IUC Vehicle Tax Subjective Incidence: Who Pays When Cars Are Registered to Importers? CAAD 207/2017-T

ARBITRAL DECISION

The Arbitrators José Baeta de Queiroz (President), Marisa Isabel Almeida Araújo and José Nunes Barata, appointed by the Ethics Council of the Administrative Arbitration Centre (CAAD) to form the Arbitral Tribunal, agree as follows:

ARBITRAL DECISION

A) Report:

A…, S.A. – BRANCH IN PORTUGAL (hereinafter referred to as "Claimant"), legal entity no. …, with registered office at …, …, …, submitted a request for arbitral pronouncement and constitution of an arbitral tribunal on 27 March 2017, pursuant to the provisions of Article 4 and Article 10(2) of Decree-Law no. 10/2011 of 20 January (Legal Framework for Arbitration in Tax Matters, hereinafter referred to as "LFATM"), in which the PORTUGUESE TAX AND CUSTOMS AUTHORITY (hereinafter referred to as "Respondent" or "TA") is the defendant.

In the said request for arbitral pronouncement, the Claimant requests that the Arbitral Tribunal declare:

• The annulment, on grounds of illegality, of the decision dismissing the request for official review;

• The annulment, on grounds of illegality, of the 610 assessments relating to the Unique Circulation Tax (UCT), concerning the years 2009 to 2012, inclusive, and of the corresponding compensatory interest, and the consequent restitution in the amount of €78,821.12;

• The recognition of the right to indemnitary interest, in accordance with legal terms, and

• The condemnation of the Respondent to payment of the arbitration fee and other expenses, if any.

The request for constitution of the Arbitral Tribunal was accepted by the President of CAAD and notified to the Respondent on 28 March 2017.

The Claimant did not proceed to appoint an arbitrator, so, pursuant to the provisions of Article 6(2)(a) of the LFATM, the signatories were appointed as arbitrators by the President of the Ethics Council of CAAD, with the appointments having been accepted within the legally prescribed terms and deadlines.

On 2 June 2017, the arbitral tribunal was constituted.

Notified for this purpose on 5 June 2017, the Respondent submitted its Response on 30 June 2017 and remitted a copy of the administrative file.

On 26 July 2017, the arbitral hearing provided for in Article 18 of the LFATM was dispensed with, and both the Claimant and Respondent were invited to present written submissions.

On 5 September 2017, the deadline for publication of the final decision was set for 2 November 2017.

On 12 and 18 September 2017, the Claimant and Respondent respectively submitted their written submissions, reaffirming, in essence, the positions already assumed in the initial petition and defence.

The Claimant supports its request, in summary, as follows:

The Claimant is the exclusive importing company of all motor vehicles of brand B… for the national market.

The Claimant, within the scope of its commercial activity, imports vehicles into Portugal, in this case new vehicles, through orders placed directly by dealers with the Claimant, which in turn places the order with C…- which places the manufacturing order at the factory.

Once imported, all vehicles are immediately sold to dealers of the brand, who pay them on the day following invoice issuance, either for immediate delivery to the end customer, or simply to remain in the showroom, at the dealer's stand, for purely exhibition purposes (cases of launch of new models) and/or while awaiting an interested customer.

When vehicles are sent from dealers to customers, the change of registration of the owner to the name of the end customer is effected.

Given that the vehicles were sold to dealers before the date of their registration, these sales invoices do not contain their respective registrations – containing only the chassis numbers of the vehicles sold to dealers.

Only the debits of the Vehicle Registration Tax/Initial Registration (VRT/IR) to dealers, which occur subsequently to the date of the sales invoices of the vehicles to dealers, contain the registration and registration date, since only afterwards, after the sale of the vehicles to dealers, the Claimant sustains, were the vehicles registered in accordance with what results from the interconnection of these VRT/IR debits with the aforementioned sales invoices of the respective vehicles to dealers - an interconnection which is evident given the coincidence of the chassis number in the sales invoice of the vehicle to the dealer and in the subsequent debit of the "Tax on Vehicles (VRT/IR)".

The Claimant sustains that it is the subject of taxation for VRT, pursuant to Article 3(1) of the Vehicle Registration Tax Code – as opposed to what occurs in the case of UCT, a distinct tax from that one.

Being that, for the purposes of VRT (Tax on Vehicles), the Claimant, as a "registered operator" responsible for the introduction of the vehicle into consumption, is the subject of taxation for this tax (VRT) – which should not be confused with UCT, the tax at issue here.

For the purposes of VRT, "Registered operators" are considered to be persons in whose name the Customs Vehicle Declaration (CVD) or the Supplementary Vehicles Declaration (SVD) is issued (see Article 3 of the Vehicle Registration Tax Code).

For the purposes of UCT, given that the vehicles in question were sold by the Claimant before the date of their respective registration, it is evident that the Claimant was not, as it sustains, the owner thereof on the dates of the registrations – and therefore is not subject to UCT and its respective compensatory interest.

The Claimant further sustains that, pursuant to the combined provisions of Article 42(1) and (2) of the Regulation of Motor Vehicle Registration, approved by Decree-Law 55/75 of 12 February, the motor vehicle registration, in the case of initial registration of ownership, must be requested within a period of 60 days from the date of assignment of the registration.

In the case of the concrete vehicles identified in the UCT assessments (and respective compensatory interest) now at issue, the question concerns UCT due with reference to the date of registration. The vehicles in question, listed in the annex as doc. 5 to the initial petition, were not the property of the Claimant on the dates of their respective registrations, contrary to what was presumed by the TA, since they had already been sold to dealers.

On the dates of registration of these vehicles, the Claimant had already sold them to third parties (to the aforementioned dealers), as demonstrated from copies of the respective sales invoices (and subsequent VRT/IR debits), attached as doc. 6 with the initial petition.

Although the Claimant appeared in the Motor Vehicle Register and with IMTT as the owner of the vehicles at the date of their respective registrations, reality demonstrates otherwise that on the dates of registration of the vehicles in question, the Claimant was no longer their owner – having already been sold to dealers.

From the provisions of Articles 1, 2, clause (a) and (d), 3, 4, 6 and 11, it is extracted that UCT is levied on the owner or acquirer with reservation of ownership on the date of registration of the vehicle, and it is presumed that the owner or acquirer with reservation on that date is the one in whose name the vehicle is registered or recorded;

All official UCT assessments reported on the date of registration, according to what can be inferred from the content of the assessments and other documentation sent by the Respondent, however, the vehicles were not the property of the Claimant on the dates of their respective registrations, given that the Claimant had already sold them to third parties (the aforementioned dealers);

The (unanimous) jurisprudence of CAAD considers that the law merely establishes a legal presumption of ownership based on registral data – allowing the interested party to allege and prove that, despite this presumption arising from registration, they are not the effective owner of the vehicles on the dates considered in the official records, citing several arbitral decisions.

To this end, the jurisprudence of CAAD invokes the rules of legal interpretation, namely the very literal element of Article 3(1) of the UCT Code, the principles of equality, contributive capacity, legality, impartiality, proportionality, justice, pursuit of public interest, inquiry and discovery of substantive truth (Articles 55 and 58 of the General Tax Law), in addition to the rule of unity of the tax-legal system; (Articles 11 of the General Tax Law and Article 9 of the Civil Code);

Also the rational or teleological element of the law, which resides in the displacement of the tax burden from the moment of acquisition of vehicles to the circulation phase, attentive to the principle of equivalence, the circumstances in which the law was drafted and the temporal conditions in which it emerged, beyond the principle of consensuality, according to which the civil-legal effects of transmission of vehicles occur immediately by simple agreement of purchase and sale; according to which the civil-legal effects of transmission of vehicles, in particular the legal effect of transmission of ownership of the vehicle, occur immediately by simple agreement of purchase and sale between the parties (rule "casum sentit dominus") - without the need for any material delivery act, written sales contract or any acts of publicity or registration (Article 408(1) of the Civil Code).

Furthermore, attentive to the principle of equivalence, according to which taxpayers should be burdened in the measure of the cost they effectively cause to the environment and road network, that is, in function of the effective losses that result to the community as a consequence of the use of motor vehicles (Article 1 of the UCT Code).

That Article 7 of the Property Registration Code (PRC), applicable supplementarily to motor vehicle registration by force of Article 29 of the Motor Vehicle Registration Code, provides that registration constitutes mere presumption that the right exists and belongs to the registered holder - this being therefore a rebuttable presumption (juris tantum), as is indeed unanimous jurisprudence, including that of the Supreme Court of Justice itself.

That is, just as is unanimous jurisprudence, registration has merely declarative effects, of opposability of the right with respect to third parties, but never constitutive effects of the right - from which it follows that registration does not constitute a condition of validity of the transmission of the vehicle from seller to buyer.

Article 18(2) of the UCT Code does not provide for any assessment of compensatory interest but only an official assessment of UCT for voluntary payment within 10 days. The requirement for compensatory interest before the deadline for voluntary payment has elapsed suffers from a defect of violation of law, and furthermore, since no UCT is in default, the assessment of compensatory interest does not comply with Article 35 of the General Tax Law as regards the verification of the legal prerequisites for its assessment;

For the assessment of compensatory interest, there would always be required an adequate causal nexus between the behaviour of the subject of taxation and the delay in the assessment of the tax, in accordance with the jurisprudence of the Administrative Supreme Court (Decision of the Administrative Supreme Court, 2nd Section, no. 587/2010, of 16 December 2010);

Since the contested assessments were paid, the Claimant, in addition to the return of the improperly paid taxes, has the right to indemnitary interest, for error of fact and law in the issuance of the assessments, in accordance with Article 43 of the General Tax Law.

In summary, the Claimant sustains that there is an error of fact and law in the interpretation and application of the norms of subjective incidence of UCT, whereby the annulment of the 610 acts of assessment relating to UCT, concerning 610 vehicles identified by registration number, must be determined, and likewise of the corresponding compensatory interest, such amounts being due to the Claimant, in addition to indemnitary interest.

1. The Respondent replied, sustaining the lack of merit of the request for arbitral pronouncement and alleging, in summary, that:

The Respondent, before proceeding to present its reply, considered that the said assessment acts should be maintained, given their enforceability, not intending thus the option of revocation, correction, reform or conversion of the same, as is permitted by Article 13 of the LFATM.

The Respondent considers that the interpretation presented by the Claimant has no support in law, since the legislator did not use the expression "are presumed" in Article 3(1) of the Unique Circulation Tax Code, whereby the Respondent considers that the said normative provision establishes, expressly and intentionally, what should be considered legally as owners of the vehicles.

In this case, the Claimant is the one who appeared in the register as owner, and therefore is the subject of taxation for the tax in question.

For this purpose, it alleges that, within the scope of Article 17 of the UCT Code, the introduction into consumption and assessment of tax on vehicles which do not possess a national registration is titulated by the issuance of a Customs Vehicle Declaration (CVD), and such issuance constitutes the taxable event, in accordance with the terms and for the purposes of the provisions of Article 5 of the Vehicle Registration Tax Code (VRTC).

Pursuant to Article 117(4) of the Road Code, the registration is requested from IMTT by the entity that proceeds to the admission or introduction into consumption of the vehicle, and pursuant to Article 24(1) of the Motor Vehicle Registration Regulation (approved by Decree-Law no. 55/75 of 12 February) (MVRR), "the initial registration of ownership of vehicles imported, admitted, assembled, constructed or reconstructed in Portugal is based on the respective request and proof of compliance with tax obligations relating to the vehicle".

For the purposes of UCT, Article 3(1) of the UCT Code establishes that "The subjects of taxation for the tax are the owners of vehicles, considering as such the natural or legal persons, of public or private law, in whose name the same are registered".

As to the time limit for assessment, Article 17(1) of the UCT Code establishes that: "In the year of registration of the vehicle in national territory, the tax is assessed by the subject of taxation within 30 days after the expiry of the period legally required for its respective registration".

From the provisions, the Respondent understands that, as to the scope of subjective incidence of UCT and the taxable event constitutive of the corresponding tax obligation, inequivocally result from Article 6 of the UCT Code the juridical situations which generate the birth of the tax obligation, namely the registration in national territory.

Furthermore, Article 6(3) of the same article provides that "the tax is considered

exigible on the first day of the taxation period referred to in Article 4(2)".

That is, the Respondent understands that the moment from which the tax obligation is constituted presents a direct relationship with the issuance of the registration certificate, in which must be included the facts subject to registration (Article 4(2) and Article 6(3), both of the UCT Code, and Article 10(1) of the MVRR).

By virtue of the combination of the express norms and in particular the provisions of Article 24 of the MVRR, it underlies that the initial registration of ownership of vehicles admitted (as is the case at issue), is based on the respective request and proof of compliance with tax obligations relating to the vehicle.

That is, the issuance of a registration certificate implies the presentation of a CVD by the Claimant and the payment of the amount corresponding to VRT/IR, and automatically originates the registration of ownership of the vehicle, under Article 24 of the MVRR in the name of the entity that proceeded to the importation of the vehicle and request for registration, namely the Claimant.

Thus, the Respondent concludes that the first registration of each motor vehicle is effected in the name of the importing entity, in this case the Claimant.

This fact is clearly evident in the procedures undertaken by the Respondent and which underlie the acts of UCT assessment, in which it is peremptory that the Claimant appears as the owner of the motor vehicles at issue here.

Consequently, pursuant to Article 24 of the MVRR, the importer appears in the register as the first owner of the vehicle and in that sense, is in accordance with the provisions of Articles 3 and 6 of the UCT Code, subject of taxation for the tax.

Being that the assignment to the Claimant of a registration certificate embodies, in accordance with Article 6 of the UCT Code, the taxable event, whereby, given that the Claimant requested the issuance of a registration certificate which is registered in the name of the latter, the prerequisites of the taxable event of UCT are met, as well as its enforceability, the Claimant being subject of taxation for the tax.

The tax legislator, in establishing in Article 3(1) who are the subjects of taxation for UCT, established expressly and intentionally that these are the owners (or in the situations provided for in Article 3(2), the persons there stated), being considered as such the persons in whose name the same are registered, since the legislator did not use the expression "are presumed",

The Respondent invokes, by way of example, normative provisions, such as Articles 2 of the Property Transfer Tax Code, 2, 3 and 4 of the Personal Income Tax Code and 4, 17, 18 and 20 of the Corporate Income Tax Code, to sustain that Article 3(1) of the UCT Code does not establish any presumption.

The Respondent sustains that it is imperative to conclude in the case at issue that the legislator in Article 3(1) of the Unique Circulation Tax Code expressly and intentionally established that persons in whose name the vehicles are registered are to be considered as owners, thus preserving the unity of the tax-legal system. Moreover, it alleged that to consider this norm a presumption would be to effect an interpretation contra legem.

Thus concludes the Respondent that Article 3(1) of the Unique Circulation Tax Code does not establish a presumption, because what is really at issue is a legislative policy choice, whose intention was that those who appear in the motor vehicle register should be considered owners of the vehicles. In this sense, the Respondent invokes the Judgment handed down by the Administrative and Tax Court of Penafiel, in the context of case no. 210/13.0 BEPNF.

On the other hand, the Respondent also refers that the systematic element of interpretation of the law demonstrates that the understanding of the Claimant has no support in law. In this sense, the Respondent establishes the articulation between the subjective incidence of UCT and the taxable event constitutive of the tax obligation, and alleges that only the situations which are subject to registration generate the birth of the tax obligation.

In accordance with the Respondent, the moment from which the tax obligation is constituted presents a direct relationship with the issuance of the registration certificate, in which must be included the facts subject to registration.

The Respondent sustains that, having or being able to have access to the Motor Vehicle Register and to the certificate in which all acts subject to registration must be included, all the necessary elements are conferred upon the Respondent for the determination of the subject of taxation for the tax, without needing to resort to any contracts of a private nature which confer those rights. Thus, the Respondent sustains that the lack of such registration or the outdating thereof, in accordance with Article 42 of the Motor Vehicle Registration Regulation, is only imputable to the subject of taxation for the Unique Circulation Tax and not to the State.

In accordance with the Respondent, the understanding sustained by the Claimant would lead to the impracticability of the Unique Circulation Tax, since any person who had registered in the Motor Vehicle Registry could avert their responsibility for payment of the tax, sufficing for this to invoke the execution of a contract, even if oral, but which was not registered, even placing in question the deadline for expiry of the tax and legal security and certainty.

The Respondent sustains its understanding by alleging that the reform of the regime of taxation of vehicles in Portugal altered the regime of motor vehicle taxation, thus the subjects of taxation for the tax becoming the owners appearing in the property register, regardless of the circulation of the vehicles, thus avoiding the existence of many vehicles which are not registered in the name of the real owner.

Still in accordance with the Respondent, although environmental concerns are evident in the Unique Circulation Tax Code, one cannot ignore that the tax legislator intended when creating the Unique Circulation Tax that persons, natural and legal, in whose name the vehicles are registered be considered subjects of taxation for this tax, regardless of the circulation of the vehicles on the public road.

On the other hand, the Respondent further invokes that the interpretation of the Claimant is unconformable with the Constitution, having in mind the principle of trust and legal security, the principle of efficiency of the tax system and the principle of proportionality, articulated with the principle of contributive capacity, because it devalues the registral reality to the detriment of an informal reality and insusceptible of minimal control by the Respondent. In this sense, the Respondent invokes Law Proposal no. 118/X, relating to the reform of motor vehicle taxation, because this reform also aims at deepening the progress that has been made in recent times at the level of the Tax Administration, particularly with regard to the management of a complete, organized and reliable information system.

For this reason, the Respondent alleges that the understanding defended by the Claimant is offensive to the principle of efficiency of the tax system, in that it translates an obstruction and increase in costs of the competencies of the Respondent, preventing the control of the tax and rendering useless the systems of registral information with prejudice to the interests of the Portuguese State.

The Respondent further invokes the absence of proof of transmission of the vehicles in question, since the Claimant only attached, for purposes of demonstrating the transmission of the vehicles, copies of sales invoices of each of the vehicles, which do not constitute a suitable document to prove the sale of the vehicles, further adding that in the said invoices appears the name of the Claimant, on the date when the tax is due.

Indeed, the Respondent considers that the invoices do not constitute proof of an unequivocal declaration of will by the purported acquirer, which should be effected through the attachment of the means of payment of the price or of receipts of discharge of debt.

With regard to indemnitary interest, the Respondent understands that the tax acts are valid and legal, and in this sense, there is no error imputable to the services which determines that the Claimant has the right to such interest.

Finally, the Respondent alleged that the Claimant should be considered responsible for payment of the arbitration costs, due to the fact that it was the Claimant that was responsible for the deduction of the request for arbitral pronouncement, for not having updated the motor vehicle register.

In summary, the Respondent considers that the request for arbitral pronouncement should be judged to lack merit, thus maintaining the contested assessment acts.

B) Sanation

The Tribunal is competent and is regularly constituted, in accordance with Articles 2(1)(a), 5 and 6, all of the LFATM.

The parties have legal personality and capacity, are legitimate and are represented, in accordance with Articles 4 and 10 of the LFATM and Article 1 of Ordinance no. 112-A/2011 of 22 March.

There are no defects nor preliminary issues which affect the entire proceeding, whereby it is necessary now to address the merits of the request.

C) Object of the Arbitral Pronouncement

1. The following questions are placed before the Tribunal, in accordance with the above described:

• Should the 610 acts of assessment relating to the Unique Circulation Tax, together with the corresponding compensatory interest, be declared annulled, with the paid amounts being returned to the Claimant?

• Does the Claimant have the right to indemnitary interest?

• Can the Respondent be exempted from payment of arbitration costs, with responsibility in such cases being solely that of the Claimant?

D) Factual Matter (Proved Facts)

1. The following facts are considered as proved, with relevance for the decision, based on the documentary evidence attached to the case file:

• The Claimant is the exclusive importing company of all motor vehicles of brand B… for the national market.

• The Claimant, within the scope of its commercial activity, imports vehicles into Portugal, in this case all new vehicles, through orders placed directly by dealers with the Claimant, which in turn places the order with C…- which places the manufacturing order at the factory.

• Once vehicles are imported, they are immediately sold to dealers of the brand and the respective invoice is issued, which does not include VRT/IR and contains the chassis number of the vehicle, but not the registration, and the dealer acquirers pay the invoiced amount on the day following issuance of that document.

• The Claimant requests the registration of each vehicle upon request of the dealer.

• When vehicles are sent from dealers to customers, the change of registration of the owner to the name of the end customer is effected.

• The Claimant, through consultation of its tax situation, issued the charging documents for the UCT of each of the vehicles in the list which it attaches to the case file and proceeded to their payment, in the total amount of €78,821.12.

• The Claimant requested official review of the assessments, which was dismissed on 23/12/2016.

The facts found proved result from the conviction of the tribunal based on examination of the documents attached to the case and on the absence of controversy concerning them.

1. There are no unproved facts with interest for decision of the case, considering the possible legal solutions.

E) Law

1. On the appraisal of the legality of the contested assessment acts, together with the corresponding compensatory interest.

The question underlying this request for arbitral pronouncement takes into account the UCT assessments which the Claimant paid, concerning the years 2009 to 2012 as per attached list and assessments attached to the case file, in a total of 610.

For this purpose, it will be necessary to determine the subjective incidence of the Unique Circulation Tax and, likewise, the moment at which the taxable event of this tax occurs.

Pursuant to Article 3(1) of the UCT Code, it is provided that "The subjects of taxation for the tax are the owners of vehicles, considering as such the natural or legal persons, of public or private law, in whose name the same are registered".

Thus, it is necessary from the outset to analyse the subjective incidence, in accordance with the provisions of the Unique Circulation Tax Code.

As to this question, the Claimant sustains that it has as its object the importation of motor vehicles into Portugal of brand B… and that, when it orders them from C…, it does so at the request of dealers.

In this sense, the Claimant sustains that Article 3(1) of the Unique Circulation Tax Code establishes a rebuttable presumption of "ownership", that is, which admits proof to the contrary, namely through the demonstration that the vehicles in question were transmitted to third parties (to the dealers) before the tax becomes due.

To the contrary, the Respondent considered that the provision of Article 3(1) of the UCT Code does not provide a presumption, but rather expressly and intentionally established that persons in whose name the vehicles are registered should be considered as owners.

In this way, the main question will be to know whether the legislator established in the norm of subjective incidence alluded to a presumption, susceptible of being rebutted, as the Claimant defends, or establishes that the persons in whose name the vehicles are registered are the owners, as argued by the Respondent.

With a view to appraisal, it is necessary to analyse the effects of vehicle registration. Pursuant to Article 7 of the Property Registration Code, applicable ex vi Article 29 of Decree-Law no. 54/75 (Motor Vehicle Registration), which provides that "definitive registration constitutes presumption that the right exists and belongs to the registered holder in the precise terms in which the registration defines it".

This means that the registration of the right of ownership of the vehicle has a merely declarative effect and not a constitutive effect of the right, whereby it is configured as a presumption of the existence of the right, in the terms in which it is registered, which can be rebutted, that is, it admits proof to the contrary.

There being no provision, particularly at the level of the UCT Code, which assigns to vehicle registration any legal effect, including a condition of validity or efficacy of the causal act, that is, of the sales contract of which the vehicle is its mediate object.

If this is so, that is, in the absence of any other effect to be attributed to the registration act and considering that ownership is thus transmitted through the execution of a sales contract, without there being any legally imposed form in force the principle of freedom of form, pursuant to Article 879(a) of the Civil Code, one of the effects of this contract is exactly the real effect of the transmission of the title of the right.

Thus, while it is undeniable that from the literal element of Article 3(1) the legislator, contrary to what it did previously, used the expression "considering as" and not "presuming", one could question whether the nature of presumption is or is not at issue in the present norm under analysis, but the truth is that from a complete analysis of the legislation and the absence of any provision which confers on registration any other effect beyond that referred to, we are led to conclude that the legislator truly intended to use both expressions with identical meaning;

Following what was stated in decision 43/2014-T, which we follow closely here, "it is verified, by way of example, that in Articles 243(3) of the Civil Code and 45(6) and 89-A(4) of the General Tax Law, the expression 'considered as' is also used, and yet we are faced with legal presumptions, whereby, in accordance with the general rules of interpretation provided in Article 9(2) of the Civil Code, it is considered that the minimum of verbal correspondence is ensured, for purposes of determining the legislative thought which is objectified in the norm at issue – literal element. Note that regarding the second legal provision referred to, Jorge Lopes de Sousa considers that a rebuttable presumption of notification is at issue, for purposes of counting the deadline for expiry of the right of assessment (see SOUSA, Jorge Lopes de, Tax Code of Procedure and Process Annotated, Vol. I, 6th Edition, Áreas Editora, S.A., Lisbon 2011, p. 388)".

That is, both expressions have been used by the legislator without this meaning that the legislator did not truly intend to establish a legal presumption, and it cannot be inferred that the alteration of the expression could lead to a different interpretive meaning, whereby we are certain that the semantic argument cited by the Respondent does not appear to merit acceptance.

On the other hand, as is extracted from the aforementioned decision 43/2014-T, whose position is endorsed, "still within the scope of the elements of interpretation in accordance with Article 9 of the Civil Code, it is important to heed the historical element. Thus, recalling Decree-Law no. 599/72 of 30 December and Decree-Law no. 116/94 of 3 May, as regards subjective incidence, the presumption was provided that the subjects of taxation of UCT are the persons in whose name the vehicles were registered on the date of assessment".

Thus, as to this element of interpretation, it does not appear that the Respondent is correct.

On the other hand, considering the rational and teleological element, the UCT has as its premise the environmental and road cost of the actual use of the motor vehicle, thus not having as its recipients the importers of the vehicles, since the activity of the latter does not give cause to any environmental cost.

The UCT thus has underlying the principle of equivalence provided in Article 1 of the UCT Code, with a view to "burdening taxpayers to the extent of the environmental and road cost which they cause, in implementation of a general rule of tax equality".

Thus fulfilling the constitutional command, provided in Article 66, whereby sustainable development requires the State to ensure "that tax policy makes compatible development with protection of the environment and quality of life" (clause h) of Article 2).

Promoting a principle of "polluter-pays", fulfilling the requirement of material equality among all citizens who give cause to environmental cost, thus embodying the UCT the environmental concerns that tax policy imposes.

Now, to consider that the tax legislator intended anything other than to admit a rebuttable presumption in Article 3(1) of the Unique Circulation Tax Code would be to violate the principle of equivalence, making the tax burden fall on the owner appearing in the register and not on the actual owner, even though that person was not (as they would not be) giving cause to the environmental and road cost which the tax burden intended to burden.

Thus, also according to this element, Article 3(1) of the UCT Code should be interpreted in the sense that what is at issue is a true presumption.

Being irrelevant the alteration of the expression, as alleged by the Respondent, since the one presently established is similar and with the same meaning.

Concluding thus that Article 3(1) of the Unique Circulation Tax Code establishes a presumption, and this is rebuttable in accordance with Article 73 of the General Tax Law - "the presumptions established in the norms of tax incidence always admit proof to the contrary, whereby they are rebuttable". Giving this as settled, it is necessary now to verify whether the Claimant fulfils the burden of rebutting the presumption which runs "against" it, by being the one which appears in the motor vehicle register as the owner of the vehicle, of being considered the subject of taxation for UCT.

By virtue of this presumption, the Claimant would have to demonstrate that it is not, on the one hand, the effective owner and, on the other, from when it is not.

The Claimant did not attach to the case file any sales contract for any of the motor vehicles, attaching only invoices with mention of the sales of each of the motor vehicles to dealers.

In fact, the invoices embody a unilateral legal act on the part of the Claimant which does not correspond to the causal act which results therefrom described.

But we cannot ignore that the causal act at issue, that is, the purchase and sale of a motor vehicle, is subject to a principle of freedom of form in the terms provided in Article 875 of the Civil Code a contrario sensu.

Thus, it is not necessary the existence of any documentary support for validity or efficacy of the causal act, it is also true that such an element is not, or cannot be, the only one for proof of the fact which gives it cause.

In this way, in the absence of documentary support, proof of the causal act is possible with recourse to other documents or even to other means of proof, such as the invoices attached by the Claimant.

Given the invoices attached, considering the practice which results from the type of commercial activity of the Claimant and of the dealers, as well as the tax relevance of the invoices, all of which are known to the Respondent, we understand that the sales invoices presented enjoy presumption of truthfulness and, in this sense, of suitability and sufficient force to rebut the presumption which results from the assessments, in accordance with the provisions of Article 75 of the General Tax Law.

In this sense, the invoices attached are suitable to avert the presumption that the Claimant was, on the date of the assessment of the UCT, the owner of the motor vehicles.

Thus, given that the owner of the vehicles, on the date of the tax event, was not the Claimant, that is, the Claimant was not the subject of taxation for the tax, the requirements of Article 3(1) of the UCT Code are not met, which determines the annulment of the corresponding assessment acts.

On the other hand, as to the matter of assessment and payment of the tax, Article 17(1) of the Unique Circulation Tax Code establishes that, in the year of registration or registration of the vehicle in national territory, the tax is assessed by the subject of taxation for the tax within 30 days after the expiry of the period legally required for its respective registration. Being that, in accordance with Article 42(2) of the Motor Vehicle Registration Regulation, in the case of initial registration of ownership, the vehicle should be registered within a period of 60 days from the date of assignment of the registration.

That is, in the year of registration, it is only possible to determine the subject of taxation for the Unique Circulation Tax after the deadline for registration has expired, that is, the 60-day period counted from the registration, whereby it is only at that moment that the tax becomes due.

Corroborating this same understanding, the Unique Circulation Tax Code establishes in its Article 18(1)(a) ("Official Assessment") that, "In the absence of registration of ownership of the vehicle effected within the legal period, the tax due in the year of registration of the vehicle is assessed and is exigible: a) To the subject of taxation for the tax on vehicles based on the customs declaration of the vehicle, or based on the supplementary declaration of vehicles on which is based the assessment of that tax, even though the latter is not due;"

That is, in accordance with this legal provision, only in situations where the ownership of the vehicle is not registered within the legal period of 60 days (Article 42(2) of the Motor Vehicle Registration Regulation) is the tax exigible to the subject of taxation for the Vehicle Registration Tax.

But the subject of taxation for the Vehicle Registration Tax – the Registered Operator, here the Claimant – is not to be confused with the subject of taxation for the Unique Circulation Tax – the actual owner of the vehicle who, pursuant to Article 3(1), is presumed to be the one in whose name the registration appears, with allowance for rebuttal of the presumption in the terms referred to.

Being that, notwithstanding the subject of taxation for the Vehicle Registration Tax being responsible for payment of the tax if, and only if, it is not possible to determine the subject of taxation for the Unique Circulation Tax after the legally established deadline for registration.

In all situations where, as is the case at issue, the subject of taxation for the Vehicle Registration Tax demonstrates that it transmitted the vehicles in question to third parties before the expiry of the deadline for registration, it should be concluded that it succeeded in rebutting the presumption established in Article 3(1) of the Unique Circulation Tax Code.

For all these reasons, in the concrete case, the Claimant, as Registered Operator, although it has, in the exercise of its commercial activity, imported the vehicles at issue, proceeded to their introduction into consumption through the issuance of the Customs Vehicle Declaration, paid the Vehicle Registration Tax and requested, with IMTT, the assignment of registration, is not subject of taxation for the Unique Circulation Tax, since it succeeded in demonstrating, through the attachment of the means of proof identified, that within the 60-day period for registration it transmitted the vehicles to third parties.

That is, the Claimant succeeded in demonstrating that the vehicles at issue were transmitted within the 60-day period for registration and, consequently, before the tax became due.

In view of the above, and as to the enforceability of the tax, it is concluded that the ownership of the vehicles at issue was transmitted by means of a sales contract and, likewise, that on the date on which the UCT became due, the Claimant was no longer the owner of the vehicles, as results from the invoices attached to the case file.

This determines the annulment of the acts of assessment of the taxes and, consequently, no compensatory interest is due by the Claimant.

On the right to indemnitary interest:

As to this point, we consider that, notwithstanding the Claimant having demonstrated that it was not the effective owner of the vehicle and that, for this reason, the assessment acts should be annulled, the Claimant does not have the right to indemnitary interest.

In fact, although, as was stated, the assessment acts should be annulled, there is no error imputable to the services which is the prerequisite to be considered - Articles 43(1) and 100 of the General Tax Law, and Article 100 of the Legal Framework for Tax Arbitration.

The right to indemnitary interest presupposes an error imputable to the services, which, in this case, does not occur, since the Tax Administration assessed the tax, as was verified, taking into account the compliance with the legal rules, particularly Article 3(1), that is, the Tax Administration availed itself, as the statute provides, of the presumption of ownership which results from the motor vehicle register in which the Claimant appeared, in fact.

This, even though that presumption is rebuttable, which admits, therefore, proof to the contrary by the Claimant, which it did, does not suffice to conclude that the Tax Administration erred in a manner imputable to the services.

In fact, the Claimant, regardless of the grounds, would always have had to comply with the burden of promoting the registration or, at least, not conforming to maintain a registral reality out of keeping with the substantive reality.

The Claimant not only did not undertake any active behaviour to update the register to the effective owner, and we refer from the outset to the sale to the dealer, but conformed itself to the maintenance of such register in its name, despite knowing, since it is one of the subjects of the causal act of transmission of ownership, that the same no longer coincided with reality.

Having admitted the sale, as it confesses, to the dealers without these registering the motor vehicles in their name, it conformed itself, on the one hand, and promoted, on the other, the "erroneous" consequences of maintaining a register of ownership in its name, when in effect it was not.

Knowing that one of the consequences of this could give cause, as it did, to UCT assessments in the terms and in accordance with the requirements provided in law, particularly Article 3(1) of the UCT Code, since the Respondent, based on these premises, and correctly so, assessed the taxes, even without prejudice to the rebuttal of the ownership at a later moment, which is the case.

Being imputable to it, as to this, the consequences of non-compliance with the burden of registration, from the first transaction between the Claimant and the dealer, with which it conforms, as it confesses, and which with this gives cause to the UCT assessments at issue.

But if it is true that the erroneously conducted assessments by the TA did not have in their genesis an error on its part and, consequently, do not make it incur the obligation to indemnify the Claimant for the payment of the improperly assessed tax, this truth did not persist over time.

This is because the Claimant, not conforming with the requirement of the tax, requested official review of the acts, essentially with the same grounds now appraised by the Tribunal and attaching the same evidentiary documents – that is, placing the TA in a position to be able to recognize the illegality of the acts whose review was requested of it.

Notwithstanding this, the Administration maintained the contested acts and, consequently, the requirement of the tax, when, if it had recognized the illegality, it should have determined the return of the amount paid by the Claimant.

Not having done so, it incurred, this time, in error, and such error determined that the Claimant continued to be deprived of the amount which it had improperly satisfied.

For this reason, notwithstanding the prejudice to the Claimant resulting from the payment improperly made to which it was obliged not resulting, in limine, from error imputable to the services and not conferring the right to indemnification, the non-recognition by the TA, in deciding the request for official review, of the illegality in which it had incurred, was a source of prejudices to the Claimant, translated in the unavailability of the amount which it had paid.

In view of the above, the request for indemnitary interest is judged to have merit, but only from 23/12/2016, the date on which the request for official review was decided.

On responsibility for payment of arbitration costs:

Pursuant to Article 527(1) of the Code of Civil Procedure, ex vi Article 29(1)(e) of the Legal Framework for Tax Arbitration, it is established that the party which gave cause to the costs or, absent success in the action, whoever obtained benefit from the proceeding shall be condemned to costs.

However, Article 2 of the said article specifies the expression "gave cause" understanding that this is the defeated party, in the proportion in which it is defeated, whereby in this sense and being the law clear and evident as to responsibility for arbitration costs, we understand this argument to lack merit.

In view of the above, the Respondent should be condemned to arbitration costs, in the proportion in which it is defeated.

F) Decision

For these reasons, and with the grounds set out, the present Arbitral Tribunal decides:

• To judge well-founded the request for declaration of illegality of the 610 UCT assessments concerning the tax years 2009 to 2012, with respect to all vehicles whose registrations are identified in the case file, thus annulling the corresponding assessment acts, and of the corresponding compensatory interest, and the consequent restitution in the amount of €78,821.12.

• To judge well-founded the request for indemnitary interest, but only from 23/12/2016 until full restitution of the amount paid by the Claimant.

• To condemn the Respondent to 99% of the costs of the present proceeding, leaving the remaining 1% at the charge of the Claimant.

G) Value of the Proceeding

In conformity with the provisions of Articles 306(2) of the Code of Civil Procedure and 97-A(1) of the Tax Code of Procedure and Process and Article 3(2) of the Regulation of Costs in Tax Arbitration Proceedings, the value of the proceeding is fixed at €78,821.12.

H) Arbitration Fee

The value of the arbitration fee is fixed at €2,448.00, in accordance with Table I annexed to the Regulation of Costs of Tax Arbitration Proceedings.

Let notification be made.

Lisbon, 19 October 2017

The Arbitrators

(José Baeta de Queiroz)

(Marisa Almeida Araújo)

(José Nunes Barata)