Process: 117/2014-T

Date: July 30, 2014

Tax Type: IUC

Source: Original CAAD Decision

Summary

This CAAD arbitration decision (Process 117/2014-T) addresses the subjective incidence of IUC (Unique Vehicle Circulation Tax) in financial leasing arrangements and procedural requirements for challenging such assessments. A leasing company contested IUC assessments for tax periods 2009-2012, seeking annulment and reimbursement of amounts paid. The Tax Authority raised two exceptions: (1) material incompetence of the Arbitral Tribunal, and (2) lack of subject matter, arguing no official assessments were issued by the TCA. The Tribunal rejected both exceptions, clarifying that CAAD has jurisdiction over self-assessment acts under Article 2(1)(a) of the LRAT, not just official assessments. The decision emphasizes that IUC payments in this context constituted self-assessments, falling within arbitral competence. Regarding procedural requirements, the Tribunal applied a declarative interpretation harmonizing LRAT with CPPT Article 131, concluding that prior administrative complaints are not mandatory when objections involve purely legal questions concerning acts performed according to Tax Administration guidelines. This ruling establishes important precedents for leasing companies challenging IUC liability, confirming arbitration access without exhausting administrative remedies in specific circumstances, and clarifying that subjective incidence disputes in financial leasing can be directly submitted to CAAD arbitration when legal interpretation issues are at stake.

Full Decision

ENGLISH TRANSLATION

I – Report

1.1. A..., S.A. (hereinafter referred to as "the claimant"), submits for the consideration of the present Court the legality of the acts of assessment of IUC for the tax periods of 2009, 2010, 2011 and 2012, having, for this purpose, filed, on 12/2/2014, a request for constitution of an arbitral tribunal and for arbitral award, in accordance with the provisions of articles 99 of the CPPT and 2, no. 1, lit. a), and 10, no. 2, lit. c), of Decree-Law no. 10/2011, of 20/1 (Legal Regime for Arbitration in Tax Matters, hereinafter referred to only as "LRAT"), in which the Tax and Customs Authority (TCA) is requested, with a view to "the annulment of the decisions of the Tax Authority and the respective IUC Collection Documents and the reimbursement of amounts unduly paid by the claimant".

1.2. On 15/4/2014 the present Singular Arbitral Tribunal was constituted.

1.3. In accordance with art. 17, no. 1, of the LRAT, the TCA was summoned, as the respondent party, to submit a response, in the terms and for the purposes of the aforementioned article. The TCA submitted its response on 21/5/2014, having argued, in summary, the total lack of merit of the claimant's request. In the said response, it invoked two exceptions, namely: "peremptory exception of lack of subject matter, which is invoked for all legal purposes, in accordance with the provisions of no. 3 of Art. 577 of the CCP as amended by Law 41/2013 of 26 June, which gives rise to the dismissal of the R. from the claim in accordance with the provisions of no. 3 of Art. 576 of the CCP, in view of the fact that no acts of official assessment of IUC were issued by the Respondent entity"; and "dilatory exception preventing examination of the merits of the case, to which article 576, nos. 1 and 2 of the CCP refers by virtue of article 2, lit. e), of the CPPT and article 29, no. 1, lits. a) and e), of the LRAT, given that the constituted Arbitral Tribunal is materially incompetent to examine and decide the claim which is the object of the litigation sub judice, having regard to the non-existence of acts of official assessment of IUC issued by the Respondent entity".

1.4. The claimant, notified of the TCA's response, replied, in writing, to the exceptions invoked, in a submission of 11/6/2014, which was notified to the respondent.

1.5. Considering that the parties had already pronounced themselves, in writing, on any possible exceptions, the present Tribunal considered, under art. 16, lit. c), of the LRAT, the holding of the meeting referred to in art. 18 of the LRAT to be dispensable and that the case should proceed to decision. The parties were notified by order of 7/7/2014 to state, within the established period, what they considered appropriate. By submissions to the Tribunal, the parties stated their agreement with the dispensing of the said meeting.

1.6. In accordance with the provisions of arts. 16, lits. c) and e), and 19 of the LRAT, the Tribunal considered, by order of 20/7/2014, the production of further pleadings to be dispensable on the grounds that it considered there were sufficient elements in the case file, both factual and legal, to render a decision. The parties were notified and did not pronounce themselves within the established period.

1.7. The Arbitral Tribunal was regularly constituted.

1.8. Considering that two exceptions were invoked (referred to above), their examination is justified beforehand, i.e., it is justified to know whether, as the now respondent alleges, the present Tribunal is "materially incompetent" and, furthermore, whether there is "lack of subject matter" (because, in its understanding, "no acts of official assessment of IUC were issued by the Respondent entity").

1.9. As to the invocation that the present Tribunal is "materially incompetent" because, allegedly, there are no "acts of official assessment of IUC issued by the Respondent entity", it is considered that the respondent's argument is unfounded, since the competence of Arbitral Tribunals comprises not only the examination of claims relating to the declaration of illegality of acts of assessment of taxes the administration of which is entrusted to the TCA (not applicable in the present case, given that the acts in question were not carried out by the TCA), but also [according to art. 2, no. 1, lit. a), of the LRAT] the examination of claims relating to the declaration of illegality of acts of self-assessment.

There is no doubt that, in the case under analysis, we are dealing with acts of self-assessment, since these occur when the assessment of the tax is made by the subject liable to tax himself, based on the rules and elements defined for such assessment (in this case, the "collection notes" contained in the TCA's computer system, and which are identified and attached to the case file as docs. nos. 2 to 60). The fact that the claimant refers to these acts of self-assessment as "official assessments" is an inaccuracy that does not alter the substance and nature of the acts in question (all the more so as the claimant also insisted on stating, in its petition and in its response to the exceptions invoked by the TCA, that it proceeded to "voluntary payment" of the IUC), which, as stated, fall within the scope of the material competence of Arbitral Tribunals, by virtue of what is provided in the aforementioned art. 2, no. 1, lit. a), of the LRAT.

However, the respondent alleges that "even if [...] it is understood that, under the provisions of lit. a) of no. 1 of Art. 2 of the LRAT, such acts constitute acts of self-assessment, and as [they are] capable of being reviewed, it should be stated from now on that such understanding is flawed in its premises having regard to the arguments set out below. [This is because] in accordance with the provisions of no. 1 of Art. 131 of the CPPT, [it is prescribed that] in the case of error in self-assessment, the objection will necessarily be preceded by an administrative complaint, within the period of 2 years from the presentation of the return. In the present case, the Claimant did not file any administrative complaint regarding the acts of self-assessment, for which reason, neither by this route are such acts of self-assessment capable of being reviewed."

In fact, the claimant did not previously file the said administrative complaint. However, was the claimant obliged to do so? The answer must be in the negative.

As Jorge Lopes de Sousa correctly states, in his "Commentary on the Legal Regime for Tax Arbitration", which is contained in the Guide to Tax Arbitration, coordinated by Nuno Villa-Lobos and Mónica Brito Vieira (Almedina, 2013, p. 131), "the reasons underlying the legal requirement and the dispensing of an administrative complaint, prior to the use of court proceedings, also apply to access to arbitral tribunals." From this follows the conclusion, "by mere declarative interpretation, [that] the possibility of requesting from arbitral tribunals the declaration of illegality of acts of self-assessment [...] provided for in article 2, no. 1, lit. a), of the LRAT, must be understood in harmony with the regime provided for in nos. 1 and 3 of article 131 of the CPPT, with the prior administrative complaint being necessary in cases where it is also necessary in tax tribunals."

The following question thus remains: in tax tribunals, and with regard to acts of self-assessment, is a prior administrative complaint always necessary? The answer is, once again, in the negative (and consequently applies to cases submitted to Arbitral Tribunals).

As Jorge Lopes de Sousa correctly states (idem, 2013, p. 130), although the rule is the necessity of a prior administrative complaint, "with regard to acts of self-assessment and withholding at source, when the ground for objection is exclusively a matter of law and the acts have been carried out in accordance with generic guidelines issued by the Tax Administration, it ceases to be obligatory to file a prior administrative complaint, as results from no. 3 of article 131 and no. 6 of article 132."

Now, as such conditions are met in the case now under analysis, it is concluded that a prior administrative complaint was not obligatory, and therefore the acts in question are capable of being reviewed.

In summary: there is no "lack of subject matter" because, although "no acts of official assessment of IUC [have] been issued by the Respondent entity", the object of this case consists of acts of self-assessment; and the present Tribunal is not "materially incompetent" because the declaration of illegality of such acts falls within the scope of the competences of Arbitral Tribunals, in accordance with the provisions of art. 2, no. 1, lit. a), of the LRAT.

1.10. From the above (in 1.9.), it is concluded that the Arbitral Tribunal is materially competent, the case has no defects that would invalidate it and the Parties have legal personality and capacity and are legitimate.

II – Grounds: The Facts

2.1. The now claimant alleges, in its petition, that: a) "it is not legitimate to conclude that the subjects liable to IUC are only the owners or equivalent holders of the vehicles, in whose names the same are registered"; b) "the ratio legis of the IUC rather points towards the taxation of the users of the vehicles, the actual owners or, still, financial lessees, as these are the ones who have the polluting potential causing environmental costs to the community"; c) "it cannot be otherwise understood that the expression 'considering as such', used in no. 1 of art. 3 of the IUC Code, establishes a legal presumption, which is rebuttable, in accordance with the general terms, and, in particular, by virtue of the provisions of art. 73 of the TLA"; d) "in order to rebut the presumption arising from registration in the motor vehicle register, the claimant presents copies of sales invoices/receipts (cf. documents nos. 61 to 105)"; e) "at the date of the tax liability to which the assessments in question relate, the claimant was no longer the owner of the vehicles identified therein, as the respective transfers had already previously taken place, in accordance with civil law"; f) "not meeting the TCA the requirements of the notion of 'third party' for registration purposes, it cannot avail itself of the failure to update the registration of the ownership right to call into question the full effectiveness of the purchase and sale contract and to demand from the seller (previous owner) the payment of the IUC owed by the buyer (new owner) provided that the presumption of the respective ownership is rebutted through sufficient proof of the sale."

2.2. The now claimant concludes, in view of the above stated, that: a) it should be "declared the illegality [of the acts of assessment of IUC for the tax periods of 2009, 2010, 2011 and 2012] (and consequently annulled), in the amount of €3,393.67"; b) it should be recognized the right to "reimbursement to the claimant of this amount, plus indemnificatory interest at the legal rate, counted from the date of the respective payment until full reimbursement."

2.3. For its part, the TCA alleges, in its response: a) that "the interpretation defended by the Claimant is based on a biased reading of the letter of the law"; b) "with regard to the systematic element of interpretation of the law [...] the solution advocated by the Claimant is intolerable, finding no support in the law the understanding upheld by it"; c) that "in light of a teleological interpretation of the regime enshrined in the entire IUC Code, the interpretation advocated by the Claimant in the sense that the subject liable to IUC is the actual owner, regardless of not appearing in the motor vehicle register, the registration of that status, is manifestly wrong"; d) that "the tax acts in question do not suffer from any defect of violation of law, insofar as in light of the provisions of article 3, nos. 1 and 2, of the IUC Code and of article 6 of the same code, it was the Claimant, in the capacity of owner, the subject liable to IUC"; e) that, "regarding the attachment of documents with a view to rebutting the presumption, it must be stated that Art. 3 of the IUC Code states that the subject liable to the tax is the person who appears as the owner that is listed in the Motor Vehicle Registry Office, hence we understand that all the reasoning advocated by the Claimant is defective, and it is not possible to rebut the presumption established"; f) that "the interpretation advanced by the Claimant is contrary to the Constitution"; g) that "the conduct of the Claimant – venire contra facto proprium – constitutes an abuse, provided for in Art. 334 of the Civil Code", insofar as, "without having been notified of any act of official assessment of IUC by the Respondent, it self-assessed by issuing the collection documents and paid the tax, knowing that in doing so without having been called upon by the Respondent it is assuming that it is the subject liable to the tax and then, comes in arbitration proceedings to review the very acts to which it gave rise and which it now no longer conforms to".

The TCA concludes that "the present request for arbitral award should be judged to lack merit, with the tax acts of assessment in question remaining in the legal order and the respondent entity being absolved from the claim."

2.4. The following facts are considered proven:

i) Within the scope of its activity, the now claimant enters into contracts with its customers for long-term car rental and financial leasing contracts for motor vehicles, after the end of which it transfers the ownership of the same to the respective lessees or to third parties.

ii) Between 14/11/2013 and 20/12/2013, the claimant proceeded to voluntary payment of allegedly outstanding IUC, relating to the vehicles identified in the request for arbitral award and relating to the tax periods of 2009, 2010, 2011 and 2012, in the total amount of €3,393.67 (see docs. nos. 2 to 60 attached to the initial petition).

iii) On a date prior to that to which the tax related, the vehicles in question were subject to sale to third parties, and were not, therefore, the property of the claimant, as can be seen from docs. nos. 61 to 105 attached to the initial petition, which, given their extension, are hereby reproduced herein. All the sales are supported by the respective sales invoices, which are properly identified.

2.5. There are no unproven facts relevant to the decision of the case.

III – Grounds: The Law

In the present case, four legal issues are in dispute: 1) whether "the interpretation defended by the Claimant is based on a biased reading of the letter of the law"; 2) whether the interpretation of the now claimant takes into account the "systematic element", and whether it ignores the "teleological element" of interpretation of the law; 3) whether there is "interpretation contrary to the Constitution" on the part of the claimant, and whether it has incurred venire contra factum proprium; 4) whether, in the present case, indemnificatory interest is owed to the claimant.

Let us then examine these.

  1. and 2) The first two legal issues converge towards the interpretation of art. 3 of the IUC Code, which makes it necessary: a) to know whether the norm of subjective incidence, contained in the aforementioned art. 3, establishes or does not establish a presumption; b) to know whether, when considering that the norm establishes a presumption, this disregards the systematic and teleological element; c) to know - admitting that the presumption exists (and that the same is rebuttable) - whether the rebuttal of the same was made.

a) Art. 3, nos. 1 and 2, of the IUC Code, has the following wording, which is reproduced here:

"Article 3 – Subjective Incidence

1 - The subjects liable to the tax are the owners of the vehicles, considering as such the natural or legal persons, of public or private law, in whose names the same are registered.

2 - Financially leasing lessees, acquirers with reservation of ownership, as well as other holders of purchase option rights by virtue of the leasing contract are deemed equivalent to owners".

The interpretation of the cited legal text is, naturally, essential for the resolution of the case under analysis. In that sense, it appears necessary to resort to art. 11, no. 1, of the TLA, and, by referral thereof, to art. 9 of the Civil Code (CC).

Now, in accordance with the aforementioned art. 9 of the CC, interpretation starts from the letter of the law and aims, through it, to reconstruct the "legislative intention". This is the same as saying (regardless of the objectivism-subjectivism debate) that literal analysis is the basis of the interpretive task and the systematic, historical or teleological elements are guides orienting the said task.

The literal apprehension of the legal text in question does not generate - even though the separation of this from the ascertainment, even if minimal, of its meaning is highly debatable - the notion that the expression "considering as such" means something different from "presuming as such". In fact, we would hardly find authors who, in a pre-understanding task of the said legal text, would instinctively reject the identity between the two expressions.

Confirming the indistinction (both literal and in meaning) of the words "considering" and "presuming" (presumption), see, for example, the following articles of the Civil Code: 314, 369, no. 2, 374, no. 1, 376, no. 2, and 1629. And, with particular interest, the case of the expression "is deemed", contained in art. 21, no. 2, of the CIT Code. As note Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, with regard to that article of the CIT Code: "beyond the fact that this norm demonstrates that what is at stake in tax treatment 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 CIS cannot fail to be considered as a presumption regarding incidence, the rebuttal of which is permitted by article 73 of the TLA" (see General Tax Law, Annotated and Commented, 4th ed., 2012, pp. 651-652).

b) These are just a few examples that allow the conclusion that it is precisely for reasons related to the unity of the legal system (the systematic element) that one cannot affirm that only when the verb "presume" is used is one dealing with a presumption, given that the use of other terms or expressions (literally similar) can also serve as the basis for presumptions. And, among these, the expressions "deemed as" or "considering as" assume, as has been seen, prominence.

If literal analysis is only the basis of the task, it naturally appears essential to assess the text in light of the other elements (or sub-elements of the so-called logical element). Indeed, the TCA also alleges that the claimant's interpretation ignores the teleological element of interpretation of the law.

It is therefore justified to determine whether the interpretation that considers the existence of a presumption in art. 3 of the IUC Code conflicts with the teleological element, i.e., with the purposes (or the sociological relevance) of what was intended with the rule in question. Now, such purposes are clearly identified at the beginning of the IUC Code: "The single vehicle circulation tax follows the principle of equivalence, seeking to burden taxpayers to the extent of the environmental and road cost that they cause, in the implementation of a general rule of tax equality" (see art. 1 of the IUC Code).

What can be inferred from this article 1? It can be inferred that the close link of the IUC to the principle of equivalence (or principle of benefit) does not allow the exclusive association of the "taxpayers" referred to therein with the figure of owners but rather with the figure of users (or economic owners). As was well noted in Administrative Ruling no. 73/2013-T, of 5/12/2013: "in fact, the ratio legis of the tax [IUC] rather points towards the taxation of the users of the vehicles, the 'economic owner' in the words of Diogo Leite de Campos, the actual owners or financial lessees, as these are the ones who have the polluting potential causing environmental costs to the community."

Indeed, if the said ratio legis were different, how could one understand, for example, the obligation (on the part of entities that proceed to rent vehicles) - and for the purposes of the provisions of art. 3 of the IUC Code and of art. 3, no. 1, of Law no. 22-A/2007, of 29/6 - to supply the DGI with data concerning the fiscal identification of the users of the said vehicles (see art. 19)? Should one read "users", where instead it should read, disregarding the systematic element, "owners with registration in their name"...?

c) From the foregoing it follows that limiting the subjects liable to this tax only to the owners of vehicles in whose names the same are registered - ignoring situations in which these no longer coincide with the real owners or real users of the same - constitutes a restriction that, in light of the purposes of the IUC, finds no basis for support. And, even if one invokes art. 6 of the IUC Code, as the TCA does, to allege "that only legal situations that are subject to registration [...] give rise to the birth of the tax obligation", it is necessary to bear in mind that such registration gives rise only to a rebuttable presumption, i.e., a presumption that can be set aside through evidence to the contrary (evidence that the registration no longer reflects, at the time of the tax obligation, the material truth that would have given rise to it).

It would, moreover, be unjustified to impose a kind of irrebuttable presumption, since, without an apparent reason, one would be imposing a (admittedly debatable) formal truth to the detriment of what could really be and would have been proven; and, on the other hand, it would set aside the duty of the TCA to comply with the inquisitorial principle established in art. 58 of the TLA, i.e., the duty to carry out the necessary steps for a correct determination of the factual reality on which its decision must rest (which means, in the present case, the determination of the current and actual owner of the vehicle).

Furthermore, if the seller were not permitted to rebut the presumption contained in art. 3 of the IUC Code, it would be benefiting, without a plausible reason, buyers who, in possession of correctly filled in and signed acquisition contract forms, and enjoying the advantages associated with their status as owners, would attempt to exempt themselves, by way of a "registration formalism", from the payment of tolls or fines.

On this point, it is also worth noting that the registration of vehicles does not have constitutive effect, functioning, as stated above, as a rebuttable presumption that the holder of the registration is, in fact, the owner of the vehicle. In this sense, see, for example, the Decision of the Supreme Court of Justice of 19/2/2004, case 03B4639: "Registration does not have constitutive effect, as it is intended to give publicity to the act registered, functioning (only) as a mere presumption, rebuttable, (presumption 'juris tantum') of the existence of the right (arts. 1, no. 1 and 7, of the CRP84 and 350, no. 2, of the C. Civil) as well as of the respective ownership, all in accordance with what is contained therein."

In the same sense, Administrative Ruling no. 14/2013-T, of 15/10/2013, stated, in terms which are here endorsed: "the essential function of motor vehicle registration is to give publicity to the legal situation of vehicles, the registration not having constitutive effect, functioning (only) as a mere rebuttable presumption of the existence of the right, as well as of the respective ownership, all in accordance with what is contained therein. The presumption that the registered right belongs to the person in whose name it is registered can be rebutted by evidence to the contrary. Not meeting the TCA the requirements of the notion of 'third party' for registration purposes [circumstance that could prevent the full effectiveness of the purchase and sale contracts executed], it cannot avail itself of the failure to update the registration of the ownership right to call into question the full effectiveness of the purchase and sale contract and to demand from the seller (previous owner) the payment of the IUC owed by the buyer (new owner) provided that the presumption of the respective ownership is rebutted through sufficient proof of the sale."

Now, in the case here under analysis, it is verified that the rebuttal of the presumption (by way of "sufficient proof" of the alleged sales) was carried out (see docs. nos. 61 to 105 attached to the initial petition).

It is true that, in an extensive list beginning at point 127 and extending to point 171 of its response, the TCA sought to refute the invoices presented, arguing, in summary, that the same are not "documents suitable to prove the sale" of the vehicles, nor do they succeed in "proving the alleged transfer" of the same, and that it is still required, in order to carry out such proof, "the attachment of a copy of the [...] official form for registration of motor vehicle ownership".

The present Tribunal, however, sees no reason to question the said invoices (nor were any elements presented that would allow, in a well-founded manner, to doubt the veracity thereof), understanding that the same are clearly demonstrative that the claimant was not, at the date of the tax, the owner of the vehicles identified therein. As was well noted in Administrative Ruling no. 27/2013-T, dated 10/9/2013, "the documents presented, particularly the copies of the invoices that support, from the outset, the sales [...] of the [...] vehicles referenced above, [...] embody means of proof with sufficient force and appropriate to rebut the presumption based on the register, as established in no. 1 of art. 3 of the IUC Code, documents, which moreover enjoy, the presumption of truthfulness provided for in no. 1 of art. 75 of the TLA."

  1. Finally, it is concluded, in view of what was set out above [in 1) and 2)], that there is no "interpretation contrary to the Constitution", contrary to what the respondent alleged in points 103 to 112 of its response, nor venire contra factum proprium, as the respondent also invoked in points 113 to 124 of its response. Note, with regard to this latter allegation, that the now claimant self-assessed, it is true, but there is no proof whatsoever that it knew "that in doing so without having been called upon by the Respondent it [was] assuming that it [was] the subject liable to the tax"; rather it did so because it knew, by reason of the "collection notes" present in the TCA's computer system, that it was the respondent that was assuming that the claimant would be the subject liable to the tax. Finally, there is nothing to suggest that compliance, by the now claimant, with what the TCA provides - even if done motu proprio - implies the preclosure of the right to challenge.

  2. A final note to consider, under the provisions of art. 24, no. 5, of the LRAT, the request for payment of indemnificatory interest in favor of the claimant (art. 43 of the TLA and 61 of the CPPT).

In this regard, Administrative Ruling no. 26/2013-T, of 19/7/2013 (which dealt with a situation very similar to the one under analysis) recalled: "The right to indemnificatory interest to which the aforesaid TLA norm refers presupposes that a tax amount higher than that owed has been paid and that such derives from an error, of fact or of law, attributable to the TCA services. [...] even if it is recognized that the tax paid by the claimant is not owed, because the claimant is not the subject liable to the tax obligation, determining, consequently, the respective reimbursement, it is not seen that, in its origin, there is the error attributable to the services, which determines such right [to indemnificatory interest] in favor of the taxpayer. In fact, in promoting the official assessment of the IUC considering the claimant as the subject liable to this tax, the TCA merely complied with the norm of no. 1 of art. 3 of the IUC Code, which, as abundantly stated above, attributes such status to the persons in whose names the vehicles are registered."

Having regard to this justification, with which agreement is expressed, it is concluded, also in the present case, for the lack of merit of the said request for payment of indemnificatory interest.

IV – Decision

In view of the foregoing, the decision is as follows:

  • The request for arbitral award is judged to have merit, with the consequent annulment, with all legal effects, of the assessment acts in question and the reimbursement of amounts unduly paid;

  • The request is judged to lack merit insofar as it concerns the recognition of the right to indemnificatory interest in favor of the claimant.

The value of the case is fixed at €3,393.67 (three thousand three hundred ninety-three euros and sixty-seven cents), in accordance with art. 32 of the CPTA and art. 97-A of the CPPT, applicable by virtue of the provisions of art. 29, no. 1, lits. a) and b), of the LRAT, and of art. 3, no. 2, of the Regulation on Costs in Tax Arbitration Proceedings (RCPAT).

Costs to be borne by the respondent, in the amount of €612.00 (six hundred twelve euros), in accordance with Table I of the RCPAT, given that the present request was judged to have merit, and in compliance with the provisions of articles 12, no. 2, and 22, no. 4, both of the LRAT, and of the provisions of art. 4, no. 4, of the said Regulation.

Notify.

Lisbon, 30 July 2014.

The Arbitrator

(Miguel Patrício)

Text prepared on computer, in accordance with the provisions of art. 138, no. 5, of the CCP, applicable by referral of art. 29, no. 1, lit. e), of the LRAT.

The drafting of the present decision is governed by the orthography prior to the Orthographic Agreement of 1990.

Frequently Asked Questions

Automatically Created

Who is liable for IUC tax on vehicles under a financial leasing agreement in Portugal?
Under Portuguese law, the subjective incidence of IUC in financial leasing agreements is a contentious issue addressed in Process 117/2014-T. While the complete decision text establishes procedural frameworks, the fundamental question of whether the leasing company (lessor) or the lessee bears IUC liability depends on interpreting tax legislation. This arbitration case involved a leasing company that had paid IUC for multiple tax periods (2009-2012) and sought reimbursement, suggesting the Tax Authority had treated the lessor as the liable party. The proper determination of IUC liability in leasing arrangements requires analyzing the legal ownership structure, possession rights, and specific provisions of the IUC Code regarding vehicle registration and economic substance.
Can the Tax Authority issue IUC assessments against leasing companies instead of the vehicle lessee?
The Tax Authority's position in Process 117/2014-T reveals important limitations on IUC assessment procedures. The case clarifies that the TCA did not issue official assessments against the leasing company; rather, the company made self-assessments and voluntary payments. The Tax Authority argued that no official assessment acts were issued, raising this as an exception to arbitral jurisdiction. This indicates that in financial leasing contexts, the Tax Authority typically relies on self-assessment mechanisms rather than issuing direct official assessments. The distinction is crucial because it affects procedural rights, challenge mechanisms, and whether prior administrative complaints are required before seeking judicial or arbitral review of IUC obligations.
What is the subjective incidence of IUC tax in financial leasing contracts under Portuguese law?
The subjective incidence of IUC in financial leasing contracts under Portuguese law centers on determining which party—lessor or lessee—qualifies as the taxable person. Process 117/2014-T involved a leasing company challenging its treatment as the IUC liable party for vehicles under financial lease agreements during 2009-2012. The case highlights tension between legal ownership (retained by the lessor) and economic possession (held by the lessee). While the excerpt does not provide the final substantive ruling, the dispute's existence demonstrates that Portuguese tax law's application to financial leasing arrangements requires careful analysis of IUC Code provisions, registration requirements, and the economic reality principle to properly identify the person subject to IUC taxation.
How can taxpayers challenge IUC tax assessments through arbitration at CAAD in Portugal?
Taxpayers can challenge IUC tax assessments through CAAD arbitration under Article 2(1)(a) of the LRAT (Legal Regime for Arbitration in Tax Matters), which grants jurisdiction over both official assessments and self-assessments. Process 117/2014-T establishes that prior administrative complaints under CPPT Article 131 are not always mandatory before accessing arbitration. When objections involve purely legal questions and acts were performed according to Tax Administration guidelines, taxpayers can directly request arbitration without exhausting administrative remedies. The process involves filing a request for constitution of an arbitral tribunal, followed by the Tax Authority's response (typically within established deadlines), and the tribunal's decision on both procedural exceptions and substantive merits. This streamlined access is particularly relevant for challenging IUC liability determinations in financial leasing contexts.
What exceptions can the Tax Authority raise in IUC arbitration proceedings before CAAD?
In IUC arbitration proceedings before CAAD, the Tax Authority can raise both dilatory and peremptory exceptions, as demonstrated in Process 117/2014-T. Key exceptions include: (1) material incompetence of the arbitral tribunal, arguing the tribunal lacks jurisdiction over the specific type of act challenged; (2) lack of subject matter (peremptory exception under CPC Article 577), claiming no challengeable administrative act exists—for example, arguing that no official assessments were issued; (3) failure to file mandatory prior administrative complaints under CPPT Article 131 when required for self-assessment errors; and (4) procedural irregularities in constituting the tribunal or filing the arbitration request. However, the Tribunal in this case rejected the incompetence and lack of subject matter exceptions, confirming CAAD's broad jurisdiction over self-assessment acts and clarifying when prior administrative complaints can be dispensed with in cases involving purely legal interpretation questions.