Process: 159/2016-T

Date: July 22, 2016

Tax Type: IUC

Source: Original CAAD Decision

Summary

CAAD arbitration case 159/2016-T addressed the subjective incidence of IUC (Unique Circulation Tax) on vehicles registered to an importer but immediately sold to dealerships. The claimant A… S.A., exclusive importer of brand B vehicles, challenged IUC assessments totaling €6,498.81 for 49 vehicles in 2011-2012. The importer argued that vehicles were imported only upon dealership orders, invoiced immediately to dealerships, and delivered directly to their facilities for resale to final consumers. Despite formal registration in the importer's name, the claimant contended that dealerships were the actual owners who requested registrations and sold to end users. The importer emphasized that vehicle registration serves only publicity purposes under Decree-Law 54/75 and does not determine actual ownership. The Tax Authority defended the assessments, invoking Article 3(1) of CIUC which establishes that IUC liability falls on persons appearing in the register as vehicle owners, regardless of underlying commercial arrangements. The AT rejected the importer's interpretation as biased and contrary to systematic and teleological interpretation of CIUC. The dispute centered on whether the legal presumption of ownership based on registration can be rebutted by evidence of immediate commercial transfer, and whether importers holding vehicles temporarily before resale qualify as passive subjects of IUC under the subjective incidence rules.

Full Decision

ARBITRAL DECISION

Claimant – A…, S.A., Tax ID: …

Respondent - Tax and Customs Authority (AT)

The Appointed Arbitrator - Maria de Fátima Alves

1 REPORT

1.1 – A…, S.A., with Tax ID: … (duly identified in the respective case files), Claimant in the tax proceedings, above and separately referenced, hereinafter referred to as "Claimant", came forward, invoking the provisions of subparagraph a) of paragraph 1 of Article 2 and Article 10 of Decree-Law No. 10/2011, of January 20 (hereinafter RJAT) and, of paragraph 1 of Article 102 and of subparagraph a) of Article 99, both of the Code of Tax Procedure and Process (CPPT) and paragraphs 1 and 2 subparagraph d) of Article 95 of the General Tax Law (LGT), to request the establishment of a Single Arbitral Tribunal, with a view to:

  • The annulment of the assessment acts relating to the Unique Circulation Tax (hereinafter designated as IUC), relating to the years 2011 and 2012, concerning 49 vehicles listed in the Gracious Objection proceedings, attached to the Request for Arbitral Pronouncement, cf., copies of the documents found attached to the case files with the designation of doc. No. 1 and doc. 2, whose contents are considered reproduced for all legal purposes;

  • The reimbursement of the total amount of € 6,498.81, plus the corresponding indemnity interest provided for in paragraph 1 of Article 43 of the LGT and in Article 61 of the CPPT.

1.2 Pursuant to the provisions of subparagraph a) of paragraph 2 of Article 6 and of subparagraph b) of paragraph 1 of Article 11 of Decree-Law No. 10/2011, of January 20, in the wording introduced by Article 228 of Law No. 66-B/2012, of December 31, the Deontological Council appointed, as single arbitrator, Maria de Fátima Alves, who communicated her acceptance of the assignment, within the applicable period:

  • On May 10, 2016, the parties were duly notified of this appointment and did not express any intention to refuse the appointment of the arbitrator, in accordance with the combined provisions of Article 11, paragraph 1, subparagraphs a) and b) of the RJAT and Articles 6 and 7 of the Deontological Code,

  • Therefore, the arbitral tribunal was constituted on May 25, 2016, as prescribed in subparagraph c) of paragraph 1 of Article 11 of Decree-Law No. 10/2011, of January 20, in the wording introduced by Article 228 of Law No. 66-B/2012, of December 31;

  • The Response of the Respondent (AT) was received on June 27, 2016, under Article 17 of the RJAT;

  • Consequently, the meeting of the parties was dispensed with, under Article 18 of the RJAT, on July 8, 2016 and the delivery of the Arbitral Decision was set for July 22, 2016.

1.3 The Claimant's business purpose is the exclusive importation of all motor vehicles of brand B for the national market. Therefore, in the substantiation of its request for arbitral pronouncement, it states, in summary, the following:

  • The Claimant, in the scope of its activity, only imports vehicles through orders placed directly by the dealerships with the Claimant;

  • The Claimant "has as its business purpose the trade in motor vehicles, respective parts and accessories (doc. 6)";

  • That once imported "all vehicles are immediately sold to the dealerships of the brand"

  • Being the dealerships that sell them to the end consumer;

  • It is thus verified that the vehicles did not enter the road circulation circuit in the interest, on behalf of, or by virtue of the possession, holding or ownership of the Claimant;

  • Because, when the Claimant imports the vehicles, these are immediately invoiced by the Claimant to the respective dealerships and delivered, subsequently, at the facilities of the respective dealerships, for immediate delivery to end consumers;

  • Therefore, the ownership of the vehicles always belongs to the dealership;

  • It is verified, however, that in the respective sales invoices, only the numbers of the respective chassis are mentioned, since the vehicle registrations are requested by the dealerships of the respective brand, after the sale by the Claimant, and the dealerships of the brand, in turn, sell the motor vehicles to final customers, these becoming the actual users of the corresponding vehicles;

  • It should be added that, only formally, the registration and registration are made in the name of the Importer, but it is the dealership of the brand that actually requests the vehicle registrations, since it is already the owner of the vehicles;

  • To the Claimant, in its capacity as national importer of the brand, responsible for introducing the vehicles into consumption, is imputable (cf., Art. 5 of the CISV) the tax on vehicles, a tax distinct from IUC, with rules of autonomous application;

  • Being that the vehicles, in this case, for purposes of IUC, were sold by the Claimant prior to the date of their respective registration, and therefore are not subject to IUC, all the more so because the purchase of a new vehicle always presupposes an invoice issued by a dealership and not by a national importer of the brand, as is the case herein, the Claimant;

  • Given the facts presented, the ownership of the said vehicles cannot be attributed to the Claimant, and it cannot be the passive subject of the tax, in view of the letter and spirit of Article 3 of the Code of the Unique Circulation Tax (hereinafter designated as CIUC);

  • It is a fact that paragraph 1 of Article 3 of the CIUC considers the ownership of the motor vehicle to be the person in whose name it is registered; however, in this case, the completion and transmission of the Vehicle Customs Declaration (DAV) by the Claimant, in its capacity as a Registered Operator and the presentation of the vehicle registration certificate request does not proceed from or confuse with the taxable event of the Unique Circulation Tax (IUC);

  • Being that the registration of vehicles at the competent Motor Vehicle Registration Office is not a condition for the transmission of ownership, since such registration aims only to give publicity to the legal situation of the goods, as appears, in particular, from the provisions of Article 1 of Decree-Law No. 54/75, of February 12;

  • Therefore, the taxation relating to CIUC cannot only fall on whoever appears in the register as the owner of the vehicles; the actual owners must be considered.

1.4 The Respondent, Tax and Customs Authority (hereinafter designated as AT), proceeded to attach the Administrative Tax Process and presented a Response, from which it appears that the tax acts in question do not suffer from any defect violating the Law, declaring itself in favor of the dismissal of the respondent and the maintenance of the controversial assessment acts, defending, in summary, the following:

  • The passive subjects of the unique circulation tax are the persons who appear in the register as owners of the vehicles, as provided in paragraph 1 of Article 3 of the CIUC, which in this case applies to the Claimant;

  • It is verified, for this purpose, that the registration of vehicles be in the name of a certain person so that such person holds the position of passive subject of the tax obligation of IUC;

  • That, notoriously, the interpretation that the Claimant makes of the provision of Article 3 of the CIUC is wrong, in that it incurs in a "biased interpretation of the letter of the law" and in the "adoption of an interpretation that does not heed the systematic element, violating the unity of the regime established throughout the CIUC and, more broadly, throughout the entire legal-fiscal system", the Claimant still following an "interpretation that ignores the ratio of the regime established in the article in question and, as well as throughout the entire CIUC".

2 ISSUES TO BE DECIDED

2.1 In light of the above paragraphs, regarding the written submissions of the parties and the arguments presented, the main issues to be decided are as follows:

  • The challenge made by the Claimant regarding the substantive assessment of the assessment acts, relating to the years 2011 and 2012, concerning IUC on the vehicles referred to above in the PI;

  • The incorrect interpretation and application of the rules of subjective incidence of the unique circulation tax assessed and collected, which constitutes the central issue to be decided in the present proceedings;

  • The legal value of the registration of motor vehicles.

3 GROUNDS OF FACT

3.1 On matters of fact relevant to the decision to be rendered, this Tribunal finds established, based on the elements in the case files, the following facts:

  • The Claimant presented probative elements of the motor vehicles in question, corresponding to the moment prior to the taxation period – cf. copies of sales invoices of the vehicles to the respective dealerships of brand B, which demonstrate that the sale to dealerships was carried out prior to the date of their registration, also demonstrating examples described in documents No. 8 and 9, and all documents are attached to the case files, which are considered fully reproduced for all legal purposes.

SUBSTANTIATION OF THE PROVEN FACTS

3.1.1 The facts held as proven are based on sales invoices to dealerships, attached to the case files (contained in the PA, and attached to the PI, Docs. No. 1), which are considered fully reproduced for all legal purposes.

3.1.2 FACTS NOT PROVEN

                       - There are no facts held as not proven, given that all facts deemed relevant to the assessment of the claim have been proven.

4-GROUNDS OF LAW

3.2 The Tribunal is materially competent and is regularly constituted, under the terms of Articles 2, paragraph 1, subparagraph a), 5, paragraph 2, subparagraph a), 6, paragraph 1, 10, paragraph 1, subparagraph a) and paragraph 2 of the RJAT:

  • The parties have legal personality and capacity and are legitimate, by virtue of Articles 4 and 10, paragraph 2 of the RJAT and Article 1 of Ordinance No. 112-A/2011, of March 22;

  • The proceedings do not suffer from any nullities;

  • There is no prior issue on which the Tribunal should pronounce itself.

                     - The claim, object of the present proceedings, is the declaration of annulment of the IUC assessment acts relating to the motor vehicles better identified in the case files.

3.2.1 Condemnation of the AT to refund the amount of tax relating to such assessments in the amount of € 6,498.81;

3.2.2 Condemnation of the AT to payment of indemnity interest on the same amount.

3.3 According to the AT's understanding, it is sufficient that in the register the vehicle appears as the property of a certain person for that person to be the passive subject of the tax obligation.

3.4 The matter of fact is fixed, as appears in paragraph 3.1 above, and it is now important to determine the law applicable to the underlying facts, in accordance with the issues to be decided, identified in paragraph 2.1 above, and it is certain that the central issue at hand in the present case, regarding which there are absolutely opposing understandings between the Claimant and the AT, consists in determining whether paragraph 1 of Article 3 of the CIUC establishes or not a rebuttable presumption.

3.5 Everything analyzed and, taking into account, on one hand, the positions of the parties in confrontation, mentioned in paragraphs 1.3 and 1.4 above and, considering, on the other hand, that the central issue to be decided is whether paragraph 1 of Article 3 of the CIUC establishes or not a legal presumption of tax incidence, it is necessary, in this context, to evaluate and issue a decision.

4 ISSUE OF INCORRECT INTERPRETATION AND APPLICATION OF THE RULE OF SUBJECTIVE INCIDENCE OF IUC

4.1 Considering that it is agreed upon in doctrine that in the interpretation of tax laws the general principles of interpretation apply fully, which will be limited only by the exceptions and particularities dictated by the law itself, subject to interpretation. This is an understanding that has been accepted in the General Tax Laws of other countries and which has also been incorporated into Article 11 of our General Tax Law, which has, moreover, been frequently emphasized by case law.

It is consensually accepted that, in order to grasp the meaning of the law, interpretation resorts, a priori, to reconstructing the legislative thought through the words of the law, which means seeking its literal meaning, evaluating it and assessing it in light of other criteria, involving the designated elements of a logical, rational or teleological nature and of a systematic order:

  • Regarding the interpretation of tax law, case law should be considered, namely, the Decisions of the STA of September 5, 2012, case No. 0314/12 and of February 6, 2013, case 01000/12, available at www.dgsi.pt, the importance of the provision of Article 9 of the Civil Code (CC), as a fundamental element of legal hermeneutics;

  • Paragraph 1 of Article 3 of the CIUC provides that "The passive subjects of the tax are the owners of the vehicles, considered as such the natural or legal persons, of public or private law, in whose name they are registered";

  • The formulation used in said article uses the expression "considered as" which raises the question of whether such expression can be given a presumptive meaning, equating it to the expression "presumed", these are expressions frequently used with equivalent meanings;

  • As Jorge Lopes de Sousa teaches, in Code of Tax Procedure and Process, Annotated and Commented, volume I, 6th Edition, Área Editora, SA, Lisbon 2011, p. 589, that in matters of tax incidence, presumptions can be revealed by the expression "it is presumed" or by a similar expression, mentioning several examples of such presumptions, referring to the one contained in Article 40, paragraph 1 of the CIRS, in which the expression "it is presumed" is used and the one contained in Article 46, paragraph 2 of the same Code, in which the expression "considered as" is used, as an expression with an effect similar to the former and also embodying a presumption;

  • In the legal formulation set forth in paragraph 1 of Article 3 of the CIUC, in which a presumption was established, revealed by the expression "considered as", of meaning similar and equivalent value to the expression "presumed", in use since the creation of the tax in question;

  • The use of the expression "considered as" aimed only at establishing a more marked and clear approximation between the passive subject of IUC and the actual owner of the vehicle, which is in line with the reinforcement given to the ownership of the vehicle, which became the taxable event of the tax, under Article 6 of the CIUC;

  • The relevance and interest of the presumption in question, which was historically revealed through the expression "presumed" and which now uses the expression "considered as", resides in the truth and justice that, by this means, is conferred on tax relationships and which embody fundamental tax values, allowing taxation of the real and actual owner and not the one who, due to circumstances of a different nature, is sometimes merely an apparent and false owner. If the case were not considered this way, if the presentation of probative elements intended to demonstrate that the actual owner is, in fact, a person different from the one appearing in the register and who initially, and in principle, was supposed to be the true owner, were not admitted and given weight, those values would be objectively set aside.

4.2 There is also to be considered the principle of equivalence, inscribed in Article 1 of the CIUC, which has underlying it the polluter-pays principle and concretizes the idea contained therein that whoever pollutes must, for that reason, pay. Said principle has constitutional basis, in that it represents a corollary of the provision of subparagraph h) of paragraph 2 of Article 66 of the Constitution, and also has basis in community law, both at the level of primary law, Article 130-R of the Maastricht Treaty (Treaty on European Union, of February 7, 1992), where the said principle became part of the basis of Community Policy in the environmental sphere and which aims to hold responsible those who contribute to the damages that arise to the community, resulting from the use of motor vehicles, being borne by their owners-users, as costs that only they must bear.

4.3 Given the facts described above, it is important to emphasize that the aforementioned elements of interpretation, whether those related to literal interpretation, supported by the words legally used, or those relating to logical elements of interpretation, of a historical nature or of a rational order, all point in the direction that the expression "considered as" has a meaning equivalent to the expression "presumed", and therefore it should be understood that the provision of paragraph 1 of Article 3 of the CIUC establishes a legal presumption which, in light of Article 73 of the LGT, where it is established that "The presumptions established in the rules of tax incidence always admit proof to the contrary", will necessarily be rebuttable, which means that the passive subjects are, in principle, the persons in whose name such vehicles are registered. These will therefore be the persons identified under these conditions to whom the AT must necessarily direct itself;

  • But it will, in principle, be the case that in the framework of the mandatory prior hearing, in light of the provision of subparagraph a) of paragraph 1 of Article 60 of the LGT, the tax relationship may be reconfigured, validating the initially identified passive subject, or redirecting the proceedings towards the one who is, in fact, the true and actual passive subject of the tax in question.

  • The taxpayer has the right to be heard, through prior hearing (José Manuel Santos Botelho, Américo Pires Esteves and José Cândido de Pinho, in Code of Administrative Procedure, Annotated and Commented, 4th edition, Almedina, 2000, annotation 8 of Article 100).

  • The prior hearing, which naturally should be conducted at the moment immediately prior to the assessment procedure, corresponds to the proper place and time to, with certainty and confidence, identify the passive subject of IUC.

5 ON THE LEGAL VALUE OF THE REGISTRATION

5.1 Regarding the legal value of the registration, it is important to note what is established in paragraph 1 of Article 1 of Decree-Law No. 54/75, of February 12 (amended several times, the last by Law No. 39/2008, of August 11), when it states that "the registration of vehicles has essentially as its purpose to give publicity to the legal situation of motor vehicles and their trailers, with a view to the security of legal commerce":

  • Article 7 of the Property Registry Code (CRP), applicable, supplementarily, to the registration of automobiles, by virtue of Article 29 of the CRA, provides that "The definitive registration constitutes a presumption that the right exists and belongs to the registered holder, in the precise terms in which the registration defines it";

  • Definitive registration is nothing more than a rebuttable presumption, thus admitting counter-proof, as follows from the law and case law has pointed out, and can be seen, among others, in the Decisions of the STJ No. 03B4369 of February 19, 2004 and No. 07B4528, of January 29, 2008, available at: www.dgsi.pt;

  • Therefore, the function legally reserved for registration is on one hand to give publicity to the legal situation of the goods, in the case at hand, of vehicles and, on the other hand, allows us to presume that there exists a right over those vehicles and that such right belongs to the holder, as such registered in the register, it does not have a constitutive nature of the right of ownership, but only declarative, wherefore the registration does not constitute a condition of validity of the transmission of the vehicle from seller to buyer;

  • The acquirers of vehicles become owners of those same vehicles through the execution of the corresponding purchase and sale contracts, with registration or without it;

  • In this context it is worth recalling that, in light of the provision of paragraph 1 of Article 408 of the CC, the transfer of real rights over things, in this case, motor vehicles, is determined by the mere effect of the contract, and pursuant to the provision of subparagraph a) of Article 879 of the CC, among the essential effects of the purchase and sale contract, stands the transmission of the thing;

  • In light of the above, it becomes clear that the legislative thought points in the direction that the provision of paragraph 1 of Article 3 of the CIUC establishes a "juris tantum" presumption, consequently rebuttable, thus allowing the person who, in the register, is inscribed as the owner of the vehicle, to present elements of proof intended to demonstrate that such ownership is inserted in the legal sphere of another person, to whom ownership was transferred.

6 THE PRESUMPTION OF ARTICLE 3 OF THE CIUC AND THE DATE ON WHICH IUC IS DUE

6.1 THE PRESUMPTION OF ARTICLE 3 OF THE CIUC

  • The AT considers that the presumption that exists in paragraph 1 of Article 3 of the CIUC is resulting from an interpretation against the law, resulting from a biased reading of the letter of the law and, for that reason, violating the unity of the legal system, however, and with all due respect, case law understanding goes in the direction that the existence of a legally rebuttable presumption should be considered, and therefore consequently serves the values and interests questioned, both at the level of material fiscal justice and at the level of the environmental objectives pursued by IUC;

  • Regarding the unity of the legal system, it is important to note everything that was cited above, namely, on the ratio of Article 1 of the CIUC; on the norms and principles of the LGT; on the pertinent and applicable norms regarding the registration of motor vehicles, on the interpretation that best serves and achieves the mentioned unity and ensures the connection of those same norms, considering the legal presumption that is provided in Article 3 of the CIUC.

6.2 DATE ON WHICH IUC IS DUE

  • IUC is a tax of periodic taxation, whose periodicity corresponds to the year that begins at the time of registration or in each of its anniversaries, as provided in paragraphs 1 and 2 of Article 4 of the CIUC;

  • It is due under the terms of paragraph 3 of Article 6 of said Code;

  • It should be noted that, as to the assessment of IUC levied on the Claimant for the vehicles referred to above, in the years 2011 and 2012, they should not be considered, because at the time of the tax events the vehicles did not belong to it, since the said vehicles when imported are already destined to be sold immediately to the respective dealerships of brand B, and it is these that request the respective registration that entitle the vehicles so they can be sold to final customers.

6.2.1 Regarding the burden of proof, Article 342, paragraph 1 of the CC stipulates "it falls to him who invokes a right to prove the facts constitutive of the right alleged";

6.2.2 Also Article 346 of the CC (counter-proof) determines that "to the proof that is produced by the party upon whom the burden of proof falls the opposing party may present counter-proof regarding the same facts, intended to render them doubtful; if it succeeds, the question is decided against the party burdened with the proof." (As stated by Anselmo de Castro, A., 1982, ED. Almedina Coimbra, "Civil Declaratory Procedural Law", III, p. 163, "where one of the parties bears the burden of proof, it is sufficient for the opposing party to present counter-proof, this being proof intended to render doubtful the facts alleged by the first").

Thus, in the case at hand, what the Claimant has to prove in order to rebut the presumption arising either from Article 3 of the CIUC or from the vehicle registration itself, is that the Claimant could never be the owner of the vehicles in question, since the Claimant only imports vehicles of brand B, which it then immediately sells to the respective dealerships, a fact verified in the period to which the contested assessments pertain. It proposes to prove, as appears from the case files, that the ownership of the vehicles did not belong to it in the periods to which the assessments relate, all the more so because it is the dealerships that request the respective registration, cf., documents attached to the Gracious Objection, contained in the PA and attached to the case files, which are considered fully reproduced for all legal purposes.

6.3 REBUTTAL OF THE PRESUMPTION

  • The Claimant, as referred to in 3.1., regarding the proven facts, alleged, with the purpose of rebutting the presumption, not being the owner of the vehicles at the time of the occurrence of the tax events, offering for this purpose the following documents:

  • Copies of sales invoices to the corresponding dealerships of brand B;

  • In this way, the ownership of the said vehicles did not belong to it, because the Claimant is only the Importer of brand B cars for the national territory and immediately transfers them to the respective dealerships of the brand, cf., sales invoices, with the designation of the corresponding chassis numbers, since the number of their respective registrations are requested by the same dealerships, who will then sell them to final customers;

  • It follows from this, that at the date on which IUC was due, whoever held the ownership of the motor vehicles could not be the Claimant!

7 OTHER ISSUES RELATING TO THE LEGALITY OF THE ASSESSMENT ACTS

  • Regarding the existence of other issues relating to the legality of the assessment acts, taking into account that it is inherent in the establishment of an order of knowledge of defects, as provided in Article 124 of the CPPT, that when the request for arbitral pronouncement is based on defects that prevent the renewal of the contested assessments, the knowledge of other defects is precluded, because it would be useless, it does not seem necessary to rule on the other issues raised.

8 REIMBURSEMENT OF THE TOTAL AMOUNT PAID

  • Pursuant to the provision of subparagraph b) of paragraph 1 of Article 24 of the RJAT and, in accordance with what is established there, the arbitral decision on the merits of the claim from which no appeal or challenge may lie, binds the tax administration from the end of the period provided for appeal or challenge, and the latter must, in the exact terms of the favorable outcome of the arbitral decision for the passive subject and until the end of the period provided for the spontaneous execution of sentences of tax courts "Restore the situation that would exist if the tax act, subject of the arbitral decision, had not been performed, adopting the acts and operations necessary for this purpose"

  • These are legal commands that are in complete harmony with the provision of Article 100 of the LGT, applicable to the case, by virtue of the provision of subparagraph a) of paragraph 1 of Article 29 of the RJAT, in which it is established that "The tax administration is obliged, in case of total or partial merits of claims or administrative appeals or judicial proceedings in favor of the passive subject, to the immediate and full restoration of the situation that would exist if the illegality had not been committed, the payment of indemnity interest corresponding to the terms and conditions provided by law".

  • The case in the present case files raises the manifest application of the mentioned norms, since, following the illegality of the assessment acts referenced in this proceedings, there must, by force of these norms, be reimbursement of the amounts paid, whether as the tax paid or the corresponding indemnity interest, as a way of achieving the restoration of the situation that would exist if the illegality had not been committed.

9 OF THE RIGHT TO INDEMNITY INTEREST

10 - The declaration of illegality and consequent annulment of an administrative act confers upon the recipient of the act the right to the restoration of the situation in which the same would have found itself prior to the execution of the annulled act.

  • In the context of tax assessment, its annulment confers upon the passive subject the right to the restitution of the tax paid and, as a rule, the right to indemnity interest, under the terms of paragraph 1 of Article 43 of the LGT and Article 61 of the CPPT.

  • Therefore, the Claimant has the right to indemnity interest on the amount of tax paid, relating to the annulled assessment.

11 DECISION

In light of the above, this Arbitral Tribunal decides:

  • To judge as meritorious the claim for declaration of illegality of the IUC assessment relating to the years 2011 and 2012, concerning the motor vehicles identified in the present proceedings, thereby annulling the corresponding tax acts;

  • To judge as meritorious the claim for condemnation of the Tax Administration to refund the amount unduly paid, in the amount of 6,498.81 Euros, plus the corresponding indemnity interest legally due, condemning the Tax and Customs Authority to make these payments.

PROCESS VALUE:

  • In accordance with the provisions of Articles 306, paragraph 2 of the CPC and 97-A, paragraph 1 of the CPPT and Article 3, paragraph 2 of the Regulation of Costs in Tax Arbitration Proceedings, the process is assigned a value of €6,498.81 (six thousand, four hundred and ninety-eight euros and eighty-one cents).

COSTS:

  • In accordance with paragraph 4 of Article 22 of the RJAT, the amount of costs is set at € 612.00, under the terms of Table I, attached to the Regulation of Costs in Tax Arbitration Proceedings, to be borne by the Tax and Customs Authority.

Let the parties be notified.

Lisbon, July 22, 2016

The Arbitrator

Maria de Fátima Alves

(the text of this decision was drawn up on a computer, pursuant to Article 131, paragraph 5 of the Code of Civil Procedure, applicable by referral of Article 29, paragraph 1 subparagraph e) of Decree-Law No. 10/2011, of January 20 (RJAT), its drafting being governed by current spelling rules)

Frequently Asked Questions

Automatically Created

Who is liable for IUC payment when vehicles are registered to an importer but ordered by concessionaires?
Under Article 3(1) of CIUC, the person registered as the vehicle owner is liable for IUC payment, regardless of commercial arrangements with dealerships. The Tax Authority maintains that formal registration creates the tax obligation, even when importers act as intermediaries ordering vehicles for immediate resale to dealerships. The legal presumption links IUC liability directly to registration records, not to actual possession or beneficial ownership. Importers cannot avoid IUC obligations by arguing that dealerships are the true economic owners or that vehicles are sold before registration, as the registration formality triggers the tax liability under the subjective incidence rule.
Can the legal presumption of vehicle ownership in IUC be rebutted by the registered keeper?
The legal presumption of vehicle ownership for IUC purposes established in Article 3(1) CIUC is difficult to rebut based solely on commercial evidence of immediate resale. While registration under Decree-Law 54/75 serves publicity purposes and does not necessarily determine civil ownership, tax law applies an autonomous concept of ownership linked to registration. The Tax Authority rejects interpretations that would allow registered keepers to avoid IUC liability through proof of underlying sale agreements, viewing such approaches as contrary to systematic and teleological interpretation of CIUC. The registration-based presumption provides administrative certainty for tax collection, and courts typically require registered owners to fulfill IUC obligations regardless of subsequent transfers.
What is the subjective incidence rule for IUC on imported vehicles held temporarily before resale?
For IUC on imported vehicles held temporarily before resale, the subjective incidence rule under Article 3(1) CIUC makes the registered owner liable, even during brief holding periods. Importers who register vehicles in their name trigger IUC obligations for the respective tax period, regardless of business models involving immediate invoicing and delivery to dealerships. The distinction between ISV (Vehicle Tax) imposed on importers under Article 5 CISV and IUC is crucial—ISV applies to introducing vehicles into consumption, while IUC is an annual circulation tax based on registration. Importers cannot avoid IUC by arguing they never intended to use vehicles or that dealerships are actual owners, as registration creates the tax relationship independently of possession, use, or commercial intent.
How does CAAD arbitration handle claims for annulment of IUC assessments and compensatory interest?
CAAD arbitration handles IUC assessment annulment claims under Article 2(1)(a) and Article 10 RJAT, combined with Article 99(a) and 102(1) CPPT. Claimants must challenge specific assessment acts, identifying the vehicles and tax periods at issue. Requests for compensatory interest follow Article 43(1) LGT and Article 61 CPPT, allowing reimbursement of overpaid amounts plus interest when assessments are annulled. The arbitration procedure includes appointment of a single arbitrator by the Deontological Council, constitution of the tribunal within 15 days after notification to parties, submission of the Tax Authority's response, and issuance of the arbitral decision within the statutory deadline. Parties may waive oral hearings under Article 18 RJAT when written submissions sufficiently frame the legal issues.
What evidence can vehicle importers present to challenge IUC liability based on registration records?
Vehicle importers challenging IUC liability can present evidence including: (1) sales invoices showing immediate transfer to dealerships before registration; (2) commercial documentation proving dealerships ordered and paid for vehicles; (3) delivery receipts demonstrating vehicles went directly to dealership facilities; (4) proof that dealerships requested registrations and acted as actual owners; (5) evidence that final consumers purchased from dealerships, not the importer; (6) corporate bylaws showing the importer's exclusive wholesale business model; and (7) systematic non-use of vehicles for the importer's own purposes. However, such evidence faces significant challenges under Article 3(1) CIUC's registration-based presumption, which the Tax Authority interprets as creating liability regardless of underlying commercial reality or temporary holding periods.