IUC Subjective Incidence: Annulment of Vehicle Tax Assessments 2009-2012 (CAAD)

ARBITRAL DECISION

I – REPORT

A. – PARTIES

A, S.A., hereinafter referred to as the Claimant, legal entity no. ..., with registered office at ..., requested on 7 March 2014 the establishment of a singular arbitral tribunal in tax matters, under the terms prescribed in art. 2, no. 1, subsection a) of Decree-Law no. 10/2011, of 20 January (Legal Framework for Tax Arbitration - LFTA) and in arts. 1, subsection a) and 2 of Administrative Order no. 112-A/2011, of 22 March, with the purpose of resolving the dispute between it and the Tax and Customs Authority, hereinafter referred to as the Respondent.

B. – CONSTITUTION OF THE TRIBUNAL

1. The request for constitution of the Arbitral Tribunal was accepted by the President of CAAD on 10/03/2014 and automatically notified to the Claimant and to the Tax and Customs Authority on 12/03/2014, with the President of the respective Deontological Council having appointed the undersigned as arbitrator of the Singular Arbitral Tribunal, under the terms provided in art. 6, no. 1, of the LFTA, a duty which was accepted, in accordance with the legally established terms.

2. On 28/04/2014, the Parties were notified of this appointment, pursuant to the combined provisions of art. 11, no. 1, subsection b) of the LFTA, in articles 6 and 7 of the Deontological Code, and manifested no wish to refuse the appointment of the arbitrator.

3. Under these circumstances, the Tribunal was constituted on 14/05/2014, in accordance with the provision of subsection c), of no. 1, of art. 11 of Decree-Law no. 10/2011, which was notified to the Parties on that date.

C. – CLAIM

The Claimant seeks a declaration from the Arbitral Tribunal of the illegality and consequent annulment of the acts of ex officio assessment of Unique Motor Vehicle Tax, whose joint consideration it requests, relating to the fiscal years 2009 to 2012 and to the vehicles identified in the case file, in the amount of 1,989.26 euros, in the terms described in the Request for Arbitral Decision.

D. – PROCEDURAL COURSE

Following the communication of the date of constitution of the Arbitral Tribunal, on 14/05/2014, the subsequent procedural steps followed in the following manner:

• On 15/05/2014 – The Respondent was notified to, pursuant to nos. 1 and 2 of art. 17 of the LFTA, submit a response within 30 days and, if desired, request production of additional evidence and send to the Arbitral Tribunal a copy of the administrative file, by electronic means.

• On 16/06/2014 – The Respondent submitted a Response to the Request for Arbitral Decision, sent a dispatch designating the legal representatives of the Respondent and inserted in the CAAD online "Platform" the administrative file, and the Claimant was notified of all of this.

• On 24/06/2014 – The Tribunal scheduled 14/07/2014 for the meeting provided for in art. 18 of the LFTA, which was notified to the Parties.

• On 14/07/2014 – The meeting provided for in art. 18 of the LFTA took place, from which resulted the following:

• The Claimant requested a period of 24 hours to rectify the value of the claim contained in the application for presentation to Arbitral Tribunal, harmonizing it with what is contained in the Request for Arbitral Decision, which it did, without the opposing party pronouncing itself within the same period.

• The Parties, heard for this purpose, declared that they did not invoke any exception susceptible to being appreciated and decided before the examination of the claim.

• The Parties declare they waive additional production of evidence and oral arguments.

• For successive written arguments, a period of ten days was set, to be counted from 1 September 2014.

• Scheduling of the date of delivery of the decision for 06/10/2014.

• On 10/09/2014 – The Claimant submitted its written arguments.

• On 19/09/2014 – The Respondent submitted its written arguments.

• On 23/09/2014 – The Respondent submitted a request for two arbitral decisions to be attached to the proceedings.

• On 26/09/2014 – The Arbitral Tribunal dismissed this request for being after the discussion of the case had closed.

• On 06/10/2014 – Delivery of the decision.

E. – CLAIM OF THE CLAIMANT AND ITS GROUNDS

To substantiate the Request for Arbitral Decision, the Claimant alleged, in summary, the following:

 - The Claimant is a Financial Credit Institution that engages, among others, in the execution of credit extension contracts for purposes of acquisition of vehicles, namely through the execution of loan agreements.

 - And that, in the context of the said commercial activity, the Claimant executed loan agreements with the taxpayers whose identification numbers are contained in the Annexed Table which it attaches as Annex I, to the Request for Arbitral Decision.

 - For acquisition of the vehicles with the license plates equally identified therein, all in accordance with copies of the loan agreements executed and the Sales Invoices issued in the name of the borrowers, which it attaches as Annexes II and III to the Request for Arbitral Decision.

 - It states that, in these situations, the ownership of the vehicles belongs exclusively to the borrowers, with the Claimant being merely the holder of a possible guarantee over them: mortgage or reservation of title, and it cannot be otherwise, given the nature of the contracts in question.

 - It cites the provision of article 3, no. 1 of the UMVT Code, under the heading of Subjective Incidence: "The passive subjects of the tax are the owners of the vehicles, as such being understood the natural or legal persons, of public or private law, in whose name the same are registered".

 - Alleging that the financing contracts for acquisition on credit (loan) executed between the present Claimant and the borrowers, had as their object motor vehicles that were acquired by the latter through the execution of a sale and purchase contract with the supplier, in accordance with Sales Invoices which it attaches as Annex III to the Request for Arbitral Decision.

 - It further alleges that the sale and purchase contract is the contract by which the ownership of a thing, or another right, is transferred, in consideration of a price (cfr. article 874 of the Civil Code).

 - Thus, sales and purchase contracts are contracts with real efficacy (quod effectum), in the sense that the transfer of ownership or possession takes place in consequence of the sale and purchase contract itself (article 879 and 408 of the Civil Code).

 - Therefore, the true owners of the motor vehicles in question were, and always have been, the borrowers.

 - Hence, in its opinion, the attachment of the loan agreements executed, as well as of the Sales Invoices, are sufficient for proof of ownership by the acquirers.

 - For the Claimant limits itself solely to granting credit of a certain amount for acquisition of a motor vehicle, not being, in any manner whatsoever, linked to the financed asset except as creditor of the amount granted to the borrower and beneficiary of the respective mortgage or reservation of title.

 - During the month of August 2013, the Claimant was notified to exercise its right of Prior Hearing, before the assessment of the tax relating to the above-mentioned fiscal years and in relation to the vehicles described in the Table attached as Annex I, to the Request for Arbitral Decision in accordance with subsection a) of no. 1 of article 60 of the General Tax Law.

 - Having on 11 October 2013 proceeded with the exercise of its right of Prior Hearing, as per Annex IV which it attaches to the Request for Arbitral Decision, by means of which it exposed to the Tax Administration the factual and legal grounds on which it did not agree with the assessment of the Unique Motor Vehicle Tax in the fiscal years in question.

 - In response to the exercise of the right of Prior Hearing submitted, the Tax and Customs Authority dismissed, in the vast majority of cases, the request formulated, determining the continuation of the ex officio assessment process, based on the following grounds, in accordance with Annex V which it attaches to the Request for Arbitral Decision:

• the taxable event of the Unique Motor Vehicle Tax is constituted by the ownership of the vehicle, as attested by the registration or registration in national territory – cfr. article 6, no. 1;

• the passive subjects of the tax are the owners of the vehicles, as such being understood the natural or legal persons, of public or private law, in whose name the same are registered – cfr. article 3, no. 1;

• financial lessees, acquirers with reservation of title as well as other holders of the right of purchase option by force of the leasing contract are equated to owners – cfr. article 3, no. 2;

• the tax is considered exigible on the first day of the taxation period – cfr. article 6, no. 3;

• according to the information available in that tax office, the vehicles in question are registered in the name of A, S.A.

  • It further alleges that, even if by mere hypothesis it were admitted that in the vehicle register the name of the Claimant appears as owner of the vehicles in question, such fact should be attributed to a registration error, since only a possible reservation of title should be registered in favor of the Claimant.

  • Adding to this that article 3 of the UMVT Code contains a legal presumption of subjective incidence of the tax, albeit in implicit form.

  • And that, in tax law there are various legal presumptions, referring, among other examples, the definition of subjective incidence of the ICI, ICA and IMV, taxes which the current Unique Motor Vehicle Tax came to replace, in which the legislator established that "the tax is owed by the owners of the vehicles, being presumed as such, until proof to the contrary, the persons in whose name the same are registered or matriculated".

  • And the provision of article 3, no. 1 of the Regulation of Motor Vehicle and Haulage Taxes, approved by Decree-Law no. 116/94, of 3 May, which establishes that passive subjects of the tax are "the owners of the vehicles, being presumed as such, until proof to the contrary, the natural or legal persons in whose name the same are registered".

  • For which reason, it understands that, although the legislator opted, in article 3 of the UMVT Code, for a formulation different from those above-mentioned, the same nevertheless does not fail to have, albeit implicitly, a legal presumption, for two reasons:

  • Firstly, because the rule in question conforms to the concept of legal presumption contained in article 349 of the Civil Code, being irrelevant whether the presumption is explicit or implicit.

  • Secondly, because the freedom of legislative configuration is limited to the fundamental principles enshrined in the Constitution of the Portuguese Republic, in this case, to the principle of equality.

  • Concluding that the presumption in question may be overcome, by means of proof to the contrary (in accordance with article 73 of the General Tax Law), that is, with proof that substantiates that the Claimant had no intervention whatsoever in the contract that gave rise to the transfer of ownership of the vehicles between the sellers and the buyers.

  • Adding further that the interpretation of the said legal rule should, in the understanding of the Claimant, be subject, namely, to the principle of inquiry in order to discover the material truth.

  • Constituting such principles fundamental rules imposed on the Public Administration by article 266 of the Constitution of the Portuguese Republic and which the General Tax Law embraced, namely, in its articles 55 and 58.

  • Therefore, bearing in mind the said principles, the Claimant considers it legitimate that the Tax Authority begins by communicating to the person that appears in the vehicle register the respective draft decision and its grounds for the exercise of the right of hearing, as it did.

  • However, if the holder of the right of hearing, in the exercise of that right, comes to indicate and prove who is the owner, nothing justifies, in the understanding of the Claimant, that it be held responsible for the payment of the tax.

  • The Claimant further alleges that in the exercise of its right of prior hearing, it overcame the presumption of ownership contained in article 3 of the UMVT Code,

  • Having, on the one hand, provided to the Tax and Customs Authority the sales invoices arising from the sale and purchase contracts executed between the borrowers and the suppliers and, on the other hand, provided the elements of fiscal identification of the same.

  • The Claimant concludes that it was never (nor can be considered), provably, owner of the motor vehicles better identified in the annexed table, nor maintained with them any legal relationship that could foster the exigibility of the tax in question.

  • It refers that, not being satisfied the assumptions that substantiate the legal tax relationship, in casu the imputation to the Claimant of the responsibility for the Unique Motor Vehicle Taxes relating to the years and motor vehicles identified in the annexed table, the Tax and Customs Authority will never be able to demand such tax from it due to manifest lack of subjective responsibility for its payment (articles 3 and 19 of the UMVT Code).

  • Therefore there is an erroneous qualification of the subjective incidence of the tax in question, relating to the fiscal years above identified, in the combined terms of articles 3 and 19 of the UMVT Code with subsection a) of article 99 of the Code of Tax Procedure.

  • Regarding the joinder of claims, the Claimant was notified of various acts of ex officio assessment of the Unique Motor Vehicle Tax, relating to the fiscal years 2009 to 2012, effected pursuant to subsection c) of no. 1 of article 2, combined with articles 3, 4, 6 and 11, all of the Code of Unique Motor Vehicle Tax, whereby each act of ex officio assessment corresponds to its respective vehicle.

  • It happens that, notwithstanding the high number of ex officio assessment acts in question, all of them refer to the assessment of the same tax (Unique Motor Vehicle Tax, relating to the fiscal years 2009 to 2012), and the factual and legal grounds that the Claimant will present, and which substantiate the illegality of the said acts, are the same.

  • It further adds that the Court competent to decide on the illegality of the acts now notified is, in relation to all of them, the same, in casu, the Administrative and Tax Court of Sintra, pursuant to the combined terms of subsection b) of article 4 of the Statute of Administrative and Tax Courts with article 3 and Annexed Table of Decree-Law no. 325/2003, of 29 December.

  • It should also be noted that, bearing in mind the principle of procedural economy, the joint examination of the legality of the ex officio assessment acts in question would prevent, on the one hand, the delay inherent in the separate analysis of the legality of each of the acts of impugnation now contested and,

  • On the other, the increase in costs corresponding to the presentation of the request for constitution of the Arbitral Tribunal for declaration of illegality, separately, for each of the acts of assessment now notified.

  • It concludes by stating that the legal assumptions allowing the joinder of claims are satisfied, pursuant to the combined terms of articles 104 of the Code of Tax Procedure with article 3, no. 1 of the Legal Framework for Tax Arbitration, requesting Your Excellency to admit the joint examination of the legality of the ex officio assessment acts attached as Documents no. 1 to 15 to the Request for Arbitral Decision.

F. – RESPONSE OF THE RESPONDENT AND ITS GROUNDS

The Respondent, duly notified for this purpose, submitted its Response in a timely manner, in which, in summary, it alleged the following:

- It does not challenge the tax assessment acts for Unique Motor Vehicle Tax identified in the Request for Arbitral Decision relating to the years 2009 to 2011, having as their object vehicles with the license plate numbers identified in Annex I attached to the Request for Arbitral Decision.

- It impugns the alleged illegitimacy of the Claimant as passive subject of the Unique Motor Vehicle Tax, in the situations in question, because, in its view:

- The Claimant makes a biased reading of the letter of the law, given that the legislator established express and intentionally that the passive subjects of the Unique Motor Vehicle Tax are the owners, or those in the situations indicated in no. 2 of art. 3 of the UMVT Code, considering them as such the persons in whose name the vehicles are registered, for which reason the expression "are presumed" was not used in this legal provision, but rather "considering-se".

- The tax normative is full of provisions analogous to that enshrined in the final part of no. 1 of article 3, in which the tax legislator, within its freedom of legislative configuration, express and intentionally, enshrines what must be considered legally, for purposes of incidence, of income, of exemption, of determination and of periodization of taxable profit, for purposes of residence, of location, among many others, as, for example, in articles 2 of the Code of Municipal Tax on Onerous Transfers of Real Estate (IMMT), 2, 3 and 4 of the Code of Tax on the Income of Natural Persons (IRPS) and 4, 17, 18 and 20 of the Code of Tax on the Income of Legal Persons (CIRC).

- It concludes, affirming that the interpretation made by the Claimant that the legislator enshrined in art. 3, no. 1 a presumption is an interpretation contra legem.

- The Respondent further alleges that such interpretation does not attend to the systematic element, violating the unity of the regime that imposes the obligation of vehicle registration, in order to prevent the Tax Authority from falling into absolute uncertainty regarding the passive subject of the Unique Motor Vehicle Tax, even placing at risk the running of the statute of limitations period, for which reason the legislator wanted intentionally and expressly that they be considered as owners, lessees, acquirers with reservation of title or holders of the right of purchase option in long-term rental, for the mentioned tax purposes, the persons in whose name the vehicles are registered.

- The Respondent further alleges that the mentioned interpretation of the Claimant ignores the teleological element of the interpretation of the law: the ratio of the regime enshrined not only in the legal provision in question, but also throughout the UMVT Code.

- The Respondent considers that the UMVT Code carried out a reform of the regime of taxation of vehicles in Portugal, substantially altering the regime of motor vehicle taxation, with the passive subjects of the tax becoming the owners appearing in the property register, regardless of the circulation of the vehicles on the public highway. That is, the Unique Motor Vehicle Tax became owed by the persons who appear in the register as owners of the vehicles.

- Such conclusion results from the tenor of the parliamentary debates surrounding the approval of Decree-Law no. 20/2008, of 31 January, of Recommendation no. 6-B/2012 of the Ombudsman and of the spirit of the UMVT Code which, having been motivated, in essence, by environmental concern, its "ratio" is to tax the users of the vehicles, which, by force of their respective use cause an environmental cost.

- It further alleges that the interpretation conveyed by the Claimant is contrary to the Constitution.
- For the ever-heralded principle of contributive capacity is not the only nor the main fundamental principle that informs the tax system.

- Alongside this principle we find others with the same constitutional dignity, such as the principle of confidence and legal security, the principle of efficiency of the tax system and the principle of proportionality.

- Imposing itself therefore that in the interpretive task of article 3 of the UMVT Code the principle of contributive capacity be articulated, or if one prefers tempered, with those other principles.

- The interpretation proposed by the Claimant, an interpretation that in substance devalues the registral reality to the detriment of an "informal reality" and insusceptible of minimal control by the Respondent, is offensive of the basilar principle of confidence and legal security that must inform any legal relationship, here including the tax relationship.

- In parallel, the interpretation given by the Claimant is offensive of the principle of efficiency of the tax system, in that it translates into an obstruction and increase in cost of the competencies attributed to the Respondent, with obvious prejudice to the interests of the Portuguese State, of which both the Claimant and the Respondent are part.

- The position defended by the Claimant is an understanding that is at the antipodes of that principle and of the reform itself of motor vehicle taxation in that, by seeking to disregard the registral reality, a reality that constitutes the cornerstone upon which the entire edifice of the Unique Motor Vehicle Tax is built, generates for the Respondent, and in the last instance for the Portuguese State, additional administrative costs, obstruction of the performance of its services, absence of control of the tax and uselessness of the registral information systems.

- Finally, the argumentation conveyed by the Claimant represents a violation of the principle of proportionality, in that it totally disregards it in confrontation with the principle of contributive capacity, when in reality the Claimant has the necessary and appropriate legal mechanisms for the safeguarding of that its capacity (e.g., vehicle registration), without, however, having exercised them in due time.

- It further adds that the Claimant would have to make suitable proof of the constitutive facts of the right it alleges in arbitral proceedings, which, according to the Respondent, does not occur, for the evidence presented by the Claimant is not in itself sufficient to effect conclusive proof of the transfer of the vehicles in question.

- This is because it presents copies of sales invoices/receipts, which, in the Respondent's view, do not constitute a suitable document to prove the sale of the vehicles in question, since the same is nothing more than a document unilaterally issued by the Claimant.

- According to the Respondent, invoices are not suitable to prove the execution of a synallagmatic contract such as sale and purchase, for that document does not reveal by itself an indispensable and unequivocal declaration of will (i.e., acceptance) on the part of the purported acquirer.

- Not lacking cases of issuance of invoices relating to transfer of goods and/or provision of services that never came to be executed.

- According to the Respondent, an invoice unilaterally issued by the Claimant cannot substitute the Motor Vehicle Registration Application, which is a document approved by official form.

- Thus, the Respondent concludes that the tax acts in question do not suffer from the alleged error as to the assumptions of fact, in that in light of the provision of article 3, nos. 1 and 2 of the UMVT Code and of article 6 of the same code, it was the Claimant, in the capacity of owner, the passive subject of the Unique Motor Vehicle Tax.

 - Regarding indemnificatory interest, in light of articles 43 of the GTL and 61 of the Code of Tax Procedure, the right to indemnificatory interest depends on the verification of the following assumptions: the tax being paid, its respective assessment having been annulled, totally or partially, in gracious or judicial proceedings, determination, in gracious or judicial proceedings, that the annulment is grounded in error attributable to the services, which would not occur in the case, since the tax acts in question are valid and legal, because in conformity with the legal regime in force at the date of the tax facts, for which reason no error attributable to the services occurred.

- As to responsibility for the payment of arbitral costs, if the Unique Motor Vehicle Tax was assessed in accordance with the registral information opportunely transmitted by the Institute of Registers and Notaries, and not in accordance with information generated by the Respondent itself, and if the Claimant did not proceed with the diligence that was required of it, by timely updating in the Motor Vehicle Register, the Respondent is not responsible for this payment, because it merely complied with the legal obligations to which it is bound.

G. – QUESTIONS TO BE DECIDED

Given the positions assumed by the Parties in accordance with the arguments presented, the following are the questions that must be appreciated and decided:

 1. Interpretation of no. 1 of art. 3 of the UMVT Code, in order to be determined whether the rule of subjective incidence inscribed therein establishes, or not, a legal presumption of tax incidence, susceptible of being overcome, that is, admits, or not, that the taxpayer, in whose name the vehicle is found registered at the Motor Vehicle Register, may demonstrate, through means of proof permitted in Law, that it is not, in the period to which the tax relates, its owner, or who disposes of it, thus removing the presumption of subjective subject of the tax that falls upon it.

 2. Responsibility for the payment of arbitral costs.

H. – PROCEDURAL REQUIREMENTS

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

 2. The Parties enjoy personality and judicial capacity, are legitimate and are regularly represented, in accordance with arts. 4 and 10, no. 2 of the LFTA and art. 1 of Administrative Order no. 112/2011, of 22 March.

 3. Considering the identity of the taxable event, of the competent court to decide and of the factual and legal grounds invoked, the Tribunal admits the joinder of requests for declaration of illegality of the tax acts that are the object of this proceeding, once the requirements established in art. 3, no. 1 of the LFTA are satisfied.

 4. The proceeding does not suffer from vices that affect its validity.

I – MATTER OF FACT

I. 1 – FACTS ESTABLISHED

 With relevance for the appreciation of the questions raised, the Tribunal establishes as proven the following facts:

 1 – The Claimant is a financial credit institution that engages, among others, in the execution of credit extension contracts for purposes of acquisition of motor vehicles, through the execution of loan agreements.

 2 – In the context of the said commercial activity, the Claimant executed loan agreements with the taxpayers whose identification numbers are contained in the Annexed Table, which it attached as Annex I to the Request for Arbitral Decision.

 3 – For acquisition of vehicles with the license plates equally identified therein, all in accordance with copies of loan agreements executed and Sales Invoices issued in the name of the borrowers, which it attached as Annexes II and III to the Request for Arbitral Decision.

 4 – These loan agreements, which were executed between the Claimant and the borrowers, had as their object motor vehicles, which were acquired by the latter through the execution of sale and purchase contracts with the suppliers of the vehicles.

 5 – During the month of August 2013, the Claimant was notified to exercise the right of prior hearing, before the assessment of unique motor vehicle tax relating to the fiscal years 2009 to 2012, concerning the motor vehicles sub judice, which it did on 11 October 2013.

 6 – In response to the exercise of the right of prior hearing, the Respondent dismissed the request of the Claimant that the Respondent refrain from proceeding with ex officio assessment of the said unique motor vehicle tax and determined the continuation of the ex officio assessment process.

 7 – In the motor vehicle register appeared the name of the Claimant as owner of the vehicles in question.

 8 – When exercising the right of prior hearing, the Claimant provided to the Respondent the invoices relating to the sale and purchase contracts executed between the borrowers and the suppliers and, also, the fiscal identification elements relating to the same.

 9 – On 7 March 2014, the Claimant submitted the Request for Arbitral Decision that gave rise to the present proceedings.

I. 2 – SUBSTANTIATION OF FACTS ESTABLISHED

 The facts established are based on the documents indicated in relation to each of them, and on the factual elements brought to the proceeding by the Parties, insofar as their adherence to reality was not questioned.

 Regarding the invoices relating to the sale and purchase contracts of the vehicles, which were executed between the borrowers and the sellers, the Tribunal decided that the same constitute means of proof with sufficient force to establish the transfer of ownership of the same, by enjoying the presumption of veracity established in art. 75, no. 1 of the GTL and based on the remaining grounds that appear in this Decision.

I. 3 – FACTS NOT ESTABLISHED

There are no facts not established with relevance to the decision.

J. – MATTER OF LAW

 Once the matter of fact is fixed, there follows the subsumption thereof under law and the determination of the Law to apply, taking into account the questions to be decided that have been enunciated.

 As regards the question to be decided, the Claimant alleges that it was not the owner of the vehicles it identifies at the date on which the tax facts occurred that gave rise to the assessments of Unique Motor Vehicle Tax, and, consequently, was not the passive subject of the tax that was assessed to it.

 The Respondent Tax Authority assumes an opposite position with respect to this question of the subjective incidence of the Unique Motor Vehicle Tax, defending that, pursuant to art. 3, no. 1 of the UMVT Code, the passive subject of the Unique Motor Vehicle Tax is the person in whose name the vehicle is found registered at the Motor Vehicle Register, a fact which occurred with the Claimant in the period in question.

 Art. 3, no. 1 of the UMVT Code provides with respect to this controversial matter, the following:

 "Art. 3 - Subjective incidence

           1. The passive subjects of the tax are the owners of the vehicles, considering-se as such the natural and legal persons, of public or private law, in whose name the same are registered

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 From the positions assumed by the Parties in the present proceeding, it is clear that fundamentally this first question amounts to knowing whether the rule of subjective incidence above transcribed, contained in no. 1 of art. 3 of the UMVT Code, establishes a legal presumption, susceptible of being overcome, as the Claimant contends, or, expressly and intentionally, considers the persons in whose name the vehicles are registered as owners for purposes of the subjective incidence of the Unique Motor Vehicle Tax, as the Respondent understands.

 The orientations assumed by the Claimant and the Respondent regarding this matter and its substantiation are set forth in summary, or with partial transcription, in E. and F. of the Report of this Decision.

 It behoves, then, to decide:

 A preliminary point to appreciate the question of the legal value of motor vehicle registration.

 No. 1 of art. 1 of Decree-Law no. 54/75, of 12 February, which regulates the registration of motor vehicles, provides that the registration of vehicles "has essentially as its purpose to give publicity to the legal situation of the vehicles… with a view to the security of legal commerce".

 On the other hand, article 7 of the Code of Real Estate Register, applicable to motor vehicle registration by force of the provision in art. 29 of the said Decree-Law no. 54/75, establishes that "The definitive registration constitutes a presumption that the right exists and belongs to the registered holder in the precise terms in which the registration defines it".

 It is thereby verified that definitive registration is merely a presumption of the existence of the right, which admits proof to the contrary, constituting, therefore, a defeasible presumption, as, moreover, has been recognized in case law.

 Given that there exists no provision in this Code that requires registration as a condition of validity of contracts, it is concluded that, in order to acquire the quality of owner of a vehicle, it is sufficient to appear as purchaser in a sale and purchase contract.

 With regard to the tenor of the rule in question – art. 3, no. 1 of the UMVT Code -, it must be said that, as universally recognized and is enshrined in art. 11 of the GTL, tax laws must be interpreted in accordance with the general principles of interpretation, thus standing out, for this purpose, the fundamental provision of interpretation which is art. 9 of the Civil Code, which provides the rules and elements for the interpretation of rules.

  This means that the traditional instruments of legal hermeneutics should be used, with a view to determining the legislative intent, in accordance with the provision in art. 9 of the Civil Code.

  In this conformity, let us begin the interpretation of art. 3, no. 1 of the UMVT Code, by the literal element, that in which it is aimed to detect the legislative intent that is objectified in the rule, to verify whether the same contemplates a presumption, or definitively determines that the passive subject of the tax is the owner that appears in the register.

  The question that arises is whether the expression "considering-se" used by the legislator in the UMVT Code, instead of the expression "are presumed", which was that which appeared in the statutes that preceded the UMVT Code, will have removed the nature of presumption from the legal provision in question.

  In our view, the response necessarily has to be negative, since, from the analysis of our legal order, it is clearly extracted that the two expressions have been used by the legislator with equivalent meaning, whether at the level of defeasible presumptions, or within the framework of indefeasible presumptions, for which reason nothing enables the conclusion intended by the Tax Authority to be extracted by a mere semantic reason.

  In truth, thus it happens in varied legal rules that enshrine presumptions using the verb to consider, of which the following are indicated, merely by way of example:

  In the sphere of civil law - no. 3 of art. 243 of the Civil Code, when it establishes that "a third party who acquired the right after the registration of the action for simulation is always considered to be in bad faith, when such registration is to take place";

   Also in the sphere of industrial property law the same occurs, when art. 59, no. 1 of the Code of Industrial Property provides that "Inventions whose patent has been requested during the year following the date on which the inventor leaves the company, are considered to have been made during the execution of the work contract"; and

   Also, in the sphere of tax law, when nos. 3 and 4 of art. 89-A of the GTL provide that it is incumbent on the taxpayer the burden of proof that the declared income corresponds to reality and that, if that proof is not made, it is presumed ("is considered" in the text of the Law) that the income is that which results from the table that appears in no. 4 of the said article.

  This conclusion of there being total equivalence of meanings between the two expressions, which the legislator uses indifferently, satisfies the condition established in art. 9, no. 2 of the Civil Code, since it is assured the minimum of verbal correspondence for purposes of determining the legislative intent.

  It behoves, next, to submit the rule in question to the other elements of logical interpretation, namely, the historical element, the rational or teleological element and the element of systematic order.

  Through the analysis of the historical element, it is extracted the conclusion that, since the entry into force of Decree-Law 59/72, of 30 December, the first to regulate this matter, until Decree-Law no. 116/94, of 3 May, the last preceding the UMVT Code, it was enshrined the presumption that the passive subjects of the Unique Motor Vehicle Tax were the persons in whose name the vehicles were registered at the date of their assessment.

  It is thereby verified that tax law has always had the objective of taxing the true and effective owner and user of the vehicle, appearing indifferent the use of one or the other expression which, as we have seen, have in our legal order a coincident meaning.

  The same should be said when we resort to the elements of interpretation of a rational or teleological nature.

  In effect, the current and new framework of motor vehicle taxation enshrines principles that aim to subject the owners of vehicles to bearing the costs of harms from road and environmental damages caused by them, as is gleaned from the tenor of art. 1 of the UMVT Code.

  Now the consideration of these principles, namely, the principle of equivalence, which merit constitutional protection and enshrinement in community law, and are also recognized in other branches of the legal order, determines that the said costs be borne by the real owners, the causers of the said harms, which removes, entirely, an interpretation that aimed to prevent the presumed owners from making proof that they are no longer so because ownership is in the legal sphere of another.

  This interpretation is grounded in the provision in no. 1, of art. 9 of the Civil Code, which ordains that the search for legislative intent should have especially in mind "the unity of the legal system and the circumstances in which the law was elaborated and the specific conditions of the time in which it is applied".

  Thus, also, from the interpretation carried out in light of elements of a rational and teleological nature, bearing in mind what the rationality of the system guarantees and the ends aimed at by the new UMVT Code, it is clear that no. 1 of art. 3 of the UMVT Code enshrines a defeasible legal presumption.

  In light of the foregoing, it behoves to conclude that the ratio legis of the tax points in the direction of taxing the effective owner-users of the vehicles, for which reason the expression "considering-se" is used in the provision in question in a sense similar to "are presumed", for which reason there is no doubt that a legal presumption is enshrined.

  Now, article 73 of the GTL establishes that "Presumptions enshrined in the rules of tax incidence always admit proof to the contrary, for which reason they are defeasible".

  Thus being, enshrining art. 3, no. 1 of the UMVT Code a presumption juris tantum, therefore, defeasible, the person that is inscribed in the register as owner of the vehicle and that, for that reason was considered by the Tax Authority as the passive subject of the tax, may present elements of proof aimed at demonstrating that the holder of ownership is another person, to whom ownership was transferred.

  Having analyzed the elements brought to the proceeding by the Claimant, it is extracted the conclusion that the latter was not owner of the vehicles to which the assessments in question relate.

   In truth, it was established that the Claimant executed loan agreements for acquisition by the borrowers of third-party vehicles.

  Thus being, the Claimant, by force of the said contracts, is only a creditor of the amounts that were granted to the borrowers and beneficiary of a mortgage, or reservation of title over the vehicles.

  However, the Claimant appeared in the motor vehicle register as owner of the vehicles, by error, as it alleges, since what should have appeared registered in favor of the Claimant would be a possible reservation of title.

  To demonstrate that it was not owner of the vehicles, the Claimant attached to the proceeding a copy of the invoices relating to the sales of the vehicles by the so-called "suppliers" to the purchasers thereof, who appear in the contracts which they executed with the Claimant as borrowers.

  Regarding the question raised by the Respondent about the suitability for proof purposes of the invoices relating to the sales of the vehicles, put in question by the Respondent in generic terms, the Tribunal has no doubt in accepting them as means of proof of the transfer of ownership of the vehicle, for the following reasons:

  In the situation of the case, we are dealing with a contract for sale and purchase of movable things, which, by application of the provision in art. 219 of the CC, is not subject to any special formality.

  Although it is recognized that the documentation of these contracts, because they have as their object motor vehicles, in which registration is obligatory, benefits from the issuance of a declaration of sale, which is necessary for registration, this does not prevent the contract from being proved in another manner, for this declaration does not constitute the sole and exclusive means of proof of the sale.

  For the case, it is of special importance the fact that, since the "suppliers" have a business nature, the invoices, which were attached to the proceedings by the Claimant, are subject to rigorous rules of an accounting and fiscal nature, with implications, also, in the collection of other taxes.

   In truth, tax legislation attributes to them very special relevance, which cannot fail to confer on them credibility for proof purposes, and which is well expressed in the provision of the following legal rules which, by way of example, are cited: arts. 29, no. 1, subsection b) and 19, no. 2 of the UMVT (Value Added Tax Code) and arts. 23, no. 6 and 123, no. 2 of the CIRC (Code of Corporate Income Tax).

    Now, since those invoices have been issued in accordance with commercial and tax legislation, a question that the Respondent does not raise, and which does not put in question, the same enjoy the presumption of veracity, which is attributed to them by art. 75, no. 1 of the GTL.

   It would be incumbent on the Respondent to present and demonstrate concrete and substantiated indicia that the operation titled by the mentioned invoice/receipt did not correspond to reality, in light of the provision in no. 2 of art. 75 of the GTL, which did not occur.

  In this conformity, bearing in mind the very special relevance that tax legislation attributes to invoicing in the situation involved and that it enjoys the presumption of veracity, which is granted to it by the provision in art. 75, no. 1 of the GTL, we conclude that it constitutes means of proof sufficient to overcome the presumption that flows from art. 3, no. 1 of the UMVT Code, since it proves that the Claimant was not owner of the vehicle at the time to which the assessment of the Unique Motor Vehicle Tax relates.

  This absence of ownership is opposable to the Respondent Tax Authority, because, although the facts subject to registration only produce effects against third parties when registered, in light of the provision in art. 5, no. 1 of the Code of Real Estate Register, the Tax Authority is not a third party for purposes of registration, since it is not in the situation provided for in no. 2 of the said art. 5 of the CRP, that is, it did not acquire from a common author incompatible rights with one another.

  In these circumstances, and demonstrated that it was that the Claimant was not owner of the vehicles in question, thereby overcoming the presumption contained in art. 3, no. 1, of the UMVT Code; the Arbitral Tribunal declares the illegality and the consequent annulment of the acts of ex officio assessment of Unique Motor Vehicle Tax, relating to the fiscal years 2009 to 2012, and to the vehicles whose license plates are identified in the case file, in the amount of 1,989.26 euros.

 As to the responsibility for arbitral costs, the Respondent alleges that it is not responsible for their payment, for being unaware of the fiscal identification of the owners, in consequence of the Claimant not having had diligence when it carried out the registration of the ownership of the vehicles, for which reason it proceeded to the assessments of the tax with the elements at its disposal.

  It cannot, however, proceed with this argument, because the law is explicit in the imputation of responsibility for the payment of costs to the party that is condemned, in light of the provision in nos. 1 and 2, of art. 527 of the Code of Civil Procedure, applicable by force of art. 29, no. 1, subsection e) of the LFTA.

  Thus being, the responsibility for the payment of arbitral costs is that of the Respondent.

L. – DECISION

 In light of the foregoing, the present Arbitral Tribunal decides:

 a) To hold the request for declaration of illegality of the assessment of Unique Motor Vehicle Tax to be well-founded, on the basis of a legal violation, with respect to all vehicles whose license plates are identified in the case file.
 b) To condemn the Respondent to pay the costs of the present proceeding (art. 527, nos. 1 and 2 of the Code of Civil Procedure, ex vi art. 29, no. 1, subsection e) of the LFTA).

 Value of the proceeding: In conformity with the provision in articles 306, no. 2 of the CPC (ex. 315, no. 2) and 97-A, no. 1 of the Code of Tax Procedure and in article 3, no. 2 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the proceeding is fixed at 1,989.26 euros.

 Costs: In accordance with no. 4 of art. 22 of the LFTA, the amount of costs is fixed at 306.00 euros, in accordance with Table I annexed to the Regulation of Costs in Tax Arbitration Proceedings.

Notify.

Lisbon, 6 October 2014

The Arbitrator

José Nunes Barata

(Prepared according to old orthography)