Process: 87/2019-T

Date: July 12, 2019

Tax Type: IMI

Source: Original CAAD Decision

Summary

This CAAD arbitral decision (Case 87/2019-T) addresses whether industrial construction land is subject to AIMI (Additional Municipal Property Tax) and whether such taxation violates constitutional principles. A company challenged the 2018 AIMI assessment of €1,182.60 on a plot of land designated for industrial warehouse construction, arguing the tax violated principles of equality and contributory capacity under the Portuguese Constitution. The claimant contended that the legislator intended to exempt properties dedicated to economic activities from AIMI taxation, particularly when the land was specifically authorized for industrial use by municipal authorities. The Tax Authority (ATA) countered that the law unequivocally subjects construction land to AIMI regardless of intended allocation, citing Article 135º-B(2) of the IMI Code and Constitutional Court Ruling 299/2019, which upheld AIMI's application to construction plots for commercial, industrial, or service purposes. The tribunal applied the principle that AIMI's scope is strictly defined by property types listed in Article 6 of the CIMI, with no exemptions based on economic activity allocation. The decision reinforces that mere designation for industrial purposes does not exempt construction land from AIMI liability. This ruling is significant for businesses holding undeveloped land intended for operational expansion, as it confirms that AIMI applies to construction plots irrespective of their future industrial, commercial, or service use, aligning with prior constitutional validation of the tax's scope and the legislator's policy choices regarding property taxation.

Full Decision

ARBITRAL DECISION

I – REPORT

1 – A... Ltd., with registered office at Rua ... no..., ... ...-..., ..., with the NIPC[1]..., filed on 12/02/2019 a petition for constitution of the Arbitral Tribunal, pursuant to the provisions of paragraph a) of no. 1 of article 2º, of no. 1 of article 3º and of paragraph a) of no. 1 of article 10º, all of the RJAT[2], with the ATA[3] being requested, with a view to declaring illegal the tax act denying the administrative claim no. ...2018..., which was processed by the ... Tax Office of ... and filed against the assessment of AIMI[4] no. 2018... for the year 2018, in the amount of €1,182.60, relating to the cadastral article ... of the Union of parishes of ... and ... and which corresponds to a plot of land for construction intended for the installation of industrial warehouses for the continuation of its industrial activity, seeking the annulment of the said assessment, considering it illegal, as it violates the principle of equality and contributory capacity.

2 – The petition for constitution of the Arbitral Tribunal was filed without exercising the option of arbitrator designation, being accepted by His Excellency the President of the CAAD[5] and automatically notified to the ATA, on 12/02/2019.

3 – In accordance with and for the purposes of the provisions of no. 2 of article 6º of the RJAT, by decision of His Excellency the President of the Ethics Council, duly communicated to the parties within the legally applicable deadlines, the sole arbitrator Arlindo José Francisco was designated, who communicated to the Ethics Council and to the CAAD the acceptance of the assignment within the regularly established deadline.

4 – The Tribunal was constituted on 23/04/2019 in accordance with the provisions contained in paragraph c) of no. 1 of article 11º of the RJAT, in the wording introduced by article 228º of Law no. 66-B/2012, of 31 December.

5 – With its petition, the claimant seeks, as already stated, the declaration of illegality of the tax act denying the administrative claim no. ...2018..., filed against the assessment of AIMI no. 2018... for the year 2018, in the amount of €1,182.60.

6 – It bases its point of view, in summary, on the fact that it considers the tax act assessing AIMI in question violates the principles of equality, fiscal equality and contributory capacity, set out in the CRP[6].

7 – It considers that the legislator, upon creating the AIMI, safeguarded properties affected by economic activity, as is the case, since on the plot of land in question, acquired for that purpose, the respective Municipal Chamber authorizes the installation of warehouses with allocation to its economic activity.

8 – Concluding that taxation in AIMI as intended by the ATA is contrary to the principles of equality, fiscal equality and contributory capacity, respectively provided for in articles 13º and no. 3 of 104º both of the CRP.

9 – In its response, the ATA also in summary understands that there is no legal basis that supports the claimant's claim, in light of the text of the law currently in force which faithfully reflects the legislator's options.

10 – In its perspective, the law is clear and establishes unequivocally the taxation in AIMI of plots of land for construction, regardless of their potential allocation, being expressly established the delimitation of scope and exclusion of scope solely on the basis of the types of properties indicated in article 6º of the CIMI, and therefore the legislator's option must be respected.

11 – It considers that the legislator did not guarantee, nor did it intend to guarantee, in all and any cases that real property affected by the exercise of any economic activity would not be affected, adhering to what was decided in Process 420/2018 of the CAAD.

12 – As to the alleged violation of the principle of fiscal equality and contributory capacity, it invokes what was decided in the recent Ruling of the Plenum no. 299/2019, handed down within the scope of process no. 752/2018, which declared not unconstitutional the rule extracted from article 135º-B, no. 2, of the IMI Code, in the sense of including, within the scope of application of the Additional IMI, "plots of land for construction" for purposes of commerce, industry, services or others, thus concluding that the acts challenged should be maintained in the legal order, accordingly absolving the respondent of the claim.

II – SANITATION

The tribunal was properly constituted and is competent ratione materiae, in accordance with article 2º of the RJAT.

The parties have legal personality and capacity, show themselves to be legitimate and are regularly represented in accordance with articles 4º and 10º, no. 2 of the RJAT and article 1º of Ordinance no. 112-A/2011, of 22 March.

Joined to the proceedings, on 27/05/2019, the ATA's response, the Tribunal issued an order which is transcribed as follows: "Having regard to the principles of autonomy of the arbitral tribunal in conducting the proceedings, and of celerity, simplification and procedural informality (articles 19º, no. 2, and 29º, no. 2, of the RJAT), the meeting of the arbitral tribunal referred to in article 18º of the RJAT is dispensed with and the continuation of proceedings is determined by notifying the parties to submit optional written submissions within a successive period of 10 days.

Under the principle of cooperation, the parties are requested to submit the procedural documents in Word format.

12 July 2019 is set as the date for issuing the arbitral decision, and by that date the Claimant must provide evidence to the CAAD of payment of the subsequent court fee".

The parties did not produce submissions.

Everything having been reviewed and the proceedings not suffering from any nullities, a decision must be rendered.

III – GROUNDS

1 – The matters to be decided, with interest to the proceedings, are the following:

To assess and decide whether the tax acts denying the administrative claim no. ...2018... and assessing AIMI 2018... for the year 2018 against which the claim was filed are violative of the principles of equality, fiscal equality and contributory capacity, set out in the CRP and, for that reason, should be annulled, as the claimant seeks, or whether, on the contrary, they respect legality and therefore should be maintained in the legal order, as the respondent seeks.

2 – Factual Matters

The material factual matters that are relevant and proven based on the elements joined to the proceedings are as follows:

  • The claimant is a commercial company taxed for engaging in the activity of production and wholesale sale of bakery products, namely baking products and cakes.

  • It is the holder of the urban cadastral article no. ... of the Union of parishes of ... and ..., which corresponds to a plot of land for construction of warehouses and industrial activity, with the location coefficient "industry".

  • The ATA applied AIMI in the amount of €1,182.60 to the VPT of the said property, in accordance with assessment 2018..., for the year 2018.

  • Against the said assessment, the claimant filed an administrative claim no. ...2018..., which was processed by the ... Tax Office of ... and was denied, by order, of 12/11/2018, from the respective head.

These are the facts considered proven with relevance to the decision of the case and result from elements joined to the proceedings by the parties and not contested by either of them.

There are no facts relevant to the decision that have not been given as unproven.

3 – Legal Matters

By Law 42/2016 of 28 December, State Budget Law for 2017, the AIMI was created, regulated by articles 135º-A to 135º-K of the CIMI[7], chapter XV of this legal instrument.

The subjective scope is contained in article 135º-A, being of interest to us in the concrete case, its nos. 1, 2 and 3, which are transcribed:

1 – The passive subjects of the additional municipal property tax are natural or legal persons who are owners, usufructuaries or emphyteuticaries of urban properties situated in Portuguese territory.

2 – For the purposes of no. 1, any structures or centres of collective interests without legal personality that appear in the property matrices as passive subjects of municipal property tax, as well as the undivided estate represented by the head of household, are deemed equivalent to legal persons.

3 – The status of passive subject is determined in accordance with the criteria established in article 8º of this Code, with the necessary adaptations, having as reference the date of 1 January of the year to which the additional municipal property tax relates.

Article 135º-B deals with the objective scope and which we also transcribe, in the wording applicable at the time:

"Article 135º-B (*)

Objective scope

1 – The additional municipal property tax applies to the sum of the taxable property values of urban properties situated in Portuguese territory of which the passive subject is the holder.

2 – Excluded from the additional municipal property tax are urban properties classified as "commercial, industrial or for services" and "others" within the terms of paragraphs b) and d) of no. 1 of article 6º of this Code".

It should be noted the exclusion of urban properties referred to in paragraphs b) and d) of no. 1 (which is transcribed) of article 6º of the CIMI:

"Article 6º
Species of urban properties

1 – Urban properties are divided into:
a) residential;
b) commercial, industrial or for services;
c) plots of land for construction;
d) others."

Given this legal framework, we summarize that the understanding of illegality pointed out by the claimant, both regarding the assessment act and regarding the denial act of the administrative claim, both carried out by the ATA, is essentially based, as already seen, on considering that the tax act assessing AIMI in question violates the principles of equality, fiscal equality and contributory capacity, set out in the CRP.

With a view to supporting its point of view, the claimant begins by making an assessment of the AIMI scheme, added to the CIMI Code, considering it unquestionable that the legislator safeguarded properties affected by economic activities held by passive subjects in the pursuit of their corporate purpose, as is the case with the plot of land for construction acquired by the claimant for its production and warehouse for products processed by it, not accepting the ATA's understanding which considers that the plot of land does not cease to be such simply because a warehouse is to be installed on it, such understanding from the claimant's perspective violates the constitutional principles already referred to, and the claim should be judged meritorious with the consequent annulment of the assessment challenged.

For its part, the respondent considers there is no reason or any basis for the claimant's claim, beginning by making the legal framework of AIMI, concluding that the law clearly and unequivocally establishes the incidence of the tax on "plots of land for construction", regardless of the potential allocation that may come to them, since they do not appear in the negative delimitation of scope. It cites various decisions handed down by Arbitral Tribunals and case law of the Constitutional Court that support the point of view it advocates, concluding that the tax acts in question should be maintained in the legal order as they do not suffer from the vices alleged.

Having assessed, succinctly, the position of the parties and considering that the Tribunal understands that AIMI is an additional tax to the IMI[8], which was created, as already seen, by Law 42/2016 of 28 December, State Budget Law for 2017 and that the revenue was allocated to the Financial Stability Fund of Social Security, thereby satisfying one of the government program's objectives of broadening the financing base of Social Security, while introducing a tax that falls on holders of larger real estate assets, reinforcing the overall progressivity of the system, by taxing larger assets more highly and that article 135º-B of the CIMI does not exclude the incidence of AIMI on properties affected by housing and plots of land for construction used by legal persons in the context of their economic activity, it is from this perspective that we will evaluate the concrete issue.

And still in line with decisions already handed down by us and others in which we were co-arbitrators and also of the majority case law of the CAAD, notably the decision handed down in Process 420/2018, which we endorse and which, with due deference, is transcribed in the part where it assesses the possible violation of constitutional principles of equality, proportionality and contributory capacity, invoked by the claimant.

Transcription:

"The wording of article 135º-B of the CIMI that came to be approved does not exclude the incidence of AIMI on properties affected by housing and plots of land for construction used by legal persons in the context of their economic activity.

The legislative concern to 'avoid the impact of this tax on economic activity' was announced in the Bill for the State Budget for 2017 and was concretized, to some extent, through the exclusion from the scope of incidence of 'urban properties classified as "industrial", as well as urban properties licensed for tourist activity, the latter provided that their destination is properly declared and proven' and the deduction from the taxable amount of the amount of '€600,000.00, when the passive subject is a legal person with agricultural, industrial or commercial activity, for properties directly affected by its operation'. However, it was not on the basis of the activity to which the properties are affected that the exclusion of scope was defined, since in the wording that came to be approved the non-incidence was defined solely on the basis of the types of properties indicated in article 6º of the CIMI, without any reference to affectation to the operation of legal persons.

They are distinct concepts, the affectation of a property, which presupposes a use, and the purpose to which it is intended, the 'normal destination', underlying the classifications of properties, referred to in no. 2 of article 6º of the CIMI. If the legislative intent to exclude incidence on properties directly affected by the operation of legal persons had been maintained in the final wording of the Budget, the reference to this affectation that appeared in the proposal and which clearly expressed this legislative option would certainly have been maintained. Thus, having been suppressed that reference to the affectation of properties, there is no legal support to conclude that residential properties and plots of land for construction affected by the activity of legal persons are not relevant for AIMI incidence. Therefore, it must be concluded that the affectation of properties to the economic activities of legal persons does not exclude AIMI taxation (except in cases where these are properties that previously were exempt or not subject to taxation in IMI, which are not accounted for for purposes of AIMI, in accordance with no. 3 of article 135º-B of the CIMI). The holding of real estate assets of high value, regardless of whether they are affected or not to economic activity, is tendentially revealing of high economic capacity which enables it to contribute additionally to the Financial Stability Fund of Social Security, to which AIMI revenue is allocated and which corresponds to the objective of the government program.

On the other hand, the holding of high-value real estate assets, regardless of whether affected or not to economic activity, is tendentially revealing of high economic capacity which enables such holders to contribute additionally to the Financial Stability Fund of Social Security, to which AIMI revenue is allocated and which corresponds to the objective of the government program.

The holding of high-value real estate assets, regardless of whether they are affected to economic activities or not, tendentially reveals high economic capacity which enables them to contribute additionally to the Financial Stability Fund of Social Security, to which AIMI revenue is allocated and which corresponds to the objective of the government program. Therefore, in principle, limiting taxation to these situations is justified. However, the reasons that may underlie the distinction, for purposes of AIMI taxation, between the property values of properties classified as residential or plots of land for construction (regardless of their effective affectation for these purposes) and those of urban properties that have other classifications, in light of article 6º of the CIMI, do not explicitly result from the Budget Report for 2017 nor from its parliamentary discussion. With regard to properties classified as "others" in light of article 6º, nos. 2, paragraph d), and 4, of the CIMI, a reason for distinction may be seen in the fact that these are essentially properties that do not have the purpose of income-generating activities, namely land situated in urban clusters that do not meet the requirements necessary for their classification as plots of land for construction nor are being used for agricultural or forestry purposes and buildings intended for public spaces, infrastructure or equipment. As for the exclusion of taxation with regard to properties intended for commerce, industry or services, an explanation may be discerned in the purpose invoked for the creation of this new taxation, which is the financing of Social Security, ensured through the allocation of AIMI revenue to the Financial Stability Fund of Social Security, provided for in no. 2 of article 1º of the CIMI, in the wording of Law no. 42/2016, of 28 December. The intention with AIMI is not to burden the taxation of luxury properties, as was aimed primarily with item 28.1 of the TGIS, since real estate assets of considerable value may be constituted by a plurality of low-value properties, but rather to create another avenue for subsidizing the Social Security system, which is one of the constitutional incumbencies of the State, provided for in article 63º, no. 2, of the CRP. The sustainability and stability of Social Security, always in doubt, is a permanent concern that has justified numerous initiatives, well evidenced in the Strategic Options of the Plan for 2017 (Law no. 41/2016, of 28 December) and for 2018 (Law no. 113/2017, of 29 December) among which the diversification of financing sources is included, which constitutes a principle long adopted in Social Security Framework Laws (article 78º of Law no. 17/2000, of 8 August, article 107º of Law no. 32/2002, of 20 December and article 88º of Law no. 4/2007, of 16 January).

The essence of the principle of diversification of Social Security financing sources consists in the expansion of the bases for obtaining financial resources, with a view in particular to reducing non-wage labor costs (article 79º of Law no. 17/2000, article 108º of Law no. 32/2002, and article 88º of Law no. 4/2007, of 16 January), which may explain why new AIMI taxation is not applied to legal persons holding properties intended for commercial, industrial and service activities, since the holding of properties of those types by legal persons is normally associated with the exercise of those activities, with the corresponding payment of contributions to Social Security as employer entities [article 92º, paragraph b), of Law no. 4/2007, and articles 3º, paragraph a), and 14º, paragraph a), of Decree-Law no. 367/2007, of 2 November]. From this perspective, in which the legislator, lacking financing for Social Security, privileges the role of tax collector over the concern with balanced taxation of enterprises, some basis may be discerned for distinguishing between the ownership of real estate assets by persons who, presumably, will develop activities connected with the financing of Social Security (who will already contribute to that financing) and the holding of properties not intended for those activities, whose owners, tendentially, will not be associated in the same way to that financing, at least not with the same intensity. Article 13º of the Constitution of the Portuguese Republic proclaims the principle of equality of citizens before the law. As has been uniformly understood by the Constitutional Court, the principle of equality, as a limit on legislative discretion, does not require equal treatment of all situations, but rather implies that those in equal situations be treated equally and those in unequal situations be treated unequally, so as not to create arbitrary and unreasonable discriminations, because they lack sufficient material basis. The principle of equality does not prohibit distinctions from being made, but rather arbitrary distinctions, devoid of objective and rational justification.

Given what has been stated, the creation of a special taxation of high-value property intended to ensure the financing of Social Security limited to real estate assets that will not already tendentially be connected with that financing will not be completely lacking in objective and rational explanation. On the other hand, the creation of AIMI, as a supplementary tax on real estate assets, which aimed to introduce into taxation 'a progressive element of personal basis, taxing larger assets more highly' (Budget Report for 2017, page 60), is consistent with the objective that the taxation of property should contribute to equality among citizens, stated in no. 3 of article 104º of the CRP, since progressivity tends to have as a corollary the imposition of higher taxation on those with greater contributory capacity. The contributory capacity of business legal persons, relevant to assessing the application of the principle of fiscal equality, is not evidenced only by income, namely by the results of the activity to which the properties are intended. In fact, 'property provides its holder with special contributory capacity, advantages which by their nature escape personal income taxation: thus, ownership of property facilitates obtaining credit, reinforces the negotiating position of its holder in the conclusion of various contracts, makes it easier to multiply wealth allowing him to take risks where in principle he would not. From this perspective, property taxation is seen as something more than a prolongation of personal income taxation – it is not a matter of overloading here income already subject to it but of reaching manifestations of contributory capacity that in fact escape it'(...) Taxes on property are justified in that they allow resources to be transferred for the benefit of the working class, instituting a 'qualitative progressivity' complementary to the progressivity in quantity of personal income taxes'. On the other hand, if it is true that the different purposes of properties do not necessarily imply distinction in the level of contributory capacity, the exclusion of taxation of properties especially vocational for productive activity, namely "commercial, industrial or for services", will find another justification (beyond the already mentioned presumed greater contribution of these activities to Social Security via contributions), since it amounts, ultimately, to favoring these activities, which is in harmony with (and therefore will have constitutionally acceptable basis) the obligation of the State to promote the increase of economic well-being, which presupposes good functioning of wealth-creating activities and constitutes one of its priority incumbencies in the economic sphere [article 81º, paragraph a), of the CRP]. Being this a constitutionally considered priority incumbency, the first listed in this norm, it will certainly not be incompatible with the CRP to give it preferential protection when confronted with the constitutional duties of the State in matters of housing indicated in article 65º of the CRP, which, obviously, are also protected through the good functioning of wealth-creating activities. Thus, if it is true that the AIMI scheme creates situations of discrimination in the taxation of enterprises with the same contributory capacity evidenced by property assets, on the assumption that there is a need for money and new forms must be found to collect it (as referred to in the Budget Report for 2017), there will be some justification for taxation being imposed on some enterprises and not others with the same or greater contributory capacity inherent to property assets, especially in light of the majority constitutional case law cited by the Tax and Customs Authority which reveals that it is constitutionally tolerable that the interests of the State as a tax collector (in this case, the sustainability of Social Security, required by the principles of trust and security) override strict respect for the principle of equality. On the other hand, the legislative objective not being the taxation of luxury housing but rather obtaining another means of financing Social Security, in line with the political choice of diversification, through 'a tax that falls on holders of larger real estate assets, reinforcing the overall progressivity of the system' (page 57 of the Budget Report for 2017), it is in light of these objectives that it must be assessed whether there is a violation of the principle of proportionality. From this perspective, it appears that this new taxation is not incompatible with the principle of proportionality, since it is adequate to the intended purpose (it provides for the increase in revenue that is intended to be obtained), it is necessary (in light of the legislative option to increase Social Security revenue with diversification of sources) and a reasonable measure is not exceeded, namely as regards legal persons, since the rates of the new tax are not high (and are lower for legal persons than for natural persons, in accordance with article 135º-F), the tax paid is deductible from the taxable matter of CIT (article 135º-J), considerable amounts are deducted from the taxable value (article 135º-C) and it is not demonstrated, nor is there reason to believe, that the amounts collected exceed what is necessary for the purpose of reinforcing the sustainability and stability of Social Security".

Adhering to the cited case law, the Tribunal does not perceive that in the decision denying the administrative claim and the taxation in AIMI, both at issue in the present proceedings, it can be considered that the constitutional principles of equality, proportionality and contributory capacity have been violated in the terms set out by the claimant. In fact, the ownership of high-value real estate assets, whether the holder is a natural or legal person, regardless of the activity carried out, evidences a special economic capacity that enables him to contribute additionally to the Financial Stability Fund of Social Security, to which AIMI revenue is allocated and which corresponds to the objective of the government program.

And, as can be gathered from article 135º-B, the taxation of plots of land for construction used by legal persons in the context of their economic activity was not excluded, the exclusion of incidence being based solely on the species of properties referred to in article 6º of the CIMI, precisely those referred to in paragraphs b) and d) of its no. 1 and no others.

To consider, as the Claimant seeks, the non-incidence of AIMI on the VPT of plots of land for construction even if intended for the creation of structures framed within the activity developed by it would constitute, on the contrary, an unjustified privileged fiscal treatment in relation to the generality of other owners of properties with identical characteristics and would configure a violation of the constitutional principle of equality.

We also do not consider that it violates the principle of proportionality, since it proves adequate for obtaining revenue for social security, diversifying sources, without exceeding the reasonable, namely as regards legal persons, who benefit from rates lower than those applied to natural persons, with the tax paid being deductible from CIT collection, in accordance with article 135º-J.

The Tribunal further understands that AIMI taxation cannot be compared with the taxation provided for in the revoked item 28 of the TGIS, in that the legislator created a designation and a taxation system with express reference to the criteria of the CIMI, and criteria or decisions taken in the context of that revoked provision cannot be transported to AIMI.

From this perspective, both the denial of the administrative claim and the AIMI assessment placed at issue here do not violate the constitutional principles invoked, and therefore should remain in the legal order, with the claim thus being dismissed.

IV – DECISION

In view of the foregoing, the tribunal decides as follows:

  • To declare meritless the petition for arbitral ruling against the denial of the administrative claim no. ...2018..., filed against the assessment of AIMI no. 2018... for the year 2018, in the amount of €1,182.60, relating to the cadastral article ... of the Union of parishes of ... and ..., tax area of the ... tax office of ... .

  • To fix the value of the proceedings at €1,182.60 in accordance with the provisions contained in article 299º, no. 1, of the CPC[9], article 97º-A of the CPPT[10], and article 3º, no. 2, of the RCPAT[11].

  • Costs to be borne by the claimant, under no. 4 of article 22º of the RJAT, fixing the respective amount at €306.00 in accordance with the provisions of table I referred to in article 4º of the RCPAT.

Notify.

Lisbon, 12 July 2019

Text prepared by computer, in accordance with article 131º, no. 5 of the CPC, applicable by reference from article 29º, no. 1, paragraph e) of the RJAT, with blank lines and reviewed by the tribunal.

The sole arbitrator,

Arlindo Francisco

[1] Acronym for Tax Identification Number of a Legal Person
[2] Acronym for Legal Regime of Arbitration in Tax Matters
[3] Acronym for Tax and Customs Authority
[4] Acronym for Additional Municipal Property Tax
[5] Acronym for Centre for Administrative Arbitration
[6] Acronym for Constitution of the Portuguese Republic
[7] Acronym for Municipal Property Tax Code
[8] Acronym for Municipal Property Tax
[9] Acronym for Code of Civil Procedure
[10] Acronym for Code of Tax Procedure and Process
[11] Acronym for Rules of Costs in Tax Arbitration Proceedings

Frequently Asked Questions

Automatically Created

Is industrial construction land subject to AIMI (Additional Municipal Property Tax) in Portugal?
Yes, industrial construction land is subject to AIMI in Portugal. According to CAAD Case 87/2019-T and Article 135º-B(2) of the IMI Code, plots of land designated for construction are taxable under AIMI regardless of their intended allocation for industrial, commercial, or service purposes. The law makes no distinction based on the future economic use of the land. Even when municipal authorities authorize construction of industrial warehouses, the land remains within AIMI's scope until actual construction occurs. The Constitutional Court Ruling 299/2019 confirmed this interpretation, validating that construction plots for commerce, industry, services, or other purposes fall under AIMI taxation without constitutional violations.
Can a company challenge AIMI liability based on the constitutional principles of equality and ability to pay?
Yes, companies can challenge AIMI liability based on constitutional principles of equality and contributory capacity, but such challenges face significant legal obstacles. In Case 87/2019-T, the claimant argued that taxing land designated for economic activity violated Articles 13 and 104(3) of the Portuguese Constitution. However, Portuguese courts and CAAD arbitral tribunals have consistently rejected these arguments. The Constitutional Court in Ruling 299/2019 specifically examined and rejected claims that AIMI on construction land violates equality and ability-to-pay principles. Taxpayers retain the right to challenge assessments on constitutional grounds through administrative claims and arbitration, but current jurisprudence strongly supports AIMI's constitutionality as applied to construction land regardless of intended business use.
Does allocating land for economic activity exempt it from AIMI taxation under Portuguese tax law?
No, allocating land for economic activity does not exempt it from AIMI taxation under Portuguese tax law. Case 87/2019-T definitively establishes that the legislator did not intend to exempt all properties affected by economic activities from AIMI. The tax applies based strictly on property classifications defined in Article 6 of the CIMI, not on the property's actual or intended business use. Even when land is specifically acquired for industrial purposes and receives municipal authorization for warehouse construction to support ongoing business operations, it remains subject to AIMI as a 'plot of land for construction.' The exemption framework focuses on property type categories rather than functional allocation, meaning designation for industrial, commercial, or service activities provides no basis for AIMI exemption until the property's classification fundamentally changes through development.
How can taxpayers file a complaint against an AIMI tax assessment through CAAD arbitration?
Taxpayers can challenge AIMI assessments through CAAD arbitration by following this procedure: First, file an administrative claim (reclamação graciosa) with the relevant Tax Office against the AIMI assessment. After the claim is decided (or deemed rejected due to silence), taxpayers have the right to initiate arbitration under Article 2(1)(a) and Article 10(1)(a) of the RJAT (Legal Regime of Tax Arbitration). The petition must be filed with CAAD within the statutory deadline, identifying the contested tax act and legal grounds for challenge. Taxpayers can either designate their preferred arbitrator or allow automatic assignment by CAAD's President. The petition must include relevant documentation, pay initial court fees, and clearly state the relief sought. In Case 87/2019-T, the claimant successfully initiated proceedings in February 2019, with the tribunal constituted by April 2019, demonstrating the process's relative efficiency compared to traditional judicial review.
What was the outcome of CAAD case 87/2019-T regarding AIMI on land designated for industrial warehouse construction?
The outcome of CAAD Case 87/2019-T was unfavorable to the taxpayer. While the complete decision text is not fully provided in the excerpt, the tribunal's reasoning section clearly indicates the case would be decided against the claimant company. The tribunal accepted the Tax Authority's arguments that Portuguese law unequivocally subjects construction land to AIMI regardless of intended industrial use. The decision referenced Constitutional Court Ruling 299/2019, which validated AIMI's application to construction plots for commerce, industry, and services, finding no constitutional violations. The tribunal emphasized that the legislator's clear policy choices must be respected and that AIMI's scope is strictly defined by property type classifications in Article 6 of the CIMI, not by functional allocation to economic activities. Consequently, both the AIMI assessment of €1,182.60 and the denial of the administrative claim were upheld as legal, establishing important precedent that mere designation for industrial purposes does not exempt construction land from this additional property tax.