The Portuguese Tax Authorities (“AT”) must review its guidelines whenever they are no longer up-to-date; to this end, on 3 March last, the Tax Authorities revoked Circular No. 8/2013, of 4 October 2013, on the tax framework for wind farms and solar parks in terms of Municipal Property Tax (“IMI”), which had caused much controversy.
Circular No. 2/2021 intends to clarify the qualification of wind farms and solar parks, and subsequently clarify how the assessment for Municipal Property Tax purposes should be carried out, and finally offers the criteria that must be met for registration in the land register. It is possible to extract the following answers from the Circular:
- What is the qualification of wind farms and solar parks?
In the understanding of the Tax Authorities, these are qualified as urban properties, since they gather the three structural elements of this concept, physical, legal and economic.
Furthermore, the nature they assume as property is that of Urban Industrial Properties, by virtue of Article 6, number 2 of the Property Tax Code.
- How should the fraction of the territory where they are located be perceived?
In the cases where the entity holding the power station holds ownership, usufruct or surface rights in relation to the occupied fraction, it is understood that these are part of the generation center.
However, if the land is not an integral part of the entity’s assets or does not have an ownership nature, then it is not part of the generation center.
- What is the evaluation method?
The evaluation of Urban Industrial Properties must be made in accordance with Article 38 of the Property Tax Code, but it is important to take into consideration Ministerial Order no. 11/2017, of 9 January, which identifies generation centers as one of the buildings covered by the remission of number 3 and 4 of Article 38.
Therefore, the adopted method is the “cost plus the value of the land”, as results from Article 46, number 2.
- For evaluation purposes what should be taken into account in this method?
- In the case of wind farms
It should be taken into account the substations, control stations, wind turbine towers that make up the power station, as well as the land on which theses constructions are located. As far as the tower itself is concerned, the foundations and the tower should be considered, whereas the set of blades, rotor and cabin (nacelle) are not relevant in terms of assessment.
- In the case of solar parks
In this type of stations, the substations, control stations and the structure supporting the solar panels or collectors that compose the power station, as well as the land where these constructions are located are relevant.
For evaluation purposes, the supporting structures, the footing and the pillars/props fixed to the foundation and the screed must be considered, solar panels not being relevant.
- And when there is economic autonomy between the constructions and the land?
In these cases, only the area that is effectively occupied by the implantation of the constructions belonging to the power stations must be taken into consideration, Article 46.º No. 3.
- How should these properties be registered in the land registry?
In the case of properties (stations) located in only one parish, these must be registered in the corresponding land registry.
On the other hand, buildings located in more than one parish and which are fenced, must be registered in the land registry of the parish where their main entrance is located. Buildings, which are not fenced, must be registered in the land registry of the parish where the highest number of buildings are located.
- What has changed?
Circular No. 8/2013 focused on wind farms, with the Tax Authority considering each wind turbine and substation as independent units for IMI purposes, which led to them constituting different urban properties (others) subject to IMI.
With the new Circular, the Tax Authority adopts a Unitarian vision, with the various elements that make up a wind farm, but also a solar park, constituting a single urban property (urban industrial property), which is also subject to IMI.
 Article 68-A, No. 4 of the Portuguese General Tax Law
 The Portuguese Tax Authorities clarifies tat in the absence of a license, its normal industrial destination must be observed, with the production of electricity from wind and solar energy integrated in category
35113 of the Portuguese Classification of Economic Activities, Revision 3.