CAAD 212/2014-T: IUC Subjective Incidence & Taxable Person Ruling

Process: 212/2014-T

Date: February 24, 2015

Tax Type: IUC

Summary

This arbitral decision addresses the subjective incidence of Portugal's Unique Circulation Tax (IUC), specifically determining who bears tax liability when vehicle ownership changes. SA company challenged 4,015 IUC assessments totaling €589,857.79 for tax years 2009-2012, arguing the Tax Authority incorrectly attributed liability. The central legal issue concerns Article 3(1) of the IUC Code, which establishes that taxpayers are vehicle owners—defined as persons in whose name vehicles are registered. The company contended that the Tax Authority's assessment notices failed to adequately explain why it was considered the liable party, citing insufficient reasoning that violated Article 268 of the Portuguese Constitution and Article 77 of the General Tax Law. The claimant argued that when vehicle ownership registration occurs within the legal 60-day period following customs declaration, IUC liability attaches to the registered owner at that specific moment, not to previous holders of customs declarations or registration requests. The Tax Authority based its assessments on Article 2(1)(b) combined with Articles 3, 4, 6, and 10 of the IUC Code, but allegedly never clarified whether liability was attributed based on the customs declaration (DAV), registration request, or initial registration in the company's name. The company emphasized that at the date of final registration, it was no longer the actual owner of the vehicles, though the excerpt cuts off before completing this argument. The case was heard before a three-arbitrator panel at CAAD (Center for Administrative Arbitration), following proper appointment procedures and a first hearing on September 5, 2014. The tribunal granted deadline extensions due to the complexity of handling over 4,000 individual assessments and additional documentation submitted during proceedings.

Full Decision

ARBITRAL DECISION[1]

The arbitrators Dr. José Pedro Carvalho (presiding arbitrator), Professor Doctor Maria do Rosário Anjos and Professor Doctor Guilherme Oliveira Martins, appointed by the Deontological Council of Administrative Arbitration to constitute the Arbitral Tribunal, hereby agree as follows:

I REPORT

SA, with registered office in... Azambuja, holder of the unique identification number for collective persons and registered at the Commercial Registry Office of Azambuja no. ..., falling within the territorial jurisdiction of the Tax Services of Azambuja, has submitted a REQUEST FOR CONSTITUTION OF ARBITRAL TRIBUNAL seeking the annulment of the levies assessed for Unique Circulation Tax (IUC) - totalling 4,015 assessments relating to the years 2009, 2010, 2011 and 2012, all identified by their respective 4,015 notifications now attached as doc. no. 1, specified by document number, registration, taxation period and tax amount, in the global amount of €589,857.79.
The request for constitution of the Arbitral Tribunal was accepted by the Esteemed President of CAAD and automatically notified to AT on 04-03-2014.
In accordance with the provisions of paragraph (a) of Article 6, no. 2 and paragraph (b) of Article 11, no. 1 of Decree-Law no. 10/2011, of 20 January, as amended by Article 228 of Law no. 66-B/2012, of 31 December, the Deontological Council appointed as arbitrators of the collective tribunal the undersigned, who communicated acceptance of the corresponding assignment within the applicable period.
On 17-04-2014 the parties were duly notified of this appointment and expressed no intention to challenge the appointment of the arbitrator in accordance with the combined provisions of Article 11, no. 1, paragraphs (a) and (b) of the RJAT and Articles 6 and 7 of the Deontological Code.
Thus, in accordance with the provisions of paragraph (c) of Article 11, no. 1 of Decree-Law no. 10/2011, of 20 January, as amended by Law no. 66-B/2012, of 31 December, the Arbitral Tribunal was constituted on 07-05-2014.
On 20-05-2014, the Respondent filed a request seeking, among other matters, an extension of the deadline to respond, due to the attachment of documents submitted by the Claimant after submission of the initial Request, which was addressed by order on 22-05-2014.
By request filed on 23-06-2014, the Claimant alleged, among other matters, the untimeliness of the Respondent's response.
By Request filed on 04-07-2014, the Respondent responded to the untimeliness alleged by the Claimant.
On 05-09-2014 the first meeting of the Tribunal took place, in accordance with and for the purposes of Article 18 of the RJAT, and minutes thereof were drawn up, which are also attached to the case file.
Following the production of evidence, the Tribunal notified the claimant and respondent to, in that order and successively, submit written arguments within 45 days, with the period for the respondent commencing upon notification of the claimant's arguments or upon expiration of the period granted for their submission without them having been presented.
With its arguments the Respondent attached 820 new documents, and consequently, regarding such circumstance, the Claimant was afforded the right to be heard, which it exercised by request filed 13-01-2015.
By order of 13-01-2015, in accordance with and for the purposes of Article 21, no. 2 of the RJAT, and having regard to the provisions of Article 17-A of the same instrument, the period referred to in no. 1 of Article 21 was extended for two months, since, given the procedural vicissitudes occurring up to that date, it was not possible to deliver the final decision within that period.
By order of 19-01-2015, the Tribunal decided to maintain in the case file the documentation presented by the Respondent in its arguments and indicated that the final decision would be delivered within the following 30 days.
Said period was extended on two occasions, the first on 18-02-2015 until 23-02-2015, and the second on 23-02-2015 until 24-02-2015.
The grounds of the Claimant's request are as follows:

The acts assessing IUC contested, numbering 4,015, were notified to the Claimant on the basis of reasoning in the following terms: "Assessment made in accordance with paragraph (b) of no. 1 of Article 2, in conjunction with Articles 3, 4, 6 and 10, all of the Unique Circulation Tax Code, because the tax relating to the vehicle identified in this document has not been assessed or paid by the date of assessment and in the month referred to in the table" (see doc. no. 1 cited).
From this stated conjunction of provisions invoked by AT, which does not clarify in what terms they are conjoined, nor in what the conclusion regarding the attribution of responsibility to the Claimant is concretely based, it does not result that the Claimant can be legally held responsible for the assessment and payment of the IUC in question.
The IUC Code establishes that the taxpayers are the owners of the vehicles, being considered as such the persons "in whose name the same are registered". (see Article 3, no. 1 of the IUC Code).
The taxable event under the same Code is constituted by the ownership of the vehicle, as attested by the registration or registration in national territory (see Article 3, no. 1 of the IUC Code); and the tax is deemed due on the first day of the taxation period (Article 6, no. 3 of the IUC Code) - which corresponds to the year which begins on the date of registration (see Article 4, no. 2 of the IUC Code).
In the year of registration or registration of the vehicle in national territory - as is the case with the contested assessments - the tax is assessed by the taxpayer within 30 days following the end of the period legally required for its registration (Article 6, no. 3 of the IUC Code), that is, 60 days after registration.
Only in the absence of registration of vehicle ownership carried out within the legal period, we are further told by the legislator of the IUC Code, the tax due in the year of vehicle registration is assessed and demanded from the taxpayer on vehicles based on the customs declaration of the vehicle, or based on the supplementary declaration of vehicles on which the assessment of that tax is based, even though not due (Article 18, no. 1, paragraph (a) of the IUC Code).
From this latter provision it results that, in the event of registration of vehicle ownership carried out within the legal period - as is the case - the tax due in the year of vehicle registration is assessed and demanded from the holder of that registration.
And if there is registration of vehicle ownership carried out within the legal period, it seems clear that by contraposition, the tax is not due from any person other than the holder of that registration (absent proof to the contrary), whether the holder of the DAV or registration request, or any other person different from the registered owner - which must be found by reference to that registration and within that period, even though the taxable event has already occurred.
It should be emphasized that AT never minimally clarified on what assumption it based the alleged ownership of the Claimant at the date of registration (nor the relevance of this fact): whether on the existence of the DAV, or registration request, or on the initial registration in the name of the Claimant... which constitutes a defect in reasoning in violation of the provisions of Articles 268 of the CRP and 77 of the LGT, which are expressly raised here for all legal purposes.
In any case, both these assumptions underlying AT's action would be wrong in the concrete case.
If AT acted solely on the basis of the DAV or registration request (the latter made by the Claimant at the request of the owners) - in violation of Article 3, no. 1 of the IUC Code - the truth is that, at the date of registration, the Claimant was no longer the owner of any of the vehicles in question.
If, on the other hand, AT acted on the basis of the initial registration in the name of the Claimant, the truth is that at the date of registration invoked by AT, the Claimant was not yet holder of an initial registration in its favour, which would only apply later and temporarily (and inaccurately, as demonstrated) - until registration in the name of the true owner.
In any case, the Claimant would never be legally responsible for the IUC for the year of registration of the vehicles in question, as already foreseen and will now be demonstrated:

Firstly, whatever the criterion - different from the legal criteria - on which AT based itself, the Claimant was never the owner of any of the vehicles in question, as demonstrated and proven in the facts, except prior to the date of registration (at a time when there was no taxable event generating the tax), so that ownership, as a condition of subjective incidence, did not exist in the sphere of the Claimant in any of the cases analysed here.

What constitutes sufficient reason to conclude that the contested assessment acts suffer, in their entirety, from the defect of violation of law - namely of Article 3 of the IUC Code invoked by AT - and sufficient reason for the contested assessments to be unable to subsist in the legal order, and consequently must be entirely annulled.
Secondly, even if AT had based its action on law, and had regard to the initial registration in the name of the Claimant, which AT never explained, it still could never consider the Claimant as owner, either because there is a subsequent registration in the name of the true owners, or because the initial registration in the name of the Claimant does not correspond to material reality, as proven.
Indeed, registration constitutes a presumption that ownership belongs to the person in whose name it is registered, yet proof to the contrary is permitted - and especially for the purposes of the subjective incidence of IUC, in accordance with jurisprudence already established on this matter, namely the uniform and repeated jurisprudence of arbitral tribunals, namely decisions delivered on 19 July 2013 in case P26/2013-T, on 10 September 2013 in case P27/2013-T, and on 15 October 2013, in case no. 14/2013-T, having regard also to the provisions of Article 73 of the LGT regarding presumptions in matters of tax incidence.
Indeed, the presumptions enshrined in provisions on tax incidence always permit proof to the contrary (Article 73 of the LGT).
As exemplarily summarized in the first cited decision (19 July 2013 in case P26/2013-T) delivered precisely on the matter of subjective incidence of IUC (emphasized by the Claimant):

"The purchasers of vehicles thus become owners of those same vehicles through the conclusion of the corresponding purchase and sale contracts, with or without registration.

(...)

In this context, it should be recalled that, in light of the provisions of no. 1 of Article 408 of the CC, the transfer of real rights over things, in this case, motor vehicles, is determined by the mere effect of the contract, and it is clear that, in accordance with the provisions of paragraph (a) of Article 879 of the said CC, among the essential effects of the purchase and sale contract, the transfer of the thing or the title to the right stands out, in the case of vehicles."

Now, as proven in the facts, with respect to all the contested assessments, the vehicles in question were all sold to the dealers and car rental companies, prior to the date of the taxable events and the tax becoming due.

Furthermore, in the present case, registration was duly carried out in the name of the true owners.
From the foregoing it results that the IUC for the year of registration of the vehicles in question could never legally be demanded from the Claimant, but only from the final customers who purchased the vehicles from the dealers, and from the car rental companies, based on their respective property registration, as the law requires - and as was indeed the normal procedure of AT regarding the remaining vehicles - of the order of hundreds of thousands!... registered by the Claimant in the period in question.
or, possibly, in the event of inaccuracy of that registration in the name of the true owners - an inaccuracy which does not occur, nor is invoked by AT - to the dealers and the same car rental companies, based on actual ownership, prior to the date of registration, or at least from the date of registration, as evidenced by the invoices attached to the case file relating to all the vehicles in question, without exception (see doc. no. 11).
It should also be recalled that the assessment of the tax is the responsibility of AT, and is made by the taxpayer itself through the Internet, being mandatory for collective persons (Article 16, no. 2 of the IUC Code) and that the assessments in question were not made available to the Claimant, nor did the Claimant have reason to believe that they should be made available to it.
On the other hand, following the date of registration - and the initial registration in the name of the Claimant - all the vehicles in question were registered in the name of their respective owners within the period for payment of the tax, or even before - mainly - the beginning of this period.
That is, also for this reason - the existence of registration in the name of the actual owner - systematically ignored by AT in the concrete case, incurring here a violation of Article 3, no. 1 of the IUC Code, due to error solely attributable to it (AT), the assessments in question must be entirely annulled.
Furthermore, the IUC Code expressly established, immediately in Article 1, that the IUC complies with the principle of equivalence - seeking to burden taxpayers to the extent of the environmental and road cost which they cause, in implementation of a general rule of tax equality.
And it cannot be ignored that this principle constituted a pillar of the 2007 motor vehicle taxation reform, which was based on precise objectives, clearly distinguishing taxation in the IMPORTATION PHASE (ISV) and the CIRCULATION PHASE (IUC): first and foremost, "to encourage the acquisition of vehicles with lower carbon dioxide emissions" (see more fully, Fernanda Alves and Nuno Victorino, The Balance of Motor Vehicle Taxation Reform, Science and Tax Technique, no. 424, p. 29-68).
These principles and objectives are embodied in the structure of tax rates applicable, in accordance with the provisions of the IUC Code, in particular with respect to category B (see Article 10 of the IUC Code) increased according to CO2 emissions.
Now, the interpretation of the provisions of the IUC Code advocated by AT in the concrete case, namely the invoked Article 3 - by systematically imputing the quality of taxpayer to the Claimant, disregarding third parties as holders of the property registration (albeit presumed taxpayers - since these may, in turn, rebut such presumption), is totally contrary to the principles and objectives of the IUC.
The implementation of the characteristics of the IUC appears impossible to achieve with AT's procedure based on the contested assessments, in which AT collects the tax from some owners - the compliant taxpayers, and disinterests itself in collecting it from others, the non-compliant taxpayers (whether the non-compliance is attributable to them, or to error of the Services themselves) ultimately acting against third parties, as in the case of the Claimant, without any relationship of ownership or use with the vehicles in question.

Indeed, it is in the circulation phase that the characteristics of the vehicle that determine more or less burdensome taxation under the IUC are relevant, and which depend on the choice - and use - of the final customer, not the importer or any intermediary.

It appears that this principle cannot be ignored by an interpretation of the incidence provisions resulting in the systematic subjection to tax of intermediaries without relationship with the vehicle in the circulation phase, as occurred with the Claimant regarding all the vehicles in question.
Indeed, the said principles and objectives of the motor vehicle taxation reform cannot be respected by imposing the IUC - a tax reserved for the circulation phase - on intermediaries without any choice of the characteristics, more or less polluting, that choice being the sole responsibility of the purchasers/users of vehicles in the circulation phase.
These principles are incompatible with the imposition of systematic IUC taxation - reserved for the circulation phase - on the taxpayer of ISV.
If the normal procedure followed by AT - assessment of IUC for the year of registration to final purchasers of new vehicles - is in harmony with this principle, the same does not occur with the exceptional procedure carried out by AT here in issue, disregarding the property registration in favour of the final customer, in an attempt to impose the IUC, ultimately, on the taxpayer of ISV in the importation phase.
And if in the present case it can be understood that AT, although erring, in attributing relevance to the date of registration rather than registration, was unaware of the owner at the date of registration, the same does not apply to the possibility of demanding the tax from the registered owner, in accordance with the law (the final purchaser, or the car rental companies themselves, in the case of these) in whose name the property was registered until the beginning of the legal period for tax assessment, or during that period, a fact which is necessarily within the official knowledge of AT, having regard to the provisions of Article 3, no. 1 of the IUC Code.
Also for this reason, for violation of the incidence provisions, in particular for violation of Article 3 of the IUC Code and interpretation in conformity with the principles underlying it, in particular the principle of equivalence which informs the entire IUC Code, the assessments here contested must be entirely annulled.
And such interpretation, leading to AT being able to burden or not, as it sees fit, motor vehicle distribution operators depending on non-compliance with obligations by their respective purchasers, without any criteria or legal basis, also violates constitutional principles, namely the principle of equality (see Article 13 of the CRP), and especially in tax matters, whether by impacting on their property, or - above all - because of the environmental vocation characteristic of the tax, seeking to burden environmentally undesirable consumption (see Article 103, nos. 3 and 4 of the CRP).
It should be recalled that the IUC Code established, precisely, that in the year of registration or registration of the vehicle in national territory, the tax is assessed by the taxpayer within 30 days following the end of the period legally required for its registration (Article 17, no. 1 of the IUC Code).
In the case of the first IUC - here exclusively in question - this period is also that which is compatible with the time necessary for the processing of vehicle documentation, in particular that which dealers have to promote registration in the name of final customers, with whom they negotiate purchase and sale contracts which frequently also involve contracting financing operations, as is the case with car rental companies (see doc. no. 15).
Being thus, it appears that the normal procedure adopted by AT described above - assessment and collection of the first IUC from the final customer - is the only one that does not contend with the principles underlying the tax, contrary to what occurs with the exceptional procedure here in question, in which the Claimant was targeted as the supposed owner of the vehicles in question, which moreover does not correspond to reality, as proven.
Where registration of property exists within the legal period - as is the case - the first IUC is not due from any person other than its holder, absent proof to the contrary, and not based on criteria different from the legal criteria, in particular by placing the burden of the tax on the ISV taxpayer or presenter of the respective Customs Declaration.
Moreover, in the concrete case AT did not even explain on what basis it concluded - wrongly - that the Claimant was 'owner' at the date of registration - a date at which there was not even registration of property in the name of the Claimant...
From all the foregoing it results that the exceptional procedure of AT based on the contested assessments - whether having regard to the registration request, or the only initial registration, moreover inaccurate, in the name of the Claimant - but in any case systematically ignoring, contrary to the provisions of Article 3, no. 1 of the IUC Code, the subsequent registration of property in favour of a holder other than the Claimant, carried out both within the period of that first registration and within the period for assessment of IUC for the year of registration, must be appraised in this context, and have the error attributable to the AT Services established, which cannot fail to have consequences.
The Claimant further requests indemnifying interest, on the basis of Article 43, no. 1 of the LGT.

In response to the Claimant's request, AT, in addition to the defence by exception:

From the conjunction of the legal provisions, in particular those of Articles 3, 6, and 17 all of the CIUC, as well as from the procedures undertaken in the context of importation and subsequent sale to dealers and car rental companies, it is not responsible for the IUC and is not a taxpayer.
In this way, the Claimant defends that the procedure of the Respondent entity, whether having regard to the registration request or the initial registration, violates the provisions of no. 1 of Article 3 of the CIUC.
Being the registration carried out both within the period of the first registration and within the period for assessment of IUC for the year of registration, the Claimant concludes the existence of error attributable to the Respondent entity regarding the 4,015 acts of assessment of IUC.
However, the arguments which the Claimant advances have no support or foundation in the letter of the law, as will be shown next.
As reiterated in the case file, the Claimant is engaged in the marketing and importation of new automobiles for its network of dealers, final customers or for car rental companies.
Under Article 17 of the Vehicle Tax Code (hereinafter CISV), the introduction for consumption and assessment of tax on vehicles not having national registration is titled by the issuance of a Customs Declaration of Vehicles (DAV).
This issuance constitutes the taxable event in accordance with and for the purposes of the provision in Article 5 of the CISV.
In accordance with the provisions of no. 4 of Article 117 of the Road Code, registration is requested from the IMTT by the entity that effects the admission or introduction for consumption.
On the other hand, the provision in Article 24 of the Motor Vehicle Registration Regulation, approved by Decree Law 55/75 of 12 February, and as amended by Decree Law 178-A/2005 of 28 October, whose heading addresses Documents for initial registration of property, determines that "1 – Initial registration of property of imported vehicles, admitted, assembled, constructed or reconstructed in Portugal is based on the respective request and proof of compliance with fiscal obligations relating to the vehicle".
Under IUC, no. 1 of Article 3 of the CIUC establishes that "The taxpayers of the tax are the owners of vehicles, being considered as such the natural or legal persons, of public or private law, in whose name the same are registered."
As regards the taxable event and the availability of the tax, Article 6 of the CIUC provides that "1 - The taxable event of the tax is constituted by the ownership of the vehicle, as attested by the registration or registration in national territory.

2 - It is also considered a taxable event of the tax the permanence in national territory for a period exceeding 183 days of vehicles not subject to registration in Portugal and which are not goods vehicles with a gross weight equal to or exceeding 12 tonnes.

3 - The tax is deemed due on the first day of the taxation period referred to in no. 2 of Article 4.

4 - Without prejudice to what is stated in the preceding numbers, where a motor is fitted or the motive power of vehicles of category F is increased, the tax is due and becomes due within 30 days following the alteration." (our emphasis)

As for the assessment period established by Article 17 of the CIUC: "In the year of registration or registration of the vehicle in national territory, the tax is assessed by the taxpayer within 30 days following the end of the period legally required for its registration.

2 - In subsequent years the tax must be assessed by the end of the month in which it becomes due, in accordance with no. 2 of Article 4.

3 - Upon reactivation of cancelled registration the tax must be assessed within 30 days from the date of reactivation. (Added by Law no. 55-A/2010, of 31 December)

4 - In the situations provided for in no. 4 of Article 6, the tax must be assessed within 30 days from the date of the alteration".

From the articulation between the scope of the subjective incidence of the IUC and the constitutive fact of the corresponding tax obligation result unequivocally from Article 6 of the CIUC the legal situations which generate the birth of the tax obligation, that is registration or registration in national territory.

In turn, no. 3 of the same article provides that "the tax is deemed due on the first day of the taxation period referred to in no. 2 of Article 4."
That is, the moment from which the tax obligation is constituted has a direct relationship with the issuance of the registration certificate, which must contain the facts subject to registration. (Compare the provisions in no. 2 of Article 4 and in no. 3 of Article 6, both of the CIUC, in no. 1 of Article 10 of Decree-Law no. 54/75, of 12 February and in Article 24 of the Motor Vehicle Registration Regulation.)
Here arrived, and by virtue of the conjunction of the express provisions and with special regard to the provisions of Article 24 of the Motor Vehicle Registration Regulation (RRA), approved by Decree Law 55/75 of 12 February, and as amended by Decree Law 178-A/2005 of 28 October, it is implicit that the initial registration of property, of admitted vehicles (as is the case in the case file), is based on the respective request and proof of compliance with fiscal obligations relating to the vehicle.
That is, the issuance of a registration certificate implies the presentation of a DAV by the Claimant and the payment of the corresponding ISV tax, and automatically generates the registration of the property of the vehicle under Article 24 of the RRA in the name of the entity that proceeded to import the vehicle and request registration, that is the Claimant.
Therefore, the first registration of each vehicle is made in the name of the importing entity, in this case the Claimant.
This fact is clearly evident in the procedures undertaken by the Respondent entity and which underlie the 4,015 acts of assessment of IUC, in which it is peremptory that the Claimant appears as the owner of the vehicles better identified in document no. 1 of the request for pronouncement.
Therefore, it is peremptory that in accordance with Article 24 of the RRA, the importer appears in the registration as the first owner of the vehicle and is, in that sense, in accordance with the provisions of Articles 3 and 6 both of the CIUC, a taxpayer.

As we have alluded, the taxable event under IUC is ascertained in accordance with Article 6 of the CIUC by registration or registration in national territory.

As is well known, the taxable event of the tax relationship will be that which combined the presuppositions provided in tax law, that is, it is reality with sufficient legal force derived from the law to set in motion, to combine, the tax presuppositions, considered these as those situations, personal and real, expressly or tacitly provided for by the tax incidence provisions.
The attribution to the Claimant of a registration certificate embodies, in accordance with the provisions of Article 6 of the CIUC, the taxable event of the tax so that, having the Claimant requested the issuance of a registration certificate and the same being registered in its name, the presuppositions of the taxable event of the IUC are met, as well as its availability, and the Claimant is a taxpayer of the tax.
The Claimant alleges in the context of the request for pronouncement that sales made to its dealers through the issuance of the corresponding invoices were made before the attribution of registration – only identified by chassis number – and regarding car rental companies, the date of the invoice coincides with the date of registration (see documents attached by the Claimant 11 and 12).
However, such understanding finds no minimum correspondence with the letter of the law and furthermore grossly violates the principle of legality, equality, taxpaying capacity and legal certainty and security.

II PRELIMINARY ISSUES

The Arbitral Tribunal is regularly constituted and is materially competent, in accordance with Article 2, no. 1, paragraph (a) of Decree-Law no. 10/2011, of 20 January.

The Parties enjoy legal personality and capacity, are legitimate and are legally represented in accordance with the provisions of Articles 4 and 10, no. 2 of Decree-Law no. 10/2011 and Article 1 of Regulation no. 112/2011, of 22 March.

The proceedings do not suffer from nullities that would invalidate them and no exceptions have been raised that would prevent the determination of the merits of the case, so the Tribunal is in a position to deliver the arbitral decision.

III. MATTERS OF FACT

A) Proven Facts

As factual matters relevant to the decision to be delivered, the Tribunal takes as established the following facts:

The Claimant is a commercial company engaged in the sale of motor vehicles, representing various brands, namely ..., ..., ..., ..., ..., and ...;
In the course of its activity, the Claimant proceeds to the importation and introduction into the Portuguese market of motor vehicles of the aforementioned brands, in the state of new vehicles, acquiring them directly from the manufacturer;
The vehicles subject to the contested assessments are part of the Claimant's usual activity of sale of new vehicles, in some cases to its network of dealers for satisfaction of their final customers, in others to car rental companies;
The Claimant acts as an intermediary between the manufacturers of the brands it represents, and its network of dealers within the scope of concession contracts or by supply contract between the Claimant and car rental companies, within the scope of supply agreements - (See doc. no. 2 and 3 attached to the PI);
The automobiles, once introduced into national territory, are immediately sold to the dealer network or to car rental companies, which in turn sell them to final customers;
The transfers to the dealers, as well as to the car rental companies are titled by invoices issued in accordance with the law and which normally occurs on the day immediately following their admission and reception in Portugal – See docs. nos. 11, 12 (DAVs), 13 (Summary Table);
The vehicles as soon as they enter Portugal are deposited in the facilities of the dealers or car rental companies, the corresponding Vehicle Tax (ISV) is processed which is reflected in the final price to be paid by the purchasers, and then the respective registration in Portugal is promoted;
It thus results that, in accordance with this procedure, at the moment the vehicles are registered, the Claimant has already sold them to third parties, carrying out the registration in conformity with commercial practice in the sector and in compliance with the legal rules in force – See: testimony of the witnesses examined in the case file, articles 53 et seq. of the PI and art. 111 of the Response of AT;
Thus, it results that, as a rule, when the Claimant registers the vehicles at a moment when they have already been transferred to their respective purchasers, in compliance with the supply agreements and in accordance with the delivery schedule stipulated; - See: Docs. Nos. 13, 14, 15 and 11 to 18 attached by the Claimant;
It further results from this procedure that the first holder of the motor vehicle registration of the vehicle is the present Claimant, with the registration being transferred to the purchaser of the automobile in all cases within days or weeks following the initial registration;
All vehicles listed in the contested assessments in the present case have a registered holder of property, immediately following the first registration in the name of the Claimant; - See Doc. 19 attached by the Claimant and Doc. no. 1 attached in annex to the arguments presented by the Respondent;
The situation described above covers all vehicles referenced in the 4,015 contested assessments in the present case;
The Claimant was notified to proceed to payment of 4,015 assessments of unique circulation tax, regarding the years 2009 to 2012, relating to vehicles with registrations duly identified in the IUC assessments attached to the case file as documents nos. 1 to 4,015 in annex to the arbitral request – See Doc. No. 10 attached by the Claimant;
The Claimant maintains concession contracts and supply agreements with a large number of entities, namely those listed in the Listing which it attached as document no. 4 and which is given as being fully reproduced;
The 4,015 vehicles in question were all marketed by the Claimant in the context of said concession contracts or supply agreements, in accordance with the procedure described above;
The same procedure occurred with all other vehicles registered by the Claimant in the period in question, regarding which the Claimant did not assess or pay the IUC for the year of registration, nor was this tax demanded from it by AT;
In its normal activity, the Claimant does not assess or pay IUC, except in the case of vehicles which it acquires for use by its own company, or in very particular cases in which this is its responsibility (such as demonstration vehicles, or repurchase of vehicles), or in situations of vehicles which remain registered in its name beyond the deadline for tax assessment, which was not the case with any of the vehicles referenced in the 4,015 contested assessments;
Regarding the vehicles mentioned above, the Claimant attached to the case file the respective sales invoices and proof of motor vehicle property registration (Doc. nos. 11 to 19), as well as a list showing, for each vehicle, the date of registration, date of invoice and date of transfer, as well as the identification of the respective contested IUC assessment – See Doc. 13 attached by the Claimant;
The tax assessments issued and notified for payment to the Claimant, which total the global amount of €589,857.79;
The Claimant made payment of all the tax assessments contested in the case file, which is evidenced by document no. 10 attached in annex to the arbitral request;
The purchasers of the vehicles in question in the case file proceeded to timely registration in their name of the vehicles; - See Doc. no. 19, cited;
With reference to the contested assessments, the Claimant was notified to exercise the right of hearing;
The Claimant exercised its right of hearing with a view to demonstrating that, by not being the owner of the vehicles in question at the time of the respective taxable event, it was not a taxpayer of the obligation of unique circulation tax (IUC);
The Respondent maintained, despite this, its initial purpose and promoted the issuance of the respective official assessments of IUC;
At the time of the acts of tax assessment of liquidation, AT had at its disposal all sufficient information elements about the contractual situation of the vehicles in question in the present case, both those initially at its disposal and those delivered by the Claimant with the exercise of the right of hearing.

B) FOUNDATION OF THE PROVEN FACTS

The decision on the factual matters as described above is based on documentary evidence which the Parties attached to the present proceedings, in particular the Claimant, in annex to the request filed and in the Administrative Proceedings, attached to the case file by the Tax Authority, and also on the testimonial evidence produced in the case file.

The Tribunal considered in particular, that the factual reality underlying the business situations respecting the various vehicles, proven by documents attached in annex to the arbitral request and further in the information contained in the administrative proceedings carried into the case file by the Respondent AT.

C) UNPROVEN FACTS

There are no other facts determined as unproven, since all factual matters relevant to the assessment of the request were determined as proven.

IV- PRELIMINARY ISSUES TO BE DECIDED

Having regard to the positions of the Parties assumed in the arguments presented, it is incumbent upon the Tribunal to decide the following preliminary issues:

a) The exception for illegality of the cumulation of claims;

b) The violation of the principle of contradiction and equality of the parties by presentation of documents at a moment subsequent to the presentation of the arbitral request.

c) Untimeliness of the presentation of the response by respondent AT.

It is therefore incumbent to decide first the preliminary issues raised by the Respondent.

As to the first issue raised, AT, in its response, as a preliminary issue to the determination of the merits, raises the illegal cumulation of claims, alleging that "In the case at hand there are not verified the existence of the same factual circumstances", as presupposed by Article 3, no. 1 of the RJAT.

With due respect, it is understood that in this case the reason leans toward the Claimant.

Indeed, Article 3, no. 1 of the RJAT provides: "The cumulation of claims, even if relating to different acts and the joinder of claimants are admissible where the success of the claims depends essentially on the assessment of the same factual circumstances and the interpretation and application of the same principles or rules of law."

From the provision in question it results that the presuppositions of the admission of the cumulation of claims, in the context of tax arbitral proceedings, that the success of the claims depends essentially on:

a) the assessment of the same factual circumstances and,

b) the interpretation and application of the same principles or rules of law.

Now, with due respect, to say that cumulation will be admissible where the success of the claims depends essentially on the assessment of the same factual circumstances, is not the same as saying that it will only be admissible where the success of the claims depends on the assessment of the same facts, which is what the interpretation advanced by AT comes down to.

Indeed, the use of the adverb "essentially" and the expression "factual circumstances", and not merely "facts", must have a meaning, and that will be to refer to a judgment of analogy between the facts sub iudice, from which it results that those facts have, between them, in what is legally relevant, a relationship of similarity which implies that the judgment to be made about them is of identical nature.

Now, in the concrete case, being at issue the sale of various automobiles (and not the invoices, since the taxable event will be the sale, and invoice mere means of proof) one cannot conclude otherwise, other than to be such the case. Thus, one must consider that the requests formulated regarding the various IUC assessments in question in the case file, depend essentially on the assessment of the same factual circumstances, as well as the interpretation and application of the same principles or rules of law, so that the cumulation of the corresponding annulment requests is admissible, in accordance with the provisions of Article 3, no. 1 of the RJAT, and must therefore be admitted.

In its response, AT included a section under the heading "VIOLATION OF THE PRINCIPLES OF CONTRADICTION AND EQUALITY OF THE PARTIES AS SET OUT IN PARAGRAPHS (A) AND (B) OF ARTICLE 16 OF THE RJAT", alleging, in sum, that the decision which admitted the attachment of documents presented by the Claimant after the presentation of the Initial Request, and while the period to respond was running, "apart from not positioning, procedurally, the parties equally, is clearly violating the most elementary principles of contradiction and equality of the parties as set out in paragraphs (a) and (b) of Article 16 of the RJAT."

Having said issue been already assessed and decided by the order of 22-05-2014, formal res judicata was formed in the matter with nothing more to be determined in it.

In any event, and without prejudice to what has been said, one cannot fail to note the procedural contradiction in AT's conduct which, despite sustaining vigorously, among other things and for example, that "the subsequent and successive presentation of documents constitutes an obstruction of a proceeding whose processing is desired and desired to be swift", and that "the late admission of documents violates the principle of equalization of the positioning of subjects and equality of means, as will be demonstrated next, placing the Respondent in the disadvantageous situation of not being able to pronounce on them in an intellectually honest manner", came, with its last intervention in the proceedings – final arguments – to attach 820 documents.

Notified of AT's response, the Claimant raised the untimeliness of the same, alleging, in sum, that it appears to it "inapplicable the invoked presumption referred to in Article 248 of the CPC, of mere subsidiary application, having regard to the dematerialized procedure of the present proceedings which provides for the use of systems Via CTT and procedural management of the CAAD, which the parties have access to, unless it is considered, under penalty of violation of the principle of equality of means, such presumption equally applicable to the notification of taxpayers, which however is considered effective upon access to the mailbox", and that "recognizing the Respondent that it was indeed notified on May 7, 2014 (see Articles 3 and 9 of AT's response), and consequently its response should have been submitted by June 6, 2014 - which only occurred on June 11, 2014 - it appears, unless otherwise reasons which however cannot be seen, untimely the presentation of AT's response."

AT, for its part, in its response, on this matter, cautiously had alleged that "In accordance with the provisions of Article 248 of the CPC as amended by Law 42/2013 of 26 June, representatives who perform procedural acts through the means provided in no. 1 of Article 132, are presumed to have been made on the 3rd day following or on the 1st day following that, when not so." and that "In the same vein it has been settled jurisprudence that dispatch by electronic means will benefit from the same extension corresponding to that of registration by postal means, reiterating that the presumption could only be rebutted by the notified party itself, in accordance with the terms established by no. 6 of Article 254 of the CPC, proving that it had not been made or occurred on a date later than the presumed."

As has already been had occasion to refer in this same proceedings, within the tax arbitral proceeding the principle of free conduct of the proceedings by the arbitrators prevails, as results from Article 16, no. 1, (c) of the RJAT, it not being therefore of automatic application any provision of a procedural nature other than those which expressly result from that law.

This does not mean, evidently, that ordinary procedural provisions do not contain regulatory contents directly transposable to the arbitral proceedings, but such transposition is always, and in any case, mediated by the prudent discretion of the arbitrators, always "with a view to obtaining, in a reasonable time, a pronouncement on the merits regarding the claims formulated." (Article 16, no. 1, (c) of the LAT).

The procedural provisions first in line to be transposed to the regulation of procedural issues will, obviously, be those of tax proceedings, mostly condensed in the Tax Procedure and Process Code, which, in its Article 2, tells us, among other matters, that "Supplementary application shall be made to the tax procedure and judicial proceedings, according to the nature of the cases omitted: (...) and (e) The Civil Procedure Code."

Also the RJAT, in its Article 29, (e) reiterates that "Subsidiary application shall be made to the tax arbitral proceeding, according to the nature of the cases omitted: (...) and (e) The Civil Procedure Code". From all the foregoing, it results thus, in sum, that the tax arbitral procedural relationship is regulated according to the prudent discretion of the arbitrators "with a view to obtaining, in a reasonable time, a pronouncement on the merits regarding the claims formulated", being based on the general tax procedural provisions, as well as those of the Civil Procedure Code.

On 1 September 2013 the new Civil Procedure Code came into force, approved by Law 41/2013. In accordance with Article 248 of that Code, "Representatives are notified in accordance with the terms defined in the regulation provided for in no. 1 of Article 132, the computer system must certify the date of preparation of the notification, with it being presumed to have been made on the 3rd day following that of preparation or on the 1st working day following that, when not so."

It is thus verified that the reference in the previous version of the Civil Procedure Code that the presumption of notification in question could only be rebutted "by the notified party proving that notification was not made or occurred on a date later than the presumed, for reasons not attributable to it", contained in no. 6 of the respective Article 254, did not carry forward to the new version of that Code.

In this manner, and having regard to the nature of the confessional acknowledgment by AT itself, both in the response itself and in the request presented on 20 May 2014, and attached to the proceedings on 23 May 2014, that it had been notified on 7 May 2014, the presumption of the current Article 248 of the Civil Procedure Code, in the present case, would have to be considered rebutted.

However, as has also been said, the provisions of the Civil Procedure Code in force will not be of automatic application to the tax arbitral proceeding, but rather should be mediated by the principles specific to the arbitral jurisdiction, namely, and in the case, the principles of informality, material truth, contradiction and obtaining a merits decision in a reasonable time.

In the concrete case, having regard to that:

the extent of the documentation attached by the Claimant, with its initial request and subsequently, to the proceedings places difficulties in its legal processing;
AT's response has its own value at the level of the concrete procedural dynamics, being significantly relevant from the point of view of the operability of contradiction;
the admissibility of AT's Response does not affect, in concrete terms, in a manner relevant, its Claimant's procedural position;
in the tax arbitral proceeding, by its very nature, the application of the provision in Article 145, no. 5 of the Civil Procedure Code will be precluded, which would provide the Respondent the ability to remedy the delay verified;
the lack of response by AT, in the tax arbitral proceeding, must be understood as having no preclusory or confessional effects due to lack of specified challenge (see Article 110, no. 6 of the CPPT);
the admission of the response, even if beyond the deadline, with the consideration of the arguments advanced by AT, unquestionably enhances the assessment of the merits of the case in the final decision of the present case file;

in this tribunal's understanding, in accordance with its prudent discretion and having in view the interests, above exposed, which it is incumbent upon it to protect in the proceedings, not to apply the provisions of civil procedural law indicated and, as such, to maintain in the proceedings AT's response.

Having decided the preliminary issues and having gathered the procedural presuppositions, it is incumbent to decide the substantive issue.

V – LEGAL FOUNDATION

Having established the factual matters, it is important to address the legal issue raised by the Claimant, which consists of assessing the terms of the configuration of the subjective incidence of the IUC in light of the provisions of Article 3 of the Unique Circulation Tax Code (CIUC), in particular the question of whether the subjective incidence is based strictly on the registration of vehicle title in the Motor Vehicle Register, or whether registration operates only as a presumption of tax incidence, which can be rebutted, in accordance with the provisions of Article 73 of the General Tax Law. On this matter, the arbitral jurisprudence is already abundant and sufficiently defined, as contained in various arbitral decisions.

A) On subjective incidence: the taxable event and the effects of motor vehicle registration under IUC incidence

The 4,015 acts of assessment of IUC contested were notified to the Claimant in the following terms:

"Assessment made in accordance with paragraph (b) of no. 1 of Article 2, in conjunction with Articles 3, 4, 6 and 10, all of the Unique Circulation Tax Code, because the tax relating to the vehicle identified in this document has not been assessed or paid by the date of assessment and in the month referred to in the table."

From the content of the referred notifications for hearing, it is noted that they identify the registration of each vehicle in question, and are based on the same (and sole) formula: "Based on the information which the Tax Authority and Customs Authority has, Your Excellency was the owner/lessee of the vehicle with registration (...), of the category (...), in [...]; (...)

"In accordance with Article 2, no. 1, paragraph (b), in conjunction with Articles 3, 4 and 6, all of the Unique Circulation Tax Code, and by application of the rate provided in Article 10 of the CIUC, the tax relating to the year(s) of (...) is due. The tax in question was not assessed or paid by the respective deadline(s), which occurred on (...)"

The Claimant alleges that this conjunction of provisions invoked by AT does not "clarify in what terms they are conjoined, nor in what the conclusion regarding the attribution of responsibility to the Claimant is concretely based, effectively it does not result that the Claimant can be legally held responsible for the assessment and payment of the IUC in question."

It adds that the interpretation of the provisions of the IUC Code advocated by AT in the concrete case, namely the invoked Article 3, by systematically imputing the quality of taxpayer to the Claimant, disregarding third parties as holders of the property registration (albeit presumed taxpayers, since these may, in turn, rebut such presumption), is totally contrary to the principles and objectives of the IUC. The Claimant further alleges that the implementation of the characteristics of the IUC appears impossible to achieve with AT's procedure based on the contested assessments, in which "AT collects the tax from some owners - the compliant taxpayers, and disinterests itself in collecting it from others, the non-compliant taxpayers (whether the non-compliance is attributable to them, or to error of the Services themselves) ultimately acting against third parties, as in the case of the Claimant, without any relationship of ownership or use with the vehicles in question."

It is in the circulation phase that the characteristics of the vehicle that determine more or less burdensome taxation under the IUC are relevant, and which depend on the choice - and use - of the final customer, not the importer or any intermediary. It appears that this principle cannot be ignored by an interpretation of the incidence provisions resulting in the systematic subjection to tax of intermediaries without relationship with the vehicle in the circulation phase, as occurred with the Claimant regarding all the vehicles in question.

Finally, the Claimant alleges that it results from what AT itself alleges in the notifications that it recognizes that the assessment and payment should have occurred until 90 days after registration, which even coincides with the legal period of 30 days after 60 days following the date of registration. Now, in none of the notifications is there any reference to the property registrations made during that period.

Finally, the Claimant further alleges that the principles underlying the motor vehicle taxation reform are incompatible with the imposition of systematic IUC taxation - reserved for the circulation phase - on the ISV taxpayer, so that in the Claimant's understanding "if the normal procedure followed by AT - assessment of IUC for the year of registration to final purchasers of new vehicles - is in harmony with this principle, the same does not occur with the exceptional procedure carried out by AT here in issue, disregarding the property registration in favour of the final customer, in an attempt to impose the IUC, ultimately, on the ISV taxpayer in the importation phase."

And, if in the present case it can be understood that AT, although erring, in attributing relevance to the date of registration rather than the registration, was unaware of the owner at the date of registration, the same does not apply to the possibility of demanding the tax from the registered owner, in accordance with the law (the final purchaser, or the car rental companies themselves, in the case of these) in whose name the property was registered until the beginning of the legal period for tax assessment, or during that period, a fact which is necessarily within the official knowledge of AT, having regard to the provisions of Article 3, no. 1 of the IUC Code.

Thus stated:

The issue to be decided is strictly concerned with the presuppositions of the incidence of IUC, in the concrete case, and to that extent, it is necessary to address the alleged illegality due to defect of violation of law due to error regarding the presuppositions which led AT to issue the contested assessments.

Thus, having analyzed the factual matters brought into the case file, the applicable legal regime resulting from the combined provisions of the CIUC, of the ISV and the Road Code, it is necessary to assess their application to the concrete case in order to be able to conclude whether the contested IUC assessments are or are not illegal.

First, it must be borne in mind that the CIUC establishes, as a rule of incidence, that the taxpayers are the owners of vehicles, being considered as such those in whose name the same are registered. The fundamental legal framework applicable in this matter is that provided in Articles 1 to 6 of the CIUC, approved by Law no. 22-A/2007, of 29 June.

Article 1 of the CIUC defines the objective incidence of the tax, distinguishing vehicles by specified categories, a provision which appears clear and without difficulties of application.

However, the same does not apply to the provision on subjective incidence contained in no. 1 of Article 3 of the CIUC, which is at the origin of the present dispute and thus constitutes the issue to be decided in the case under consideration. The analysis of both provisions (Articles 1 and 3) allow the conclusion that in the operation of the IUC motor vehicle registration has a fundamental role, but the correct application of the regime proposed by the legislator requires recourse to other interpretive elements.

What is important, then, is to determine the meaning and scope of the provision on subjective incidence, contained in Article 3, no. 1 of the CIUC, and the possible existence or not of a rebuttable presumption, connected with the question of the legal effects of motor vehicle registration, raised by the Claimant. On this question, the positions of the parties set out above can be summarized as follows:

for the Claimant, it cannot be considered a taxpayer of IUC, since it was not the owner of said vehicles at the moment the taxable event occurred, having alienated said vehicles on a date prior to the registration itself; moreover, all the purchasers registered the acquisition of vehicle ownership; but even if, in the year to which the IUC in question relates, the transfer of said vehicles was not duly registered with the Motor Vehicle Registry Office, the Claimant also could not be considered the debtor of the tax, since registration, or its absence, cannot be considered a determining element of the Claimant's tax responsibility;
for the Respondent, Article 3, no. 1 of the CIUC enshrines a rule of tax incidence and not mere rebuttable presumption, so that, being it the first holder of motor vehicle registration, it is, without further consideration, the debtor of the IUC in the year in question.

Now, Article 3 of the CIUC provides:

"ARTICLE 3

SUBJECTIVE INCIDENCE

1 – The taxpayers of the tax are the owners of vehicles, being considered as such the natural or legal persons, of public or private law, in whose name the same are registered.

2 – Financial lessees, purchasers with reservation of ownership, as well as other holders of purchase option rights by force of lease contracts are equated to owners."

No. 1 of Article 11 of the LGT establishes:

"In the determination of the meaning of tax provisions and in the qualification of the facts to which they apply, the general rules and principles of interpretation and application of laws are observed."

The interpretation and application of the legal provision presuppose the carrying out of interpretive activity, which must be objective, balanced, and in accordance with the letter and the spirit of the law. Any text, and the law is no exception, contains multiple meanings and frequently contains ambiguous or obscure expressions. For this reason, although the letter of the law is "the guide wire" of the interpreter, it must be interpreted having regard to the underlying objectives, "the ratio" or the motivation of the legislator in establishing the provision in analysis. To these elements is added another according to which the interpretation of the legal provision must respect the "unity of the legal system", its coherence and intrinsic logic.

Article 9 of the Civil Code (CC) provides the rules and fundamental elements for the interpretation of the legal provision, which the interpretation of tax law must also obey, the provision in question, which begins by stating that interpretation must not be confined to the letter of the law, but must reconstruct from it the "legislative thought".

In addition to these general principles, there are also the principles contained in the LGT, namely in Article 73, which establishes that the presumptions contained in tax incidence provisions always permit proof to the contrary.

Furthermore, as regards the issue under analysis, the contribution of arbitral decisions already delivered in cases nos. 14/2013-T, of 15 October, 26/2013-T of 19 July, 27/2013-T, of 10 September, 217/2013-T of 28 February and, more recently, in decisions delivered in cases 286/2013-T, of 2 May 2014, 293/2013-T, of 9 June 2014, 46/2014-T of 5 September, 250/2014 – T, of 17 November 2014 and 43/2014 – T, which, among others, reveal a refined reflection on the fundamental issue under consideration.

It is thus in this background framework, using the fundamental hermeneutic principles just referred to, accepted by the jurisprudence of our higher courts, that we must seek to find the adequate interpretation of the provisions in question.

Returning to the analysis of the concrete case, the taxable event of the tax, under the CIUC, is constituted by the ownership of the vehicle, as attested by the registration or registration in national territory, in the year of its importation or introduction into the national market (Article 3, no. 1 of the CIUC).

The tax is deemed due on the first day of the taxation period (Article 6, no. 3 of the IUC Code), which corresponds to the year which begins on the date of registration (see Article 4, no. 2 of the IUC Code).

Now, in the case of the present case file it is noted that in the year of registration, the vehicle was also registered in national territory, the respective vehicle tax having been assessed by the taxpayer within 30 days following the end of the period legally required for its registration (Article 6, no. 3 of the IUC Code), that is, 60 days after registration. It was also noted that all vehicles were sold to dealers or car rental companies before registration, having been duly invoiced, and immediately following the completion of the usual commercial procedure in these cases. Thus, the first registration was made in the name of the now Claimant (already this was no longer the owner of the vehicles), but immediately thereafter registration was made in the name of the legitimate owners.

Now, only in the absence of registration of vehicle ownership carried out within the legal period, is the tax due in the year of vehicle registration assessed and demanded from the taxpayer of vehicle tax (ISV) based on the customs declaration of the vehicle, or based on the supplementary declaration of vehicles on which the assessment of that tax is based, even though not due (Article 18, no. 1, paragraph (a) of the CIUC). From this latter provision it results that, in the event of registration of vehicle ownership carried out within the legal period, the tax due in the year of vehicle registration is assessed and demanded from the holder of that registration.

Now, from the factuality proven in the case file it is concluded that in the case of the vehicles listed in the 4,015 contested assessments, that is exactly what happened. That is, although the vehicles in question had an initial registration in the name of the now Claimant (as is understood from the legally established procedure to which the importer is subject), the vehicles were already, at that date, the property of another, in whose name they were registered with the Motor Vehicle Registry Office. – See Doc. 13 attached to the arbitral request which condenses all the information relating to the date of sale/transfer, date of registration and registration; See, still, Doc. no. 1 attached to AT's response, which confirms and exemplifies what has just been described.

Thus, if the Claimant was not the actual owner at the date of occurrence of the facts which determine the tax obligation, given that the same had already been sold to the respective dealers and/or car rental companies, on a date prior to the registration of the vehicles themselves, as evidenced by the invoices issued, which it attaches as probatory evidence, it is not understood nor justified the assessment of the IUC to the importer and now Claimant.

This conclusion also results from the interpretation of the provisions of no. 1 of Article 17 and Article 18 of the CIUC, relating to the tax payment period and official assessment, respectively, which are based on the presupposition that "in the year of registration the IUC taxpayer is the owner of the vehicle on the date on which those 60 days end counted from the date of the attribution of registration, which must assess and deliver it to the State within the 60 days following."

And, being thus, in the case of the present case file, it is demonstrated that the taxpayer was not the now Claimant.

Indeed, any other understanding would be manifestly contrary to the principles underlying the IUC reform and even to its nature as a tax on motor vehicle circulation.

In fact, in the activity carried out by the now Claimant, in the capacity of importer, the transfer of vehicle ownership normally operates, even before the date of registration. This is because the Claimant proceeds to the admission into Portuguese territory of new vehicles, which, at a moment prior to their registration, it transfers to its customers, dealers and/or car rental companies, a fact which it proves through their respective contracts, business plans and objectives and invoicing attached to the case file.

However, by virtue of the applicable legal provisions, the registration of the vehicles in question is made in the name of the Claimant, even though, at the moment it is made, this is no longer its owner. This procedure, moreover, results from the provisions of Articles 117, no. 4 of the Road Code, which attributes to the person, natural or legal, who proceeds to the admission, importation or introduction for consumption in national territory, the obligation to request the registration of vehicles, as well as from the provisions of Article 24, no. 1 of the Motor Vehicle Registration Regulation, which determines that the initial registration of property of imported vehicles, admitted, assembled, constructed or reconstructed is based on the respective request.

From the said provisions it results, then, that the Claimant, in the capacity of registered operator who proceeds to the admission of new vehicles into national territory, necessarily appears in the respective initial registration as its owner, even though at the moment it is made, the ownership of the same has already been transferred to third parties. And, if so, by imposition of the legislator, this aims at the control of the activity by the competent authorities in order to control who comes to acquire such vehicles and when. From this, among others, various tax obligations result.

From the perspective of the Respondent "having the Claimant requested the issuance of a registration certificate, the same being registered in its name, the presuppositions of the taxable event of the IUC are met, as well as its availability (...)". Of course, it says nothing regarding the consequences of the existence of registration immediately following in favour of the true owners or purchasers. This disregard is clearly due to the fact that it was easier for AT to promote the 4,015 assessments against the same taxpayer, the now Claimant, in terms of safeguarding the statute of limitations period regarding some of the vehicles, in particular regarding the year 2009.

In contrast, this tribunal understands that such procedure is based on an error regarding the factual and legal presuppositions upon which the unique circulation tax is erected. Thus, the provision on subjective incidence of this tax enshrines a legal presumption of ownership, susceptible of being rebutted through proof to the contrary. In the perspective of the Respondent, we are not faced with a rebuttable presumption.

Accordingly, we are faced with the question of whether the issue is the interpretation of Article 3, no. 1 of the CIUC, in order to determine whether the same enshrines, or not, a presumption relating to the qualification as owner, and consequently as a taxpayer of this tax, the person, natural or legal, in whose name the vehicle property is registered, and, if that is concluded, its rebuttal based on the probatory elements which comprise it.

Not withstanding the IUC Code establishing as a structuring principle of this tax the principle of equivalence, understood as compensation for the harmful effects in environmental and energy terms resulting from motor vehicle circulation, the said Code elects, regarding subjective incidence, the owner of the vehicle, considering as such the person in whose name the same is registered (Article 3, no. 1 of the CIUC). But, notwithstanding this, the legislator reserved some particular cases in which formal or legal ownership of the vehicle was secondarized by its use, imputing to the latter the obligation of payment of the IUC, as occurs with financial lessees, purchasers with reservation of ownership, as well as other holders of purchase option rights by force of lease contract (Article 3, no. 2 of the CIUC).[2]

Certain is that the incidence provision, by referring to the elements of motor vehicle registration, does not distinguish between the initial registration of the vehicle and subsequent registrations: the taxpayer of the tax is the owner of the vehicle, considered as such the person, natural or legal, in whose name the vehicle is registered. It is thus on the interpretation of the provision of no. 1 of Article 3 that, as already referred, the different positions expressed by the Claimant and the Respondent are evident.

According to the Claimant, the said provision establishes a presumption of ownership, based on registration, rebuttable in accordance with general terms and, in particular, by force of the provisions of Article 73 of the General Tax Law.

For the Respondent, establishing the CIUC the tax liability as well as the taxable event of the tax obligation, by reference to the elements contained in motor vehicle registration, as results from Articles 3 and 6 of the CIUC, and being the Claimant the one requesting the issuance of the registration certificate and the vehicles being registered in its name in the taxation periods "the presuppositions of the taxable event of the IUC are met, as well as its availability, and the Claimant is a taxpayer of the tax regarding the period in question." It says nothing regarding the fact that said same registration was immediately altered to the name of the true and purchasers of the motor vehicles, in the same taxation period, certainly by disregarding such fact as relevant, which, prima facie, enters into contradiction with the value which it itself advocates attributing to motor vehicle registration.

This matter has been the subject of various arbitral decisions which, repeatedly and uniformly, have pronounced themselves to the effect that the provision of no. 1 of Article 3 of the CIUC establishes a presumption, rebuttable, in accordance with general terms and, in particular, by force of the provisions of Article 73 of the LGT. This tribunal will also closely follow that orientation.[3]

Indeed, the recourse to motor vehicle registration as a structuring element of the system of assessment of this tax is evident throughout the entire respective Code. But it is necessary to bear in mind the provisions of its Article 6, relating to the definition of the taxable event of the tax obligation, whose no. 1 provides that the taxable event of the tax obligation is "the ownership of the vehicle, as attested by the registration or registration in national territory".

From this provision it results that motor vehicles which are not, nor should be, registered in Portuguese territory, are only covered by the objective incidence of this tax if they remain there for a period exceeding 183 days, in accordance with the provisions of no. 2 of the same Article. There is no doubt that it is by recourse to the registral element that the legislator establishes, simultaneously, the taxable event of the tax, as well as the determination of the moment of the beginning of the taxation period and the constitution of the tax obligation and, in a general manner, all elements necessary for the assessment of the tax in question, as, moreover, well emphasized comes in the response prepared by AT.

Notwithstanding the above regarding the dependence of the IUC taxation regime on motor vehicle registration, it cannot be immediately concluded that the provision on subjective incidence, in the segment in which it considers as owner the person in whose name the vehicle is registered, does not constitute a presumption of incidence. According to the concept contained in Article 349 of the C. Civil, presumptions are the inferences which the law or the judge draws from a known fact to establish an unknown fact. In addition, Article 341 of the Civil Code establishes that presumptions constitute means of proof, having the latter the function of demonstrating the reality of facts, such that whoever has the legal presumption in his favor is excused from proving the fact to which it leads (see no. 1 of Article 350 of the Civil Code).

With this said, it further results that presumptions, which may be explicit or implicit, except where the law prohibits it, may be rebutted, by proof to the contrary, as indeed results expressly from the provision in no. 2 of Article 350 of the Civil Code. Finally, where presumptions of tax incidence are concerned, these are always rebuttable, as expressly provided in Article 73 of the LGT.

The controversy around this issue arose in the context of the new law, in that the expression "presumed" was replaced by the expression "considered". In the same sense, Article 3, no. 1 of the Regulation of Circulation and Haulage Taxes, approved by Decree-Law no. 116/94, of 3/05, establishes that the taxpayers of these taxes are "the owners of vehicles, being presumed as such, until proof to the contrary, the natural or legal persons in whose name the same are registered."

Contrary to the position expressed by AT, we understand that this is a mere semantic question, which does not alter minimally the content of the provision in question.

Thus, as to the question of, given the literal tenor of the provision in no. 1 of Article 3 of the CIUC, what is the scope of the expression "considered as such", given that in the current version the legislator did not use the term "presumed" (which appeared in the extinct Regulation of Vehicle Tax), the Tribunal understands that it can only be the following: the legislator presumes (considers) that the owners are the persons in whose name the vehicles are registered. This means that such presumption, implicit, is naturally rebuttable in accordance with the terms provided in Article 73 of the LGT.

The presumption established in Article 3, no. 1 of the current CIUC, was already enshrined in the earlier versions of the codes abolished with the entry into force of the CIUC. Article 3 of the Vehicle Tax Regulation (approved by Decree-Law no. 143/78) established that: "the tax is due by the owners of vehicles, being presumed as such, until proof to the contrary, the persons in whose name the same are registered or recorded."

Similarly, Article 2 of the Regulation of Circulation and Haulage Taxes (approved by Decree-Law no. 116/94) established that: "the taxpayers of the circulation tax and of the haulage tax are the owners of vehicles, being presumed as such, until proof to the contrary, the natural or legal persons in whose name the same are registered."

In fact, in the current version of the Code only the verb changed, the legislator now opting for the expression "considered". Certain is that between the earlier legislative versions and the current one, the LGT came into force, which expressly enshrined the principle contained in Article 73, from which it results that in matters of tax incidence any presumption always permits proof to the contrary. Therefore, it becomes indifferent the adoption of an explicit or implicit presumption, since one like the other are equally rebuttable.

Thus, it is understood that the fact that the legislator, in the current version of the CIUC, opted for an implicit presumption (using the expression "considered") instead of an explicit presumption (with recourse to the expression "presumed"), as happened previously, does not translate a substantive alteration in what respects the subjective incidence of the tax. It is not, therefore, the title contained in motor vehicle registration, a condition, by itself determining tax incidence, but rather the ownership as results from the registration, which results in a mere rebuttable presumption.

In addition, contrary to what has been alleged by the Respondent, we can easily point out various examples, drawn from the tax legal order, in which the legislator opted for the use of the verb "consider", with presumptive meaning. Beyond that, as has already been said above, where a tax incidence provision is concerned, an irrebuttable presumption could never be admissible. As state, Diogo Leite Campos, Benjamin Silva Rodrigues and Jorge Lopes de Sousa, in the annotation to no. 3 of Article 73 of the LGT, "presumptions in matters of tax incidence may be explicit, revealed by the use of the expression 'presumed' or similar (...). However, presumptions may also be implicit in incidence provisions, in particular of objective incidence, when certain values of movable or immovable property are considered as constituting taxable matter, in situations where it is not impossible to ascertain the real value".[4]

And there are many examples of provisions in which the verb "consider" is used to establish rebuttable presumptions, as occurs with the provision in no. 2 of Article 21 of the CIRC, in Article 89-A of the LGT or in Article 40, no. 1 of the CIRS, among others. Alleges, however, the Respondent in the response submitted, that this same word "considered" is also normally used, by the tax legal order, to define situations distinct from presumptions. Now, such appears normal, in particular in the case of other tax provisions in which the legislator used the formula "considered" or "are considered", but attributing a different meaning, since these are expressions which, depending on the context, may assume a plurality of meanings, without the conclusion which the Respondent intends being able to be extracted from this.

Having in mind that the legal system should form a coherent whole, the examples referred to above, as well as the jurisprudence and doctrine indicated, permit the conclusion that it is not only when the verb "presume" is used that we are faced with a presumption, but also the use of other terms or expressions, such as the term "considered" may serve as the basis for presumptions. And, as referred to above, with the literal element being the first instrument of interpretation of the legal provision, in search of legislative thought, it is important to confront it with the other elements of interpretation, in particular the rational or teleological element, the historical element and the systematic one.

And, also along these lines of reflection, the Tribunal cannot follow the argument adduced by the Tax Authority. As regards the historical element, it should be said that since the origin of the circulation tax, with the entry into force of Decree-Law no. 599/72 of 30 December, a presumption was explicitly enshrined, regarding the taxpayers of the tax as being those in whose name the vehicles were registered or recorded. This version of the law used the literal expression "presumed as such".

However, having regard to the aims of the tax in question, it must be acknowledged that the use of the expression "considered" in the current version, contemplates an expression with an effect similar to that, embodying, equally, a presumption. This same occurs in the formulation contained in no. 1 of Article 3 of the CIUC, in which a presumption was enshrined, revealed through the use of the expression "considering", of similar meaning and equivalent value to the expression "presumed", in use since the creation of the tax in question. The use of the expression "considering" is justified because it appears, perhaps, more in keeping with the strengthening of the vehicle ownership, which became the taxable event of the tax, in accordance with the terms contained in Article 6 of the CIUC.

So, in the light of the literal element of interpretation, nothing prevents the understanding that the provision in no. 1 of Article 3 of the CIUC enshrines a rebuttable presumption.

Thus, as to subjective incidence of the tax, it is to be concluded that no alterations are verified regarding the situation previously in force in the context of the Municipal Tax on Vehicles, Circulation Tax and Haulage Tax, as is moreover widely recognized by doctrine, a rebuttable presumption continuing to apply in this matter.

This understanding is, furthermore, the only one which appears adequate and in accordance with the principle of material truth, which, although not expressly stated in the RJAT, is a principle which must inspire the entire arbitral proceedings, in particular having regard to the aims to be pursued, which are none other than the attainment of justice through the delivery of a pronouncement which reflects the real situation in the concrete case and not merely the formal observation of procedural rules.

In fact, were we to adopt the interpretation of the Respondent, by virtue of which the bare fact of registration would constitute an irrebuttable incidence condition, we would be accepting that tax liability would be determined solely by the register, without regard to any material reality. This would mean accepting a system of tax incidence which would not contemplate the possibility of addressing manifest injustices which could result from mere technical facts relating to the register, without any connection to the material reality of ownership.

Such an interpretation would therefore be fundamentally incompatible with the principle of material truth, a principle which presides over our entire legal system and which, in the tax field, has been strengthened by the entry into force of the LGT, particularly through Article 73 thereof, which establishes that presumptions of tax incidence always permit proof to the contrary.

Furthermore, the interpretation of Article 3, no. 1 of the CIUC, as establishing a rebuttable presumption of ownership based on registration, is perfectly compatible with what has been established in the legislative history of the tax, as well as with its overall regulatory framework and with the principles which underlie it.

In this manner, we can proceed to address the rebuttal of the presumption of ownership based on registration, by means of the evidence presented in the case file.

From the proven facts established in this decision, it is demonstrated that:

The Claimant is an importer and distributor of new motor vehicles, which sells them to authorized dealers and car rental companies;
The Claimant, in its capacity as importer and first person to admit the vehicles into Portuguese territory, is necessarily registered as the initial owner of the vehicles in accordance with the applicable legal provisions;
However, in practice, the transfer of ownership of the vehicles to the dealers and car rental companies occurs prior to the registration of the vehicles, being documented through invoicing in accordance with the law;
The first registration of the vehicles necessarily occurs in the name of the Claimant, as it is the person responsible for requesting the registration;
Immediately following the first registration, the vehicles are re-registered in the name of the actual owners, the dealers or car rental companies;
On the dates in question, the Claimant had no ownership rights over the vehicles, having transferred the same to the actual owners prior to or simultaneously with the registration;
All the evidence relating to the vehicles in the contested assessments corroborates this factual situation.

From all of the foregoing, it is clear that the registration of the Claimant as the owner of the vehicles was merely a technical and procedural necessity, arising from the fact that the Claimant, as the importer, was the person responsible for requesting the registration. However, the material reality was that the Claimant did not own the vehicles at the time the tax obligation arose.

The presumption of ownership based on registration can therefore be rebutted, and indeed has been rebutted, through the production of evidence demonstrating the actual ownership of the vehicles by other persons, the dealers and car rental companies.

Having established that the Claimant was not the actual owner of the vehicles at the time the taxable event occurred, it must be concluded that the Claimant was not a taxpayer of the IUC in respect of the contested assessments. Accordingly, the contested assessments are illegal and must be annulled.

Furthermore, the manner in which the contested assessments were made violates not only the legal provisions regarding subjective incidence, but also the fundamental principles underlying the IUC, in particular the principle of equivalence. The IUC is intended to burden vehicle owners in accordance with the environmental and road costs they generate through the use of their vehicles. To impose the tax on an intermediary, such as the Claimant, who has no control over the vehicle characteristics or its use, and who transfers the vehicle to the actual owner prior to or simultaneously with registration, is contrary to the fundamental aim of the tax.

This interpretation is supported by the consistent jurisprudence of the arbitral tribunals which have previously addressed this issue, as well as by the principles of material truth and equity which must inform all tax proceedings.

For all the foregoing reasons, this tribunal concludes that the contested assessments are illegal and must be entirely annulled.

VI - DECISION

Based on all the foregoing considerations and in light of the evidence presented and the legal provisions applicable to the case, the Arbitral Tribunal decides:

To annul all 4,015 acts of assessment of Unique Circulation Tax issued and notified to SA, relating to the years 2009, 2010, 2011 and 2012, as identified in the contested assessments, which are declared null and void;
Given the illegality of the assessments and the error committed by AT in assessing the IUC to the Claimant, who was not the actual owner of the vehicles, and furthermore, given that AT had the information necessary to identify the true owners of the vehicles within the assessment period, to condemn AT to the payment of indemnifying interest on the amounts paid by the Claimant in respect of these assessments, in accordance with Article 43, no. 1 of the General Tax Law, calculated from the date of each assessment until the date of this decision;
To reject all other claims presented by the parties.

Given in Lisbon, on [DATE], at the seat of the Administrative Tax Arbitration Council.

The Arbitrators:

Dr. José Pedro Carvalho
(Presiding Arbitrator)

Professor Doctor Maria do Rosário Anjos

Professor Doctor Guilherme Oliveira Martins

Frequently Asked Questions

Automatically Created

Who is the taxable person (sujeito passivo) liable for IUC under Portuguese tax law?

Under Portuguese tax law, the taxable person (sujeito passivo) liable for IUC is the vehicle owner, defined by Article 3(1) of the IUC Code as the person in whose name the vehicle is registered. The taxable event is constituted by vehicle ownership as evidenced by registration in national territory. The tax becomes due on the first day of the taxation period, which corresponds to the year beginning on the registration date. In the year of initial registration, the taxpayer must self-assess the tax within 30 days following expiration of the legal registration period (60 days after customs clearance). Only when registration does not occur within the legal timeframe can the Tax Authority assess IUC based on the customs declaration, even if not yet due.

Can a company challenge IUC assessments when vehicles are no longer in its possession but still registered in its name?

Yes, a company can challenge IUC assessments even when vehicles are no longer in its possession but remain registered in its name, as demonstrated in Process 212/2014-T. The company argued that liability should not be attributed based solely on prior possession or customs declarations if ownership had transferred before final registration occurred. The key legal principle is that IUC liability attaches to the registered owner at the specific moment when registration is completed within the legal 60-day period. If the company can prove it was no longer the owner at the date of registration, despite being the holder of the customs declaration or registration request, it may have grounds to contest the assessments. The challenge requires demonstrating that the Tax Authority incorrectly applied Article 3(1) of the IUC Code in determining subjective incidence.

What is the procedure for filing a collective arbitration request at CAAD to annul multiple IUC tax assessments?

To file a collective arbitration request at CAAD (Centro de Arbitragem Administrativa) to annul multiple IUC assessments, the taxpayer must submit a formal Request for Constitution of Arbitral Tribunal identifying all contested assessments. In Process 212/2014-T, SA company challenged 4,015 assessments by submitting comprehensive documentation including notification details specifying each assessment's document number, vehicle registration, taxation period, and tax amount. The request must comply with Decree-Law 10/2011 as amended by Law 66-B/2012. After acceptance by the CAAD President, the Tax Authority is automatically notified. The Deontological Council appoints arbitrators (three for collective tribunals), and parties have the opportunity to challenge appointments. Once constituted, the tribunal follows procedural rules including response deadlines, evidence production, hearings under Article 18 of RJAT, and submission of written arguments within specified timeframes.

How does subjective incidence (incidência subjetiva) determine IUC liability for registered vehicle owners in Portugal?

Subjective incidence (incidência subjetiva) determines IUC liability by identifying who qualifies as the taxpayer based on vehicle ownership status. Article 3(1) of the IUC Code establishes that registered owners are liable parties. The critical temporal element is the moment of registration: when ownership registration occurs within the legal 60-day period following customs clearance, liability attaches to the person registered as owner at that specific time, not to previous holders of customs declarations or registration requests. The taxable event is ownership as evidenced by registration in national territory, with tax due on the first day of the taxation period beginning at registration. This means subjective incidence is determined by formal registration status rather than mere physical possession or prior administrative steps. If ownership changes between customs clearance and final registration, and registration occurs within the legal timeframe, the IUC liability should attach to the registered owner, not the entity that initiated the import process.

What are the legal grounds for annulling IUC assessments totaling €589,857.79 covering multiple tax years?

Legal grounds for annulling IUC assessments totaling €589,857.79 include: (1) Violation of Article 3(1) of the IUC Code if the Tax Authority incorrectly identified the taxable person—liability should attach to the registered owner, not necessarily the holder of customs declarations or registration requests; (2) Defective reasoning in violation of Article 268 of the Portuguese Constitution and Article 77 of the General Tax Law (LGT), as the Tax Authority failed to adequately explain why the company was considered liable, not clarifying whether attribution was based on customs declaration, registration request, or initial registration; (3) Incorrect application of Article 18(1)(a) of the IUC Code, which governs assessment when registration does not occur within the legal period—if registration occurred within 60 days, assessment should be directed to the registered owner; (4) Lack of substantive basis if the company can prove it was not the owner at the date of registration despite being involved in prior import procedures; and (5) Procedural irregularities in the assessment process that violated fundamental guarantees of taxpayer rights.

IUC Subjective Incidence: Annulment of 4,015 Vehicle Tax Assessments (CAAD 212/2014-T)

Table of Contents

Summary

Full Decision

ARBITRAL DECISION[1]

I REPORT

II PRELIMINARY ISSUES

III. MATTERS OF FACT

A) Proven Facts

B) FOUNDATION OF THE PROVEN FACTS

C) UNPROVEN FACTS

IV- PRELIMINARY ISSUES TO BE DECIDED

V – LEGAL FOUNDATION

A) On subjective incidence: the taxable event and the effects of motor vehicle registration under IUC incidence

VI - DECISION

Frequently Asked Questions

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FRESH Legal Group

Table of Contents

IUC Subjective Incidence: Annulment of 4,015 Vehicle Tax Assessments (CAAD 212/2014-T)

Table of Contents

Summary

Full Decision

ARBITRAL DECISION[1]

I REPORT

II PRELIMINARY ISSUES

III. MATTERS OF FACT

A) Proven Facts

B) FOUNDATION OF THE PROVEN FACTS

C) UNPROVEN FACTS

IV- PRELIMINARY ISSUES TO BE DECIDED

V – LEGAL FOUNDATION

A) On subjective incidence: the taxable event and the effects of motor vehicle registration under IUC incidence

VI - DECISION

Frequently Asked Questions

Tags

FRESH Legal Group

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Table of Contents