IUC Vehicle Tax Liquidation Annulment: CAAD Arbitral Decision 145/2017-T

ARBITRAL DECISION

I. - REPORT

A - PARTIES

The A…, SA legal entity n.º…, with registered office at Street…, n.º…, …-… - Lisbon, hereinafter referred to as "Claimant", submitted a request for the constitution of an arbitral tribunal, pursuant to the provisions of subparagraph a) of n.º 1 of article 2.º of Decree-Law n.º 10/2011, of 20 January (Legal Regime of Arbitration in Tax Matters, hereinafter referred to as "RJAT"), with a view to the examination of the following claim against the Tax and Customs Authority (which succeeded, inter alia, the Directorate-General of Taxes) hereinafter referred to as "Respondent" or "AT".

B - CLAIM

1 - The request for the constitution of the arbitral tribunal was accepted by His Excellency the President of CAAD on 27 February 2017 and, on that same date, notified to AT.

2 - The Claimant did not proceed to nominate an arbitrator, so that, pursuant to the provisions of n.º 1 of article 6.º of RJAT, the undersigned, on 11-04-2017, was designated by the Deontological Council of the Centre for Administrative Arbitration as arbitrator of a Sole Arbitral Tribunal, having accepted in the terms legally provided.

3 - The Parties were, on 11-04-2017, duly notified of that designation, having not expressed any intention to refuse it, in accordance with the combined provisions of subparagraphs a) and b) of n.º 1 of article 11.º and of articles 6.º and 7.º of the Deontological Code.

4 - In these circumstances, in accordance with the provisions of subparagraph c) of n.º 1 of art.º 11.º of Decree-Law n.º 10/2011, of 20 January, in the version introduced by art.º 228.º of Law n.º 66-B/2012, of 31 December, the arbitral tribunal was regularly constituted on 02-05-2017.

5 - On 12 July 2017, the Arbitral Tribunal, pursuant to art.º 16.º, subparagraph c) of RJAT (Decree-Law n.º 10/2011, of 20 January), and having regard to the content of the order issued on 28 June 2017, considered dispensed with the holding of the meeting provided for in article 18.º of the said legal instrument.

6 - The now Claimant requests that the present Arbitral Tribunal:

a) - Declare the illegality and consequent annulment of the 3 assessment acts relating to the Unique Circulation Tax (hereinafter referred to as IUC), and of the compensatory interest (JC), as identified in the case files (Annex A), referring to 1 motor vehicle, equally identified in the said Annex, which are hereby considered fully reproduced, which total the amount of € 163.06;

b) - Declare the illegality of the act of dismissal of the hierarchical appeal filed against the act that dismissed the administrative petition presented against the IUC assessment acts, aforementioned and identified in the said Annex A;

c) - Condemn the Tax and Customs Authority to the reimbursement of the amount of € 163.06, referring to the IUC and the Compensatory Interest, which it paid and indicates as the value of the claim.

d) - Condemn the Tax and Customs Authority to the payment of indemnificatory interest for the deprivation of the sum of € 163.06.

C - CAUSE OF ACTION

7 - The Claimant, in the substantiation of its request for arbitral pronouncement, states, in summary, the following:

8 - That it is a credit financial institution with a strong presence in the national market.

9 - That, as a credit financial institution, it has, in the financing of the automobile sector, one of its most relevant areas of activity, celebrating, in this context, inter alia, financial leasing contracts.

10 - That the vehicle, identified in the said Annex A, was given in financial leasing to one of its customers, the company B…, Lda, as is also identified in the case files.

11 - That a key point of the said contracts lies in the fact that the lessees, during the duration of the contracts, hold its exclusive enjoyment, being able, at the end thereof, to acquire the vehicle, by means of the payment of a residual value.

12 - That, regarding the vehicle in question in the process, a financial leasing contract was in effect at the moment when the obligation to pay the corresponding IUC became due, the Claimant being unable to be responsible for the payment of that tax.

13 - That it was notified to proceed to the payment of the IUC relating to the assessment acts identified in the document attached to the request for arbitral pronouncement, as Annex A, regarding the vehicle, equally identified in the said Annex.

14 - That AT, even knowing that the said vehicle was subject to a financial leasing contract, and knowing perfectly the identity of the lessee, understood it should demand payment of the tax in question from it.

15 - That, although unable to assume the status of passive subject of the tax, it proceeded to its payment, regarding the assessments referenced in the case files, referring to the years 2009 to 2011, in the amount of € 163.06.

16 - That, in the field of CIUC, the legislator opted to burden the passive subject, not in accordance with his wealth, distancing the principle of contributive capacity, but rather in the just measure of the cost to the environment and to the road infrastructures that the passive subject, through the use of motor vehicles, may generate.

17 - That, in most cases, it will be the owner of the motor vehicle, as such registered, the passive subject of the IUC, in accordance with n.º 1 of art.º 3.º of CIUC, inasmuch as the rule is that, together with the ownership of the vehicle, the individual also holds its usufruct.

18 - That, by being subject to financial leasing, the motor vehicle identified in the case files was never, at any time, used by it, but rather by the respective lessee, who had the exclusive use of the vehicle in question, to whom belonged its systematic use and all the potential causing the environmental and road costs, which constitute the underlying ratio of the tax.

19 - That, in financial leasing contracts, the right to use the vehicle is subtracted from its owner, as lessor, the lessee being granted the right to use and enjoy, exclusively, such vehicle.

20 - That, in accordance with the provisions of n.º 2 of art.º 3.º of CIUC, it is to the lessees that the exclusive enjoyment of the motor vehicle belongs, and the obligation to pay the respective tax also belongs to them.

21 - That, with a financial leasing contract in effect, regarding the vehicle identified in the process, at the moment when IUC became due, it is to the lessee, and not to the lessor, that it falls to ensure payment of that tax.

D - RESPONSE OF THE RESPONDENT

22 - The Respondent, Tax and Customs Authority, (hereinafter referred to as AT), presented, on 07-06-2017, its Response.

23 - In the said Response, AT considers that the tax legislator when establishing in art.º 3.º, n.º 1 of CIUC who are the passive subjects of the IUC established, expressly and intentionally, that these are the owners (or in the situations provided for in n.º 2, the persons enumerated therein), being considered as such the persons in whose names the same are registered. (cfr. art.º 4.º of the Response)

24 - It considers that the wording of art.º 3.º of CIUC corresponds to a clear choice of legislative policy adopted by the legislator and does not carry any legal presumption, so that to understand that a presumption is consecrated therein would unequivocally be to make an interpretation contra legem. (cfr. art.ºs 5.º and 9.º of the Response)

25 - It emphasizes that the legislator did not use the expression "it is presumed" as it could have done, for example, in the following terms: "the passive subjects of the tax are the owners of the vehicles, being presumed as such the natural or legal persons, of public or private law, in whose names the same are registered". (cfr. art.º 6.º of the Response)

26 - It refers that the aforementioned understanding has already been adopted by the jurisprudence of our courts, transcribing, for this purpose, part of the judgment of the Administrative and Tax Court of Penafiel, issued in Process n.º 210/13.OBEPNF. (cfr. art.º 10.º of the Response)

27 - It adds that CIUC conducted a reform of the regime of taxation of vehicles in Portugal, substantially altering the motor taxation regime, with the passive subjects of the tax becoming the owners listed in the property register, regardless of the circulation of vehicles on public roads. (cfr. art.º 35.º of the Response)

28 - In this sense, it refers to this being the understanding inscribed, namely, in the recommendation n.º 6-B/2012 of 22-06-2012, of the Ombudsman addressed to the Secretary of State for Public Works, Transport and Communications.

29 - It adds that the interpretation put forward by the Claimant is also at odds with the Constitution in that such interpretation results in the violation of the principle of confidence, of the principle of legal certainty, of the principle of efficiency of the tax system and of the principle of proportionality. (cfr. art.º 41.º of the Response)

30 - Finally, it states that it was not the Respondent who gave rise to the filing of the request for arbitral pronouncement, but rather the Claimant, and consequently, the Claimant should be condemned to pay the arbitral costs "in accordance with art.º 527.º/1 of the New Code of Civil Procedure ex vi of art.º 29.º/1-e) of RJAT", adding that the legal requirements are not met capable of conferring the right to indemnificatory interest. (cfr. art.ºs 56.º to 60.º of the Response)

31 - It considers, in conclusion, that, in view of all the arguments presented, the request for arbitral pronouncement should be judged unmeritorious, with the tax assessment acts impugned remaining in the legal order, absolving, accordingly, the Respondent entity of the claim.

E - ISSUES TO BE DECIDED

32 - It is necessary, therefore, to examine and decide.

33 - In light of the above, regarding the positions of the Parties and the arguments presented, the issues to be decided are, in particular, those of knowing:

a) - Whether the rule of subjective incidence contained in article 3.º, n.º 1, of CIUC, establishes or not a presumption.

b) - What the legal value of vehicle registration is in the economy of CIUC, particularly for the purposes of the subjective incidence of this tax.

c) - Whether, on the date the tax becomes due, a financial leasing contract is in effect with a motor vehicle as its object, the passive subject of the IUC, for the purposes of the provision of article 3.º, n.ºs 1 and 2 of CIUC, is the lessee or the lessor entity, owner of the vehicle, in whose name the right of ownership is registered.

d) - Whether the documents presented relating to financial leasing, regarding the vehicle identified in the process, are fit to prove the respective contract.

F - PROCEDURAL REQUIREMENTS

34 - The Arbitral Tribunal is regularly constituted and is materially competent, in accordance with subparagraph a) of n.º 1 of article 2.º of Decree-Law n.º 10/2011, of 20 January.

35 - The Parties have legal personality and capacity, are legitimate and are legally represented (cfr. art.º 4.º and n.º 2 of art.º 10.º of Decree-Law n.º 10/2011 and art.º 1.º of Ordinance n.º 112/2011, of 22 March).

36 - The process does not suffer from vices that invalidate it.

37 - Having regard to the tax administrative process, a copy of which was attached to the case files by AT, and the documentary evidence contained in the process, it is now necessary to present the factual matter relevant to the understanding of the decision, as it is fixed in the terms mentioned below.

II - SUBSTANTIATION

G - SUBSTANTIATION OF FACTS

38 - In terms of relevant factual matter, this tribunal deems the following facts to be established:

39 - The Claimant is a credit financial institution, with financing of the automobile sector being one of its most relevant areas of activity, celebrating, in this context, inter alia, financial leasing contracts.

40 - The vehicle identified in the case files was given in financial leasing to the company B…, Lda, as is also identified in the case files.

41 - The Claimant was notified to proceed to the payment of the IUC relating to the assessment acts identified in document attached to the request for arbitral pronouncement, regarding the vehicle with the license plate …-… -…, equally identified in the process.

42 - AT had knowledge that the said vehicle was subject to a financial leasing contract, but understood to require from the Claimant payment of the tax in question, having.

43 - The Claimant, although not assuming the status of passive subject of the tax, proceeded to its payment, in the total amount of € 163.06, regarding the three assessments of IUC and JC referenced in the case files, relating to the vehicle, equally identified in the process.

44 - Regarding the vehicle in question in the process, a financial leasing contract was in effect at the moment when the corresponding IUC became due.

45 - On the dates relating to the due date of the IUC, to which the assessments identified in the case files refer, relating to the year 2009 to 2011, the vehicle identified in the case files was under the validity of a financial leasing contract.

SUBSTANTIATION OF PROVEN FACTS

46 - The facts deemed as proven are based on the documents mentioned, regarding each of them, inasmuch as their adherence to reality was not questioned.

UNPROVEN FACTS

47 - There are no facts deemed as unproven, given that all facts considered relevant to the examination of the claim were proven.

H - SUBSTANTIATION OF LAW

48 - The factual matter is fixed, and it is now necessary to proceed to its legal subsumption and to determine the Law applicable to the underlying facts, in accordance with the issues to be decided enumerated in n.º 33.

49 - The first issue, regarding which there are absolutely opposing understandings between the Claimant and AT, is expressed in knowing whether the rule of subjective incidence contained in n.º 1 of art.º 3.º of CIUC establishes or not a defeasible presumption.

50 - The positions of the parties are known. Indeed, for the Claimant, the provision of n.º 1 of art.º 3.º of CIUC configures a defeasible legal presumption, inasmuch as the owner of the motor vehicle is deemed to be the passive subject of the IUC, by presuming him to be the individual who uses it and holds its usufruct, also considering that, in accordance with the provision of n.º 2 of the said article, it is to the lessees that the exclusive enjoyment of the motor vehicle belongs, and the obligation to pay the respective tax also belongs to them.

51 - The Respondent, on its part, understands that the tax legislator, when establishing in art.º 3.º, n.º 1 of CIUC who are the passive subjects of the IUC, determined, expressly and intentionally, that these are the owners (or in the situations provided for in n.º 2, the persons enumerated therein), being considered, as such, the persons in whose names the same are registered.

I - INTERPRETATION OF THE RULE OF SUBJECTIVE INCIDENCE CONTAINED IN N.º 1 OF ARTICLE 3.º OF CIUC

52 - On this matter, that is, whether the rule of subjective incidence contained in n.º 1 of art.º 3.º of CIUC, consecrates a presumption, it should be noted that the established jurisprudence in CAAD points to the effect that the said rule consecrates a defeasible legal presumption. Indeed, since the first Decisions, issued on this matter, in the year 2013, among which may be, namely, referred to those issued in the context of Processes n.ºs 14/2013-T, 26/2013-T and 27/2013-T, up to the most recent ones which may be indicated the Decisions issued in the scope of Processes n.º 69/2015-T, n.º 191/2015-T and n.º 202/2015 - T, passing through numerous Decisions issued in the year 2014, of which are mentioned, by way of mere example, the Decisions issued in Processes n.ºs 34/2014-T, 120/2014-T and 456/2014 - T, all point to the understanding that n.º 1 of art.º 3.º of CIUC consecrates a defeasible legal presumption.

For this purpose, mention should also be made of the recent Decision of the Tax Court of Lisbon, issued, on 23-01-2017, in Proc. N.º 463/13.4BELRS, where it is considered that the "[…] claimant succeeded in defeating the presumption established in art.º 3.º, n.º 1 of CIUC."

The understanding inscribed in the Decision of the Central Administrative Court South, issued on 19-03-2015, Process 08300/14, available at: www.dgsi.pt, should also be considered, which seconds the said jurisprudence, when therein it is expressly stated that art.º 3.º, n.º 1 of CIUC "[…] consecrates a legal presumption that the holder of vehicle registration is its owner, such presumption being defeasible by virtue of art.º 73.º of LGT".

This is an understanding in which, wholly, we rely and which is given, without further, as valid and applicable in the present case, not considering, consequently, necessary other developments, in view of the abundant substantiation contained in the aforementioned Decisions and in the said Decision.

53 - Being this the understanding that, as far as art.º 3.º, n.º 1 of CIUC is concerned, is wholly embraced by this tribunal, it is, however, still important to note the lack of merit that assists the Respondent, when, in article 41.º of its Response, it alleges that the interpretation that goes in the direction of understanding that a defeasible legal presumption is consecrated in n.º 1 of art.º 3.º of CIUC violates the constitutional principles of confidence and legal certainty, of the efficiency of the tax system and of proportionality.

Let us examine, then, that question.

Let us see,

• Regarding the principle of proportionality, it should be noted, first and foremost, that the same, inasmuch as it is materially inherent to the regime of rights, freedoms and guarantees, being inscribed in their defense, aims, in essence, to discipline the action of the Public Administration in order for its activity, in the relationship with individuals, to be governed by the choice of the most appropriately balanced measures for the pursuit of the public interest.

As Professor Freitas do Amaral teaches, in Course of Administrative Law, Vol II, Almedina, 2002, pp. 127/128 and segs, the "principle of proportionality constitutes a constitutive manifestation of the principle of the Rule of Law", being "[…] firmly anchored the idea that, in a democratic Rule of Law state, the measures of the public powers should not exceed what is strictly necessary for the achievement of the public interest".

The principle of proportionality, adds the said Professor, ibidem, p.129, means that "[…] the limitation of goods or interests of individuals by acts of the public powers must be adequate and necessary to the concrete purposes that such acts pursue, as well as tolerable when compared with those purposes".

With regard to the principle of proportionality, it is also worth noting what J. J. Gomes Canotilho and Vital Moreira tell us, in CONSTITUTION OF THE PORTUGUESE REPUBLIC, ANNOTATED, VOLUME I, 4th Edition, 2007, Coimbra Editor, pp. 392/393, when they consider that the said principle is divisible into three sub-principles, namely: "[…] a) principle of adequacy (also designated by principle of suitability); b) principle of exigibility (also called principle of necessity or indispensability); c) principle of proportionality in the strict sense, which means that the restrictive legal means and the purposes obtained should be placed in a "just measure", preventing the adoption of restricted legal measures disproportionate, excessive, in relation to the purposes obtained […]".

The said sub-principles all have a common denominator, which is that of just balance and permanent coherence between the purposes of the law and the means adopted to reach such purposes, which, in the circumstance and attempting the transposition of the said principle to the case at hand, will entail answering the question of what is the adequate interpretation of n.º 1 of art.º 3.º, having in view the pursuit of the legal purposes provided for in art.º 1.º of CIUC, which translate into the tax burden of the effective owners of motor vehicles (and not, necessarily, of those listed in the register) to the extent of the environmental and road cost that they may cause.

As Professor J. J. Gomes Canotilho refers in Constitutional Law and Theory of the Constitution, Almedina - Coimbra, 1998, pp. 264 and segs, the most important field of application of the principle of proportionality or of prohibition of excess, which has constitutional basis in art.ºs 18.º, n.º 2 and 266.º, n.º 2 of CRP, "[…] is that of the restriction of rights, freedoms and guarantees by acts of the public powers. However, the logical domain of application of the principle of proportionality extends to conflicts of legal goods of any kind." The administration, adds the said author, idem, "[…] should always observe, in each concrete case, the requirements of the prohibition of excess […]".

In this same direction points the jurisprudence, namely the decision of the STA of 01-07-1997, Process n.º 041177, available at: www.dgsi.pt, when it considers that the principle of proportionality in the broad sense, comprises the congruence, adequacy or suitability of the means or measure to achieve the legally proposed purpose and, in the strict sense, encompasses the prohibition of excess.

The principle of proportionality is a corollary of the principle of justice, which means and implies that in its action the Public Administration must harmonize the specific public interest that it has to pursue with the rights and legitimate interests of the individuals eventually affected by its acts, interests and rights which, in the case at hand, are reduced to the non-taxation in IUC of persons who are no longer owners of the vehicles and who, consequently, in no way contribute to the effectuation of any road and environmental cost.

What matters is to balance the legal purposes and the means to pursue them, and, within a framework of judgment of balance, to identify the most appropriate means for this purpose, which, in this case, translate into the interpretation embraced by the arbitral tribunal.

It will be said, moreover, that the understanding that the said n.º 1 of art.º 3.º of CIUC establishes a defeasible legal presumption corresponds to the only interpretation that coherently agrees with the said principle of equivalence, and that is in line with the principles of justice and proportionality.

The interpretation that understands that a defeasible legal presumption is consecrated in n.º 1 of art.º 3.º of CIUC is, therefore, the only one that permits ensuring the pursuit of the purposes envisaged by the law - to burden the owners of motor vehicles to the extent of the environmental and road cost that they cause, - as provided for in art.º 1.º of CIUC, which means that the passive subjects of the IUC are, presumably, the persons in whose names the vehicles are registered, that is, the said passive subjects are, in principle, and only in principle, the persons in whose names such vehicles are registered, there being, therefore, no other interpretation capable of achieving the said legal purposes, only thus, it is reaffirmed, are the said principles of proportionality and justice fulfilled.

The contrary understanding, that is, the one considered by AT, which interprets n.º 1 of art.º 3.º of CIUC as not consecrating a defeasible legal presumption, understanding that the passive subjects of the IUC are, definitively, the persons in whose names the vehicles are registered, in the just measure in that it leads to the imposition of a tax burden on who may no longer be the owner of the vehicle in question and who, in this way, does not pollute, removing from tax subjection who, in reality, is the effective cause of the environmental and road damage resulting from the use of vehicles of which they are the real owners, shows that the legally prescribed purposes would not, in fact, be achieved, thus not respecting the principle of equivalence which, in the context of CIUC, has an absolutely structuring function. Such understanding, this one, does not show itself, in these circumstances, in harmony with the principle of proportionality.

The interpretation that is here embraced, absolutely, takes into account the principle of proportionality, when, contrary to what is understood by the Respondent, it considers that the definitive registration does not have constitutive effect by being intended to give publicity to the registered act, functioning only as a mere defeasible presumption of the existence of the right and when, in homage to that principle, it heeds the principle of equivalence, as a fundamental element of CIUC.

• As to the efficiency of the tax system, it will be said that the efficiency of the Administration in general, or of AT in particular, in current sense, will correspond to the capacity/working methodology oriented towards the optimization of the work executed or of the services provided, which means producing the maximum, in quantity and quality, with the minimum of costs and means, having nothing to do with the observance of legally established principles and with respect for the rights of citizens, whether in the capacity of taxpayers or not.

In technical sense, it will be said that the principle of efficiency of the tax system is, commonly held, in the field of tax procedure, as a corollary of the principle of proportionality, which, as is known, imposes an adequate proportion between the legal purposes and the means chosen to achieve these purposes, or, as referred to by Diogo Leite Campos, Benjamin Silva Rodrigues and Jorge Lopes de Sousa, in General Tax Law, Annotated and Commented, 4th Edition 2012, Writing Meeting, Lda, Lisbon, p. 488, in the annotations to article 55.º of LGT, it is a principle that obliges "[…] the tax administration to refrain from imposing on taxpayers obligations that are unnecessary to satisfy the purposes that it aims to pursue".

In this context, the said principle of efficiency of the tax system will mean the capacity to achieve the legally fixed objectives with the minimum of means, which will also have nothing to do with respect for the rights of citizens, nor with the need to observe other principles to which the tax administration must subordinate its activity, namely that of the inquisitorial and the discovery of material truth, not being able, obviously, the application of the aforementioned principle of efficiency to be made, either with prejudice to the rights of citizens, or by the absence of observation of the legal purposes. [1]

• As to the principle of legal certainty and confidence, it should be noted, first of all, that the latter principle, that of confidence, is a concretization of the principle of good faith, which, having had enshrined in our legal order, since 1996, came to have express constitutional inscription, as appears from n.º 2 of art.º 266.º of CRP, where it is established that "The organs and agents of administration are subordinated to the Constitution and to the law and should act, in the exercise of their functions, with respect for the principles of equality, proportionality, justice, impartiality and good faith". (emphasis ours)

With regard to good faith, it is worth noting what Professor Freitas do Amaral refers to, when, in Course of Administrative Law, Vol. II, Almedina, 2002, pp. 135/136, citing Professor V. Fausto de Quadros, tells us that "[…] the Public Administration is obliged to obey good faith in relations with individuals. More: it should even give, also there, the example to individuals of the observance of good faith, in all its manifestations, as an essential nucleus of its ethical behavior. Without this, one will never be able to affirm that the State (and with it other public entities) is a person of integrity".

On the other hand, the principle of confidence is also held to be a consequence of the principle of legal certainty, inseparable from the Rule of Law, which, having to guarantee a minimum of certainty in the rights of persons and in the legal expectations created for them, is a generator of confidence of citizens in the legal protection of the Public Administration.

With regard to the principles of legal certainty and protection of confidence, Professor J. J. Gomes Canotilho tells us in Constitutional Law and Theory of the Constitution, Almedina - Coimbra, 1998, p. 250 and segs, that the said principles are closely associated, considering that "[…] legal certainty is connected with objective elements of the legal order - guarantee of legal stability, security of orientation and realization of law - while protection of confidence is more concerned with the subjective components of security, namely the calculability and predictability of individuals in relation to the legal effects of the acts of the public powers". In any case, adds the said Professor, idem, that the "[…] general principle of legal certainty in the broad sense (encompassing, therefore, the idea of protection of confidence) can be formulated as follows: the individual has the right to be able to trust that to his acts or to the public decisions affecting his rights, positions or legal relationships based on valid and effective legal norms are linked the legal effects foreseen and prescribed by those same norms".

It follows from this doctrine that persons, when alienating their vehicles, must be secure that, if they proceed to the sale of the vehicles of which they are owners, and, these not being registered in the name of the acquirers, the legal effects resulting therefrom will be those foreseen and resulting from the legal norms in force and their adequate interpretation in view of the legal purposes of those same norms, which, in this case, leads the arbitral tribunal to consider the existence of a defeasible presumption consecrated in n.º 1 of art.º 3.º of CIUC and that only persons who cause road and environmental costs should be taxed.

The best way to, in the case at hand, ensure legal certainty, in the broad sense, is, thus, that concretized through the interpretation made by the arbitral tribunal, when it considers that it is consecrated in n.º 1 of art.º 3.º of CIUC, a defeasible legal presumption, allowing any citizen, who proceeds to sell, to a third party, a motor vehicle, the possibility of demonstrating that, when the due date of the IUC, was no longer its owner nor responsible for the payment of that tax.

• Beyond what is mentioned above, it is still important to know whether the interpretation embraced by the arbitral tribunal, in addition to not conflicting with any of the referenced principles, is directly and substantially inscribed in the context of the constitutional order.

With regard to the interpretation of the law in light of the Constitution, or of the interpretation according to the Constitution, Professor Jorge Miranda tells us, in Manual of Constitutional Law, TOME II, Introduction to Theory of the Constitution, 2nd edition, Coimbra Editor, 1987, p. 232 and segs, that what is at stake, first and foremost, is "[…] taking into account, within the systematic element of interpretation, what relates to the Constitution. Indeed, each legal provision must not only be grasped in the set of provisions of the same law and each law in the set of the legislative order; it must also be considered in the context of the constitutional order [..]". (emphasis ours)

The understanding that considers that a defeasible legal presumption is consecrated in n.º 1 of art.º 3.º of CIUC is supported by various elements of interpretation, among which reference should be made to the systematic element, in that the interpretation according to the Constitution implies that within the systematic element of interpretation, account is taken of what relates to the Constitution.

On the aforementioned systematic element, the following should be noted:

a) In the understanding of BAPTISTA MACHADO, in Introduction to Law and Legitimizing Discourse, p. 183, the systematic element "[…] comprises the consideration of the other provisions that form the complex normative of the institute in which the norm to be interpreted is integrated, that is, that regulate the same matter (context of the law), as well as the consideration of legal provisions that regulate parallel normative problems or related institutes (parallel places). It also comprises the systematic place that corresponds to the norm to be interpreted in the overall order, as well as its consonance with the spirit or intrinsic unity of the entire legal order".

b) It is known that a legal principle, in this case the principle of equivalence, does not exist in isolation, but is linked by an intimate nexus with other principles that integrate, at the more global level, the respective legal order, in this case, with the other principles embodied in the system inscribed in CIUC, and with other constitutionally established principles. In that sense, each article of a given legal instrument, in this case CIUC, will only be understandable if we place it, both before the other articles that follow or precede it, and before the constitutional order.

c) With regard to the systematization of CIUC, the concerns of an environmental order were decisive in order for the aforementioned principle of equivalence to be, from the outset, inscribed in the first article of the said Code, which necessarily leads to the subsequent articles, inasmuch as they are grounded in such principle, being influenced by it. This is what happened, namely, with the tax base, which came to be constituted by various elements, particularly those relating to pollution levels, and with the tax rates, established in articles 9.º to 15.º, which were influenced by the environmental component, and, naturally, also with the subjective incidence itself, provided for in article 3.º of CIUC, which cannot escape the aforementioned influence.

d) The said principle of equivalence, as pointed out by Sérgio Vasques, in Special Excise Taxes, Almedina, 2001, p. 122 and segs, implies that "[…] the tax must correspond to the benefit that the taxpayer derives from the public activity; or to the cost that the taxpayer imputes to the community by its own activity". Adds the said author, idem, that "Thus, a tax on automobiles based on a rule of equivalence will be equal only if those who cause the same road wear and the same environmental cost pay the same tax; and those who cause different wear and environmental cost, pay different tax also." Therefore, as the cited author also refers, idem, the realization of the principle of equivalence dictates special requirements "[…] as regards the subjective incidence of the tax [..]."

The aforementioned principle that informs the current Unique Circulation Tax is inscribed in the environmental concerns stated in n.º 2, subparagraph a) of art.º 66.º of CRP and in the need to, - having in view ensuring the right to environment, within the framework of sustainable development, - "Prevent and control pollution and its effects and harmful forms of erosion", concerns these, which are, manifestly, considered in the interpretation adopted by this arbitral tribunal.

On the other hand, the provision of subparagraph h) of n.º 2 of art.º 66.º of the Constitution, when it provides that, within the framework of sustainable development, it is incumbent upon the State "to ensure that fiscal policy is compatible with development and environmental protection and quality of life", carries, as a corollary, the principle of the polluter - payer, which concretizes the idea, inscribed therein, that whoever pollutes should, because of this, pay, being, thus, the interpretation that is defended here in perfect agreement with the constitutional order.

e) It is also worth leaving a brief note, merely to raise the question of why the rules contained in art.º 9.º of the Civil Code bind the interpreter of ordinary legislation, given that the said Code does not occupy any prominent place in the legal system.

To this question answers Professor Jorge Miranda, ibidem, p. 230, when he considers that the "[…] conclusion to which one is inclined is that rules like these are valid and effective, not because they are contained in the Civil Code - since this occupies no prominent place in the legal system - but, directly, as such, by translating a legislative will, not contradicted by any other provisions, regarding the problem of interpretation (which are not only legal-technical) with which they deal."

Adds the said author, idem, that "rules on these matters can be considered substantially constitutional and would not even be repugnant to see them raised to the Constitution in formal sense."

With regard to the problematic of interpretation and its rules, as drawn from Professor José de Oliveira Ascensão, in The Law, Introduction and General Theory, 2nd edition, Calouste Gulbenkian Foundation, 1980, pp. 352/353, it should be emphasized the imperative character of these rules, and their binding nature for the interpreter.

The interpretation that this arbitral tribunal makes of n.º 1 of art.º 3.º of CIUC and the criteria that, for this purpose, it considered, from the literal element, to the systematic element, passing through the historical and rational (or teleological) element, do not, thus, collide with any constitutional principles.

N.º 1 of art.º 9.º of CC provides that the search for legislative thought should "[…] above all take into account […] the unity of the legal system, the circumstances in which the law was elaborated and the specific conditions of the time in which it is applied", circumstances and conditions these, which, today more than ever, are of sensitivity towards the environment and respect for the issues related to it, and which are inscribed in the constitutional order.

Thus, in view of what is mentioned above, it does not seem, with due respect, to have merit the position of AT, inasmuch as the interpretation here considered, as being the only one capable of respecting the legal purposes, does not violate any of the principles in question, that is, the principles of confidence and legal certainty, of the efficiency of the tax system and of proportionality, being that, on the other hand, such interpretation is expressly and substantially in accordance with the principles inscribed in the Constitution.

In these circumstances, it is not discernible that the interpretation made by this arbitral tribunal, on n.º 1 of art.º 3.º of CIUC, contends with any legal or constitutional principles in force.

J - ON THE VALUE OF VEHICLE REGISTRATION

54 - Establishes n.º 1 of art.º 1.º of DL n.º 54/75, of 12 February, relating to the registration of motor vehicles, that "Vehicle registration has essentially the purpose of giving publicity to the legal situation of motor vehicles and their trailers, with a view to the security of legal commerce". (emphasis ours)

55 - Making clear, in light of the said norm, what the purpose of registration is, there is, however, no clarity, within the said Decree-Law, on the legal value of that registration, being important to consider article 29.º of the said legal instrument, relating to the registration of vehicle ownership, when therein it is provided that "The provisions relating to property registration are applicable, with the necessary adaptations, to vehicle registration, […]". (emphasis ours)

56 - In this context, in order to achieve the legal value of vehicle ownership registration, it is important to take into account what is established in the Code of Property Registration, approved by Decree-Law n.º 224/84, of 6 July, when it provides in its article 7.º that "the definitive registration constitutes a presumption that the right exists and belongs to the person inscribed therein in the precise terms in which the registration defines it". (emphasis ours)

57 - The combination of the provisions mentioned above, that is, in n.º 1 of art.º 1.º of DL n.º 54/75, of 12 February and in art.º 7.º of the Code of Property Registration, permits considering, on one hand, that the fundamental function of registration is to give publicity to the legal situation of vehicles, allowing, on the other hand, to presume that the right exists and that such right belongs to the person in whose favor the same is registered, in the precise terms in which it is defined in the registration.

58 - Thus, the definitive registration constitutes nothing more than a presumption that the right exists and belongs to the inscribed person, in the exact terms of the registration, but a defeasible presumption, admitting, for this reason, contrary evidence, as results from the law and jurisprudence has been signaling, and one may, for this purpose, see, among others, the Decisions of the STJ n.ºs 03B4369 and 07B4528, respectively, of 19/02/2004 and 29/01/2008, available at: www.dgsi.pt.

59 - The function legally reserved to registration is, thus, on one hand, to publicize the legal situation of the goods, in this case, of the vehicles and, on the other, to allow us to presume that there exists the right over those vehicles and that the same belongs to the person, as such inscribed in the registration, which means that the registration does not have a constitutive nature of the right of ownership, but only declarative, being such presumptions defeasible, either by force of what is established in n.º 2 of art.º 350.º of CC, or in the light of what is provided in art.º 73.º of LGT. Hence, from the moment when the presumptions in question are set aside, by means of adequate proof, AT will not be able to persist in considering as passive subject of the IUC the person in whose name the vehicle continues to be registered.

L - ON THE PASSIVE SUBJECT OF THE IUC IN THE VALIDITY OF THE FINANCIAL LEASING CONTRACT

60 - It is important, first and foremost, to note that the Legal Regime of the Financial Leasing Contract, approved by Decree-Law n.º 149/95, of 24 June, with the last amendment introduced by Decree-Law n.º 30/2008, of 25 January, provides in its art.º 9.º that the obligations of the lessor are, in particular, those of granting the enjoyment of the good for the purposes for which it is intended and of selling the good to the lessee, should the latter wish, at the end of the contract, as respectively, subparagraphs b) and c) of its n.º 1.

61 - On the other hand, in light of what is established in art.º 10.º of the said legal instrument, namely in subparagraphs a) of its n.ºs 1 and 2, we come to know that the obligations of the lessee are to pay the rents and to use and enjoy the leased good, which means that, in the validity of a financial leasing contract with a motor vehicle as its object, only the lessee has its exclusive enjoyment.

62 - The obligations of the lessee, in light of the referred norms, point, clearly, in the direction that it is that contractual subject that has the exclusive enjoyment of the vehicle object of the financial leasing contract, being he who uses it as if he were the true owner of that good.

63 - The interpretation of n.º 1 of art.º 3.º of CIUC, in light of all that, for this purpose, was mentioned above, taking into account, particularly, the legal relevance conferred on the principle of equivalence, does not comprise the taxation, in IUC, of the lessor who, as formal owner of the vehicle, does not have, consequently, any potential polluting capacity, which means that the damage coming to the community, resulting from the use of motor vehicles should be assumed by their real users, as costs that only they should bear. The lessee, that one, has the full use and enjoyment of the vehicle, as legally established, being its true user and effective generator of environmental damage, should, thus, respond by the corresponding tax, being this the understanding that, in light of the ratio legis of CIUC, should be drawn from the provision of n.º 2 of art.º 3.º of that same Code.

64 - Thus, the interpretation of n.º 2 of art.º 3.º of CIUC will only permit to view the lessee as responsible for the payment of the IUC, being important, for this purpose, to note the provision of art.º 19.º of CIUC, when, precisely, for the purposes of the provision of art.º 3.º of the said Code, that is, for the purposes of the subjective incidence, it comes to impose on the entities that proceed to financial leasing the obligation to provide to AT the data relating to the tax identification of the users of the leased vehicles, which reveals, namely, that, for the purposes of the referred incidence, it was intended to know who were, finally, the real users of the leased vehicles, so that they, and no others, would bear the unique circulation tax, which, indeed, shows itself in total harmony with the principle of equivalence, as a structuring principle of CIUC.

65 - In light of what has just been referred, it is our understanding that, if a financial leasing contract is in effect, on the date when the tax becomes due, that has as its object a motor vehicle, the passive subject of that tax is not, in light of the provision of n.º 2 of art.º 3.º of CIUC, the lessor but rather the lessee, given that it is this one who has the enjoyment of the vehicle and, as such, the intrinsic potential polluting capacity, regardless of the registration of the right of ownership being kept in the name of the lessor.

66 - In this context, because the motor vehicle identified in the case files, with the license plate …-… -…, was subject to a financial leasing contract valid on the dates when the corresponding IUC became due (three assessments of 2009, 2010 and 2011), its payment was the responsibility of the lessee, given that, in light of what has already been mentioned, the same was, then, passive subject of the tax.

67 - The amount assessed and paid, in IUC and JC, with reference to the vehicle in question, and to the three years aforementioned, was, respectively, € 55.91; € 53.99 and € 53.16, which totals the sum of € 163.06.

M - ON THE MEANS OF PROOF PRESENTED

68 - The means of proof presented are embodied in the financial leasing contract (copy), relating to the aforementioned vehicle, with the license plate …-… -…, contract that was valid at the date when the IUC became due, as is shown proven in the process.

69 - Such contract is a suitable means to prove the status of the lessee, for the purposes of the provision of n.º 2 of art.º 3.º of CIUC, that is, for the purposes of its assimilation to owner of the vehicle and of its, consequent, binding to the payment of the tax in question. There are no, in fact, any elements that permit understanding that the data inscribed in that contract do not correspond to the contractual truth, not seeing this Tribunal reasons to call them into question, being also certain that the law, in this case, n.º 1 of art.º 75.º of LGT, attributes to that document a presumption of truthfulness.

70 - In light of what has just been referred, and taking into account, both the presumption established in n.º 1 of art.º 3.º of CIUC, as well as the interpretation of n.º 2 of that same article and the responsibility of the lessee as passive subject of the tax, as well as the legal value of vehicle registration in the economy of CIUC, as well as the financial leasing contract referring to the vehicle identified in the case files, which was in effect on the dates when the corresponding IUC became due, the tax acts relating to this vehicle, cannot merit our agreement, either because an adequate interpretation and application of the legal norms of subjective incidence was not taken into account, which constitutes an error on the legal assumptions, or because the said acts were based on a factual matter, clearly divergent from the effective reality, which constitutes an error on the factual assumptions.

71 - In summary, it will be said, in consonance with what is mentioned above, that the assessment acts relating to the vehicle identified in the case files are considered illegal, inasmuch as, on the date when the IUC became due, a financial leasing contract was in effect, the passive subject of the tax being the respective lessee, and not the Claimant, in light of the provision of n.º 2 of art.º 3.º of CIUC.

N - REIMBURSEMENT OF THE AMOUNT PAID AND INDEMNIFICATORY INTEREST

72 - In accordance with the provision of subparagraph b) of n.º 1 of art.º 24.º of RJAT, and in conformity with what is established therein, the arbitral decision on the merits of the claim to which no appeal or challenge may lie binds the tax administration from the end of the period provided for appeal or challenge, this one having to - in the exact terms of the merit of the arbitral decision in favor of the passive subject and until the end of the period provided for the spontaneous execution of the judgments of the judicial tax courts - "Restore the situation that would exist if the tax act that is the subject of the arbitral decision had not been practiced, adopting the acts and operations necessary for this purpose." (emphasis ours)

73 - These are legal commands that are in total harmony with the provision of art.º 100.º of LGT, applicable to the case by force of the provision of subparagraph a) of n.º 1 of art.º 29.º of RJAT, in which it is established that "The tax administration is obliged, in case of total or partial merit of claims or administrative appeals, or of judicial process in favor of the passive subject, to the immediate and full reconstruction of the situation that would exist if the illegality had not been committed, comprising the payment of indemnificatory interest, in the terms and conditions provided for in the law." (emphasis ours)

74 - The case in the present case files raises the manifest application of the aforementioned norms, given that following the illegality of the assessment acts, referenced in this process, there will, by force of those norms, be place to the reimbursement of the amounts paid, either as tax or as compensatory interest, as a way to achieve the reconstruction of the situation that would exist if the illegality had not been committed, amounts these that in the case at hand total the sum of € 163.06.

75 - As to the indemnificatory interest, it seems manifest that, in light of what is established in article 61.º of CPPT and the requirements of the right to indemnificatory interest being met, that is, verified the existence of error imputable to the services from which results payment of the tax debt in amount greater than that legally due, as provided for in n.º 1 of art.º 43.º of LGT, the Claimant has the right to indemnificatory interest at the legal rate, calculated on the sum of € 163.06.

CONCLUSION

76 - It is concluded, thus, that if on the date when the tax becomes due a financial leasing contract is in effect that has as its object an automobile, for the purposes of the provision of article 3.º, n.ºs 1 and 2, of CIUC, the passive subject of the IUC is the lessee, even if the registration of the right of ownership of the vehicle in the Registry of Vehicle Ownership is made in the name of the leasing entity, provided that this one makes proof of the existence of the said contract.

77 - Having the assessment acts of IUC relating to the vehicle, identified in the process, been supported on the idea that, within the framework of the financial leasing contract in effect, at the moment when the IUC became due, the passive subject of the tax was the lessor, in light of what is established in article 3.º, n.ºs 1 and 2, of CIUC, AT makes erroneous interpretation and application of the said legal norms, committing an error of law on the assumptions which constitutes violation of law.

78 - In light of these errors on the factual and legal assumptions on which the said assessment acts are based, the Request for Arbitral Pronouncement underlying the present process must be judged as meritorious, justifying the annulment of those assessment acts, with all legal consequences.

III - DECISION

79 - Therefore, having regard to all of the above, this Arbitral Tribunal decides:

• To judge meritorious, as proven, on the ground of vice of violation of law, the request for arbitral pronouncement as far as the annulment of the assessment acts of IUC relating to the vehicle identified in the process is concerned;

• To annul the act of dismissal of the hierarchical appeal filed against the act that dismissed the Administrative Petition referenced in the case files with the n.º …2014…;

• To annul the assessment acts of IUC, relating to the years 2009, 2010 and 2011, relating to the vehicle, as is mentioned above;

• To condemn AT to the reimbursement of the sum of € 163.06, relating to the IUC and the compensatory interest that were paid, relating to the years 2009 to 2011, and to the payment of indemnificatory interest at the legal rate, counted from the date of payment of the said sum, until the full reimbursement thereof;

• To condemn AT to pay the costs of the present process.

VALUE OF THE PROCESS

In accordance with the provision of articles 306.º, n.º 2 of CPC (former 315.º, n.º 2) and 97.º - A, n.º 1 of CPPT and article 3.º, n.º 2 of the Regulation of Costs in the Processes of Tax Arbitration, the value of the process is fixed at € 163.06.

COSTS

In accordance with the provision of article 12.º, n.º 2, in fine, in art.º 22.º, n.º 4, both of RJAT, and art.º 4.º of the Regulation of Costs in the Processes of Tax Arbitration and the Table I, which is attached thereto, the amount of total costs is fixed at € 306.00.

Notify.

Lisbon, 13 July 2017

The Arbitrator

António Correia Valente

[1] See the study on the matter, prepared by Professor Carlos Pestana Barros, in Science and Tax Technique, 2005, n.º 416, pp. 105-126