Summary
Full Decision
ARBITRAL DECISION
I – REPORT
BANCO…, S.A., a legal entity no. …, with registered office at … (hereinafter "Applicant"), filed a petition for the constitution of an arbitral tribunal in tax matters and a petition for an arbitral pronouncement, pursuant to the provisions of articles 2º no. 1 a) and 10º no. 1 a), both of Decree-Law no. 10/2011, of 20 January (Legal Regime of Arbitration in Tax Matters, briefly designated as RJAT), requesting the declaration of illegality of the following Unique Circulation Tax assessments: … .
The petition for the constitution of the arbitral tribunal was presented on 05-03-2014 and accepted by the President of CAAD, and automatically notified to the Tax and Customs Authority, on 06-03-2014.
Pursuant to the provisions of paragraph a) of article 6.º no. 2 and paragraph b) of article 11.º no. 1 of the RJAT, in the version introduced by article 228.° of Law no. 66-B/2012, of 31 December, the Deontological Council appointed the undersigned as arbitrator of the singular arbitral tribunal, who communicated acceptance of the duty within the applicable time period.
On 22-04-2014 the parties were duly notified of this appointment, and did not manifest any intention to challenge the appointment of the arbitrator, in accordance with the combined provisions of article 11.º no. 1 paragraphs a) and b) of the RJAT and articles 6.º and 7.º of the Deontological Code.
Thus, in accordance with the provision in paragraph c) of article 11.º no. 1 of the RJAT, in the version introduced by article 228.° of Law no. 66-B/2012, of 31 December, the singular arbitral tribunal was constituted on 12-05-2014.
Notified for this purpose, the Tax and Customs Authority responded, by exception, alleging the illegal cumulation of claims, and by impugnation, arguing that the petition should be judged without merit. The Authority also raises the incident of provoked principal intervention.
Notified for this purpose, the Applicant submitted a written pronouncement regarding the matter of exception alleged by the Authority.
Given the circumstance that none of the objectives legally assigned to it were verified in this case, the parties waived the holding of the meeting provided for in article 18.º of the RJAT, as well as the presentation of arguments, which were thus dispensed with.
The arbitral tribunal was regularly constituted and is materially competent, in light of the provisions of articles 2.º, no. 1, paragraph a), and 30.º, no. 1, of Decree-Law no. 10/2011, of 20 January.
II. ON PROVOKED PRINCIPAL INTERVENTION
In its response, the Authority raises the incident of provoked principal intervention, but does not indicate any legal norm supporting this claim, nor on which side of the legal-procedural relationship the called parties should be placed, though it is admitted that it would be on the passive side.
The incident of provoked principal intervention, currently regulated in articles 316.º et seq. of the Code of Civil Procedure, does not constitute an exception. In fact, the incident in question does not have the capacity to prevent the examination of the merits of the case (which would constitute it as a dilatory exception – cf. article 576.º/2 of the Code of Civil Procedure) or, even less, to constitute a cause preventing, modifying or extinguishing its right (which would constitute it as a peremptory exception – cf. article 576.º/3 of the Code of Civil Procedure).
Rather, as results from article 316.º itself of the Code of Civil Procedure, provoked intervention is the power that, within civil procedure, the parties have to, when legal prerequisites are met, summon a third party to court, whether as their associate or as an associate of the opposing party.
Before proceeding with the examination of the merits of the question now before us, it must be made very clear the framework in which it concretely arises.
Indeed, one cannot at any time lose sight of the fact that we are within the scope of arbitral jurisdiction. A specific arbitral jurisdiction, certainly, but undoubtedly arbitral.
Within this scope, the principle of free conduct of the proceedings by the arbitrators applies fully, as results from article 16.º/1/c) of the RJAT, and therefore no procedural norm that does not expressly result from that law shall be automatically applied.
This is not to say, evidently, that ordinary procedural norms do not contain normative contents directly transferable to arbitral proceedings, but such transposition is always, in any case, mediated by the prudent discretion of the arbitrators, "with a view to obtaining, within a reasonable time period, a pronouncement on the merits regarding the claims formulated." (article 16.º/1/c) of the RJAT).
Beyond the fact that we are within the scope of arbitral jurisdiction, we are, obviously, within the scope of tax jurisdiction. From this it follows that the procedural norms primarily transferable to the regulation of procedural questions will be, obviously, those of tax procedure, in their majority condensed in the Code of Tax Procedure and Process, which, in its article 2.º tells us that "The following shall apply supplementarily to tax judicial procedure and process, according to the nature of the gaps:
a) The norms of a procedural or process nature of tax codes and other tax laws;
b) The norms on the organization and functioning of the tax administration;
c) The norms on organization and process in administrative and tax courts;
d) The Code of Administrative Procedure;
e) The Code of Civil Procedure.".
That is, from what has been stated it follows that civil procedural law is the last on the list of legislation applicable to gaps in procedural and process matters in taxation.
From all the foregoing, it follows then, in summary, that the tax arbitral procedural relationship is regulated according to the prudent discretion of the arbitrators "with a view to obtaining, within a reasonable time period, a pronouncement on the merits regarding the claims formulated.", based on the general tax procedural norms, compared to which the Code of Civil Procedure comes in last place as regards filling in gaps.
It is, then, according to the criterion thus formulated that the petition for provoked principal intervention filed by the party defendant must be examined.
Now, as clearly follows from what has been said, the norms of the Code of Civil Procedure, which could found a petition for the intervention of a third party filed by that entity, shall only be applicable if such:
a) Does not prevent "the obtaining, within a reasonable time period, of a pronouncement on the merits regarding the claims formulated."; and
b) Reconduits to a gap in tax procedural legislation, not filled by any of the enactments that precede the Code of Civil Procedure in the hierarchy of enactments applicable to gaps established in the Code of Tax Procedure and Process.
Reserving respect for other opinions, it is understood that neither one nor the other of these situations occurs. Let us see.
First, it is understood that the intervention of third parties in tax procedure does not constitute a gap to be filled by the norms of the Code of Civil Procedure.
In fact, as is well known, Portuguese tax litigation departs from an objectivist matrix, being structured, broadly speaking, as a "process on a single act" (tax). That is, tax litigation, as a rule and as is the case here under judgment, has as its object a tax act whose legality must be reviewed.
In coherence with such a model, passive legitimacy falls to the author of the act, being incumbent upon him to defend the legality of his actions. Hence, for example, in the initial petition it is incumbent only on the Authority to indicate that person (article 108.º/1 of the CPPT), and nothing more in that regard.
On the other hand, active legitimacy shall fall to those targeted by the impugned tax act, who, in the case of this being an assessment, shall be those to whom the assessed tax has been charged, in addition to jointly and severally liable parties, and subsidiarily liable parties, provided that the requirements of articles 9.º no. 2 and 3 of the CPPT are met, respectively.
Understood in this way, it is easy to see that the intervention of third parties interested in the maintenance or annulment of the impugned tax act should be strongly restricted, if not even excluded. The absence of regulation relating to the intervention of third parties in tax procedure should not, therefore, be regarded as a gap, but as a deliberate intention to exclude it, insofar as it does not result as admissible under the CPPT itself.
Moreover, as regards the passive side, which appears to be the case now before us, this deliberate intention to exclude provoked principal intervention will stand out, among other things, from the contrast with the provisions of administrative procedure, where it is provided that the Authority, among other things, must, in the initial petition, identify those with conflicting interests in the maintenance of the impugned act (article 78.º/2/f) of the CPTA).
This very point was already affirmed by the Supreme Administrative Court in an analogous situation, within the scope of process 0624/10, in whose judgment dated 17-11-2010 it was written that "Given the subjective nature of tax litigation in general and the structure of the judicial impugn process … there is no room for the defense of private conflicting interests in the maintenance of the impugned act…" (judgment available for consultation at www.dgsi.pt).
Indeed, the admissibility of interests of third parties in relation to the author of the impugned act within the scope of tax procedure would result in the profound subversion of its structure.
Even if this were not so, having duly weighed the requirements of celerity that should guide the decisions of this arbitral tribunal regarding the regulation of the procedural relationship, and the foreseeable repercussions of granting the claim of the party defendant now under examination on the course of proceedings, one should nevertheless understand that the norms of the Code of Civil Procedure relating to provoked principal intervention, which could found the claim of the party defendant in this matter, shall be, in the concrete case, inapplicable to the present arbitral instance.
Given the foregoing, the petition for provoked principal intervention filed by the Authority is denied.
Thus, since the parties enjoy legal personality and capacity, are legitimate and are represented (articles 4.º and 10.º, no. 2, of the same enactment and article 1.º of Administrative Regulation no. 112-A/2011, of 22 March), and the proceeding does not suffer from nullities, it is incumbent to pronounce
III. DECISION
A. MATTERS OF FACT
A.1. Facts found as proved
1- The Applicant is a credit institution with strong presence in the national market.
2- In its areas of activity is included financing of the automotive sector.
3- A substantial part of its activity is reconducted to the conclusion - among others - of financial leasing contracts intended for the acquisition, by companies and individuals, of motor vehicles.
4- These contracts are generally subject to a common script, typical of this type of financing: the Applicant, after being contacted by the client - who, at that stage, has already chosen the type of vehicle they wish to acquire, its characteristics (brand, model, accessories, etc.), and even its price - acquires the vehicle from the supplier indicated to him by the client, and subsequently proceeds to its delivery to the said client - who thus assumes the quality of lessee.
5- During the period to be stipulated in the contract, this lessee maintains temporary enjoyment of the vehicle - which remains property of the Applicant - by means of remuneration to be paid to the Applicant in the form of rents; being able to acquire the vehicle for itself or for a third party, at the end of the contract, through payment of a residual value, or during its term, under the conditions provided for.
6- The motor vehicles referred to in the assessments that are the object of the present proceeding, with the license plates …, were, in the tax periods to which they refer, registered in the name of the Applicant.
7- The vehicles above identified, in the periods of the assessments that are the object of the present proceeding whose tax period began on a date prior to that of their respective sale, below indicated, were always transferred by the Applicant, in a financial leasing regime, under validly concluded contracts.
8- The lessees of the said motor vehicles decided to exercise their option to purchase, against payment of the contractually due consideration.
9- Thus, the vehicles in question were sold on the following dates:
…
…
…
…
10- The transfers of the vehicles in question were not recorded in the vehicle register in the years to which the assessments at issue in the present proceeding relate.
11- The Applicant proceeded, in a timely manner, to payment of the assessments that are the object of the present proceeding.
12- By having proceeded with its payment under the exceptional regime instituted by Decree-Law 151-A/2013, the Applicant only paid the amount due (and contained in the said assessment acts) as tax, being dispensed from payment of the corresponding compensatory interest.
A.2. Facts found as not proved
With relevance to the decision, there are no facts that should be considered as not proved.
A.3. Reasoning for the matters of fact proved and not proved
Regarding matters of fact, the Tribunal does not have to pronounce on everything that was alleged by the parties, falling to it, rather, the duty to select the facts that matter for the decision and to discriminate between proved and not proved matters (cf. article 123.º, no. 2, of the CPPT and article 607.º, no. 3 of the CPC, applicable ex vi article 29.º, no. 1, paragraphs a) and e), of the RJAT).
In this way, the facts relevant to the judgment of the case are chosen and delimited according to their legal relevance, which is established in attention to the various plausible solutions of the legal question(s) (cf. former article 511.º, no. 1, of the CPC, corresponding to current article 596.º, applicable ex vi article 29.º, no. 1, paragraph e), of the RJAT).
Thus, having regard to the positions assumed by the parties and the documentary evidence attached to the case file, the facts listed above were considered proved, as they were relevant to the decision, for the rest consensually recognized and accepted by the parties, with the exception of the facts referred to in point 9, which the Respondent contests.
With respect to these latter facts, the Tribunal formed its conviction from the documentary evidence available, freely evaluated, taking into account a judgment of normality based on common experience of matters.
Indeed, being provided by the Applicant the sales invoices, as well as the financial leasing contracts of the vehicles in question (whose normal purpose is, precisely, the transfer of ownership of the vehicle by the lessor, at the end of the contract), and considering that it would not – at all – be normal that the invoices in question were actually issued (and the Respondent does not contest that they were), bearing the Applicant the VAT and the corresponding income increase, to mask a fictitious transaction with purposes that cannot be divined (and which the Respondent does not even suggest), no reasonable doubt remained for this Tribunal as regards the effective occurrence of the sale of the vehicles, in the terms found as proved.
The circumstance was also weighed that the line of business of the Applicant – which is public and notorious – has no room for the systematic retention of second-hand vehicles.
The content of article 16.º of the initial petition was not found as proved or not proved, given its conclusory nature.
B. ON THE LAW
In order to prevent examination of the merits of the case, the Authority alleges, in its response, the exception of illegal cumulation of claims, arguing, in summary, that "in the case at hand, the success of the several petitions for annulment does not depend in totum on the examination of the same factual circumstances", since "with respect to each of the assessment acts whose annulment is sought, the Applicant invokes a different factual circumstance, embodied in an individualized invoice.".
Reserving respect for any contrary opinion, it is understood that in the case at hand the balance of reason lies with the Applicant.
In fact, article 3.º/1 of the RJAT provides:
"The cumulation of claims even if relating to different acts and the joinder of authors are admissible when the success of the claims depends essentially on the examination of the same factual circumstances and the interpretation and application of the same principles or rules of law.".
From the provision in question it follows that the prerequisites for the admission of the cumulation of claims, in the framework of the tax arbitral process, are that the success of the claims depends essentially:
a) on the examination of the same factual circumstances; and
b) on the interpretation and application of the same principles or rules of law.
Now, reserving better opinion, to say that cumulation will be admissible when the success of the claims depends essentially on the examination of the same factual circumstances is not the same as saying that it will only be admissible when the success of the claims depends on the examination of the same facts, which is what the interpretation advocated by the Authority amounts 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 an analogy judgment between the facts sub iudice, from which it results that those facts have, between them, in what is legally relevant, a relationship of similarity that entails that the judgment to be made about them is of an identical nature.
Now, in the concrete case, being at issue the sale of several automobiles (and not the invoices, contrary to what the Authority seems to understand; indeed, the fact is the sale, and the invoice is merely a means of proof) one cannot conclude in any other way than that this is the case.
Thus, one must consider that the petitions formulated with respect to the various Unique Circulation Tax assessments at issue in the case file depend essentially on the examination of the same factual circumstances, as well as the interpretation and application of the same principles or rules of law, whereby the cumulation of the corresponding annulment petitions is admissible, in accordance with the provision of article 3.º/1 of the RJAT, and should therefore be admitted.
At issue in the case file is determining whether the applicant should, or should not, be considered a taxpayer of Unique Circulation Tax with respect to vehicles that it acquired and on which it concluded a financial leasing contract, and that it alienated without this operation having been duly recorded in the register, having in mind two distinct periods, namely:
i) In the tax periods on whose initial day the leasing contract was in force;
ii) In the tax periods subsequent to that in which the unrecorded alienation of the vehicle occurred - and where the said contract had already been extinguished.
The matter at hand has already been the subject of several decisions within the scope of arbitral tribunals operating at CAAD, in their majority in the sense of the success of their respective petitions, and to whose reasoning, in a general way, adherence is given, dispensing with, as unnecessary and tedious, their reproduction, given that no innovative arguments were advanced in the present proceeding, formulating only the following clarifications.
i)
Article 3.º of the Unique Circulation Tax Code provides:
"1- The taxpayers of the tax are the owners of the vehicles, being considered as such the natural or legal persons, of public or private law, in whose name the same are registered.
2 - Financial lessees, acquirers with reservation of ownership, as well as other holders of purchase option rights by force of the leasing contract are assimilated to owners.".
Article 4.º of the same Code states that:
"1 - Unique Circulation Tax is of annual periodicity, being due in full in each year to which it relates.
2 - The tax period corresponds to the year that begins on the date of registration or on each of its anniversaries, with respect to vehicles of categories A, B, C, D and E, and to the calendar year, with respect to vehicles of categories F and G.".
Finally, article 6.º, also of the Unique Circulation Tax Code, tells us that:
"1 - The taxable event of the tax is constituted by ownership of the vehicle, as evidenced by registration in national territory. (...)
3 - The tax is considered exigible on the first day of the tax period referred to in no. 2 of article 4.º."
From the combination of the norms referred to, and having in particular consideration no. 3 of article 6.º, it is concluded that Unique Circulation Tax will be an annual tax, which becomes due on the first day of the tax period, with the owner of the vehicle being the taxpayer, or whoever is assimilated thereto.
In the concrete case, it is verified that, in the first group of cases at issue, the owner of the vehicle was the Applicant.
However, it is equally verified that the vehicles in question, in the period now under examination, were transferred to third parties, under financial leasing contracts.
Thus, it is noted that the requirements of both no. 1 and no. 2 of article 3.º of the Unique Circulation Tax Code are fulfilled.
The question that then arises is whether the verification of that no. 2 excludes or does not the subjection resulting from no. 1.
Being not a question of linear solution, being able to elaborate arguments in either or another of the possible directions of response, it is understood that the response to be given should be affirmative, that is, in the case of there being an "assimilated" to owner, the subjection of this (the owner) will be set aside, with only the "assimilated" being the taxpayer of the tax.
This response is required, it is judged, essentially and among other things, for reasons of coherence of the system, taking into account, above all, that in the case of IMI (Real Estate Transfer Tax) (cf. article 8.º/2 and 3) tax subjection by non-owner sets aside the subjection of the owner.
Thus, notwithstanding the distinct – and, perhaps, not altogether happy – terminology used in the Unique Circulation Tax Code, having regard to the interpretive criteria formulated in article 9.º of the Civil Code, and in particular the lack of reasons why a reasonable legislator would regulate the assimilation to ownership differently in the cases of Unique Circulation Tax and Real Estate Transfer Tax, it is understood that, in fact, the definition of the taxpayer of that tax will be made, alternatively (and not cumulatively), in accordance with no. 1 or no. 2 of article 3.º of the respective Code.
This understanding is, moreover, reinforced by the obligation enshrined in article 19.º of the Unique Circulation Tax Code, which imposes on "entities that proceed with financial leasing" the obligation "to provide to the General Tax Authority the data relating to the tax identification of the users of the leased vehicles.". Naturally this obligation will only be comprehensible, from the perspective that the leasing entities see their subjection set aside by force of the leasing, since, if this were not the case, that obligation would make no sense, given that the Authority could always collect the tax in question from the lessor, an entity which will, for that matter and as a rule, be more solvent than the lessee.
Thus, with the vehicles in question in a financial leasing regime, the taxpayer of the respective Unique Circulation Tax will be the lessee, in accordance with no. 2 of article 3.º of the Unique Circulation Tax Code, and not the Applicant, as owner, in accordance with no. 1 of the same article.
What has been concluded is not impeded by the circumstance that the Applicant may not have given due compliance with the provision of the aforementioned article 19.º of the Unique Circulation Tax Code. Indeed – and as is clear – the sanction for non-compliance with any obligation that in this respect falls or fell on the applicant, would always have to be sought in the framework of the Tax Offense Regime, and not, naturally, in subjection to a tax.
The assessments referred to in this part have thus erred in law and should, accordingly, be annulled.
ii)
As for the second group of situations – which relates to tax periods subsequent to that in which the unrecorded transfer of ownership of the vehicle occurred – the question that arises is whether, given that the transfer of ownership from the Applicant to the acquirers of the vehicles was not registered, the Applicant should, or should not, be considered a taxpayer of the corresponding Unique Circulation Tax.
We are here beyond the term of validity of the financial leasing contract, in a situation in which only the application of the already transcribed no. 1 of article 3.º of the Unique Circulation Tax Code is at issue, and no longer its no. 2.
Concretely, it is a matter of determining whether the legal provision that "The taxpayers of the tax are the owners of the vehicles, being considered as such the natural or legal persons, of public or private law, in whose name the same are registered." aims to burden, without more, with subjection to the tax, the holder of the registration on the vehicle, or whether, rather, this registration only presumes ownership, the latter legal situation being the object of the incidence of the tax.
Conceding that the legislative formulation is not, here once again, as felicitous as it could be, it is nonetheless understood that it will, in fact, be the ownership of the motor vehicle that is the object of incidence of the tax, and Unique Circulation Tax should not be considered as a "tax on registration".
In this sense, moreover, and beyond all that which has been most learnedly expounded in the decisions to which appropriate reference has been made, it suffices to see that registration is not the only index of ownership used in the Code. Thus, in article 6.º/1, also already transcribed, it states that "The taxable event of the tax is constituted by ownership of the vehicle, as evidenced by registration in national territory". That is, registration, will not be, in themselves, the object of incidence of the tax, but rather mere means of evidencing the ownership of vehicles.
Thus, and having determined in this case that, in fact, the vehicles referred to in the assessments at issue, relating to periods subsequent to the term of the financial leasing contracts that affected them, were sold by the Applicant, being, as such, not its property at the beginning of the periods in question, it should not be subjected to the corresponding Unique Circulation Tax, and these assessments should also be, in view of the error of fact and law underlying them, annulled.
The Applicant accumulates with the petition for annulment of the tax act object of the present case file the petition for condemnation of the Authority to payment of compensatory interest on the amount paid by it following notification of the assessments now annulled.
It is a prerequisite for the award of compensatory interest that the error in which the Authority labored be imputable to it.
Financial leasing contracts, in addition to being registered, must be communicated to the Authority under article 19.º of the Unique Circulation Tax Code - at the moment when the tax was due.
It happened that, in the case, nothing was determined either as to the registration of the financial leasing contracts or as to compliance by the Applicant of the obligation that accrued to it, by force of article 19.º of the Unique Circulation Tax Code.
Being such facts, a matter that would favor the Applicant, the same should have proceeded to its timely allegation and proof. Having not fulfilled that burden incumbent on it, nor resulting the same from any probative element available in the case file, the same cannot be considered.
In this way, being impossible to formulate the judgment of censure indispensable for the condemnation of the Authority in compensatory interest, the corresponding petition should be denied.
The Authority alleges that it should not be held responsible for the costs of the present arbitral proceeding, for it was the Applicant who gave cause to the action.
It appears, however, that the Authority is not right.
Indeed, in the tax arbitral process the Authority is notified of the arbitral petition and may, under the terms of article 13.º/1 of the RJAT, proceed with the revocation of the contested tax act. At least there, the Authority had knowledge of the grounds alleged by the Applicant, which led to the present arbitral decision, and opted to proceed with the litigation.
Hence it should be held responsible for the costs.
C. DECISION
In these terms, this Arbitral Tribunal decides:
a) To deny the incident of provoked principal intervention raised by the Authority;
b) To judge the arbitral petition filed as having merit and, in consequence, to annul the tax acts that are the object of the present case file and to condemn the Authority to restitute to the Applicant the tax paid;
c) To absolve the Authority of the petition for condemnation in compensatory interest;
d) To condemn the Authority for the costs of the proceeding, in the amount of €612.00, having regard to what has already been paid.
D. Case Value
The case value is fixed at €3,223.97, in accordance with article 97.º-A, no. 1, a), of the Code of Tax Procedure and Process, applicable by force of paragraphs a) and b) of article 29.º no. 1 of the RJAT and no. 2 of article 3.º of the Regulation of Costs in Tax Arbitration Proceedings.
E. Costs
The arbitration fee is fixed at €612.00, in accordance with Table I of the Regulation of Costs in Tax Arbitration Proceedings, to be paid by the Respondent, since the petition was entirely successful, in accordance with articles 12.º, no. 2, and 22.º, no. 4, both of the RJAT, and article 4.º, no. 4, of the said Regulation.
Notify.
Lisbon
3 December 2014
The Arbitrator
(José Pedro Carvalho)
[1] The same occurring in the context of the RJAT (cf. article 29.º/1/e)).
[2] Cf. proceedings 14/2013T, 26/2013T, 27/2013T, 73/2013T and 170/2013T, 256/2013T, 286/2013T, 289/2013T and 294/2013T, all available at www.caad.org.pt.
[3] Which would always have to be concluded following the thesis sustained by the Authority, in view of the inadmissibility of irrebuttal presumptions, in the matter of tax incidence (which is the case), arising from article 73.º of the General Tax Law.
[4] Cf. article 43.º of the General Tax Law.
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