Process: 183/2014-T

Date: July 14, 2014

Tax Type: IUC

Source: Original CAAD Decision

Summary

This CAAD arbitral decision (Case 183/2014-T) addresses a jurisdictional challenge in an IUC (Unique Circulation Tax) dispute involving a financial credit institution. The claimant contested IUC assessments for 2009-2012 totaling €2,291.40 for vehicles under long-term and financial lease contracts that had been transferred to lessees or third parties. The financial institution argued that vehicle registration constitutes merely a rebuttable legal presumption under Article 7 of the Real Property Registration Code, and that the principle of equivalence in Article 1 of the IUC Code requires taxation of the actual vehicle owner or lessee who generates the environmental costs, not the registered owner. The Tax Authority raised a fundamental jurisdictional defense, arguing that no official assessments were issued—rather, the claimant voluntarily generated collection notes from the Finance Portal and paid them. The Tax Authority contended that collection notes are mere publicity acts, not challengeable tax acts, resulting in the arbitral tribunal's absolute lack of jurisdiction. The appropriate remedy would be a Special Administrative Action, not tax arbitration under LRAT. Additionally, the Tax Authority argued that even if treated as self-assessments, the claimant failed to file the mandatory prior Gracious Claim required by Article 131 CTPT within two years. This case highlights critical procedural requirements for challenging IUC assessments, the distinction between official assessments and collection notes, the jurisdictional limits of CAAD arbitral tribunals, and the debate over whether vehicle registration creates a definitive or rebuttable presumption for determining IUC tax liability in leasing arrangements.

Full Decision

ARBITRAL DECISION

CAAD: Tax Arbitration

Case No. 183/2014 – T

Subject Matter: IUC – subjective scope of application; absolute lack of jurisdiction of the tribunal

I. Report

  1. On 25-02-2014, the company "A" — FINANCIAL CREDIT INSTITUTION, S.A., Tax ID … filed a petition for constitution of a single arbitral tribunal, pursuant to the combined provisions of Articles 2 and 10 of Decree-Law No. 10/2011, of 20 January (Legal Regime for Arbitration in Tax Matters, hereinafter referred to only as LRAT), with a view to the illegality of official assessments of Unique Circulation Tax (IUC), relating to the years 2009, 2010, 2011, and 2012, which it attached as docs. 2 to 35, in the total amount payable of 2,291.40 euros, recognition of the right to restitution of the tax unduly paid, plus indemnity interest calculated on said amount.

  2. Pursuant to Article 6(1) of the LRAT, the Deontological Council of the Arbitration Centre appointed the undersigned arbitrator, notifying the parties.

  3. The tribunal is duly constituted to examine and decide on the subject matter of the case.

  4. The allegations supporting the Claimant's request for arbitral pronouncement are, in summary, as follows:

4.1. In the course of its business, the Claimant enters into Long-Term Lease contracts and Financial Lease contracts for motor vehicles with its customers, and upon termination thereof, transfers the ownership of said vehicles to the respective lessees or to third parties.

4.2. Between 10 and 20 December 2013, the Claimant was notified of Official Assessments of IUC relating to the vehicles identified in this petition for arbitral pronouncement and to the tax periods of 2009, 2010, 2011 and 2012, and proceeded to voluntary payment of the allegedly outstanding IUC (Documents Nos. 2 to 35 attached to the Initial Petition), despite considering that the vehicles were not its property on the date identified by the Tax and Customs Authority (hereinafter TA) as the date of occurrence of the taxable event.

4.3. The Claimant considers that the reference to vehicle registration contained in Articles 3(1) and 6 of the IUC Code constitutes a mere legal presumption of tax incidence, since the principle of equivalence, referred to in Article 1 of the same Code, requires that taxation fall on the actual owner of the vehicle or, alternatively, the financial lessees, as these are the ones that have the polluting potential causing environmental costs to the community.

4.4. Indeed, pursuant to Article 1(1) of Decree-Law 54/75, of 12 February, vehicle registration has only the purpose of giving publicity to the legal situation of vehicles, and Article 7 of the Real Property Registration Code, applicable by force of Article 29 of that statute, establishes that registration constitutes a presumption that the right exists and belongs to the registered holder.

4.5. And, in light of the concept of third parties contained in Article 5(4) of the Real Property Registration Code, the TA cannot be considered a third party so as to invoke the absence of registration to justify the ineffectiveness of motor vehicle sales contracts.

4.6. Thus, if the purchaser (new owner of the vehicle) does not proceed to register their property right, it is presumed that this right continues to belong to the seller and may, however, this presumption be rebutted by contrary proof.

4.7. Therefore, the TA cannot avail itself of the failure to update the registration of the property right to demand payment of the tax from the previous owner in whose name the vehicle is registered if and when sufficient proof of the respective sale is presented to it by any means.

4.8. Therefore, the Claimant requests that the illegality of the IUC assessments relating to the tax periods of 2009 to 2012, in the amount of €2,291.40, be declared, with their consequent annulment, given the manifest illegality thereof, with all legal consequences, namely the reimbursement to the claimant of this sum, plus indemnity interest at the legal rate counted from the date of the respective payment until full reimbursement.

  1. For its part, the Respondent Tax and Customs Authority filed a reply, in which it defended itself in the following terms:

5.1. Contrary to what is alleged by the Claimant, there were no "official assessments" of IUC, with Documents 2 to 35 attached to the initial petition corresponding to mere collection notes generated and extracted by the Claimant itself from the Finance Portal, as evidenced by Documents 1 to 34, which it attaches.

5.2. With respect to the motor vehicles sub judice, the Respondent did not generate nor send to the Claimant any official assessments for IUC for the years 2009 to 2012.

5.3. This fact is plainly demonstrated both in Documents 2 to 35 attached by the Claimant.

5.4. And also in the Divergence Management concerning each of the vehicles, in which there is mention of "Out of Deadline - Awaits Official Assessment" and "Completed without Corrections" (cf. Documents 35 to 68 attached to the Reply).

5.5. It was, therefore, the Claimant which, without having been notified to do so, proceeded to issue the collection notes at issue here for each of the vehicles and for the years 2009 to 2012.

5.6. For which reason, the subject matter of the present petition for arbitral pronouncement is not based on acts of "official assessment" issued by the Respondent, but rather on collection notes that the Claimant, in a completely voluntary manner, extracted from the Finance Portal and following which it proceeded to payment.

5.7. Now, whereas an assessment constitutes a tax act, subject to challenge by way of filing a petition for arbitral pronouncement, a collection note is not a tax act, nor does it even have a complementary nature to it, constituting a mere act of publicity.

5.8. Since the collection note does not constitute a tax act, naturally a situation of lack of subject matter is verified in the present case, which constitutes a peremptory exception, which is invoked for all legal purposes, pursuant to Article 577(3), CPC, as amended by Law 41/2012, of 26 June, applicable ex vi Article 29(1)(e) of the LRAT, which results in the dismissal of the Respondent from the claim, pursuant to and for the purposes of Article 576(3) of the CPC.

5.9. Therefore, since collection notes do not constitute tax acts, the remedy against those acts should be a Special Administrative Action, and not the filing of a petition for arbitral pronouncement as performed here by the Claimant.

5.10. The Respondent accordingly contends that the Arbitral Tribunal constituted lacks material jurisdiction to examine and decide on the claim at issue, given the non-existence of official IUC assessments issued by the Respondent, which constitutes a dilatory exception precluding examination of the merits of the case, pursuant to Article 576(1) and (2) CPC, ex vi Article 2(e) of the CTPT and Article 29(1)(a) and (e) of the LRAT.

5.11. Even if this were not the case, on the grounds that it would be considered as self-assessments generated by the Claimant itself in the Finance Portal, the petition for arbitral pronouncement should be judged as lacking merit due to failure to pursue the necessary Gracious Claim, pursuant to Article 131 CTPT and Ordinance 112-A/2011, of 22 March.

5.12. Indeed, pursuant to Article 131(1) CTPT, the remedy against self-assessment in light of Article 2(1)(a) LRAT depends on prior and necessary filing of a Gracious Claim within two years from submission of the declaration.

5.13. Now, the Claimant did not file any Gracious Claim concerning the self-assessment acts sub judice, and therefore such acts are not susceptible to being reviewed by these means.

5.14. Furthermore, pursuant to Article 2(a) of Ordinance No. 112/2011, of 22 March, the Tax Administration bound itself to the jurisdiction of the arbitral tribunals functioning at CAAD that have as their object the examination of claims relating to taxes whose administration is entrusted to them, with the exception of claims relating to the declaration of illegality of self-assessment acts that have not been preceded by recourse to the administrative remedy, pursuant to Article 131 CTPT.

5.15. This exception is verified in the present case since, the filing of a gracious claim being mandatory, pursuant to Article 131 CTPT, the arbitral tribunal lacks jurisdiction to judge the present case.

5.16. By the foregoing, the exception of absolute lack of jurisdiction due to violation of the rules of material jurisdiction must be considered verified, and the Respondent must be dismissed from the proceedings pursuant to Articles 96(a), 99(1), 278(1)(a), 577(a) CPC, applicable ex vi Article 29(1)(e) LRAT.

5.17. The claimant further contends that there is untimeliness of the petition for arbitral pronouncement, since this, pursuant to Article 10(1)(a) of the LRAT, should have been filed within 90 days, counted from the facts provided in Articles 102(1) and (2) of the CTPT.

5.18. Now, section (a) of Article 102(1) establishes that said 90-day period is to be counted from the expiration of the voluntary payment period for tax obligations.

5.19. Thus, and in light of the voluntary payment period stated in the collection notes that the Claimant extracted via the internet, and which it attached to the file as Documents 2 to 35, it appears that by the date of filing of the arbitral petition, 25.02.2014, the right to file the arbitral petition had already expired due to manifest untimeliness thereof.

5.20. Even if this period were counted on the basis of section (f) of Article 102(1) thereof, from the "knowledge of acts harmful to legitimately protected interests", with the Claimant having become aware of the acts, ultimately, at the moment of extraction of the collection documents that it attached to the petition, 11/10/2013, the right to file the petition for arbitral pronouncement would have equally expired at that date.

5.21. By the foregoing, the untimeliness of the petition for arbitral pronouncement must also be considered verified, and thus the Claimant must be dismissed from the claim due to expiration of the right of action.

5.22. By impugning, the TA contends that the tax legislator, in establishing in Article 3(1) of the IUC Code who are the passive subjects of IUC, expressly and intentionally established that these are the owners (or in the situations provided for in (2), the persons mentioned therein), being considered as such the persons in whose names the vehicles are registered.

5.23. It is not manifestly possible to argue that this is a presumption, as the Claimant contends, but rather that it is a clear option of legislative policy adopted by the legislator, whose intention, within its freedom to frame legislation, was that, for the purposes of IUC, those who appear in the vehicle registration as owners be considered as owners.

5.24. Beyond what is provided in Article 3(1) of the IUC Code, this understanding also results from other provisions enshrined in said Code, such as Articles 6(1), (2) and (3) and Article 3(2).

5.25. This, moreover, is the understanding already adopted by the jurisprudence of our administrative and tax courts.

5.26. Indeed, in the context of Case No. 210/13.0BEPNF, the Administrative and Tax Court of Penafiel upheld the position supported by the TA, in the terms explicitly set out above (Document 1 now attached), having decided for the lack of merit of the appeal filed by the passive subject, on the following grounds:

"The taxable event of IUC is determined by Article 6(1) of the IUC Code, being constituted by ownership of the vehicle, as attested by the registration or registration in national territory. That is, as long as the vehicle has registration or is registered in national territory (Article 2 of the IUC Code - objective scope), IUC is owed by the owner of the vehicle, being considered as such the natural or legal person, of public or private law, in whose name it is registered, who is the passive subject of the tax (Article 3(1) of the IUC Code - subjective scope). The ownership and effective possession of the vehicle is irrelevant to the verification of the subjective and objective scope and the taxable event of the tax. It follows from the appeal that the appellant admits that in 2008 the vehicle was registered in his name, despite not being his owner since 15.12.2006. But, regardless of whether the registration of the property right in the vehicle registration is mandatory (Article 5(1)(a) and (2) of Decree-Law No. (DL) 54/75, of 12 February) and of the appellant having sold the vehicle on 15/12/2006, in the case of IUC, the issue is not the derivation of the presumption of property right from vehicle registration, nor the rebuttal of the presumption of the property right in vehicle registration. What is at issue is the determination of the taxable event and the determination of its subjective scope, which are fixed by the ownership of the vehicle 'as attested by the registration or registration in national territory'. That is, regardless of the presumptions derived from vehicle registration and their derivation and/or rebuttal. In accordance with Articles 1 to 6 of the IUC Code, in particular Article 3(1) of the IUC Code, all elements of subjective and objective scope - taxable event and exigibility of the tax - for the assessment of IUC of said vehicle in 2008 in the name of the appellant are verified, regardless of the transfers of the property right in the vehicle and no exemption is verified. The sale of the vehicle on 15/12/2006 is irrelevant. For the assessment of IUC in 2008 and the determination of the person responsible for its payment, the only relevant facts are the maintenance of the registration in national territory and the registration of the property right in the Motor Vehicle Registration Office and the registration of the property right regardless of its actual disposal. The seller has the duty at the moment of disposal to proceed to register the sale for the new acquirer, this being the only way to ensure that the registration is made for the new acquirer. In the case at hand, in 2008 there was no cancellation of the registration and until then the vehicle was registered in Portugal and its ownership was registered in the name of the appellant. Therefore, it is in the appellant that the taxable event is verified and the elements of objective and subjective scope of IUC (Articles 2, 3 and 6(1) of the IUC Code). The failure to register in the name of the new acquirer means that the subjective scope of IUC (Article 3(1) of the IUC Code) is maintained only in the holder of the property right registered in the Motor Vehicle Registration Office and is the person responsible for the assessment and payment of IUC, regardless of its actual disposal. Therefore, the assessment of IUC for 2008 in the name of the appellant does not suffer from any illegality and the failure to pay the respective tax within the legal period is also his responsibility, constituting failure to pay within the legal period (Article 179(2) of the IUC Code) a breach contrary to public order provided for and punished by Article 114(2) of the General Tax Infraction Regulations."

5.27. The tax legislator, in establishing in Article 3(1) who are the passive subjects of IUC, expressly and intentionally established that these are the owners (or in the situations provided for in (2), the persons mentioned therein), being considered as such the persons in whose names the vehicles are registered.

5.28. From the articulation between the scope of subjective scope of IUC and the fact constitutive of the corresponding tax obligation, it follows unequivocally that only the legal situations object of registration (without prejudice to the permanence of a vehicle in national territory for a period exceeding 183 days, provided for in Article 6(2)) generate the birth of the tax obligation.

5.29. For its part, Article (3) of the same article provides that "the tax is considered exigible on the first day of the tax period referred to in Article 4(2)".

5.30. In the same sense, militate the legislative solution adopted by the tax legislator in Article 3(2) of the IUC Code, in making coincide the equivalences enshrined therein with the situations in which vehicle registration requires the respective registration.

5.31. By way of example only, note that the legislator did not enshrine the same legal solution for the case of usufruct.

5.32. This position is also evident in the circumstance that the Vehicle Registration to which the Tax Administration has or may have access, and the certificate in which must appear the acts subject to registration, whose exhibition may be required by the same Administration from the interested party, contain all the elements intended for the determination of the Passive Subject, without need of access to the contracts of a private nature that confer such Rights stated by the IUC Code as constitutive of the Legal Situation of Passive Subject of this Tax. In the absence of such registration, naturally, the Owner will be notified to fulfill the corresponding tax obligation, since the Tax Administration, taking into account the current configuration of the Legal System, will not have to proceed to the assessment of the Tax based on elements that do not appear in public records and documents and, as such, authentic. In these terms, the failure to update the registration, pursuant to Article 42 of the Motor Vehicle Registration Regulations, will be imputable in the legal sphere of the Passive Subject of IUC and not in that of the State, as the active subject of this Tax.

5.33. Let us consider, then, a simple example:

With a view to the assessment of IUC, the TA proceeds to consult the databases, both of the Institute of Mobility of Land Transport (IMTT), and of the Institute of Registration and Notary (IRN - Motor Vehicle Registration Office), as a way of determining the owners, or the financial lessees, purchasers with reservation of ownership or holders of the purchase option right, passive subjects of IUC, in light of what is provided in Article 3 of the IUC Code, combined with Article 6 of the same code.

5.34. Once the passive subject of IUC is determined, on the basis of the persons in whose names the vehicle in question is registered with the Motor Vehicle Registration Office, the TA proceeds to assess IUC in relation to these. After assessing IUC, the passive subject in question comes to invoke, on the grounds of the conclusion of a contract (which, note, may even be of a merely oral nature) that he is no longer the owner of the vehicle or that he gave the vehicle in financial lease, but did not proceed to register and that the passive subject is someone else.

5.35. If one were to accept the position defended by the Claimant, the TA would have to proceed to assess IUC in relation to that "someone else" identified by the person shown in the vehicle registration to whom it had first assessed IUC (or not, since the latter would only need to disclaim his quality as a passive subject at the date of the tax fact).

5.36. For its part, after assessing IUC in relation to that "someone else", this person could also allege and prove that in the meantime he has already concluded a contract of sale, financial lease, long-term lease, etc., with someone else, but did not register.

5.37. The TA would then have to reassess IUC against that other (presumed) passive subject and so on successively... And indefinitely.

5.38. Placing, even, in question, the statute of limitations for the tax.

5.39. And putting in question, unequivocally, legal certainty and security (the institution of registration would cease to provide the certainty and security that constitute its main purposes), as well as, the power/duty of the TA to assess taxes.

5.40. Even admitting that, from the point of view of the rules of civil law and property registration, the absence of registration does not affect the acquisition of the quality of owner and that registration is not a condition of validity of contracts with real effect, pursuant to what is established in the IUC Code (which in the case at hand constitutes special law, which, pursuant to general rules of law derogates the general rule), the tax legislator wanted intentionally and expressly that those considered as owners, lessees, purchasers with reservation of ownership or holders of the purchase option right in long-term leases be the persons in whose names [the vehicles] are registered.

5.41. Finally, it is important to demonstrate that, in light of a teleological interpretation of the regime enshrined throughout the IUC Code, the interpretation put forward by the Claimant to the effect that the passive subject of IUC is the actual owner, regardless of whether or not he appears in the vehicle registration, the registration of this quality is manifestly wrong, in that it is the very ratio of the regime enshrined in the IUC Code that constitutes clear proof that what the fiscal legislator intended was to create a Unique Circulation Tax based on the taxation of the owner of the vehicle as shown in the vehicle registration (in this regard, note, immediately, that the cases expressly typified in Article 3 of the IUC Code, both in its (1) and in its (2), correspond exactly to the cases of mandatory vehicle registration, pursuant to the Motor Vehicle Registration Code (MVRC)).

5.42. Indeed, the IUC Code carried out a reform of the regime of taxation of vehicles in Portugal, substantially altering the motor vehicle taxation regime, with the passive subjects of the tax becoming the owners shown in the property registration, regardless of the circulation of the vehicles on the public road. That is, the Unique Circulation Tax came to be owed by the persons who appear in the registration as owners of the vehicles.

5.43. From the parliamentary debates surrounding the approval of Decree-Law No. 20/2008, of 31 January, it results unequivocally that the Unique Circulation Tax is owed by the persons who appear in the registration as owners of the vehicles.

5.44. The approval of said Decree-Law had as its objective to establish procedures designed to adapt vehicle registration to the new taxation regime, so as to avoid existing problems, namely, those related to the fact that there are many vehicles not registered in the name of the actual owner.

5.45. And this, precisely because the new regime of taxation of the unique circulation tax substantially altered the motor vehicle taxation regime, with the passive subjects of the tax becoming the owners shown in the property registration, regardless of the circulation of the vehicles on the public road. That is, because the Unique Circulation Tax came to be owed by the persons who appear in the registration as owners of the vehicles.

5.46. Indeed, the IUC Code carried out a reform of the regime of taxation of vehicles in Portugal, substantially altering the motor vehicle taxation regime, with the passive subjects of the tax becoming the owners shown in the property registration, regardless of the circulation of the vehicles on the public road. That is, the Unique Circulation Tax came to be owed by the persons who appear in the registration as owners of the vehicles.

5.47. In any case, the invoices attached to the file do not constitute elements of proof of vehicle transmission, since the invoice is insufficient to demonstrate such transmission.

5.48. From all that has been set out above it is clear that the tax acts in question do not suffer from any defect of violation of law, in that in light of the provisions of Articles 3(1) and (2) of the IUC Code and Article 6 of the same code, it was the Claimant, in its capacity as owner, the passive subject of IUC, as attested by the Information concerning the historical record of the ownership of the vehicles at issue, contained in the Motor Vehicle Registration Office.

5.48. In light of Articles 43 of the General Tax Law and 61 of the CTPT, the right to indemnity interest depends on the verification of the following requirements: the tax being paid, the respective assessment having been annulled, in whole or in part, in gracious or judicial proceedings, determination, in gracious or judicial proceedings, that the annulment is based on error imputable to the services.

5.49. From all that has been set out above it is clear that the tax acts in question are valid and legal, because in conformity with the legal regime in force on the date of the tax facts, therefore, there did not occur, in this case, any error imputable to the services.

5.56. Thus, the legal requirements conferring the right to the requested indemnity interest are not met.

5.57. Indeed, even if it is understood, which is not conceded, that the tax is not owed by the Claimant because it is not the passive subject of the tax obligation, still, and as was decided by the Arbitral Tribunal constituted in the context of Case No. 26/2013T, it is undeniable that the respondent merely proceeded to comply with the provision of Article 3(1) of the IUC Code, which imputes such quality to the persons in whose names the vehicles are registered, therefore, necessarily, the recognition of the right to indemnity interest would have to fail.

  1. Faced with the various exceptions invoked by the Tax Authority in its reply, and in order to better ensure the exercise of the right to be heard, the Tribunal invited on 5/6/2014 the Claimant to pronounce itself in writing on the same within ten days, which it did as follows:

6.1. The Claimant was confronted in its private section of the Finance Portal with a series of IUC debts documented in what the TA calls collection notes (collection documents).

6.2. For the purposes of its tax situation, the IUC debts documented by said collection notes were already capable of payment and were paid by the claimant, as is evidenced by the documentation attached to the petition for constitution of the Arbitral Tribunal, in order to obtain a certificate of no debt (certificate of regularized contribution status).

6.3. These IUC debts logically and necessarily presuppose a series of IUC assessments, being irrelevant to the case the means by which the claimant became aware of them.

6.4. The Claimant paid the IUC debts in December 2013 and until June 2014 had not yet been directly or officially notified of the assessments.

  1. On 7 June 2014, the Arbitral Tribunal issued, pursuant to Article 16(c) of the LRAT, an order waiving the meeting provided for in Article 18 of the same statute because the subject matter of the dispute concerns essentially a matter of law, the Claimant has already pronounced itself in writing on the exceptions, no autonomous evidentiary proceedings were requested by the parties, the pertinent documents are on file, and the administrative proceeding has been joined to the file.

  2. On 24 June 2014 the Respondent filed a motion requesting the issuance of a separate order on the exceptions or alternatively the holding of said meeting, which was denied by the Tribunal, as no justification was seen for adopting the suggested procedure.

II - Proven Facts

  1. Before proceeding to the examination of the issues that fall to be decided, beginning with the dilatory exceptions and proceeding, in the hypothesis of none of those being accepted by the Tribunal, to the examination of the merits, it is necessary to present the factual matter relevant to the respective understanding and decision, which, having examined the documentary evidence and the tax administrative proceeding attached, and in light of the facts alleged, is fixed as follows:

9.1. Between October and December 2013 the Claimant proceeded to voluntary payment of Unique Circulation Tax, considered by the Tax Authority as outstanding, relating to the tax periods of 2009, 2010, 2011, and 2012, in the total payable amount of 2,291.40 euros, relating to the vehicles...-…-…, ...-…-…, ...-…-…, ...-…-…, ...-…-…, ...-…-…, ...-…-…, ...-…-…, ...-…-…, ...-…-…, ...-…-…, ...-…-…, ...-…-…, ...-…-…, ...-…-…, ...-…-…, ...-…-…, ...-…-…, ...-…-…, ...-…-…, ...-…-…, ...-…-…, ...-…-…, ...-…-…, having for this purpose proceeded to the assessments of the tax (docs. Nos. 2 to 35 attached to the initial petition).

9.2. The aforementioned vehicles were sold to third parties on the dates shown in docs. Nos. 36 to 60 attached to the initial petition, which are hereby fully reproduced.

9.3. The Tax Authority did not generate nor send to the Claimant any official assessments for IUC for the years 2009 to 2012.

9.4. The Claimant did not file any claim in relation to the tax assessments it proceeded to.

There are no unproven facts relevant to the decision of the case.

  1. The proven facts, in addition to being documented, also result essentially from the administrative instructional proceeding.

III. On the Law

  1. It is therefore necessary to examine and decide. It will be necessary to first examine the exceptions relating to the lack of jurisdiction of the Arbitral Tribunal and to the untimeliness of the petition invoked by the Respondent. Only if these are judged to lack merit will the illegality of the acts of assessment of Unique Circulation Tax (IUC) and compensatory interest, relating to the years between 2009 and 2012, in the total payable amount of 2,291.40 euros, and the recognition of the right to restitution of the tax, as well as any possible right to indemnity interest, be examined.

Let us analyze these issues:

A) On the exception relating to lack of jurisdiction of the arbitral tribunal.

  1. The Respondent argues, first, that what is at issue in this proceeding are not tax assessments, but merely collection notes, which would not constitute a tax act, which would constitute a situation of lack of subject matter, since the remedy against those acts should be a Special Administrative Action, and not the filing of a petition for arbitral pronouncement as performed here by the Claimant.

  2. The Respondent accordingly contends that the Arbitral Tribunal constituted lacks material jurisdiction to examine and decide on the claim at issue, given the non-existence of official IUC assessments issued by the Respondent, which constitutes a dilatory exception precluding examination of the merits of the case, pursuant to Article 576(1) and (2) CPC, ex vi Article 2(e) of the CTPT and Article 29(1)(a) and (e) of the LRAT.

  3. In this regard, it does not appear that the Respondent is right. Indeed, docs. Nos. 2 to 35 attached by the Claimant include not only a collection note but also a reference to the demonstration of the assessment, which in the concrete case was carried out by the passive subject.

  4. This is, moreover, the solution provided in Article 16(2) of the IUC Code, which expressly provides that "the assessment of the tax is made by the passive subject itself via the internet, under the conditions of registration and access to electronic declarations, and is mandatory for legal entities".

  5. It is at the moment of this "assessment of the tax that a single collection document is issued which, certified by the means in use in the collection network, evidences good payment of the tax" (Article 16(4), IUC Code).

  6. Although the Tax Authority has not yet proceeded to the official assessment of the tax, pursuant to Article 18(2) of the IUC Code, there was clearly an assessment of tax by the passive subject, which manifestly constitutes a tax act, which can be challenged through a petition for arbitral pronouncement.

  7. In this regard, therefore, the Respondent is wrong when it invokes the lack of jurisdiction of the Arbitral Tribunal to decide the present case, since it is competent, pursuant to Article 2(1)(a) LRAT, to examine the claim regarding the legality of acts of assessment and self-assessment of taxes.

  8. The Respondent contends, however, that, even if it is understood that these are self-assessments generated by the Claimant itself in the Finance Portal, there would still be lack of jurisdiction of the Arbitral Tribunal due to failure to pursue the necessary Gracious Claim, pursuant to Article 131 CTPT and Ordinance 112-A/2011, of 22 March, where it is established that the remedy against self-assessment in light of Article 2(1)(a) LRAT depends on prior and necessary filing of a Gracious Claim within two years from submission of the declaration.

  9. Indeed, pursuant to Article 2(a) of Ordinance No. 112/2011, of 22 March, the Tax Administration bound itself to the jurisdiction of the arbitral tribunals functioning at CAAD which have as their object the examination of claims relating to taxes whose administration is entrusted to them, with the exception of claims relating to the declaration of illegality of self-assessment acts which have not been preceded by recourse to the administrative remedy, pursuant to Article 131 CTPT.

  10. Thus, the filing of a gracious claim being mandatory, pursuant to Article 131 CTPT, the Arbitral Tribunal would not have jurisdiction to judge the present case.

  11. In this regard, one cannot fail to find merit in what the Respondent argues.

  12. Indeed, pursuant to Article 2(a) of Ordinance 112-A/2011, of 22 March, the Tax Administration did not bind itself to the jurisdiction of the arbitral tribunals with respect to claims relating to the declaration of illegality of self-assessment acts which have not been preceded by recourse to the administrative remedy in accordance with Articles 131 to 133 of the CTPT.

  13. The present proceeding not having been preceded by recourse to the administrative remedy, the Arbitral Tribunal accordingly lacks jurisdiction to judge this question.

  14. In light of the foregoing, one concludes that the exception raised by the Tax and Customs Authority relating to absolute lack of jurisdiction of this Arbitral Tribunal ratione materiae is well-founded, and the examination of the other questions invoked is accordingly prejudiced.

V – Decision

In light of the foregoing, the exception of absolute lack of jurisdiction ratione materiae is found to be well-founded, with the consequent dismissal of the Tax and Customs Authority from the proceedings.

Value of the case

In accordance with the provisions of Article 306(1) and (2) of the CPC, Article 97-A(1)(a) of the CTPT and Article 3(2) of the Cost Regulation in Tax Arbitration Proceedings, the value of the case is fixed at 2,291.40 euros.

Costs

Pursuant to Article 22(4) of the LRAT, the amount of costs is fixed at €612.00, in accordance with Table I annexed to the Cost Regulation in Tax Arbitration Proceedings, to be borne by the Claimant.

Let notice be given.

Lisbon, 14 July 2014

The Arbitrator

(Luís Menezes Leitão)

Text prepared by computer, pursuant to Article 131(5) of the CPC, applicable by reference to Article 29(1)(e) of Decree-Law No. 10/2011, of 20/01.

The drafting of this decision is governed by the old orthography.

Frequently Asked Questions

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Who is liable for IUC payment when a vehicle is under a long-term rental or financial leasing contract?
Under Articles 3(1) and 6 of the IUC Code, the person registered as the vehicle owner in the registration system is primarily liable for IUC payment. However, when vehicles are under long-term rental or financial leasing contracts, the registered owner (often the financial institution) may argue that registration creates only a rebuttable presumption of ownership. The principle of equivalence in Article 1 of the IUC Code supports the position that liability should fall on the actual owner or lessee who possesses and uses the vehicle (creating the environmental costs), rather than the registered owner who no longer has control over the vehicle after contract termination and transfer of ownership.
Does vehicle registration create a legal presumption of ownership for IUC tax purposes?
Yes, vehicle registration creates a legal presumption for IUC tax purposes under Articles 3(1) and 6 of the IUC Code. However, this presumption is rebuttable. According to Article 7 of the Real Property Registration Code (applicable through Article 29 of Decree-Law 54/75), registration establishes a presumption that the right exists and belongs to the registered holder, but this can be rebutted by contrary proof. The Tax Authority cannot be considered a 'third party' under Article 5(4) of the Real Property Registration Code, meaning it cannot invoke absence of updated registration to deny the effectiveness of vehicle sale contracts when sufficient proof of sale is presented by any means.
Can the CAAD arbitral tribunal rule on IUC disputes involving absolute incompetence?
No, the CAAD arbitral tribunal lacks absolute jurisdiction when the dispute does not involve challengeable tax acts. In this case, the Tax Authority successfully argued that no official IUC assessments were issued. Instead, the claimant voluntarily generated collection notes from the Finance Portal. Collection notes are mere publicity acts, not tax acts subject to arbitral review under Article 2 of LRAT (Decree-Law 10/2011). This constitutes a dilatory exception precluding examination of the merits under Articles 576(1)-(2) of the Civil Procedure Code, applicable via Articles 2(e) CTPT and 29(1)(a) and (e) LRAT. The appropriate remedy for challenging collection notes would be a Special Administrative Action in the administrative courts, not tax arbitration at CAAD.
What is the principle of equivalence under Article 1 of the IUC Code and how does it affect subjective incidence?
The principle of equivalence under Article 1 of the IUC Code establishes that IUC taxation should correspond to the environmental costs generated by vehicle circulation. This principle affects subjective incidence by requiring that the tax burden fall on those who actually cause the pollution and environmental impact—namely, the actual owner or user of the vehicle. Financial institutions argued that this principle means lessees or purchasers (who possess and use vehicles, creating the polluting potential) should be liable for IUC, not the financial institution that merely appears in the registration system but no longer has possession or control over the vehicle. The principle of equivalence thus challenges the rigid application of registration-based liability when ownership has been effectively transferred.
How can financial institutions challenge official IUC tax assessments through tax arbitration in Portugal?
Financial institutions can challenge official IUC tax assessments through tax arbitration by filing a petition for constitution of an arbitral tribunal at CAAD (Tax Arbitration Centre) under Articles 2 and 10 of Decree-Law 10/2011 (LRAT). However, several critical requirements must be met: (1) there must be an actual official assessment issued by the Tax Authority, not merely self-generated collection notes from the Finance Portal; (2) if the issue involves self-assessments, a prior Gracious Claim must be filed within two years from submission of the declaration, pursuant to Article 131 CTPT and Ordinance 112-A/2011; (3) the challenge must be filed within the applicable statutory deadlines; and (4) the dispute must involve a challengeable tax act falling within CAAD's material jurisdiction. Failure to meet these procedural requirements results in dismissal for lack of jurisdiction or failure to exhaust administrative remedies.