Summary
Full Decision
ARBITRAL DECISION
REFORMED (consult complete version in PDF)
REPORT
A..., taxpayer no. ..., with tax domicile at Rua..., ..., in Lisbon ("Claimant"), filed on 13/03/2018 a request for arbitral pronouncement, in the capacity of incorporating entity, by merger, of the company in the meantime extinct B... –, S.A., taxpayer no. ..., which had its registered office at the same address, in which it petitions the declaration of illegality of the act of dismissal of the gracious complaint procedures no. ...2017..., no. ...2017... and no. ...2017... and of the tax acts of assessment of Motor Vehicle Tax (IUC), relating to the year 2017, in the amount of € 10,202.84.
The Honourable President of the Deontological Council of the Administrative Arbitration Centre (CAAD) designated, on 28/03/2018, as sole arbitrator the signatory of this decision.
On 24/05/2018 the arbitral tribunal was constituted.
In compliance with the provisions of article 17, no. 1 of the Legal Regime of Tax Arbitration (RJAT), the Tax and Customs Authority (AT) was notified, on 25/05/2018, to, if it wished, submit a reply and request the production of additional evidence.
On 25/06/2018 the AT submitted its reply, accompanied by the respective administrative file.
The arbitral tribunal on 04/07/2018 decided to dispense with the holding of the meeting to which article 18, no. 1 of the RJAT refers, on the basis of the principle of autonomy of the arbitral tribunal in the conduct of the proceedings, inviting both parties to, if they wished, submit optional written pleadings and scheduled the date for pronouncement of the final decision.
The Claimant and the Respondent did not submit optional written pleadings.
CLARIFICATION OF PROCEDURAL ISSUES
The arbitral tribunal was regularly constituted and is materially competent.
The parties have legal personality and capacity and are legitimate, with no defects in representation occurring.
There are no nullities, exceptions or preliminary questions that prevent examination of the merits and of which it is necessary to be cognisant ex officio.
Consequently, the conditions are met for the final decision to be pronounced.
POSITIONS OF THE PARTIES
There are two positions in confrontation, that of the Claimant, set out in the request for arbitral pronouncement, and that of the AT in its reply.
In summary, the Claimant bases its claim on the fact that it acquires new vehicles from national importers and enters into financial leasing contracts and operational leasing contracts for these vehicles in favour of third parties, and after the term of the contracts proceeds to transfer ownership to the lessees or to third parties, for the residual value. Whereby it argues the illegality of the IUC assessments relating to those vehicles, object of leasing contracts entered into by the Claimant.
The Claimant further alleges that on the dates of the due date of the IUC relating to the vehicles in question, it had already leased these vehicles to third parties, through financial leasing contracts or operational leasing contracts with promise of sale. It maintains that the tax acts in question are based on error regarding their assumptions, insofar as it was no longer the owner of the respective vehicles at the moment in which the obligation to assess the respective IUC became due, despite the vehicle register indicating the Claimant as the owner thereof.
Otherwise, the AT maintains, in summary, that in the matter of financial leasing and for the purposes of the exclusion of article 3 of the IUC Code, it is essential that the financial lessors (such as the Claimant) comply with the obligation inherent in article 19 of the IUC Code in order to be exempt from the obligation to pay the tax.
The AT further alleges that the understanding advocated by the Claimant incurs not only a skewed reading of the letter of the law, but also the adoption of an interpretation that does not attend to the systematic element, violating the unity of the regime established throughout the IUC Code and, more broadly, throughout the entire legal-fiscal system and further derives from an interpretation that ignores the rationale of the regime established in the article in question, and likewise, throughout the IUC Code.
MATERIAL FACTS
FACTS CONSIDERED PROVEN
In light of the documents brought into the proceedings, it is established as proven that:
On 01/06/2016, following a cross-border merger process by incorporation of all B... –, S.A. into C..., S.A., as well as all legal responsibilities.
C..., S.A. is a company with registered office in France, which has a branch in Portugal – A... .
B..., S.A. was a financial institution which, within the scope of its corporate purpose, carried out transactions permitted to banks, with the exception of the receipt of deposits, as well as entered into contracts with its clients for long-term rental, short-term rental contracts and financial leasing contracts for motor vehicles.
Within the scope of its commercial activity, B..., S.A. entered into contracts of a diverse nature with its clients, among which stand out rental contracts for vehicles without driver with promise of sale, financial leasing contracts and financing contracts.
After the term of these contracts, as a rule, B..., S.A. proceeded to transfer ownership of the vehicles to the respective lessees or to third parties, for a residual value.
B..., S.A. voluntarily paid the IUC relating to the vehicles identified in the summary tables presented below, having for that purpose, proceeded to the respective self-assessment, through the issuance of the respective invoices, which were paid.
Notwithstanding having proceeded to the payment of the IUC assessment invoices (€ 6,192.71 + € 981.34 + € 3,028.84, totalling € 10,202.84), B..., S.A., filed on 18/10/2017, 20/10/2017 and on 15/11/2017, respectively, gracious complaints against these IUC self-assessments and respective compensatory interest, which were subject to partial approval by order of the Honourable Head of the Finance Service of Lisbon –..., on 22/11/2017 and on 15/12/2017, of the Honourable Head of the Finance Service (SF) of Lisbon.
FACTS NOT CONSIDERED PROVEN
There are no facts relevant to the decision that have not been established as proven.
THE LAW
SUBJECTIVE INCIDENCE OF IUC
In accordance with the provisions of article 3, no. 1 of the IUC Code, in the applicable wording, "passive subjects of the tax are the owners of the vehicles, considered as such natural or legal persons, of public or private law, in whose name the same are registered."
Moreover, in accordance with article 3, no. 2 of the IUC Code, in the applicable wording "financial lessees, acquirers with reservation of ownership, as well as other holders of purchase option rights by virtue of leasing contracts are deemed to be owners".
Now, the recourse to the vehicle register as a structuring element of the functioning of this tax is evident, moreover, throughout the entire IUC Code.
It should also be noted the content of article 6 of the IUC Code, relating to the definition of the taxable event of the tax obligation, in accordance with which this "(…) is constituted by ownership of the vehicle, as attested by the registration or registration in national territory." [1]
From this provision it likewise follows that vehicles that are not, nor should be, subject to registration in Portuguese territory, are only subject to this tax if they remain therein for a period exceeding 183 days. [2]
It is, therefore, a rule that, by resorting to the registral element, simultaneously establishes the taxable event of the tax and the respective tax nexus.
It is also from the elements of the vehicle register that the moment of the start of the period of taxation is extracted [3], as well as, in a general manner, all elements necessary for the assessment of the tax in question, such as, in particular, the case of engine displacement, age of registration, type of fuel and level of carbon dioxide (CO2) emission. [4]
However, from the dependence of the IUC taxation regime on the vehicle register one cannot fail to conclude that the rule of subjective incidence insofar as it considers as owner the person in whose name the vehicle is registered constitutes a mere (legal) presumption of incidence.
It is important, therefore, to have recourse to other interpretative elements, in particular to the respective legal notion.
Attending to the literal content of article 3 of the IUC Code, in the applicable wording, it is important to analyse, in particular, the expression "considered as such", especially from the perspective of the provision of article 9, no. 2 of the Civil Code, when it establishes that there cannot be understood among the possible meanings of the law that legislative thought which does not have in the respective letter a minimum of verbal correspondence even if imperfectly expressed.
It is true that the text did not resort to the term "presumed", contrary to what was contained in the extinct Regulation of the Tax on Vehicles. [5]
Could the fact that the legislator chose the expression "considered" make it impossible to be dealing with a legal presumption?
Now, examining the Portuguese legal order, we find various examples of rules that establish presumptions using the verb "to consider", many of which employed in the gerund ("considering" or even "considered as").
Examples of these are the rules presented below. In the Civil Code, among others, articles 314, 369 no. 2, 374 no. 1, 376 no. 2 and 1629. In the Industrial Property Code, merely by way of example, article 98 where also the term "considering" is used in a presumptive context.
Also in the tax legal order we can find the verb "to consider" with a presumptive meaning.
According to Diogo Leite de Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, in the annotation to article 73, no. 3 of the General Tax Law (LGT) "presumptions in matters of tax incidence may be explicit, revealed by the use of the expression 'it is presumed' or similar (…). However, presumptions may also be implicit in incidence rules, namely of objective incidence, when certain values of movable or immovable property are considered as constituting taxable matter, in situations where it is not unfeasible to ascertain the real value", providing thereafter some examples of rules in which the verb "to consider" is used, such as, in particular, the case of article 21, no. 2 of the Code of Tax on Income of Legal Persons (IRC), by establishing that "for the purposes of determining taxable profit, the value of acquisition of patrimonial increases obtained free of charge is considered to be its market value and cannot be less than that resulting from the application of the rules for determining the taxable value provided in the Stamp Tax Code".
The authors sustain, with respect to this article 21, no. 2 of the IRC Code that "in addition to this rule showing that what is at issue in the taxation of capital gains is to ascertain the real value (the market value), the limitation to the ascertainment of real value derived from the rules for determining the taxable value provided for in the Stamp Tax Code cannot fail to be considered as a presumption in matters of incidence, whose rebuttal is permitted by article 73 of the LGT". [6]
It can still be referred to in this regard, the provision of article 89-A, no. 4 of the LGT, in which a presumption is likewise established, without the term "is presumed" having been used, but rather "is considered". [7] [8]
Taking into account that the legal system should form a coherent whole, the examples above referred to, accompanied by the doctrine and jurisprudence indicated, by appeal to the systematic element, allow the conclusion that it is not only when the verb "to presume" is used that we are dealing with a presumption, but also the use of other terms or expressions can equally serve as the basis for presumptions, namely the term "is considered", thus showing that the condition established in article 9, no. 2 of the Civil Code is met.
If it is true, however, that the literal element, by itself, cannot be considered entirely decisive, when accompanied by other elements it is quite relevant and indicative of the true meaning of the rule in question, pointing to the expression "considered as such" being equivalent to the expression "presumed as such".
Let us resort now to the rational or teleological element which is of the greatest importance in determining the meaning of the rule in question.
Under the heading "principle of equivalence" article 1 of the IUC Code establishes that "Motor Vehicle Tax obeys the principle of equivalence, seeking to burden taxpayers in accordance with the environmental and road cost that they provoke, in implementation of a general rule of tax equality".
With respect to the concept of the principle of equivalence, Sérgio Vasques argues that "In obedience to the principle of equivalence, the tax should be shaped in attention to the benefit that the taxpayer derives from public activity, or in attention to the cost that it imputes to the community by its own activity" [emphasis ours]. [9]
The author continues, further arguing that "(…) a tax on automobiles based on a rule of equivalence will be equal only if those who cause the same road wear and the same environmental cost pay the same tax; and those who cause different road wear and environmental cost, pay different tax also. Therefore, from what is said one perceives that the implementation of the principle of equivalence dictates special requirements regarding the design of the taxable matter and the structure of rates". [10]
On the other hand, "When a tax is prefigured as the counterpart of the cost caused by a determined group of taxpayers, one must look for among them the signs of this cost. Thus, within the scope of Motor Vehicle Tax, instituted by Law no. 22-A/2007, of 29 June, the definition of the tax base and the structure of rates is also directed towards a rule of equivalence, intending to 'seek to burden taxpayers in accordance with the environmental and road cost that they provoke, in implementation of a general rule of tax equality'. And therefore, the IUC Code takes as fundamental elements, in the fixing of the respective rates, the engine displacement and the level of CO2 emissions of light vehicles, or the gross weight, number of axles, type of suspension and age of heavy vehicles, seeking, instead of the contributing capacity, the 'polluting capacity' of each vehicle." [emphasis ours]. [11]
Now, with respect to the design of the taxable matter and the structure of rates, Sérgio Vasques further points out that "(…) in the context of the reform of the automobile tax (…), the delimitation of the base of incidence and the fixing of rates are suggested not only as a function of engine displacement, but also as a function of the weight of vehicles, the polluting potential and the safety levels presented. The new circulation tax that is proposed asserts itself to have the same basic philosophy as the circulation and freight taxes: it is intended to compensate for the right to circulate on public roads, that is, the harmful effects resulting from the circulation of vehicles" [emphasis ours]. [12]
Let us attend, for a moment, to the statement of reasons which accompanied Bill no. 118/X, of 1 March 2007, which gave rise to Law no. 22-A/2007, of 29 June, which approved the Code of Tax on Vehicles and the IUC Code.
Indeed, in the mentioned statement of reasons, it is stated that "The reform which this bill embodies therefore results from the imperative necessity of bringing clarity and coherence to this area of the tax system and from the still more imperative necessity of subjecting it to the principles and concerns of an environmental and energy nature which nowadays mark the discussion of automobile taxation".
Further in accordance with the aforesaid Bill, both taxes "constitute something different, figures already of the century in which we live, with which it is certainly intended to raise public revenue, but to raise it in accordance with the cost that each individual provokes to the community".
And this purpose (to raise public revenue in accordance with the cost that each individual provokes to the community) is, moreover, well emphasized in Annex II of the said Bill when, with respect specifically to the IUC Code, it is stated "(…) as a structuring and unifying element (…) the principle of equivalence is established, thus making it clear that the tax, as a whole, is subject to the idea that taxpayers should be burdened in accordance with the cost they cause to the environment and the road network, this being the raison d'être of this tax figure".
Thus, and with respect to the principle of equivalence, we are led to conclude that this is a structuring principle of the IUC.
As is, moreover, stated in the mentioned Bill, vehicles should, therefore, be taxed in accordance with, in particular, their polluting potential and the safety levels presented. [13]
For all the above stated and attending, on the one hand, to the systematic place that the principle of equivalence occupies in the IUC Code, to the historical element embodied in Bill no. 118/X, of 1 March 2007 and, as well, to the rational element underlying the reform of automobile taxation referred to in the preceding paragraphs, it only makes sense to conceive the expression "considered as such", in the context of article 3 of the IUC Code, as revealing the presence of a rebuttable presumption.
OF THE CONCEPT OF PRESUMPTION
In light of the provision of article 349 of the Civil Code, "presumptions are the inferences that the law or the judge draws from a known fact to establish an unknown fact".
Presumptions thus constitute means of proof, having this as its function the demonstration of the reality of the facts. [14]
Thus, whoever has the legal presumption in their favour is excused from proving the fact to which it leads.[15]
Nevertheless "legal presumptions may, however, be rebutted by contrary proof, except in cases where the law prohibits it". [16]
As the Jurisprudential Standardization Decision of the STJ, relating to Process no. 002663, states, "the presumption represents the logical judgment by which, arguing according to the bond of causality which links one to the other natural and human events, we can infer the existence or the mode of being of a certain fact that is unknown to us as a consequence of another fact or facts that are known to us."
The said Decision further states that "legal presumptions are juris et de jure, when they do not admit contrary proof; juris tantum, when they can be set aside by opposing proof. In the first case, it prevents contrary proof; in the second, it reverses the burden of proof."
Now, "presumptions function as a way to overcome the difficulties of proof, because they refer, for example, to facts that are not objectified by their very nature, there being an appearance that deserves protection - enforceability against third party of simulated action registered, whether also when it is more difficult to produce for those who would normally have to bear the burden of proof (relevatio ab onere probandi)." [emphasis ours].
The STJ concludes that "(…) juris tantum presumptions constitute the rule, being juris et de jure presumptions the exception. In doubt, the legal presumption is juris tantum, as it should not be considered, unless the law so provides, that it was intended to prevent the production of contrary proofs, imposing a formal truth to the detriment of proven reality." [emphasis ours].
In the case of presumptions of tax incidence, these are always rebuttable. [17]
Thus, one cannot fail to understand that the expression "considered as such" used in article 3 of the IUC Code, in the applicable wording, sets out a legal presumption, which is rebuttable, in accordance with general terms and, in particular, by virtue of the provision of article 73 of the LGT.
As mentioned earlier, the presumptions established in tax incidence rules always admit contrary proof.
According to José Maria Fernandes Pires (Coordinator), Gonçalo Bulcão, José Ramos Vidal and Maria João Menezes, in annotation to article 73 of the LGT, "When they relate to rules of incidence, presumptions are always relative" [emphasis ours]. [18]
Now, presumptions of tax incidence can be rebutted through the proper adversarial procedure provided for in article 64 of the CPPT or, alternatively, by way of gracious complaint or judicial challenge of the tax acts based thereon.
In the case at hand, the Claimant did not use the referred proper procedure, wherefore the present request for arbitral pronouncement constitutes the proper means to rebut the presumption of subjective tax incidence of the IUC that supports the tax assessments whose annulment is the object of the present request.
Thus, once it has been concluded that article 3 of the IUC Code, in the applicable wording, establishes a rebuttable presumption, it is necessary to further analyse whether this presumption was, or was not, effectively rebutted by the Claimant.
In the case at hand, the Claimant produced documentary proof, having attached to the proceedings copies of "vehicle rental contracts without driver and promise of sale" and "financial leasing contracts".
Indeed, given that the formal validity of the contracts submitted by the Claimant is not questioned, it is considered documentarily proven that, on the date of the due date of the tax the vehicles to which the same refer, although property of the Claimant, were given by it under a financial leasing regime or leasing with purchase option.
Thus, in situations where vehicles, on the date of occurrence of the taxable event, are assigned to lessees, under the aegis of financial leasing contracts or other leasing arrangements that involve purchase option, the passive subject of the tax obligation is not the lessor owner but rather, in accordance with article 3, no. 2 of the IUC Code, the respective lessee, by being the one who has enjoyment of the vehicle. And this occurs independently of whether or not the provision of article 19 of the IUC Code has been complied with and of the circumstance that the ownership registration remains in the name of the lessor, without the leasing contract having been registered therein.
For all the above stated, it is concluded that there is no legal foundation for the acts of assessment of IUC and compensatory interest with respect to the vehicles and periods identified which, on the date of the due date of the tax, were assigned to the respective lessees under the aegis of financial leasing contracts or leasing with purchase option.
The assessment of the remaining questions raised by the Claimant is thus prejudiced, by the declaration of illegality of the above identified assessments, by substantive defect that prevents the renewal of the acts, effectively ensuring the protection of the rights of the Claimant, in accordance with the provision of article 124 of the CPPT. [19]
OF INDEMNIFICATORY INTEREST
Together with the annulment of the assessments, and consequent reimbursement of the amounts unduly paid, the Claimant further requests that it be recognized the right to indemnificatory interest, under article 43 of the LGT.
Indeed, in accordance with the provision of no. 1 of the said article, indemnificatory interest is due "when it is determined, in gracious complaint or judicial challenge, that there was error attributable to the services from which results payment of the tax debt in an amount greater than legally due." In addition to the means referred to in the rule which is transcribed, we understand that, as follows from no. 5 of article 24 of the RJAT, the right to the mentioned interest can be recognized in the arbitral process and, thus, the request is known.
The right to indemnificatory interest to which the above referred LGT rule alludes presupposes that tax has been paid in an amount greater than due and that this derives from error, of fact or of law, attributable to the services of the AT. In the present case, both conditions are met, constituting, thus, the obligation of indemnificatory interest in favour of the passive subject, which is thus declared.
DECISION
In these terms and with the foundation described above, the arbitral tribunal decides:
To judge favorably the request for declaration of illegality of the tax acts of assessment of IUC, relating to the year 2017; and
To judge favorably the request for recognition of the right to indemnificatory interest.
Condemning the AT to pay the costs of the present proceeding.
VALUE OF THE PROCEEDING
The value of the proceeding is fixed at € 10,202.84 (ten thousand, two hundred and two euros and eighty-four cents), in accordance with article 97-A of the Code of Procedure and Tax Proceedings (CPPT), applicable by virtue of sub-items a) and b) of no. 1 of article 29 of the RJAT and of no. 2 of article 3 of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT).
COSTS
Costs to be borne by the AT, in the amount of € 918 (nine hundred and eighteen euros), in accordance with Table I of the Regulation of Costs of Tax Arbitration Proceedings, in accordance with no. 2 of article 22 of the RJAT.
Notify.
Lisbon, 26 November 2018
The Arbitrator,
(Hélder Filipe Faustino)
Text prepared by computer, in accordance with the provision of no. 5 of article 131 of the CPC, applicable by referral of sub-item e) of no. 1 of article 29 of the RJAT.
The wording of the present decision is governed by the spelling prior to the Orthographic Agreement of 1990.
[1] See article 6, no. 1 of the IUC Code.
[2] See article 6, no. 2 of the IUC Code.
[3] See article 4 of the IUC Code.
[4] See articles 7 and 9 of the IUC Code.
[5] In accordance with the wording of the then article 3, no. 1 of the Regulation of Tax on Vehicles (approved by Decree-Law no. 143/78, of 12 June and repealed by Law no. 22-A/2007, of 29 June), "the tax is due by the owners of the vehicles, presumed to be as such, until proof to the contrary, the persons in whose name the same are matriculated or registered." [emphasis ours].
[6] See "General Tax Law Annotated and Commented", pp. 651 and 652.
[7] Op. cit., annotations 7 and 12 to articles 75 and 89-A of the LGT, respectively, pp. 667 and 782, and, likewise, the Decisions of 2 May 2012, Process no. 0381/12 and of 17 April 2013, Process no. 0433/13.
[8] According to José Maria Fernandes Pires (Coordinator), Gonçalo Bulcão, José Ramos Vidal and Maria João Menezes, "The standard income does not coincide with the value spent, being determined in accordance with a presumption of income, legally defined, taken as reasonable in light of the type and amount of the expenditure effected. In the legal design of this no. 4 of article 89-A the legislator does not intend to rigorously tax the value spent." [emphasis ours], Op. cit., p. 945.
[9] See "Special Consumption Taxes", Almedina, 2000, p. 110 et seq.
[10] Op. cit., p. 122.
[11] See Sérgio Vasques and Tânia Carvalhais Pereira, "Special Consumption Taxes", Almedina 2016, p. 94 et seq.
[12] Op. cit., p. 124.
[13] See Sérgio Vasques, Op. cit., p. 124.
[14] See article 341 of the Civil Code.
[15] See article 350, no. 1 of the Civil Code.
[16] See article 350, no. 2 of the Civil Code.
[17] See article 73 of the LGT.
[18] See "General Tax Law Annotated and Commented", Almedina, 2015, p. 810.
[19] Subsidiarily applicable by virtue of the provision of sub-item a) of no. 1 of article 29 of the RJAT.
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