IUC Tax on Leased Vehicles: Subjective Incidence and Legal Presumptions in CAAD Case 149/2014-T

CLAIMANT: A

RESPONDENT: Tax and Customs Authority

Arbitral Decision[1]

I REPORT

A) The Parties and the Constitution of the Arbitral Tribunal

1. A, sgps, s.a., legal entity no. …, with registered office at …, in its capacity as liquidating company of company B (extinct legal entity no. ...), hereinafter referred to as the "Claimant", filed a petition for constitution of a singular Arbitral Tribunal, pursuant to Article 10 and paragraph (a), no. 1, of Article 2 of the Legal Regime for Tax Arbitration, approved by Decree-Law no. 10/2011, of 20 January (LRTA) and Articles 1 and 2 of Ordinance no. 112-A/2011, of 22 March, to rule on the dispute that opposes it to the Tax and Customs Authority, hereinafter referred to as the "Respondent" or "TCA", with a view to the annulment, on grounds of illegality, of four acts of ex officio assessment of Unique Vehicle Circulation Tax (IUC), relating to the years 2009, 2010, 2011 and 2012, in the total amount of €198.47, relating to the motor vehicle …-…-…, as set out in the assessments attached to the arbitral petition, which are hereby fully incorporated herein.

2. The petition for constitution of the Arbitral Tribunal, filed on 18.02.2014, was accepted by the Esteemed President of CAAD and automatically notified to the Tax and Customs Authority on 20.02.2014. The Claimant opted not to appoint an arbitrator, whereupon, pursuant to no. 1, Article 6 of the LRTA, the undersigned was appointed by the Ethics Council of the Centre for Administrative Arbitration as arbitrator of the singular Arbitral Tribunal. The appointment was accepted and the parties, notified of the acceptance, on 7.04.2014, did not refuse the appointment, in accordance with the provisions of paragraphs (a) and (b), no. 1, Article 11 of the LRTA, in conjunction with Articles 6 and 7 of the Ethics Code.

Thus, in accordance with the provision in paragraph (c), no. 1, Article 11 of Decree-Law no. 10/2011, of 20 January, as amended by Article 228 of Law no. 66-B/2012, of 31 December, the singular Arbitral Tribunal was constituted on 23 April 2014.

On 24 April 2014, the Respondent "TCA" was notified to submit its response within the legal period, in accordance with nos. 1 and 2, Article 17 of the LRTA. On 27 May 2014 the TCA filed its Response.

On 13 June the parties were notified to pronounce themselves on the eventual waiver of the holding of the meeting provided for in Article 18 of the LRTA. Only the Tax and Customs Authority pronounced itself favourably to the waiver of the holding of the meeting. The Claimant did not pronounce itself. By order of 7 July 2014 the tribunal issued an arbitral order, waiving the holding of the meeting and fixed the period of ten successive days for each of the parties to present, if they so wished, written pleadings. The Claimant did not submit pleadings and the TCA, by request of 18 September 2014, informed that it waived the submission of pleadings. The date for issuance of the arbitral decision was set until 10 October 2014. On 23 September 2014 the Tax and Customs Authority requested the attachment to the proceedings of two arbitral decisions nos. 150-2014T and 220-2014 T, allegedly concerning identical matter to that in the present proceedings, whereupon a period was set for exercise of any response by the Claimant, which pronounced itself by request attached to the proceedings on 10.10.2014, whereupon the period for issuing the arbitral decision was extended until 20 October 2014.

B) Procedural Prerequisites

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

The Parties have legal personality and capacity, are legitimately constituted and are legally represented (See Articles 4 and 10, no. 2, of DL no. 10/2011 and Article 1 of Ordinance no. 112/2011, of 22 March). The legitimacy of Claimant A SA to file the present arbitral petition in its capacity as liquidator of company B is demonstrated by the content of the deed and the Permanent Certificate of the Commercial Register, attached to the proceedings as document no. 4 attached to the Initial Petition.

As to the cumulation of claims, with a view to the joint appraisal of the legality of the four IUC assessments relating to the years 2009 to 2012, all relating to the same motor vehicle, and although they constitute autonomous acts, it is verified that the prerequisites required by no. 1, Article 3 of the LRTA and Article 104 of the TCPC are met, whereupon the cumulation of all tax acts of IUC assessment and respective compensatory interest is admissible.

The proceedings do not suffer from nullities that would invalidate it and no exceptions were raised that would bar the judgment on the merits of the case, whereupon the Tribunal is in a position to issue the arbitral decision.

C) THE CLAIM FORMULATED BY THE CLAIMANT

1. The Claimant formulates the present arbitral petition seeking the illegality and consequent annulment of the acts of assessment of Unique Vehicle Circulation Tax and respective Compensatory Interest, relating to the years 2009 to 2012, in the total amount of €198.47, with reference to the vehicle identified with the licence plate …-…-…, as set out in the notes of demonstration of tax assessment and respective compensatory interest, as shown in the note attached to the proceedings as document no. 1 attached to the petition.

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

a) The Claimant is not a debtor of any tax, inasmuch as company B SA was dissolved in 2006, and ceased its activity on 10.01.2007, whereupon it no longer existed at the time of the tax facts, and the IUC in question relates to the years 2009 to 2012;

b) In addition, company B, SA was never the owner of this vehicle nor of any vehicle, and the payment of IUC is not required of it with reference to the years 2009 to 2012;

c) The motor vehicle in question, with the licence plate …-…-…, of brand …, appears in the registry records as being owned by Company B with registered office at …;

d) According to the Claimant's findings, there exists at this same address an Agency of … C.

e) B, SA always had its registered office at … and not at the address contained in the registration record of the vehicle in question, which manifestly does not reflect the true ownership of the asset.

1. The legal basis of the arbitral petition is, summarily, as follows:

a. The TCA in order to carry out the taxation in question presumes the ownership of the asset in the claimant's legal sphere as the criterion for the incidence of IUC;

b. It follows that in tax law irrefutable presumptions are not admissible at the level of tax incidence;

c. It further invokes the jurisprudence set forth in arbitral decision no. 26/2013 T, which it attaches to the proceedings as document no. 7.

It concludes by petitioning the declaration of illegality and consequent annulment of the assessment acts and compensatory interest relating to the year 2012 and not reimbursed, unduly paid by the Claimant, as well as the payment of compensatory interest.

D) THE RESPONSE OF THE RESPONDENT

1. The Respondent alleges in its response, in summary, that the Claimant is not correct inasmuch as:

a) The understanding of the claimant set forth in the present arbitral petition incurs in a biased reading of the letter of the law, in an interpretation that does not heed the systematic element, which violates the unity of the regime enshrined in the entire CIUC and, more broadly, in the entire legal-fiscal system which ignores the ratio legis of the regime enshrined in the CIUC".

b) In no. 1 of Article 3 of the CIUC the legislator determines that "The passive subjects of the tax are the owners of the vehicles, being considered as such the natural or legal persons, of public or private law, in whose name the same are registered" and that the passive subjects of the IUC are "the owners (or in the situations provided for in no. 2, the persons there stated), being considered as such the persons in whose name the same are registered"; whereupon the legislator expressly and intentionally determined that those registered in the vehicle register as such are considered as owners, this not being any presumption but rather a rule of incidence;

c) The legislator did not use the expression "are presumed", as could have been done, indeed similarly to what occurs in other legal provisions, exemplifying some situations provided for in the law; the Claimant understands that in cases where the tax legislator uses the expression "is considered", it is not establishing a presumption; it lists, merely as an illustrative example, various provisions contained in different tax codes that use the expression "is considered"; understanding that the legislator enshrined here a presumption is based on an interpretation against the law, inasmuch as "the legislator's clear option was to consider that, for the purposes of IUC, those appearing as such in the vehicle register be considered as owners;" it invokes, in defence of this understanding, the decision issued in the context of Case no. 210/13.0BEPNF, by the Administrative and Tax Court of Penafiel;

d) It concludes that this is the interpretation that heeds the systematic element and preserves the unity of the legal-fiscal system, beyond which, another interpretation would be to ignore the teleological element of interpretation of the law, the ratio of the regime enshrined in the article in question, and likewise in the entire CIUC;

e) In addition, the failure to update the register, in accordance with Article 42 of the Regulations of the Vehicle Register, shall be imputable in the legal sphere of the passive subject of the IEC and not in that of the State, as the active subject of this tax.

f) Still in reinforcement of this understanding, the TCA invokes the parliamentary debates surrounding the approval of DL no. 20/2008, of 31 January, from which it transcribes excerpts, to conclude that the legislator intentionally wanted to enshrine a solution from which it results that IUC is owed by the persons appearing in the register as owners of the vehicles;

g) To add to all this, the Respondent alleges that the interpretation conveyed by the Claimant is shown to be contrary to the Constitution, inasmuch as it violates the principle of trust and legal certainty, the principle of efficiency of the tax system and the principle of proportionality;

h) Finally, considering the rules of the burden of proof, the Respondent further alleges the lack of proof of the transmission of ownership of the vehicle, given that invoices are not, in the TCA's view, by themselves documents fit to prove the conclusion of a synallagmatic contract such as a purchase and sale.

It concludes that the acts of IUC assessment do not suffer from illegality nor are the legal prerequisites met for condemnation to compensatory interest. And, also as regards liability for arbitral costs, the Respondent understands that, not being within its control the transmission of ownership of motor vehicles, the IUC is assessed in accordance with the registry information, duly transmitted by the Institute of Registers and Notary; that is, the IUC is not assessed in accordance with information generated by the Respondent itself. Thus, it was not the Respondent that gave rise to the filing of the arbitral petition, but rather the Claimant itself which, moreover, has only now submitted documentary proof relating to the transmission of ownership, which did not occur in the course of prior administrative proceedings, whereupon the Claimant should be condemned to payment of the arbitral costs arising from the present petition, in accordance with Article 527/1 of the New Code of Civil Procedure, by virtue of Article 29/1 – (e) of the LRTA, in line, indeed, with a similar matter decided in the context of case no. 72/2013-T, which was heard in this centre of arbitration.

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

II. ISSUES FOR DECISION

1. Given the positions of the Parties assumed in the arguments presented, it is incumbent upon the Tribunal to decide the following issues:

1st - The subjective incidence of IUC, the effects of vehicle registration and the existence or not of a refutable presumption in this matter;

2nd - The proof of ownership of the vehicle and the rebuttal of the presumption;

3rd - The right to payment of compensatory interest and liability for payment of arbitral costs.

III. FACTUAL GROUNDS

A) Proven Facts

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

1st) The Claimant succeeded to the assets and liabilities of B, a company dissolved on 28.11.2006, as set out in the Notarial Certificate of deed no. 28 of the general assembly and permanent certificate of the Commercial Register attached to the proceedings as document no. 4.

2nd) Assessments were issued in the name of B, SA and notified to the address located at Place of … for the payment of the assessments of unique vehicle circulation tax and respective compensatory interest, relating to the vehicle of brand ..., with the licence plate ...-...-..., relating to the years 2009 to 2012, as set out in the assessments attached to the proceedings as document no. 1, which are hereby fully incorporated herein;

3rd) All IUC assessments were paid on 19.11.2013 by the Claimant, which totalled the amount of € 220.08; (see Documents nos. 1 and 2 attached to the Initial Petition);

4th) Subsequently, on 25.11.2013 the TCA refunded the amount of €21.61, relating to the assessments of compensatory interest relating to the IUC for the years 2009, 2010 and 2011; (See Document no. 3 attached to the Initial Petition)

5th) The total amount paid by the Claimant corresponds to the amount of the assessments plus compensatory interest for the year 2012 (not reimbursed), which totals the amount of € 198.47;

6th) At the date of the tax facts, the motor vehicle referenced in the IUC assessments impugned herein was registered in the vehicle register under the ownership of the company designated as "B, with registered office at …"; (See Document 6 attached to the Initial Petition)

6th) At the date of the tax assessment acts, the TCA had information on the dissolution and cessation of activity of the company "B, with registered office at …", as well as the information contained in the registry records and, subsequently, that which was communicated to it already in the context of the present arbitral petition.

B) GROUNDS FOR THE PROVEN FACTS

1. The decision on factual matters as described above is based on documentary proof which the Parties attached to the proceedings, with particular relevance to the documentary proof attached by the Claimant and which is part of the present proceedings.

C) UNPROVEN FACTS

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

IV – GROUNDS OF LAW

1. Once the factual matters are established, it is necessary to address the legal issues indicated above, corresponding, in summary, to the question of illegality raised by the Claimant in the present arbitral petition and the question of means of proof raised by the TCA. Let us therefore address the first issue for decision.

1st - The subjective incidence of IUC, the effects of vehicle registration and the existence or not of a refutable presumption

1. The first issue for decision is to determine whether the Claimant should be qualified as a passive subject of the Unique Vehicle Circulation Tax, assessed in relation to the years 2009 to 2012, as regards the vehicle identified in the arbitral petition.

The Claimant alleges that, at the date of the tax facts, it was not the owner of the motor vehicle mentioned in the impugned IUC assessments, and that for that reason it cannot be required to pay the Tax. It further alleges that it was never, indeed, the owner of this vehicle or any other and that the collection of the IUC in question in the proceedings is based on a manifest and crass error of the TCA resulting from vehicle registration records. In fact, what appears in the vehicle register is that the ownership of this vehicle, with the licence plate …-…-… has been registered, since 1988, under the ownership of the company "B SA, with registered office at …, …". Now, it is verified that the TCA, on the basis of this misunderstanding, came to wrongfully tax the claimant for the IUC relating to the years 2009 to 2012. Moreover, such tax should never have been attributed to the present claimant all the more so as it no longer exists as a legal entity as of the date of its dissolution, that is, since November 2006, a date prior to that of the tax facts contained in the proceedings.

Thus, it is necessary first to appraise the terms of the configuration of the subjective incidence of IUC in light of the provisions of Article 3 of the Code of Unique Vehicle Circulation Tax (CIUC), namely the question of whether subjective incidence is based strictly on the registration of vehicle ownership in the Vehicle Register, or whether registration operates only as a presumption of tax incidence, refutable in accordance with Article 73 of the General Tax Law. On this matter, there is already abundant and fairly settled arbitral jurisprudence set forth in various decisions mentioned by the parties and in some others issued subsequent to the filing of the present arbitral petition, which will be referred to in due course.

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

Article 1 of the CIUC defines the objective incidence of the tax, distinguishing vehicles by specified categories, a rule which appears clear and without difficulties of application. However, the same is not true of the rule of subjective incidence contained in no. 1, Article 3 of the CIUC, which is at the origin of the present dispute and thus constitutes a question for decision in the case under appraisal.

The analysis of both provisions (Articles 1 and 3) allows us to conclude that in the operation of IUC the vehicle register has a fundamental role. What is important, therefore, is to determine the meaning and scope of the rule of subjective incidence contained in Article 3, no. 1 of the CIUC and the possible existence or not of a refutable presumption, connected with the question of the legal effects of vehicle registration, raised by the Claimant. Article 3 of the CIUC provides as follows:

"ARTICLE 3

SUBJECTIVE INCIDENCE

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

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

Article 11, no. 1 of the General Tax Law provides that "in determining the meaning of tax norms and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed".

The interpretation and application of a legal norm presupposes the performance of an interpretive activity, which must be objective, balanced, and in accordance with both the letter and the spirit of the law. And although the letter of the law is "the guiding thread" of the interpreter, it must be interpreted taking into account the underlying objectives, "the ratio" or the motivation of the legislator in establishing the norm in question.[2]

To these elements is added another according to which the interpretation of the legal norm must respect the "unity of the legal system", its coherence and intrinsic logic. Article 9 of the Civil Code (CC) provides the rules and fundamental elements for the interpretation of the legal norm, to which the interpretation of tax law must also obey the provisions of that normative provision, which begins by stating that interpretation should not be limited to the letter of the law, but should reconstruct from it the "legislative intent".[3]

To these general principles are added, furthermore, the principles contained in the General Tax Law, namely in Article 73, which establishes that presumptions contained in rules of tax incidence always admit proof to the contrary.

With regard to the issue under analysis, it is necessary to highlight the contribution of arbitral decisions already issued in cases nos. 14/2013-T, of 15 October, 26/2013-T of 19 July, 27/2013-T, of 10 September, 217/2013-T of 28 February and, more recently, in the decisions issued in cases 286/2013-T, of 2 May 2014 and 293/2013-T, of 9 June 2014, 46/2014-T and 89/2014-T of 5 September, among others, revealing a refined reflection on the fundamental issue under appraisal, establishing a uniform understanding on this same issue, indeed ratified by the arbitral judgment 63/2014-T and by decisions 150/2014-T and 220/2014-T, attached to the proceedings by respondent TCA. In all of them, the understanding on this issue is unanimous: we are faced with a refutable presumption.

Whereupon, as to the question of whether, faced with the literal wording of no. 1, Article 3 of the CIUC, the scope of the expression "being considered as such", given that in the current version the legislator did not use the term "are presumed" (which appeared in the defunct Regulation of the Vehicle Tax), this Tribunal understands it can only be the following: the legislator presumes (considers) that the owners are the persons in whose name the vehicles are registered. This means that such presumption, implicit, is naturally refutable in accordance with the provisions of Article 73 of the General Tax Law.

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

In truth, in the current version of the Code only the verb changed, the legislator now opting for the expression "being considered". It is true that, between the previous legislative versions and the current one, the General Tax Law entered into force, which expressly enshrined the principle contained in Article 73, from which it follows that in the matter of tax incidence any presumption always admits proof to the contrary. Therefore, it becomes irrelevant whether an express or implicit presumption is adopted, inasmuch as both are equally refutable.

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

1. In addition, contrary to what is alleged by the Respondent, we can easily point to various examples, drawn from the tax legal order, in which the legislator opted for the use of the verb "consider", with a presumptive sense. Besides which, as already stated above, being a rule of tax incidence, it would never be admissible the establishment of an irrefutable presumption. As stated by Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, in the annotation to no. 3, Article 73 of the General Tax Law, "presumptions in the matter of tax incidence may be explicit, revealed by the use of the expression is presumed or similar (…). However, presumptions may also be implicit in rules of incidence, namely of objective incidence, when certain values of movable or immovable property are considered as constituting taxable matter, in situations where it is not unfeasible to ascertain the real value". And there are many examples of provisions in which the verb "consider" is used to establish refutable presumptions, as happens with the provision in no. 2 of Article 21 of the CIRC, in Article 89-A of the General Tax Law or in Article 40, no. 1 of the CIRS among others.

The Respondent alleges, however, in the response presented, that this same word "being considered" is also normally used, by the tax legal order, to define situations distinct from presumptions. Now, such appears normal, namely, in the case of other tax norms in which the legislator used the formula "is considered" or "are considered", but attributing to it another meaning, since these are expressions which, depending on the context, can assume a plurality of meanings, without from which the conclusion that the Respondent intends can be drawn.

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

And, also in this line of reasoning, the Tribunal cannot follow the argumentation adduced by the Tax Authority. With regard to the historical element, it should be noted that since the origin of the circulation tax, with the entry into force of Decree-Law no. 599/72 of 30 December, an explicit presumption was established, regarding the passive subjects of the tax as being those in whose name the vehicles were registered or matriculated. That version of the law used the literal expression "being presumed as such".

However, considering the purposes of the tax in question, it must be recognized that the use of the expression "is considered" in the current version contemplates an expression with a similar effect to that, embodying, equally, a presumption. This is what happens in the formulation contained in no. 1, Article 3 of the CIUC, in which a presumption was established, revealed by the use of the expression "being considered", of similar meaning and equivalent value to the expression "are presumed", in use since the creation of the tax in question. The use of the expression "being considered" is justified only by appearing more in keeping with the reinforcement conferred on vehicle ownership, which has become the tax event, as set out in Article 6 of the CIUC.

Whereupon, in light of the literal element of interpretation, nothing precludes the understanding that the provision in no. 1, Article 3 of the CIUC establishes a refutable presumption.

Thus, as to the subjective incidence of the tax, it is to be concluded that there are no changes relative to the situation previously in force in the scope of the Municipal Tax on Vehicles, Circulation Tax and Haulage Tax, as is widely recognized by doctrine, with a refutable presumption continuing to apply in this matter.[4]

1. This understanding is, furthermore, the only one that appears adequate and in accordance with the principle of material truth and justice, underlying fiscal relationships, with the objective of taxing the real and effective owner and not that which, by circumstances of diverse nature, is, sometimes, but an apparent and false owner, by appearing in the vehicle register. And, in this sense, arbitral decisions 150 and 220/2014 T also confirm the same understanding already embodied in prior arbitral decisions, among which the one invoked in the proceedings by the Claimant. Still in this sense, arbitral judgment no. 63-2014-T of 15 September states that: "(…) if the legislator had, as the Respondent intends, established in the law a non-presumptive qualification of who is the owner of vehicles (a legal fiction), it would be establishing, through a different formulation, a rule entirely identical to the referred hypothetical rule. It would be basing the subjective incidence of the tax on a legal fiction, in complete disconnection from any economic substance as the basis of subjective incidence. (…) And, if so, it will be necessary to also conclude that Article 3, no. 1, can only establish a presumption of ownership of the vehicle, even with all the negative consequences that this conclusion will certainly entail, in terms of efficiency of tax administration."

For this reason, the holder registered in the vehicle register must be allowed the possibility of presenting evidentiary elements sufficient to demonstrate that the effective owner is, after all, a person different from the one appearing in the register, and who, initially, and in principle, was supposed to be the true owner. Otherwise, one would accept the supremacy of the formal truth of the register over material truth, and would be to admit a gross violation of the fundamental tax principles stated above and, furthermore, of the principle contained in Article 73 of the General Tax Law according to which there are no irrefutable presumptions in the matter of tax incidence. The legislator felt no need to maintain in the new rule of incidence an explicit and refutable presumption, since after the entry into force of the General Tax Law (1999) "the presumptions enshrined in rules of incidence always admit proof to the contrary". Therefore, in light of Article 73 of the General Tax Law, it would be technically incorrect to use the expression "being presumed as such, until proof to the contrary", contained in the previous version in force.

Furthermore, it is possible to extract, furthermore, another argument from the provision of Article 7 of the Property Register Code (which constitutes the fundamental legal basis in the matter of registration of ownership) which provides that "definitive registration constitutes a presumption that the right exists and belongs to the registered holder, in the precise terms in which the register defines it." In light of the principle of uniformity and intrinsic coherence of the legal system, no justification appears acceptable for the principle prevailing in property registration in general to suffer an inflection or indeed an unjustified "override" in the matter of vehicle registration.

1. Finally, if any doubt persisted, it would always be said that, as to elements of interpretation of rational or teleological bearing, the statement of reasons of Bill no. 118/X of 07/03/2007, underlying Law no. 22-A/2007, of 29/06, is quite expressive in clarifying that the reform of automobile taxation is implemented by shifting part of the tax burden from the moment of vehicle acquisition to the circulation phase and aims to "form a coherent whole" which, although intended for public revenue collection, seeks for such collection to be realized "in the measure of the environmental costs that each individual causes to the community", adding, with regard to the tax in question and the different types and categories of vehicles, that "as a structuring and unifying element (…) the principle of equivalence is enshrined, thus making it clear that the tax, as a whole, is subordinated to the idea that taxpayers should be burdened in the measure of the cost they cause to the environment and to the road network, this being the reason for being of this tax figure", further stating that it is "(…) this principle that dictates the burden of vehicles according to their respective ownership and until the moment of scrapping (…)".

Thus, the logic and rationality of the new system of automobile taxation presupposes and seeks a passive subject coinciding with the owner of the vehicle, on the assumption that it is this, and not another, the real and effective subject causing environmental damage, as follows from the principle of equivalence inscribed in Article 1 of the CIUC. This principle of equivalence, which informs the current unique circulation tax, underlies the polluter-pays principle, and embodies the idea, contained therein, that whoever pollutes should, for that reason, pay. It is, after all, a matter of addressing the negative environmental externalities arising from the use of motor vehicles, being assumed by their owners and/or users, as costs that only they should bear. [5]

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

1. In summary, in light of the rule of incidence, the passive subject of IUC is the owner, even if not appearing in the vehicle register, provided that sufficient proof is made to rebut the legal presumption arising from registration, the debtor of the IUC.

As to the effects of registration, it is clear from the provisions of Articles 1 and 7 of the Property Register Code (PRC) that registration has a dual purpose: to publicize the legal situation of property and to constitute a presumption that the right exists and belongs to the holder registered therein. These presumptions are, however, refutable by proof to the contrary, as expressly results from Article 350, no. 2 of the Civil Code (CC) and, in tax matters, reinforced by Article 73 of the General Tax Law.

It is settled for doctrine and for the jurisprudence of our superior courts that registration is not a condition of validity of transactions subject to it or underlying it, the transmission of ownership does not depend on it and it is not the responsibility of the transferor to promote registration, whereupon no sanction can be imposed on him for non-compliance with that obligation by the acquirer (who is the one obligated to promote registration). [6]

In addition, the Tax Authority cannot be considered a "third party" for purposes of registration, given that, it results from no. 4, Article 4 of the PRC that "third parties, for purposes of registration, are those who have acquired from a common author rights incompatible with each other". Now, the TCA does not meet the legal requirements of the concept, whereupon it cannot require the seller to pay the tax owed by the buyer (owner) from the moment the presumption of registration is rebutted. Whereupon, acquirers of vehicles thus become, owners of those same vehicles by virtue of the conclusion of the corresponding contracts of sale and purchase, by mere effect of contract, with registration or without it.[7]

This interpretation is the only one that ensures perfect harmony between this regime and what results from no. 1, Article 408 of the Civil Code, according to which the transfer of real rights over things is determined by mere effect of contract, being one of those effects the transmission of the thing or the holding of the right (see paragraph (a), Article 879 of the aforementioned Civil Code).

1. But the Respondent further alleges that the interpretation defended by the Claimant in this matter, according to which we are faced with a refutable presumption, beyond translating a biased reading of the law and basing itself on an interpretation against the law, is shown to be contrary to the Constitution.

Now, by all that is set out above, it also results that the arbitral tribunal does not follow the Respondent in this allegation. It will be important, nevertheless, to add to all the arguments already set out, one final argument extracted from the very jurisprudence of the Constitutional Court (CC). Thus, it should be noted that, contrary to what is alleged by the Respondent, the consideration that the provision of Article 3, no. 1 of the CIUC establishes a refutable presumption represents the best interpretation and the most in keeping with the Constitution, as results from the judgment of the CC with no. 348/97, of 29.4.1997, a position reiterated in judgment no. 311/2003, of 28.4.2003, which declare the unconstitutionality of the "establishment by the tax legislator of a presumption 'juris et de jure'" since it "completely prevents taxpayers from being able to contest the presumed fact, subjecting them to a taxation that may be based on a taxable matter fixed in disregard of the principle of tax equality". In this conformity, the Respondent's allegation does not appear capable of acceptance.

Having arrived here, it remains to analyze the final and decisive issue: to know whether, faced with the registry reality and the evidentiary documents attached to the proceedings by the Claimant, one should consider, or not, that from vehicle registration results a presumption of ownership in favor of the present claimant and if so, whether this presented to the proceedings means of proof sufficient to rebut that presumption.

2nd) The proof of ownership of the vehicle and the rebuttal of the presumption

1. Focusing now the analysis on the means of proof attached to the proceedings, it must be noted that in the case in question the TCA made use of the presumption contained in the vehicle register to attempt to sustain the IUC assessments relating to the vehicle identified in the proceedings, with reference to the years 2009 to 2012, selecting the company "B, with registered office at …" as the passive subject of the tax. However, that reality is not what results from the very factuality inscribed in the register, inasmuch as, it results from document no. 6 attached to the proceedings by the Claimant that the ownership of the automobile brand ..., licence plate …-…-…, is registered in the vehicle register in favor of: "B, with registered office at …". It further results from the said document that this registration entry, with no. ..., dates from 03.05.1988, and no further registrations are verified.

Now, faced with this factuality inscribed in the vehicle register, there is no doubt that we are faced with different legal entities and the present claimant could never be a passive subject of IUC. Thus, it is to be concluded that from the reality inscribed in the vehicle register there does not result a presumption of ownership in favor of the present Claimant given that the entity therein contained does not match the one that was subject to IUC assessment with reference to the motor vehicle identified in the proceedings.

Or, if such were not understood, we would always have to conclude that the register suffers from an essential error as to the identifying elements of the owner of the vehicle, from which the conclusion would always be drawn that it could not serve as the basis for the assessments issued and the presumption contained therein would be, without further ado, rebutted by lack of suitability thereof.

What results from the registration entry is, without doubt, that the essential identifying elements of the holder (name and registered office) do not coincide with the identifying elements of the present Claimant, whereupon the TCA committed a manifest error regarding the premises, in attempting to tax a legal entity different from the one contained in the vehicle register itself. In addition, the TCA attaches not a single document to the proceedings from which any other conclusion can be inferred, invoking a presumption based on a register from which it results, with evidence, that the company now claiming is not the same as the one appearing in the registration entry. It is necessary to add that the Tax Authority has particular obligations to respect in the scope of the procedure for assessment and collection of the tax, among which the duty to assess the tax by all means complying with all the rules of incidence legally provided for, using, if necessary, its powers of investigation to inquire into all elements essential to the proper assessment and collection, in accordance with the principle of the inquisitorial procedure oriented towards the discovery of material truth.

Being so, all that this Tribunal can conclude from the documentation attached to the proceedings is that the presumption arising from the register does not even burden the present Claimant, since the entity registered therein as owner is not the present Claimant. Whereupon the impugned assessments suffer from manifest and gross error regarding the premises of fact and law.

But, even if the understanding of this tribunal were otherwise and the presumption of the register were considered as burdening the present Claimant, we would necessarily have to conclude that, with all the documentation attached to the proceedings, this has rebutted without any margin for doubt the presumption contained in Article 3, no. 1 of the CIUC, in accordance with the general terms provided for in Article 342 of the Civil Code. Considering the factual matter proven in the proceedings and the documents attached by the Claimant, it is necessarily concluded that:

a) this does not coincide with the legal entity identified in the vehicle register;

b) it no longer even existed as a legal entity at the date of the tax facts (years 2009 to 2012) by virtue of the deliberation that determined its dissolution in November 2006;

c) it complied with all informational procedures and ancillary obligations with the competent tax service, as regards the process of liquidation of the company;

d) there are no documentary elements in the proceedings that suggest that the claimant was at any time the owner of this motor vehicle (that it had acquired or disposed of it) but only that, by coincidence of designation, the TCA made an error in processing the tax assessments with reference to the years 2009 to 2012.

1. In these terms, this Tribunal understands that the Claimant has proven in the present proceedings that it was not, at the date of the tax facts (nor previously) the owner of the motor vehicle in question in the present proceedings.

The Respondent alleges the lack of sufficient proof presented by the Claimant, but its lack of conviction is well evident in what it alleges in Articles 60 to 64 of the response, from which its total inability to explain what occurred may be extracted. It merely says that "the difference in addresses contained in the register is not relevant". But if so, then what should we consider relevant from a register that only contains the name of the company and the registered office? Will this registry system be reliable for the correct identification of the holders of the ownership of the vehicle in question? The Tax Authority's argumentation in this particular case well reveals the fragility and lack of rigor of the information contained in the vehicle register and the fragility of the presumption resulting therefrom.

Now it reinforces its thesis with arbitral decisions nos. 150 and 220/2014 T. However, the potentially relevant issue to be extracted from these decisions concerns the probative value of invoices, an issue that is not even under discussion in these proceedings, given that we are not discussing whether or not any transmission of ownership occurred but solely the fact that the present claimant was never the owner of the vehicle in question in the impugned assessments.

Thus, the attachment to the proceedings of the decisions in question proves to be inappropriate since the understanding set forth therein concerns the probative value of invoices, an issue that has no application to the specific case in the proceedings. To this end, it should be clarified that the attachment to the proceedings of the aforementioned decisions was admitted, notwithstanding the moment at which such occurred, in absolute compliance with the principle of due process and considering the fact that the Claimant also attached to the proceedings another arbitral decision in favor of its procedural position. Justified the relevance of the issue raised by the TCA and guaranteed the equality of the parties and the principle of due process, an opportunity was given to the Claimant to pronounce itself, which it did by request attached to the proceedings on 9 October 2014.

What is relevant to the present proceedings is that the means of proof attached by the Claimant (Certificate of the vehicle register – Document no. 6; deed of dissolution and permanent certificate of the commercial register – Document no. 4 and Declaration of cessation of activity – Document no. 5), are suitable and sufficient for the rebuttal of the presumption contained in the vehicle register and demonstrate with a high degree of probability that the claimant was not nor ever was the owner of the motor vehicle with reference to which the impugned IUC assessments were issued.

A restrictive or limiting understanding as to the means of proof suitable would make the proof necessary to rebut the presumption disproportionate and excessively burdensome for the claimant who has to prove that it was the owner at the date of the tax event. We are thus faced with the need to make proof of a negative fact, such "diabolic proof", which, not being entirely inadmissible, since it can resort to proof of positive facts that demonstrate it, cannot be made difficult to the point of being inaccessible. The increased difficulty of proof of negative facts must have as a corollary, by virtue of the constitutional principle of proportionality, "a lesser evidentiary requirement on the part of the law applicator, giving weight to less relevant and convincing evidence than would be required if such difficulty did not exist, applying the Latin maxim 'iis quae difficilitoris sunt probationis leviores probationes admittuntur'". [8]

In these terms it is concluded that the means of proof presented are sufficient to rebut the presumption based on the vehicle register and that the Claimant was never the owner of the aforementioned motor vehicle, neither at the date of the tax facts nor at any other time. The decision of the TCA that led to the issuance and collection of the tax assessments now impugned was based on a wrong premise, according to which, in accordance with the provision of no. 1, Article 3 of the CIUC, the tax was owed by the holder registered in the vehicle register, regardless of the subsequent demonstration that ownership did not belong to him.

Thus, it is concluded that the Claimant could not be considered as a passive subject of the tax. As a consequence of all the above, it results that all impugned assessments are illegal, suffer from the vice of violation of law, by error regarding the premises of fact and law, whereupon they must be subject to annulment, proceeding, consequently, to the reimbursement to the Claimant of the amount unduly paid.

3rd) The right to payment of compensatory interest and for the costs of the proceedings

1. Article 24, no. 1, paragraph (b) of the LRTA provides that the arbitral decision on the merits of the claim to which no appeal or challenge is available binds the tax administration from the end of the period provided for appeal or challenge, and this administration - in the exact terms of the success of the arbitral decision in favor of the passive subject and until the end of the period provided for voluntary execution of judgments of the tax courts - must restore the situation that would have existed if the tax act subject to the arbitral decision had not been committed, adopting the acts and operations necessary for that purpose.

Such provision is in harmony with Article 100 of the General Tax Law, applicable to the case by virtue of paragraph (a), no. 1, Article 29 of the LRTA, in which it is established that "The tax administration is obligated, in case of total or partial success of complaints or administrative appeals, or of judicial proceedings in favor of the passive subject, to the immediate and full restoration of the situation that would have existed if the illegality had not been committed, including the payment of compensatory interest, in the terms and conditions provided for by law."

Article 43, no. 1 of the General Tax Law provides, in turn, that "compensatory interest is owed when it is determined, in voluntary remission or judicial challenge, that there was error attributable to the services from which resulted payment of the tax debt in an amount greater than legally owed."

1. From the analysis of the probative elements contained in the present proceedings it is possible to infer that the TCA had knowledge of factual elements, in essence, sufficient to proceed with the correct assessment of the tax, first and foremost considering the information contained in the vehicle register itself. But, even if such were not the case, it would always be said that it had the possibility of revocation of the tax acts illegally committed, and could have done so within the period for response to the present arbitral petition.

The error for which it is obligated to indemnify results, therefore, from the erroneous interpretation and validation of the facts underlying the assessment and collection procedure and the incorrect application of the law in force, whereupon the tribunal cannot support the Respondent's allegation according to which it merely applied the law and that, in the view of the TCA, no error attributable to the services would result therefrom. If such were the case, the administration would never be held responsible for the illegal application of the norms in force nor for the damages caused.

Thus being, considering the provision of Article 61 of the TCPC and considering that the requirements for the right to compensatory interest are met, that is, verified the existence of error attributable to the services from which resulted payment of the tax debt in an amount greater than legally owed, as provided for in no. 1 of Article 43 of the General Tax Law, the Claimant has the right to compensatory interest at the legal rate, calculated on the amount of €198.47, from the date on which the payment was made until its full reimbursement.

1. As to costs: the Respondent, in its response raises the question of liability for payment of costs in the event the Tribunal comes to consider the arbitral petition successful, seeking in that case the application of Article 527, no. 1 of the new Code of Civil Procedure, by virtue of Article 29, no. 1 paragraph (e) of the LRTA, in line with a similar matter decided in the context of case no. 72/2013 – T.

The Respondent's argument is based on the same argument invoked to attempt to rebut its responsibility as regards payment of compensatory interest, which is inappropriate for the same reasons indicated in the decision as regards compensatory interest.

In addition, in the matter of determination of costs due for the arbitral proceedings, the rules specially provided for in the LRTA and in the respective Regulations of Costs in Tax Arbitration Proceedings (RCPAT) are applied, being resorted to, possibly, to the application of rules of subsidiary law, if and when there exists any omitted case that justifies it. It results from Article 29, no. 1, paragraph (e) of the LRTA, the possibility of subsidiary application of the CPC to tax arbitral proceedings, in accordance with the nature of the omitted cases. There is no evidence of the existence of an omitted case to be resolved, in the present proceedings, as regards the determination of the costs of the proceedings that would justify the application of the principle contained in Article 527, no. 1 of the CPC.

Whereupon, it is considered inappropriate the Respondent TCA's request as regards liability for the costs of the proceedings.

No other relevant issues raised by the parties appear to exist.

V - DECISION

Given the foregoing, this Arbitral Tribunal decides:

A) - To rule the petition for declaration of illegality of the impugned IUC assessments in the present proceedings successful, for suffering from the vice of violation of law, by error regarding the premises of fact and law, annulling, consequently, the corresponding tax acts;

B) - To rule the petition successful for condemnation of the Tax Administration to the reimbursement of the amount unduly paid, in the amount of €198.47, plus compensatory interest at the legal rate, counted from the day of the payment made until the full reimbursement of the aforementioned amount, condemning the Tax and Customs Authority to make these payments.

Value of the proceedings: In accordance with the provisions of Articles 306, nos. 1 and 2 of the CPC, Article 97-A, no. 1, paragraph (a) of the TCPC and Article 3, no. 2 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the proceedings is set at €198.47.

Costs: In accordance with no. 4, Article 22 of the LRTA and in accordance with Table I annexed to the Regulation of Costs in Tax Arbitration Proceedings, the amount of costs is set at €306.00, at the charge of Respondent Tax and Customs Authority.

Recorded and notified.

Lisbon, 20 October 2014

The Sole Arbitrator,

(Maria do Rosário Anjos)

[1] This decision is drawn up in accordance with ancient orthography.

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

[3] In this sense, see, among others, the Judgments of the SAC of 05/09/2012 and 06/02/2013, respectively issued in cases nos. 0314/12 and 01000/12, available at www.dgsi.pt.

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

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

[6] In this sense, see, among others, the following Judgments of the Supreme Court of Justice: Judgment STJ of 31.05.1966, in Case no. 060727 (Rapporteur: Counselor Lopes Cardoso), a decision specifically concerning vehicle registration; Judgment STJ of 5.05.2005 (Rapporteur: Counselor Araújo Barros) and Judgment STJ of 14.11.2013, in Case no. 74/07.3TCGMR.G1.S1 (Rapporteur: Counselor Serra Baptista) exemplary in asserting the predominance of the principle of substance over form, with proof by any suitable means of who is substantively the holder of the right of ownership, which rebuts the presumption of registration.

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

[8] In this sense, see Manuel de Andrade - "Elementary Notions of Civil Procedure", 1979, p. 203; Opinion of the Supreme Court of Justice no. 4/83 of 11-7-1983, in Official Gazette, I series, of 27-08-1983; Judgment SAC of 17/10/2012, in case no. 0414/12, among others.