely that of paragraph a) of no. 7), the taxpayer being required to request assessment of the respective tax.

We thus understand that what is at issue is neither the retroactivity or otherwise of the law, nor does there exist any prejudice to the Claimant's legitimate expectations or aggravation of its tax position. The rationale for granting a tax benefit in the context of IMT to FIIAH was established clearly from the beginning – "The acquisitions of urban properties or autonomous fractions of urban properties intended exclusively for rental for permanent residence by the investment funds...".

As for the question of nullity or voidability of the taxable acts in question, for alleged violation of no. 3 of article 103 of the CRP (no one can be required to pay taxes that have not been created in accordance with the Constitution, which have a retroactive nature or whose assessment and collection are not made in accordance with the law), the Arbitral Tribunal considers that they would be voidable and not null, if they were violators of the principle of tax legality.

In effect, in accordance with article 133 of the [former] Code of Administrative Procedure (CPA), acts shall be null, only, to which any of the essential elements are lacking or for which the law expressly provides that form of invalidity.

Administrative acts undertaken with violation of the applicable legal principles or norms for whose violation no other sanction is provided are voidable, cf. article 135 of the [former] CPA.

In this sense, among others, the following judgments available at www.dgsi.pt:

"I - The sanction that generally falls on an invalid administrative act is its voidability (art. 135 of the CPA), it being the case that the law only determines its nullity when it lacks any of its essential elements or when it expressly sanctions it with that form of invalidity - art. 133 of the same statute. In this way, only administrative acts specifically indicated in the law are null - this is the case of those enumerated in no. 2 of that art. 133 - and those lacking one of their essential elements.

II - By essential elements of the administrative act for purposes of art. 133, no. 1, of the CPA, should be understood the elements comprising the administrative act itself contained in art. 120 of the same code and, therefore, the same relate to its densification, which follows from the types of acts in question or the seriousness of the defects that affect them[3]".

"When what is at issue is the violation of fundamental rights that do not fill the 'hard core', nor can be classified as so-called analogous rights, nor does the eventual violation thereof generate nullity, but rather mere voidability[4]".

In effect, in the Portuguese legal-administrative order, the rule regime of invalidity of acts is, for reasons of legal certainty, mere voidability, including for those undertaken on the basis of illegal or unconstitutional deliberations, with the Supreme Administrative Court having pronounced itself in that same sense.

Thus, declaration of nullity appears reserved for those acts that offend the essential content of a fundamental right, in conflict with the rights, freedoms and guarantees of citizens, but not those that conflict with the principle of legality, as is the case herein.

However, for the present case, the category of invalidity of the acts will matter little – if null or voidable – since the request for arbitral pronouncement is timely, in light of the provisions of paragraph a) of no. 1 of article 10 of the RJAT, combined with paragraph a) of no. 1 of article 102 of the CPPT, no. 1 of article 43 of the IMT Code and no. 2 of article 49 of the Stamp Duty Code.

By all of the foregoing, we understand that the IMT and Stamp Duty assessments in question do not suffer from any defect, and shall therefore be maintained in the legal order.

6. Decision

In light of the foregoing, it is decided:

  • To judge unfounded the dilatory exceptions invoked (lack of material jurisdiction of the Arbitral Tribunal and passive lack of standing of the Respondent); and

  • To judge unfounded the request for declaration of illegality of the IMT assessments no. ... and Stamp Duty no. ..., in the amounts of €33,004.75 and €4,404.00, respectively, effected on October 6, 2015, concerning the acquisition of the autonomous unit identified by the letter "V" of the urban property under the horizontal property regime, located at Avenue..., no..., Block..., ..., registered in the urban property register of the parish of ... and ... under article..., maintaining the aforementioned tax acts in the legal order.

7. Value of the Case

In accordance with the provisions of article 306, no. 2, of the CPC, 97-A, no. 1, paragraph a), of the CPPT and 3, no. 2, of the Regulation on Costs in Tax Arbitration Proceedings, the value of the case is set at €37,408.75.

8. Costs

Under the provisions of article 22, no. 4, of the RJAT, the amount of costs is set at €1,836.00, in accordance with Table I attached to the Regulation on Costs in Tax Arbitration Proceedings, to be borne by the Claimant.

Let notification be made.

Lisbon, 19-05-2016

The Arbitrator,

(Rui Ferreira Rodrigues)

Text prepared by computer, in accordance with the provisions of article 131, no. 5, of the CPC, applicable by reference of article 29, no. 1, paragraph e), of the RJAT.

[1] Extended until 31-12-2015, cf. article 234 of Law no. 83-C/2013, of 31-12

[2] Available at https://www.parlamento.pt/OrcamentoEstado/Documents/oe/2009/RelatorioOE2009.pdf

[3] Judgment of the SAT of 03-03-2004 (Case no. 01938/03)

[4] Judgment of the TCAN of 03-07-2013 (Case no. 01795/10.9BEBRG)

Frequently Asked Questions

Automatically Created

What IMT and Stamp Duty exemptions apply to FIIAH funds under Article 236 of Law 83-C/2013?
Article 236 of Law 83-C/2013 established a special tax regime for FIIAH (Real Estate Investment Funds) and SIIAH regarding IMT and Stamp Duty on property acquisitions. However, this decision specifically challenges the constitutionality and application of Article 236's provisions. The fund argues that the article unconstitutionally removed or limited exemptions that should apply to FIIAH funds under Article 103(3) of the Portuguese Constitution. The exact scope of exemptions depends on whether Article 236 is applied, which is the central dispute in this case. FIIAH funds traditionally benefited from favorable tax treatment on property transactions, but Article 236 allegedly modified this regime in violation of constitutional principles.
Can a FIIAH fund challenge IMT and IS liquidation acts through CAAD tax arbitration?
Yes, FIIAH funds can challenge IMT and Stamp Duty liquidation acts through CAAD tax arbitration. This decision confirms that arbitral tribunals constituted under the RJAT (Legal Regime for Arbitration in Tax Matters) have material jurisdiction to hear such challenges. The tribunal rejected the Tax Authority's objection that it lacked jurisdiction, clarifying that CAAD tribunals can assess the legality of applying tax legislation to concrete facts under Article 2(1)(a) of RJAT. However, they cannot conduct abstract constitutional review—that power belongs exclusively to the Constitutional Court. FIIAH management companies, acting on behalf of the funds, have standing to request arbitration by filing a request for constitution of an arbitral tribunal under Articles 2 and 10 of Decree-Law 10/2011.
How does the special tax regime for FIIAH and SIIAH affect property acquisition taxes in Portugal?
The special tax regime for FIIAH and SIIAH under Article 236 of Law 83-C/2013 significantly affects property acquisition taxes by modifying the standard exemptions or tax treatment these investment vehicles receive. This decision arose because Article 236 allegedly changed the favorable tax regime previously applicable to FIIAH funds, leading to IMT and Stamp Duty assessments that the fund claims should be exempt. The regime creates specific rules for real estate investment funds that differ from ordinary property buyers. The constitutional challenge in this case suggests Article 236 may have restricted or eliminated tax benefits, imposing IMT and Stamp Duty obligations where exemptions previously applied. The outcome of such challenges determines whether FIIAH acquisitions receive preferential tax treatment or face standard property transfer taxation.
What is the procedure for requesting annulment of IMT and Stamp Duty assessments at CAAD?
To request annulment of IMT and Stamp Duty assessments at CAAD, the procedure involves: (1) Filing a request for constitution of an arbitral tribunal under Articles 2(1)(a) and 10 of RJAT (Decree-Law 10/2011) and Order 112-A/2011; (2) Identifying the specific assessment notices being challenged with dates and amounts; (3) Stating the legal grounds (nullity, annulment, illegality); (4) Optionally appointing an arbitrator or allowing the CAAD President to designate one; (5) The tribunal is constituted after designation and notification to parties; (6) The Tax Authority has 30 days to respond under Article 17 of RJAT; (7) The tribunal may dispense with hearings and proceed with written submissions; (8) A final decision is issued within the statutory deadline. Claimants can also request restitution of amounts paid plus compensatory interest under Article 43 of the General Tax Law.
Are FIIAH management companies entitled to refunds and compensatory interest on unlawful IMT and IS charges?
Yes, FIIAH management companies acting on behalf of investment funds are entitled to request refunds and compensatory interest on unlawful IMT and Stamp Duty charges. In this case, the claimant explicitly requested condemnation of the Tax Authority to restitution of amounts paid (€37,408.75 total), increased by compensatory interest under Article 43 of the General Tax Law (LGT). This legal provision establishes the right to interest when tax authorities must return amounts improperly collected. The management company has standing to pursue these claims in its capacity as manager of the FIIAH fund. If the arbitral tribunal rules the assessments were illegal, null, or should be annulled, the Tax Authority must refund the amounts paid plus interest calculated from the payment date until actual restitution, compensating the fund for the time value of money improperly retained by the state.