Real Estate Funds to Keep Exemption from IMT

22 September 2018

According to an article in Expresso’s weekly edition, the exemption will cost the Treasury at least 20 million euros.

Real estate funds’ exemption from IMT (municipal tax on transmissions), which had been expected to end in 2016, continues to be in force, Expresso reported in this Saturday’s edition. The extension is still valid because a law dating from 1987 was not repealed, and the exemption was thereby maintained. Requests for tax refunds have already exceeded €20 million.

The tax benefit that was halved in 2013 and then repealed three years later does not refer to the payment of the IMT upon the acquisition of a property, as the law is currently interpreted, but rather to an exemption granted to buyers of properties sold by the funds. The real estate funds are using this argument to ask for refunds on any taxes paid from 2014 onwards.

The exemption from IMT at the time of purchase remains in force, but since the tax authorities do agree with the funds’ interpretation, the funds pay first when they acquire the buildings and seek to claw back the taxes in court. Up to now, the funds have won every case.

The arbitration court already ruled in favour of taxpayers in six cases and has already received new applications for tax refunds totalling more than €20 million, Expresso reported, adding that this amount will increase as the funds buy property and ask for additional refunds. So far, the real estate funds have managed to recover €3.6 million in taxes.

Original Story: Jornal de Negócios

Photo: Bruno Colaço

Translation: Richard Turner