Summary
Full Decision
ARBITRAL AWARD
The arbitrators, Counselor Maria Fernanda dos Santos Maças (arbitrator-president), Dr. António Alberto Franco and Prof. Dr. Maria do Rosário Anjos designated by His Excellency the President of the Ethics Council of CAAD to form the Collective Arbitral Tribunal, constituted on 02-06-2017, hereby agree to render the following arbitral award:
I – REPORT
1. A…– BRANCH IN PORTUGAL, legal entity no.…, with registered office at … – …, …, filed, on 27-03-2017, a request for constitution of the arbitral tribunal, in accordance with the provisions of articles 2 and 10 of Decree-Law No. 10/2011, of 20 January (Legal Regime of Arbitration in Tax Matters, hereinafter referred to only as RJAT), in conjunction with article 102 of the CPPT, wherein the Tax and Customs Authority is requested (hereinafter referred to only as Respondent).
2. The claimant seeks, with its request, the declaration of illegality of 488 assessments of the Single Vehicle Circulation Tax (IUC) and respective compensatory interest, relating to the years 2009 to 2012, in the total amount of 65,237.73 €, as well as of the act refusing the request for official revision relating to the same, with the consequent reimbursement of the tax paid, as well as the recognition of the right to compensatory interest.
3. The request for constitution of the arbitral tribunal was accepted by the President of CAAD and automatically notified to the Tax and Customs Authority on 31-03-2017.
3.1. The claimant did not appoint an arbitrator, therefore, under the provisions of subparagraph a) of no. 2 of article 6 and subparagraph b) of no. 1 of article 11 of the RJAT, the President of the Ethics Council appointed the signatories as arbitrators of the collective arbitral tribunal, who communicated acceptance of their appointment within the legal period.
3.2. On 18-05-2017 the parties were notified of the appointment of the arbitrators, no objection having been raised.
3.3. In accordance with the provisions of subparagraph c) of no. 1 of article 11 of the RJAT, the arbitral tribunal was constituted on 02-06-2017.
3.4. In these terms, the Arbitral Tribunal is regularly constituted to examine and decide the object of the case.
4. To support the request for arbitral decision, the claimant alleges, in summary, the following:
- To be the sole importer of all motor vehicles of brand B… for the domestic market.
- Once imported, all vehicles are immediately sold to the brand's dealers who in turn sell them to end customers – who will be the users of the vehicles and in whose interest they enter into road circulation.
- All imported vehicles are imported following a prior request from the dealers, submitted electronically directly to the claimant and, consequently, by B… International to the factory.
- The vehicles, once imported, are immediately sold and invoiced to the dealers to whom they are delivered at their respective facilities, with the exception of those destined for Madeira and the Azores which are deposited in the warehouse of a logistics company, awaiting subsequent shipment to that destination.
- Although in an initial phase the registration and registration of the vehicles is initially done in the name of the importer (the Claimant), at the date of the vehicle registration requests the dealer is already the owner of them, having already sold and invoiced them to them, and it is the dealer who requests the registration of the vehicles.
- Given that the vehicles were sold to the dealers before the date of their registration, such sales invoices do not contain their respective registrations, containing only the chassis numbers of the vehicles sold to the dealers.
- Only the ISV/IA debits to the dealers, which occur after the date of the invoices for the sale of the vehicles to the dealers, contain the registration and the date of registration, as it was only after that, following the sale of the vehicles to the dealers, that the vehicles were registered.
- After selling them to third parties, the claimant never resumes ownership of the vehicles, as it is not a mere car dealer, but rather the national importer of the brand.
- The price is paid by the dealer to the claimant on the day immediately following the date of the invoice.
- The CIUC imports the principle of equivalence as a fundamental principle of taxation of this tax, making clear that taxpayers should be burdened to the extent of the environmental impact they cause to the environment and the road network, thereby enshrining the polluter-pays principle. Therefore, it should be the real polluters – or possessors – who bear the cost of the tax, being certain that the claimant was never the real polluter and cause of the environmental damage caused by motor vehicles.
- The Claimant is a taxpayer of ISV, in accordance with no. 1 of article 3 of the CISV – unlike what happens in the case of IUC, a distinct tax from that one – in which, as a "registered operator" responsible for the introduction of the vehicle into consumption, it is the taxpayer of this tax (ISV) – which is not to be confused with the IUC.
- It is notorious and of public knowledge that in the purchase of any new vehicle, it is invoiced by the dealer and not by the national importer of the brand.
- The IUC presupposes the actual use of the vehicles and the "environmental and road cost" caused by such use – taxing the user of the vehicles, who derives benefit from such use, with said social costs, representing, considering the provision of article 4, no. 3 of the LGT, a case of "special contribution".
- From the provisions of articles 3, no. 1 and 6, no. 1 of the CIUC it is derived that the IUC is levied on the owner or purchaser with retention of ownership at the date of vehicle registration – presuming that the owner (or purchaser with retention of ownership) on that date is the one in whose name the vehicle is then registered or recorded.
- None of the vehicles subject to the tax assessments contested were owned by the claimant on the dates of their respective registrations as it had already sold them to the aforementioned dealers, as evidenced by copies of the sales invoices and subsequent ISV debits.
- The legislator has always been clear regarding the subordination of vehicle registration in relation to the actual ownership of the vehicle – the true and only taxable fact, regardless of the formal appearance resulting from vehicle registration. Despite the taxable fact being vehicle ownership, the registration presumption is rebuttable, that is, subject to proof to the contrary.
- Being that article 73 of the LGT clearly states that the presumptions contained in tax rules of incidence (as is the case) always admit proof to the contrary, in implementation of the constitutional principles in force in the fiscal domain.
- Article 7 of the CRP, applicable subsidiarily to vehicle registration, provides that registration constitutes mere presumption that the right exists and belongs to the registered holder.
- Furthermore, in light of the principle of consensuality, the legal effects of the transfer of vehicles, in particular the legal effect of the transfer of vehicle ownership, are produced immediately, by simple purchase and sale agreement between the parties (rule "casum sentit dominus") – without need for any material act of delivery, written purchase and sale contract or any acts of publicity or registration (article 408 no. 1 of the CC).
- On the other hand, the Claimant benefits from the presumption of truthfulness and good faith enjoyed by the documents presented to prove the transfer of vehicle ownership – as is the case with the sales invoices for the vehicles that it attaches (cf. article 75 no. 1 of the LGT).
- By means of the sales invoices that it attaches, the Claimant demonstrates that it sold the vehicles in question before the date of their registration – which, in the terms mentioned, constitutes factuality that prevents the right to taxation (legally presumed) of the TA, since the IUC, in the year of registration, is levied on the owner (or equivalent) on the date of registration.
- All the sales invoices in question are known officially to the TA, because they were duly communicated to the TA via SAF-T (cf. article 74 no. 2 of the LGT) and also the dealers will have communicated to the TA the invoices issued by them to the end customers, by the same means. Moreover, these sales invoices were accounted for as sales revenues, as is also officially known to the TA – as they were declared in the respective income tax returns for IRC purposes and in the successive IES declarations presented.
- On the other hand, the new wording of article 3 of the CIUC, introduced by Decree-Law No. 41/2016, of 1 August, is inapplicable to the case, as it came into force only on 02.08.2016 (article 15 no. 1 of Decree-Law 41/2016, of 1/8) and the taxable facts in question occurred previously.
- In accordance with article 58 of the LGT, "The tax administration must, in the procedure, perform all necessary actions to satisfy the public interest and the discovery of material truth, not being subordinated to the initiative of the author of the request.", as an expression of the inquisitorial principle. In this case, the TA demonstrated total lack of interest in seeking material truth – it did not heed, namely, the sales invoices for the vehicles in question, of which it has full official knowledge, as stated above. Being certain that "The failure to verify the elements necessary to discover material truth, with the consequent violation of the inquisitorial principle, is grounds for illegality of the tax act (…)."
- The claimant presented a Request for Official Revision against the IUC and JC assessments in question, which was rejected, with the TA basing its decision solely and exclusively on the presumption of Vehicle Registration.
5. The Tax and Customs Authority submitted a response, having sustained in summary:
- Under article 17 of the CIUC, the introduction into consumption and assessment of tax on vehicles that do not have national registration is governed by the issuance of a Vehicle Customs Declaration (DAV), such issuance constituting the taxable event, in accordance with the terms and for the purposes set forth in article 5 of the Vehicle Tax Code (CISV).
- In accordance with article 117, no. 4 of the Highway Code, the registration is requested from the IMTT by the entity that carries out the admission or introduction into consumption of the vehicle.
- On the other hand, article 24, no. 1 of the Motor Vehicle Registration Regulation (approved by Decree-Law No. 55/75, of 12 February) (RRA), "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 the tax obligations relating to the vehicle."
- It follows from the foregoing that the first registration of each motor vehicle is carried out in the name of the importing entity, in this case the Claimant.
- The issuance to the claimant of a registration certificate, in accordance with article 6 of the CIUC, constitutes the taxable event, so that, having the Claimant requested the issuance of a registration certificate being the same registered in the name of this claimant, the requirements of the taxable event are met, as well as its enforceability, the Claimant being the taxpayer of the tax.
- The first misconception underlying the interpretation advocated by the Claimant is based on a skewed reading of the letter of the law, the thesis advocated by it having no support in the letter of the law.
- The tax legislator, in establishing in article 3, no. 1 who are the taxpayers of the IUC, expressly and intentionally established that these are the owners (or in the situations provided for in no. 2, the persons mentioned there), being considered as such the persons in whose name they are registered.
- It emphasizes that the legislator did not use the expression "it is presumed," as it could have done, for example, in the following terms: "the taxpayers of the tax are the owners of the vehicles, it being presumed that such are the natural or legal persons, of public or private law, in whose name the same are registered."
- The tax regulation is full of provisions analogous to that established in the final part of no. 1 of article 3, in which the tax legislator, within his freedom of legislative configuration, expressly and intentionally, establishes what should be considered legally, for purposes of incidence, of income, of exemption, of determination and of periodization of taxable profit, for purposes of residence, of location, among many others.
- This is a clear option of legislative policy adopted by the legislator, whose intention, within his freedom of legislative configuration, was that, for purposes of IUC, those who appear as such in the vehicle registration should be considered owners.
- In summary, article 3 of the CIUC does not contain any legal presumption, being certain that the thesis advocated by the Claimant directs its objective to the wrong target.
- Even admitting that, from the point of view of the rules of civil law and land 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, in accordance with the terms established in the CIUC (which in this case constitutes special law, which, under the general terms of law, derogates from the general norm), the tax legislator intentionally and expressly wanted that those considered as owners, lessees, purchasers with retention of ownership or holders of the right of option to purchase in long-term leasing be the persons in whose name the vehicles are registered.
- In light of a teleological interpretation of the scheme established throughout the IUC Code, the interpretation advocated by the claimant to the effect that the taxpayer of the IUC is the actual owner, regardless of not appearing in the vehicle register, the registration of such quality, is manifestly erroneous, in that it is the proper ratio of the scheme established in the IUC Code that constitutes clear proof that what the tax legislator intended was to create a Single Vehicle Circulation Tax based on the taxation of the vehicle owner as it appears in the vehicle registration.
- Even if – by mere academic hypothesis – it were admitted to be admissible to defeat the presumption in light of the jurisprudence already established in this arbitral tribunal, the truth is that the invoice is not fit to prove the conclusion of a synallagmatic contract, such as a purchase and sale, as that document does not itself reveal an indispensable and unequivocal declaration of intent on the part of the purported purchasers.
- It concludes, therefore, by the Respondent by the legality of the tax acts in question, as they comply with the legal regime in force at the date of the taxable facts, so that, no error occurred, in this case, imputable to the services.
6. The meeting referred to in article 18 of the RJAT was held, at which the witnesses called by the claimant were examined, with written submissions being subsequently presented.
II – CONSIDERATION OF PROCEDURAL ISSUES
7.1. The tribunal is competent and regularly constituted.
7.2. The parties have legal capacity and standing, show themselves to be legitimate and are regularly represented (articles 4 and 10, no. 2, of the RJAT and article 1 of Ordinance No. 112-A/2011, of 22 March).
7.3. The case contains no procedural defects.
III – FINDINGS OF FACT AND LAW
8.1. Findings of Fact
Given that the Tribunal need not pronounce upon all that was alleged by the parties, falling instead upon it the duty to select the facts that matter for the decision and to distinguish the proven facts from the unproven (cf. article 123, no. 2, of the CPPT and article 607, nos. 3 and 4, of the CPC, applicable by virtue of article 29, no. 1, subparagraphs a) and e), of the RJAT), having regard to the positions taken by the parties, the documentary evidence attached to the case file and the witness testimony produced, the following facts are considered proven:
8.1.1. FACTS FOUND PROVEN
The following facts are considered proven:
a) The claimant is a commercial company which, in the scope of its activity, imports, exclusively, all motor vehicles of brand B… for the domestic market.
b) The vehicles are imported by the claimant from B… International, following a prior request from the dealers, submitted electronically directly to the factory.
c) The need for vehicle imports stems from orders placed directly by the dealers to the claimant, so there are no vehicle sales to the claimant, and from it to those, without the respective purchase order.
d) Once arrived in Portugal, the vehicles are immediately invoiced by the claimant to the dealers and immediately delivered at their respective facilities, except for vehicles destined for Madeira and the Azores which are deposited in the warehouse of a logistics company.
e) Once the vehicles are imported, the official representative associated – C… – requests on behalf of the claimant the issuance of registrations for the vehicles.
f) The sales invoices for the vehicles to the dealers do not contain the registrations, as they have not yet been requested, but only the chassis numbers of the vehicles sold to the dealers.
g) After the sale to the dealers, the claimant pays the due Vehicle Tax, requests the issuance of the registration and invoices them for the tax borne, with the respective invoices showing the registrations of the vehicles.
h) The assessments contested result from the fact that the claimant is the first owner of the vehicles, for purposes of vehicle registration, as their importer.
i) There are 488 IUC assessments in question and respective compensatory interest, relating to the years 2009 to 2012 that the claimant paid.
j) The claimant presented a request for official revision of the assessments in question, which process ran under no. …2016… and related proceedings, which was the subject of an order rejecting the claim by the Head of the Division of the Unit for Large Taxpayers on 23-12-2016, in the exercise of delegated powers, whose notification was issued by registered mail of the same date.
8.1.2. There are no facts found to be unproven that are relevant to the examination of the claim.
8.1.3. The facts found proven and unproven were based on the documents attached to the case by the claimant, the administrative file attached by the respondent and the testimony of the witnesses called by the claimant, D… and C…, which were shown to be impartial and enlightening.
8.2. Matters of Law
8.2.1 With the facts established, it is necessary to address the legal question raised by the Claimant, which consists of assessing the terms of the configuration of subjective incidence of the IUC in light of the provisions of article 3 of the Single Vehicle Circulation Tax Code (CIUC), namely, the question of whether subjective incidence is based strictly on the registration of vehicle ownership in the Vehicle Register, or whether registration operates merely as a presumption of tax incidence, rebuttable, in accordance with the provisions of article 73 of the General Tax Law. In connection with this, there follow questions of whether, in case it is mere presumption, how it may be rebutted by the taxpayer, to whom falls the burden of proof. On this matter there is already abundant and quite definite jurisprudence from arbitral decisions.
A final question, raised by the Claimant, concerns the right to compensatory interest. Let us see.
8.2.2 By way of preliminary remark, it should be noted that the contentious regime provided for in the RJAT is one of legality only, aimed solely at the declaration of illegality of acts of the types provided for in subparagraphs a) and b) of no. 1 of its article 2. Therefore, the legality of the contested acts must be assessed as they were performed, with the reasoning used in them, with other possible justifications being irrelevant that could serve as support for other acts, with decisory content totally or partially coinciding with the act performed. Thus, reasoning invoked a posteriori, after the end of the tax procedure in which the act whose declaration of illegality is requested was performed, is irrelevant, including those advanced in the judicial proceeding.
On the other hand, it must once again be noted that the Courts (which obviously include arbitral tribunals) need not examine all the arguments formulated by the parties (Cf., inter alia, Decision of the Plenary of the 2nd Section of the STA, of 7 June 95, case 5239, in DR – Appendix of 31 March 97, pgs. 36-40 and Decision STA – 2nd Sec – of 23 April 97, DR/AP of 9 October 97, p. 1094).
a. Regarding subjective incidence:
8.2.3 Let it be stated from the outset that the majority arbitral tax jurisprudence on this matter is followed in the essentials [Cf., in particular, decisions rendered in CAAD case files nos. 14/2013, 26/2013, 27/2013, 73/2013, 170/2013, 154/2014, 212/2014 and, more recently, in case files nos. 539/2016-T, 580/2016-T, 623/2016-T, 109/2017-T; 145/2017-T, 185/2017-T, all published on www.caad.org.pt].
On this matter, article 3 of the CIUC (Single Vehicle Circulation Tax Code) provides as follows:
"Article 3
Subjective Incidence
1 – The taxpayers of the tax are the owners of the vehicles, being considered as such the natural or legal persons, of public or private law, in whose name the same are registered.
2 – Equated to owners are financial lessees, purchasers with retention of ownership, as well as other holders of purchase option rights by virtue of the lease contract".
As to the interpretation of the legal-tax norm, no. 1 of article 11 of the LGT establishes that "in determining the meaning of tax rules and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed".
In this regard, promoting the necessary interpretative activity of the norms in question, the best interpretation of article 3, no. 1 of the CIUC must be examined, in light of fundamental hermeneutical principles. Thus, and first of all, attention should be paid to the literal element, that is, the one in which it is sought to detect the legislative thought that is objectified in the norm, to verify whether it contemplates a presumption, or whether it determines, definitively, that the taxpayer of the tax is the owner appearing in the registration.
The question that arises is whether the expression "considered" used by the legislator in the CIUC, rather than the expression "presumed," which was that contained in the decrees that preceded the CIUC, will have removed the nature of "presumption" from the legal provision in question.
In our view, and contrary to what the TA argues, the answer must necessarily be negative, since from an analysis of our legal system it clearly emerges that the two expressions have been used by the legislator with equivalent meaning, whether at the level of rebuttable presumptions, or within the framework of irrebuttable presumptions, so that nothing enables us to draw the conclusion sought by the Tax Authority by a mere semantic reason.
In fact, this happens in various legal norms that establish presumptions using the verb "to consider," of which the following are indicated, merely by way of example:
- within the scope of civil law - no. 3 of article 243 of the Civil Code, when it establishes that "the third party who acquired the right after the registration of the simulation action is always considered to be in bad faith, when such shall take place";
- also within the scope of industrial property law, the same occurs, when article 59, no. 1 of the Industrial Property Code provides that "(…) inventions whose patent has been requested within one year from the date on which the inventor leaves the company are considered to be made during the execution of the employment contract (…)";
- and, also still, within the scope of tax law, when nos. 3 and 4 of article 89-A of the LGT provide that it is incumbent upon the taxpayer to prove that the income declared corresponds to reality and that, if such proof is not made, it is presumed ("considered" in the letter of the Law) that the income is that which results from the table contained in no. 4 of the said article.
This conclusion that there is total equivalence of meaning between the two expressions, which the legislator uses indifferently, satisfies the condition established in article 9, no. 2 of the Civil Code, since the minimum of verbal correspondence is ensured for the purposes of determining the legislative thought.
Moreover, on this matter there is already such abundant jurisprudence from arbitral decisions, accompanied by jurisprudence from our superior Courts. It is, therefore, a presumption.
Furthermore, this conclusion is equally reinforced when the other elements of interpretation are revisited, that is, the historical element, the rational or teleological element and the systematic element.
Discussing the interpretative activity, FRANCESCO FERRARA states that this "is the most difficult and delicate operation to which the jurist can dedicate himself, and demands fine touch, refined sense, fortunate intuition, much experience and perfect mastery not only of the positive material, but also of the spirit of a certain legislation. (…) Interpretation must be objective, balanced, without passion, daring at times, but not revolutionary, acute, but always respectful of the law" (Cf. Essay on the Theory of Legal Interpretation, translation by MANUEL DE ANDRADE, (2nd ed.), Arménio Amado, Editor, Coimbra, 1963, p. 129).
As BAPTISTA MACHADO states: "the legal provision presents itself to the jurist as a linguistic statement, as a set of words that constitute a text. Interpreting obviously consists in drawing from that text a certain meaning or content of thought.
The text admits multiple meanings (polysemy of the text) and frequently contains ambiguous or obscure expressions. Even when apparently clear upon first reading, its application to concrete cases in life often gives rise to unforeseen and unpredictable interpretation difficulties. Furthermore, although apparently clear in its verbal expression and bearing only one meaning, there is still the need to account for the possibility that the verbal expression has betrayed the legislative thought – a phenomenon more frequent than it would seem upon first glance" (Cf. Introduction to Law and to the Legitimating Discourse, pp. 175/176).
"The purpose of interpretation is to determine the objective meaning of the law, the vis potestas legis. (…) The law is not what the legislator wanted or intended to express, but only that which he expressed in the form of law. (…) Moreover, the legal command has an autonomous value that may not coincide with the will of the architects and drafters of the law, and may lead to unforeseen and unexpected consequences for the legislators. (…) The interpreter must seek not that which the legislator wanted, but that which appears objectively intended in the law: the mens legis and not the mens legislatoris (Cf. FRANCESCO FERRARA, Essay, pp. 134/135).
Understanding a law "is not merely mechanically grasping the apparent and immediate meaning that results from verbal connection; it is to inquire in depth into the legislative thought, to descend from the verbal surface to the intimate concept that the text contains and to develop it in all its possible directions" (loc. cit., p. 128).
With the objective of unveiling the true sense and scope of legal texts, the interpreter makes use of interpretative factors that are essentially the grammatical element (the text, or the "letter of the law") and the logical element, which in turn is subdivided into the rational (or teleological) element, the systematic element and the historical element. (Cf. BAPTISTA MACHADO, loc. cit., p. 181; J. OLIVEIRA ASCENSÃO, The Law – Introduction and General Theory 2nd Ed., Calouste Gulbenkian Foundation, Lisbon, p. 361).
Among us, it is article 9 of the Civil Code (CC) that provides the rules and fundamental elements for the correct and adequate interpretation of norms.
The text of no. 1 of article 9 of the CC begins by stating that interpretation should not be limited to the letter of the law, but should reconstruct, from it, the "legislative thought."
On the expression "legislative thought," BAPTISTA MACHADO tells us that article 9 of the CC "did not take a position in the controversy between the subjectivist doctrine and the objectivist doctrine. It is proven by the fact that it does not refer to either the 'will of the legislator' or the 'will of the law,' but rather points instead as the scope of interpretative activity the discovery of 'legislative thought' (article 9, 1st). This expression, deliberately colorless, means exactly that the legislator did not want to commit itself" (loc. cit., p. 188).
To the same effect, PIRES DE LIMA and ANTUNES VARELA pronounce themselves in annotation to article 9 of the CC (Cf. Annotated Civil Code – vol. I, Coimbra ed., 1967, p. 16).
And regarding no. 3 of article 9 of the CC, that author states: "(...) this no. 3 thus proposes to us an ideal legislator model that enshrined the most appropriate solutions (most correct, fair or reasonable) and knows how to express itself in correct form. This model is clearly characterized by objectivist features, as the point of reference is not the concrete legislator (so often incorrect, hasty, unfortunate) but an abstract legislator: wise, foreseeing, rational and fair (...)" (loc. cit. p. 189/190).
Shortly thereafter, this distinguished Professor calls attention to the fact that no. 1 of article 9 refers to three more interpretation elements "the unity of the legal system," the "circumstances in which the law was elaborated" and the "specific conditions of the time in which it is applied" (loc. cit, p. 190).
As for the "circumstances in which the law was elaborated," BAPTISTA MACHADO explains that this expression "(...)represents that which is traditionally called the occasio legis: the conjunctural factors of political, social and economic order that determined or motivated the legislative measure in question(...)" (loc. cit., p. 190).
Regarding the "specific conditions of the time in which it is applied," this author states that this element of interpretation "has decidedly an actualist connotation (loc. cit., p. 190) which coincides with the opinion expressed by PIRES DE LIMA and ANTUNES VARELA in annotations to article 9 of the CC.
With respect to "the unity of the legal system," BAPTISTA MACHADO considers this the most important interpretative factor: "its consideration as a decisive factor would always be imposed upon us by the principle of evaluative or axiological coherence of the legal order" (loc. cit., p. 191).
It is also this author who tells us, regarding the literal or grammatical element (text or "letter of the law") that this "is the starting point of interpretation. As such, it immediately falls upon it a negative function: to eliminate those meanings that have no support, or at least some correspondence or resonance in the words of the law.
But it equally has a positive function, in the following terms: if the text admits only one meaning, that is the meaning of the norm – with the caveat, however, that one can conclude based on other norms that the wording of the text has betrayed the thought of the legislator" (loc. cit., p. 182).
Referring to the rational or teleological element, this author states that it consists "in the reason for being of the law (ratio legis), in the end aimed at by the legislator in elaborating the norm. Knowledge of this end, especially when accompanied by knowledge of the circumstances (political, social, economic, moral, etc.,) in which the norm was elaborated or of the political-economic-social conjuncture that motivated the legislative decision (occasio legis) constitutes a subsidy of the utmost importance for determining the meaning of the norm. It suffices to recall that the clarification of the ratio legis reveals to us the valuation or weighing of the various interests that the norm regulates and, therefore, the relative weight of those interests, the choice between them expressed by the solution that the norm expresses" (loc. cit., pp. 182/183).
It is also BAPTISTA MACHADO who tells us, now with respect to the systematic element (context of the law and parallel places) that "(...) this element comprises the consideration of the other provisions that form the complex normative of the institute in which the norm to be interpreted is integrated, that is, that regulate the same matter (context of the law), as well as the consideration of legal provisions that regulate parallel normative problems or related institutes (parallel places). It also comprises the systematic place that befalls the norm to be interpreted in the global legal order, as well as its consonance with the spirit or intrinsic unity of the entire legal order.
It is based on this interpretative subsidy on the postulate of the intrinsic coherence of the legal order, namely the fact that the norms contained in a codification obey in principle a unitary thought(...)" (loc. cit., p. 183).
As JOSEF KOHLER teaches, cited by MANUEL DE ANDRADE "(...) in particular we must take into account the chain of the various laws of the country, because a fundamental requirement of all sound legislation is that the laws adjust to one another and do not result in a jumble of disconnected provisions (...)" (Essay, p. 27).
In sum, through the analysis of the historical element, the conclusion is drawn that, from the entry into force of Decree-Law 59/72, of 30 December, the first to regulate the matter, through Decree-Law No. 116/94, of 3 May, the last preceding the CIUC [cf Law No. 22-A/2007, with the amendments of Law 67-A/2007 and 3-B/2010], the presumption was enshrined that the taxpayers of the IUC are the persons in whose name the vehicles were registered at the date of their assessment.
8.2.4 – It is observed that tax law has always had, for the case that now interests us, the objective of taxing the true and actual owner and user of the vehicle, by force of the principle of equivalence underlying the IUC. Thus, the legislator, in adopting the principle of equivalence, chose to burden the subject using the vehicle to the extent of the cost caused due to the negative externalities caused by motorized vehicles. In the letter of the law, it establishes only the presumption that the owner appearing in the Vehicle Register coincides also with its user and that registration evidences the reality affecting the use of the vehicle. This policy choice on extrafiscal grounds also justifies the solution contained in no. 2 of article 3 of the CIUC regarding lessees, chosen by the legislator as the subjects burdened by the payment of the tax even during the term of a lease contract from which there may not necessarily result the acquisition of the ownership of the vehicle. Indeed, the current and new framework of vehicle taxation establishes principles that aim to subject vehicle owners to bear the costs of damage caused by road and environmental harm caused by them, as is understood from the tenor of article 1 of the CIUC.
The consideration of these principles, namely the principle of equivalence, which deserve constitutional protection and recognition in community law, and are also recognized in other branches of the legal order, determines that said costs are borne by the actual owners, the causes of said damage, which completely rules out an interpretation aimed at preventing the presumed owners from proving that they no longer are because ownership is in the legal sphere of another.
Thus, also, from the interpretation made in light of elements of a rational and teleological nature, considering what the rationality of the system guarantees and the aims pursued by the new CIUC, it is clear that no. 1 of article 3 of the CIUC establishes a rebuttable legal presumption.
Thus, the interpretation of a rational or teleological nature also leads us to the same conclusion.
*
In light of the foregoing, it is important to conclude that the ratio legis of the tax points in the direction of the actual owner-users of the vehicles being taxed, whereby the expression "considered" is used in the provision in question in a sense similar to "presumed," reason for which there is no doubt that a legal presumption is enshrined.
8.2.5 Finally, but with great acuity for the case in question, article 73 of the LGT establishes that "(…) the presumptions enshrined in the rules of tax incidence always admit proof to the contrary, whereby they are rebuttable (…)".
Thus, establishing article 3, no. 1 of the CIUC a rebuttable presumption, the person who is registered in the register as the owner of the vehicle and who, for that reason was considered by the Tax Authority as the taxpayer of the tax, may present evidence aimed at demonstrating that the holder of ownership, on the date of the taxable event, is another person, to whom ownership was transferred.
b. Regarding the burden of proof and means of proof suitable to rebut the presumption
8.2.6 - The second question that must be analyzed is that of proof. Thus, as to the burden of proof, there is no doubt that it is incumbent upon the taxpayer to present suitable means to promote the proof necessary to overcome the presumption. It falls to them to provide "proof to the contrary," that is, proof that they were not the owner on the date of the taxable event. Let us see how this objective can be achieved, which raises the question of the suitability of vehicle sales invoices as a means of proof of the sale of such vehicles.
As to this question, it should first be noted that motor vehicle purchase and sale contracts have a consensual basis and are not subject to special formalities (Cf articles 219 and 408-1, of the Civil Code).
Invoices have essentially the formalities provided for in article 36 of the CIVA and 5 of Decree-Law No. 198/90.
The presumption of truthfulness that invoices contain may be rebutted by the TA in light of the provisions of article 75-2 of the LGT.
On the other hand, the ownership of motor vehicles is subject to mandatory registration (cf. article 5-1 and 2, of Decree-Law No. 54/75, of 12/2). The obligation to carry out the registration falls upon the purchaser – the active subject of the fact subject to registration (cf. article 8-B – 1, of the Real Estate Registration Code, applicable to the Vehicle Register by virtue of article 29 of Decree-Law No. 54/75, of 12/2, combined with article 5-1/a), of this last decree).
However, the Motor Vehicle Registration Regulation contains a special regime, in force since 2008, for entities that, by virtue of their commercial activity, proceed with regularity to the transfer of ownership of motor vehicles. According to this regime, which is established in article 25-1/d), of Decree-Law No. 55/75, of 12/2 (version resulting from Decree-Law No. 20/2008, of 31/1), the registration can be promoted by the seller, by means of a request signed only by the seller himself.
The IUC is legally configured, as has been seen, to function in integration with the motor vehicle register, which is inferred, from the outset, from the cited article 3-1, of the CIUC, a norm where it is established that the taxpayers of the tax are the owners of the vehicles, further adding that those persons are considered as such who are in whose name the same are registered.
The rebuttal of the legal presumption obeys the rule contained in article 347 of the Civil Code, in accordance with which full legal proof can only be contradicted by means of proof showing that the fact of which it is the object is not true. What means that it is not enough for the other party to oppose mere counter-proof – which is intended to cast doubt on the facts (cf. article 346 of the Civil Code) that make the presumed facts doubtful; on the contrary, it must show that the presumed fact is not true, in such a way that there remains no uncertainty that the facts resulting from the presumption are not real.
Now, the invoice constitutes an accounting document drawn up within the enterprise and intended for external use, namely, for the TA, which derives from it all the effects inherent in the assessment for incidence of various taxes. Therefore, unless its falsity is demonstrated, invoices are presumed to be valid for all legal purposes, and cannot fail to be so, solely as a means of proof of the transaction, relevant for purposes of IUC incidence. For its part, the debit note also consists of the document in which the issuer communicates to the recipient that the latter owes it a certain monetary amount. Both documents appear in the invoicing phase (which often does not coincide with the actual payment) of the amount to be paid by the purchaser. Thus, although not proving the actual payment of the price by the same purchaser, they constitute proof of that same transaction, that is, of the purchase and sale effected. Purchase and sale that may moreover be effected, with retention of ownership for the seller until payment of the price without this preventing the obligation of IUC from resting on the purchaser.
8.2.7 - Furthermore, tax incidence presumptions may be rebutted through the contradictory procedure itself provided for in article 64 of the CPPT or, alternatively, through the channel of gracious complaint, revision of tax act or judicial challenge of tax acts based thereon. In the case at hand, the Claimant did not use that procedure itself, but instead opted for the request for revision of the tax act followed by the arbitral request, invoking in both and attaching proof to demonstrate that it was not the owner of the vehicles on the date the taxable event occurred. Therefore, the documents attached to the case file, which served as the basis for the facts established, in accordance with the reasoning above, constitute suitable means to rebut the presumption of subjective incidence of the IUC upon which the tax assessments whose annulment is petitioned in this case are based.
The tribunal's understanding, having assessed the proof produced by the Claimant, in particular with the complement of the testimony of the witnesses it called, is to the effect of deciding that this proof is sufficient to attest to the sale of all vehicles contained in the tax assessments to the respective purchasers, in such a manner that at the time of the taxable event and the first registration of ownership carried out, it was no longer their owner. Indeed, it should be noted that the TA and now Respondent never, neither in the Response nor in the Submissions attached to the case file, questioned this documentation, the actual occurrence of the transfers or the evidentiary value of the documentation attached, the same that served as the basis for the incidence of other taxes assessed to the Claimant (for example, VAT and IRC).
*
It is thus concluded by accepting proof of the sale of motor vehicles through demonstration of the existence of issuance of a valid invoice. Having examined the elements carried to the case by the Claimant and the facts proven, the conclusion is drawn that it was not actually the owner of the vehicles to which the assessments in question relate, having transferred, on the date on which the respective IUC was due, the ownership of the vehicles, in accordance with the terms provided for in civil law.
The documentary elements attached to the case file enjoy the presumption of truthfulness conferred upon them by the aforementioned article 75, no. 1 of the LGT, and thus have suitability and sufficient strength to rebut the presumption that supported the assessments made based exclusively, as the Law provides, on the motor vehicle register.
These apparent transfers of ownership operations are opposable to the Tax and Customs Authority, because, although facts subject to registration only produce effects in relation to third parties when registered, in light of the provision of article 5, no. 1 of the Real Estate Registration Code [applicable by referral of the Motor Vehicle Registration Code], the Tax Authority is not a third party for purposes of registration, since it does not find itself in the situation provided for in no. 2 of the said article 5 of the Real Estate Registration Code, applicable by force of the Motor Vehicle Registration Code, that is, it did not acquire from a common author rights incompatible with one another.
8.2.8 - Thus it is that, in summary, motor vehicle registration, in the economy of the CIUC, represents mere rebuttable presumption of the taxpayers of the tax.
In this case, the claimant successfully, with complete success, rebutted that presumption and demonstrated that the reality of the register was a mere appearance of that same reality, that is, the registered owner was not the real owner, taxpayer of the IUC.
In these circumstances, the mentioned and now contested assessments appear to be illegal, suffer from the vice of violation of law by error regarding the factual and legal assumptions underlying, wherefore their annulment is imperative and, consequently, the restitution to the Claimant, by the Tax and Customs Authority, of the respective amounts paid wrongfully, as set out in the documents attached to the case file.
c. Regarding the request for compensatory interest:
8.2.9 - In the arbitral request the Claimant petitions, as a consequence of the illegality and annulment of the contested assessments, the right to compensatory interest.
Thus, it is necessary to determine whether, under article 24, no. 5, of the RJAT, the request for payment of compensatory interest in favor of the Claimant (Cf. article 43 of the LGT and 61 of the CPPT), should proceed.
As to this question, no. 1 of article 43 of the LGT establishes that compensatory interest is due when it is determined that there was error imputable to the services from which resulted payment of the tax debt in an amount superior to that legally due.
In this regard, the TA responds with the invocation of jurisprudence contained in the arbitral decision rendered in case no. 26/2013-T, of 19/7/2013 (which dealt with a situation similar to the one now under examination), that is, that "(...) the right to compensatory interest to which the aforementioned LGT norm alludes presupposes that there has been payment of tax in an amount superior to that due and that such derives from error, of fact or of law, imputable to the services of the TA. [...] even if it is recognized that the tax paid by the claimant is not due, because it is not the taxpayer of the tax obligation, determining, in consequence, its respective reimbursement, it is not seen that, in its origin, there is the error imputable to the services, which determines such right [to compensatory interest] in favor of the taxpayer. Indeed, upon promoting the official assessment of the IUC considering the claimant as the taxpayer of this tax, the TA merely limited itself to complying with the norm of no. 1 of article 3 of the CIUC, which, as abundantly mentioned above, attributes such quality to the persons in whose name the vehicles are registered."[1]
As to this question, it is necessary to determine whether the grounds for annulment are or are not based on error imputable to the services.
Let us see, therefore, whether the Claimant has reason on this matter.
In the case of the present case, it was the Respondent who proceeded, in a first moment, on its own initiative, to the self-assessments (avoiding the prejudice and loss of rights resulting from the existence of tax debts registered in the system). It subsequently proceeded to their payment and, only later, came in the context of a procedure for revision of the tax act to set forth its reasons of fact and of law by which it claims the annulment of the assessments, previously self-assessed and paid.
In accordance with this factuality, it cannot be concluded, from the outset, by the existence of error imputable to the TA in the assessments in question.
However, after the presentation of the request for revision of the act by the Claimant, the TA had the opportunity to verify the correct factuality and conclude that the tax previously paid was wrongfully due. At that moment, having regard to the information at its disposal, it should have corrected the error. In failing to do so and having decided as it did in determining the non-viability of the revision request, it became responsible from that moment on for the payment of compensatory interest, to be calculated, note it, only after the date on which it became aware of such factuality, that is, from the date on which it rendered the decision rejecting the revision request presented by the Claimant. Only from this moment can we consider the requirements contained in article 43 of the LGT to be met.
In this case, the errors that affect the assessments are imputable to the Tax and Customs Authority, in that it should have corrected the act when confronted with this reality and with the underlying proof. Upon rejecting the revision request lodged by the Claimant, the TA decided on the basis of error regarding the factual and legal assumptions underlying and, in that measure and only after that date, the illegal assessment acts subsisted by its initiative.
On the other hand, there is place for reimbursement of the tax paid by the Claimant, by virtue of the provisions of the aforementioned articles 24, no. 1, subparagraph b), of the RJAT and 100 of the LGT, as this is essential to "re-establish the situation that would exist if the tax act that is the subject of the arbitral decision had not been performed."
In conclusion, the Claimant has the right to be reimbursed for the amount that it paid wrongfully (in accordance with the provisions of articles 100 of the LGT and no. 1 of article 24 of the RJAT) and, furthermore, to be indemnified for the wrongful payment through the payment of compensatory interest, by the Respondent, from the date of the rejection of the request for revision of the tax act, until reimbursement, at the legal supplementary rate, in accordance with nos. 1 and 4 of article 43 and no. 10 of article 35 of the LGT, article 559 of the Civil Code and Ordinance No. 291/2003, of 8 April.
d. Regarding costs:
8.3 - The payment of costs at the end of the case falls to the unsuccessful party, in the proportion in which it is unsuccessful. This will not be the case, however, if despite being unsuccessful, this party did not give cause to the action, which is not the case, as the TA had, as was said in the preceding point, the opportunity to revoke the act after being called upon to decide the question in the context of a procedure for revision of the tax act. Therefore, by choosing not to do so, it gave rise to the present arbitral request, and, in that measure, is responsible for the payment of the costs of the case.
Consequently, it will be the TA that must bear the costs in full.
IV - DECISION
In accordance with the foregoing, the members of this Arbitral Tribunal agree to:
a) Judge the requests for declaration of illegality of the rejection of the request for Revision of the tax acts embodied in the self-assessments of IUC and compensatory interest subject to this case, in the total amount of 65,237.73 €, to be well-founded;
b) Revoke the act rejecting the Revision request and annul the said assessments;
c) Judge the request for payment of compensatory interest by the Tax and Customs Authority, to be calculated from the date of rejection of the Revision request until full payment, to be well-founded;
d) Condemn the Tax and Customs Authority in the costs of the present case.
V - VALUE OF THE CASE
The value of the case is fixed at 65,237.73 €, in accordance with article 97-A, no. 1, a), of the Code of Tax Procedure and Process, applicable by virtue of subparagraphs a) and b) of no. 1 of article 29 of the Legal Regime of Tax Arbitration and no. 2 of article 3 of the Regulation of Costs in Tax Arbitration Proceedings.
VI - COSTS
The amount of the arbitration fee is fixed at 2,448.00 €, in accordance with Table I of the Regulation of Costs of Tax Arbitration Proceedings, in accordance with articles 12, no. 2, and 22, no. 4, both of the Legal Regime of Tax Arbitration, and article 4, no. 4, of the cited Regulation.
Let notification be made.
Lisbon, 7 December 2017
The Arbitrator President,
(Maria Fernanda dos Santos Maças)
The Arbitrator Member,
(António Alberto Franco)
The Arbitrator Member,
(Maria do Rosário Anjos)
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