IUC Vehicle Tax Subjective Incidence and Legal Presumptions – CAAD Arbitration 157/2015-T

ARBITRAL DECISION

CAAD: Tax Arbitration

Case No. 157/2015-T

Subject: IUC

CLAIMANT: A…

RESPONDENT: TAX AND CUSTOMS AUTHORITY

I – REPORT

A) THE PARTIES AND THE CONSTITUTION OF THE ARBITRAL TRIBUNAL

1. A…, of age, single, taxpayer No. …, resident at Street …, No. … – …, Development …, …, … – …, hereinafter referred to as "Claimant", submitted a request for the constitution of a sole arbitral tribunal, under the terms of Article 2, No. 1, paragraph a) and Article 10, Nos. 1 and 2 of Decree-Law No. 10/2011, of 20 January, hereinafter referred to as "RJAT" and Regulation No. 112-A/2011, of 22 March, regarding the decision to reject the Gracious Claim made by the Tax and Customs Authority (ATA), seeking the declaration of illegality of the assessments of Unique Vehicle Circulation Tax (IUC) concerning the motor vehicle with registration … - … - …, relating to the taxation periods of 2013 and 2014, identified with the numbers of unique collection documents (DUC) … and …, respectively, attached to the proceedings as an annex to the arbitral request, which are hereby fully reproduced, in the total amount payable of €430.67.

2. The request for constitution of the Arbitral Tribunal was submitted by the Claimant on 05-03-2015, was accepted by the President of CAAD and immediately notified to the Tax and Customs Authority.

3. The Claimant chose not to appoint an arbitrator, therefore, under the terms of Article 6, No. 1 of the RJAT, was appointed by the Deontological Council of the Centre for Administrative Arbitration as sole arbitrator and the parties were notified of this appointment on 23-04-2015. The appointment was accepted and the parties were notified of the arbitrator's designation, having manifested no wish to refuse the appointment.

4. 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 (RJAT), the Sole Arbitral Tribunal was constituted on 11-05-2015. On 21-05-2015 the ATA was notified, in the terms and for the purposes of Articles 17, Nos. 1 and 2 of the RJAT, to present a response, which was presented in the proceedings on 15-06-2015.

5. On 16-06-2015 an arbitral order was issued joining the response of the ATA to the proceedings and notifying the Claimant to pronounce itself on the alleged unnecessary nature of holding the meeting referred to in Article 18 of the RJAT and on the production of testimonial evidence. The Claimant pronounced itself by Request in the proceedings on 21-06-2015, substantiating the necessity of holding the meeting for the production of testimonial evidence. It also raised the failures and incompleteness of the administrative process attached to the proceedings by the ATA, inasmuch as not all elements that should be part of the Administrative Process are contained therein. As this fact is not prohibitive of the continuation of the proceedings, the Claimant invoked, as a consequence of the failure to send all elements of the administrative process where the acts whose illegality is raised were committed, that the facts alleged by the Claimant be considered proven, in accordance with the terms of Article 84, No. 5 of the CPTA, applicable ex vi Article 29, No. 1, paragraph c), of the RJAT.

6. On 10-07-2015, at 10 o'clock, the meeting provided for in Article 18 of the RJAT was held, at which testimonial evidence was produced, examining the witnesses presented by the Claimant, B… and C…. The Claimant waived the examination of the third witness indicated, D…. The production of testimonial evidence was recorded as appears in the respective minutes.

The Claimant further requested that a copy of the cheque proving payment of the price of the damaged motor vehicle be joined to the proceedings, to which the ATA did not object and which the Tribunal immediately decided to admit its joining, as shown in the document attached to the minutes of the meeting.

The parties then presented their respective oral arguments. The Tribunal set the date for pronouncement of the arbitral decision until 30-10-2015.

B) THE CLAIM FORMULATED BY THE CLAIMANT:

1. The Claimant formulates the present request for arbitral pronouncement arguing for the illegality, with the consequent annulment, of the assessments of Unique Vehicle Circulation Tax, relating to the taxation periods of 2013 and 2014, concerning the motor vehicle with … - … - …, hereinafter detailed:

a) DUC No. …, for the year 2013, in the amount of €197.46, plus interest in the amount of €10.62;

b) DUC No. …, for the year 2014, in the amount of €219.56, plus interest in the amount of €3.03,

All in the total amount of €430.67.

1. These assessments are attached to the proceedings as document No. 1 – Assessment Demonstration – which is hereby fully reproduced.

2. In summary, it bases its claim, alleging the following:

a) The Claimant is not the owner of the above-identified vehicle as of 23-12-2011, therefore cannot be considered the taxable person for this tax, with reference to the years in question, namely 2013 and 2014;

b) It alleges that after the road accident suffered on 16-11-2011, the vehicle identified in the proceedings suffered irreversible damage, the insurer having decided on total loss and contracted with a specialized company the negotiation of salvage, after consultation of the market quotation for the damaged vehicle;

c) A purchase and sale agreement was concluded on 23-12-2011, by which ownership was transferred to the acquiring company, E…, Single-Member Ltd., against payment to the Claimant of the sum of €1,999.00;

d) It further alleges that as of 12-09-2012 the process of cancellation of the registration with the IMTT was initiated;

e) Accordingly, the Claimant concludes that it was entirely diligent in the handling and signing of all documentation necessary between the parties to effect the transfer of the vehicle, as well as the cancellation of its registration, to which is added the obligation of the buyer to promote the registration of the same in its name;

f) Thus, the Claimant considered that the procedure was duly completed on the date of the completion of the purchase and sale contract, from which it had no further contact with the identified vehicle or with the then acquirer;

g) Despite having provided all elements to the ATA in the context of the exercise of hierarchical appeal, converted into a gracious claim, the Claimant was surprised by the notification to proceed with the assessment of the Unique Vehicle Circulation Tax, relating to that vehicle, for the years 2013 and 2014;

h) As to the legal basis, the Claimant alleges that the purchase and sale contract obeys the principles of private autonomy, contractual freedom and consensuality; therefore, the verbal contract is valid by which one party sells to another a motor vehicle, registration being merely a condition of publicity;

i) From Article 3 of the Unique Vehicle Circulation Tax Code (CIUC), it follows the presumption that the taxable person of this tax is the owner of the vehicle that is registered with the Motor Vehicle Registration Office, however, this presumption is rebuttable, since the registration of the acquisition is not a condition for the transfer of ownership and does not affect its validity. The obligation to effect registration falls on the owner and has as its purpose to give publicity, nothing more than that; the acquirer at the time of acquisition of the vehicle, had full awareness of this obligation, all the more so since it is a company in the business sector;

j) On the date of the taxability of the tax to which the assessments in question relate, this was not the owner of the vehicle in question, since the respective transfer had already previously taken place, in accordance with civil law. The documentary evidence presented by the Claimant, as well as the testimonial evidence cited are suitable means for the rebuttal of the presumption, in accordance with the terms of Article 350, No. 2 of the CC and Article 73 of the LGT; once the presumption on which those assessments are based is rebutted, these should be annulled, with the legal consequences;

k) It concludes by petitioning the declaration of illegality of these IUC assessments, in the total amount of €430.67, as well as the reimbursement of the amounts unduly paid for that title (tax and compensatory interest), that the extinction of the ongoing administrative offense proceedings be ordered and the condemnation of the ATA to the payment of the costs of the proceedings.

C – THE RESPONSE OF THE RESPONDENT

1. The Respondent, duly notified for this purpose, presented a Response in the present proceedings, in which, by way of opposition, alleges in summary the following:

a) As regards the question of the subjective scope of IUC, it considers that the provisions of Articles 1 and 2 of Article 3 of the CIUC constitutes a true rule of scope and not a mere presumption, pointing out that the legislator did not use the expression "are presumed", as it could have done, moreover in line with what happens in other legal enactments;

b) It understands, therefore, that in cases where the tax legislator uses the expression "are considered", it is not establishing a presumption, but rather a legislative choice to consider as owners those who appear as such in the registry; to understand that the legislator has established here a presumption would be unequivocally effecting an interpretation against legem;

c) The legislator expressly and intentionally established that are considered as such the persons in whose name they are registered, because it is this interpretation that preserves the unity of the legal-fiscal system and any other interpretation would be to ignore the teleological element of interpretation of the law: the ratio of the regime established in the article in question, and also in all of the CIUC; this allegation is reinforced by invoking that this is the understanding followed by the jurisprudence of our courts expressed in the judgment handed down by the Administrative and Tax Court of Penafiel, in the context of Case No. 210/13.0BEPNF;

d) It concludes that Article 3 of the CIUC does not contain any legal presumption, and for the dismissal of the arbitral claim, inasmuch as the tax acts in question do not suffer from any defect of violation of law, to the extent that in light of the provision of Article 3, Nos. 1 and 2 of the CIUC and Article 6 of the same code, the Claimant was, in the capacity of owner, the taxable person of IUC, as attested by the Information relating to the history of ownership of the vehicles in question, issued by the Motor Vehicle Registration Office;

e) According to the ATA, the Real Property Registration Code applies subsidiarily to the Motor Vehicle Registration Regulations, however, the Real Property Registration Code is not subsidiary legislation of the IUC Code, therefore IUC became, in accordance with the provision of Article 3 of the CIUC, due by the persons who appear in the registry as owners of the vehicles; any other interpretation would be to ignore the teleological element of interpretation of the law, the systematic element, violating the unity of the regime and would also be an interpretation contrary to the Constitution;

f) The AT alleges that, if this is not understood, it would always have to be considered that the probative documents filed by the Claimant are not capable of rebutting the presumption of the registry, given the unilateral nature of the invoice; for this purpose, it invokes the arbitral jurisprudence set out in the decisions handed down in cases Nos. 63/2014-T, 130/2014-T; 150/2014 – T, 220/2014-T and 339/2014-T, among others;

g) It concludes arguing for the legality of the impugned acts, so the arbitral claim should be judged without merit, maintaining in the legal order the impugned tax assessment acts, absolving the Respondent of the claim.

II - PROCEDURAL REQUIREMENTS

1. The Arbitral Tribunal is regularly constituted. It is materially competent, in accordance with Article 2, No. 1, paragraph a) of Decree-Law No. 10/2011, of 20 January.

2. The parties have legal personality and capacity, are legitimate and are legally represented (See Article 4 and 10, No. 2 of Decree-Law No. 10/2011 and Article 1 of Regulation No. 112/2011, of 22 March).

3. The Claimant intends to raise the joint assessment of the legality of the two IUC assessments, relating to the years 2013 and 2014, although they constitute autonomous acts, the requirements provided for in No. 1 of Article 3 of the RJAT and Article 104 of the CPPT are met, it is permissible to cumulate, given the identity of the tax and the assessment of the tax acts in question depends on the assessment of the same factual circumstances and the application of the same legal rules.

4. The proceedings do not suffer from defects that would invalidate them.

5. Having the positions assumed by the parties and already set out above, the documentary evidence joined to the proceedings by the Claimant and that contained in the Administrative Process (PA) joined by the ATA, as well as the testimonial evidence produced in the present proceedings, it is necessary to establish the factual matter relevant to the decision.

III - FACTUAL GROUNDS

A) Proven Facts

1. As relevant factual matter, this tribunal accepts as established the following facts:

a) The IUC assessments in question in the proceedings relate to a vehicle of brand BMW 320 (passenger car), with the registration number … - … - …, of which the Claimant A… was the owner;

b) This vehicle suffered a road accident on 16-11-2011, at 6 hours and 45 minutes, on the IC17, which resulted in irreversible damage, which determined, in expert assessment, the determination of total loss of the vehicle, as evidenced by document No. 2, attached to the proceedings and the testimony of witnesses B… and C…;

c) The insurer, following the result of the expert assessment conducted, contacted a company in the sector, commercial company F…, Ltd., with Tax Identification Number …, to effect the quotation of the damaged vehicle (salvage) in the market, as resulted from the testimony of witness B…, which revealed precise knowledge of the factual situation under discussion, because she was then an employee of the company;

d) It was precisely through this witness, B…, that the company contacted the present Claimant to inform him of the vehicle's quotation and propose its placement for sale in the market, to which the Claimant agreed;

e) Following the facts described above, an interested party emerged in the purchase of the damaged vehicle, for the amount of €1,999.00, the commercial company E… Single-Member Ltd., with Tax Identification Number …, with headquarters at Street …, No. …, … …;

f) Still according to the same witness, with the agreement of the Claimant, the respective purchase and sale agreement was concluded, on 23-12-2011, which gave rise to the issuance of the respective receipt of payment, attached to the proceedings as document No. 3, to which came to be exhibited and joined to the proceedings, also, a copy of the cheque, in the amount of €1,999.00, paid for the acquisition of the vehicle, a document that was joined to the proceedings at the meeting already referred to above;

g) Still according to the testimony of witness C…, process manager who conducted the procedure relating to the Claimant and the vehicle in the proceedings, on the same date of the conclusion of the purchase and sale agreement the Claimant handed over the keys to the vehicle and all its documents; namely for the purposes legally provided for alteration of registry and/or cancellation of registration of the vehicle with the IMTT; the facts described were also confirmed by witness C…;

h) The acquiring company is a company in the sector, which develops its activity, specifically, in the acquisition of damaged vehicles and salvage, in some cases for repair (if possible), but especially for the use of parts in good condition and their trading in the market; it is, therefore, an entity fully aware of its obligations in relation to this type of process;

i) On 12-09-2012 a guide for documents requesting the cancellation of the registration of the vehicle was delivered to the IMTT – see documents Nos. 3, 4, 5, 6 and 8 attached to the proceedings and contained in the PA;

j) The apprehension of documents was only ordered by the IMTT on 17-07-2014 – see Doc. No. 8.

k) The Claimant was notified of the statement of Assessment of IUC, attached to the arbitral request, in which are identified the IUC assessments impugned, their respective amounts of tax and interest, as well as the due date for payment: 27-02-2015;

l) The Claimant submitted a Hierarchical Appeal, subsequently converted into a Gracious Claim, in which it attached all documents contained in the respective PA, which came to be rejected with the reasons contained in the said order contained in the PA;

m) The Claimant proceeded to the payment of the IUC assessments and respective interest;

n) Administrative offense proceedings were instituted, due to the facts described above, with Nos. …2015… and …2015…, relating, respectively, to the non-compliance verified in the years 2013 and 2014;

o) That the Claimant paid all the impugned tax assessments, as evidenced by the attachments to the proceedings.

B) UNPROVEN FACTS

1. There are no unproven facts with relevance to the decision to be handed down.

C) SUBSTANTIATION OF THE PROVEN FACTS

1. The facts described above were accepted as proven based on the documents that the Claimant attached to the proceedings, as an annex to the Arbitral Request, as well as on the document attached to the proceedings at the meeting of 10-07-2015, in all documentation attached from the PA, as well as in the testimony of the witnesses examined, who revealed rigorous knowledge of what happened and the development of the process that led to the sale of the damaged vehicle. The Tribunal recognizes as particularly relevant the testimony of witness B…, for the knowledge and reason of science revealed, given the professional functions exercised, in the context of which she was the manager of the process relating to the Claimant's damaged vehicle.

2. As to what was alleged by the Claimant regarding the incompleteness of elements contained in the Administrative Process, the Tribunal considers that despite this, the missing elements in no way prejudice the evidence produced, nor the knowledge of the legal questions under discussion in the present proceedings, so it appears irrelevant.

IV – QUESTIONS TO BE DECIDED AND SUBSTANTIATION OF LAW

1. It is therefore necessary to assess and decide the questions to be resolved, as they are configured in the arbitral claim and in the response deduced by the ATA and which are as follows:

a) Interpretation of the rule of subjective scope provided for in Article 3, No. 1 of the CIUC, that is, to determine whether this rule provides for a rebuttable presumption or, instead, a legal fiction, insusceptible, therefore, of being rebutted by proof to the contrary;

b) The legal value of the registration of motor vehicles;

c) The probative value of the documents attached to the proceedings by the Claimant to prove that he was no longer the owner of the vehicle on the date of the tax facts and, consequently, to rebut the presumption.

A) AS TO THE INTERPRETATION OF ARTICLE 3, NO. 1 OF THE CIUC

1. The Claimant invokes that it was no longer the owner of the vehicle in question in the proceedings, on the date of the tax facts (years 2013 and 2014), therefore the prerequisites for the subjective scope provided for in Article 3 of the CIUC are not met, and therefore is not the taxable person of IUC and, as a consequence, the assessments should be annulled for manifest lack of subjective responsibility for their payment. It alleges that it sold the damaged vehicle on 23-12-2011 to the commercial company E…, Single-Member Ltd., therefore from then on it is no longer the owner of the motor vehicle subject to the impugned assessments.

2. The Claimant understands that Article 3 of the CIUC establishes an implicit presumption of ownership of vehicles in favor of those in whose name they are registered, a presumption that, by force of the application of the general rule provided for in Article 73 of the General Tax Law, is rebuttable by proof to the contrary. Moreover, in the case in the proceedings, the Claimant on the date of the conclusion of the purchase and sale agreement, in which it received the amount of €1,999.00 paid by cheque whose copy appears in the proceedings, signed the respective receipt and handed over the keys and documentation of the vehicle so that the acquirer could proceed with the respective procedure for alteration of registration and/or cancellation of registration with the IMTT.

3. Already for the Respondent, Article 3 of the CIUC does not establish any implicit presumption, but a true legal fiction, irrebuttal, therefore, the holder of the motor vehicle registry is the debtor of the tax regardless of whether or not they are its owner. This same reason appears referenced in the order of rejection of the gracious claim (by conversion of the hierarchical appeal presented), contained in the PA.

4. With reference to this question, there is already abundant arbitral jurisprudence produced in recent years, from which we highlight the decisions handed down 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 handed down in cases 286/2013-T, of 2 May 2014, 293/2013-T, of 9 June 2014, 46/2014-T of 5 September, 246 and 247/2014-T, of 10 October, among others.

5. Let us see what should be the meaning and scope of the provision in Article 3, No. 1 of the CIUC, in accordance with the principles of legal hermeneutics. Article 3, No. 1 of the CIUC provides:

"The taxable persons 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 they are registered."

1. From the simple reading of number one of the indicated rule, it is clear, without great difficulty, that the key point lies in the expression "are considered" used by the legislator. Should it be understood that the legislator intended to establish an implicit presumption or a true legal fiction?

2. It is important to pay attention to some reference concepts to find the most appropriate answer to this question, such as the provision in Article 349 of the Civil Code, according to which "presumptions are the inferences that the law or the judge draws from a known fact to establish an unknown fact."

According to No. 2 of Article 350 of the Civil Code, legal presumptions may be rebutted by proof to the contrary, except in cases where the law prohibits it.

Furthermore, with regard specifically to presumptions of tax scope, according to Article 73 of the General Tax Law, these always admit proof to the contrary.

A different situation, to which the legislator sometimes resorts, is what is designated as "legal fictions", which consist "in a legal process that considers a situation or a fact as distinct from reality in order to attribute legal consequences to it."

1. According to the thesis repeatedly defended by the Respondent AT in various proceedings identical to that discussed in the present proceedings and which appeared as the reason for the rejection of the gracious claim directed to the present Claimant, the fact that Article 3, No. 1 of the CIUC establishes that are "considered" as owners, instead of "are presumed" as owners, reveals that the legislator, within its freedom of legislative configuration, expressly intended to determine that the persons in whose name the vehicles are registered are considered, without admission of any proof to the contrary, to be owners of them. According to the ATA, if the legislator intended to create a presumption and not a legal fiction, it would have written, as it did in various other enactments, that they are presumed to be owners and not that they are considered to be owners.

2. Well, this is not the understanding of this Tribunal. And let it not be said that this is a position only set out in the successive arbitral proceedings that have focused on this issue, as the same position was recently endorsed by the Central Administrative Court South, by Judgment handed down on 19-03-2015, in case No. 08300/14, in which it is stated that "(…) the cited Article 3, No. 1 of the CIUC establishes a legal presumption that the holder of the motor vehicle registration is its owner, and such presumption is rebuttable, by virtue of Article 73 of the LGT."

And it adds, the same Judgment of the TCA South "that the rebuttal of the legal presumption follows the rule contained in Article 347 of the Civil Code, in terms of which legal proof can only be contradicted by means of proof that shows the fact which is its subject is not true."

It is therefore incumbent upon the Claimant to prove that on the date of the tax facts it was no longer the owner of the vehicle in question in the present proceedings.

1. In fact, as has been emphasized in various arbitral decisions handed down, the analysis of the historical and teleological elements, in addition, naturally, to the literal element, of legislative interpretation, lead to the logical conclusion that the legislator did not intend to establish any legal fiction but only a presumption, rebuttable by proof to the contrary in the terms and for the purposes of the provision in Article 73 of the General Tax Law. Being a rule of tax scope, any other understanding would be clearly contrary to the principles governing fiscal legal relations.

2. Thus, as to the historical element, it is important to note that the CIUC had its genesis in the creation, through Decree-Law 599/72, of 30 December, of the tax on vehicles, which already expressly established that the tax was due by the owners of the vehicles, being presumed as such the persons in whose name they were registered or registered. Similarly, Article 2 of the Regulations on Circulation and Haulage Taxes (approved by Decree-Law No. 116/94) established that: "the taxable persons 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 they are registered". However, in the CIUC, the legislator replaced the expression "being presumed" with the expression "are considered", which in the view of the Respondent translated the establishment of a legal fiction, irrebuttal. However, we do not consider that to be the case.

3. In fact, in the current version of the Code only the verb changed, with the legislator now opting for the expression "are considered". It is true that, between the previous legislative versions and the current one, the General Tax Law came into force, which expressly established the principle contained in Article 73, from which it follows that in the matter of tax scope any presumption always admits proof to the contrary. Therefore, it becomes immaterial the adoption of an express or implicit presumption, since one as well as the other are equally rebuttable.

4. As appears in various arbitral decisions, now reinforced by the jurisprudence of the higher courts, we are faced with a rebuttable presumption. Furthermore, as already mentioned above, being a rule of tax scope, it would never be admissible the establishment of an irrebuttal presumption. As stated by Diogo Leite Campos, Benjamin Silva Rodrigues and Jorge Lopes de Sousa, in the annotation to No. 3 of Article 73 of the General Tax Law, "presumptions in the matter of tax scope may be explicit, revealed by the use of the expression 'is presumed' or similar (…). However, presumptions may also be implicit in rules of scope, namely of objective scope, when certain values of movable or immovable property are considered to constitute taxable matter, in situations where it is not impractical to ascertain the real value".

5. And there are many examples of rules in which the verb "consider" is used to establish rebuttable presumptions, as is the case with the provision in No. 2 of Article 21 of the CIRC, Article 89-A of the General Tax Law or Article 40, No. 1 of the CIRS among others. The Respondent alleges, however, in the response presented, that this same word "are considered" is also commonly used by the fiscal legal system to define situations other than presumptions. It seems normal, namely in the case of other fiscal rules in which the legislator used the formula "is considered" or "are considered", but giving it another meaning, since these are expressions which, depending on the context, may assume a plurality of meanings, without which the conclusion the Respondent intends to draw can be extracted from that.

6. Taking into account that the legal system should 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 "presume" is used that we are faced with a presumption, but also the use of other terms or expressions, such as the term "are considered" can serve as the basis for presumptions. And, as mentioned above, being the literal element the first instrument of interpretation of the legal rule, in search of the legislative thought, it is important to confront it with the other elements of interpretation, namely the rational or teleological element, the historical element and the systematic element.

7. It appears clear that, in the matter of tax scope, presumptions may be revealed by the expression "is presumed" or by similar expression.

By way of example, Jorge Lopes de Sousa mentions that "in Article 40, No. 1 of the CIRS the expression 'is presumed' is used, whereas in Article 46, No. 2 of the same Code the expression 'is considered' is used, there being no difference between one and the other expression, both meaning, after all, the same thing: a legal presumption."

Thus, although the CIUC has opted for the expression "are considered" instead of "are presumed", from this no change of substance is drawn, both having the same meaning, that is, the establishment of a rebuttable presumption.

1. If we consider the teleological element, the same conclusion is imposed.

In the statement of reasons of the Bill No. 118/X of 07/03/2007, underlying Law No. 22-A/2007, of 29 June, it is evident that it was intended to undertake a "comprehensive and coherent reform of the taxes linked to the acquisition and ownership of motor vehicles" which results from the "pressing need to bring clarity and coherence to this area of the fiscal system and the even more pressing need to subordinate it to the principles and concerns of environmental and energy order that nowadays mark the discussion of motor taxation. (…) the two new taxes that are now created, the tax on vehicles and the unique circulation tax, constitute much more than the technical extension of the figures created in the 70s and 80s that preceded them, turned predominantly to revenue raising, indifferent to the social cost resulting from motor circulation. They constitute something different, figures already of the century in which we live, with which it is certainly intended to raise public revenue, but raise it in proportion to the cost that each individual causes to the community."

1. Along these lines of thinking the legislator established the principle of equivalence, inscribed in Article 1 of the CIUC, as a fundamental principle in the functioning of the tax, "thus making clear that the tax, as a whole, is subordinated to the idea that taxpayers should be burdened in proportion to the cost they cause to the environment and the road network, and this is the raison d'être of this tax figure. It is this principle that dictates the burden on vehicles in function of their respective ownership and until the moment of scrapping".

The IUC, as a true environmental tax, elected as taxable person the user, the polluter, in obedience to the polluter-payer principle. Which, in the case of the proceedings, given the circumstance resulting from the road accident, with total loss of the vehicle, no longer any justification persists for the collection of IUC, demonstrated as it is its disuse. It should, instead, the new acquirer have immediately activated the mechanism of the IMTT for cancellation of the registration. But it is also true that, despite the diligence being carried out as early as 2012, only in July 2014 the IMTT concluded the process, that is 2 years later, a fact to which the Claimant is totally unrelated.

1. It is thus verified that the structuring principle of the reform of motor vehicle taxation is precisely the incidence of taxation on the true user of the vehicle, not being compatible with this principle with the "blind" reading of the letter of the law, which could lead, after all, to taxing those who were not owner and, in that way, who was not the subject causing the "environmental and road cost" caused by the vehicle, to which Article 1 of the CIUC alludes.

2. Thus, in accordance with the literal, historical and teleological elements of interpretation of the law, they necessarily lead to the conclusion that the expression "are considered" has exactly the same meaning as the expression "are presumed", and should, therefore, be understood that Article 3, No. 1 of the CIUC establishes a true presumption of ownership and not any fiction, and is, therefore, such presumption rebuttable.

3. Therefore, the taxable person of the tax is, in principle, the owner, because the law presumes that he himself uses the property, however, if the presumed owner rebuts the presumption by proving that he was no longer so on the date of the tax facts, cannot be considered the taxable person of the tax. Moreover, in this matter it is concluded that no changes are verified in relation to the situation previously in force in the context of the Municipal Tax on Vehicles, Circulation Tax and Haulage Tax, as indeed is widely recognized by doctrine, a rebuttable presumption continuing to be valid in this matter.

4. This understanding is also the only one that appears adequate and in conformity with the principle of material truth and justice, underlying fiscal relations, with the objective of taxing the real and effective owner and not the one who, by circumstances of a different nature, is sometimes, nothing more than an apparent and false owner, by appearing in the motor vehicle registry. In this sense, also the arbitral decisions handed down in cases Nos. 150/2014-T and 220/2014-T, confirm the same understanding already set out in arbitral decisions prior, among which, the one invoked in the proceedings by the Claimant. Still in this regard, and in the same sense, states the Arbitral Judgment No. 63-2014-T, of 15 September, that: "(…) if the legislator had, as the Respondent claims, established in law a non-presumptive qualification as to who is the owner of the vehicles (a legal fiction), it would thereby establish, through a different formulation, a rule identical in all respects to the hypothetical rule mentioned. It would be basing the subjective incidence of the tax on a legal fiction, in total disconnection from any economic substance as the basis for subjective incidence. (…) And if this is so, it will also be necessary to 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 entail, certainly, in terms of efficiency of the administration of the tax."

5. For being so, the registered holder of the motor vehicle registry must be permitted the possibility to present evidentiary elements sufficient to demonstrate that the effective owner is, after all, a person different from the one appearing in the registry, and who initially, and in principle, was assumed to be the true owner. Otherwise, one would accept the supremacy of the formal truth of the registry over material truth, and would be admitting the gross violation of the fundamental fiscal principles outlined and, furthermore, of the principle contained in Article 73 of the General Tax Law, according to which there are no irrebuttal presumptions in the matter of fiscal scope. To all that is left exposed above would be added the violation of the principles of legality, proportionality and justice, as well as the inquisitorial principle, established, respectively, in Articles 55 and 58 of the General Tax Law. This interpretation is also in harmony with the principle stated in Article 11, No. 3 of the General Tax Law, which establishes, in cases of doubt about the interpretation of tax rules that "the economic substance of the tax facts" must be considered and, on the other hand, with the principle of equality in the distribution of public burdens, which requires that the taxation of taxpayers in general, whenever possible, be based on the economic reality underlying the tax facts."

6. In this regard, the position set out in Arbitral Decision No. 286/2013-T, of 2 May 2014, is quite enlightening in stating that: "It is this principle (of equivalence) that dictates the burden on vehicles in function of their respective ownership and until the moment of scrapping, the common use of a specific tax base, the revision of the framework of tax benefits in force and the allocation of a portion of the revenue to municipalities of their respective use. Now, to claim, as the Respondent does, that the legislator, in Article 3, No. 1 of the CIUC, fixed, whatever the underlying technical means, the subjective incidence of the tax in the persons in whose name the vehicles are registered, with total independence of whether or not they are, in the relevant tax period, holders of the right of use of the vehicle, especially of its ownership, would imply disregarding that purpose that presides over tax normativity, as well manifested in the objective incidence and the tax base associated with the various categories of vehicles (see Articles 2 and 7 of the CIUC). For neither the registrational registration, without correspondence with the underlying ownership, has any value for the satisfaction and performance of such purpose, nor are the persons in whose name the vehicles are registered when they are not holders of rights over their use that cause environmental and road costs, but rather such environmental and road costs are caused by the effective users of the vehicles, in accordance with the relevant substantive legal situations, even if not registered, as they should be, in the motor vehicle registry. The registry, in fact, has nothing to say or serve as to the principle of equivalence established in Article 1 of the CIUC. Moreover, to assume that the determining element of subjective tax incidence is simple and exclusively the motor vehicle registry also does not allow for asserting a link with any manifestation of relevant tax capacity, which, as a rule, in taxes not strictly commutative, is essential, since there must exist, without prejudice to practicability requirements, some effective link between the tax and a substantive economic prerequisite materially relevant capable of founding the tax. The raison d'être of the tax figure thus removes the idea that its incidence is linked strictly and exclusively to the very registrational registration of ownership of taxable vehicles and not to the substantive situations conferring the right of use of the vehicles (Article 3, Nos. 1 and 2 of the CIUC) to which registration is intended to give publicity (see Article 1 and Article 5 of Decree-Law No. 54/75, of 12 February, as amended, which regulates the motor vehicle registry)."

7. This is also the position of the arbitral tribunal in the present proceedings, endorsing the positions already previously set out in the various arbitral decisions mentioned above, therefore, it is understood that the presumption inscribed in No. 1 of Article 3 of the CIUC constitutes a rebuttable presumption, which corresponds to the interpretation most suited to the pursuit of the objectives sought by the legislator. 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 causes of such damage would not be subject to the tax, frustrating absolutely the regulatory purposes of the law itself, that is, its true ratio legis.

B) AS TO THE LEGAL VALUE OF THE MOTOR VEHICLE REGISTRY

1. In accordance with the provision in No. 1 of Article 1 of Decree-Law 54/75, of 12 February, which instituted the Motor Vehicle Property Registry, "the registration of vehicles is essentially intended to give publicity to the legal situation of motor vehicles and their respective trailers, with a view to the security of legal commerce". Article 7 of the Real Property Registration Code, supplementary legislation for the motor vehicle registry, adds that "definitive registration constitutes a presumption that the right exists and belongs to the registered holder, in the precise terms in which registration defines it".

2. The registration of ownership does not have a constitutive nature, but merely declarative, allowing only the registration in the registry to presume the existence of the right and its ownership. Therefore, the presumption resulting from the registry can be rebutted by proof to the contrary.

3. And this is so precisely because, in accordance with the provision in Article 408 of the Civil Code, save for the exceptions provided for in the law, the constitution or transfer of real rights over a determined thing takes place by mere effect of the contract, its validity not being dependent on registration in the registry. In the case of a purchase and sale agreement for a motor vehicle, with the law not providing for any exception for it, the contract has real efficacy, the acquirer becoming its owner, regardless of the registry, just as the person registered in the registry will no longer be the owner, despite possibly still appearing, for some time or even a long time, in the registry as such.

4. It should also be noted that the transfers carried out are opposable to the ATA, despite the provision in No. 1 of Article 5 of the Real Property Registration Code, which provides: "the facts subject to registration produce effects against third parties only when registered." This is because the ATA is not a third party for purposes of registration, in the context provided for in the law. The notion of third parties for purposes of registration is established in No. 4 of the same Article 5: third parties, for purposes of registration, are those who have acquired from a common author rights incompatible with each other, which manifestly is not the case of the AT.

5. The transfer of ownership of movable property, even if subject to registration, as is the case with a motor vehicle, takes place by mere effect of the contract, in the terms provided for in Article 408, No. 1 of the Civil Code. The purchase and sale agreement has a real nature, that is, the transfer of ownership of the thing sold, or the transfer of the alienated right, has as its cause the contract itself. Motor vehicles are movable property, the transfer of whose ownership does not obey any special formality. This question is of fundamental importance, further, for the determination of the means of proof necessary and sufficient for the rebuttal of the presumption.

6. In Portuguese law, the fact that determines the transfer of ownership of movable property (even if subject to registration) is the contract expressed by the will of the parties. So much so that the buyer becomes the owner of the sold vehicle by means of the conclusion of the purchase and sale agreement, independent of registration, which is assumed as a condition of effectiveness and opposability against third acquiring parties.

7. Thus, the proof of the existence of this type of purchase and sale agreement, based as it is on the principle of consensuality, can be made by any suitable means, namely testimonial proof. Since the presumption resulting from the registry is rebuttable, it remains to analyze whether in the case in question in the present proceedings, such presumption, if it exists, was or was not rebutted.

C) AS TO THE PROBATIVE VALUE OF THE DOCUMENTS CONTAINED IN THE PROCEEDINGS TO REBUT THE PRESUMPTION:

1. As results from the proven matter in the present proceedings, on the date of the tax facts referenced to the years 2013 and 2014, the Claimant was no longer the owner of the vehicle, because he had alienated it in December 2011 in the circumstances described above. The Claimant also demonstrated, also, to whom he had alienated it, that is, who was the acquiring owner of the vehicle, being the commercial company E… Single-Member, Ltd.

2. Having arrived here, it is necessary to mention that what is alleged by the ATA regarding the "Invoice" as a means of proof and the controversy about its unilateral nature and suitability for being admitted as a sufficient means of proof, does not hold in the present proceedings, first and foremost because there is no invoice (nor did there have to be) attached to the proceedings. Recall that, in the present proceedings, the seller is a private individual, therefore did not issue an invoice nor was obliged to do so. He only sold the damaged automobile, in the conditions that are proved in the proceedings, issuing the respective receipt of payment. In this factuality the thesis around the probative value of the invoice does not find a reference point in the case in question under discussion, and it is certain that, even if the understanding was otherwise, the acceptance of the parties as to the conditions of the business is fully proven by the content of the documents mentioned above, both by the presentation of the payment proof, and also by the testimonial evidence produced.

3. Thus, this tribunal understands that, in the case of the present proceedings, the Claimant proved the conclusion of the purchase and sale agreement, for which the law does not require any special form, being able to be merely verbal, in obedience to the principle of consensuality. But the truth is that the evidence produced in the proceedings leaves no doubt as to the conclusion of the agreement, the date on which it was concluded, the complete identification of the acquirer, as appears in the receipt of payment attached to the proceedings, corroborated by the document proving payment of the agreed amount (copy of the cheque attached to the proceedings) and the remaining documentation, also contained in the PA attached by the ATA. To these evidence documents is added the testimonial evidence produced, and the witnesses examined in the proceedings offer all credibility due to their direct knowledge of the facts and were objective, coherent and precise in the statements given. Now, the proof of the transfer of ownership can be made by any suitable means, legally admissible, as is the case in the present proceedings.

4. It is further added that the obligation to alter the property registry falls on the acquirer, which in this case is a company in the automobile business sector, with an obligation to know its legal obligations. Finally, the documentation delivered to the IMTT for the cancellation of the registration also leaves no doubt as to the facts that occurred and are proven in the present proceedings.

5. Now, if we pay attention to the rules of civil law governing the transfer of ownership of movable property, already mentioned above and duly explained, it is concluded that the transfer takes place by mere effect of the contract, being the question of the motor vehicle registry, even if mandatory, a condition of publicity and not of validity nor of effectiveness of the purchase and sale business. It would, moreover, be offensive of the principle of uniformity of the legal system if a transfer were considered valid, for all effects provided for in civil law and not so for fiscal effects, following entirely the jurisprudence in this regard in the decision handed down in case No. 265/2013-T.

6. As the law does not provide for any specific form for the conclusion of a purchase and sale agreement for movable property, it will necessarily have to be accepted as sufficient evidence for the rebuttal of the presumption the documents attached to the proceedings as documents Nos. 3, 5 to 10, in the annex to the arbitral request and the copy of the means of payment (cheque) attached to the proceedings at the meeting of Article 18 of the RJAT.

7. Therefore, in the case of the present proceedings, the evidence joined by the Claimant is sufficient to rebut the presumption resulting from the registry. It is further important to emphasize that the obligation of registration falls on the buyer, so, having the Claimant acted prudently, nothing more was required of him. Moreover, it is settled for doctrine and for jurisprudence that registration is not a condition of validity of the businesses subject to it or underlying it. Its validity does not depend on it and the burden of promoting registration does not belong to the transferor, so no penalty can be imposed on him for the non-fulfillment of that obligation by the acquirer (the latter yes obliged to promote the registration).

8. The Claimant proves the alienation of the vehicle by the presentation of means of documentary and testimonial proof, perfectly unequivocal, already mentioned above, as to the conclusion and full performance of the purchase and sale agreement realized and all the factuality that determined it, namely: participation in the accident, receipt of payment for the sale of the damaged vehicle (salvage) and copy of the cheque with which the payment of the transaction was made (it being certain that payment is not a condition of validity of the purchase and sale business, but only of its performance), so that the Claimant succeeded, without any margin of doubt, in rebutting the presumption.

9. In these terms, the assessments must be considered illegal due to error regarding the factual and legal prerequisites on which they were based, namely due to error in the qualification of the taxable person responsible for the payment of the tax.

Finally, it should be noted that from the elements joined to the proceedings in the PA, it is concluded that the ATA had knowledge of the probative elements joined to the present proceedings, in time suitable for not issuing the final tax assessments, or at least for their revocation and immediate extinction of the corresponding proceedings in progress. Yet it preferred to maintain in the legal order the illegal tax acts.

1. Therefore, with the presumption set aside, it is necessary to consider that the IUC assessments reclaimed and here impugned must be annulled.

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

V - DECISION

Given that, this Tribunal Arbitral decides:

a) To judge the arbitral claim entirely well-founded and, in consequence, to annul the impugned assessments, relating to the years 2013 and 2014, with reference to the vehicle identified in the proceedings, with all legal consequences, which imply the extinction of all proceedings in progress;

b) To condemn the Respondent to reimburse the Claimant of all amounts paid as title of IUC, in the total amount of €430.67, plus interest at the legal rate;

c) To condemn the Respondent to the payment of procedural costs, in the terms provided for in Articles 2, 3 and 4, No. 6 of the Regulations of Costs in Tax Arbitration Proceedings.

VALUE OF THE PROCEEDINGS: In accordance with the provision in Articles 305, No. 2 of the CPC, Article 97-A, No. 1, paragraph a), of the CPPT and Article 3, No. 2 of the Regulations of Costs in Tax Arbitration Proceedings, the value of the proceedings is fixed at €430.67.

COSTS: In accordance with the provision in Article 22, No. 4 of the RJAT and in accordance with Table I attached to the Regulations of Costs in Tax Arbitration Proceedings, the amount of costs is fixed at €306.00, to be borne by the Respondent Tax and Customs Authority.

Let it be registered and notified.

Lisbon, 10 August 2015

The sole arbitrator,

 (Maria do Rosário Anjos)