CAAD 125/2014-T: IUC Subjective Incidence in Financial Leasing and Long-Term Vehicle Rental

CLAIMANT: A..., sa

RESPONDENT: Tax and Customs Authority

Arbitral Decision[1]

I REPORT

A) The Parties and the Constitution of the Arbitral Tribunal

1. A... sa, legal entity no. ..., with registered office at Rua ..., in …, hereinafter referred to as the "Claimant", filed a request for the constitution of a singular Arbitral Tribunal, pursuant to Article 10 and paragraph a) of section 1 of Article 2 of the Legal Framework for Tax Arbitration, approved by Decree-Law no. 10/2011, of 20 January, hereinafter referred to as "RJAT" and Articles 1 and 2 of Ordinance no. 112 – A/2011, of 22 March, to decide the dispute between it and the Tax and Customs Authority, hereinafter referred to as "Respondent" or "TA", with a view to the annulment, on grounds of illegality, of 209 acts of ex officio assessment of the Unique Motor Vehicle Tax (IUC), relating to the years 2009 to 2012, in the total amount of €7,931.37, concerning 60 motor vehicles identified by their respective registration number in the assessments attached to the arbitral request and in accordance with the table attached as Annex A, contained in the arbitral ruling request, which are hereby deemed fully reproduced.

2. The request for constitution of the Arbitral Tribunal, filed on 13 February 2014, was accepted by the Esteemed President of CAAD and automatically notified to the Tax and Customs Authority on 17.02.2014. The Claimant chose not to designate an arbitrator, therefore, pursuant to section 1 of Article 6 of the RJAT, the undersigned was designated by the Deontological Council of the Centre for Administrative Arbitration as arbitrator of the singular Arbitral Tribunal. The appointment was accepted and the parties, notified of the acceptance, on 2 April 2014, did not refuse the designation, in accordance with the terms provided in paragraphs a) and b) of section 1 of Article 11 of the RJAT, in conjunction with the provisions of Articles 6 and 7 of the Deontological Code.

Thus, in accordance with the provision of paragraph c) of section 1 of Article 11 of Decree-Law no. 10/2011, of 20 January, as amended by Article 228 of Law no. 66-B/2012, of 31 December, the singular Arbitral Tribunal was constituted on 17 April 2014.

On 22 April 2014, the Respondent "TA" was notified to file its answer within the legal period, pursuant to sections 1 and 2 of Article 17 of the RJAT. On 19 May 2014 the TA filed its Answer and the attached documents designated as PA (administrative proceedings).

On 10 July 2014, at 15:00, the meeting provided for in Article 18 of the RJAT took place, of which minutes were drawn up and are attached to the file and are hereby deemed fully reproduced. At the meeting held, the Claimant requested the attachment to the file of a set of accounting documents (copies of accounting extracts evidencing the payments of the invoices attached to the file). A period of ten days was fixed for the Respondent to attach documents, with an equal period for the TA to comment if it so wished. The Claimant dictated to the minutes the clarification regarding the observations made in point 115 et seq. of the TA's answer. The Claimant delivered a copy of the documents whose attachment it requested, which was granted. A period of 20 days was fixed for the TA to comment. The parties waived the submission of arguments. The date for delivery of the arbitral decision was set for 3 October 2014. On 23 September 2014 the Tax Authority requested the attachment to the file of arbitral decisions nos. 150-2014T and 220-2014 T on matters identical to those of the present file, therefore a period was fixed for the Claimant to respond if it so wished and the deadline for delivering the arbitral decision was extended to 22 October 2014.

B) Procedural Prerequisites

1. The Arbitral Tribunal is regularly constituted and is materially competent, pursuant to Article 2, section 1, paragraph a) of Decree-Law no. 10/2011, of 20 January.

The Parties have legal personality and capacity, are legitimate and are legally represented (See Articles 4 and 10, section 2, of DL no. 10/2011 and Article 1 of Ordinance no. 112/2011, of 22 March).

As to the cumulation of claims, seeking the joint appraisal of the legality of 249 assessments of IUC, relating to the years 2009 to 2012, despite constituting autonomous acts, the prerequisites required by section 1 of Article 3 of the RJAT and Article 104 of the CPPT being met, the cumulation must be admitted. Thus, in the same arbitral request, the cumulation of requests for a declaration of illegality of all tax assessment acts for IUC and their respective compensatory interest is accepted, given the identity of the tax and the appraisal of the tax acts in question depending on the appraisal of the same factual circumstances and the application of the same legal rules.

The proceedings do not suffer from nullities that would invalidate them and no exceptions were raised that would prevent judgment on the merits of the case, therefore the Tribunal is in a position to deliver the arbitral decision.

C) THE REQUEST FORMULATED BY THE CLAIMANT

1. The Claimant formulates the present request for arbitral ruling seeking the illegality and consequent annulment of the assessment acts for the Unique Motor Vehicle Tax and respective Compensatory Interest, relating to the years 2009 to 2012, in the total amount of €7,931.37, with reference to sixty vehicles, identified by their respective registration number in the list contained in the arbitral ruling request (Annex A), which is hereby deemed reproduced, as well as in the notes showing the assessment of tax and their respective compensatory interest, all attached to the file and which are hereby deemed fully reproduced.

It bases its request on the illegality of the tax assessments and their respective interest, alleging in summary the following:

a) The Claimant is a credit institution with strong presence in the national market, with financing to the automotive sector constituting one of the areas of activity of particular relevance;

b) A substantial part of its activity is conducted through the conclusion, among others, of financial leasing contracts and long-term rental (ALD) contracts, intended for the acquisition, by companies and individuals, of motor vehicles;

c) These contracts comply, as results from their own legal configuration, with a common script, typical of this type of financing: the Claimant, after being contacted by the customer – who, at that stage, has already chosen the type of vehicle it wishes to acquire, its characteristics (make, model, accessories, etc.), and even its price – acquires the vehicle from the supplier indicated by the customer, and then proceeds to deliver it to said customer – who thus assumes the status of lessee;

d) During the period to be stipulated in the contract, this lessee maintains the temporary enjoyment of the vehicle – which remains the property of the Claimant – by means of remuneration to be delivered to the Claimant in the form of lease payments;

e) Being legally obliged to, at the end of the contract, acquire the vehicle by paying a residual value;

f) The motor vehicles identified in the list attached to the PI as ANNEX A (whose registration number appears in column K) were given in ALD by the Claimant to the customers also identified there (column I);

g) All these customers acquired, at the end of their respective contract, the motor vehicle to which it applied, by payment of the corresponding residual value (as results from the sales invoices attached as documents nos. 61 to 120 and identified in column N of the table attached as ANNEX A to the PI;

h) In the case of the motor vehicle identified in lines 165 to 168 with registration number ..-..-..) its acquirer was not the previous lessee, but a third party to whom the latter indicated that the vehicle be transferred and the corresponding residual value invoiced;

i) Which in no way alters the Claimant's factual position, since, during the term of the contracts, it was a mere lessor; once the contract ended, it ceased to be the owner of these vehicles;

j) Recently the Claimant was notified to proceed with the payment of the IUC assessments contained in the present arbitral request (Annex A), and made the payment in accordance with the evidence attached to the file with nos. 1 to 60;

k) The demand for payment of the IUC in question, relating to the years 2009 to 2012, occurred even knowing that the TA – or should have known – that the motor vehicles in question were no longer the property of the Claimant at the moment (in the year) in which the tax should have been paid;

l) This is because, on the dates to which the facts that gave rise to the IUC assessments in question refer, the Claimant was no longer the owner of the vehicles to which they refer;

m) It exemplifies with the case of the vehicle with registration number ..-..-.., which appears in lines no. 1 to 4 of the table attached as Annex A, one for each assessment act/year concerning this automobile, i.e., 2009 to 2012, a factual scenario which, it alleges, is repeated in relation to all the other tax acts identified in the table attached to the PI.

1. The legal basis of the request for arbitral ruling rests, in summary, on the following:

a. The Claimant cannot be considered a liable party for IUC, even if, in the year to which the IUC in question relates, the transfer of the said vehicles was not properly registered with the Motor Vehicle Registry Office;

b. Although the tax acts do not expressly mention the reasons that led to the issuance of the assessments which constitutes a defect of lack of reasoning, the Claimant understands that the reason underlying the assessments is the fact that the transfer of ownership by the lessees, in accordance with the terms provided in their respective contracts, was not registered at the Motor Vehicle Registry Office;

c. The registration, or its lack, cannot be considered a determining element of the Claimant's tax liability, for which reason the contested tax assessments appear to be illegal;

d. Thus, underlying these proceedings is essentially a single issue: whether the fact that the transfer of the vehicles identified in the table attached as ANNEX A, to their previous lessees (or, in the specific cases identified above, to third parties indicated by them), at the end of the ALD contract, was not registered with the Motor Vehicle Registry Office, makes that transfer unenforceable against the TA, for the purposes of proceeding to collect the tax from its former owner;

e. The responsibility for proceeding with the payment of the IUC whose assessment is contested does not fall, nor has it ever fallen, on the Claimant, and is therefore intrinsically illegal – due to lack of substantive legitimacy of the Claimant – the assessment made by the TA.

f. As case law (particularly arbitral) has highlighted, not even during the term of a financial leasing contract should the lessor entity be considered a liable party for IUC; all the more so, even less so after the end of the leasing contract and the exercise, by the lessee entity, of its right to acquire the asset at the residual value;

g. The lessee also becomes the owner of the vehicle in question, ceasing to apply to it the provision of section 1 of Article 3 of the CIUC;

h. It further invokes, in summary, the provisions of Articles 408, section 1 and 874 of the Civil Code, the regime resulting from Decree-Law no. 54/75 of 12 February, as well as the case law resulting from various arbitral decisions already delivered in similar cases and, finally, attaches an Opinion by Prof. Doctor Agostinho Cardoso Guedes.

It concludes by petitioning for the declaration of illegality and consequent annulment of both the assessment acts relating to IUC concerning the 60 vehicles identified by their respective registration number in the list attached as ANNEX A, and the assessment acts for compensatory interest associated with them, as well as the reimbursement of the amount of €7,931.37, relating to the tax and compensatory interest unduly paid by the Claimant and the payment of compensatory interest, for the loss of the said amount of €7,931.37, pursuant to Article 43 of the General Tax Law.

D) THE RESPONDENT'S ANSWER

1. The Respondent alleges in its answer, in summary, that the Claimant's claim that there is a defect of lack of reasoning nor as to the other grounds that form the basis of the arbitral request is unfounded, and that there is no error on the prerequisites that would invalidate the assessment acts. The understanding of the claimant set out in the present arbitral request incurs a biased reading of the letter of the law, an interpretation that does not attend to the systematic element, which violates the unity of the regime established throughout the CIUC and, more broadly, throughout the entire legal-fiscal system that ignores the ratio legis of the regime established in the CIUC".

It bases its allegation on the provisions of sections 1 and 2 of Article 3 of the CIUC, which respectively provide that "The liable parties of the tax are the owners of the vehicles, being considered as such the natural or legal persons, of public or private law, in whose name the same are registered" and that the liable parties of the IUC are "the owners (or in the situations provided for in section 2, the persons mentioned there), being considered as such the persons in whose name the same are registered".

The Respondent alleges that the legislator did not use the expression "are presumed", as it could have done, moreover in a similar manner to what happens in other legal norms, exemplifying some situations provided for in the law; the Claimant understands that in cases where the fiscal legislator uses the expression "is considered", it is not establishing a presumption; it enumerates, purely by way of example, various norms contained in different fiscal codes that use the expression "is considered". To understand that the legislator established a presumption here is based on an interpretation against the law, since "the clear option of the legislator was to consider that, for the purposes of IUC, those who appear as such in the motor vehicle registry should be considered owners;" it invokes, in defense of this understanding, the decision rendered in the scope of Case no. 210/13.0BEPNF, by the Administrative and Tax Court of Penafiel.

It concludes that this is the interpretation that attends to the systematic element and preserves the unity of the legal-fiscal system, and that any other interpretation would be to ignore the teleological element of interpretation of the law, the ratio of the regime established in the article in question, and, also, throughout the CIUC.

Furthermore, the failure to update the registry, pursuant to the provisions of Article 42 of the Motor Vehicle Registry Regulations, will be imputable to the legal sphere of the liable party of the IEC and not to the State, as the active subject of this tax.

Also in further support of this understanding, the TA invokes parliamentary debates around the approval of DL no. 20/2008, of 31 January, from which it transcribes excerpts, to conclude that the legislator intentionally wanted to establish a solution from which it results that the IUC is owed by the persons who appear in the registry as owners of the vehicles.

Adding to all this, the Respondent alleges that the interpretation conveyed by the Claimant is contrary to the Constitution, insofar as it violates the principle of trust and legal certainty, the principle of efficiency of the tax system and the principle of proportionality. Finally, having regard to the rules of burden of proof, it further alleges the lack of proof of the transfer of ownership of the vehicle, since invoices are not, in the TA's view, by themselves, documents apt to prove the celebration of a synallagmatic contract such as the purchase and sale.

1. It concludes that the IUC assessment acts do not suffer from illegality nor are the legal prerequisites met for an award of compensatory interest. And, also as regards liability for arbitral costs, the Respondent understands that, not being within its control the transfer of ownership of motor vehicles, the IUC is assessed in accordance with registry information, properly transmitted by the Institute of Registries and Notaries; that is, the IUC is not assessed in accordance with information generated by the Respondent itself. Thus, it was not the Respondent that gave rise to the filing of the arbitral ruling request, but the Claimant itself which, moreover, has only now provided documentary evidence of the transfer of ownership, which did not occur in the administrative proceedings, therefore the Claimant should be ordered to pay the arbitral costs arising from the present request, pursuant to Article 527/1 of the New Code of Civil Procedure, ex vi Article 29/1 – e) of the RJAT, in line, moreover, with a similar issue decided in the scope of case no. 72/2013-T, which took place at this arbitration center.

It concludes by the dismissal of the arbitral request, seeking the legality of the contested tax acts and the acquittal of the Respondent in the request.

II. ISSUES TO BE DECIDED

1. Having regard to the positions of the Parties taken in the arguments presented, the Tribunal must decide the following issues:

1st - On the defect of lack of reasoning;

2nd - On the subjective incidence of IUC, the effects of the motor vehicle registry and the existence or not of a rebuttable presumption in this matter;

3rd - On proof of transfer of ownership of the vehicles and the rebuttal of the presumption;

4th - On the right to payment of compensatory interest and liability for payment of arbitral costs.

III. FACTUAL FINDINGS

A) Proven Facts

1. As factual matter relevant to the decision to be rendered, the Tribunal takes as established the following facts:

1st) The Claimant is a credit institution whose substantial activity consists in financing to the sector, through the conclusion, among others, of financial leasing contracts and long-term rental (ALD) contracts, intended for the acquisition, by companies and individuals, of motor vehicles;

2nd) The Claimant was notified to proceed with the payment of the unique motor vehicle tax assessments here contested, relating to the years 2009 to 2012, as well as their respective compensatory interest, concerning sixty vehicles with the registration numbers duly identified in the IUC assessments attached to the file as documents nos. 1 to 60 attached to the arbitral request, all duly itemized in the table attached to the PI as annex A, which are hereby deemed fully reproduced;

3rd) All IUC assessments were paid within the period set for payment and total the amount of €7,931.37; (see Docs. nos. 1 to 60);

4th) The sales of said vehicles were invoiced to the entities identified in the invoices/receipts attached as documents nos. 91 to 120;

7th) On the date of the tax facts, the motor vehicles referenced in the IUC assessments here contested were registered in the motor vehicle registry in the name of the now Claimant, in the capacity of owner;

11th) On the date of the tax assessment acts, the TA had at its disposal the information elements contained in the Claimant's accounting, the registry basis and, later, those communicated to it within the scope of the present arbitral ruling request.

B) JUSTIFICATION OF PROVEN FACTS

1. The decision on the factual matter in the manner described above is based on the documentary evidence that the Parties attached to the proceedings and which are part of the present file. The Tribunal considered in particular the corporate purpose of the Claimant and the specific nature of its activity, the factual reality underlying the negotiation situations regarding the various vehicles, proven by the documents attached to the arbitral request as well as by the documents subsequently attached to the file at the meeting of 10 July 2014 (extracts evidencing the payments of the invoices attached to the PI), concerning the vehicles subject to the contested assessments.

C) UNPROVEN FACTS

1. There are no other facts taken as unproven, since all facts relevant to the appraisal of the request were taken as proven.

IV – LEGAL JUSTIFICATION

1. Having established the factual matter, it is necessary to address the legal issues indicated above, corresponding, in summary, to the issues of illegality raised by the Claimant in the present arbitral request. Let us then see the first issue to be decided.

1st - On the Alleged Defect of Lack of Reasoning

1. The Claimant alleges violation of the duty of reasoning, given that "the tax acts do not expressly mention the reasons that led to the issuance of the assessments which constitutes a defect of lack of reasoning".

Immediately after, however, the Claimant states that "it understands that the reason underlying the assessments is the fact that the transfer of ownership by the lessees, in accordance with the terms provided in their respective contracts, was not registered at the Motor Vehicle Registry Office". This sums up the Claimant's allegation of the defect of lack of reasoning.

There is no doubt that reasoning is a requirement of tax acts in general, being a constitutional requirement (Article 268 of the CRP) and legal (Art. 77 of the LGT). It can be said, succinctly, that it is a well-settled understanding among us, both in doctrine and in case law, that the reasoning legally required must meet a minimum set of characteristics, such as: i) officiousness, being the reasoning of the sole initiative and obligation of the administration (power/duty), reasoning on request is not admissible and must accompany the performance of the act, with no sense in "a posteriori" reasoning; ii) the reasoning must be clear, that is, understandable by an average recipient, avoiding polysemic concepts or deeply technical concepts of difficult comprehension; iii) it must contain all the essential elements that were determinative in the decision taken, indicating the legal rules and the motivation of the act.

Notwithstanding the above, it is known that reasoning can also be express or tacit, by reference to previous opinions, information or proposals, as indeed results expressly from the provision of section 1 of Article 77 of the LGT.

Now, since the tax act is an act of considerable burden on the legal sphere of its recipient, it should be carefully reasoned so as to convince the taxpayer of the legality underlying it and of the criteria that presided over its quantification.

However, it is also pacifically established today, for doctrine and case law, that reasoning must be expressed through a concise statement of the factual and legal grounds, being equivalent to the lack of reasoning the adoption of grounds which, by obscurity, contradiction or insufficiency do not concretely clarify the motivation of the act. [2] An act should therefore be considered sufficiently reasoned when it allows a normal recipient to understand the cognitive and evaluative itinerary followed by the author of the act in terms that allow its recipient to understand the reasons that led the author of the act to perform it.

1. In the case of the present proceedings, in each of the contested tax acts the vehicle to which it relates is duly identified, with indication of the tax in question (IUC), the periods to which the tax relates, as well as the amount determined in the respective assessment and deadline for payment.

Precisely for this reason, the Claimant understood perfectly (or understood) as recipient of the tax acts, the entire situation of fact and law underlying it, that is to say that it understood its content.

To which is added that the reasoning must be assessed in accordance with "the concrete circumstances, among which stand out those of the type of act, those of the taxpayer's participation in the procedure and its extent (…) "[3].

Now, in the present proceedings the Claimant as a contracting party in the ALD contracts that it alleged in the file, was in a position to identify the concrete circumstances, underlying the procedure that will have led to the contested assessments, in terms sufficient to understand them clearly.

In this respect, it must be said that the Claimant's quality as a reference financial institution in the market naturally strengthens its ability to understand the succession of facts that reveal the reasoning of the act that was notified to it, as it did in fact understand, which it amply demonstrated in the arbitral request it filed. [4]

From the confrontation of all elements contained in the arbitral request itself, based on the content of the tax acts notified to the Claimant as recipient, it is possible to conclude that it properly understood their grounds, as evidenced in the arguments advanced.

It thus results sufficiently perceivable to an average recipient, placed in the position of the concrete recipient, what the reasoning of the tax acts contested in the present proceedings is, therefore the allegation of the defect of lack of reasoning is unfounded.

2nd - On the Subjective Incidence of IUC, the Effects of the Motor Vehicle Registry and the Existence or Not of a Rebuttable Presumption

1. Moving on to the analysis of the second issue to be decided, it is necessary to verify whether the Claimant should be qualified as a liable party for the Unique Motor Vehicle Tax, assessed in relation to the years 2009 to 2012, as regards the vehicles identified in the arbitral ruling request.

As the Claimant itself refers in the arbitral request, the fundamental issue to be decided is whether the fact that the transfer of the vehicles identified in the table attached as ANNEX A, to their previous lessees (with a single specific case in which the transfer occurred in favor of a third party indicated by the original lessee), at the end of the ALD contract, was not registered with the Motor Vehicle Registry Office, makes that transfer unenforceable against the TA, for the purposes of proceeding to collect the tax from its former owner. The Claimant alleges that, on the date of the tax facts, it was no longer the owner of the motor vehicles mentioned in the contested IUC assessments, despite all the motor vehicles in question being registered in its name.

First of all, it is necessary to appraise the terms of the configuration of the subjective incidence of IUC in light of the provision of Art. 3 of the Unique Motor Vehicle Tax Code (CIUC), namely, the question of whether the subjective incidence is strictly based on the registration of the title of the vehicle in the Motor Vehicle Registry, or whether the registry operates only as a presumption of tax incidence, rebuttable, in accordance with the provision of Art. 73 of the General Tax Law. On this matter there is already abundant and quite defined case law, expressed in various decisions mentioned by the parties and in some others delivered after the filing of the present arbitral ruling request, which will be referred to as appropriate.

1. The fundamental legal framework applicable to this matter is provided for in Articles 1 to 6 of the CIUC, approved by Law no. 22-A/2007, of 29 June.

Article 1 of the CIUC defines the objective incidence of the tax, distinguishing vehicles by specified categories, a norm that appears clear and without difficulties of application. However, the same is not true of the subjective incidence norm contained in section 1 of Article 3 of the CIUC, which is at the origin of the present dispute and thus constitutes a question to be decided in the case under consideration.

The analysis of both provisions (Articles 1 and 3) allows the conclusion that in the functioning of the IUC the motor vehicle registry has a fundamental role. What is important, therefore, is to determine the meaning and scope of the subjective incidence norm contained in Article 3, section 1 of the CIUC and the possible existence or not of a rebuttable presumption, connected with the question of the legal effects of the motor vehicle registry, raised by the Claimant.

On this issue, the positions of the parties can be summarized as follows:

• for the Claimant it cannot be considered a liable party for IUC, even if, in the year to which the IUC in question relates, the transfer of the said vehicles was not properly registered with the Motor Vehicle Registry Office, since the registry, or its lack, cannot be considered a determining element of the Claimant's tax liability;

• for the Respondent Article 3, section 1 of the CIUC establishes a norm of tax incidence and not mere rebuttable presumption.

Let us see what results from the legal regime in force and its application to the concrete case of the proceedings.

Article 3 of the CIUC provides that:

"ARTICLE 3

SUBJECTIVE INCIDENCE

1 – The liable parties of the tax are the owners of the vehicles, being considered as such the natural or legal persons, of public or private law, in whose name the same are registered.

2 – Financial lessees, acquirers with reservation of ownership, as well as other holders of purchase option rights by virtue of the leasing contract, are equated to owners".

Section 1 of Article 11 of the LGT provides that "in determining the meaning of fiscal norms and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed".

The interpretation and application of the legal norm presupposes the carrying out of an interpretive activity, which must be objective, balanced, and in accordance with the letter and spirit of the law. Any text, and law is no exception, bears multiple meanings and frequently contains ambiguous or obscure expressions. For this reason, although the letter of the law is "the guiding thread" of the interpreter, it must be interpreted taking into account the underlying objectives, "the ratio" or the legislator's motivation in establishing the norm under analysis.[5]

To these elements is added another according to which the interpretation of the legal norm must respect the "unity of the legal system", its coherence and intrinsic logic. Article 9 of the Civil Code (CC) provides the rules and fundamental elements for the interpretation of the legal norm, which the interpretation of fiscal law must also obey, which begins by saying that interpretation should not be limited to the letter of the law, but should reconstruct from it the "legislative thinking".[6]

To these general principles are added, still, the principles contained in the LGT, namely in Article 73, which establishes that presumptions contained in norms of tax incidence always admit proof to the contrary.

With respect to the issue under analysis, it is important to highlight the contribution of arbitral decisions already delivered in cases nos. 14/2013-T, of 15 October, 26/2013-T of 19 July, 27/2013-T, of 10 September, 217/2013-T of 28 February and, more recently, in the decisions delivered in cases 286/2013-T, of 2 May 2014 and 293/2013-T, of 9 June 2014, 46/2014-T and 89/2014-T of 5 September, among others, revealing a refined reflection on the fundamental issue under consideration, establishing a uniform understanding on this same issue, moreover, upheld by Arbitral Award 63/2014- T and by decisions 150/2014-T and 220/2014-T, attached to the file by the respondent TA. In all of them, the understanding on this issue is unanimous: we are dealing with a rebuttable presumption.

Therefore, as to the question of whether, in light of the literal wording of section 1 of Article 3 of the CIUC, the scope of the expression "being considered as such", given that in the current version the legislator did not use the term "are presumed" (which appeared in the now-defunct Motor Vehicle Tax Regulation), the Tribunal understands that it can only be the following: the legislator presumes (considers) that the owners are the persons in whose name the vehicles are registered. This means that such presumption, implicit, is naturally rebuttable under the terms provided in Article 73 of the LGT.

The presumption established in Article 3, section 1 of the current CIUC was already enshrined in the earlier versions of the codes abolished with the entry into force of the CIUC. Already Article 3 of the Motor Vehicle Tax Regulation (approved by Decree-Law no. 143/78) established that: "the tax is owed by the owners of the vehicles, being presumed as such, until proof to the contrary, the persons in whose name the same are registered or matriculated". Similarly, Article 2 of the Regulation on Circulation and Trucking Taxes (approved by Decree-Law no. 116/94) established that: "the liable parties of the circulation tax and the trucking tax are the owners of the vehicles, being presumed as such, until proof to the contrary, the natural or legal persons in whose name they are registered".

In fact, in the current version of the Code only the verb changed, the legislator now opting for the expression "being considered". It is certain that between the earlier legislative versions and the current one the General Tax Law entered into force, which expressly enshrined the principle contained in Article 73, from which it results that in matters of tax incidence any presumption always admits proof to the contrary. Therefore, it becomes indifferent whether to adopt an express or implicit presumption, since both are equally rebuttable.

Thus, it is understood that the fact that the legislator, in the current version of the CIUC, opted for an implicit presumption (using the expression "being considered") instead of an express presumption (resorting to the expression "are presumed"), as happened previously, does not translate a substantial alteration with respect to the subjective incidence of the tax. It is therefore not the ownership contained in the motor vehicle registry the determining condition, by itself, of tax incidence in the context of IUC, but merely a presumption that the ownership belongs to the person registered in the registry, a naturally rebuttable presumption.

Furthermore, contrary to what is alleged by the Respondent, we can easily point to several examples, extracted from the tax legal system, in which the legislator opted for the use of the verb "consider", with a presumptive sense. Besides which, as already said above, being a norm of tax incidence, a non-rebuttable presumption would never be admissible. As state Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, in the annotation to section 3 of Article 73 of the 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 norms of incidence, namely of objective incidence, when certain values of tangible or intangible assets are considered as constituting taxable matter, in situations in which it is not impossible to ascertain the real value". And there are many examples of norms in which the verb "consider" is used to establish rebuttable presumptions, as happens with the provision of section 2 of Article 21 of the CIRC, in Article 89-A of the LGT or in Article 40, section 1 of the CIRS among others.

Alleges, however, the Respondent in its answer, that this same word "being considered" is also normally used by the tax legal system to define situations distinct from presumptions. Now, such appears normal, namely in the case of other fiscal norms in which the legislator used the formula "is considered" or "are considered", but attributing another sense to it, since these are expressions which, depending on context, can assume a plurality of meanings, without which the conclusion the Respondent wishes to draw can be extracted.

Taking into account that the legal system must form a coherent whole, the examples referred to above, as well as the doctrine and case law indicated, allow the conclusion that it is not only when the verb "presume" is used that we are dealing with a presumption, but also the use of other terms or expressions, such as the term "is considered" can serve as the basis for presumptions. And as referred to above, being the literal element the first instrument of interpretation of the legal norm, in search of legislative thinking, it is important to confront it with the other elements of interpretation, namely the rational or teleological element, the historical element and the systematic element.

And also, following this line of reflection, the Tribunal cannot follow the argument advanced by the Tax Authority. As to the historical element, it should be noted that since the origin of the circulation tax, with the entry into force of Decree-Law no. 599/72 of 30 December, a presumption was explicitly established, regarding the liable parties of the tax as being those in whose name the vehicles were registered or matriculated. This version of the law used the literal expression "being presumed as such".

However, having regard to the purposes of the tax in question, it must be recognized that the use of the expression "being considered" in the current version contemplates an expression with an effect similar to that one, embodying, equally, a presumption. The same occurs in the formulation contained in section 1 of Art. 3 of the CIUC, in which a presumption is established, revealed by the use of the expression "being considered", of similar meaning and equivalent value to the expression "being presumed", in use since the creation of the tax in question. The use of the expression "being considered" is justified only by appearing to be more in line with the reinforcement given to the ownership of the vehicle, which became the tax-generating event, in accordance with the terms contained in Article 6 of the CIUC.

Therefore, in light of the literal element of interpretation, nothing prevents the understanding that the provision of section 1 of Art. 3 of the CIUC establishes a rebuttable presumption.

Thus, as to the subjective incidence of the tax, it is to be concluded that there are no alterations relative to the situation previously in force within the scope of the Municipal Tax on Vehicles, Circulation Tax and Trucking Tax, as is moreover broadly recognized by doctrine, continuing to be valid a rebuttable presumption in this matter.[7]

This understanding is, still, the only one that appears adequate and in accordance with the principle of material truth and justice, underlying fiscal relations, with the objective of taxing the real and effective owner and not the one who, by circumstances of a different nature, is often merely an apparent and false owner, by appearing in the motor vehicle registry. As is referred to in Arbitral Award no. 63-2014-T of 15 September "… if the legislator had, as the Respondent contends, established in the law a non-presumptive qualification of who is the owner of the vehicles (a legal fiction), it would thereby be establishing, through a different formulation, a rule in all respects identical to the hypothetical rule mentioned. It would be basing the subjective incidence of the tax on a legal fiction, in total disconnection from any economic substance as a basis for the subjective incidence. (…) But the principle of efficiency in taxation cannot absolutely override the principle of ability to pay, to the point of eliminating it as a criterion of subjective incidence. And it is also true that the fiscal legislator would have at its disposal other means of holding the vehicle seller responsible, delinquent in his duty to communicate the vehicle sale, for the payment of the tax, without being as a direct taxpayer (configuring, e.g., a case of tax liability for the debt of a third party). And, if so, it must also be concluded that Article 3, section 1 can only establish a presumption of ownership of the vehicle, even with all the negative consequences that conclusion will certainly entail in terms of efficiency of tax administration."

For this to be the case, it must be possible for the person registered in the motor vehicle registry to present sufficient evidential elements for the demonstration that the effective owner is, after all, a different person from the one appearing in the registry, and who initially, and in principle, was supposed to be the true owner. Otherwise, one would accept the supremacy of the formal truth of the registry over material truth, and would be admitting a gross violation of the fundamental fiscal principles enunciated and also of the principle contained in Article 73 of the LGT according to which there are no non-rebuttable presumptions in matters of fiscal incidence. The legislator did not feel the need to maintain in the new incidence norm an express and rebuttable presumption, since after the entry into force of the General Tax Law (1999) "presumptions established in the norms of incidence always admit proof to the contrary". Therefore, given the wording of Article 73 of the LGT, it would be technically incorrect to use the expression "being presumed as such, until proof to the contrary", contained in the previous version in force.

Otherwise, it is possible to extract yet another argument from the provision of Article 7 of the Land Registry Code (which constitutes the fundamental legal basis in matters of property registry), which provides that "definitive registration constitutes a presumption that the right exists and belongs to the registered holder, in the precise terms in which the registration defines it.". In light of the principle of uniformity and intrinsic coherence of the legal system, no basis appears acceptable for the principle in force in property registry in general to suffer an inflection or even an unjustified "override" in matters of motor vehicle registry.

1. Finally, if any doubt persisted, it would always be said that, as to elements of interpretation of a rational or teleological character, the explanatory memorandum of Bill no. 118/X of 07/03/2007, underlying Law no. 22-A/2007, of 29/06, is quite expressive in clarifying that the reform of motor vehicle taxation is implemented through the displacement of part of the tax burden from the moment of acquisition of vehicles to the circulation phase and aims to "form a coherent whole" which, although intended for the collection of public revenue, intends that the same be collected "in the measure of the environmental costs that each individual causes to the community", adding, regarding the tax in question and the different types and categories of vehicles, that "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 the measure of the cost they cause to the environment and to the road network, this being the reason for being of this tax figure", adding, still, that "… this principle dictates the charging of vehicles according to their respective ownership and until the moment of scrapping (…)".

Thus, the logic and rationality of the new system of motor vehicle taxation presupposes and aims at a liable party coincident with the owner of the vehicle, on the assumption that it is this, and not another, the real and effective subject causing environmental damage, as follows from the principle of equivalence inscribed in Art. 1 of the CIUC. This principle of equivalence, which informs the current unique circulation tax, has underlying it the polluter-pays principle, and concretizes the idea inscribed in it that whoever pollutes should, for that reason, pay. It is, after all, about addressing the negative environmental externalities arising from the use of motor vehicles, to be assumed by their owners and/or users as costs that only they should bear. [8]

Any other understanding would involve accepting the possibility of taxing legal or natural persons without responsibility in the production of any environmental damage, while the real causes of such damage would not be subject to the tax, completely frustrating the regulatory purposes of the law itself, that is, its true ratio legis.

In summary, in light of the incidence norm, the liable party for IUC is the owner, even if not appearing in the motor vehicle registry, provided sufficient proof is made to rebut the legal presumption arising from the registry, the debtor of the IUC.

As to the effects of the registry, it results clearly from the provisions of Articles 1 and 7 of the Land Registry Code (CRP), that the registry has a dual purpose: to give publicity to the legal situation of the assets and to constitute a presumption that the right exists and belongs to the registered holder. These presumptions are, however, rebuttable by means of proof to the contrary, as results expressly from the provision of Article 350, section 2 of the Civil Code (CC) and, in tax matters, reinforced by Article 73 of the LGT.

It is well-established for doctrine and for the case law of our superior courts that the registry is not a condition of validity of the transactions subject or subordinate to it, that the transmission of ownership does not depend on it, and that it does not belong to the transferor to promote the registry, therefore no sanction can be imposed on him for the failure to perform this obligation by the acquirer (who is obligated to promote the registry). [9]

Furthermore, the Tax Authority cannot be considered a "third party" for purposes of registry, since it results from section 4 of Article 4 of the CRP that "third parties, for purposes of registry, are those who have acquired from a common author incompatible rights among themselves". Now, the TA does not meet the legal requirements of the concept, therefore cannot require the seller to pay the tax owed by the buyer (owner) from the moment the presumption of the registry is rebutted by means of proof of the transfer.

In these terms, the TA cannot avail itself of the failure to update the property registry to demand payment of the tax from the former owner in whose name the vehicle is registered if, by any means, sufficient proof of the respective sale is presented to it.[10]

Therefore, the acquirers of the vehicles become, thus, owners of those same vehicles by virtue of the celebration of the corresponding purchase and sale contracts, by mere effect of the contract, with or without registration.

This interpretation is the only one that guarantees perfect harmony between this regime and that which results from the provision of section 1 of Art. 408 of the Civil Code, according to which the transfer of real rights over things is determined by mere effect of the contract, being one of those effects the transfer of the thing or the holding of the right (see paragraph a) of Art. 879 of the aforesaid Civil Code).

The Respondent alleges that "it has no control over the transfer of ownership, since there is no accessory declarative obligation regarding this matter (…)". Even recognizing that this solution may lead to consequences not entirely adequate to the operational capacity of the TA in this matter, it is certain that it is not acceptable to distort the principles of civil and registry law in force for reasons of efficiency of the tax administration. The invoked difficulties are the sole consequence of the present legal regulation, it being up to the legislator to alter the law if and when it deems appropriate.

Finally, it should also be noted that in the particular case of lessors it is not true that the TA has no access to any accessory information about the existence of contracts concluded by these companies and their respective users, since the provision of Article 19 of the CIUC imposes, precisely, for purposes of the provision of Article 3 of the said CIUC (that is, for purposes of subjective incidence), on entities that proceed to financial leasing the obligation to provide the TA with the data relating to the tax identification of the users of the leased vehicles. Once again the legal solution leaves no doubt as to who the legislator wanted to impose the burden of payment of the tax: the owner, equating with this financial lessees, acquirers with reservation of ownership, as well as other holders of purchase option rights by virtue of the leasing contract" (Art. 3, section 2 of the CIUC).

But the Respondent further alleges that the interpretation defended by the Claimant on this matter, apart from translating a biased reading of the law and resting on an interpretation against the law, appears to be contrary to the Constitution.

Now, for all that is set out above, it also results that the arbitral tribunal does not follow the Respondent in this allegation. It is important, still, to add to all the arguments already exposed, a last one extracted from the case law of the Constitutional Court (TC) itself. Thus, it should be noted that, contrary to what is alleged by the Respondent, the consideration that the provision of Art. 3, section 1 of the CIUC establishes a rebuttable presumption represents the best interpretation and the one most in accordance with the Constitution, as results from the decision of the TC with no. 348/97, of 29.4.1997, a position reiterated in decision no. 311/2003, of 28.4.2003, which declare unconstitutional the "establishment by the fiscal legislator of a presumption "juris et de jure" since "completely prevents taxpayers from being able to contradict the presumed fact, subjecting them to taxation that may be based on a taxable matter fixed against the principle of tax equality". In this accordance, the Respondent's allegation does not appear to have any basis.

Having come here, it remains to analyze the last and decisive issue: whether the invoices/receipts attached to the file by the Claimant, as well as the remaining documentation, are suitable means for the proof necessary to rebut the presumption of the registry.

3rd) On Proof of Transfer of Ownership of the Vehicles and Rebuttal of the Presumption

1. Naturally the burden of proof falls on the party that has the burden of promoting the rebuttal of the presumption, in accordance with the general terms provided in Article 342 of the CC, since in its name there exists a motor vehicle property registry from which results the presumption of ownership of all the vehicles involved in the proceedings.

Considering the factual matter proven in the proceedings and the documents attached by the claimant, the issue that must be decided is whether the evidence brought to the file is sufficient to demonstrate the transfer of ownership of the sixty vehicles in question.

The Claimant proved in the present proceedings that it proceeded with the invoicing of the sale of the sixty vehicles, as appears from the documents attached to the file with nos. 91 to 120, resulting in all cases such processing occurring on dates prior to the date of the tax facts. The same results from the Listings attached to the file with complete specification of the contracts, vehicles, beginning and end of payment of the same. It further attached 10 documents, on 14 July 2014, designated by customer account extract concerning only the vehicles ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-., from which it is possible to extract that in the Claimant's internal accounting system the invoices mentioned therein are considered paid.

However, for the present decision the tribunal is based fundamentally on the invoices/receipts attached to the file for considering them to be the documents with the greatest relevance for proof of the transfer of ownership of the vehicles.

The Respondent alleges the lack of sufficient proof presented by the Claimant, considering that invoices are not, by themselves, documents apt to prove the celebration of a synallagmatic contract such as purchase and sale. Now it reinforces its thesis with arbitral decisions nos. 150 and 220/2014 T, as well as in Arbitral Award no. 63/2014-T. However, this tribunal does not follow, with due respect, the understanding expressed there as to the evidentiary value of invoices nor as to the rigor of the evidentiary requirements for rebuttal of the presumption, for the reasons set out below.

In this regard, let it be clarified that the attachment to the file of said decisions was admitted, despite the moment when it occurred, in absolute compliance with the principle of contradiction and having regard to the interest of the issue raised by the TA. The Claimant was given the opportunity to comment, which it did by request to the file on 9 October 2014.

Let us see, therefore, the issue of the evidentiary value of the documents attached for the purposes intended by the Claimant, that is, for the rebuttal of the presumption resulting from the motor vehicle registry.

1. The transfer of ownership operates by mere effect of the contract, in accordance with the terms provided in Article 408, section 1 of the CC. The purchase and sale contract has a real nature, that is, the transfer of ownership of the thing sold, or the transfer of the alienated right, has as its cause the contract itself. Motor vehicles are movable assets, whose transfer of ownership does not comply with any special formalism.

In Portuguese law, the fact that determines the transfer of ownership of a movable asset (even if subject to registry) is the contract expressed by the will of the parties. The fact is such that the buyer becomes the owner of the sold vehicle by means of the celebration of the purchase and sale contract, independently of the registry, which is assumed as a condition of efficacy and enforceability against third party acquirers.

Thus, proof of the existence of this purchase and sale contract can be made by any means,[11] with an invoice being an accounting document suitable for this purpose, as it is for tax purposes, in determining taxable matter for purposes of CIT and/or VAT, therefore it is not accepted that, as a document, it can be suitable for this purpose, which in itself presupposes the acceptance of the underlying transaction, and not be so for proof of the transaction itself. On the other hand, its unilaterality does not prevent the TA from drawing from this type of document, moreover the essential basis of the entire fiscal architecture, all the consequences, as said, for purposes of generating tax. Thus, invoices constitute documents of sufficient proof for this purpose provided that in due time they have also produced all their effects, in particular tax effects, benefiting from the presumption of veracity provided for in Article 75 of the LGT. Although the Respondent now, within the scope of the present proceedings, raises some irregularities attributable to the invoices/receipts attached to the file by the Claimant (see Art. 117 to 123 of the answer), the fact is that such alleged irregularities in no way detract from the evidentiary value of the attached documents, especially since the TA has not demonstrated that it did not accept them as valid documents for the processing of VAT recorded in them, in accordance with the terms and for the purposes provided for in the CIVA. Or, put another way, the documents that served it in time to collect the taxes owed, now, some years later, do not serve as means of proof of the sale of the goods, that very sale that generated the collected taxes?! Now, such argument appears unacceptable in light of the most elementary general principles of law from which the prohibition of abuse of right is readily extracted.

Indeed, in the situation of the proceedings, we are dealing with contracts for the purchase and sale of movable things, which, by application of the provision of Article 219 of the CC, are not subject to any special formalism. The transfer of ownership occurs by mere effect of the contract and although these (motor vehicles) are subject to mandatory registration, this does not have constitutive effects but merely presumptive effects as to the existence of the right of ownership.

Therefore, for this reason, nothing prevents proof of the transfer of ownership from being made by any means, provided it is proven that the transfer occurred.

The understanding that only the presentation of the sales declaration, necessary for inscription in the registry, constitutes proof of the transfer is not followed in this point. Such understanding is reductive and would make the proof necessary for the rebuttal of the presumption disproportionate and excessively burdensome for the seller, if not even "impossible", especially since we cannot overlook the fact that the sales declaration is a document intended to be delivered to the buyer, since the latter is the interested party and legal obligation to perform the registration. To demand as the sole and exclusive means of proof the presentation of the sales declaration by the seller would correspond, in practice, to leaving the seller completely unprotected, requiring him as the sole means of proof that document which it is practically certain he cannot present because he does not have it in his possession.

Furthermore, the burden of proof required from the seller for the rebuttal of the presumption resulting from the registry consists in requiring him to prove that he was no longer an owner on the date of the tax fact. We are therefore dealing with the need to prove a negative fact, that "impossible" proof, which, not being inadmissible at all, since one can resort to proof of positive facts that demonstrate it, cannot be made difficult to the point of being inaccessible. The added difficulty of proof of negative facts should have as a corollary, by force of the constitutional principle of proportionality, "a lower requirement of proof by the applier of the law, giving relevance to less relevant and convincing evidence than would be required if such difficulty did not exist, applying the Latin maxim "iis quae difficilitoris sunt probationis leviores probationes admittuntur".[12]

Indeed, it must be considered that, since the Claimant is of an entrepreneurial nature and a substantial part of the activity forming part of its corporate purpose consists in the conclusion of financial leasing contracts and ALD intended for the acquisition of motor vehicles, the documents (invoices/receipt) that were attached to the file by the Claimant, are subject to rigorous legal requirements of an accounting and tax nature, with implications, as already said, in the collection of other taxes. Thus, and apart from all that is set out above, it is added that it is the tax legislation itself that attributes to invoices a legal value from which follows the credibility and sufficient evidentiary value for proof of the existence of the transfer of ownership of the assets contained in the same. Thus, by way of purely exemplary reference, the legal norms contained in Arts. 29, section 1, paragraph b) and 19, section 2 of the CIVA or Arts. 23, section 6 and 123, section 2 of the CIRC. Now, provided that these invoices have been accepted by the TA as credible for determining the respective taxes on added value and on income (a question that the Respondent has not demonstrated), these enjoy the presumption of veracity, which is attributed to them by Art. 75, section 1 of the LGT.

It would be incumbent on the Respondent to present and demonstrate concrete and substantiated indications that the accounting documents presented did not correspond to reality or that the latter had been subject to inspection leading to its correction or declaration of falsity. If this did not occur and those same documents served as the basis for the assessment of other taxes, they enjoy a presumption of veracity, which the TA did not rebut, in accordance with the provision of section 2 of Art. 75 of the LGT.

In this accordance, given the very special relevance that tax legislation attributes to invoicing, the fact that the Claimant completes the presentation of that invoicing relating to the sale with accounting extracts and customer listings that prove the existence of the purchase and sale contracts of the vehicles, this tribunal understands that the invoicing is suitable and enjoys the presumption of veracity, which is conferred on it by the provision of Art. 75, section 1 of the LGT.

In these terms, it concludes that these means of proof are sufficient to rebut the presumption based on the motor vehicle registry and that which arises from Art. 3, section 1 of the CIUC, therefore on the date of the tax facts the Claimant was no longer the owner of the said motor vehicles.

Consequently, the decision of the TA which led to the issuance and collection of the tax assessments now contested was based on a wrong premise, according to which, under the terms of the provision of section 1 of Article 3 of the CIUC, the tax was owed by the person registered in the motor vehicle registry, regardless of the subsequent demonstration that the ownership did not belong to him.

With the said presumption rebutted by means of proof to the contrary, the TA cannot persist in considering as liable party of the IUC the seller of the vehicle, who continues to appear in the registry as its owner.

Thus, given what has already been said about the situation of the vehicles contained in the assessments now contested, it is concluded that on the date when the tax was due for each of them, the Claimant was no longer the owner of the assets and therefore could not be considered a liable party of the tax.

Consequently, from all the above, it results that all the contested assessments are illegal, suffer from the defect of violation of law, by error on factual and legal prerequisites, therefore must be subject to annulment, proceeding consequently to the reimbursement to the Claimant of the amount unduly paid.

4th) On the Request and on the Right to Payment of Compensatory Interest and Arbitral Costs

1. Article 24, section 1, paragraph b) of the RJAT provides that the arbitral decision on the merits of the claim of which no appeal or challenge is available binds the tax administration from the end of the period provided for appeal or challenge, and the latter must - in the exact terms of the merit of the arbitral decision in favor of the liable party and until the end of the period provided for the spontaneous execution of sentences of tax court tribunals - restore the situation that would have existed if the tax act subject to the arbitral decision had not been performed, adopting the acts and operations necessary for this purpose.

This provision is in harmony with the provision of Art. 100 of the LGT, applicable in this case by virtue of the provision of paragraph a) of section 1 of Art. 29 of the RJAT, in which it is established that "the tax administration is obliged, in case of full or partial merit of complaints or administrative appeals, or of judicial proceedings in favor of the liable party, to the immediate and full restoration of the situation that would have existed if the illegality had not been committed, including the payment of compensatory interest, on the terms and conditions provided for in the law."

On the other hand, Article 43, section 1 of the General Tax Law provides that "compensatory interest is owed when it is determined, in a favorable claim or judicial challenge, that there was an error attributable to the services from which results payment of the tax debt in an amount higher than the legally due."

1. From the analysis of the evidence elements contained in the present proceedings, it is possible to infer that, by force of the provision of Article 19 of the CIUC, which obliges lessors to communicate to the TA (precisely, for purposes of the provision of Art. 3 of the said CIUC in the context of the subjective incidence of the tax) the data relating to the tax identification of entities that proceed to financial leasing and of users of leased vehicles, it is possible to conclude that the TA had knowledge of factual elements, in essence, sufficient to proceed with the correct assessment of the tax. But even if such were not the case, it would always be said that it had the possibility of revoking the illegally performed tax acts, which it could have performed within the period for response to the present arbitral ruling request.

The error for which it is obliged to indemnify comes from the erroneous application of the law in force, therefore the tribunal cannot endorse the allegation of the Respondent according to which it merely limited itself to applying the law, therefore from the TA's perspective, no error attributable to the services would result. If such were the case, the administration would never be held responsible for the illegal application of the norms in force nor for the damages caused.

Thus being, attentive to the provision of Article 61 of the CPPT and considering that the requirements for the right to compensatory interest are met, that is, the existence of an error attributable to the services from which results payment of the tax debt in an amount higher than the legally due, as provided for in section 1 of Art. 43 of the LGT, the Claimant has the right to compensatory interest at the legal rate, calculated on the amount of €7,931.37, from the date when the payment was made until its full reimbursement.

1. As to costs: the Respondent, in its answer, raises the question of liability for payment of costs in the event the Tribunal considers the arbitral request well-founded, seeking in that case the application of the provision of Article 527, section 1 of the new Code of Civil Procedure, ex vi Article 29, section 1 paragraph e) of the RJAT, in line with a similar issue decided in the scope of case no. 72/2013 – T.

The Respondent's argument is based on the same argument invoked to try to rebut its responsibility for payment of compensatory interest, which is unfounded for the same reasons. We have already seen that the obligation to proceed with the update of the registry did not fall to the Claimant but to the acquirer, therefore the arguments advanced by the TA are unfounded.

The Respondent's claim is without merit, for the same reasons indicated in the decision regarding compensatory interest. All that is set out above regarding the issue of condemnation for payment of compensatory interest also serves as grounds for the decision to condemn in matters of arbitral costs. The respondent had the opportunity, as we have already mentioned above, to revoke the illegal tax acts, at least within the period for response in the present proceedings. The proceedings only continued because the TA deemed it appropriate.

Furthermore, regarding the determination of costs due from the arbitral proceedings, the rules specially provided for in the RJAT and in the respective Regulation of Costs in Tax Arbitration Proceedings (RCPAT) apply, being possible to resort, if necessary, to the application of subsidiary law rules, if and when there is any case not covered by it that justifies it. It results from Article 29, section 1, paragraph e) of the RJAT, the possibility of subsidiary application of the CPC to the tax arbitration proceedings, in accordance with the nature of the cases not covered. Now, no existence of a case not covered is apparent in the present proceedings, as to the determination of the costs of the proceedings that justifies the application of the principle contained in Article 527, section 1 of the CPC.

Therefore, it is considered unfounded the request of the Respondent TA regarding liability for payment of the costs of the proceedings.

It does not appear that there are other relevant issues raised by the parties.

V - DECISION

In light of the above, this Arbitral Tribunal decides:

A) - To find well-founded the request for declaration of illegality of the contested IUC assessments in the present proceedings, for suffering from the defect of violation of law, by error on factual and legal prerequisites, annulling, consequently, the corresponding tax acts;

B) - To find well-founded the request for condemnation of the Tax Administration to reimburse the amount unduly paid, in the amount of €7,931.37, plus compensatory interest at the legal rate, counted from the day of payment made until the full reimbursement of the aforementioned amount, condemning the Tax and Customs Authority to make these payments.

Case Value: In accordance with the provision of Articles 306, sections 1 and 2 of the CPC, Article 97 - A, section 1, paragraph a) of the CPPT and Article 3, section 2 of the Regulation of Costs in Tax Arbitration Proceedings, the case value is set at €7,931.37.

Costs: Pursuant to the provision of section 4 of Art. 22 of the RJAT and in accordance with Table I annexed to the Regulation of Costs in Tax Arbitration Proceedings, the amount of costs is set at €612.00, to be borne by the Respondent Tax and Customs Authority.

Let it be recorded and notified.

Lisbon, 14 October 2014

The Singular Arbitrator,

(Maria do Rosário Anjos)

[1] The present decision is written in accordance with the old spelling.

[2] In this regard, it is appropriate to mention the decision expressed in the Arbitral Award delivered in case no. 76/2013- T of 25 November and Arbitral Decision no. 46-2014 T of 5 September.

[3] In this sense, see, among others, Administrative Court Award of 19.09.2012, in case 0659/12; Administrative Court Award of 29.10.2009 in case no. 778/09, available at www.dgsi.pt.

[4] In this sense, see also Arbitral Award 76/2013-T. Corroborating established case law on this matter, among others, the following Administrative Court Awards: Administrative Court Award of 20/02/2008, in case 0765/07; Administrative Court Award of 11/02/2009, in case 0767/07, available at www.dgsi.pt.

[5] In this sense, see BAPTISTA MACHADO, Introduction to Legitimizing Discourse, p. 175 et seq.

[6] In this sense, see, among others, Administrative Court Awards of 05/09/2012 and 06/02/2013, respectively delivered in cases nos. 0314/12 and 01000/12, available at www.dgsi.pt.

[7] In this sense, see Afonso, A. Brigas and Fernandes, M. (2009) Tax on Vehicles and Unique Motor Vehicle Tax, Coimbra Editora, p. 187.

[8] In this sense, and regarding the principle of equivalence, see arbitral decision no. 286/2013 – T of 2 May 2014. In the same sense, see Arbitral Decisions nos. 14/2013-T, 26/2013-T of 19 July 2013, 27/2013 – T, 217-2013-T of 28 February and, more recently, 293/2013-T of 9 June 2014, 46/204 –T and 89/2014-T of 5 September, among others.

[9] In this sense, see, among others, the following Supreme Court Awards: Supreme Court Award of 31.05.1966, in Case no. 060727 (Rapporteur: Counsellor Lopes Cardoso), a decision specifically concerning motor vehicle registration; Supreme Court Award of 5.05.2005 (Rapporteur: Counsellor Araújo Barros) and Supreme Court Award of 14.11.2013, in Case no. 74/07.3TCGMR.G1.S1 (Rapporteur: Counsellor Serra Baptista) excellent in affirming the predominance of the principle of substance over form, with proof by any suitable means of who is substantially the holder of the property right, which rebuts the presumption of the registry.

[10] In this sense, see also arbitral decisions nos. 14-2013-T of 15 October and 217/2013 of 28 February 2014.

[11] We highlight in this regard the following excerpt from the opinion of Prof. Doctor Agostinho Cardoso Guedes attached by the Claimant to the file, when he states that proof of the transfer of ownership of the vehicle can be made "by any means, since the law does not require a written form for this contract.. Thus, and in particular, proof can be made by confession, verbal or written, by witnesses or by document. In the latter case, for example, proof can be made by presentation of a sales declaration (including the declaration prepared for purposes of registration) or of an invoice/receipt of the vehicle sale."

[12] In this sense, see Manuel de Andrade - "Elementary Notions of Civil Procedure", 1979, page 203; Supreme Court Assent no. 4/83 of 11-7-1983, in DR, I series, of 27-08-1983; Administrative Court Award of 17/10/2012, in case no. 0414/12, among others.