"The municipality of Miranda do Douro decided to challenge the assessment made by the AT, as it does not agree with the exclusion of the safety and production organs of these power plants, such as turbines, transformers or dischargers, because they are an integral part of the building, and that they must be taken into account, for their tax value", explained councilman Vítor Bernardo.

According to the councilman, the request to challenge the assessment of the dams under the Municipal Property Tax (IMI) was submitted to the court on April 2.

"This challenge to the assessment arises now, because our two dams were registered in due time in the property matrix for assessment", stressed Vítor Bernardo.

Bernardo also said that the Miranda do Douro dam was assessed by the AT at 52 million euros and the Picote dam at 55 million euros.

"The value of these two ventures, in addition to the building, with the production unit as transformers, turbines and other equipment, (...) increases by more than 120% per centre compared to that established by the AT, in each of these power plants", highlighted the social democrat councilman.

Now, the municipality of Miranda Douro, in the district of Bragança, expects the top officials of the AT to comply with the dispatch of the former Secretary of State for Tax Affairs, Nuno Santos Félix, and that the administrative act of the tax assessment made on the dams be annulled.

Nuno Santos Félix determined that the assessments of dams that were challenged for not considering all the elements that make them up should be revoked and redone by the Tax Authority.

This indication is included in a dispatch dated March 4, which reads that "if the assessment of hydroelectric projects is challenged", based on the "exclusion of safety or exploration organs from the challenged assessment [...], the assessment acts that have excluded safety or exploration organs from their respective object must be revoked", when they "must be classified as 'component part' of the building".

The origin of this dispatch - the third since that government official determined the assessment of dams for IMI purposes - is the difference with which the municipalities and the AT understand what should be considered for IMI assessment and taxation purposes with regard to dams.

The municipalities contest the understanding of the AT - expressed in a circular in 2021 - according to which machines and equipment (such as dam turbines) should not be classified as buildings, being outside the scope of IMI, and ask the Government to revoke it.

The dispatch recalls how the current legislation defines a dam, noting that the "safety and exploration organs are thus part of the legal concept" of this type of infrastructure, with the law also determining that, for the purposes of building a dam, the project must include safety organs such as "flood dischargers", "bottom discharges" or the "power plant and hydraulic circuits".

With the assessment of most of the hydraulic projects completed, and there being a possibility of judicial (or arbitration) challenge of the second assessments by the municipality or the dam concessionaire (taxpayer), Nuno Santos Félix anticipated that the AT would be "called to contest any or revoke the respective acts".

The dispatch argued that, given the political situation at the time, it should be the next government in full capacity to pronounce itself globally on the understanding of the AT's assessment, thus limiting the effect of that diploma "to what is strictly necessary in view of the urgency of the AT's practice of procedural acts in litigation relating to the assessment of hydroelectric projects".

The fiscal aspect of dams jumped to the media agenda following the sale by EDP of six dams in Trás-os-Montes (Miranda do Douro, Picote, Bemposta, Baixo Sabor, Feiticeiro and Tua), for 2.2 billion euros, to a consortium led by Engie.

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