Process: 210/2016-T

Date: November 30, 2016

Tax Type: ISV

Source: Original CAAD Decision

Summary

This CAAD arbitral decision (Process 210/2016-T) addresses a dispute concerning ISV (Imposto Sobre Veículos - Vehicle Tax) liquidation following importation of a used vehicle from France. The claimant company challenged an additional ISV assessment of €2,440.38 issued by the Customs Authority after review of the initial tax determination. The core issue involves conflicting vehicle classification: the Certificate of Conformity and Portuguese technical inspection classified the vehicle as a 5-seat light passenger vehicle, while the French registration certificate identified it as a 2-seat light commercial vehicle derived from a passenger vehicle. Initially, Customs assessed ISV based on the passenger vehicle classification (€1,448.60). Following administrative review, Customs reclassified the vehicle as a light commercial vehicle derived from passenger vehicle, triggering assessment at 100% of Table B under article 7(2)(a) of the ISV Code, resulting in the contested additional charge. The claimant argued that the Certificate of Conformity, IMTT homologation, and Portuguese technical inspection all confirmed the 5-seat passenger classification, making the additional assessment erroneous. The Tax Authority contended that the French registration certificate evidencing 2-seat capacity and commercial derivative classification should prevail, and that IMTT homologation is not binding for tax purposes. The case raises significant questions about documentary hierarchy in vehicle fiscal regularization, the binding nature of certificates of conformity versus foreign registration documents, and whether technical homologation determinations control tax classification. This arbitral proceeding was initiated under Decree-Law 10/2011 (RJAT) with the tribunal constituted on June 20, 2016, following proper designation procedures through CAAD's Deontological Council.

Full Decision

ARBITRAL DECISION

1. REPORT

1.1 - A…, LDA, taxpayer number …, with registered office at Place …, no. … to …, …, …-… -…, claimant in the tax procedure referenced above and on the margins thereof (hereinafter Claimant), came forward, invoking the provisions of subparagraph a), paragraph 1, of article 2 of Decree-Law no. 10/2011 of 20 January (hereinafter RJAT) and of articles 1 and 2 of Ordinance no. 112-A/2011 of 22 March, to request the constitution of an arbitral tribunal, having in view:

  • The declaration of annulment of the assessment of Motor Vehicle Tax, with its respective legal consequences (hereinafter designated as ISV), in the amount of € 2,440.38, to which refers the Assessment Record no. … of 02-02-2016 of the Customs Authority of …, issued following the dispatch of 21-01-2016 pronounced by the Head of the said Customs Authority.

1.2 - Pursuant to the provisions of paragraph 1 of article 6 and subparagraph a) of paragraph 1 of article 11 of Decree-Law no. 10/2011 of 20 January, the Deontological Council of CAAD designated the undersigned, on 02-06-2016, as sole arbitrator António Correia Valente, who communicated acceptance of the assignment.

  • On 02-06-2016 the Parties were notified of this designation, in the combined terms of article 11, paragraph 1, subparagraph b) of RJAT, in the wording introduced by article 228 of Law no. 66-B/2012 of 31 December, and in articles 6 and 7 of the Deontological Code, without having expressed any desire to refuse the appointment of the arbitrator.

  • In these circumstances, in conformity with the provisions of subparagraph c) of paragraph 1 of article 11 of Decree-Law no. 10/2011 of 20 January, in the wording introduced by article 228 of Law no. 66-B/2012 of 31 December, the arbitral tribunal was constituted on 20/06/2016.

  • On 9 November 2016 there was held the meeting to which article 18 of RJAT refers, of which minutes were drawn up, which are attached to the case file, and the examination of witnesses B… and C…, called by the Respondent, also took place.

The Claimant did not attend the said meeting, nor did the witness called by it, and the proceedings continued in accordance with the provisions of article 19 of RJAT.

1.3 - The Claimant, in substantiating its request for an arbitral decision, affirms, in summary, the following:

  • That it filed, at the Customs Authority of …, a procedure for fiscal regularization of a motor vehicle of its property, with license plate …-… -…, covered by the Vehicle Customs Declaration (DAV) 2015/…, of 13-04-2015.

  • That it then proceeded to attach various documents, namely the certificate of conformity; the certificate of registration; the commercial invoice; the document relating to the inspection of the vehicle and the document relating to the national homologation issued by IMTT.

  • That the Customs Authority of …, given the said documents, presented and attached to the Vehicle Customs Declaration (DAV) 2015/…, of 13-04-2015, proceeded to classify the vehicle in question as a light passenger vehicle with 5 seats, proceeding to assess the ISV and the corresponding collection, in the amount of € 1,448.60.

  • That the Customs Authority of … subsequently proceeded to review the tax assessment issued and to the consequent additional assessment, considering that the classification of the vehicle in question, as a light passenger vehicle with 5 seats, was wrong, proceeding to assess it at 100% of table B.

  • That the said assessment resulting from the review of the tax assessment was based on the certificate of registration of the country of origin of the vehicle in question, in which the same is classified as a light commercial vehicle - derived from a light passenger vehicle.

  • That the vehicle in question entered national territory accompanied by the respective certificate of conformity, with the classification of light passenger vehicle with 5 seats, a classification that was confirmed both at the time of inspection of the vehicle and at the time of its homologation by IMTT.

  • That the mentioned vehicle was duly registered in the Motor Vehicle Registration Registry as a light passenger vehicle with 5 seats.

  • That the Tax and Customs Administration, given the documents that were presented for purposes of fiscal regularization of the motor vehicle in question, particularly the certificate of conformity, which determines the characteristics of the vehicle, proceeded to an erroneous additional assessment of the ISV.

1.4 - The Respondent, the Tax and Customs Authority (hereinafter designated as AT), proceeded, on 05-09-2016, to attach the Administrative File and presented a response, in which it affirms, in summary, the following:

  • That the Claimant, on 13-04-2015, presented to the Customs Authority of … a Vehicle Customs Declaration (DAV), which obtained the number 2015/…, for placing into consumption a used vehicle of brand …, with numbers W… and …, respectively of chassis and motor, having been declared in the fields of the DAV reserved for this purpose, that it was a light passenger vehicle with capacity of 5 seats.

  • That the vehicle in question was acquired in France on 12-03-2015, and transported to Portugal via truck, as appears from the International Transport Document (CMR) and the invoice presented.

  • That the Claimant proceeded both to the presentation of the Certificate of Conformity of the vehicle in reference, issued by …, where it is indicated that it has capacity of 5 seats, and of the Vehicle Registration Certificate issued in France, where in the appropriate fields it is indicated that the vehicle has capacity of 2 seats and that it is a vehicle derived from a light passenger vehicle, and of the Certificate of Approval in Technical Inspection for Registration (MOD. 112 of IMPT), issued by company D…, SA in which it appears, namely, that the vehicle was approved and that it is a light passenger vehicle with capacity of 5 seats.

  • That on 13-04-2015 an application was presented at the Customs Authority of …, requesting the application of the method of assessment of the tax, in the terms of the provisions of paragraph 3 of article 11 of the ISV Code, having the ISV been assessed in accordance with the elements stated in the DAV, as if the vehicle fell within the fiscal classification of light passenger vehicles.

  • That subsequently it was detected that the vehicle in reference had been declared as a light passenger vehicle of 5 seats, assessing the ISV in conformity with such fiscal classification, when its French registration certificate referred to a vehicle derived from a light passenger vehicle with capacity of 2 seats, which included it in the classification of light commercial vehicle - derived from light passenger vehicle, with assessment, according to subparagraph a) of paragraph 2 of article 7 of the ISV Code, at 100% of table B of CISV. (cfr. article 12 of the Response)

  • That the Claimant was notified to exercise the right of prior hearing, relative to the review of the tax assessment, having, on 05-02-2016, proceeded to its notification for payment of the amounts assessed in the value of € 2,519.27, of which € 2,440.38 relating to the ISV and € 78.89 regarding compensatory interest.

  • That the content of the Inspection Certificate, as regards the elements of identification of the vehicle, does not correspond to the truth of the facts, inasmuch as they do not observe the elements that actually appear in the French Registration Certificate. (cfr. article 22 of the Response)

  • That the Certificate of Technical Inspection for Registration should contain, in the framework relating to the inspection of the vehicle, designated as "Certificate of Registration", all the elements that exactly appear in the Certificate of Registration of the vehicle. (cfr. article 22 of the Response)

  • That the homologation and classification of vehicles by IMTT is not binding for tax purposes, emphasizing that both Directive 2007/46/CE of the European Parliament and of the Council of 5 September, and the internal legislation that transposed it into the domestic legal order have objectives wholly unrelated to the taxation of vehicles. (cfr. articles 31 and 33 of the Response)

  • That the Certificate of Conformity - CE is a document instituted at community level intended to be issued by the manufacturer to certify that a given vehicle of a series of a homologated model is in conformity with all the regulatory acts at the time of its production, adding that, in light of what is provided in article 18 of Directive 2007/46/CE of the European Parliament and of the Council of 5 September, the manufacturer, in its capacity as holder of a CE homologation certificate of a vehicle, must deliver a certificate of conformity to accompany each complete, incomplete or completed vehicle manufactured in conformity with the model of vehicle homologated.

  • That the Certificate of Conformity always has as its basis the characteristics of the vehicle according to the CE homologation, which is not binding for tax purposes, also referring that the mentioned certificate merely attests that a certain vehicle was manufactured according to the technical characteristics contained in a given homologation granted for a model of vehicle.

  • That, notwithstanding the claimant having declared the vehicle for placing into consumption as a light passenger vehicle of 5 seats, the fact is that its respective document of identification - registration certificate - issued in France, identified the vehicle as derived from a light passenger vehicle of 2 seats, placing it within the scope of ISV in the classification of light commercial vehicle of 2 seats.

2. QUESTION FOR DECISION

In light of the foregoing in the preceding paragraphs, relative to the positions of the parties and the arguments presented, the question to be decided is as follows:

To rule on the legality of the tax assessment recorded under no. …, of 02-02-2016, of the Customs Authority of …, in the amount of € 2,440.38, issued following the dispatch of 21-01-2016 of the Head of the said Customs Authority, relating to the additional assessment of ISV, relative to the motor vehicle declared for placing into consumption, covered by DAV no. 2015/…, of 13-04-2015.

3. PROCEDURAL REQUIREMENTS

  • The Tribunal is materially competent and is regularly constituted, in the terms of articles 2, paragraph 1, subparagraph a), 5, paragraph 2 subparagraph a), 6, paragraph 1, 10, paragraph 1 subparagraph a) and paragraph 2 of RJAT;

  • The parties enjoy legal personality and capacity, are legitimate and are legally represented (Cfr. articles 4 and 10, paragraph 2, of RJAT and article 1 of Ordinance no. 112-A/2011 of 22 March);

  • The case does not suffer from defects that would invalidate it;

  • There are no outstanding incidents that require resolution, nor are there any preliminary questions on which the Tribunal must rule.

Taking into account the administrative tax procedure, a copy of which was attached to the case by AT, the documentary evidence attached to the case file and the testimony of the witnesses, it is now necessary to present the factual matter relevant to the understanding of the decision, which is fixed as follows.

4. FINDINGS OF FACT

4.1 - PROVEN FACTS

On the matter of fact, relevant to the decision to be rendered, this tribunal considers proven, in light of the elements existing in the case file, the following facts:

  • The Claimant is a company dedicated to the repair and trade of motor vehicles.

  • The Claimant, within the scope of its activities, acquired a motor vehicle in France on 12-03-2015, as results from the invoice presented, transported to Portugal via truck, as appears from the International Transport Document (CMR).

  • The said motor vehicle, registered in the Certificate of Registration issued in France, with license plate …-…-…, of 10-10-2011, was declared for placing into consumption, and fiscal regularization, at the Customs Authority of …, with license plate …-… -…, covered by the Vehicle Customs Declaration (DAV) 2015/…, of 13-04-2015.

  • Upon declaration of placing into consumption of the vehicle, the Claimant proceeded to present the certificate of conformity; the certificate of registration; the commercial invoice; the document relating to the inspection of the vehicle and the document relating to the national homologation issued by IMPT.

  • In the Certificate of Conformity of the vehicle in reference, issued by …, on 11-02-2015, it is indicated that it has capacity of 5 seats; in the Certificate of Registration of the Vehicle issued in France, it is indicated, in the appropriate fields, that the vehicle has capacity of 2 seats and that it is a vehicle derived from a light passenger vehicle; in the Certificate of Approval in Technical Inspection for Registration (MOD. 112 of IMPT), issued by company D…, SA it appears, namely, that the vehicle was approved and that it is a light passenger vehicle with capacity of 5 seats.

  • The Customs Authority of …, given the said documents, presented and attached to the Vehicle Customs Declaration (DAV) 2015/…, proceeded to classify the vehicle in question as a light passenger vehicle with 5 seats, proceeding to assess the ISV and the corresponding collection, in the amount of € 1,448.60.

  • The assessment of the ISV, in the amount of € 1,448.60, was effected on 13-04-2015, under the assessment record no. …, following the request presented, on that same date, by the Claimant at the Customs Authority of …, requesting the application of the method of assessment of the tax, in the terms of the provisions of paragraph 3 of article 11 of the ISV Code, having the ISV been assessed in accordance with the elements stated in the DAV, where the vehicle is inserted in the fiscal classification of light passenger vehicles.

  • The Customs Authority of … subsequently proceeded to review the tax assessment issued and to the consequent additional assessment, considering that the classification of the vehicle in question, as a light passenger vehicle with 5 seats, was wrong, proceeding to assess it at 100% of table B.

  • The additional assessment of the tax, resulting from the review of the tax assessment, was subject to assessment record no. -…, of 02-02-2016, in the amount of € 2,440.38, was based on the administrative guidelines sent to the Customs House of …/Customs Authority of …, by means of Circular Dispatch no. 35,049, of 23-07-2015, of DSIECIV-AT, as well as the certificate of registration of the vehicle in question issued in France, where it appears that it has capacity of 2 seats and is classified as light commercial vehicle - derived from light passenger vehicle.

  • The vehicle in question entered national territory accompanied by the respective certificate of conformity, with the classification of light passenger vehicle with 5 seats, a classification that was confirmed both at the time of inspection of the vehicle and at the time of its homologation by IMPT.

  • The mentioned vehicle, as appears from the process of assignment of license plate received from IMT.IP on 18-11-2016, was considered as being of the category of light, of the type passenger and with capacity of 5 seats.

4.2 - UNPROVEN FACTS

There are no facts given as unproven, given that all facts considered as relevant to the assessment of the request were proven.

4.3 - SUBSTANTIATION OF THE FACTUAL MATTER

The substantiation of the factual matter was based on the documents attached to the case file, relative to each of the facts, inasmuch as their adherence to reality was not questioned and on the testimony of the witnesses.

  • The witnesses showed knowledge of the facts about which they testified and there was no fact that would justify suspicions as to their impartiality.

5. LEGAL GROUNDS

5.1 - The factual matter is fixed, as appears from paragraph 4 above, it being now necessary to determine the Law applicable to the underlying facts, having in view the question for decision identified in paragraph 2 above, that is, to rule on the legality of the tax assessment recorded under no. …, of 02-02-2016, of the Customs Authority of …, in the amount of € 2,440.38, issued following the dispatch of 21-01-2016 of the Head of the said Customs Authority, relating to the additional assessment of ISV, relative to the motor vehicle declared for placing into consumption, covered by DAV no. 2015/…, of 13-04-2015.

Having considered everything, and taking into account, on the one hand, the positions of the parties in confrontation, referenced in paragraphs 1.3 and 1.4 above, and considering, on the other hand, that the question to be decided is inseparable from the characteristics of the vehicle declared and validated upon its presentation to the Customs House, having in view its placing into consumption, it is necessary, in this framework, to assess and render a decision.

6. CONCERNING THE REVIEW OF THE ASSESSMENT

6.1 - The central question that it is necessary, first and foremost, to clarify in the present case is whether the review of the assessment of ISV, recorded under no. …, of 13-04-2015, in the amount of € 1,448.60, at the Customs Authority of …, is in conformity with what is legally established.

As follows from paragraph 1 of article 78 of the General Tax Law (LGT), the review of tax assessments may be effected by initiative of the tax administration, within the period of four years following the assessment, on the ground of error attributable to the services.

With respect to the said error attributable to the services, it should be noted that the same, as is settled jurisprudence, comprises not only material error or error of fact, but also error of law, thus referring to the defect of violation of law through error in the factual or legal presuppositions.

Let us then examine whether in the case at hand there was error attributable to the services:

6.2 - On 13-04-2015 there was processed, at the Customs Authority of …, the vehicle customs declaration (DAV) no. 2015/…, relative to the motor vehicle, as identified in the case file.

The vehicle in question was declared in the said DAV as being a light passenger vehicle with capacity of 5 seats, and there were presented, in addition to the commercial invoice, the Certificate of Registration, the Certificate of Conformity, the Certificate of Approval in Technical Inspection for Registration and the Technical Homologation issued by IMPT, under no. 2010….

In the framework of the fiscal regularization of the said vehicle and its placing into consumption, it is necessary to know its characteristics at the time of presentation of the respective DAV on 13-04-2015.

It should be noted that the said fiscal regularization was effectuated following a request presented by the Claimant on 13-04-2015 at the Customs Authority of …, requesting the application of the assessment method provided for in paragraph 3, of article 11 of CISV, having in view the definitive assessment of the tax. In that framework, the application of the said method was effectuated in harmony with the elements legally required for that purpose, namely the category and type of vehicle (light passenger vehicle with capacity of 5 seats), having, in conformity, calculated the ISV to be paid in the amount of € 1,448.60, as appears from the document, properly validated and attached to the case file at page 17 of the Administrative File.

In this regard, it cannot be overlooked that the technical characteristics of the vehicle recognized by IMPT as respecting a light passenger vehicle with capacity of 5 seats, which are coincident with those that were declared for the vehicle in question at the time of processing of the said DAV and the application of the method for calculating the ISV, both of 13-04-2015, will not permit any understanding other than the recognition and customs acceptance of the vehicle as such for tax purposes.

On the other hand, the testimony of the witnesses permits, namely, to conclude that we are faced with a light passenger vehicle with capacity of 5 seats at the time of acceptance of the respective DAV and application of the method for calculating the ISV, inasmuch as the said vehicle was, as such, considered by the Customs House without necessity of its physical inspection, that is, the customs services understood that they would waive the physical inspection of the vehicle, validating, in those terms, its clearance as a light passenger vehicle with capacity of five seats.

Just as the Single Administrative Document - DAU, documentary support designed, namely, to receive the information necessary for the identification and tariff classification of the goods declared to the Customs Houses (AT) for importation, the Vehicle Customs Declaration - DAV is also designed to receive the elements of information considered as necessary for purposes, namely, of the definitive admission of motor vehicles into national territory, having in view their assessment, within the framework of motor vehicle fiscal matters.

Among the various "fields" making up the said DAV, it is worth noting the one identified with the letter A - Characteristics of the Vehicle. It is a "field" provided for to receive all the elements of information capable of identifying the motor vehicle submitted to clearance, in order to its placing into consumption, whether of a strictly technical nature, such as those relating to the model of the vehicle, its displacement and technical homologation, or to the emission of CO2, or of a functional and utilitarian nature, such as those referring to the type of vehicle or the number of seats.

With respect to the clearance of the vehicle in question, declared covered by the mentioned DAV, it seems pertinent to take into account the application, by analogy, of the General Rules for the Interpretation of the Combined Nomenclature, which, indeed, would be applied if the same vehicle had been submitted to importation.

Importation and admission, inasmuch as they constitute cases with clear affinity, particularly because each of them is aimed at the clearance of goods (in the first case, imported from a country or territory which is not part of the Community, in the second, proceeding from Member States of the European Union), having in view their placing into consumption, appear capable of, with respect to the classification of goods, having identical regulation.

It is known that the classification of goods in the Tariff Nomenclature is governed by various rules, designated as General Rules for the Interpretation of the Combined Nomenclature, as established in REGULATION (EEC) NO. 2658/87 OF THE COUNCIL of 23 July 1987, with the last amendment introduced by IMPLEMENTING REGULATION (EU) NO. 2016/936 OF THE COMMISSION of 08 June 2016. Among the said rules it is worth highlighting rule 2. a), when it determines that "Any reference to an article in a given heading covers that article even if incomplete or unfinished, provided that it presents, in the state in which it is found, the essential characteristics of the complete or finished article. […]". It is particularly reasons of certainty and legal security that are sought to be ensured, fixing the good, for purposes of its clearance, in the state in which it is declared to the Customs House.

It follows from the said rules that once the characterizing elements of a given article/product/good are fixed when it is submitted to clearance, as being those which, in reality, permit, in an essential manner, its recognition and identification, it is these that matter to, for all purposes, consider, that is, being coincident the understanding of the declarant, concretized in the elements declared in the DAV, with that manifested by the customs services, by way of the recognition of these elements, at the date of the said clearance, the motor vehicle in question in the case file has to be taken into account, as such, for all effects, customs and legally relevant, namely those of a tax nature. Thus, one may question whether the good/vehicle in question was well or poorly assessed, whether its framing in a given fiscal, tariff or other regime was or was not what was legally due, whether a given document grants it or not a given fiscal-customs regime, which cannot be done is, subsequently, to consider that the good/automobile is after all a different reality from that which was fixed at the moment of its declaration to the Customs House and as such subject to clearance.

Having arrived here, it is important to emphasize that the good declared covered by DAV no. 2015/…, processed on 13-04-2015 at the Customs Authority of … and as such validated by the services, was the motor vehicle of brand …, model …, light passenger vehicle, with capacity of five seats, it being necessary to take into account that the documentation then presented, namely the Certificate of Conformity and the Certificate of Approval in Technical Inspection for Registration, are in line/harmony with the declared reality, referring to a light passenger vehicle with capacity of five seats. In these circumstances, the assessment of the ISV in the amount of € 1,448.60, effected on 13-04-2015, under assessment record no. …, following the application of the method of assessment of the tax, in the terms of the provisions of paragraph 3 of article 11 of the ISV Code, requested by the Claimant, does not permit any accusation of error against the services that determined the payment of tax debt in an amount lower than what was legally due, given that the assessment in question of ISV could not have been effected in a manner different from that which it was, at the time when it was issued, which places the additional assessment of the tax processed under assessment record no. …, of 02/02/2016, of the Customs Authority of …, in the amount of € 2,440.38, on a level of offense against the established legal order.

6.3 - The assessment issued on 02-02-2016, effected under Assessment Record No. …, of the Customs Authority of …, with the value of € 2,440.38, in the framework of the review of the tax assessment of 13-04-2015, was supported by the administrative guidelines transmitted to the Customs Houses under Circular Dispatch no. 35,049 of 23-07-2015 of the Department of Services for Excise Taxes and Motor Vehicle Tax (DSIECIV) of the Tax and Customs Authority, which fixed the understanding that, for purposes of the fiscal classification of vehicles and the calculation of ISV due, the elements contained in the registration certificates of the countries of origin should be considered, that is, the legal basis on which the additional assessment of ISV, relative to the vehicle in question in the case, with license plate …-… -…, was founded, lay in the cited administrative guidelines. It should be noted that the said Guidelines also transmit other Administrative Guidelines referring to some procedures adopted by IMPT related to the assignment of national license plates to motor vehicles admitted/imported.

Following the said Dispatch which, as has been noted, fixed the understanding that, for purposes of the fiscal classification of vehicles, in order to the calculation of ISV, motor vehicles should be declared to the Customs House with the characteristics that appear in the registration/certificate of registration of the country of origin, the Esteemed Head of the Customs Authority of … determined - some months (9) after the assessment effected on 13-04-2015 under assessment record no. … and the collection of the assessed tax - the assessment of the difference of the ISV and the respective compensatory interest, counting from the first assessment, relative to the vehicle identified in the case file, as appears from the documents attached to the Proceedings, comprising the Administrative File at pages 23 et seq.

The assessment whose review is the subject of this case was issued on 13-04-2015, and the rules of Law that for that purpose were considered applicable were embodied in the guidelines that were disseminated to the Customs Houses on 23-07-2015 by DSIECIV - AT, and reached the knowledge of the Customs Authority Branch of … on 18-08-2015. It follows from this circumstance that the said Guidelines were not, at the time of that assessment, considered, nor could they have been, in light of their non-existence at the date of the first assessment that was subject to review, so that this assessment does not suffer from any error attributable to the services.

Thus, no error can be imputed to the Customs Services/Customs Authority of … - AT that, on its own, determined the payment of tax debt in an amount lower than what was legally due, since it was not within its discretion to decide in a manner different from that which it decided at the time it did so.

In these circumstances, AT could not, as it did, resort to the official review of the tax assessment embodied in the assessment issued under record no. …, dated 13-04-2015, in the amount of € 1,448.60, given that we are not in the presence of a case of "error attributable to the services" as provided for in paragraph 1 of article 78 of the General Tax Law, since the error presupposed the lack of knowledge or non-consideration of legal norms existing and pertinent at the date of the assessment of ISV on 13-04-2015, which, in this case, did not occur, given that, as has been emphasized above, at the time of such assessment, the said administrative guidelines intended to support the new assessment were not yet known, nor did such guidelines, furthermore, constitute legal norms suitable for the purpose.

The act of additional assessment in question was based on information from IMPT which led to the understanding sanctioned on 22-07-2015 by the Esteemed Director-General of the Tax and Customs Administration to the effect that "Transformations of used motor vehicles admitted/imported at a time prior to fiscal regularization in national territory are not authorized, so that, for purposes of fiscal classification and the calculation of ISV due, motor vehicles must be declared to the Customs House with the characteristics that appear in the registration/certificate of registration of the country of origin, and may only be subject to transformation following assignment of a national license plate."

In this framework, the ground for the review of the first act of assessment and the consequent issuance of the additional tax act lay, as is made explicit in dispatch no. … of 17-12-2015 of the Customs Authority of … attached to the case file, in the circumstance that the ISV relative to the vehicle with license plate …-… -… had been "[…] calculated on the basis of the national homologation which reflected the elements contained in the Certificate of Conformity of the respective vehicle - light passenger vehicle with 5 seats. Subsequently it was detected that this classification was wrong since in the French Registration Certificate in field S1 there are 2 seats which classifies the said vehicle as light commercial vehicle - derived from light passenger vehicle - to be assessed at 100% of table B […]".

This is the introduction of administrative criteria in the assessment of ISV, an assessment which, as is known, is subject to the principle of legality. We are thus in the presence of a situation that appears to lack legal-tax support, first and foremost, in light of the non-existence of any legal provision that foresees and provides that the ISV due by vehicles declared to the Customs House subject to the regime of placing into consumption must be calculated in conformity with the elements contained in the registration certificate of the country of origin, relating to the type of vehicle and its passenger capacity, a certificate which, it must be said, incidentally, referencing the date of the first registration and establishing the connection between the previous registration issued in the country of origin and the new registration issued at the national level, has, namely, a particular function of a historical character.

It has already been stated that the assessment of ISV in the amount of € 1,448.60, subject to official review, was effected on 13-04-2015 following the application by the Services of the formula for calculating the tax, in conformity with the provisions of paragraph 3 of article 11 of the ISV Code.

It has also already been stated that on 02-02-2016, that is, nine months after the act of assessment issued in the said circumstances, the Customs Authority of … proceeded to its review, having issued Assessment Record No. …, with the value of € 2,440.38, relating to ISV, plus € 78.89 relating to CJ, which occurred in compliance with the guidelines transmitted to the Customs Houses on 23-07-2015 by means of Circular Dispatch no. 35,049 of 23-07-2015.

Circular dispatches correspond to a type of administrative guidelines which, as referred to by Américo Fernando Brás Carlos in "Taxes - General Theory," Almedina, Coimbra, June 2006, pp. 191/192, have "[…] the nature of instructions to the services on a given matter, without prejudice to their potentially also being based on an interpretive activity […]". Concerning administrative guidelines, the said author notes, idem, that the same cannot exceed the legal norms to which they relate, being illegal the acts carried out in their compliance "[…] to the extent that they exceed the law […]", adding, citing Saldanha Sanches, that it is incorrect to admit that "the administrative guideline will fill the space that the legal provision did not occupy, concretizing the fundamental guidelines of the norm", since "that role of development of the law belongs to regulations. Not to administrative guidelines."

In the same sense may be seen, namely, Pedro Soares Martinez in "Manual of Tax Law," Almedina, Coimbra, 1983, pp. 109/110, and Nuno Sá Gomes in "Lessons in Tax Law (VOLUME II)," Science and Technical Taxation, July-September 1984 - nos. 307/309, pp. 74 et seq.

The administrative guidelines in question in the case file, disseminated to the Customs House of Aveiro/Customs Authority of …, in the terms already mentioned, not restricting themselves to the specifically administrative framework that is their responsibility, dared to occupy a space reserved for legal provision, which is not compatible with the principle of legality, which has a fundamental role in the field of taxation.

Indeed, the fiscal implications associated with the fiscal classification of vehicles, in this case the vehicle with license plate …-… -…, particularly at the level of tax rates, do not tolerate that, for tax purposes, its classification be concretized in light of criteria fixed by administrative means.

The typological identification of a vehicle (of the vehicle in question in the case file) must thus be achieved by means of the reality recognized by the Customs Services at the time of its clearance in the legal terms already mentioned above, combined with the reality recognized and set out in the documentation relating to the inspection of the vehicle for purposes of the assignment of the national license plate, in conformity with what is legally established by the entity competent for that purpose. Now, in the case at hand, both AT - Customs Authority of … as the entity competent for the clearance of the vehicle, and IMPT as the national entity competent for the said inspection, recognized the vehicle in question as being of the category of light, of the type passenger and with capacity of 5 seats, not being able thus the same to cease to be framed in Table A provided for in paragraph 1 of article 7 of CISV, as correctly did the Customs Authority of … when, on 13-04-2015, it proceeded to the consequent assessment of ISV under record no. …, in the amount of € 1,448.60.

7 - CONCERNING THE INCIDENT OF FALSITY

Concerning the incident of falsity raised by the Tax Authority, it should be noted that, as well noted by the said Authority, the Certificates issued by a Center for Inspection of Motor Vehicles constitute authentic documents which, as is established in paragraph 1 of article 371 of the Civil Code, provide full evidence "(…) of the facts that they refer to as practiced by the authority or public official respectively, as well as of the facts that are attested in them based on the perceptions of the documenting entity (…)", whose full evidentiary force, as provided in paragraph 1 of article 372 of the said Code, "can only be overcome on the basis of its falsity." (emphasis ours)

The mentioned allegation of falsity relative to the Certificate of Approval in Technical Inspection for Registration referenced in the case file is sustained on the presupposition that the entity responsible for the inspection, upon identifying in the Certificate of Approval in Technical Inspection for Registration the vehicle in question with the category of light, of the type passenger and with capacity of 5 seats, when such information does not appear in the Certificate of Registration issued in France on 10/10/2011, is failing the truth by introducing false elements into the said document, conferring upon it thus a dimension of falsity.

In this regard, that is, concerning the entity competent to carry out the inspection and the verifications and observations legally imposed relating to the inspection procedures having in view the assignment of registration, it should be noted that, on the one hand, in the terms of paragraph 1 of article 6 of Decree-Law no. 144/2012 of 11 July, the inspection in question is within the competence of IMPT which may resort, for its conduct, to entities managing inspection centers, as occurred in the case at hand in light of recourse for that purpose to company D…, SA. On the other hand, concerning the said verifications and observations, it is important to consider that in light of the provisions of paragraph 3 of article 5 of the cited Decree-Law and in its Annex IV, the same are namely reconditioned to the elements of information related to the identification of the vehicle as they appear in paragraph 2 of the mentioned Annex IV, which coincide with those foreseen both in the Certificate of Approval in Technical Inspection for Registration and in the Certificate of Motor Vehicle Registration approved by Decree-Law no. 178-A/2005 of 28 October.

As already referred, AT raises the falsity of the Certificate of Approval in Technical Inspection for Registration, supported by the contradiction existing between the information contained in the Certificate of Registration issued in France on 10-10-2011 and that which is inscribed in the said Certificate of Approval for Registration relative to the vehicle as being light passenger with capacity of 5 seats. This is an understanding based on the presupposition that the Certificate of Approval in Technical Inspection for Registration must fully reproduce the elements that are set out in the Certificate of Registration issued in France, which, with all due respect, finds no legal support.

AT states that the Certificate of Approval in Technical Inspection for Registration (Mod. 112 of IMPT) has on its back a box that is entitled "Certificate of Registration" which is "composed of the fields that correspond to those of the motor vehicle registration certificate." The harmony and juxtaposition between the elements contained in one and the other document appears indeed to make all sense in that the elements referenced in the Certificate of Motor Vehicle Registration should correspond to the elements particularly contemplated by the inspection as they are reflected in the Certificate of Approval in Technical Inspection for Registration, which cannot be said concerning the concordance between the information set out in the certificate of registration issued in France and those that should appear in the Certificate of Motor Vehicle Registration, provided for in Decree-Law no. 178-A/2005 of 28 October, whose model was approved by Ordinance no. 1135-B/2005 of 31 October.

Indeed what is legally provided, as to the inspection procedures in light of the first part of the provisions of paragraph 3 of article 5 of Decree-Law no. 144/2012 of 11 July is that on the one hand in inspections of vehicles for assignment of registration the respective characteristics and their conformity with the applicable legal and regulatory provisions are identified, being that on the other hand its conditions of safety are also to be verified in the terms of Annex IV of the said decree.

As can be seen from the said Annex the approval of vehicles for assignment of registration, being proven by the issuance of the respective certificate is fundamentally centered on two categories of information elements each focused on its visual observation: One concerns the identification of the vehicle referring namely to the brand, the model, the frame number, its type and capacity as well as displacement and fuel; Another concerns fundamentally the verification of the vehicle's safety systems.

It is in either case a verification that is not based on the information contained in the Certificate of Registration of the vehicle issued in the country of origin in this case France but which is based and founded on the material information concretely founded in the elements perceived by the entity responsible for the inspection of the vehicle for the assignment of new registration which appears to have occurred with the Certificate of Approval in Technical Inspection for Registration attached to the case file. In this regard it should be noted that the process (copy) of assignment of license plate …-… -… to the vehicle referenced in the case properly requested from IMPT and received on 18-11-2016 reveals in its respective registration certification that it is a vehicle of the category of light of the type passenger and with capacity of 5 seats.

The documents of homologation and classification of IMPT as well pointed out by the Respondent do not bind the Tax Administration for purposes of the fiscal classification of vehicles. Such circumstance does not prevent however that the Customs Services consider the said documents in the framework of the remaining legally required documentation and the effective acceptance and recognition of the vehicle declared for clearance as being of the category of light of the type passenger and with capacity of 5 seats as occurred at the Customs Authority of….

Concerning the foreign registration certificate aforementioned it should be noted that the same being one of the documents which in light of the provisions of paragraph 2 of article 20 of CISV should accompany the DAV constitutes a source of information of the said Vehicle Customs Declaration. The "field" B of the said DAV is indeed in large measure intended to contain the information contained in the Certificate of Registration of the vehicle issued in the country of origin in this case France it being proper to highlight among such information those that particularly relate to the identification of the vehicle namely to its previous registration and to the date of the first registration elements that are fundamental particularly for the history of the vehicle. The said legal provision establishes moreover that the DAV must be accompanied namely of the foreign registration certificate or equivalent document of commercial invoice or declaration of sale in case of acquisition from a private party of the certificate of conformity and of the transport document.

The said foreign registration certificate may legally be replaced by equivalent document such replacement not being foreseen for the certificate of conformity which makes all sense in that as provided in article 4 of CISV the motor vehicle tax has its taxable base anchored in the elements contained in the said certificate of conformity namely in the displacement and the level of emission of carbon dioxide and not in the elements contained in the Foreign Registration Certificate.

It is not legally foreseen that the inspecting entity be bound by the elements inscribed in the Certificate of Registration issued in the country of origin of the vehicle. Such norm indeed if it existed would recognize and grant to the formal dimension of the elements relative to the vehicle a value superior to the real dimension of these elements affirming thus the primacy of formal truth relative to material truth which does not appear compatible with the principle of material truth that is important to bear in mind.

Inspection is by definition an action of observation of reality. According to the Dictionary of Contemporary Portuguese Language of the Academy of Sciences of Lisbon Vol. II p. 2119 inspection is the "detailed observation of something with a given purpose." In the case at hand the thing to be observed in detail was the motor vehicle with license plate …-… -… the purpose of the inspection being associated both with the identification of the vehicle and with the approval of the various safety systems that integrate it. Inspection for assignment of new registration as results from what is established in ANNEX IV to Decree-Law no. 144/2012 of 11 July is not concretized in a "Certificate of Confirmation" of information inscribed in the Certificates of Registration issued in the countries of origin of vehicles well on the contrary it respects as mentioned above the real and concrete finding of the elements destined for the identification of the vehicle and the goodness of the systems that integrate it.

The inspection of the vehicle in question in the case for assignment of new registration had thus as objectives on the one hand the identification of the type of vehicle previously registered and on the other the verification of its characteristics and the confirmation of the conditions of functioning and safety of that vehicle being that which was materialized in the respective Certificate of Approval in Technical Inspection for Registration not being able thus the said Certificate in light of what has been stated be taken as false.

8 - CONCLUSIONS

Having considered all the foregoing the following shall be stated by way of conclusion:

8.1 - The inspection of the vehicle in question in the case for assignment of new registration had as objectives on the one hand the identification of the type of vehicle previously registered and on the other the verification of its characteristics and the confirmation of the conditions of functioning and safety of that vehicle being that which in conformity with what is legally established was materialized in the respective Certificate of Approval in Technical Inspection for Registration and is fully confirmed in the process (copy) of assignment of license plate …-… -… received on 18-11-2016 from IMPT not being able the said Certificate be taken as false.

8.2 - The Customs Authority of … as the entity competent for the clearance of the vehicle as well as IMPT as the national entity competent for the inspection intended for the assignment of registration recognized the vehicle in question in the case as being of the category light of the type passenger and with capacity of 5 seats not being able thus the same to cease to be framed in Table A provided for in paragraph 1 of article 7 of CISV as correctly did the Customs Authority of … when on 13-04-2015 it proceeded to the consequent assessment of ISV under record no. … in the amount of € 1,448.60.

8.3 - The administrative guidelines disseminated to the Customs House of …/Customs Authority of… by means of Circular Dispatch no. 35,049 of 23-07-2015 of DSIECIV-AT in light of their fiscal implications associated with the fiscal classification of the motor vehicle referenced in the case with license plate …-…-… particularly at the level of the tax rates exceeded the specifically administrative framework that was their responsibility making illegal the tax assessment recorded under no. … of 02-02-2016 in the value of € 2,440.38 of the said Customs Authority carried out in their compliance.

8.4 - The Respondent in considering that the vehicle in question in the case should be fiscally classified as light commercial vehicle of 2 seats frameable in subparagraph a) of paragraph 2 of article 7 of CISV makes an erroneous interpretation and application of the applicable legal norms which constitutes an error as to the legal presuppositions it being verified on the other hand that the additional assessment of ISV in question in the case was based on a matter of fact clearly divergent from the concrete reality which constitutes an error as to the factual presuppositions it being thus verified the practice of a tax act deficient in legality through error as to the factual and legal presuppositions which determines its annulment by violation of law.

9 - DECISION

Therefore having considered all the foregoing this Arbitral Tribunal decides:

9.1 - To find well-founded as proven on the ground of defect of violation of law the request for arbitral decision insofar as it concerns the annulment of the act of additional assessment of ISV recorded under no. … of 02-02-2016 in the value of € 2,440.38 of the Customs Authority of….

9.2 - To annul consequently the act of assessment recorded under no. … of 02-02-2016 in the value of € 2,440.38 issued at the Customs Authority of … relating to the additional assessment of ISV relative to the vehicle with license plate …-… -… with all the legal consequences flowing therefrom.

9.3 - To condemn AT to pay the costs of the present case.

VALUE OF THE CASE

In conformity with the provisions of articles 306, paragraph 2 of the Code of Civil Procedure (former 315, paragraph 2) and 97-A, paragraph 1 of the Code of Tax Procedure and in article 3, paragraph 2 of the Regulation of Costs in Tax Arbitration Proceedings the value of the case is fixed at € 2,440.38.

COSTS

In harmony with the provisions of article 12, paragraph 2 at the end and article 22, paragraph 4 both of RJAT and in article 4 of the Regulation of Costs in Tax Arbitration Proceedings and the Table I attached thereto the amount of the total costs is fixed at € 612.00.

Notify accordingly.

Lisbon, 30 November 2016

The Arbitrator

António Correia Valente

(The text of this decision was drawn up by computer in terms of article 131, paragraph 5 of the Code of Civil Procedure (former 138, paragraph 5) applicable by referral of article 29, paragraph 1 subparagraph e) of Decree-Law no. 10/2011 of 20 January (RJAT) being governed in its wording by the orthography prior to the Orthographic Agreement of 1990.)

Frequently Asked Questions

Automatically Created

What is ISV (Imposto Sobre Veículos) and how is it calculated for imported vehicles in Portugal?
ISV (Imposto Sobre Veículos) is Portugal's Vehicle Tax applied to registration and importation of motor vehicles. For imported vehicles, ISV calculation depends on vehicle classification (passenger, commercial, mixed-use), environmental factors (CO2 emissions, engine capacity), and applicable rate tables (Table A for passenger vehicles, Table B for commercial vehicles). Light commercial vehicles derived from passenger vehicles are assessed at 100% of Table B under article 7(2)(a) of the ISV Code. The taxpayer must submit a Vehicle Customs Declaration (DAV) to the Customs Authority with supporting documentation. Assessment methodology can follow standard tables or, upon request under article 11(3) of the ISV Code, alternative valuation methods. Vehicle classification fundamentally determines which assessment table and percentage apply, significantly impacting the final tax liability.
Can a taxpayer challenge an ISV vehicle tax liquidation through CAAD arbitral proceedings?
Yes, taxpayers can challenge ISV vehicle tax liquidations through CAAD (Centro de Arbitragem Administrativa) arbitral proceedings under Decree-Law 10/2011 (RJAT - Regime Jurídico da Arbitragem em Matéria Tributária). Article 2(1)(a) of RJAT grants jurisdiction to arbitral tribunals for disputes concerning legality of tax acts, including ISV assessments. The taxpayer submits an arbitration request to CAAD, which designates an arbitrator (or arbitral panel). The tribunal constitutes formally after parties are notified and the acceptance period expires. CAAD arbitration provides an alternative to judicial tax courts, offering faster resolution of tax disputes. The arbitral decision has the same force as a court judgment. This jurisdictional avenue is specifically designed for administrative tax disputes, including customs and excise matters like ISV liquidations.
How does vehicle classification as passenger or commercial affect ISV tax liability in Portugal?
Vehicle classification as passenger or commercial fundamentally affects ISV tax liability in Portugal by determining applicable assessment tables and rates. Light passenger vehicles are assessed under Table A of the ISV Code with rates based on engine capacity and CO2 emissions. Light commercial vehicles and vehicles derived from passenger vehicles (conversions maintaining commercial characteristics) are assessed under Table B, typically at different rates. Specifically, light commercial vehicles derived from light passenger vehicles are taxed at 100% of Table B under article 7(2)(a) of the ISV Code. This classification difference can result in substantially different tax amounts - in this case, the difference between passenger vehicle assessment (€1,448.60) and commercial derivative assessment (additional €2,440.38). Classification depends on objective vehicle characteristics including seating capacity, structural configuration, and registration documentation, with disputes arising when different official documents provide conflicting classifications.
What documents are required for the fiscal regularization of a vehicle at a Portuguese Customs Delegation?
For fiscal regularization of a vehicle at Portuguese Customs Delegations, taxpayers must submit: (1) Vehicle Customs Declaration (DAV - Declaração Aduaneira de Veículo); (2) Certificate of Conformity issued by the manufacturer establishing vehicle technical specifications and type-approval; (3) Vehicle Registration Certificate from the country of origin showing ownership, identification numbers, and classification; (4) Commercial invoice or purchase documentation proving acquisition value and date; (5) Certificate of Technical Inspection for Registration (Model 112 IMPT) issued by authorized inspection entity confirming vehicle complies with Portuguese technical standards; (6) National homologation certificate from IMTT (Instituto da Mobilidade e dos Transportes Terrestres), when required; (7) Transport documentation (CMR - International Consignment Note for road transport) if applicable. These documents establish vehicle identity, technical characteristics, classification, ownership chain, and compliance with safety and environmental standards. Incomplete or contradictory documentation can lead to assessment disputes and subsequent review procedures.
What are the legal grounds for annulment of an ISV tax assessment under Decreto-Lei 10/2011 (RJAT)?
Legal grounds for annulment of ISV tax assessments under Decree-Law 10/2011 (RJAT) include challenges to the legality of tax acts per article 2(1)(a). Specific grounds encompass: (1) violation of material tax law, including incorrect application of ISV Code provisions on vehicle classification, assessment tables, or calculation methodology; (2) procedural irregularities violating taxpayer rights, including inadequate prior hearing (audiência prévia) before adverse decisions; (3) factual errors in determining vehicle characteristics or classification; (4) lack of legal basis or competence for the tax act; (5) violation of legal principles such as proportionality, legal certainty, or legitimate expectations. The arbitral tribunal reviews both legal and factual determinations, assessing whether the Tax Authority correctly applied ISV legislation to established facts. Burden of proof regarding legality of challenged acts typically rests with the Tax Authority. The tribunal can declare full or partial annulment with corresponding legal consequences including tax refund and interest.