Process: 76/2019-T

Date: July 9, 2019

Tax Type: IMT Selo

Source: Original CAAD Decision

Summary

This CAAD arbitration decision (Process 76/2019-T) addresses critical procedural issues regarding challenges to IMT (Municipal Property Transfer Tax) and Stamp Tax assessments. The taxpayer purchased rural property through two consecutive deeds in October 2016, paying €10,000 in IMT and €1,600 in Stamp Tax. After executing a rectification deed in November 2017 to revoke the first sale, the taxpayer requested a tax refund in March 2018 under Article 44 of the IMT Code. Following rejection by the Tax Authority in November 2018, the taxpayer filed an arbitration request in February 2019. The Tax Authority raised a preliminary objection of untimeliness, arguing the 90-day deadline under Article 10(1)(a) of RJAT should run from the original voluntary payment period (October 2016), not from notification of the administrative complaint rejection. The Arbitral Tribunal agreed with the Tax Authority, finding the request untimely because the taxpayer explicitly challenged the original IMT and IS assessments, not the rejection decisions. The Tribunal emphasized that identifying the contested acts determines timeliness calculation. Since nearly three years elapsed between payment and the arbitration request, the 90-day statutory period was grossly exceeded. The decision clarifies that filing an administrative complaint (reclamação graciosa) does not suspend or restart arbitration deadlines when taxpayers directly challenge underlying assessments rather than rejection decisions. The claim was dismissed without substantive analysis of the tax refund merits. Costs of €918 were charged to the taxpayer. This ruling underscores the importance of precise procedural compliance and strategic identification of contested acts in Portuguese tax arbitration.

Full Decision

ARBITRAL DECISION

A..., taxpayer no. ..., resident in ..., ..., ..., in ..., submitted a request for arbitral determination with a view to declaring the illegality and annulling the assessment acts of Municipal Tax on Onerous Property Transfers (hereinafter IMT) no. ..., which gave rise to the Single Collection Document no. ..., in the amount of €10,000 and also with a view to declaring the illegality of the assessment of Stamp Tax (hereinafter IS) no. ..., which gave rise to the Single Collection Document no. ..., of €1,600.

The Tax and Customs Authority, hereinafter AT, responded by raising the preliminary issue of untimeliness of the request for arbitral determination, by exception and by objection.

By petition dated 4 June 2019, the Claimant requested the expansion of the claim, pursuant to article 265 of the Code of Civil Procedure, in this case applicable ex vi of paragraph e) of article 2 of the CPPT, considering it implicit in the claim the declaration of illegality of the rejection of the administrative reclamation submitted.

The Arbitral Tribunal was duly constituted on 16 April 2019 and is competent.

The parties possess legal personality and capacity, are legitimate (arts. 4 and 10, no. 2, of the same statute and article 1 of Order no. 112-A/2011, of 22 March) and are duly represented.

The proceedings are not affected by any nullities.

Given that the preliminary issue of untimeliness is raised, the exception invoked shall be assessed as a priority matter.

I. Relevant Facts

The relevant matter for assessing the exception invoked is as follows:

By public deed executed on 4 October 2016, the Claimant purchased from A... and wife the rural property denominated "..." or "...", registered in the property register of the parish of ... under article ..., of section FF;

On 12 October 2016, the Claimant purchased from A... and wife the above-identified property for the same price;

On 11 October 2016, A. presented at the Finance Office of ..., IMT Form 1 declaration (no. ...) for the purpose of assessment of IMT for the acquisition of full ownership rights of the same property which he intended to transfer to B..., for the same amount of €200,000.00;

On 12 October 2016, the Claimant proceeded to pay the IMT assessment no. ..., which gave rise to the collection document no. ..., of €10,000.00;

On 12 October 2016, the Claimant proceeded to pay the Stamp Tax assessment no. ..., which gave rise to the Single Collection Document no. ..., of €1,600.00;

On 9 November 2017, the Claimant executed a deed of rectification of the purchase and sale of 12 October 2016, contemplating the distrate – revocation of a legal transaction – evidenced by the deed of purchase and sale of 4 October 2016;

On 29 March 2018, the Claimant requested the annulment of the IMT and IS assessment acts originated by the execution of the deeds of 4 October 2016 and 12 October 2016, under article 44 of the IMT Code;

By Office no. ... and Office no. ..., both of 9 November 2018, the Claimant was notified of the rejection decisions which fell upon his request for restitution of the IMT and IS, subsequently presented;

On 5 February 2019, the request for arbitral determination was submitted.

The facts were established as proven based on the documents attached to the proceedings and by agreement of the parties, with no question raised regarding their correspondence with reality.

There are no facts relevant to the decision of the preliminary issue which have not been established as proven.

II. Preliminary Issue: Untimeliness of the Submission of the Request for Arbitral Determination

In response to the arbitral petition, the Respondent invoked the exception of untimeliness of the present request for arbitral determination on the grounds that it was submitted beyond the 90 days provided for in paragraph a) of no. 1 of article 10 of the RJAT, counted from the end of the voluntary payment period, that is, from 12 October 2016.

The Claimant contested this position by arguing that the deadline for submission of the request for arbitral determination provided for in paragraph a) of no. 1 of article 10 of the RJAT should be counted, not from the voluntary payment period, as the Respondent contends, but from the notification of the rejection decision rendered on 9 November 2018.

It so happens that the Claimant, when expressly identifying the arbitral claim, does so in the following terms:

"REQUEST FOR ARBITRAL DETERMINATION

with a view to declaring the illegality of the assessment of Municipal Tax on Onerous Property Transfers (hereinafter IMT) no. ..., which gave rise to the Single Collection Document no. ... ([1]), of €10,000.00 and also with a view to declaring the illegality of the assessment of Stamp Tax (hereinafter IS) no. ..., which gave rise to the Single Collection Document no. ... ([2]), of €1,600.00 in a total amount of €11,600.00"

36.

Notwithstanding those rejection decisions of the administrative reclamation, anchored, e.g., in the Judgment of the STA, of 19.12.2007, Appeal 0617/07 and given that the acts here impugned and which are supporting the requests for restitution of the tax paid in the meantime, continues to be the IMT assessment no. ..., which gave rise to the Single Collection Document no. ..., in the amount of €10,000.00 and also the IS assessment no. ..., which gave rise to the Single Collection Document no. ..., of €1,600.00 and not the aforementioned rejection decisions, which merely confirmed the contested assessments, the subject matter of the present litigation is precisely the above better identified act of IMT assessment and the act of IS assessment, since, we argue, affected by gross illegality as shall be explained hereinafter."

And terminates his claim as follows:

In such terms and in the other respects of Law which Your Excellency shall most learned supply, it is requested that you deign:

To judge, in totum, the contested assessments as illegal, because in violation of law, such vice being embodied in the grounds which we have above set forth and which are reiterated here, sanctioning such illegality with the legal consequence of the voidability of the IMT and IS assessment act originated by the execution of the deed of 12 October 2016 (See Doc. no. 5), under article 44 of the CIMT; subsidiarily under article 78 of the LGT and subsidiarily also under article 45 of the CIMT, judging the present action meritorious, thus re-establishing, in tax terms, the situation that would have existed had the deed not been executed in error of the property purchase and sale contract which A. did not intend to acquire;"

Thus, it is clear that when the Claimant identified and formulated his arbitral claim, not only did he fail to identify the acts rejecting the administrative reclamations submitted as impugned acts, but expressly stated that the subject matter of the present proceedings constituted the IMT and IS assessment acts duly identified.

In light of the foregoing, it is understood that the Respondent is correct when it alleges that "In so far as timeliness is assessed by the request for arbitral determination, that is, in relation to the impugned acts, it appears that the same is untimely, since the present arbitral request was submitted on 5 February 2019."

It is therefore concluded that the exception of untimeliness invoked is meritorious.

III – Value of the Proceedings

In accordance with the provisions of article 315, no. 2, of the CPC and 97-A, no. 1, paragraph a), of the CPPT and 3, no. 2, of the Regulation of Costs in Tax Arbitration Proceedings, the value of the proceedings is fixed at €11,600.

IV – Costs

Pursuant to article 22, no. 4, of the RJAT, the amount of costs is fixed at €918, in accordance with Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, to be borne by the Claimant.

V – Decision

In such terms, this Arbitral Tribunal decides to judge meritorious the exception of untimeliness of the request for arbitral determination and, in consequence, to judge unmeritorious the request for arbitral determination, thereby absolving the Respondent thereof.

Lisbon, 9 July 2019

The Arbitrator,

(Magda Feliciano)

(The text of this decision was prepared by computer, in accordance with article 131, no. 5, of the Code of Civil Procedure, applicable by cross-reference of article 29, no. 1, paragraph e) of Decree-Law no. 10/2011, of 20 January (RJAT), with its wording governed by the spelling prior to the Orthographic Agreement of 1990.)

[1] Doc. no. 1. Attached as Doc. no. 2, proof of payment of the tax on 12.10.2016.

[2] Doc. no. 3. Attached as Doc. no. 4, proof of payment of the tax on 12.10.2016.

Frequently Asked Questions

Automatically Created

What is the time limit for filing an arbitration request (pedido de pronúncia arbitral) to challenge IMT and Stamp Tax assessments at CAAD?
The time limit for filing an arbitration request at CAAD to challenge IMT and Stamp Tax assessments is 90 days from the end of the voluntary payment period, as established in Article 10(1)(a) of the RJAT (Legal Regime of Tax Arbitration). This deadline runs from when the tax becomes payable, not from subsequent administrative decisions. In Process 76/2019-T, the Arbitral Tribunal ruled that when a taxpayer directly challenges the original tax assessments rather than rejection decisions of administrative complaints, the 90-day period begins when payment was due. The taxpayer paid IMT and Stamp Tax on October 12, 2016, making the arbitration deadline mid-January 2017. Filing in February 2019 was deemed untimely, resulting in dismissal. The Tribunal emphasized that timeliness is assessed based on the acts explicitly identified as contested in the arbitration petition, making precise identification of challenged acts crucial for procedural compliance.
Can a taxpayer request annulment of IMT and Stamp Tax paid after a property sale is reversed through a rectification deed (escritura de rectificação)?
Yes, taxpayers can theoretically request annulment of IMT and Stamp Tax after a property sale is reversed through a rectification deed (escritura de rectificação), but strict procedural requirements apply. Article 44 of the IMT Code provides for tax reimbursement when transactions are resolved (distrate). In Process 76/2019-T, the taxpayer executed a rectification deed in November 2017 revoking an October 2016 sale, then requested tax refunds in March 2018. The Tax Authority rejected these requests in November 2018. However, the CAAD Arbitral Tribunal never reached the substantive merits of whether the rectification justified refunds because the arbitration request was filed outside the 90-day statutory deadline. The decision highlights that even legitimate substantive grounds for tax recovery can fail if procedural deadlines aren't respected. Taxpayers must act promptly after transaction reversals, either challenging original assessments within 90 days of payment or, if filing administrative complaints first, ensuring subsequent arbitration requests properly identify rejection decisions as contested acts to benefit from extended deadlines.
What happens if an arbitration request challenging IMT and IS liquidations is filed after the legal deadline has expired?
When an arbitration request challenging IMT and Stamp Tax liquidations is filed after the legal deadline expires, the CAAD Arbitral Tribunal dismisses the case on procedural grounds without examining substantive merits. In Process 76/2019-T, the Tribunal upheld the Tax Authority's untimeliness exception (exceção de intempestividade), finding the February 2019 arbitration request was filed nearly three years beyond the 90-day deadline that expired in January 2017. The Tribunal ruled it lacked competence to hear the case due to procedural non-compliance with Article 10(1)(a) of RJAT. The taxpayer was ordered to pay procedural costs of €918 under the Regulation of Costs in Tax Arbitration Proceedings. This outcome demonstrates that Portuguese tax arbitration strictly enforces statutory deadlines as jurisdictional prerequisites. Untimeliness constitutes an absolute bar to adjudication, regardless of claim merits. The decision underscores that taxpayers cannot resurrect expired challenge rights through administrative complaint procedures unless they properly identify rejection decisions as the contested acts, thereby creating new deadlines running from notification of those rejections rather than original assessments.
How does the filing of a reclamação graciosa (administrative complaint) affect the deadline for submitting an arbitration request at CAAD?
Filing a reclamação graciosa (administrative complaint) does not automatically extend or suspend the deadline for submitting an arbitration request at CAAD unless the taxpayer strategically identifies the rejection decision as the contested act. Process 76/2019-T clarifies this critical procedural distinction. The taxpayer filed administrative complaints requesting tax refunds in March 2018, receiving rejection notices in November 2018, then submitted the arbitration request in February 2019—within 90 days of the rejection notifications. However, the Arbitral Tribunal ruled the request untimely because the taxpayer explicitly identified the original October 2016 IMT and Stamp Tax assessments as contested acts, not the November 2018 rejection decisions. The Tribunal emphasized that 'timeliness is assessed by the request for arbitral determination, that is, in relation to the impugned acts.' When taxpayers challenge underlying assessments directly, the 90-day period runs from the voluntary payment deadline regardless of subsequent administrative proceedings. To benefit from deadlines running from rejection notifications, taxpayers must clearly identify those rejection decisions as the impugned acts in their arbitration petitions. This ruling demonstrates that administrative complaint procedures don't inherently reset arbitration deadlines—proper identification of contested acts determines applicable timeframes.
Is the ampliação do pedido (extension of claims) under Article 265 of the Civil Procedure Code applicable in tax arbitration proceedings at CAAD?
The ampliação do pedido (extension of claims) under Article 265 of the Civil Procedure Code has limited applicability in CAAD tax arbitration proceedings. In Process 76/2019-T, the taxpayer filed a June 4, 2019 petition requesting claim expansion under Article 265 CPC (applicable via Article 2(e) of CPPT) to implicitly include challenging the administrative complaint rejection decisions. However, the Arbitral Tribunal did not substantively address this expansion request because it dismissed the case on untimeliness grounds. The decision reveals procedural complexities: while CPC provisions apply subsidiarily to tax arbitration through CPPT, claim expansion cannot cure fundamental jurisdictional defects like untimeliness. The Tribunal prioritized assessing the preliminary untimeliness exception before considering claim modifications. This suggests that even if claim expansion is theoretically available in tax arbitration, it cannot retroactively remedy missed statutory deadlines or transform the nature of originally contested acts. Taxpayers cannot use claim expansion to substitute timely challenges to rejection decisions for untimely challenges to underlying assessments. The ruling underscores that proper initial identification of contested acts and compliance with statutory deadlines are prerequisites that cannot be corrected through subsequent procedural amendments, making precise drafting of initial arbitration petitions essential.