IUC Subjective Incidence: Leasing Company Not Liable for Vehicle Tax After Ownership Transfer (CAAD 152/2014-T)

Arbitral Decision

CAAD: Tax Arbitration

Case No. 152/2014 – T

Subject Matter: IUC – subjective incidence

I – Report.

1. A, S.A., Open Company, NIPC …, with registered office …, no. …, in its capacity as legal successor to entities B LEASING -, S.A., NIPC …, which incorporated by merger of December 2002 and C LEASING -, S.A., NIPC …, incorporated by B LEASING by merger occurring in 1998, requested the constitution of the arbitral tribunal in tax matters, with a view to annulling the acts of assessment of IUC, and respective compensatory interest, relating to the taxation periods of 2009 to 2012 and to the motor vehicles, identified by their respective registration number in lists contained in the request for arbitral pronouncement (Table I - Vehicles registered in the name of B LEASING and Table II - Vehicles registered in the name of C LEASING), which are hereby considered fully reproduced.

2. As the basis for the request, the Claimant alleges that it is not the owner of the vehicles in question in the periods to which the tax relates to which the aforementioned assessments refer, inasmuch as those were subject to transfer within the scope of the business activity of the merged companies.

3. The Tax and Customs Authority (AT) responded concluding that the claim is unfounded and, consequently, for the maintenance of the questioned assessment acts.

4. The arbitral tribunal was duly constituted on 24-04-2014 and is materially competent in the face of the provisions of article 2, no. 1, al. a), of the RJAT.

5. The case contains all the (documentary) elements necessary and sufficient for the tribunal to decide, so there was no need to convene the meeting provided for in article 18 of the RJAT.

6. The parties enjoy legal personality and capacity and have standing (articles 4 and 10, no. 2, of the RJAT, and article 1 of Ordinance no. 112-A/2011, of 22/03).

7. The case is not vitiated by nullities and no questions have been raised that prevent the appraisal of the merits of the case, with the conditions being satisfied for a final decision to be rendered.

II - Factual Matter.

1. With relevance for the appraisal of the questions raised in the present request for arbitral pronouncement, the following factual elements stand out:

8.1. The Claimant is a credit institution subject to supervision by the Bank of Portugal.

8.2. By merger occurring on 19-12-2012, it incorporated B LEASING (Doc. 1), succeeding it in its rights and obligations.

8.3. By merger occurring on 12-05-1998, C LEASING had been integrated into B LEASING, having succeeded to it in its rights and obligations.

8.4. The Claimant is, therefore, the legal successor to both entities subject to the Unique Motor Vehicle Tax assessments in question.

8.5. The corporate object of both B LEASING and C LEASING consisted precisely in the performance of financial leasing operations.

8.6. Within the scope of their activity, the aforementioned B LEASING and C LEASING concluded financial leasing contracts having as their object the vehicles identified, respectively, in Tables I and II of the present petition, which, under the respective legal regime, came to be sold at a date prior to the occurrence of the taxable event.

8.7. On 27-08-2013, the Claimant was notified to exercise the right to prior hearing with respect to official assessments of IUC relating to the identified vehicles, which were based on the fact that the entities identified above, incorporated by the Claimant, were registered as owners of the vehicles identified in the said Tables (Docs. 2 and 3).

8.8. In the exercise of the right to be heard, the Claimant expressed its disagreement with the projected IUC assessments by virtue of no longer being the owner of the vehicles on the date of occurrence of the respective taxable events, and, consequently, not being the passive subject of the tax.

8.9. Such facts were not, however, taken into consideration by the Tax and Customs Authority (AT), which maintained the decision to assess officially the vehicles in question, communicated to the Claimant through the respective payment documents (Docs. 4 and 5).

8.10. The Claimant effected payment of the assessed tax, as evidenced by the supporting documents attached (Docs. 6 and 7).

8.11. The facts mentioned above were deemed to be proven based on the documents attached to the case. No unproven facts were noted.

III - Joinder of Claims.

1. Invoking the principle of procedural efficiency, the Claimant chose to request the joint appraisal of the tax acts in question. Considering the identity of the taxable event, of the tribunal competent to decide and of the factual and legal grounds invoked, nothing precludes, in light of the provisions of articles 3 of the RJAT and 104 of the CPPT, the intended joinder of claims.

IV - Position of the Parties.

1. In the request for arbitral pronouncement, the Claimant submits to the appraisal of this tribunal the legality of the acts of assessment of IUC relating to the periods of 2009, 2010, 2011 and 2012 and to the vehicles which it identifies in the said request - Tables I and II - invoking the circumstance that, on the date to which the taxable facts that originated them relate, the companies referred to above were not owners of the vehicle, to which, by merger by incorporation, it is successor and, consequently, it does not assume the status of passive subject of the tax assessed to it, a fact which it proves through the presentation of the invoices timely issued.

2. In response to the allegations, the Respondent (AT) considers that not only is the Claimant not right regarding the interpretation of the law it advocates, but it has not proven the factual matter that serves to support its request for arbitral pronouncement, which is why the same should be judged entirely unfounded.

3. Regarding the interpretation of the rule of subjective incidence of IUC, diametrically opposed positions are immediately evident between the Respondent (AT) and the Claimant (SP): for the former, the passive subject of this tax is the person in whose name the vehicle is registered; whereas for the latter, the rule of incidence establishes a presumption, derived from registration, rebuttable by force of the provisions of article 73 of the LGT.

4. These being the questions of law to be decided in the present process of arbitral pronouncement, it is important to analyze in greater detail the positions in confrontation.

Position of the Claimant (SP).

1. On this matter and as the basis for the request for arbitral pronouncement, the Claimant alleges, in summary, that:

a) On the dates to which the taxable facts of IUC that originated the questioned assessments relate, the companies B LEASING and C LEASING were not owners of the vehicles, which the Claimant incorporated by merger and, consequently, the latter does not assume the status of passive subject of the tax assessed to it;

b) In light of the provisions of article 73 of the LGT, which provides that presumptions enshrined in the rules of tax incidence always admit proof to the contrary, the subjective incidence of the tax in question, based on the presumption of ownership derived from registration, can be set aside by means of proof to the contrary;

c) It is not sufficient, therefore, that registration in the vehicle register in the name of a given person is verified for that person to qualify as the passive subject of the tax obligation;

d) The rule of no. 1 of article 3 of the CIUC admits that the person in whose name the vehicle is registered at the Registry Office may demonstrate through the means of proof admitted in law that is not the owner of the vehicle in the period to which the tax relates and thus set aside the tax obligation that falls upon it;

e) The presumptions of tax incidence can be rebutted through the contradictory procedure provided for in article 64 of the CPPT or, alternatively, by means of voluntary claim or judicial challenge of the tax acts that are based on them;

f) In the case at hand, the Claimant did not use the said specific procedure, so the present request for arbitral pronouncement constitutes the proper means to rebut the presumption of subjective incidence of IUC that supports the assessments whose annulment constitutes the object of the present request.

g) In order to rebut the presumption resulting from registration in the vehicle register, the Claimant presents a copy of the invoices/sales receipt (Docs. 8 and 9).

Position of the Respondent (AT).

1. In response to what was alleged by the Claimant, the AT responded to the effect that the interpretation to be made of the rule of subjective incidence of IUC contained in article 3 of the CIUC is widely supported and reinforced by the systematic and teleological elements.

2. Indeed, article 3, no. 1, of the CIUC establishes 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 names the same are registered."

3. The tax is of annual periodicity, being owed for each taxation period which, in the case of motor vehicles, corresponds to the year that begins on the date of registration and on each of its anniversaries, with the tax being owed until cancellation of the registration due to scrapping carried out in accordance with the law, as provided in article 4 of the CIUC.

4. The taxable event of the tax is constituted by ownership of the vehicle, with the tax being considered payable on the first day of the taxation period, as per article 6 of the CIUC.

5. From the aforementioned norms and from the factual matter proven in the case file, the Respondent extracts that "the obligation of the disputed tax was constituted in the legal sphere of the now Claimant in the month of registration and successively in the years 2009, 2010, 2011 and 2012."

6. Resorting to the literal and systematic elements of interpretation, the Respondent develops its position arguing, in summary, that "within its freedom of configuration, it was the unequivocal intention of the tax legislator, expressed in no. 1 of article 3 of the CIUC, to consider as passive subjects of IUC the persons in whose names the vehicles are registered."

7. In defense of this point of view, the Respondent emphasizes that "the legislator did not use the expression 'are presumed' as it could have done." It also notes that "the fiscal system is replete with provisions analogous to those enshrined in the final part of no. 1 of article 3, in which the fiscal legislator, within its freedom of legislative configuration, expressly and intentionally, establishes what should be considered for legal purposes, whether with respect to incidence, income, exemption, determination and periodization of taxable profit, residence, location, among many others."

8. As an example, among others, it refers to the rule of subparagraph a) of no. 2 of article 2 of the CIMT, in which the tax legislator does not presume that "there is a case of onerous transmission for the purposes of no. 1 of article 2 of the CIMT, in the execution of promise contract for acquisition and alienation of immovable property in which it is stipulated in the contract or subsequently that the promisee-acquirer may assign his contractual position to a third party." In this case, "the legislator expressly and intentionally assimilates this contract to an onerous transmission of property for purposes of IMT." Similarly, in the case of article 17 of the CIRC, the legislator also does not establish that the net surpluses of cooperatives are presumed as net result of the period but that they are considered as such. After noting that most of the rules of incidence of CIT have as their underlying rationale determining what should be considered as income for purposes of this tax, it would have to be concluded that by using the expression "is considered" the fiscal legislator would have established a presumption in practically all rules of incidence of CIT that would be set aside precisely because accounting prescribes solutions different from the CIRC, which is exactly the intention of the legislator to set aside accounting rules.

9. Following this reasoning, the Respondent concludes that, "combining the disputed rule with others of the tax-legal system, it results that the legislator expressly and intentionally established that the persons in whose names the vehicles are registered are considered as owners, inasmuch as this is the interpretation that preserves the unity of the tax-legal system."

10. Still appealing to the systematic element of interpretation of the law, the Respondent understands that, in the same sense as provided in no. 1 of article 3 of the CIUC, "article 6 of the CIUC establishes, under the heading 'Taxable Event and Exigibility', in its no. 1, that 'The taxable event of the tax is constituted by ownership of the vehicle, as attested by registration or registration in national territory.' In turn, 'no. 3 of the same article provides that the tax is considered payable on the first day of the taxation period referred to in no. 2 of article 4.'"

11. That is, "the moment from which the tax obligation is constituted has a direct relationship with the issuance of the registration certificate, in which the facts subject to registration must appear.... In the same sense, the legislative solution adopted by the fiscal legislator in no. 2 of article 3 of the CIUC works, in making the assimilations enshrined therein coincide with the situations in which vehicle registration is mandatory."

12. The Respondent further maintains that "This position is still evident in the circumstance that the Vehicle Register that serves as the basis for the IUC assessments issued by the AT contains all the elements intended for determining the passive subject, without need for access to the contracts of a private nature that confer such rights, as well as to the objective aspects of the incidence of the tax."

13. Thus "In assessing subjective incidence based on registration in force in the Vehicle Register, the fiscal legislator ensures the legal certainty and security necessary for tax assessment, under penalty of this being able to be systematically assessed against those who are not the passive subject, with all the charges associated with the administrative function, with payment of undue tax (e.g. compensatory interest), or with the provision of undue guarantee in execution proceedings, placing at risk the possibility of timely, that is, within the period of limitation, achieving a valid and effective IUC assessment."

14. Therefore, concludes the Respondent, "The criterion of registration in force in the vehicle register appears, therefore, to be the only reasonable one, given that vehicle owners are not subject to any declarative/ancillary obligation regarding the updating of data with the Tax and Customs Authority, which, in this way, is entirely dependent on the information contained in the vehicle register."

15. Beyond the reasoning set forth, the Respondent considers it still important to note that "the interpretation conveyed by the Claimant is shown to be contrary to the Constitution."

16. Defending that "The always-cited principle of contributive capacity is not the only nor the main fundamental principle that shapes the tax system" and that "Alongside this principle we find others with the same constitutional dignity, such as the principle of trust and legal security, the principle of efficiency of the tax system and the principle of proportionality, tax justice and equality", the Respondent considers that it is necessary, "for this reason that in the interpretive task of article 3 of the CIUC the principle of contributive capacity be articulated, or if preferred, tempered, with the other principles mentioned."

Hence concluding that "the interpretation proposed by the Claimant, an interpretation that in substance downplays the registration reality in favor of an 'informal reality' and not susceptible to minimal control by the Respondent, and offensive to the fundamental principle of trust and legal security that should form the basis of any legal relationship, here including the tax relationship."

1. Set forth, in summary and with partial transcription, the positions of the claimant and respondent, they will be clearly defined:

• for the Claimant, the subjective incidence of IUC is based on a presumption of ownership, derived from vehicle registration, susceptible to rebuttal under legal terms; and

• for the Respondent, the rule of the CIUC does not establish any presumption, expressing understanding to the effect that the legislator defined as the passive subject of this tax, expressly and intentionally, the owner of the vehicle identified in the respective registration.

V - Matters of Law.

Subjective Incidence of IUC.

1. With the exception of the provisions in no. 2, relating to situations of sale with reservation of ownership and leases that assume the nature of financing, article 3 of the CIUC establishes that "the passive subjects of this tax are the owners of the vehicles, being considered as such the natural or legal persons in whose names the vehicles are registered."

2. The recourse to vehicle registration as a structuring element of the assessment system of this tax is evident throughout the respective Code. Notably, article 6 thereof relating to the definition of the taxable event of the tax obligation, the no. 1 of which provides that it is constituted by ownership of the vehicle, as attested by registration or registration in national territory. From this provision it follows that motor vehicles that are not, nor should be, registered in national territory are only covered by the objective incidence of this tax if they remain in the same for a period exceeding 183 days, as provided in no. 2 of the same article. It is, therefore, a rule that, resorting to the registration element, simultaneously establishes the taxable event of the tax and its respective fiscal connection. It is, also, from the elements of the vehicle register that the moment of the beginning of the taxation period and constitution of the tax obligation is extracted and, in general, all elements necessary for the assessment of the tax in question, as, moreover, well emphasized in the response prepared by the Respondent.

3. However, from the dependence of the IUC taxation regime on vehicle registration, one cannot immediately conclude that the rule of subjective incidence, in the segment in which it considers as owner the person in whose name the vehicle is registered, does not constitute a presumption of incidence. It will be necessary, therefore, to resort to other interpretive elements, with particular relevance to the legal notion of presumption.

Notion of Presumption.

1. According to the notion set forth in article 349 of the Civil Code, presumptions are the inferences that the law, or the judge, draws from a known fact to establish an unknown fact. Presumptions constitute means of proof, having as their function the demonstration of the reality of facts (article 341 of the Civil Code). Thus, one who has in his favor the legal presumption is excused from proving the fact to which it leads (article 350, no. 1, of the Civil Code). However, presumptions, unless the law prohibits it, can be rebutted by means of proof to the contrary (article 350, no. 2, of the Civil Code). In the case of presumptions of tax incidence, these are always rebuttable, as expressly provided by article 73 of the LGT.

Presumption and Fiction.

1. Alongside presumptions, used in tax law mainly as a means of averting the possibility of fraud and evasion or for reasons of simplification and practicability of tax laws, the legislator also resorts, with some frequency, to fictions. Unlike presumption, which starts from a known fact to establish an unknown fact, fiction, on the other hand, "translates into a legal process that considers a situation or a fact as distinct from reality to attribute legal consequences to it" [1]. There is, therefore, a notable difference between one and the other of these figures, used, with some frequency, in the provisions of tax codes and laws. This difference, which is not highlighted in the reasoning of the AT's position, will be particularly relevant in the appraisal of the present case.

2. Taking as a reference the exemplification presented by the Respondent in support of its thesis, we can consider the case of no. 2 of article 17 of the CIRC, which for the purposes of this tax determines that "the net surpluses of cooperatives are considered as net result of the fiscal year." Not ignoring the CIRC legislator that cooperatives, by force of their respective principles and legal regime applicable to them, cannot have as their purpose the realization of profit, imputes to those surpluses a nature distinct from reality, to attribute to them a legal consequence, namely that of net result of the fiscal year for purposes of application of the rules of determination of taxable profit of companies.

3. On the other hand, the existence, in parallel, of presumptions and fictions in the legal provisions of tax incidence is even more evident, for example, in article 2 of the CIMT, referred to in the response of the AT. According to the body of no. 3 of this article "It is also considered that there is a case of onerous transmission for the purposes of no. 1 (rule that defines the general rule of incidence of this tax, consisting of onerous transmission of the right of ownership over immovable property) in the execution of the following acts or contracts:

a) Execution of promise contract for acquisition and alienation of immovable property in which it is stipulated in the contract or subsequently that the promisee-acquirer can assign his contractual position to a third party."

and

e) Assignment of contractual position or resale arrangement, by the promisee-acquirer in a promise contract for acquisition and alienation, with the final contract to be executed between the original promisee-seller and the third party."

1. In the first of the mentioned cases, we are faced with a fiction, for the legislator does not ignore that the possibility of assignment of contractual position in a promise contract does not imply the transmission of the right of ownership, the object of the general incidence of the said municipal tax. But, for tax purposes, it attributes to it the corresponding consequences. In the second case - resale arrangement, to which subparagraph e) of the same number refers - there is a somewhat more complex situation, but which, according to the settled case law of the superior courts, translates into a presumption.

2. How does one reach this conclusion if both rules have as their purpose and effects to tax as transmissions of ownership of immovable property realities that they are not? The answer lies, precisely, in resorting to the legal concept of presumption. The rule of subparagraph e) of no. 3 of article 2 of the CIMT, with respect to "resale arrangement," was already provided for, in identical terms, in paragraph 2 of article 2 of the previous Stamp Duty Code: the promisee-purchaser who would arrange, with a third party, the sale of the immovable which he had promised to acquire would be subject to the tax, based on the presumption that the property had been delivered to him as the object of the promise contract and that he had acted as an owner over it, by means of the assignment of his contractual position in that contract, but only if the conveyancing contract were to be executed between the original promisee-seller and that third party. In this case, the legislator created the presumption of economic transmission (delivery), covered by the incidence of the tax, whenever the promisee-acquirer acted, before a third party and with the consent of the original promisee-seller, as a true owner, arranging the resale of the property in question. It is the existence of the "legal delivery" - delivery of the property which is the object of the promise contract - that the rule presumes, in order to tax it. And here also, the legislator starts from known facts - the contractual position and the legal transmission of the property to a third party - to establish an unknown fact, the resale arrangement. A presumption that is rebuttable, by force of the provisions of article 73 of the LGT. [2]

Explicit and Implicit Presumptions.

1. The Respondent maintains that the fiscal legislator, "within its freedom of configuration, it was the unequivocal intention of the tax legislator, expressed in no. 1 of article 3 of the CIUC, to consider as passive subjects of IUC the persons in whose names the vehicles are registered," not using the expression "are presumed," as it could have done.

2. Indeed, in the definition of the subjective incidence of ICI, ICA and IMV, taxes which the current IUC came to replace, it was this expression that was used by the legislator. Within the scope of the abolished taxes, it is established that "the tax is owed by the owners of the vehicles, being presumed as such, unless proof to the contrary, the persons in whose names the same are registered or inscribed" [3]

3. In the same sense, article 3, no. 1, of the Regulation of Motor Vehicle Circulation and Haulage Taxes, approved by Decree-Law no. 116/94, of 3/05, establishes that the passive subjects of these taxes are "the owners of the vehicles, being presumed as such, unless proof to the contrary, the natural or legal persons in whose names the same are registered."

4. With respect to IUC, the legislator chose to use a formulation different from that of the rule of subjective incidence. As in the abolished taxes, it continues to attribute to vehicle owners the status of passive subjects. However, it abandons the expression "being presumed as such, unless proof to the contrary, the persons in whose names the same are registered" in favor of "being considered as such the persons (...) in whose names the same are registered."

5. Contrary to the position expressed by the AT, we understand that this is a mere question of semantics, which does not alter in the least the content of the rule in question and for two lines of reasoning: For there to be a legal presumption, it is necessary that the rule that establishes it conforms to its legal concept, set forth in article 349 of the Civil Code, it being irrelevant for such purposes that the same be explicit, revealed by the use of the expression "are presumed" or merely implicit [4]. On the other hand, the legislator's freedom of configuration is limited by fundamental principles enshrined in the Constitution of the Republic, of which, with relevance to the present case, the principle of equality stands out. In the tax sphere, this principle translates into the generality and abstraction of the rule that creates the essential elements of the tax, in accordance with the contributive capacity of each person. According to what is extracted from the judgment of the CC no. 343/97, of 29-04-97 "Taxation in accordance with the principle of contributive capacity will imply the existence and maintenance of an effective connection between the tax payment and the economic presupposition selected as the object of the tax, requiring, for that reason, a minimum of logical coherence of the various concrete hypotheses of tax provided for in the law with the corresponding object thereof."

6. It is in the sense of the legal concept of presumption and in respect of the constitutional principles of equality and contributive capacity that the legislator attributes full efficacy to the presumption derived from vehicle registration, embracing it as such in the definition of the subjective incidence of this tax established in no. 1 of article 3 of the CIUC.

7. Furthermore, Decree-Law no. 54/75, of 12/02, which regulates the registration of motor vehicles, not providing any rule regarding the constitutive character of the registration of motor vehicle ownership, establishes, in no. 1 of its article 1 that vehicle registration aims only to give publicity to the legal situation of the goods. In accordance with article 7 of the Land Registry Code, supplementarily applicable to vehicle registration, by referral of article 29 of that decree, it determines that registration only "(...) constitutes a presumption that the right exists and belongs to the registered holder, in the precise terms in which the registration defines it."

8. Pronouncing itself on this matter, the STJ, in Judgment of 19-02-2004, rendered in Case no. 3B4369, concludes that "(...) the registration does not have constitutive effect, as it is intended to give publicity to the registered act, functioning (merely) as a presumption, rebuttable ('presumption juris tantum') of the existence of the right (arts. 1, no. 1, and 7, of the Land Registry Code and 350, no. 2, of the Civil Code) as well as of the respective ownership, in the terms thereof (...)."

9. Thus, following the reiterated arbitral jurisprudence [5] relating to identical situations, one cannot fail to understand that the expression "being considered as such" contained in the said rule configures a legal presumption, and that this is rebuttable, under general terms, and, in particular, by force of the provisions of article 73 of the LGT which determines that presumptions enshrined in the rules of tax incidence always admit proof to the contrary.

Rebuttal of Presumptions.

1. Presumptions of tax incidence can be rebutted through the contradictory procedure specifically provided for in article 64 of the CPPT or, alternatively, through voluntary claim or judicial challenge of the tax acts that are based on them.

2. In the present case, the Claimant did not use that specific procedure, having instead opted for the present request for arbitral decision which, thus, constitutes the appropriate means to rebut the presumption of subjective incidence of IUC upon which the tax assessments whose annulment constitutes its object are based, as it is a matter that falls within the scope of the material competence of this arbitral tribunal (articles 2 and 4 of Decree-Law 10/2011).

3. To rebut the presumption derived from the registration in the vehicle register, the Claimant offers, as a means of proof, the invoicing issued with reference to the transmission of the vehicles to which the questioned assessments relate (Docs. 8 and 9).

4. Pronouncing itself on the documentary evidence presented, the Respondent alleges that the invoices attached to the case do not constitute suitable documents to effect the intended proof that the Claimant was not the owner of the vehicles in the taxation periods to which the assessments in question relate.

5. On this matter, the Respondent argues that:

"a) The invoice is not a suitable document to prove the sale of the vehicle in question, since the same is nothing more than a unilaterally issued document by the Claimant,

b) The invoice in question is not apt to prove the execution of a bilateral contract such as the purchase and sale, as that document does not reveal in itself an essential and unequivocal expression of will (i.e., acceptance) on the part of the presumed acquirer,

c) Indeed, and as is publicly known, there is no shortage of cases of issuance of invoices relating to transmissions of goods and/or provision of services that never occurred;

d) The rules of vehicle registration have not yet reached the point where an invoice unilaterally issued by the Claimant can substitute the Vehicle Registration Application, moreover a document approved by official model,

e) The unequivocal expression of will of the presumed acquirer could be indicated by the submission of a copy of the said official model for registration of motor vehicle ownership, as it is a document signed by the intervening parties;

1. With this reasoning, the Respondent concludes that "Given the factual matter to be considered established in the case for purposes of proof, even if the Arbitral Tribunal adheres to the Claimant's thesis, considering that article 3 of the CIUC contains a rebuttable presumption as to the owner of the vehicle for purposes of the disputed tax, still, and because the Claimant has not proven the facts it alleges as to the transmission of ownership of those vehicles, its claim for annulment of the assessments in question must be judged unfounded, absconding the Respondent entity from the claim."

2. If the Respondent's position regarding the proof produced is well extracted, this would be insufficient to set aside the tax incidence defined on the basis of ownership, as appears in the register, which, in coherence with the substantive position assumed by it, would only be set aside as a function of timely updating of the register itself.

3. This not being the tribunal's understanding, it is important to evaluate the proof produced by the Claimant in order to determine whether it is sufficient to rebut the presumption derived from vehicle registration which, at the level of subjective incidence, is embraced for purposes of IUC.

4. For this purpose, it is important to bear in mind that, in the situation under analysis, we are faced with purchase and sale contracts which, relating to movable things and not being subject to any special formalism (Civil Code, article 219), effect the corresponding transfer of real rights (Civil Code, article 408, no. 1).

5. Being contracts that involve the transmission of ownership of movable goods for payment of a price, such contracts have, as essential effects, among others, that of delivering the thing (Civil Code, articles 874 and 879).

6. However, since it is a purchase and sale contract having as its object a motor vehicle, in which registration is mandatory, its timely performance presupposes the issuance of the sales declaration necessary for inscription in the register of the corresponding acquisition in favor of the purchaser, as has been understood by the case law of the superior courts. [6] Such declaration, relevant for purposes of registration, may constitute proof of the transaction, but does not constitute the only or exclusive means of proof of the transaction.

7. For registration purposes no special formalism is required, the presentation to the competent entity of an application subscribed by the purchaser and confirmed by the seller, who through a sales declaration confirms that the ownership of the vehicle was acquired by the latter by verbal purchase and sale contract (see Motor Vehicle Registration Regulation, article 25, no. 1, subparagraph a)).

8. Notwithstanding these being the rules resulting from the provisions of civil law relating to the informality of the transmission of movable things and, as the case may be, of the respective registration, one cannot fail to also bear in mind that, in the situation under analysis, we are faced with commercial transactions effected by business entities within the scope of the activity that constitutes their corporate object.

9. Within that scope, the company is bound by compliance with specific accounting and tax norms, in which invoicing assumes particular relevance.

10. From the outset, by force of tax norms, the transmitting entity is obliged to issue an invoice with respect to each transmission of goods, whatever the status of the respective acquirer (VAT Code, article 29, no. 1, subparagraph b)).

11. Also in accordance with the provisions of tax norms, the invoice must comply with a given form, detailed regulated in articles 36 of the VAT Code and 5 of Decree-Law no. 198/90, of 19/06.

12. It is on the basis of this document issued by the supplier of goods that the acquirer, when it is an economic operator - as is the case in the vast majority of situations referred to in the present proceedings - will deduct the VAT to which it is entitled (VAT Code, article 19, no. 2) and account for the cost of the operation (CIRC, articles 23, no. 6 and 123, no. 2).

13. For its part, it is also on the basis of the invoicing issued that the supplier of goods must account for the respective income, as follows from the provisions of subparagraph b) of no. 2 of article 123 of the CIRC.

14. Provided that issued in the legal form and constitute supporting elements of the accounting entries in bookkeeping organized in accordance with the commercial and tax legislation, the data contained therein are covered by the presumption of truthfulness to which article 75, no. 1, of the LGT refers.

15. Indeed, the said presumption covers not only the books and accounting records, but also the respective supporting documents, as, moreover, constitutes the settled understanding of the tax administration [7] and the firm jurisprudence of the superior courts [8]

16. The presumption of truthfulness of commercial invoices issued in accordance with the law can, however, be set aside whenever the operations to which they refer do not correspond to reality, it being sufficient for such purposes that the Tax Administration gathers and demonstrates founded indications of that fact (LGT, article 75, no. 2, subparagraph a)). [9]

17. In the present case, although the Respondent alleges, generalizing, that there is no shortage of cases of invoices relating to operations that never occurred, it raises no doubt as to the operations evidenced by the invoices presented by the Claimant.

18. Considered, therefore, the relevance attributed by tax legislation to invoices issued, in accordance with the law, by commercial companies within the scope of their business activity and the presumption of truthfulness of the operations evidenced by them, one cannot fail to consider that the same constitute, in themselves, sufficient proof of the transmissions invoked by the Claimant.

19. It is thus deemed proven, by documentary evidence, the transmission of the right of ownership of the vehicles in question in all cases on dates well before the date of exigibility of the tax.

20. In these terms, the presumption of ownership derived from vehicle registration embraced in no. 1 of article 3 of the CIUC is deemed to be rebutted, with respect to the vehicles and taxation periods to which the questioned assessments relate, identified in Tables I and II of the petition.

Arbitration Costs.

1. Invoking the provisions of no. 1 of article 527 of the C.P.C., applicable to arbitral proceedings by referral of article 29, no. 1, subparagraph e), of the RJAT, the Respondent understands that the Claimant should bear the costs of the present request for arbitral pronouncement for, in its understanding, being the one that gave rise to the dispute.

2. Such understanding is based, in summary, on the consideration that it would be up to the Claimant to diligently ensure the timely updating of vehicle registration which, had it been done timely, would have prevented the assessments under analysis and the consequent dispute regarding the same.

3. In accordance with the rule invoked, the general rule of responsibility for costs is based, principally, on the principle of causality, falling on the party that has given rise to the action. Only in the case where there is no prevailing of the action does responsibility for costs fall on whoever profits from the proceedings. It clarifies, however, no. 2 of that provision of the C.P.C. that it is understood to give rise to the action the party that is defeated or, namely, in the present case, the Respondent entity.

VI - Decision.

In these terms, and with the grounds set forth, the Arbitral Tribunal decides:

a) To judge the request for arbitral pronouncement well-founded, with respect to the rebuttal of the presumption of subjective incidence of IUC, relating to the assessments identified in Tables I and II of the request for arbitral pronouncement, determining their annulment and consequent refund of the amounts wrongfully paid.

b) To condemn the Respondent to pay the costs.

Value of the case: € 6,086.37

Costs: Under article 22, no. 4, of the RJAT, and in accordance with Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, I fix the amount of costs at € 612.00, to be borne by the Respondent (AT).

Lisbon, August 6, 2014,

The Arbitrator, Álvaro Caneira.

[1] Cf. Francisco Rodrigues Pardal, "The Use of Presumptions in Tax Law", in Science and Tax Technique no. 325-327, pages 20 et seq.

[2] In this sense, see, among others, STA, Judgments of 21.4.2010, 3.11.2010, 2.5.2012 and 6.6.2012, Cases 924/09, 499/10, 895/11 and 903/11, respectively.

[3] See article 3, no. 1 of the Regulation of the Municipal Tax on Vehicles, approved by Decree-Law no. 143/78, of 12 June.

[4] Cf. Jorge de Sousa, CPPT, 6th Edition, Áreas Editora. Lisbon, 2011, pages 586 and STA, Judgments of 29.2.2012 and 2.5.2012, Cases 441/11 and 381/12.

[5] See Arbitral Decisions of 19.7.2013, 10.9.2013, 15.10.2013, 5.12.2013 and 14.2.2014, rendered, respectively, in Cases 26/2013-T, 27/2013-T, 14/2013-T, 73/2013-T and 170/2013-T.

[6] Cf. STJ, Judgments of 23.3.2006 and 12.10.2006, Cases 06B722 and 06B2620.

[7] Cf. Opinion of the Center for Tax Studies, approved by dispatch of the Director-General of Taxes, of January 2, 1992, published in Science and Tax Technique no. 365.

[8] Cf. STA, Judgment of 27.10.2004, Case 0810/04, TCAS, Judgment of 4.6.2013, Case 6478/13 and TCAN, Judgment of 15.11.2013, Case 00201/06.8BEPNF, among others.

[9] Cf. STA, Judgments of 24.4.2002, Case 102/02, 23.10.2002, Case 1152/02, 9.10.2002, Case 871/02, 20.11.2002, Case 1428/02, 14.1.2004, Case 1480/03, among many others.