Process: 128/2019-T

Date: October 25, 2019

Tax Type: IUC

Source: Original CAAD Decision

Summary

This CAAD arbitral decision (Process 128/2019-T) addresses whether a taxpayer can be liable for IUC (Imposto Único de Circulação - single circulation tax) when their vehicle has been immobilized and unable to circulate since 2005. The Applicant contested IUC assessments for years 2013-2019 for a category C vehicle (registration ...), arguing the vehicle had been left at a repair shop since 2005 and disappeared in 2013, as confirmed by court judgment. Despite repeatedly informing the Tax Authority of these circumstances and providing judicial confirmation through a 2015 court decision (final in 2017), the Tax Authority continued issuing IUC assessments. The Applicant had previously succeeded in annulling the 2016 IUC assessment through CAAD case 166/2017-T. The central legal question is whether vehicle registration alone triggers IUC liability or whether actual impossibility of use and circulation constitutes grounds for exemption. The case highlights tensions between formal registration requirements and substantive tax justice principles, examining whether the Tax Authority must consider proven factual impossibility of vehicle use when assessing IUC. The Applicant also initiated proceedings with IMT (Institute of Mobility and Transport) to cancel the vehicle registration and filed enforcement proceedings (2/2019-A) with CAAD. This decision is significant for establishing whether Portuguese tax law permits IUC liability to continue indefinitely for vehicles that are demonstrably not in circulation or capable of use.

Full Decision

ARBITRAL DECISION

I. Report

  1. A... (TIN...), with postal address at Apartment ..., ...-... Lisbon ("APPLICANT"), came, under the provisions of subsection a) of paragraph 1 of article 2 of Decree-Law no. 10/2011, of 20 January, to present, on 23/2/2019, a request for arbitral pronouncement on the legality of the acts of assessment of "IUC for the years 2013, 2014, 2015, 2017, 2018 and 2019" relating to the "vehicle with registration number ..., of category C."

  2. The request for constitution of the arbitral tribunal was accepted by the President of CAAD and automatically notified to the Respondent.

2.1. The Applicant did not proceed to the appointment of an arbitrator, whereupon, pursuant to the provisions of paragraph 1 of article 6 and subsections a) and b) of paragraph 1 of article 11 of RJAT, the President of the Deontological Council of CAAD designated the present signatory as arbitrator of the singular arbitral tribunal, who communicated acceptance of the assignment within the applicable timeframe.

2.2. The parties were duly notified of that designation and did not manifest any intention to refuse the designation of the arbitrator, pursuant to the combined provisions of article 11, paragraph 1, subsections a) and b), of RJAT, and articles 6 and 7 of the Deontological Code.

2.3. Thus, in accordance with the provisions of subsection c) of paragraph 1 of article 11 of RJAT, the Arbitral Tribunal was constituted on 8 May 2019.

  1. To substantiate the request for arbitral pronouncement, the Applicant alleges, in summary, the following:

a) Since 2012, the Tax and Customs Authority initiated successive notification acts to A... to proceed with the payment of IUC.

b) The issuance of documents for notification began in March 2014 [with regard to IUC for the years 2013 and 2014 on the vehicle with registration number ..., of category C] and has continued concerning the years [2015,] 2017, 2018 and 2019 with regard to IUC on the vehicle identified above.

c) Regarding the subject matter of these notification documents for payment, the citizen/taxpayer always communicated to the Tax and Customs Authority that the vehicle in question had been immobilized since 2005 for deep repair, as it was not in conditions to be able to circulate and, therefore, was not in conditions for the same to be enjoyed/used.

d) To the present, the Tax and Customs Authority has ignored/disregarded such information and justification.

e) However, and to avoid any doubts about the truthfulness of the impossibility of circulation and use of the said vehicle with registration number ..., requested in 2012 – A...– legal protection including the appointment of an official counsel, to bring – duly advised – the competent judicial action concerning the same vehicle identified above.

f) Such judicial action proceeded in the District Court of the District of Santarém – Cartaxo – Local Instance – Section of General Competence – Judge..., under case number .../13...YXLSB, having been instituted on 25.02.2013, with judgment pronounced on 19.05.2015, as appears from the judgment certificate whose copy is attached as Doc. 5 [...]. It follows from that same certificate that the judgment was the subject of an appeal which became final on 03.04.2017 (cf. Doc. 5).

g) In this judgment was confirmed what the applicant had invoked before the Tax and Customs Authority, the following facts being taken as proven, among others: a) "At the beginning of the year 2005, on a date that cannot be precisely determined, that vehicle was left at the repair, painting and bodywork workshop belonging to the defendant herein and in his care." (cf. Judgment, Doc. 5 – Proven Fact no. 2); b) "The vehicle with registration number ... disappeared from his workshop, where it was located, in December 2013." (cf. Judgment, Doc. 5 – Proven Fact no. 19).

h) Therefore, through the said judgment it is proven that since 2005 the applicant is not a user, possessor or beneficiary of the said vehicle as it is not in his possession and cannot enjoy the use of the same. Given the situation of impossibility of use of the vehicle with registration number ... since 2005 to date, as the vehicle was also considered in the same judgment to have disappeared since 2013, A... cannot be being taxed with IUC with specific and legalized legal characteristics for the years 2013, 2014, 2015, 2017, 2018 and 2019.

i) Throughout this matter, the applicant has always kept the Tax and Customs Authority informed of all the factual circumstances existing and judicially confirmed and established by judgment pronounced on 19.05.2015 (cf. Doc. 5).

j) It is thus expressly requested that the arbitral constitution take place in tax matters with a view to declaring the illegality and consequent annulment of all IUC assessment acts and respective compensatory interest relating to the tax periods of IUC for the years 2013, 2014, 2015, 2017, 2018 and 2019 and for the vehicle with registration number ....

k) It is further informed to the tax arbitration that with respect to and specifically to the IUC for the year 2016 and concerning the same vehicle, concerning which it requested the intervention of the Administrative Arbitration Centre, on 13.10.2017 a learned Arbitral Decision was pronounced in case no. 166/2017-T, of which a copy is attached as Doc. 6 and which is hereby reproduced.

l) It is verified that only from the end of 2012 did the applicant become aware, through a notification for Prior Hearing, of this tax matter, immediately requesting legal protection to obtain clarification from the judicial authority regarding the situation of the vehicle, referring to the judicial action filed on 25.02.2013 in the District Court of the District of Santarém – Cartaxo – Local Instance – Section of General Competence – Judge..., under case number .../13...YXLSB, with judgment pronounced on 19.05.2015 and meanwhile became final on 03.04.2017 (cf. Doc. 5).

m) Equally, with the Institute of Mobility and Transport, invoking the same arguments, requested the cancellation of the registration of the vehicle long disappeared, as appears from the copy of the request of 26.10.2017 attached as Doc. 11, as well as from the proof of its sending (email print) attached as Doc. 12 and hereby reproduced.

n) However, the inertia of the Institute of Mobility and Transport regarding satisfaction of the requested matter, persisting in a position of non-cancellation, even through the intervention of the Tax Arbitration Commission, leads to a continuous increase in the demand for responsibility by the Tax and Customs Authority concerning the IUC on the vehicle with registration number ..., long disappeared. On such matter with CAAD the appropriate diligence was undertaken to provide for the execution of the learned Judgment that became final on 03.04.2017 (cf. Doc. 5 – certificate), having meanwhile with CAAD brought the proceeding with number 2/2019-A, as appears from the request whose copy is attached as Doc. 13 and respective proof of acceptance and filing, whose copy is attached as Doc. 14 and hereby reproduced.

3.1. The Applicant ends by requesting that the arbitral action be judged entirely proven and well-founded and, through that means, annul the IUC assessment acts "relating to the vehicle with registration number ... for the years 2013, 2014, 2015, 2017, 2018 and 2019, as well as respective attached appendages (cf. Doc. 7, point 6, Doc. 8, Doc. 9 and Doc. 10)."

  1. The Tax and Customs Authority (hereinafter briefly designated as "Respondent" or "TA") submitted a reply, invoking, in summary, the following:

a) The Applicant was notified of the IUC assessment acts, referring to the years 2013 and 2014, whose payment deadline occurred on 2014-06-17.

b) Not agreeing with those assessments, the Applicant filed, on 2014-07-23, the gracious objection no. ...2014..., which was wholly rejected on 2014-08-28.

c) Thus, having the above gracious objection been filed on 2014-07-23 and the most recent payment date relating to IUC assessments for 2013 and 2014 being 2014-06-17, the deadline for challenging the assessments is far exceeded (article 102, paragraph 1 of CPPT, ex vi article 70, paragraph 1 of the same Code).

d) In the situation at hand, the request for constitution of the arbitral tribunal submitted by the Applicant was received on 2019-02-23, the deadline for challenging the assessments for the years 2013 and 2014 being far exceeded, whereby the arbitral request is time-barred with respect to those assessments.

e) Time-bar constitutes a peremptory exception, pursuant to article 576 of the Code of Civil Procedure (applicable subsidiarily by article 29 of RJAT), which entails the absolution of TA as to the request relating to the years 2013 and 2014, as it prevents the legal effect of the facts alleged by the Applicant.

f) With respect to IUC assessments for the years 2015 and 2017, the Applicant opted to challenge directly in the arbitral tribunal such assessments. The payment deadline for the IUC assessment for the year 2015 occurred on 2015-07-30. And the payment deadline for the IUC assessment for the year 2017 occurred on 2017-11-10. Also with respect to these assessments, the arbitral request is time-barred, as the deadline for challenging the same is far exceeded, pursuant to the provisions of article 10, paragraph 1 of RJAT combined with article 102, paragraphs 1 and 2 of CPPT.

g) Time-bar constitutes a peremptory exception, pursuant to article 576 of the Code of Civil Procedure (applicable subsidiarily by article 29 of RJAT), which entails the absolution of TA, as it prevents the legal effect of the facts alleged by the Applicant.

h) The Applicant was notified of the IUC assessment acts, referring to the year 2018, whose payment deadline occurred on 2018-05-11. Not agreeing with that assessment, filed, on 2018.05.03, the gracious objection no. ...2018..., which was wholly rejected on 2019-01-28. Having the arbitral request been filed on 2019-02-23, the same is timely only with respect to the assessments for the years 2018 and 2019, as it was filed within the deadline of article 10 of RJAT.

i) Given the foregoing, the arbitral request is timely for the appraisal of IUC assessments for the years 2018 and 2019. Whereby the value of the arbitral request should be rectified for the value of IUC assessments for the years 2018 and 2019.

j) The Applicant alleges that the impugned tax acts rest on error concerning its assumptions, to the extent that he was already not the owner of the motor vehicle identified in the assessments, at the moment in which the obligation to assess the respective IUC became due, despite the vehicle registration indicating the Applicant as the owner thereof.

k) With all due respect, we understand that the allegations of the Applicant cannot proceed at all, inasmuch as he makes a notoriously incorrect interpretation and application of the legal norms subsumable to the case sub judice.

l) Effectively, the understanding propounded by the Applicant derives not only from a biased reading of the letter of the law, but also from the adoption of an interpretation that does not attend to the systematic element, violating the unity of the regime enshrined throughout the IUC Code and, more broadly, throughout the entire legal-fiscal system and further derives from an interpretation that ignores the ratio of the regime enshrined in the article in question, and likewise, throughout the IUC Code.

m) The tax legislator, in establishing in article 3, paragraph 1 who are the passive subjects of IUC, expressly and intentionally established that these are the owners (or in the situations provided for in paragraph 2, the persons enumerated therein), considering as such the persons in whose names the same are registered.

n) It is imperative to conclude that, in the case of the present arbitral pronouncement proceedings, the legislator expressly and intentionally established that they are to be considered as such [as owners or in the situations provided for in paragraph 2, the persons enumerated therein] the persons in whose names the same [the vehicles] are registered, inasmuch as this is the interpretation that preserves the unity of the legal-fiscal system. To understand that the legislator enshrined here a presumption would unequivocally be to carry out an interpretation contra legem.

o) In sum, article 3 of the IUC Code contains no legal presumption whatsoever, and it is certain that the thesis propounded by the Applicant directs its objective to the wrong target.

p) Also the systematic element of interpretation of the law demonstrates that the arguments of the Applicant find[s] no support in the law, inasmuch as this results not only from the aforementioned paragraph 1 of article 3 of the IUC Code, but also from other norms enshrined in the said Code.

q) Even admitting that, from the perspective of the rules of civil law and property registration, the absence of registration does not affect the acquisition of the quality of owner and that registration is not a condition of validity of contracts with real effect, pursuant to the IUC Code (which in the case at hand constitutes special law, which, pursuant to general rules of law, derogates the general norm), the tax legislator intentionally and expressly wished that those be considered as owners, lessees, acquirers with reservation of ownership or holders of purchase option rights in long-term leasing, the persons in whose names the vehicles are registered.

r) Lastly, it is also important to demonstrate that, in light of a teleological interpretation of the regime enshrined throughout the IUC Code, the interpretation propounded by the Applicant to the effect that the passive subject of IUC is the effective owner, irrespective of not appearing in the vehicle registration, the registration of that quality, is manifestly wrong, to the extent that it is the very ratio of the regime enshrined in the IUC Code that constitutes clear proof that what the tax legislator intended was to create a Single Circulation Tax based on the taxation of the owner of the vehicle as appearing in the vehicle registration (in this regard, note, at the outset, that the cases typified exhaustively in article 3 of the IUC Code, both in its paragraph 1 and in paragraph 2, correspond exactly to the cases of mandatory vehicle registration, pursuant to the Vehicle Registration Code (CRA)).

s) From all that was set forth above it is clear that the tax act in question does not suffer from any defect of violation of law, to the extent that in light of the provisions of article 3, paragraphs 1 and 2, of the IUC Code and article 6 of the same code, it was the Applicant, in the capacity of owner, the passive subject of IUC.

t) Whereby it is concluded that article 3 of the IUC Code does not contemplate any presumption, whose non-rebuttal would remove it from the incidence of the tax. If in the registration it is the Applicant who appears, then it is he who is responsible for payment of IUC, irrespective of whether he uses the vehicle.

u) From the analysis of the arbitral request, it is verified that the Applicant did not attach any document proving that he is not the owner of the vehicle, namely cancellation with the IMT or the vehicle registration, whereby he continues to appear in the registration as owner of the vehicle.

v) The Applicant attached only a plain copy of the judgment pronounced in Case no. .../13...YXLSB, of the District Court of the District of Santarém. Now, the judgment pronounced, should it eventually have already become final, only proves that the Applicant, during a certain time period, did not enjoy the motor vehicle. [...]. And even if the judgment has already become final, the fact that the Applicant did not enjoy during that time period the vehicle in question does not mean that the same ceases to be his owner, since it was proven that it was in a workshop for repair, but it has always continued in his name in the Vehicle Registration and consequently, it is the Applicant who is responsible for the tax obligations, namely for the payment of IUC.

w) As he did not proceed to cancel the registration, it is the Applicant who appears in the vehicle registration as owner of the vehicle, hence it is he who is responsible for payment of IUC.

x) The Applicant did not attach a copy evidencing that he requested registration cancellation, the possibility of doing so now being precluded.

y) In sum, the Applicant failed to prove the alleged transmission/disappearance of the vehicle at issue herein at the dates herein in discussion.

4.1. The TA concludes by requesting that it be judged: a. The exception of time-bar with respect to IUC assessments for the years 2013, 2014, 2015 and 2017 as well-founded; b. The value of the request reduced to the value of IUC assessments for the years 2018 and 2019; c. The present request for arbitral pronouncement relating to IUC assessments for the years 2018 and 2019 as unfounded, maintaining in the legal order the tax assessment acts impugned and absolved accordingly, the Respondent of the request.

  1. Having an exception been invoked but the Applicant having replied thereto after an Order of the Tribunal dated 2/7/2019, and there being no disputed matter of fact, as the questions to be decided are of law, the Arbitral Tribunal, through an Order of 7 October 2019, dispensed with the meeting provided for in article 18 of RJAT, which it did under the principles of autonomy in the conduct of the process and in order to promote the speed, simplification and informality thereof. The date of 25 October 2019 was also set for the pronouncement of the arbitral decision.

II. Preliminary Determination of Issues

  1. The arbitral tribunal was regularly constituted and is materially competent, as provided in articles 2, paragraph 1, subsection a), and 4, both of RJAT.

  2. The parties have legal personality and capacity, are legitimate and are represented (see articles 4 and 10, paragraph 2, of the same statute, and articles 1 to 3 of Order no. 112-A/2011, of 22 March).

  3. As the Respondent invoked, in its reply, an exception of time-bar as to the requests for annulment of IUC assessments for the years 2013, 2014, 2015 and 2017 (given that, as to these, it understands that "far [the deadline for challenging the same] is exceeded, pursuant to the provisions of article 10, paragraph 1 of RJAT combined with article 102, paragraphs 1 and 2 of CPPT"), it is necessary to ascertain whether the mentioned exception should be considered well-founded, taking into account, also, what appears from the requests of the Applicant submitted on 15/7/2019 and 1/9/2019, in which the latter expressed itself regarding the said exception.

  4. In the understanding of the Respondent, the invoked time-bar derives, namely, from the fact that: i. as to the requests for annulment of IUC assessments for the years 2013 and 2014, the respective gracious objection was "filed on 2014-07-23 and the most recent payment date relating to IUC assessments for 2013 and 2014 being 2014-06-17, [whereby] the deadline for challenging the assessments is far exceeded"; and ii) as to the requests for annulment of IUC assessments for the years 2015 and 2017, "the payment deadline for the IUC assessment for the year 2015 [having occurred] on 2015-07-30. And the payment deadline for the IUC assessment for the year 2017 [having occurred] on 2017-11-10. Also with respect to these assessments, the arbitral request is time-barred" because, having these been directly challenged in this arbitral Tribunal (and having the request for arbitral pronouncement been filed on 23/2/2019), "the deadline for challenging the same is far exceeded, pursuant to the provisions of article 10, paragraph 1 of RJAT combined with article 102, paragraphs 1 and 2 of CPPT."

  5. For its part, the present Applicant, having been notified to express itself regarding the said exception, alleged, in summary, that:

10.1. As to the lack of timeliness of the arbitral request relating to IUC assessment for the years 2013 and 2014: i. "as a precautionary measure – in the time of the notification for prior hearing, [the Applicant] instituted and is in court in the Tax Court of Lisbon, Organic Unit 1, the judicial challenge proceeding with number .../16...BELRS instituted on 21.12.2016, matter which the Tax and Customs Authority knows and in which the IUC assessments are being challenged concerning the years 2013 and 2014 of which together in 2014 was notified"; ii. "It cannot [...] come to the Tax and Customs Authority to deduce in article 4 and following of the learned reply, exception of lack of timeliness of the arbitral request, inasmuch as it is still pending judicial decision, the act of prior hearing, or more properly, the right to exercise the right of prior hearing by the applicant."; iii. "it cannot come to pass any situation of exception regarding lack of timeliness of request for arbitral pronouncement concerning IUC assessments for the years 2013 and 2014 and relating to the vehicle with registration number .... "

10.2. As to the lack of timeliness of the arbitral request relating to IUC assessment for the year 2015: i. "it is necessary that the Tax and Customs Authority not overlook that concerning this tax there are proceedings running in the Administrative and Tax Court of Sintra, Organic Unit 2, under case number .../17...BESNT, matter therefore, in court and which for that reason cannot be ignored."; ii. "Situation that contradicts what well stated in article 13 of the learned reply, given that a decision is pending concerning challenge of this matter (IUC 2015) in the proceedings which were referred."

10.3. As to the lack of timeliness of the arbitral request relating to IUC assessment for the year 2017: i. "With regard to the year 2017, on 07.03.2019 A... delivered with the Tax and Customs Authority a request informing that it would present this matter with the Administrative Arbitration Centre to be decided, as appears from the communication whose copy is attached as Doc. 20, which is verified through the present proceeding."; ii. "The Tax and Customs Authority ignores [...] in the learned reply all the correspondence had with A... between the end of August 2017 and 07.03.2019 of which copies of everything are attached (cf. Doc. 7 to Doc. 20, especially, Doc. 7 and Doc 20)."; iii. "It is always necessary to verify that the date of the finality of the learned Judgment of the Évora Court of Appeal on 03.04.2017 (cf. RI - Doc. 5), which beyond any doubt verifies the incapacity of movement of the vehicle with registration number ... since 2005 and the respective disappearance – theft, loss – of the same since 2013, factual circumstances to which A... is alien as per judgment pronounced in the said proceedings of case number .../13...YXLSB and which is transcribed in these proceedings."

  1. Let us see, then.

  2. Excluding the requests for annulment of IUC assessments for the years 2018 and 2019 (as to which the exception was not invoked), there remain, for analysis in light of the said exception, the requests for annulment of assessments relating to IUC for the years 2013 and 2014, 2015 and 2017.

  3. It follows from reading the present proceedings that, at the date in which the present request for arbitral pronouncement was made (23/2/2019), the deadline for challenging IUC assessments for the said years 2013, 2014, 2015 and 2017 was far exceeded, taking into account the provisions of article 10, paragraph 1, of RJAT, combined with article 102, paragraphs 1 and 2, of CPPT – a fact which is not contravened by the present Applicant in its reply to the exception.

  4. Effectively, and as the Respondent correctly noted (not having been, with respect to these dates, contradicted by the Applicant in its reply to the exception): i. as to the requests for annulment of IUC assessments for the years 2013 and 2014, the respective gracious objection was "filed on 2014-07-23 and the most recent payment date relating to IUC assessments for 2013 and 2014 [was] 2014-06-17, [whereby] the deadline for challenging the assessments is far exceeded"; and ii) with regard to the requests for annulment of IUC assessments for the years 2015 and 2017, "the payment deadline for the IUC assessment for the year 2015 occurred on 2015-07-30. And the payment deadline for the IUC assessment for the year 2017 occurred on 2017-11-10. Also with respect to these assessments, the arbitral request is time-barred" because, having these been directly challenged in this arbitral Tribunal (and having the request for arbitral pronouncement been filed on 23/2/2019), "the deadline for challenging the same is far exceeded".

  5. Not contesting these dates, the present Applicant alleges, in its reply to the exception, that, in addition to "all the correspondence had" with the TA between "August 2017 and 07.03.2019" (as to IUC for the year 2017), also one cannot ignore existing "proceedings running in the Administrative and Tax Court of Sintra, Organic Unit 2, under case number .../17...BESNT, matter therefore, in court and which for that reason cannot be ignored." (as to IUC for the year 2015), and being "in court in the Tax Court of Lisbon, Organic Unit 1, the judicial challenge proceeding with number .../16...BELRS instituted on 21.12.2016, matter which the Tax and Customs Authority knows and in which the IUC assessments are being challenged concerning the years 2013 and 2014 of which together in 2014 was notified" (as to IUC for the years 2013 and 2014).

  6. Taking into account the foregoing – and having examined the Docs. attached to the reply of the Applicant and, namely, Doc. 1 (which contains the opening pleading in the judicial challenge proceeding with number .../16...BELRS, instituted on 21/12/2016 and which has not yet become final, and in which "the IUC relating to the vehicle with registration number ... and for the years 2013 and 2014" is being challenged) –, the following conclusions are drawn for each of the years in question:

16.1. With regard to the request for annulment of IUC assessments for the years 2013 and 2014, it is verified that the time-bar alleged by the Respondent occurs. [It should be added that, in this case, the hypothesis of a possible exception of lis pendens does not arise because from reading the judicial challenge proceeding with number .../16...BELRS it can be concluded that there is no identity of the cause of action, once the grounds ("the concrete fact or the specific invalidity that is invoked to obtain the intended effect": article 498, paragraph 4, of CPC) for the declaration of illegality in the actions in progress – judicial and arbitral – are different.]

16.2. As to the request for annulment of IUC assessment for the year 2015, it is verified that the time-bar alleged by the Respondent also occurs. [In this case there is, equally, no place for the analysis of a possible exception of lis pendens because, although the Applicant has informed, in its reply to the exception, "that concerning this tax there are proceedings running in the Administrative and Tax Court of Sintra, Organic Unit 2, under case number .../17...BESNT", it is not possible to ascertain – because the opening pleading of that judicial action does not appear in these proceedings – what are the grounds invoked in that challenge, there not existing, thus, conditions for it to be concluded, e.g., by the existence, or not, of identity of the cause of action (nor for it to be concluded by the existence, or not, of the referred lis pendens).]

16.3. As to the request for annulment of IUC assessment for the year 2017, it verifies that the time-bar alleged by the Respondent also occurs. Effectively, and as mentioned above already, the present Applicant did not refute or contradict the allegation of time-bar, only invoking that there had been a correspondence exchange with the TA since "August 2017" – a fact which, in light of the norms relating to deadlines for challenging, already mentioned above, is not relevant.

  1. In light of the foregoing, it is concluded that the arbitral request is time-barred with respect to IUC assessments for the years 2013, 2014, 2015 and 2017 – time-bar which constitutes a peremptory exception pursuant to article 576 of the CPC (ex vi article 29, paragraph 1, subsection e), of RJAT), entailing, in the referred part, the absolution of the TA. For this reason, the value of the present request shall have to be reduced, pursuant to the provisions of article 97-A of CPPT (ex vi article 29, paragraph 1, subsection a), of RJAT), to the challenged value of the IUC assessment (and compensatory interest) relating to the year 2018 (which has implications in the definition of the amount of costs).

  2. Taking into account the elements contained in the TAP no. .../2019, as well as the information contained in the gracious objection proceeding no. ...2018..., both attached to the proceedings, the IUC assessment (and compensatory interest) no. ..., relating to the period of 2018 and corresponding to the vehicle with registration number ..., has the value of €53.42. (Thus, the value of the costs of this arbitral proceeding will be €306.00.)

  3. It is thus necessary, and next, to take cognizance of the merits of the arbitral request solely with respect to the IUC assessment for the year 2018 which was imposed on the vehicle with registration number ... – once, with respect to this, the present arbitral request was filed within the deadline of article 10 of RJAT (the gracious objection filed by the present Applicant was rejected through an Order of 21/1/2019, which was notified to the Applicant by official letter of 28/1/2019 – see Doc. 21 attached to the present proceedings –, the latter having, in turn, filed its request for constitution of arbitral tribunal on 23/2/2019).

III. Questions to be Decided

  1. In the present case, there are three questions of law that are disputed: 1) whether article 3 of the IUC Code contains a presumption; 2) whether rebuttal thereof has occurred; 3) whether, as the TA alleges, the interpretation made by the present Applicant does not attend to the systematic and teleological elements of interpretation of the law.

IV. Merits

IV.1. Factual Matters

  1. With relevance for the appraisal and decision of the question of merits, the following facts are taken as established and proven:

A. With reference to the month of January 2018, the Applicant appeared in the database of the Institute of Registries and Notaries (IRN – Vehicle Registration Conservatory) as owner of the motor vehicle with registration number ....

B. As of 31/1/2018 the Applicant did not proceed to payment of IUC relating to the year 2018, the TA proceeded, on 14/4/2018, to official assessment of the tax in question.

C. The Applicant was notified of the IUC assessment and compensatory interest in question through Document no. 2018..., of 23/4/2018.

D. Disagreeing with the said assessment, the Applicant filed, on 3/5/2018, a gracious objection requesting the annulment thereof. This objection was rejected by order of 21/1/2019 (which was notified to the Applicant by official letter of 28/1/2019: see Doc. 21 attached to the present proceedings).

E. With a view to demonstrating the impossibility of circulation and use/enjoyment of the vehicle with registration number ..., the present Applicant filed, on 25/2/2013, a judicial action in the District Court of the District of Santarém – Cartaxo – Local Instance – Section of General Competence – Judge..., under case number .../13...YXLSB.

F. Pursuant to the judgment of that proceeding, pronounced on 19/5/2015 (see Doc. 5 attached to the proceedings) – judgment which was the subject of an appeal which became final on 3/4/2017 – the following points of fact (with interest for the present proceedings) were taken as established: "At the beginning of the year 2005, on a date that cannot be precisely determined, that vehicle was left at the repair, painting and bodywork workshop belonging to the defendant herein and in his care. [proven fact no. 2]"; "The vehicle with registration number ... disappeared from his workshop, where it was located, in December 2013. [proven fact no. 19]".

G. The IUC assessment for the year 2019, invoked in the opening pleading of the Applicant, does not appear in the tables of the TAP no. .../2019 (attached to the present proceedings) and, as the Applicant itself also confirms, in its Request filed on 16/10/2019, "contrary to what has been awaited, the Tax and Customs Authority has not yet requested/demanded payment of IUC concerning the year 2019."

H. The Applicant filed its request for constitution of arbitral tribunal on 23/2/2019.

IV.2. Unproven Facts

  1. There are no other facts with relevance for appraisal of the merits of the case that have not been proven.

IV.3. Substantiation of the Establishment of Factual Matters

  1. The Tribunal does not have to pronounce itself on all the details of the factual matters alleged by the parties, the duty lying with it to select the facts that are of interest to the decision and to discriminate the matter it judges proven and declare that which it considers not proven (see article 123, paragraph 2, of CPPT, and article 607, paragraph 3, of CPC, ex vi article 29, paragraph 1, subsections a) and e), of RJAT).

  2. In this manner, the facts pertinent to the judgment of the case are selected and shaped in function of their legal relevance, which is established with regard to the various solutions for the subject matter of the dispute in the applicable law (see article 596, paragraph 1, of CPC, applicable ex vi article 29, paragraph 1, subsection e), of RJAT).

  3. The conviction of the Arbitral Tribunal was founded on the free appraisal of the positions assumed by the Parties (with respect to fact) and on the content of the documents attached to the proceedings, not contested by the Parties.

IV.4. Matters of Law

  1. The questions of law that are disputed (relating to whether article 3 of the IUC Code contains a presumption and whether rebuttal thereof has occurred; and whether, as the TA alleges, the interpretation made by the Applicant does not attend to the systematic and teleological elements of interpretation of the law) converge in the direction of the interpretation of article 3 of the IUC Code, whereby it is shown necessary: a) to know whether the norm of subjective incidence, contained in the said article 3, establishes or not a presumption; b) to know whether, in considering that this norm establishes a presumption, such violates the "unity of the regime", or disregards the systematic element and the teleological element; c) to know - admitting that the presumption exists (and that the same is iuris tantum) - whether rebuttal thereof has been made.

  2. Article 3, paragraphs 1 and 2, of the IUC Code, has the following wording, which is here reproduced:

"Article 3 – Subjective Incidence

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

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

  1. The interpretation of the cited legal text is, naturally, essential for the resolution of the case under analysis. In that measure, it is shown necessary to resort to article 11, paragraph 1, of the General Tax Law (LGT), and, by reference thereof, to article 9 of the Civil Code (CC).

  2. Now, pursuant to the said article 9 of the CC, interpretation starts from the letter of the law and aims, through it, to reconstruct the "legislative thought". The same is to say (irrespective of the objectivism-subjectivism controversy) that the literal analysis is the basis of the interpretive task and the systematic, historical or teleological elements are guides for orientation of the said task.

  3. The literal apprehension of the legal text in question does not generate - even though the separation of this from the determination, albeit minimal, of its meaning may be highly disputable - the notion that the expression "considering as such" means something different from "presuming as such". Effectively, we would very scarcely find authors who, in a task of pre-comprehension of the said legal text, would reject, "instinctively", the identity between the two expressions.

  4. Confirming the indistinction (both literal and of meaning) of the words "considering" and "presuming" (presumption), see, for example, the following articles of the Civil Code: 314, 369, paragraph 2, 374, paragraph 1, 376, paragraph 2, and 1629. And, with special interest, the case of the expression "is considered", contained in article 21, paragraph 2, of the Corporate Income Tax Code (CIRC). As point out Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, with respect to that article of the CIRC: "beyond this norm evidencing that what is at stake in the taxation of capital gains is to ascertain the real value (that of the market), the limitation to the ascertainment of real value derived from the rules of determination of the taxable value provided for in the Tax Determination Code cannot fail to be considered as a presumption in matters of incidence, whose rebuttal is permitted by article 73 of the General Tax Law" (General Tax Law, Annotated and Commented, 4th ed., 2012, pp. 651-2).

  5. 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 "to presume" is used is one faced with a presumption, given that the use of other terms or expressions (literally similar) may also serve as the basis for presumptions. And, among these, the expressions "is considered as" or "considering as" assume, as has been seen, prominence.

  6. If literal analysis is only the basis of the task, it is, naturally, essential to assess the text in light of the other elements (or sub-elements of the so-called logical element). In this regard, the TA alleges that "also the systematic element of interpretation of the law demonstrates that the arguments of the Applicant find[s] no support in the law", and "in light of a teleological interpretation of the regime enshrined throughout the IUC Code, the interpretation propounded by the Applicant [...] is manifestly wrong".

  7. It is thus justified to ascertain whether the interpretation that considers the existence of a presumption in article 3 of the IUC Code clashes with the teleological element, i.e., with the purposes (or with the sociological relevance) of what was intended with the rule in question. Now, such purposes are clearly identified in the opening of the IUC Code: "The single circulation tax follows the principle of equivalence, seeking to burden the taxpayers to the extent of the environmental and road cost which these cause, in realization of a general rule of tax equality" (see article 1 of the IUC Code).

  8. What can be inferred from this article 1? It can be inferred that the close connection of IUC to the principle of equivalence (or principle of benefit) does not permit the exclusive association of the "taxpayers" referred to therein to the figure of owners but rather to the figure of users (or of economic owners). As was well noted in Arbitral Decision of case no. 73/2013-T: "in truth, the ratio legis of the tax [IUC] rather points in the direction of the taxation of users of vehicles, the «economic owner» in the words of Diogo Leite de Campos, the effective owners or the financial lessees, as these are the ones who have the pollution potential causing environmental costs to the community."

  9. Effectively, if the said ratio legis were another, how to understand, for example, the obligation (on the part of the entities that proceed to the leasing of vehicles) - and for the purposes of the provisions in article 3 of the IUC Code and in article 3, paragraph 1, of Law no. 22-A/2007, of 29/6 - of supply to the Tax Authority of the data concerning the identification of users of the said vehicles (see article 19)? Should where it reads "users", it rather read, disregarding the systematic element, "owners with registration in their name"...?

  10. From the foregoing is drawn the conclusion that to limit the passive subjects of this tax solely to owners of vehicles in whose names the same are registered - ignoring the situations in which these no longer coincide with the real owners or the real users of the same -, constitutes a restriction which, in light of the purposes of IUC, does not find basis of support. And, even though the TA alleges that the "option [...] adopted by the legislator [...] was that, for the purposes of IUC, be considered owners those who, as such, appear in the vehicle registration", it is necessary to bear in mind that such registration, in face of what was said above, generates only a rebuttable presumption, i.e., a presumption that may be dispelled if contrary proof is presented.

  11. In the same sense here defended, may be seen, for example, the Judgment of the Administrative Court of the South of 14/3/2019, case 201/14.4BEALM: "As was written in the Judgment of the Supreme Administrative Court of 18.04.2018, pronounced in case no. 0206/17: «Given that the registration of the right of ownership over a movable thing, whose validity depends on the regularity of the respective constitutive act, merely affords publicity to the registered act, it is always possible to rebut the presumption that the holder inscribed in the registration coincides with the effective holder of the registered right. Thus, when the holder of the right of ownership inscribed in the registration does not coincide with the holder of the right of ownership it is possible to rebut the presumption that the registered holder is the holder of the registered right, in numerous situations with repercussions at the level of civil and commercial law. It should be admitted that the same happens, in the tax law field, with the consequent possibility of producing the alteration in the subjective incidence of tax giving prevalence to the constitutive act of the right over the registered act.» Effectively, definitive registration constitutes nothing more than a rebuttable presumption, thus admitting, therefore, counter-proof."; the Judgment of the Administrative Court of the South of 19/3/2015, case 8300/14: "The [...] article 3, paragraph 1, of the IUC Code, enshrines a legal presumption that the holder of the vehicle registration is its owner, such presumption being rebuttable"; or, further, the Judgment of the Administrative Court of the North of 11/1/2018, case 00888/13.5BEPRT: "Article 3, paragraph 1, of the IUC Code, enshrines a legal presumption that the holder of the vehicle registration is its owner but that presumption is rebuttable by force of article 73 of the General Tax Law."

  12. It would, moreover, be unjustified to impose a sort of irrebuttable presumption, since, without an apparent reason, one would be imposing a (admittedly disputable) formal truth to the detriment of what could really have been proven; and, on the other hand, it would distance the TA from the duty of compliance with the inquisitorial principle established in article 58 of the General Tax Law, i.e., the duty of undertaking 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 actual and effective owner of the vehicle).

  13. It follows further that, if the seller were not permitted to rebut the presumption contained in article 3 of the IUC Code, one would be benefiting, without a plausible reason, the acquirers who, in possession of correctly filled out and signed contract forms of acquisition, and enjoying the advantages associated with their condition of owners, attempted to exempt themselves, by way of a "registral formalism", from the payment of tolls or fines.

  14. In this regard, it is also worthwhile to note that vehicle registration has no constitutive effect, functioning, as said before, as a rebuttable presumption that the holder of the registration is, effectively, the owner of the vehicle. In this sense, see, for example, the Judgment of the Supreme Court of Justice of 19/2/2004, case 03B4639: "Registration has no constitutive effect, since it is intended to afford publicity to the registered act, functioning (merely) as mere presumption, rebuttable, (presumption «iuris tantum») of the existence of the right (articles 1, paragraph 1 and 7, of the Constitution and 350, paragraph 2, of the Civil Code) as well as of the respective ownership, all in accordance with what is contained therein."

  15. In the same sense, referred, in this regard, Arbitral Decision of 15/10/2013, pronounced in case no. 14/2013-T, in terms that are endorsed: "the essential function of vehicle registration is to afford publicity to the legal situation of vehicles not the registration having constitutive effect, functioning (merely) as 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 right registered belongs to the person in whose name it is inscribed may be rebutted by contrary proof." See, also, the following excerpt: "[«endorses the legal argumentation adduced in the judgment of this Section, pronounced in case no. 2502/14.2BEPRT of 01.06.2017, which appears to remain unpublished, where it is stated:»] «The examined article 3, paragraph 1, of the I.U.C. Code, enshrines a legal presumption that the holder of the vehicle registration is its owner, such presumption being rebuttable, by force of article 73 of the General Tax Law.. In this situation, the rebuttal of the presumption follows the rule contained in article 347 of the Civil Code, pursuant to which full legal proof can only be contradicted by means of proof that shows it is not true the fact which would be the subject thereof. Which means that it is not enough for the opposing party to put forward mere counter-proof - which is intended to cast doubt on the facts (article 346 of the Civil Code) that render the presumed facts doubtful, or rather, to the contrary, it has to show that it is not true the presumed fact, in a manner such that there remains no uncertainty that the facts resulting from the presumption are not real" (Judgment of the Administrative Court of the North of 7/12/2017, case 00358/14.4BEVIS).

  16. Now, it is verified, in the case here under analysis, that the rebuttal of the said presumption, by way of presentation of contrary proof (see article 73 of the General Tax Law and article 350, paragraph 2, of the Civil Code), was made, once, as noted above, in proven fact G, pursuant to the judgment pronounced on 19/5/2015 in the course of case no. .../13...YXLSB (see Doc. 5 attached to the proceedings) – judgment which was the subject of an appeal which became final on 3/4/2017 – the following points of fact (with interest for the present proceedings) were taken as established: "At the beginning of the year 2005, on a date that cannot be precisely determined, that vehicle was left at the repair, painting and bodywork workshop belonging to the defendant herein and in his care. [proven fact no. 2]"; "The vehicle with registration number ... disappeared from his workshop, where it was located, in December 2013. [proven fact no. 19]".

  17. From this it is concluded that: i) despite continuing to appear in the vehicle registration as being the owner of the vehicle in question, the Applicant, taking into account the (proven) disappearance of that vehicle, ceased to have the use, enjoyment and power of disposal thereof, whereby, in that measure, made complete demonstration that, from that date onwards, he was no longer the effective owner of the same (see article 1305 of the Civil Code); ii) having the (proven) disappearance of that vehicle occurred before the date of accrual of the tax now in question, the presumption established by the registration cannot operate.

  18. In the same sense, and with respect to a very similar case, see Arbitral Decision no. 166/2017-T, of 13/11/2017: "[the] principle [of equivalence] is present in the norm of subjective incidence of the tax, enshrined in article 3 of the Code, which points in the direction of the taxation of the effective users of vehicles, considering as such the respective owners, in the presupposition that, as follows from article 1305 of the Civil Code, they enjoy the rights of use and enjoyment. [...]. [...] with reference to taxes whose element defining subjective incidence is the possession, enjoyment or ownership of assets, constitutes an admissible ground for opposing fiscal enforcement the substantive illegitimacy of the opponent, founded on the fact that this, despite appearing as debtor in the enforcement title, has not been, during the period to which the executable debt relates, the possessor of the assets which originated it (Cf. article 204, paragraph 1, subsection b), of CPPT). As follows from the doctrine accepted by the Supreme Administrative Court, «this is one of the exceptions to the general rule that it is not possible to discuss in the proceedings for opposition to fiscal enforcement the legality of the assessment which gave rise to the executable debt. In truth, in the referred situations it is admitted that the legality of the assessment as to its subjective incidence may be questioned, but this exceptional possibility is justified by the 'lack of verification, by the tax authority, of the factual assumptions of the assessment act, relative to this type of tax and in the ascertainment of an error which is attributable to it', as, 'to proceed to the assessment of these taxes, no information is collected from the taxpayer through a declaration, nor is any inquiry made as to who is the real owner, beneficiary or possessor of the assets referred to, rather the assessment is made from the knowledge of the condition of owner which appears in the registers of the tax authority or other public services' (Jorge Lopes de Sousa, ob. cit., annotation 5 to article 158, page 103). Now, one of the situations in which the ownership of certain assets is a presupposition of the incidence of the tax in question, is precisely IUC [...] (see STA, Judgment of 24.2.2016, Case 0677/15. In the same sense, STA, Judgment of 8.7.2015, Case 0606/15)» [...]. According to the doctrine cited, and accepted in the referred judgment, one is faced with an exceptional possibility of questioning, in proceedings for opposition to fiscal enforcement, the very legality of the tax assessment which, taking as reference the ownership, as it appears in the registration, does not attribute relevance to the possession or enjoyment of the asset [...], no inquiry being made as to "who is the real owner, beneficiary or possessor of the assets". It is concluded, therefore, [...] that, although [the Applicant is, by the registration,] the owner of the vehicle in the period to which the impugned assessment relates, he was not, in that period, its possessor or beneficiary, a fact from which follows the illegality of the same".

  19. In light of the foregoing, and taking into account the elements brought to the proceedings and (also) identified above, it is considered that the Applicant has rebutted the presumption contained in article 3 of the IUC Code – whereby, consequently, the IUC assessment act for the year 2018 must be annulled.

V. DECISION

In light of the foregoing, it is decided:

  • To judge the exception of time-bar with respect to IUC assessments (and compensatory interest) relating to the years 2013, 2014, 2015 and 2017 as well-founded.

  • To judge the request for arbitral pronouncement as well-founded, with the consequent annulment, with all legal effects, of the IUC assessment (and compensatory interest) for the year 2018.

VI. Value of Proceeding

The value of the proceeding is fixed at €53.42 (fifty-three euros and forty-two cents), pursuant to the provisions of article 32 of the Code of Administrative Procedure and article 97-A of CPPT, applicable by force of the provisions of article 29, paragraph 1, subsections a) and b), of RJAT, and article 3, paragraph 2, of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT).

VII. Costs

Pursuant to Table I annexed to the RCPAT, the costs are in the amount of €306.00 (three hundred and six euros), to be paid by the Respondent, in accordance with the provisions of articles 12, paragraph 2, and 22, paragraph 4, of RJAT, and article 4, paragraph 5, of RCPAT.

Let notice be given.

Lisbon, 25 October 2019.

The Arbitrator

(Miguel Patrício)

Text prepared by computer, pursuant to the provisions of article 131, paragraph 5, of CPC, applicable by reference of article 29, paragraph 1, subsection e), of RJAT.

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

Frequently Asked Questions

Automatically Created

Can I be exempt from IUC (Imposto Único de Circulação) if my vehicle is immobilized and not in circulation?
Exemption from IUC based solely on vehicle immobilization is not automatically granted under Portuguese law. IUC liability is primarily triggered by vehicle registration, not actual use. However, if a vehicle is proven to be immobilized, not roadworthy, or has disappeared, you may challenge IUC assessments through administrative procedures or CAAD arbitration. You must provide substantive evidence such as court judgments confirming the vehicle's status. The Tax Authority typically requires formal deregistration through IMT to cease IUC obligations, though case law suggests circumstances of proven impossibility of use may constitute grounds for annulment of assessments.
What happens if the Portuguese Tax Authority (AT) ignores my claim that a vehicle is not roadworthy for IUC purposes?
If the Portuguese Tax Authority ignores your claims that a vehicle is not roadworthy or in circulation, you have several legal remedies. First, submit formal written complaints with supporting documentation (repair shop records, expert reports, court judgments). If the Tax Authority maintains IUC assessments despite evidence, you can file a gracious objection (reclamação graciosa) within the legal deadline. If this is rejected, you may seek judicial review through administrative courts or request arbitration through CAAD (Centro de Arbitragem Administrativa). Previous CAAD decisions have addressed similar situations where vehicles were immobilized or disappeared, potentially establishing precedent for annulment of assessments when impossibility of use is judicially confirmed.
How do I challenge IUC tax assessments through CAAD arbitral proceedings in Portugal?
To challenge IUC assessments through CAAD, file a request for arbitral pronouncement under Decree-Law 10/2011. The request must identify the contested tax acts (specific IUC assessment years and vehicle), state grounds for illegality, and include supporting documentation. You can request appointment of an arbitrator or allow automatic designation. The process involves submission of your case, the Tax Authority's reply, possible hearings, and a binding arbitral decision. CAAD arbitration is faster than judicial courts, typically resolving within 6 months. Legal costs are moderate, and you may request legal aid. In IUC cases, common grounds include vehicle deregistration disputes, calculation errors, or circumstances preventing vehicle use as confirmed by judicial decisions.
Does vehicle registration alone determine IUC tax liability even if the vehicle cannot be used?
Vehicle registration alone generally determines IUC tax liability under Portuguese law, regardless of whether the vehicle can actually be used or is in circulation. The IUC Code establishes that registered vehicles trigger annual tax obligations. However, this principle is not absolute. CAAD jurisprudence has recognized exceptional circumstances where proven impossibility of use, vehicle disappearance, or destruction may justify annulment of IUC assessments, particularly when confirmed by judicial decisions. The proper procedure is to request deregistration with IMT, but delays or refusals by IMT do not automatically suspend IUC liability. Taxpayers may need to pursue parallel administrative and arbitral proceedings to both cancel registration and contest accumulated IUC assessments.
What are the grounds for contesting multiple years of IUC tax liquidations before the CAAD arbitral tribunal?
Grounds for contesting multiple years of IUC before CAAD include: (1) vehicle deregistration not processed by IMT despite valid requests; (2) proven impossibility of vehicle circulation due to immobilization, destruction, or disappearance, especially when judicially confirmed; (3) vehicle theft or loss reported to authorities; (4) calculation errors in assessment amounts; (5) procedural irregularities in notification or assessment; (6) duplicate taxation; (7) vehicle export not reflected in registration records. You must challenge each tax year separately but can consolidate them in one CAAD proceeding. Time limits apply: generally you must exhaust administrative remedies (gracious objection) first, then file with CAAD within 90 days of final administrative decision. Supporting evidence is crucial, including court judgments, police reports, IMT correspondence, and proof of notification to Tax Authority of relevant circumstances.