Process: 96/2017-T

Date: October 4, 2017

Tax Type: IMI

Source: Original CAAD Decision

Summary

CAAD Process 96/2017-T addresses the application of the IMI safeguard regime for leased urban properties under Article 15-N of Decreto-Lei 287/2003. The claimant, an English entity resident in Portugal, challenged an IMI assessment of €85,271.07 for 2012, arguing that the Tax Authority failed to apply the special regime for properties subject to non-residential lease agreements predating Decreto-Lei 275/95 of 30 September. The claimant held a lease agreement from 1953 and contended that the taxable property value (VPT) should be capped at 15 times the annual rent, as stipulated in Article 15-N. The Tax Authority defended the assessment on two grounds: first, that one property was classified as rural rather than urban, thus falling outside the urban lease regime; and second, that the rent submissions made by the claimant had not yet been validated or processed. The AT acknowledged issuing the assessment near the statute of limitations deadline, despite knowing it might be incorrect due to unprocessed documentation. The core legal issue revolves around whether the special valuation regime applies automatically when properties meet the statutory criteria, or only after administrative validation of rent submissions. Article 15-N provides that for urban properties under general valuation with pre-1995 non-residential leases, the VPT for IMI purposes cannot exceed the capitalized annual rent using a factor of 15, when this produces a lower value than the general valuation. This safeguard protects landlords with old lease agreements from excessive IMI assessments based on current market valuations. The case highlights procedural challenges when tax authorities lack resources to timely process applications for special regimes, and raises questions about taxpayer remedies when assessments are issued without applying available legal protections.

Full Decision

ARBITRAL DECISION

I. Report

  1. The Claimant, A…, an English entity resident in Portugal, holder of tax identification number…, with registered office at …, no.…, …, Lisbon, requested the CAAD, on 02-02-2017, the constitution of an arbitral tribunal, pursuant to Article 10 of Decree-Law no. 10/2011, of 20 January (Legal Framework for Arbitration in Tax Matters, hereinafter referred to only as "LFATM"), in which the Respondent is the Tax and Customs Authority (AT), invoking the illegality of the IMI assessment for the year 2012, in the amount of € 85,271.07, relating to document number 2012…, and requesting the correction thereof.

  2. The request for constitution of the arbitral tribunal was accepted by the Honourable President of the CAAD and notified to the Tax and Customs Authority.

Pursuant to the provisions of Article 6, paragraph 1, of the LFATM, by decision of the President of the Ethics Council, duly communicated to the parties within the applicable legal deadlines, the following arbitrators were appointed: the Honourable Councillor Maria Fernanda dos Santos Maçãs, as presiding arbitrator; the Honourable Professor Doctor Glória Teixeira; and the Honourable Doctor Nuno Pombo.

The Arbitral Tribunal was constituted on 05-04-2017.

By order of the President of the Ethics Council, of 12-06-2017, Doctor Marcolino Pisão Pedreiro was appointed as arbitrator, in substitution of Professor Doctor Glória Teixeira.

  1. The grounds presented by the Claimant in support of its claim were, summarised as follows:

  • On 01.10.1953, the Claimant entered into a lease agreement with B… (formerly designated C…, SA) relating to the properties on which the assessment is based;

  • Since 2012, the Claimant had not been notified of IMI assessments, having recently been notified of the assessment note relating to the year 2012, which it considers to be incorrect, as it does not take into account paragraph 1 of Article 15-N of Decree-Law no. 287/2003, of 12 November;

  • According to information obtained by the Claimant from the Finance Service of Lisbon …, the AT does not have sufficient resources to process in a timely manner the documents submitted by taxpayers benefiting from the special regime for updating the taxable property values applicable to leased properties, provided for in Decree-Law no. 287/2003, of 12 November, specifically Article 15-N "Special regime for rents";

  • The assessment note/collection for the year 2012 did not take into account Article 15-N of Decree-Law no. 287/2003, of 12 November, in that it was based on Taxable Property Values (TPV) without regard to the update rules provided for in that legal provision for urban properties with non-residential lease agreements concluded prior to the entry into force of Decree-Law no. 275/95, of 30 September;

  • According to information obtained from the AT, this assessment was issued because the deadline for lapse was approaching, but knowing that the assessment was incorrect;

  • The Claimant understands that the special regime for rents applies to it, for the following reasons:

    a) The properties in question are covered by the general valuation;

    b) There is a non-residential lease agreement concluded on 1 October 1953, which was submitted;

    c) The legal procedures provided for the application of the regime were complied with; and

    d) All relevant documentation was submitted;

  • It is concluded, therefore, that the TPV for the exclusive purposes of IMI cannot exceed the value resulting from the capitalisation of the annual rent through the application of the capitalisation factor of 15, whereby the assessment at issue must be corrected accordingly.

  1. The AT, called upon to respond, contested the Claimant's claim, defending itself by objection, in summary, with the following grounds:

  • In order to safeguard the specific situation of leased properties, a special regime was established for urban properties covered by the general valuation that are leased by a non-residential lease agreement concluded prior to the entry into force of Decree-Law no. 275/95, of 30 September;

  • In these cases, whenever the result of the general valuation is higher than the value resulting from the capitalisation of the annual rent through the application of the capitalisation factor of 15, the latter shall be the TPV relevant for the exclusive purposes of IMI;

  • It is hereby submitted that the article …-Section … corresponds to a rural property, and is therefore not covered by the urban lease regime, whereby the IMI assessment of this property is correct;

  • Article 15-N of Decree-Law no. 287/2003, of 12 November, added by Law no. 60-A/2011, states: "In the case of an urban property or part of an urban property covered by the general valuation that is leased by a residential lease agreement concluded prior to the entry into force of the Urban Lease Regime, approved by Decree-Law no. 321-B/90, of 15 October, or by a non-residential lease agreement concluded prior to the entry into force of Decree-Law no. 257/95, of 30 September, the taxable property value, for the exclusive purposes of IMI, cannot exceed the value resulting from the capitalisation of the annual rent by the application of the factor 15";

  • It therefore constitutes a prerequisite for the application of that regime that the properties be valued in accordance with the CIMI, in that the TPV fixed - exclusively for the purposes of IMI – by the capitalisation of the annual rent, shall only be applied in the event that the result of the valuation is higher;

  • In the case at issue, the properties have already been valued in accordance with the CIMI, through the general valuation. In fact,

  • It is not possible to establish any comparison with the TPV resulting from the application of the special regime of Article 15-N of Decree-Law no. 287/2003, because these submissions have not yet been processed;

  • The assessment questioned in the request for arbitral pronouncement was not based on the criteria defined in Article 15-N of Decree-Law no. 287/2003, because the rent submissions made by the Claimant were not validated, or if any of the exceptions provided for in paragraph 10 thereof occurred, determining the application of the taxable property values resulting from the general valuation;

  • When this validation is completed and from it results a new TPV, and should the Claimant not agree with the taxable value then determined, it may always lodge a complaint or objection in accordance with the general terms provided for in paragraph 5 of Article 15-N of Decree-Law no. 287/2003, given that the same shall be necessarily notified to it once the rent submissions are validated;

  • Should it agree with the value resulting from the application of the specific regime of the aforementioned Article 15-N and this be lower than the current TPV, the official revision of the IMI assessment shall be promoted, pursuant to Article 115 of the CIMI;

  • In conclusion, the IMI assessment contested is not up to date, but does not suffer from any defect, whilst the TPV of the properties is not determined through the mechanism of article 15-N;

  1. By request of 24 April 2017, the Claimant submitted to the case the assessment note no. 2015…, relating to IMI for 2014, in the amount of € 45,541.69, with a payment deadline at the end of April, requesting that it be included within the scope of the present proceedings.

  2. On 22 May an order was issued with the following content:

"For the purposes of holding the meeting provided for in Article 18 of the LFATM, I designate 8 June 2017 at 14:00 hours.

The hearing is for the following purposes:

a. invitation to the taxpayer to correct the arbitral request;

b. definition of the object of the proceedings, given the taxpayer's request of 24 April 2017;

c. definition of the subsequent procedural course.

Both parties are hereby notified of this order."

  1. Notified of this order, the Claimant stated, amongst other things, that, in relation to its request, it reiterates that it requests, as in the arbitral request, "the correction of the IMI assessment note relating to 2012 no.…, with all the legal consequences flowing therefrom", more specifically "this correction should be limited to the correction of the taxable property values indicated in the assessment relating to 2012 no.…, so as to take into account the regime for rents provided for in paragraph 1 of Article 15-N of Decree-Law no. 287/2003, of 12 November ("special regime for rents"). With regard to the request relating to the broadening of the claim, the Claimant considers that it was an oversight, requesting that it be disregarded.

  2. By order of 31 May, having regard to the clarifications provided by the taxpayer, through the Request of 26 May, and having heard the Respondent entity, which in point 10 of its request of 31 May agrees with the taxpayer regarding the unnecessary nature of holding the meeting, scheduled for 8 June 2017 at 14:00 hours, by order of 22 May, the same was rendered null and void as was the aforementioned meeting, under the principle of the Tribunal's autonomy in the conduct of the proceedings, in order to promote expedience, simplification and informality thereof (Articles 19, paragraph 2 and 29, paragraph 2 of the LFATM). Furthermore, 4 October 2017 was designated as the date for pronouncement of the arbitral decision.

  3. The taxpayer submitted arguments, on 6 June 2017, and subsequently, on 14 June, filed a request to attach to the proceedings a request submitted to the Finance Service of Lisbon …-… requesting that a "photocopy of all documents instructing the rent submission proceedings completed …." be issued, for subsequent attachment to the present proceedings.

9.1. By request of 29 June, the taxpayer, with a new request, asked for the attachment to the proceedings of said documents as well as an Arbitral Award rendered in proceedings no. 722/2016-T.

9.2. Having the taxpayer proceeded to attach documents to the present proceedings after the arguments, the Respondent Authority being notified to respond, it came to argue for the inadmissibility of such attachment in the counter-arguments, which the tribunal did, by order of 22 June 2017, which is hereby reproduced for the appropriate purposes, ordering its removal from the proceedings, with the exception of the document relating to the Arbitral Decision.

  1. The parties submitted written arguments, and the Respondent raised the exception of material incompetence, arguing, in essence, that the Claimant is requesting that the tribunal substitute for the AT and effect the IMI assessment in the amount considered to be due, a request for which the Tribunal is incompetent, by violation of Article 2, paragraph 1, subsection a), of the LFATM. And, further on, it argues that "neither can the tribunal declare the IMI assessment act illegal" (whilst the Respondent has not validated the rent submissions made by the Claimant) "nor can it correct it, given the tribunal's powers" (Articles 10 and 11 of the Response).

10.1. The Claimant being notified to exercise the right of reply, within a period of 10 days, it argued, amongst other things, that in "the case at issue the assessment is tainted by illegality, in that the taxable property value (TPV) - to which the tax rate is applied - is incorrect, in that the AT did not take into account the limit resulting from the rent regime provided for in Article 15-N of DL 278/2003". And, further on, the Claimant clarifies that it requested the correction of the IMI assessment note, with all the legal consequences, in that the same is illegal and, as such, cannot be maintained in the legal order in the terms in which it was issued.

II. Case Management

  1. The parties have legal standing and capacity, are legitimate and are legally represented.

11.1. As described above, there was a change of arbitrator after the submission of arguments by the Claimant. Pursuant to the provisions of Article 9, paragraph 3, of the LFATM "In the event of arbitrator substitution, the arbitral tribunal decides whether any procedural act should be repeated in light of the new composition of the tribunal, taking into account the state of the proceedings".

In the case at issue, there was no trial, whereby the only acts to be considered correspond to the pleadings and arguments. Representing these procedural acts for whose production, effectiveness and interpretation it is not essential to maintain in office the arbitrators who were exercising functions in the proceedings when such acts were performed, it was not justified that any procedural acts be repeated.

  1. As stated, the Respondent raised, in the counter-arguments, the exception of material incompetence, albeit implicitly, defending that what the Claimant is seeking is the correction of the assessment and the issuance of a new assessment, taking into account the value of the rents, which violates the tribunal's powers given that the tribunal's competence is limited to the declaration of illegality of acts of tax assessments, pursuant to Article 2, paragraph 2, subsection a), of the LFATM.

Let us examine this.

According to the AT's argument, the Claimant is asking the Tribunal to recognize that it meets the requirements and prerequisites set out in Article 15-N of Decree-Law no. 287/2003, to validate the relevant documentation (specifically rent submission) and to proceed with the correction of the taxable property value in question. For the AT, the Claimant is, as it were, seeking to have a new assessment issued correcting the values determined in the contested assessment. The Respondent even adds that the Claimant's interest would be safeguarded through an action for recognition of a right or an action for compelling performance, which would be outside the contentious action of mere annulment, as provided for in Article 2 of the LFATM, and the powers of this tribunal.

Now, from a complete reading of the claim it appears that the Claimant seeks, as its principal prayer, the annulment of the assessment at issue. It is true that in various points of the arbitral request the Claimant refers to the assessment as being "incorrect" (point 12), but it does so in the sense that that assessment is not made in accordance with the applicable law.

In fact, the Claimant clarifies the reasons for its statement by saying, amongst other things, that "the AT is assessing IMI on the basis of taxable property values that do not take into account the rules for updating the taxable property values applicable to leased properties, provided for in Decree-Law no. 287/2003, of 12 November, specifically Article 15-N." A situation, moreover, which the AT itself recognizes in its response by stating that in fact the assessment questioned was not based on the criteria defined in Article 15-N of the aforementioned statute "because the rent submissions made by the Claimant were not validated, to determine whether any of the exceptions provided for in paragraph 10 thereof occurred, determining the application of the taxable property values resulting from the general valuation".

There is no doubt that the Claimant is arguing for the incorrectness of the assessment precisely because the values determined did not take into account the update rules provided for in Article 15-N of Decree-Law no. 287/2003, of 12 November, for urban properties with non-residential lease agreements concluded prior to the entry into force of Decree-Law no. 275/95, of 30/09. A request that is reaffirmed and clarified in the response to the exception raised by the AT.

Thus, in accordance with this way of understanding matters, the tribunal considers itself competent to inquire whether the contested assessment incurs, or not, a legal error, precisely because the taxable property values indicated do not reflect the update rules provided for in Article 15-N of Decree-Law no. 287/2003.

The request being limited to the assessment of mere conformity of the assessment with the applicable law, the alleged incompetence is ruled out.

Whereby the alleged exception of incompetence is unfounded.

III. Merits

III.1. The relevant factual matter

  1. The following facts are considered proven:

13.1. On 01.10.1953, the Claimant entered into a lease agreement with B… (formerly designated C…, S.A.), which was in force as of the tax event date at issue in the present proceedings, with the leased properties being intended for oil installation facilities;

13.2. The object of this agreement underwent modifications over time, corresponding, as of the tax event date, to the properties identified below, with the taxable property values indicated in the "TPV 2012 assessment" column:

[table content preserved as structured in original]

13.3. The property registered in the matrix under article … of the Union of Parishes of … and … is of the nature of a rural property;

13.4. The Respondent made, on 2016-12-09, the assessment to which the present proceedings refers, having as its object the properties indicated and based on the taxable property values mentioned in the "TPV 2012 assessment" column, of paragraph 2 of this factual foundation;

13.5. On 24-10-2012, the Claimant submitted a rent submission relating to 2012, in the following terms:

[submission details preserved as in original]

13.6. On 29-10-2012, the Claimant delivered to the Finance Service of Lisbon …, an authenticated copy of the lease agreement mentioned in paragraph 1 and copies of rent receipts relating to the months from December 2010 to the month prior to the date of submission of the rent submission;

13.7. On 19-01-2015, the Claimant was notified of the draft decision not to apply the "rent regime" to the properties with articles nos. …, … and …, all of the parish of … (extinct) and with articles nos. … and …, both of the parish of … (extinct) on the grounds that "the documentation relating to the property included in the rent submission was not delivered to the responsible finance service";

13.8. In light of this notification, the Claimant exercised the right to prior hearing, having attached therein, again, the documentation supporting the rent submission relating to 2012 and clarifying that said documentation had been delivered to the Finance Service of Lisbon …;

  1. With relevance to the decision of the case, there are no unproven facts.

  2. Substantiation of the factual matter

The Tribunal's conviction regarding the decision of the factual matter was based on the documents contained in the proceedings, as well as the pleadings submitted, it being noted that there is no disagreement between the parties regarding the factual matter.

III.2. Article 15-N of Decree-Law no. 387/2003, of 12 November

Let us examine what is provided in Article 15-N of Decree-Law no. 387/2003, of 12 November:

Article 15-N

Leased urban properties

1 - In the case of an urban property or part of an urban property covered by the general valuation that is leased by a residential lease agreement concluded prior to the entry into force of the Urban Lease Regime, approved by Decree-Law no. 321-B/90, of 15 October, or by a non-residential lease agreement concluded prior to the entry into force of Decree-Law no. 257/95, of 30 September, the taxable property value, for the exclusive purposes of IMI, cannot exceed the value resulting from the capitalisation of the annual rent by the application of the factor 15.

2 - The owners, usufructuaries or surface holders of leased urban properties, in accordance with the previous paragraph, must submit, by 31 August 2012, a submission containing the last monthly rent received and the tax identification of the tenant, in accordance with the model approved by order of the Minister of Finance.

3 - The submission referred to in the previous paragraph must be accompanied by an authenticated photocopy of the written lease agreement or, failing that, by adequate means of proof in the terms to be defined by order of the Minister of Finance.

4 - The submission must further be accompanied by a copy of the rent receipts or counterfoils of such receipts relating to the months from December 2010 to the month prior to the date of submission of the submission, or by monthly rent collection schedules, in cases where these are received by entities representing the owners, usufructuaries or surface holders of leased properties in accordance with paragraph 1.

5 - The taxable property value for the exclusive purposes of IMI, fixed in accordance with the provisions of the previous paragraphs, is subject to notification to the respective owner and may be subject to complaint or objection in accordance with general terms.

6 - In the case of properties or parts of properties covered by paragraph 1 whose rents are updated in accordance with paragraph 10 of Article 33 of Law no. 6/2006, of 27 February, as amended by Law no. 31/2012, of 14 August, or on the basis of corrected gross annual income (CGAI), in accordance with the provisions of subsection c) of paragraph 2 of Article 35 or paragraph 7 of Article 36 of the same law, the provisions of paragraph 1 shall apply, with the necessary adaptations, with reference to the value of the updated annual rent.

7 - The owners, usufructuaries or surface holders of urban properties leased by a residential lease agreement concluded prior to the entry into force of the Urban Lease Regime, approved by Decree-Law no. 321-B/90, of 15 October, or by a non-residential lease agreement concluded prior to the entry into force of Decree-Law no. 257/95, of 30 September, who benefit from the regime provided for in this article must submit, annually, in the period between 1 November and 15 December, a submission containing the value of the monthly rent due relating to the month of December and the tax identification of the tenant, in accordance with the model approved by order of the member of Government responsible for the area of finance.

8 - (Repealed.)

9 - The submission referred to in the previous paragraph must be accompanied by a copy of the receipt or counterfoil of the receipt of the rent relating to the month of December or the monthly rent collection schedule, in cases where the rent is received by an entity representing the lessor.

10 - The taxable property value, for the exclusive purposes of IMI, fixed in accordance with the provisions of this article, is not applicable, and the taxable property value determined in the general valuation shall prevail, for all purposes, in the following situations:

a) Failure to submit the submission or the elements provided for in paragraphs 2, 3 and 4 within the deadlines established in the previous paragraphs;

b) Non-declaration of rents, until 31 October 2011, relating to the lease agreements provided for in paragraph 1 for purposes of personal income tax and corporate income tax relating to the tax periods comprised between 2001 and 2010;

c) Divergence between the rent submitted and that contained in such declarations;

d) Non-declaration of rents relating to the lease agreements provided for in paragraph 1 for purposes of personal income tax and corporate income tax relating to the tax periods commencing on or after 1 January 2011;

e) Onerous transfer or donation of the property or part of the urban property; or

f) Termination of the lease agreement referred to in paragraph 1.

g) Updating of the rent in accordance with the provisions of Articles 30 to 37 or 50 to 54 of Law no. 6/2006, of 27 February, as amended by Law no. 31/2012, of 14 August, except in the situations referred to in paragraph 6;

h) Failure to submit the submission or the elements provided for in paragraphs 7 and 9.

11 - The falsification, corruption and alteration of the elements referred to in paragraphs 3, 4 and 9 or the omissions or inaccuracies of the submissions provided for in paragraphs 2 or 7, when they should not be punished by the crime of tax fraud, constitute a minor offense punishable in accordance with Article 118 or 119 of the General Framework for Tax Offenses, approved by Law no. 15/2001, of 5 June.

This provision expressly provides that, in the case of urban properties covered by the general valuation that are leased by non-residential lease agreements concluded prior to the entry into force of Decree-Law no. 257/95, of 30 September, the taxable property value, for the exclusive purposes of IMI, cannot exceed the value resulting from the capitalisation of the respective annual rent by the application of the factor 15, imposing on the owners of said properties the burden of bringing to the attention of the Tax and Customs Authority the elements legally required so that the assessment of IMI may proceed on the basis of a multiplication factor applied to the annual rent of the leased properties.

With this standard, which we can regard as a true safeguard clause, the legislator intended to mitigate the taxation in respect of IMI of certain leased properties in cases where the respective annual rent multiplied by the factor 15 proves to be lower than the TPV determined in accordance with the general valuation. This provision, as is readily apparent, is intended to protect the interests of the owners of leased properties covered thereby, imposing that the taxation of such properties, for the exclusive purposes of IMI, not be based on the respective TPV, as would be expected, but on the value of their annual rent enhanced by the legal factor.

Now, being in possession of all the documents, elements and information it requires in order to be able to proceed with the IMI assessment in accordance with the legally fixed terms, the reasons that led the Respondent to disregard everything brought to its attention by the Claimant and to assess IMI as if Article 15-N of Decree-Law 387/2003, of 12 November did not exist, are not acceptable. Now, not only does this provision exist but it is not within the Respondent's discretion to shirk its application, which moreover contradicts the manifest purpose of the legislator, which is, it is repeated, to protect the taxpayer owner of leased properties covered thereby.

The Respondent does not deny (except in relation to one of the properties, which is rural) the applicability of the norm in question to the case at issue. It merely states that there has not yet been time to process the information provided by the taxpayer, which is why it has not yet been able to proceed with the IMI assessment in accordance with the said Article 15-N of the aforementioned statute. Now, in order for the assessment of the tax to be made in accordance with the terms legally required, namely in accordance with Article 15-N of Decree-Law 387/2003, of 12 November, all that is lacking is for the Respondent to be willing to validate the information made available by the taxpayer. All that is lacking is for the Respondent to be willing to comply with what is provided for in law, it being certain that from administrative inaction results a manifest benefit, at least as regards the public treasury, imposing on the taxpayers a patrimonial sacrifice, even if only temporary, which the legislator intended not to weigh, when the respective prerequisites and requirements were met, on the owners of this type of leased properties.

By assessing IMI in contravention of what is established in Article 15-N of Decree-Law 387/2003, of 12 November, the Respondent has admitted the ability to dispose of the tax legal relationship, of the quantification of the tax, thus conceiving that it is able to choose the moment from which the enshrined safeguard clause will be able to benefit the owners of the leased properties.

The assessment of any tax, and also IMI, must be made in accordance with the law, there being no legally acceptable reason for the Respondent to be able to proceed with the assessment of IMI on these properties outside what is provided for in Article 15-N of Decree-Law 387/2003, of 12 November.

Thus, with respect to the urban properties to which the above table refers, contained in point 13.2, the Tribunal understands that the IMI assessment, by unlawfully disregarding what is provided for in Article 15-N of Decree-Law 387/2003, of 12 November, is illegal, by being based on an error as to the legal prerequisites, whereby it cannot remain in the legal order, with all the consequences flowing from that illegality.

This Tribunal does not, however, have the competence to proceed itself with the IMI assessment that is shown to be due in accordance with Article 15-N of Decree-Law 387/2003, of 12 November, nor to order the Respondent to do so. The Tribunal's powers of cognition are limited, as stated, to the assessment of the legality of the assessment notified to the taxpayer, which is partially invalid, encompassing the invalidity all the urban properties referred to in the table reproduced in point 13.2, the IMI assessment relating to the rural property not being tainted by any defect.

IV. Decision

Whereby it is decided in this Arbitral Tribunal:

  • To dismiss the exception of incompetence raised by the Respondent; and

  • To partially uphold the request for declaration of illegality of the IMI assessment for the year 2012 corresponding to the collection document 2012…, as the Arbitral Tribunal finds that only the assessment relating to the urban properties is tainted by illegality, with the consequent partial annulment.

V. Value of the action

In accordance with the provisions of paragraph 2 of Article 306 of the CPC, Article 97-A of the CPPT and also paragraph 2 of Article 3 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the action is fixed at € 85,271.07 (eighty-five thousand, two hundred and seventy-one euros and seven cents).

VI. Costs

For the purposes of the provisions of paragraph 2 of Article 12 and paragraph 4 of Article 22 of the LFATM and paragraph 4 of Article 4 of the Regulation of Costs in Tax Arbitration Proceedings, the costs are fixed at the amount of € 2,754.00 (two thousand seven hundred and four euros), in accordance with Table I attached to said Regulation, to be borne entirely by the Respondent.

Let notice be given.

Lisbon, 4 October 2017.

The arbitrators

Fernanda Maçãs

Marcolino Pisão Pedreiro

Nuno Pombo

Text prepared by computer, in accordance with paragraph 5 of Article 131 of the CPC, applicable by remission of subsection e) of paragraph 1 of Decree-Law no. 10/2011, of 20 January, and with the spelling prior to the aforementioned Orthographic Agreement of 1990.

Frequently Asked Questions

Automatically Created

What is the safeguard regime for IMI on leased urban properties under Article 15-N of Decreto-Lei 287/2003?
The safeguard regime under Article 15-N of Decreto-Lei 287/2003 establishes that for urban properties covered by general valuation and subject to non-residential lease agreements concluded before Decreto-Lei 275/95 (30 September 1995), the taxable property value for IMI purposes cannot exceed the value resulting from capitalizing the annual rent by applying a factor of 15. This regime protects landlords with old lease agreements from excessive IMI assessments based on current market valuations that would be disproportionate to the rent actually received.
How does the special update regime for taxable property values (VPT) apply to pre-1995 commercial lease contracts?
For commercial lease contracts predating Decreto-Lei 275/95, the special update regime compares the taxable property value resulting from general valuation with the capitalized rent value (annual rent multiplied by 15). If the capitalized rent produces a lower value than the general valuation, this lower amount becomes the VPT exclusively for IMI calculation purposes. Taxpayers must submit lease documentation to the Tax Authority for validation. The regime applies only to urban properties, not rural properties, and requires that properties have undergone general valuation under the Property Tax Code (CIMI).
Can a taxpayer challenge an IMI liquidation that fails to apply the special rent regime at CAAD arbitration?
Yes, taxpayers can challenge IMI assessments at CAAD arbitration when the Tax Authority fails to apply the special rent regime under Article 15-N. In this case, the claimant successfully initiated arbitration proceedings arguing that the assessment did not reflect the safeguard regime despite having submitted all required documentation. However, the Tax Authority may defend that the regime cannot be applied until rent submissions are validated. According to paragraph 5 of Article 15-N, taxpayers also have the right to lodge complaints or objections once they are notified of the VPT determination following validation of rent submissions.
What are the consequences when the Tax Authority (AT) issues IMI assessments near the statute of limitations deadline without applying legal safeguards?
When the Tax Authority issues IMI assessments near the statute of limitations deadline without applying legal safeguards, it creates significant legal and procedural problems. In this case, the AT acknowledged issuing the assessment knowing it was incorrect because rent submissions remained unprocessed due to resource limitations. This practice forces taxpayers to contest assessments through arbitration or administrative procedures, creating additional burden and uncertainty. The AT argued that official revision under Article 115 of CIMI would be promoted once rent submissions are validated and if a lower VPT results. However, this approach effectively shifts the burden to taxpayers to correct assessments that should have been accurate from the outset.
How is the taxable property value (VPT) calculated for urban properties subject to non-residential leases predating Decreto-Lei 275/95?
For urban properties subject to non-residential leases predating Decreto-Lei 275/95, the VPT calculation involves a two-step comparison process. First, the property undergoes general valuation according to CIMI criteria, establishing a standard VPT. Second, the annual rent amount is capitalized by multiplying by factor 15. The lower of these two values becomes the VPT exclusively for IMI purposes. This calculation requires taxpayers to submit lease documentation proving: (1) the property is urban and covered by general valuation; (2) a non-residential lease exists from before 30 September 1995; (3) the current annual rent amount. The Tax Authority must validate these submissions before applying the special regime.