IUC Subjective Incidence: CAAD Arbitral Decision 208/2018-T on Vehicle Tax Liability

ARBITRAL DECISION

I. REPORT

1. On 24 April 2018, A... – BRANCH IN PORTUGAL, legal entity no. ..., with registered office at ..., ...-..., ..., ..., pursuant to the provisions of Articles 2, paragraph 1, point a), and 10, paragraph 1, point a), of Decree-Law no. 10/2011, of 20/01, which approved the Legal Framework for Tax Arbitration (RJAT), and Articles 1 and 2 of Ordinance no. 112-A/2011, of 22/03, submitted an application for the constitution of an Arbitral Tribunal, in which the Tax and Customs Authority (AT) appears as the Respondent.

2. The Applicant challenges the orders of the Head of the Tax Management and Assistance Division (DGAT) of the Large Taxpayers Unit (UGC) of the AT, dated 22-01-2018 and 22-03-2018, issued pursuant to a delegation of authority granted by order no. 12729/2015 (DR, 2nd series, no. 222, of 12-11-2015), which rejected the requests for official revision duly submitted by the Applicant against 6 and 114 assessments, respectively, of Unique Circulation Tax (IUC) and compensatory interest (JC), relating to the years 2009 to 2014, inclusive, requesting the tribunal to declare the illegality of said orders – partial rejection within the scope of official revision procedure no. ...2017... and total rejection in procedure no. ...2018... (see Doc. 1 and Administrative File) – as well as the illegality of the IUC and JC assessment acts, subject to the same official revision requests, insofar as they were rejected, in the total amount of € 15,120.21, identified in the annex to the application (see Docs. 4 and 6 and attached list), with their consequent annulment and reimbursement of the tax improperly paid, plus the corresponding indemnification interest, calculated in accordance with legal provisions.

3. The Applicant further requests that the Respondent be ordered to pay the costs of the proceedings.

4. The Applicant chose not to designate an arbitrator.

5. The application for constitution of the arbitral tribunal was accepted by the President of CAAD and automatically notified to the Tax and Customs Authority (AT).

6. Pursuant to the provisions of paragraph 2, point a) of Article 6 and paragraph 1, point b) of Article 11 of Decree-Law no. 10/2011, of 20/01, as amended by Article 228 of Law no. 66-B/2012, of 31/12, the Deontological Council designated the undersigned as arbitrator of the single arbitral tribunal, who communicated acceptance of the appointment within the applicable period and duly notified the parties.

7. Properly notified of this designation, the parties did not express their will to refuse the arbitrator's designation, in accordance with the combined provisions of Article 11, paragraph 1, points a) and b) of RJAT and Articles 6 and 7 of the Deontological Code.

8. Therefore, in accordance with the provisions of paragraph 1, point c) of Article 11 of RJAT, as amended by Article 228 of Law no. 66-B/2012, of 31/12, the collective arbitral tribunal was constituted on 04-07-2018.

9. In response to what was requested, the Tax and Customs Authority (AT) expressed its view that this arbitral opinion request was unfounded, expressing the understanding that the contested tax acts should be maintained in the legal order and, accordingly, the tribunal should rule for the absolution of the respondent entity.

10. Considering the knowledge derived from the procedural documents filed by the parties, which is deemed sufficient for the decision, the Tribunal decided to waive the meeting referred to in Article 18 of RJAT as well as the hearing of the witness indicated by the Applicant.

II. PROCEDURAL COMPLIANCE

1. The Arbitral Tribunal is regularly constituted and is materially competent, pursuant to paragraph 1, point a) of Article 2 of Decree-Law no. 10/2011, of 20/01.

2. The Parties possess legal personality and capacity, are legitimate and are legally represented (see Article 4 and paragraph 2 of Article 10 of Decree-Law no. 10/2011 and Article 1 of Ordinance no. 112/2011, of 22/03).

3. The case is not vitiated by defects that would invalidate it and no issues have been raised that would impede the examination of the merits of the case.

III. CUMULATION OF CLAIMS

1. Considering the existence of a direct relationship between the tax assessments whose legality is questioned in this proceeding, nothing prevents the joint examination of the tax acts in question, given that, in light of what is alleged and the documentation attached, it is established that, in essence, the possible merit of the claim depends on the same factual circumstances and the interpretation and application of legal norms relating to the subjective scope of IUC.

2. Given, therefore, that the examination of essentially the same factual circumstances and application of the same legal norms concerning the subjective scope of IUC is at issue, the cumulation of claims is lawful, in the manner admitted in Article 3 of RJAT.

3. Indeed, the cited provision, as well as Article 104 of CPPT, determines that the cumulation of claims is admissible "when the merit of the claims depends essentially on the examination of the same factual circumstances and the interpretation and application of the same principles or rules of law."

4. It is emphasized that the referred legal norms do not require complete identity of the contested acts nor do they require the coexistence, alongside common grounds, of a specific ground for annulment of one or more of the contested acts.

5. In the present case, tax acts relating to IUC are involved, concerning a large number of motor vehicles, and, in terms of law, the application of legal norms relating to the subjective scope of this tax.

6. In these terms, considering the identity of the tax facts, the tribunal competent for the decision, and the factual and legal grounds invoked, it is concluded, in light of the provisions of Articles 3 of RJAT and 104 of CPPT, that nothing prevents the cumulation of claims.

IV. FACTS

1. Based on the documentary evidence included in this proceeding, whether presented by the Applicant or from the duly instructed Administrative File, the following factual elements are highlighted which, not being contested by the Parties, are deemed fully proven:

20.1. The Applicant is a commercial company whose corporate purpose is the trade in motor vehicles, their parts and accessories.

20.2. Within the scope of its activity, it proceeds with the importation, in Portuguese territory, of all motor vehicles of the B... brand.

20.3. The vehicles are acquired from C... following a prior request from the dealers, submitted electronically directly to the manufacturer.

20.4. The needs for importation of vehicles stem from orders placed directly by the dealers with the Applicant, so there are no sales of vehicles to the Applicant and from it to them without the respective purchase order.

20.5. The vehicles imported into Portuguese territory are immediately invoiced by the Applicant to the dealers and immediately delivered to their facilities, except for vehicles intended for the Autonomous Regions of the Azores and Madeira, which are deposited in a logistics company warehouse.

20.6. After the importation of the vehicles, the Applicant, through an associated official representative, requests the assignment of the respective registrations.

20.7. Since, at the time of sale, the vehicles transferred are not yet registered in Portugal, they are identified, in the respective invoice, through the indication of the corresponding chassis number.

20.8. Only after the sale to the dealers does the Applicant, in its capacity as a registered operator, bear the corresponding Motor Vehicle Tax, which it passes on to the purchasers, then promoting the respective registration in Portugal.

20.9. It therefore follows that at the moment when the vehicles are registered, the Applicant has already transferred the ownership of the vehicles to third parties.

20.10. The situation described above covers the vehicles identified in a list annexed to this arbitral opinion request as Doc. 6, which is hereby deemed fully reproduced, to which, in the assessments now contested, corresponds the total amount of € 15,120.21, in IUC and compensatory interest.

20.11. With regard to the vehicles in the situation referred to above, the respective sales invoices are presented as evidence (attached, collectively, as Doc. 7 of the application), bank account statements relating to the receipt of the invoiced amounts, as well as a list relating all the assessments now contested.

20.12. The Applicant, although it has paid the tax and compensatory interest that were assessed against it, deducted requests for official revision of the assessments in question, pursuant to Article 78, paragraph 1, of the General Tax Law, on the grounds that, as of the date of exigibility of the tax, it was not the owner of the vehicles to which it relates and was not the passive subject of the corresponding tax obligation (see Doc. 4).

20.13. The aforementioned official revision requests, submitted on 25-08-2017 and 07-02-2018, were subject to express rejection – partially regarding what was submitted on the first of those dates and in their entirety as to what was submitted on the latter – by orders of the Head of the Division of the Large Taxpayers Unit of the AT, issued in the exercise of delegated authority (Order 12,729/2015 – DR, 2nd series, no. 222, of 12-11-2015) (Doc.1), after the Applicant was duly given the opportunity to exercise the right to prior hearing (Docs.2 and 3 and the Administrative File).

20.14. The aforementioned decisions were notified through Official Letters nos. ... and ..., dated 22-01-2018 and 23-03-2018, respectively, from the Tax Management and Assistance Division (DGAT) of the Large Taxpayers Unit of the AT.

V. LEGAL ISSUES

1. The Applicant bases the arbitral opinion request, essentially, on the illegitimacy of its qualification as the passive subject of IUC, with respect to the vehicles and taxation periods it identifies in documents annexed to the arbitral opinion request, considering the fact that the ownership of the vehicles was transferred to third parties prior to the date of their registration in Portugal.

2. According to the Applicant's allegation, although the vehicles in question were registered in its name at the Motor Vehicle Registry, it was not their effective owner as of the date of the occurrence of the facts that determine the tax obligation, given that they had already been sold to the respective dealers, as evidenced by the invoices it issues as evidence.

3. Indeed, in light of the elements attached to the proceeding evidencing the alleged facts, it is verified that the Applicant, within the scope of its business activity, proceeds with the importation into Portuguese territory of new vehicles which, at a moment prior to their registration, transfers to its dealers, a fact which is evidenced through a copy of the respective invoice.

4. However, by force of the applicable legal norms, the registration of the vehicles in question is effected in the name of the Applicant, even though, at the moment it is effected, it is not the owner thereof.

5. This is what results from the combined reading of Articles 117, paragraph 4, of the Highway Code – which assigns to the person, natural or legal, who proceeds with the admission, importation or introduction into consumption in national territory, the obligation to request the registration of the vehicles – and 24, paragraph 1, of the Motor Vehicle Registration Regulation, which provides that the initial registration of ownership of imported, admitted, assembled, constructed or reconstructed vehicles is based on the respective request.

6. From the aforementioned norms it follows, therefore, that the Applicant, in its capacity as a registered operator that proceeds with the importation of new vehicles into national territory, necessarily appears in the respective initial registration as their owner, even though at the moment this takes place, the ownership of the same has already been transferred to third parties.

7. From the above, the Respondent concludes that, "the Applicant having requested the issuance of a registration certificate, with the same being registered in its name, the prerequisites for the taxable event of IUC are met, as well as its exigibility, the Applicant being the passive subject of the tax."

8. Differently, the Applicant understands that the norm of subjective scope of the said tax, set forth in Article 3 of its Code, establishes a legal presumption of ownership, capable of being rebutted by proof to the contrary.

9. At issue, therefore, is the interpretation of Article 3, paragraph 1, of CIUC, as worded on the date of the facts, in order to determine whether it establishes, or not, a presumption regarding the qualification as owner, and consequently, as the passive subject of this tax, of the person, natural or legal, in whose name the ownership of the vehicle is registered and, if an affirmative conclusion is reached, its rebuttal based on the evidentiary elements included in this proceeding.

ON THE SUBJECTIVE SCOPE OF IUC

1. Notwithstanding the fact that the IUC Code establishes as a structuring principle of this tax the principle of equivalence, understood as compensation for the harmful effects in environmental and energy terms resulting from vehicle circulation, the said Code elects, as to subjective scope, the owner of the vehicle, considered as such the person in whose name it is registered (Article 3, paragraph 1, of CIUC, as worded in the original version of Law no. 22-A/2007, of 29/06).

2. Without, in general, according special relevance to the actual use of vehicles, the legislator does not fail, however, to consider such a fact in specific situations involving their presumptive and potential use, equating with owners financial lessees, buyers with reservation of ownership, as well as other holders of purchase option rights by virtue of lease contract (Article 3, paragraph 2, of CIUC).

3. The subjective scope norm, by referring to motor vehicle registry elements, does not distinguish between the initial registration of the vehicle and subsequent registrations: the passive subject of the tax is the owner of the vehicle, considered as such the person, natural or legal, in whose name the vehicle is registered.

4. The interpretation of the norm in paragraph 1 of Article 3 is, therefore, as already mentioned, where the different positions expressed by the Applicant and the Respondent are evident.

5. According to the Applicant, the referred norm, as worded on the date of the occurrence of the tax facts to which the questioned assessments relate, establishes a presumption of ownership, based on motor vehicle registry, rebuttable in accordance with general terms and, in particular, by force of the provisions of Article 73 of the General Tax Law.

6. Differently, the Respondent understands that, with the CIUC establishing passive subject status as well as the taxable event of the tax obligation, by reference to elements contained in the motor vehicle registry, as results from Articles 3 and 6 of its Code, the Applicant being the one to request the issuance of the registration certificate and the vehicles being registered in its name during the taxation periods to which the questioned assessments relate, "the prerequisites for the taxable event of IUC are met, as well as its exigibility, the Applicant being the passive subject of the tax."

7. This matter has been the subject of numerous arbitral decisions which, repeatedly and uniformly, have ruled in the sense that the norm in paragraph 1 of Article 3 of CIUC, as originally worded in Law no. 22-A/2007, of 29/06, establishes a rebuttable presumption, in accordance with general terms and, in particular, by force of the provisions of Article 73 of the General Tax Law. It is this orientation that is adhered to and will be followed closely.

8. Indeed, with the exception of the provisions of paragraph 2 regarding situations of sales with reservation of ownership and leases of a financing nature, Article 3 of CIUC, as worded on the date of the occurrence of the tax facts to which the contested assessments relate, provides that the passive subjects of this tax are the owners of vehicles, considered as such the persons in whose name the vehicles are registered.

9. The recourse to motor vehicle registry as a structuring element of the system for assessment of this tax is evident throughout its Code. Reference is made, in particular, to its Article 6 relating to the definition of the taxable event of the tax obligation, whose paragraph 1 provides that it is constituted by the ownership of the vehicle, "as attested by the registration or registry in national territory". From this provision it follows that motor vehicles that are not, nor should be, registered in Portuguese territory are only covered by the objective scope of this tax if they remain there for a period exceeding 183 days, as provided in paragraph 2 of the same article. It is, therefore, a norm that, resorting to the registry element, simultaneously establishes the taxable event of the tax and its respective fiscal connection. It is also from the elements of motor vehicle registry that the moment of the beginning of the taxation period and constitution of the tax obligation is extracted and, in a general manner, all the elements necessary for the assessment of the tax in question, as is well emphasized in the response prepared by the AT.

10. However, from the dependence of the IUC taxation system on motor vehicle registry, it cannot be immediately concluded that the norm of subjective scope, in the segment where it considers as owner the person in whose name the vehicle is registered, does not constitute a presumption of scope.

11. Therefore, recourse must be had to other interpretive elements, with special relevance to the legal notion of presumption.

12. According to the notion set forth in Article 349 of the Civil Code, presumptions are the conclusions that the law or the judge draws from a known fact to establish an unknown fact. Presumptions constitute means of proof, having the function of demonstrating the reality of the facts (Article 341 of the Civil Code). Thus, one who has a legal presumption in their favor is relieved of the burden of proving the fact to which it leads (Article 350, paragraph 1, of the Civil Code). However, presumptions, except in cases where the law prohibits it, may be rebutted by proof to the contrary (Article 350, paragraph 2, of the Civil Code). In the case of presumptions of tax scope, these are always rebuttable, as expressly provided by Article 73 of the General Tax Law.

13. Presumptions may be explicit or merely implicit in the text of the law.

14. Indeed, in the definition of the subjective scope of ICI, ICA and IMV, taxes which the current IUC replaced, this was the expression used by the legislator. Within the scope of the abolished taxes, it is provided that "the tax is due by the owners of vehicles, being presumed as such, unless proven otherwise, the persons in whose name they are registered"

15. In the same sense, Article 3, paragraph 1, of the Motor Vehicle Circulation and Haulage Tax Regulation, approved by Decree-Law no. 116/94, of 03/05, provides that the passive subjects of these taxes are "the owners of vehicles, being presumed as such, unless proven to the contrary, the natural or legal persons in whose name they are registered."

16. With regard to IUC, the legislator chose to use a formulation different from the norm of subjective scope. Like the abolished taxes, it continues to attribute to the owners of vehicles the status of passive subjects. However, it abandons the expression "being presumed as such, unless proven to the contrary, the persons in whose name they are registered" in favor of "considering as such the persons (...) in whose name they are registered".

17. Contrary to the position expressed by the AT, we understand that this is merely a semantic matter, which does not minimally alter the content of the norm in question and for two reasons: For there to be a legal presumption, it is necessary that the norm establishing it conforms to its legal concept, set forth in Article 349 of the Civil Code, for which it is irrelevant whether it is explicit, revealed by the use of the expression "presumed" or only implicit.

18. It is therefore, in the sense of the legal concept of presumption and in respect of constitutional principles of equality and contributive capacity that the legislator attributes full effect to the presumption derived from motor vehicle registration, adopting it as such in the definition of the subjective scope of this tax established in paragraph 1 of Article 3 of CIUC.

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

20. Ruling on this matter, the Supreme Court of Justice, in a decision of 19-02-2004, in case no. 3B4369, concludes that "(...) registration does not have constitutive effect, as it is intended to give publicity to the registered act, functioning (only) as a mere presumption, rebuttable (presumption 'juris tantum') of the existence of the right (arts. 1, paragraph 1, and 7, of CRP84 and 350, paragraph 2, of the Civil Code) as well as of its respective ownership, in accordance with its terms (...)".

21. Thus, following the repeated arbitral case law relating to identical situations, it cannot fail to be understood that the expression "considering as such" contained in the referred norm configures a legal presumption, and that this is rebuttable, in accordance with general terms, and in particular by force of the provisions of Article 73 of the General Tax Law, which determines that presumptions established in the norms of tax scope always admit proof to the contrary.

ON THE REBUTTAL OF THE PRESUMPTION

1. Presumptions of tax scope may be rebutted through the specific adversarial procedure provided for in Article 64 of CPPT or, alternatively, through the means of administrative reclamation or judicial challenge of the tax acts based on them.

2. In the present case, the Applicant did not use that specific procedure, instead opting for this arbitral decision request which thus constitutes a proper means to rebut the presumption of subjective scope of IUC on which the tax assessments whose annulment is the object of its claim are based, as this is a matter falling within the material jurisdiction of this arbitral tribunal (Articles 2 and 4 of Decree-Law 10/2011).

3. To rebut the presumption derived from the inscription in motor vehicle registry, the Applicant offers, as a means of proof, the invoices issued with reference to the transfer of vehicles to which the questioned assessments relate (Docs. 6, 7 and attached list).

4. Pronouncing on the documentary evidence presented, the Respondent considers that "...even if this is not understood – which is only admitted as a mere academic hypothesis – and accepting that it is admissible to rebut the presumption in light of the case law already established in this arbitral tribunal, it will be important to assess the documents filed by the Applicant and their evidentiary value with a view to such rebuttal."

5. In the Respondent's view, "The invoices filed by the Applicant are not capable of proving the conclusion of a bilateral contract such as a sale, as such documents do not reveal by themselves an essential and unequivocal declaration of will (that is, acceptance) on the part of the purported buyers."

6. In support of this thesis, the Respondent refers to case no. 63/2014-T of CAAD in which, although with a dissenting vote, the Arbitral Tribunal considered the invoices to be "unilateral and internal documents, to which case law has recognized very limited value to prove the existence of a bilateral contract."

7. In the same sense as the insufficiency of invoices to rebut the presumption contained in paragraph 1 of Article 3 of CIUC, it further refers to the arbitral decisions delivered in cases nos. 150/2014-T and 220/2014-T.

8. As is well extracted from the Respondent's position regarding the evidence produced, supported by the reasoning of the cited judicial decisions, the latter would be insufficient to rebut the presumption established in the norm of tax scope, defined on the basis of ownership, as contained in motor vehicle registry.

9. However, this being not the Tribunal's understanding, it is necessary to evaluate the evidence produced by the Applicant in order to determine whether it is sufficient to rebut the presumption derived from the registry which, in the plane of subjective scope, is accepted for purposes of IUC.

10. To do so, it is important to bear in mind that, in the situation under analysis, we are dealing with sales contracts which, relating to movable property and not being subject to any special formalities (Civil Code, Article 219), effect the corresponding transfer of real rights (Civil Code, Article 408, paragraph 1).

11. In the case of contracts involving the transfer of ownership of movable property through the payment of a price, these have, as essential effects, among others, that of delivery of the thing (Civil Code, Articles 874 and 879). However, in the case of a sales contract relating to a motor vehicle, in which registration is mandatory, its punctual performance presupposes the issuance of the declaration of sale necessary for inscription in the registry of the corresponding acquisition in favor of the buyer, as has been understood by the case law of the higher courts.

12. Such a declaration, relevant for registry purposes, may constitute proof of the transaction, but is not the only or exclusive means of proof of such fact.

13. For registry purposes, nor is any special formalism required, it sufficing to present to the competent entity a request signed by the buyer and confirmed by the seller, which, through a declaration of sale, confirms that the ownership of the vehicle was by the latter acquired by verbal sales contract (see Motor Vehicle Registration Regulation, Article 25, paragraph 1, point a)).

14. Notwithstanding that these are the rules resulting from the provisions of civil law, relating to the informality of the transfer of movable property and, as the case may be, its registration, it cannot fail to also bear in mind that, in the situation under analysis, we are dealing with commercial transactions, effected by a business entity within the scope of the activity that constitutes its corporate purpose.

15. Within that scope, the company is bound by the fulfillment of specific accounting and tax norms, in which invoicing assumes special relevance.

16. Indeed, by force of tax norms, the entity transferring the goods is obliged to issue an invoice for each transfer of goods regardless of the quality of the respective buyer (IVA Code, Article 29, paragraph 1, point b).

17. Also in accordance with the provisions of tax norms, the invoice must comply with a certain form, detailed regulated in Articles 36 of the IVA Code and Article 5 of Decree-Law no. 198/90, of 19/06.

18. It is on the basis of this document issued by the supplier of the goods that the buyer, when it is an economic operator – as is the case with the generality of the situations to which this proceeding refers – will deduct the IVA to which it is entitled (IVA Code, Article 19, paragraph 2) and account for the cost of the operation (CIT Code, Articles 23, paragraph 6 and 123, paragraph 2).

19. For its part, it is also on the basis of the invoicing it issues that the supplier of the goods must account for the respective income, as results from the provisions of point b) of paragraph 2 of Article 123 of the CIT Code.

20. Provided they are issued in legal form and constitute supporting elements of the accounting entries in accounting organized in accordance with commercial and tax legislation, the data contained therein are covered by the presumption of veracity referred to in Article 75, paragraph 1, of the General Tax Law.

21. Indeed, the referred presumption covers not only the books and accounting records, but also the respective supporting documents, as is, moreover, the established understanding of the tax administration itself and the settled case law of the higher courts.

22. The presumption of veracity of commercial invoices issued in accordance with legal terms may, however, be set aside whenever the operations to which they refer do not correspond to reality, it sufficing, for such, that the Tax Administration gathers and demonstrates well-founded indications of that fact (General Tax Law, Article 75, paragraph 2, point a)).

23. In the present case, the Respondent has not challenged, nor raises any doubt, concerning the operations evidenced by the invoices presented by the Applicant.

24. Considering, therefore, the relevance attributed by tax legislation to invoices issued, in accordance with legal terms, by commercial companies within the scope of their business activity and the presumption of veracity of the operations evidenced by them, it cannot fail to be considered that the same constitute, by themselves and in the case, sufficient proof of the transfers invoked by the Applicant, following, in this matter, the majority arbitral case law.

25. Considering, therefore, the transfer of the right of ownership of the vehicles in question as documentally proven, there remains only to determine the date on which, according to the respective invoice, the same will have occurred, noting that the exigibility of the tax, with respect to new land vehicles, occurs on the first day of the taxation period, which begins on the date of registration, as provided for in Article 6, paragraph 3, of CIUC, this being the moment at which the tax legal relationship is defined.

26. Based on the documents that are part of this proceeding, it is verified that, as of the date of exigibility of the tax, the vehicles identified therein were no longer the property of the Applicant by virtue of the fact that, by it, they had been transferred to third parties.

27. In light of the above, it is concluded that there is no legal basis for the IUC assessments and compensatory interest assessments relating to the vehicles and periods identified in the annex to the arbitral opinion request.

28. In these terms, considering the presumption of ownership derived from motor vehicle registry accepted in Article 3 of CIUC – as worded on the date of the facts to which the assessments in question relate – to be rebutted, the assessments identified in the list annexed to this arbitral opinion request should be annulled, in the total amount of € 15,120.21, on the basis of illegality and error in the assumptions on which they are based.

ON THE RIGHT TO INDEMNIFICATION INTEREST

1. Together with the revocation of the decision rejecting the requests for official revision and annulment of the tax assessments and compensatory interest, and the consequent reimbursement of the amounts improperly paid, the Applicant further requests recognition of the right to indemnification interest, pursuant to Articles 43 and 100 of the General Tax Law.

2. Article 100 of the General Tax Law provides that "The tax administration is obliged, in case of total or partial merit of administrative complaints or remedies, or of court proceedings in favor of the taxpayer, to the immediate and full restoration of the situation that would have existed if the illegality had not been committed, including the payment of indemnification interest, in accordance with the terms and conditions provided by law."

3. Now, in accordance with the provision of paragraph 1 of Article 43, indemnification interest will be due "when it is determined, in administrative reclamation or judicial challenge, that there was error attributable to the services resulting in payment of the tax debt in an amount superior to that legally due."

4. In this particular, beyond the administrative and judicial means referred to in the transcribed norms, we understand that, as results from paragraph 5 of Article 24 of RJAT, the right to the mentioned interest may be recognized in the arbitral proceeding and, thus, the request is ruled upon.

5. The right to indemnification interest to which the above-referred General Tax Law norms allude presupposes that tax has been paid in an amount superior to that due and that such derives from error, of fact or of law, attributable to the AT services, which manifestly occurs in this arbitral proceeding.

6. However, the annulment of the assessments only occurred by way of challenging the rejection of the official revision requests submitted by the Applicant on 25-08-2017 and 07-02-2018, by which the provision of point c) of paragraph 3 of Article 43 of the General Tax Law applies to it: "3 - Indemnification interest is also due in the following circumstances: (…) - c) When the revision of the tax act at the taxpayer's initiative is effected more than one year after the taxpayer's request, except if the delay is not attributable to the tax administration."

7. The fact that the AT decided before the lapse of one year is not, in the view of this Arbitral Tribunal, a circumstance prohibiting the right to indemnification interest claimed by the Applicant, for the reason that in such context the AT did not revise the tax acts, but rather obliged the Applicant to appeal the rejection to this Tribunal.

8. Indeed, it has long been settled case law that indemnification interest is due whenever the AT decides favorably to the taxpayer's claim, after the lapse of that one-year period counted from the revision request, as it will also be due when more than one year lapses after the revision request because the taxpayer is obliged to resort to the judicial route to obtain a decision favorable to its claim, by virtue of the AT (within or outside that period) having refused to revise the act. This is what occurs in the case of the Applicant which only after resorting to this arbitration sees its claim proceed.

9. Thus, the Applicant is entitled to indemnification interest, but only that which is due as of one year after submission of the official revision request submitted on 25-08-2017, which gave rise to the Official Revision Procedure no. ...2017..., and with respect to the assessments covered by the rejection decision to which it refers, until the date of restitution to the Applicant of the amounts of the assessments now annulled.

VI - DECISION

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

a) To rule as well-founded the request for declaration of illegality of the rejection of the official revision requests, determining, as a consequence, its annulment;

b) To rule as well-founded the arbitral opinion request relating to the annulment of tax assessments and compensatory interest, with respect to the taxation periods and vehicles identified in the list annexed to this arbitral opinion request;

c) To rule as well-founded the request concerning the recognition of the right to indemnification interest that is due as of one year after submission of the official revision request submitted on 25-08-2017, and until the date of restitution to the Applicant of the amounts of the assessments now annulled.

d) To order the Respondent to pay the costs of this proceeding.

Value of the case: € 15,120.21

Costs: Pursuant to Article 22, paragraph 4, of RJAT, and in accordance with Table I annexed to the Costs Regulation in Tax Arbitration Proceedings, the amount of costs is set at € 918.00, to be borne by the Respondent (AT).

Lisbon, 25 November 2018,

The Arbitrator, Álvaro Caneira