IUC Vehicle Tax Self-Assessment Challenge: Arbitral Tribunal Rules on 719 Tax Liquidations (2013-2014)

Arbitral Award

I – Report

1.1.

A…, S.A. – Branch in Portugal, Corporate Person No. …, with registered office at …, …, … (hereinafter referred to as the "Claimant"), hereby impugns the order dismissing the gracious complaint filed against 719 self-assessments of IUC (Single Circulation Tax) and compensatory interest relating to the years 2013 and 2014, in the total amount of €99,395.91. For this purpose, it submitted, on 9/4/2017, a request for constitution of an arbitral tribunal and for arbitral ruling, in accordance with the provisions of Articles 2, No. 1, paragraph a), and 10, No. 1, paragraph a), of Decree-Law No. 10/2011, of 20/1 (Legal Framework for Arbitration in Tax Matters, hereinafter referred to only as "LFAT"), wherein the Tax Authority and Customs Authority (TA) is requested, with a view to: "a) the annulment, on grounds of illegality, of the order dismissing the Gracious Complaint; b) the annulment, on grounds of illegality, of the IUC self-assessments and respective compensatory interest hereby impugned, with the consequent restitution of the totality of IUC and compensatory interest unduly paid, €99,395.91; c) the recognition of the Claimant's right to indemnifying interest, in accordance with legal terms; d) the condemnation of the Respondent to pay the arbitral fee and other charges, if any."

1.2.

On 27/6/2017, the present Collective Arbitral Tribunal was constituted.

1.3.

By order of 4/7/2017, and in accordance with the terms and for the purposes provided in Article 17, No. 1, of the LFAT, the TA was cited as the respondent party to, within a period of 30 (thirty) days, submit a reply and, if desired, request the production of additional evidence. The TA submitted its reply on 18/9/2017, arguing, in summary, the total lack of merit of the Claimant's request. The Administrative File was also submitted on 18/9/2017.

1.4.

Through a motion dated 29/9/2017, the Claimant replied to the preliminary issue that had been raised in the Respondent's reply – having attached, in this regard, three documents evidencing the total number of vehicles in question for 2013 – and further requested the holding of the meeting of Article 18 of the LFAT for the production of the witness evidence requested.

1.5.

By arbitral order of 10/10/2017, the meeting of Article 18 of the LFAT was scheduled, as well as the examination of the witnesses enrolled and to be presented by the party at the hearing, for 24/11/2017. It was also requested that the indication, within a period of 5 (five) days, of the disputed facts and on which such evidentiary proceeding was intended.

1.6.

The Claimant requested, through motions of 17/10/2017 and 8/11/2017, the rescheduling of that date, given that it was prevented from attending the same due to absence from the country. The rescheduling of the proceeding for a new day and time was also requested (with some days of preference of the Claimant being indicated).

1.7.

By arbitral order dated 9/11/2017, it was determined that the proceedings scheduled for 24/11/2017 were without effect, and it was further informed that, "in the impossibility of rescheduling for the dates indicated by the Claimant", the Tribunal would proceed to reschedule such proceedings for the month of January, with the parties being required to inform, within a period of 5 (five) days, of the existence of schedule impediments on the days suggested by the Tribunal.

1.8.

Based on the responses given by the parties regarding availability for the dates indicated by the Tribunal, the aforesaid proceedings were, by arbitral order of 16/11/2017, rescheduled for 17/1/2018. Given the Claimant's request for rescheduling of the proceedings and the fact that the same were scheduled for 17/1/2018, the Tribunal decided, by arbitral order of 4/12/2017, and in exercise of the faculty provided in Article 21, No. 2, of the LFAT, to extend by 2 (two) months, commencing on 27/12/2017, the statutory time period for the pronouncement and notification of the final decision.

1.9.

Through a motion dated 12/1/2018, the Claimant herein requested the benefit, in the present proceedings, of the witness evidence produced and recorded in arbitral proceedings Nos. 206/2017-T and 209/2017-T, "thus avoiding [in this manner] the repetition of proceedings, in particular the proceeding scheduled for [...] 17.01.2018, notifying the parties for written submissions within a period to be designated by the Tribunal." By motion of 17/1/2018, the Respondent informed the Tribunal that it did not oppose the benefit, in the present proceedings, of the witness evidence produced and recorded in the above-mentioned proceedings.

1.10.

By arbitral order dated 14/1/2018, it was determined that the proceeding designated for the aforesaid 17/1/2018 was without effect and that, there being no substantiated opposition from the opposing party, the Claimant would submit in the proceedings, for the purposes indicated, the elements it referred to, within a period of 5 days. It was further informed that a period for final written submissions would be set in due course.

1.11.

Through a motion of 19/1/2018, the Claimant herein attached the minutes of witness examinations conducted in the arbitral proceedings referred to above and the recordings of witness testimony given in those proceedings.

1.12.

By order dated 19/1/2018, the Tribunal requested the parties to submit, within a simultaneous period of 15 (fifteen) days, written submissions on facts and law. The Tribunal further set 26/2/2018 as the foreseeable deadline for the pronouncement and notification to the parties of the arbitral decision.

1.13.

Both parties submitted final submissions within the indicated period, having, in essence, maintained the positions defended in their respective statements of claim.

1.14.

The Arbitral Tribunal was regularly constituted, is substantively competent, the proceedings do not suffer from defects that would invalidate it, and the Parties have legal standing and capacity, being legitimate.

II – Parties' Submissions

2.1.

The Claimant alleges, in its petition, that: a) "the order dismissing the gracious complaint hereby impugned, as well as those IUC self-assessments and compensatory interest, suffer from error in the factual assumptions and from the vice of violation of law - whereby the illegality of that order and those IUC self-assessments and respective compensatory interest should be declared"; b) "the Claimant is the exclusive importer of all motor vehicles of brand B… for the national market"; c) "all imported vehicles are so imported pursuant to a prior request from the concessionaires, submitted electronically (via webpage) to the Claimant – and, consequently, by C… to the factory. Once imported, all vehicles are immediately sold to the concessionaires of the brand, who in turn sell them to end customers. That is, when a vehicle is imported, it already has a buyer. Once arrived in Portugal, the vehicles are immediately invoiced by the Claimant to the concessionaires and immediately delivered at the concessionaires' facilities - either for immediate delivery to the end customer, or simply to remain in the showroom, at the concessionaire's stand, for merely display purposes (cases of launch of new models) and/or awaiting an interested customer. [...]. When the vehicles are sent from the concessionaires to the customers, the change of registration of the owner to the name of the end customer is effected. [...]. [...] at the date of the request for registration the vehicles in question had already been invoiced/sold by the Claimant to the concessionaires"; d) "thus, once imported, all vehicles are immediately sold to the concessionaires of the brand, some of them part of the same economic group, who in turn sell them to the end customers - who will be the users of the vehicles and in whose interest they enter road circulation"; e) "pursuant to Article 3 of the IUC Code (Subjective Scope), wording applicable in 2013 and 2014, [...] the passive subjects of IUC are the owners of the vehicles, to whom are assimilated financial lessees, purchasers with reservation of ownership in favor of the seller. It being certain that, after selling them to third parties, the Claimant never resumes ownership of the vehicles - since it is not merely a motor vehicle dealer, but rather the national importer of the brand"; f) "for the purposes of IUC, given that the vehicles in question were sold by the Claimant before the date of their respective registration, it is evident that the Claimant was not the owner of the same on the dates of the registrations – whereby it is not subject to IUC and respective compensatory interest. Note that the Claimant's sales to the concessionaires occur precisely on the date of the issuance of invoices by the Claimant to the concessionaires – which, therefore, document those same sales. And here are attached the invoices for the sale of the vehicles to the concessionaires, which document and demonstrate precisely the sale of the vehicles to the concessionaires at a moment prior to their registration"; g) "from the above it follows that the Claimant is not the user of the vehicles that the IUC sought to burden – the Claimant, in its activity as importer of the vehicles, does not produce any "environmental and road cost" or "wear on public goods", not being the "polluter - payer" that the legislator of the IUC sought to tax (see Article 1 of the IUC Code)"; h) "as mentioned above, the vehicles in question, detailed in the list now attached as doc. 5 (whose content, for brevity of exposition, is hereby given as fully reproduced for all legal purposes), were not the property of the Claimant on the dates of their respective registrations, contrary to what was presumed by the TA. Indeed, on the dates of registration of these vehicles, the Claimant had already sold them to third parties (to the aforementioned concessionaires), as is demonstrated from copies of the respective invoices for sale (and subsequent debits of ISV, as explained and exemplified above), here attached in aggregate as doc. 6 - whose content, for brevity of exposition, is hereby also given as fully reproduced for all legal purposes"; i) "the self-assessments hereby impugned, relating to these vehicles, are illegal, either by error in the factual assumptions, or by the vice of violation of law, in particular of the provisions of Articles 1, 2, No. 1 a) and d), 3, 4, 6 and 11 of the IUC Code"; j) "although IUC is due by the owners of the vehicles – in the case, on the date of registration, because it is the IUC relating to the year of registration - it is unanimous Case Law of CAAD that the persons in whose names the vehicles are registered or recorded may rebut the (mere) legal presumption of ownership that flows from that registration or motor registration"; l) "the transmission of motor vehicle ownership is effected by mere effect of the agreement of sale and purchase, not being dependent on any subsequent act for it to be constituted or for it to become effective, legal and juridically, such as the handing over of the thing or the registration"; m) "the same CAAD Case Law does not fail to stress that 'The documents presented, particularly the copies of the invoices that support, at the outset, the sales relating to the thirty-seven vehicles referred to above, that is, the vehicles whose ownership was transferred to the former lessees on dates prior to those on which the IUC was due, embody means of proof with sufficient force and suitable to rebut the presumption based on the registration, as enshrined in No. 1 of Article 3 of the IUC Code, documents, those, which also enjoy the presumption of veracity provided for in No. 1 of Article 75 of the General Tax Law.' Indeed, the Claimant benefits from the presumption of veracity and good faith that documents presented as proof of the transmission of ownership of the vehicles enjoy – as is the case with the invoices for the sale of the vehicles attached here (see Article 75, No. 1, of the General Tax Law)"; n) "by means of the invoices for sale that are attached here, the Claimant demonstrates that it sold the vehicles in question before the date of registration of the same – which, in the terms referred to, constitutes a factual impediment to the TA's right of taxation (legally presumed), since the IUC, in the year of registration, falls upon the owner (or equivalent) on the date of registration. The motor registration of the vehicles in the name of the Claimant on the dates of registration of the vehicles merely presumes that the Claimant would be the owner of those vehicles on those dates of registration - it does not constitute full proof that the Claimant was effectively the owner of the vehicles on their respective dates of registration."; o) "all the invoices for sale in question are within the official knowledge of the TA, because duly communicated to the TA via SAF-T (see Article 74, No. 2, of the General Tax Law). And also the concessionaires will have communicated to the TA the invoices issued by them to the end customers, via SAF-T. Whereby the TA has official knowledge of the date of the sales of the vehicles in question, as well as of their end customers. Indeed, those invoices for sale were accounted for as sales revenues, as is also within the official knowledge of the TA - since they were declared in the respective income statements for the purposes of IRC and in successive IES declarations submitted. As such, those sales were taxed under IRC."; p) "the self-assessments in question are based on error in the factual assumptions, which causes them not to meet the criterion of subjective scope – given that the Claimant, as demonstrated, was not the owner of the vehicles on the dates of their respective registrations."; q) "given that tax is not due, for the aforesaid reasons, neither is compensatory interest due, as accessories of the principal tax, on the basis of which they are assessed and on which they depend. [...]. [...] the compensatory interest, in the specific case, suffer from the vice of violation of the provisions of Articles 94 of the IRC Code and 35 of the General Tax Law"; r) "given that the self-assessments hereby impugned were paid, in addition to the restitution of the IUC and compensatory interest unduly paid, the Claimant has the right to indemnifying interest, for error of fact and of law by the TA in demanding such IUC and compensatory interest, in accordance with Articles 43 and 100 of the General Tax Law."

2.2.

The Claimant requests, in light of the above: "a) the annulment, on grounds of illegality, of the order dismissing the Gracious Complaint; b) the annulment of the IUC and compensatory interest self-assessments hereby impugned, with the consequent restitution of the totality of IUC/compensatory interest unduly paid, €99,395.91; c) the recognition of the Claimant's right to indemnifying interest, in accordance with legal terms; d) the condemnation of the Respondent to pay the arbitral fee and other charges, if any."

2.3.

For its part, the TA alleges, in its defense, that: a) "the Claimant understands that, from the conjunction of the provisions of Articles 3, 6 and 17 of the IUC Code, as well as the procedures undertaken in the context of the import and subsequent sale to concessionaires, it is not responsible for the payment of IUC, not being a passive subject of tax"; b) "from the provisions regarding the scope of subjective scope of the IUC and the constitutive fact of the corresponding tax obligation, flow unequivocally from Article 6 of the IUC Code the legal situations that generate the birth of the tax obligation, that is, the registration or the record in national territory"; c) "pursuant to Article 24 of the RRA, the importer appears in the record as the first owner of the vehicle and in that sense is, in accordance with the provisions of Articles 3 and 6 of the IUC Code, a passive subject of tax"; d) "the attribution to the Claimant of a registration certificate embodies, pursuant to Article 6 of the IUC Code, the tax-generating fact whereby, the Claimant having requested the issuance of a registration certificate with the same registered in its name, the prerequisites for the tax-generating fact of IUC are met, as well as its enforceability, the Claimant being a passive subject of the tax."; e) "the first misunderstanding underlying the interpretation defended by the Claimant relates to a skewed reading of the letter of the law, with the thesis defended by the Claimant having no support in the letter of the law"; f) "it is imperative to conclude that, in the case of the present arbitral proceedings, the legislator established expressly and intentionally that are considered as such [as owners or in the situations provided in No. 2, the persons therein listed] the persons in whose names the same [the vehicles] are registered, because this is the interpretation that preserves the unity of the tax-legal system. To understand that the legislator enshrined here a presumption, would unequivocally be to perform an interpretation against the law. In light of this wording it is manifestly not possible to argue that it is a presumption, as the Claimant contends"; g) "Article 3 of the IUC Code contains no legal presumption whatsoever"; h) "also the systematic element of interpretation of the law demonstrates that the solution proposed by the Claimant is untenable, with the understanding endorsed by it finding no support in law"; i) "in light of a teleological interpretation of the regime enshrined in the entire IUC Code, the interpretation proposed by the Claimant, in the sense that the passive subject of the tax is the effective owner, regardless of not appearing in the motor registration the record of that status, is manifestly wrong"; j) "the tax acts in question do not suffer from any vice of violation of law, in so far as, in light of the provisions in Article 3, Nos. 1 and 2, of the IUC Code and Article 6 of the same code, it was the Claimant, in its capacity as owner, the passive subject of IUC"; l) "the invoices attached by the Claimant are not apt to prove the conclusion of a synallagmatic contract as is the sale and purchase, because such documents do not reveal by themselves an essential and unequivocal declaration of will (that is, the acceptance) by the purported purchasers"; m) "all the invoices attached by the Claimant do not demonstrate, expressly and unequivocally, by themselves alone, the purported transfer of ownership of the motor vehicle"; n) "not containing the invoices any registrations, then obviously there is no computer system that, through the crossing of the information contained in those invoices with the information of the IRN and the IMT, can determine the transfer of ownership"; o) "even if, by academic hypothesis and without conceding, the Arbitral Tribunal were to conclude that the Claimant's request for arbitral ruling has merit, it is important to point out the following: [...] the competence for motor registration is not in the sphere of the Respondent, but rather assigned to various external entities, in particular to the Institute of Records and Notaryship which is responsible for transmitting to the Respondent the changes that occur regarding the ownership of motor vehicles. [...]. On the other hand, the transmission of ownership of motor vehicles is not susceptible to control by the Respondent, because there is no accessory declarative obligation regarding this matter, unlike the control that is capable of being carried out, for example, via the prior payment of Municipal Tax on Transfer of Real Property in the matter of transmission of real property"; p) "from all that has been set out above, it is clear that the tax acts in question are valid and legal, because in accordance with the legal regime in force on the date of the tax facts, whereby no error occurred, in this case, imputable to the services, all the more so since the Claimant never presented any gracious complaint or exposition, which would have allowed the Respondent to pronounce itself regarding the assessments now impugned and respective documents. Accordingly, the legal prerequisites conferring the right to indemnifying interest are not met. But even if this were not so [...] it is undeniable that the Respondent merely complied with Article 3/1 of the IUC Code [...], whereby also here necessarily will the recognition of the right to payment of indemnifying interest be lacking."

The TA concludes, in summary, that "the present request should be corrected as to value" and "the present request for arbitral ruling should be judged without merit and, consequently, the Respondent absolved of all requests, with the due and legal consequences."

III – Established, Unestablished Factuality and Respective Justification

3.1.

The following facts are considered established:

i) The Claimant herein is the exclusive importer of all motor vehicles of brand B… for the national market. All imported vehicles are so imported pursuant to a prior request from the concessionaires, submitted electronically (via webpage) to the Claimant – and, consequently, by C… to the factory. Once imported, all vehicles are immediately sold to the concessionaires of the brand, who in turn sell them to end customers.

ii) The Claimant herein proceeded to the voluntary payment of IUC allegedly in default, relating to the vehicles identified in the request for arbitral ruling and relating to the years 2013 and 2014, in the total amount in question of €99,395.91 (see Doc. No. 3 attached to the proceedings).

iii) Although the TA considered 11 registrations in 2013, the total number of vehicles in question in that year was 17 (see Docs. attached to the present proceedings and identified as "Proof 17 vehicles 2013" and as "17 vehicles or registrations 2013"), with an IUC corresponding, in any of those 17 cases, to the amount of €141.47 (= €130.40 + €10.07), as indicated by the Claimant herein in its request for arbitral ruling. With respect to the vehicle with registration ...-... -... (whose IUC value is also questioned by the Respondent), it is verified, from the reading of Doc. attached and identified as "Proof ...-... -...", that the value that was indicated for the same by the Claimant herein is correct: €174.58 (= €164.51 + €10.07).

iv) On a date prior to that to which the tax related, the vehicles here in question (see description of the same in Doc. No. 5 – doc. whose content, given its length, is hereby considered reproduced) were not the property of the Claimant herein, as can be observed from the reading of Doc. No. 6 attached to the present proceedings – which, given its length, will also hereby be considered reproduced. All sales are supported by the respective invoices for sale, which are duly identified (and whose veracity was not, in the proceedings, put into question).

v) When the vehicles are sent from the concessionaires to the customers, the change of registration of the owner to the name of the end customer is effected. Although at an initial stage the registration of the vehicles is done in the name of the Claimant, on the date of the request for registrations the concessionaire is already the owner of the same. That is, on the date of the request for registrations the vehicles in question had already been invoiced/sold by the Claimant herein to the concessionaires. Since the vehicles were sold to the concessionaires before the date of registration of the same, those invoices for sale cannot contain their respective registrations, containing only the chassis numbers of the vehicles sold to the concessionaires, as results from the content of the invoices whose copies appear in Doc. No. 6 attached to the present proceedings.

vi) The Claimant herein submitted a gracious complaint (No. …2016…), which was expressly dismissed by order of 19-12-2016 (see Doc. No. 1 attached). On 9/4/2017, the Claimant submitted, from the aforementioned dismissal decision and from the (719) IUC assessment acts already referred to (vehicles that are detailed, as mentioned above, in Doc. No. 5 attached to the present proceedings), the present request for arbitral ruling.

3.2.

There are no unestablished facts relevant to the decision of the case.

3.3.

The facts considered pertinent and established (v. 3.1) are grounded in the analysis of the positions set out by the parties, the documentary evidence attached to the proceedings and the witness testimonies, recorded, given in the analogous proceedings Nos. 206/2017-T and 209/2017-T, of CAAD, as per the recordings duly attached to the proceedings.

IV – Preliminary Issue Regarding the Value of the Arbitral Request

The Respondent alleges, in its reply, and as a preliminary issue, that "[it is] verified that, in the gracious complaint No. …2016…, the Claimant indicated the value of €141.47 relating to 11 vehicles relating to the IUC assessment of 2013, when in the computer system the value of €130.10 appears, and indicated for the vehicle with the registration ...-... -... the value of €174.58, when the IUC assessment of 2013 was €162.87." It concludes, thus, in light of the above, that "the value of the arbitral request should be corrected, in view of the divergence that only by mistake occurred."

The Respondent is not, however, correct.

As can be verified from the three documents attached to the proceedings by the Claimant herein, in reply to this preliminary issue, the values presented by it are correct, since – as noted in point iii) of the established factuality – although the TA considered 11 registrations in 2013, the total number of vehicles in question in that year was 17 (see Docs. attached to the present proceedings and identified as "Proof 17 vehicles 2013" and as "17 vehicles or registrations 2013"), with an IUC corresponding, in any of the 17 cases, to the value of €141.47 (= €130.40 + €10.07), as indicated by the Claimant in its request for arbitral ruling. As for the vehicle with registration 91-OE-07, it is also verified, from the reading of Doc. attached to the proceedings and identified as "Proof ...-... -...", that the value that was indicated for it by the Claimant herein is correct: €174.58 (= €164.51 + €10.07).

It is thus concluded that there is no reason whatsoever to proceed with the requested correction of the value of the arbitral request.

V – Reasoning

5. On the Law

5.1. On the Assessment of Legality of the Contested Assessment Acts

The issue underlying the present request for arbitral ruling takes into account the 719 IUC assessments that the Claimant paid, relating to the years 2013 and 2014, in the total amount of €99,395.91.

For this purpose, it will be necessary to determine the subjective scope of the Single Circulation Tax.

5.1.1. Regarding the Interpretation and Application of the Rule of Subjective Scope of IUC and the Date on Which the Tax is Due

Article 3, No. 1 of the IUC Code provides that:

"The passive subjects 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 names the same are registered".

Fiscal laws, pursuant to Article 11 of the General Tax Law, are interpreted in accordance with general principles, saving only the exceptions and particularities dictated by the norm object of interpretation.

The object of interpretation of Article 3, No. 1, of the IUC Code lies in the expression "being considered" and it is imperative to determine whether the legislator, with this expression, intended to maintain, or not, the nature of a presumption. I.e., whether to the formulation used by the legislator can be attributed a presumptive sense.

Following the reference in decisions Nos. 43/2014-T, 207/2017-T and 408/2017-T [which we follow especially closely], "it is verified, by way of example, that in Articles 243, No. 3, of the Civil Code and 45, No. 6, and 89-A, No. 4, of the General Tax Law, the expression "is considered" is also used, and yet, we are faced with legal presumptions, whereby, in accordance with the general rules of interpretation provided in Article 9, No. 2, of the Civil Code, it is considered that the minimum of verbal correspondence is assured, for the purposes of determining the legislative thought that is objectified in the norm in question – literal element".

It further teaches Jorge Lopes de Sousa (in CPPT, Annotated and Commented, Vol. I, 6th Edition, Área Editora, p. 589) that in the matter of tax scope, presumptions may be revealed by the expression "it is presumed" or by a similar expression, mentioning therein various examples of such presumptions, referring to the one contained in Article 40, No. 1 of the IRC Code, in which the expression "it is presumed" is used and the one contained in Article 46, No. 2, of the same Code, in which use is made of the expression "is considered", as an expression with an effect similar to that and, likewise embodying a presumption; in the legal formulation set out in No. 1 of Article 3 of the IUC Code, in which a presumption was enshrined, revealed by the expression "being considered", of similar meaning and of equivalent value to the expression "being presumed", in use since the creation of the tax in question.

That is, both expressions have been used by the legislator without which it can be concluded that it did not intend to establish, in fact, a legal presumption, and it cannot be inferred that the alteration of the expression could lead to a distinct interpretive sense.

On the other hand, as is extracted, e.g., from the aforementioned decision in CAAD process No. 43/2014-T, "still within the framework of the elements of interpretation in accordance with Article 9 of the Civil Code, it is important to pay attention to the historical element. Thus, recalling Decree-Law No. 599/72, of 30 December and Decree-Law No. 116/94, of 3 May, with respect to subjective scope, the presumption was provided that the passive subjects of IUC are the persons in whose names the vehicles were registered on the date of assessment".

Thus, as to this element of interpretation, it does not appear that the Respondent is correct.

On the other hand, considering the rational and teleological element, the IUC has as a premise the environmental and road cost of the effective use of the motor vehicle, not having, therefore, as recipients the importers of the vehicles, since the activity of the latter does not cause any environmental cost.

The IUC thus has underlying the principle of equivalence provided in Article 1 of the IUC Code, with a view to "burdening taxpayers in the measure of the environmental and road cost that they cause, in the implementation of a general rule of tax equality".

Thus giving effect to the constitutional command, provided in Article 66, in which sustainable development requires that the State ensure "that fiscal policy reconciles development with protection of the environment and quality of life" (paragraph h) of No. 2).

Promoting a principle of "polluter-payer", meeting the assumption of material equality among all citizens who cause environmental cost, thus embodying the IUC the environmental concerns that fiscal policy imposes.

Now, to consider that the tax legislator intended anything other than to admit a rebuttable presumption in Article 3, No. 1, of the Single Circulation Tax Code would be to violate the principle of equivalence, making the tax burden fall upon the owner appearing in the register and not upon the real owner, even if it were not that one (as it would not be) to cause the environmental and road cost that the tax burden intended to tax.

Thus, also according to this element, Article 3, No. 1, of the IUC Code should be interpreted in the sense that a true presumption is at issue.

From the literal element of Article 3, No. 1 -, the legislator, contrary to what it did previously, used the expression "being considered" and not "being presumed" -, one could question whether the nature of presumption is or is not at issue in the present norm under analysis, but, the truth is that, from a complete analysis of the legislation and the non-existence of any provision that confers upon the register any other effect beyond that referred to below, we are led to conclude that the legislator intended, in fact, to use both expressions with identical sense.

Thus, following the decision handed down, e.g., in process No. 634/2016-T of CAAD, "the relevance and interest of the presumption in question, which historically was revealed by means of the expression "being presumed" and which now serves the expression "being considered", resides in the truth and justice that, by that means, is conferred upon fiscal relations and, which embody fundamental fiscal values, allowing to tax the real and effective owner and not the one who, by circumstances of a different nature, is sometimes nothing more than an apparent and false owner. If the case were not so considered, not admitting and relevance of the presentation of evidentiary elements intended to demonstrate that the effective owner is, after all, a person different from the one appearing in the register and, who initially, and in principle, was supposed to be the true owner, those values would be objectively postponed".

It is thus concluded that Article 3, No. 1, of the Single Circulation Tax Code enshrines a presumption, this being rebuttable in accordance with Article 73 of the General Tax Law - "the presumptions enshrined in the rules of tax scope always admit proof to the contrary, whereby they are rebuttable".

Establishing this as certain, it now becomes important to verify whether the Claimant complies with the burden of rebutting the presumption that applies "against" it, by being the one appearing in the motor register as the owner of the vehicles, being considered the passive subject of IUC.

By force of this presumption, the Claimant would have to demonstrate that it is not, on the one hand, the effective owner and, on the other, since when it is not, in accordance with Article 346 of the Civil Code.

Thus, in the case at hand, what the Claimant has to prove, in order to rebut the presumption that flows from both Article 3 of the IUC Code and from the Motor Register itself, is that it Claimant was not the owner of the vehicles in question in the period to which the contested assessments relate. It proposes to prove, as appears from the proceedings, that the ownership of the vehicles did not belong to it in the periods to which the assessments relate.

It was upon the Claimant, in fact, that the burden was imposed to rebut the presumption, demonstrate that it is not the passive subject of the tax, at the time of occurrence of the tax facts, offering for this purpose an apt means of proof.

Now given the invoices attached, of which the TA was already aware at the hearing, considering the practice that results from the type of commercial activity of the Claimant and of the concessionaires and car rental companies, as well as the fiscal relevance of the invoices, all within the knowledge of the Respondent, we understand that the invoices for sale presented enjoy a presumption of veracity and, in this sense, of fitness and sufficient force to rebut the presumption that results from the assessments, in accordance with the provisions of Article 75 of the General Tax Law.

In this sense, the invoices attached are apt to rebut the presumption that the Claimant was, on the date of assessment of the IUC, the owner of the motor vehicles.

It follows from this that on the date on which the IUC was due those who held ownership of the motor vehicles were the legitimate owners and not the Claimant.

In all situations in which, as is the case here, the passive subject of the Tax on Vehicles demonstrates that it transferred the vehicles in question to third parties before the expiry of the registration deadline, it should be concluded that it succeeded in rebutting the presumption established in Article 3, No. 1, of the Single Circulation Tax Code.

For all these reasons, in the specific case the Claimant, as a Registered Operator, although it has, in the exercise of its commercial activity, imported the vehicles in question, proceeded to their entry into consumption, through the issuance of the Vehicle Customs Declaration, paid the Tax on Vehicles and requested, from the IMTT, the attribution of a registration, is not a passive subject of the Single Circulation Tax since it succeeded in demonstrating, through the attachment of the means of proof identified, that within the 60-day period for registration it transferred the vehicles to third parties.

In this way, having the Claimant demonstrated that the vehicles in question were transferred within the 60-day period for registration and, consequently, before the tax became due, one can only conclude that the subjective scope of Article 3, No. 1, of the IUC Code is not verified, and the Claimant is not therefore the debtor of the tax.

All of which the Claimant demonstrated to the TA right at the hearing, which, nevertheless, ended up dismissing the gracious complaint even though the Respondent was duly clarified independently of any mention of registration.

This matter of registration will now be analyzed in more detail.

5.1.2. The Value of Registration

Pursuant to Article 7 of the Land Register Code, applicable ex vi Article 29 of Decree-Law No. 54/75 (Motor Register), which provides that "final registration constitutes a presumption that the right exists and belongs to the person registered in the precise terms in which the registration defines".

With a view to the assessment, it is necessary to analyze the effects of the registration of the vehicle.

The registration of the right of ownership of the vehicle has a merely declarative effect and not a constitutive effect of the right, whereby it is configured as a presumption of the existence of the right, in the terms in which it is registered, which may be rebutted, that is, it admits proof to the contrary.

The final registration is nothing more than a rebuttable presumption, thus admitting counterproof, as follows from the law and case law has been pointing out, and may be seen, among others, in the Decisions of the Supreme Court of Justice No. 03B4369 of 19-02-2004 and No. 07B4528, of 29-01-2008, available at: www.dgsi.pt.

At the level of the IUC Code there is no legal provision that attributes to the registration of the vehicle any legal effect, including condition of validity or effectiveness of the underlying transaction, i.e., the contract of sale and purchase of which the vehicle is its mediate object.

If this is so, that is, in the absence of any distinct effect to be attributed to the registration act and considering that property is thus transferred by means of the conclusion of a contract of sale and purchase, without which there is any legally imposed form, the principle of freedom of form prevailing, in accordance with Article 879, paragraph a), of the Civil Code, one of the effects of this contract is exactly the real effect of the transmission of the title of the right.

The purchasers of the vehicles become owners of those same vehicles by virtue of the conclusion of the corresponding contracts of sale and purchase, with registration or without it.

Whereby, regardless of the mention that appears in the motor register, it is certain that, as mentioned above, the Claimant demonstrated that it was not the owner of any one of the vehicles in question in these proceedings.

In light of the above, it becomes clear that the legislative thought points in the direction that the provision in No. 1 of Article 3 of the IUC Code enshrines a presumption "juris tantum", consequently rebuttable, thus permitting the person who in the register is registered as the owner of the vehicle, to present elements of proof intended to demonstrate that such ownership is inserted in the legal sphere of another person, to whom the ownership was transferred, as was the case.

For all these reasons, and following the decision handed down in the context of the aforementioned process No. 624/2016-T, "in view of the facts described above, it is important to point out that the aforementioned elements of interpretation, whether those related to literal interpretation, supported by the words legally used, whether those relating to the logical elements of interpretation, of a historical nature or of a rational order, all point in the direction that the expression "being considered" has a meaning equivalent to the expression "being presumed", and should, thus, be understood that the provision in No. 1 of Article 3 of the IUC Code enshrines a legal presumption which, in light of Article 73 of the LGT, where it is established that "the presumptions enshrined in the rules of tax scope always admit proof to the contrary", will necessarily be rebuttable, which means that the passive subjects are, in principle, the persons in whose names such vehicles are registered. They will be, therefore, those persons, identified in those conditions, to whom the TA should, necessarily, turn".

For this reason, bearing in mind that the owner of the vehicles, on the date of the tax fact, was not the Claimant, i.e., it was not the Claimant the passive subject of the tax, the requirements of Article 3, No. 1, of the IUC Code are not met, which determines the annulment of the corresponding assessment acts.

With respect to the existence of other issues relating to the legality of the assessment acts, taking into account what is inherent in the establishment of an order of knowledge of the vices, such as that provided for in Article 124 of the Code of Tax Procedure and Process, it is concluded that, proceeding the request for arbitral ruling based on vices that prevent the continuation of the contested assessments, it is prejudiced, because useless, the knowledge of other vices, whereby it does not seem necessary to know about the other issues raised.

5.2. Reimbursement of the Total Amount Paid

In accordance with the provisions in paragraph b) of No. 1 of Article 24 of the LFAT, and, in conformity with what is established therein, the arbitral decision on the merits of the claim for which there is no appeal or challenge, binds the tax administration from the end of the period provided for appeal or challenge, and the latter must, in the exact terms of the merits of the arbitral decision in favor of the passive subject and up to the end of the period provided for execution of the sentences of tax judicial courts, "restore the situation that would exist if the tax act object of the arbitral decision had not been practiced, adopting the acts and operations necessary for this purpose".

These are legal commands that are in complete harmony with the provision of Article 100 of the General Tax Law, applicable to the case, ex vi, of the provision in paragraph a) of No. 1 of Article 29 of the LFAT, in which it is established that "the Tax Administration is obliged, in case of total or partial success of complaints or administrative appeals or of judicial proceedings in favor of the passive subject, to the immediate and full restoration of the situation that would exist if the illegality had not been committed, with the payment of indemnifying interest corresponding, in accordance with the terms and conditions provided for by law".

The case contained in the present proceedings raises the clear application of the aforementioned rules, given that as a result of the illegality of the assessment acts referenced in this proceeding, there must, by force of these rules, be a reimbursement of the amounts paid, in this case only as a title of the tax paid since there was no place for compensatory interest, as a way of achieving the restoration of the situation that would exist if the illegality had not been committed.

5.3. On the Right to Indemnifying Interest

The tax acts questioned have their genesis in the presumption, derived from the register, contained in Article 3, No. 1, of the IUC Code.

At the moment they were practiced, the TA did not incur any error of fact or of law. It could, however, the passive subject rebut the presumption, in particular through a gracious complaint (see Code of Tax Procedure and Process, Article 64). And, in the case under analysis, it did so by that means.

What means that, with the dismissal of the complaint, the TA incurred in error, and thus from the moment it made that decision will indemnifying interest be due.

We follow the sense of the decision in the CAAD proceedings Nos. 53/2017-T and 408/2017-T, in the passage which follows:

"Alongside the annulment of the assessments, and consequent reimbursement of the amounts unduly paid, the claimant further requests that it be recognized the right to indemnifying interest, under Article 43 of the General Tax Law.

Indeed, in accordance with the provision in No. 1 of the aforementioned article, indemnifying interest is due 'when it is determined, in a gracious complaint or judicial challenge, that there was error imputable to the services from which results payment of the tax debt in an amount greater than that legally due.'"

Beyond the means referred to in the provision that is transcribed, we understand that, as follows from No. 5 of Article 24 of the LFAT, the right to the aforementioned interest may be recognized in the arbitral proceeding and, thus, knowledge of the request is had.

The right to indemnifying interest to which the aforementioned General Tax Law provision alludes presupposes that there has been payment of tax in an amount greater than that due and that such derives from error, of fact or of law, imputable to the services of the TA.

In the case at hand, even if it is recognized that no tax is due paid by the Claimant, by not being the passive subject of the tax obligation, determining, in consequence, the respective reimbursement, one does not see that, in its origin, is the error imputable to the services, which determines such a right in favor of the taxpayer.

Indeed, in promoting the official assessment of the IUC considering the Claimant as the passive subject of this tax, the TA limited itself to complying with the provision in No. 1 of Article 3 of the IUC Code, which, as abundantly referred to above, attributes such quality to the persons in whose names the vehicles are registered.

On the other hand, also as concluded, the aforementioned provision has the nature of a legal presumption, from which flows, for the TA, the right to assess the tax and demand it from those persons, without need to prove the facts that lead to it, as expressly provided in No. 1 of Article 350 of the Civil Code.

However, with respect to the assessments that constitute the object of the present request for arbitral ruling, it is important to know whether the act of dismissal of the claim of the Claimant herein, formulated in the gracious complaint duly filed, constitutes, or not, error imputable to the Tax Administration for purposes of the exigibility of indemnifying interest, under Article 43, No. 1, of the General Tax Law.

On this matter, account is taken of the guidance resulting from the case law of the Supreme Administrative Court, which goes in the direction of recognizing that a decision of the Tax Administration dismissing a request for annulment of an admittedly illegal assessment and consequent restitution of unduly collected tax, constitutes error imputable to the services.

According to the aforementioned case law – embodied in a learned decision of 28 October 2009, in Proc. 601/09 – indemnifying interest is due from the date of dismissal of the complaint until the date of processing of the respective credit note, in accordance with Article 61 of the Code of Tax Procedure and Process.

For all that has just been set out, it is concluded that the TA did not incur any error of fact or of law at the time of the practice of the aforementioned tax acts; however, maintaining, despite the elision of the aforementioned presumption, the aforementioned acts and the demand for IUC, it constituted itself in the obligation to restore the tax paid plus interest from the date of the decision of the gracious complaint submitted by the Claimant.

That is: not having then proceeded to the restitution of the tax, as it should have, the TA incurred, this time yes, in error, and such error determined that the Claimant remained deprived of the amount it had unduly satisfied.

For this reason, notwithstanding the prejudice to the Claimant resulting from the unduly payment obligation to which it was compelled not resulting, in limine, from error imputable to the services and not conferring right to indemnification, the non-recognition by the TA, upon deciding the request for official revision, of the illegality in which it had incurred, was a source of prejudice to the Claimant, translated in the unavailability of the amount it had paid.

Adopting the aforementioned guidance, the Claimant's right to indemnifying interest is recognized with reference to the assessments to which the proceedings refer and which, by the present decision, constitute the object of annulment, but only from the date on which the request for gracious complaint was decided.

5.4. On Responsibility for Payment of Arbitral Costs

In accordance with Article 527, No. 1, of the Code of Civil Procedure, ex vi Article 29, No. 1, paragraph e), of the Legal Framework for Tax Arbitration, shall be condemned in costs the party that has caused them or, where there is no victory of the action, whoever has drawn profit from the proceedings.

However, No. 2 of the aforementioned article specifies the expression "has caused them" understanding that it refers to the defeated party, whereby, in this sense and the law being clear and evident as to the responsibility for arbitral costs, we understand that the Respondent should be condemned in the arbitral costs.

VI – Decision

In these terms, and with the grounds set out, the present Arbitral Tribunal decides:

• To judge the request for revocation of the decision dismissing the gracious complaint and the declaration of illegality of the 719 self-assessments of IUC and compensatory interest, with respect to all vehicles whose registrations are identified in the proceedings, thus annulling the corresponding assessment acts of the years 2013 and 2014 and determining the consequent restitution of the global amount of €99,395.91.

• To judge the request for indemnifying interest as of the date of dismissal of the gracious complaint, on 19-12-2016, until the date of processing of the respective credit note, in accordance with Article 61 of the Code of Tax Procedure and Process.

• To condemn the Respondent in the costs of the present proceedings.

VII – Value of the Proceedings

In conformity with the provisions of Articles 306, No. 2, of the Code of Civil Procedure and 97-A, No. 1, of the Code of Tax Procedure and Process and Article 3, No. 2, of the Regulations of Costs in Tax Arbitration Proceedings, the proceedings is assigned the value of €99,395.91.

VIII – Arbitration Fee

The amount of the arbitration fee is set at €2,754.00, in accordance with Table I annexed to the Regulations of Costs in Tax Arbitration Proceedings.

• Notify.

Lisbon, 9 February 2018

The Collective Arbitral Tribunal,

José Poças Falcão
(President)

Maria da Glória Teixeira
(Arbitrator Assessor)

Miguel Patrício
(Arbitrator Assessor)