Process: 287/2015-T

Date: December 21, 2015

Tax Type: IUC

Source: Original CAAD Decision

Summary

This CAAD arbitral decision (Process 287/2015-T) addresses the critical issue of subjective incidence of Portugal's Single Vehicle Circulation Tax (IUC) when vehicles are sold or subject to financial leasing contracts. A financial credit institution challenged 36 IUC assessments totaling €3,959.67 for tax years 2013-2014, arguing it should not be liable for vehicles no longer in its ownership. The claimant contended that Article 3(1) of the IUC Code establishes a rebuttable presumption of ownership based on vehicle registration, and that actual ownership should determine tax liability. For vehicles under financial leasing contracts, the institution argued the financial lessee is the taxpayer, not the lessor/owner. The Tax and Customs Authority countered that Article 3 creates a legal fiction—not a rebuttable presumption—making the registered owner the taxpayer regardless of actual ownership or possession. The Authority argued that failure to update vehicle registration does not shift IUC liability away from the registered owner, as tax authorities cannot assess based on elements outside the official register. Central legal issues included: whether registration establishes conclusive or rebuttable ownership for IUC purposes; whether financial leasing arrangements alter the statutory definition of taxable person; and whether sale of vehicles without registration transfer eliminates the seller's tax liability. The case required the tribunal to interpret the nature of the Article 3(1) provision and balance the practical administrative need for registration-based taxation against principles of taxing actual ownership and economic benefit from vehicle use.

Full Decision

ARBITRAL DECISION

I. REPORT

A…, S.A., a company with registered office at Building …, Avenue …, lot …. ... …, … floor, Lisbon, holder of the unique registration and identification number for a legal entity…, hereinafter simply designated as Claimant, filed a petition for the establishment of an arbitral tribunal in tax matters and a request for an arbitral award, pursuant to the provisions of paragraph a) of article 2, section 1 and paragraph a) of article 10, section 1, both of Decree-Law No. 10/2011, of 20 January (Legal Framework of Arbitration in Tax Matters, hereinafter abbreviated as JFATM), petitioning for the annulment of 36 assessment acts for the Single Vehicle Circulation Tax (IUC) and corresponding default interest identified in the Table Annexed to the initial petition, relating to the tax years 2013 and 2014, in the total amount of € 3,959.67, as well as condemnation of the Tax and Customs Authority (hereinafter TCA or Respondent) to refund the amount paid, plus indemnity interest.

To substantiate its petition, it alleges, in summary:

a) It is a financial credit institution that pursues its activity in the field of motor vehicle financing;

b) Within the scope of its activity, it grants loans for the acquisition of vehicles and enters into financial leasing contracts;

c) It was notified of various IUC assessment notes relating to vehicles connected with the aforementioned activity, relating to the tax years 2013 and 2014;

d) The disputed IUC assessment acts relate to vehicles already sold by the Claimant; to vehicles with respect to which a financial leasing contract was in force; and to a vehicle with respect to which a financial leasing contract was entered into in a situation of breach;

e) Pursuant to the provisions of article 6, section 3 and article 4, section 2, both of the IUC Code, the tax is considered due on the first day of the tax period of the vehicle, that is, on the date of the registration of the vehicle;

f) With respect to vehicles alienated by the Claimant, on the date of the IUC maturity, it was no longer the owner of the vehicles in question, therefore the taxpayer of the tax should be the new owner of each vehicle;

g) Even if the transfer of ownership of the vehicles was not registered by the acquirers of the vehicles, this does not prevent the IUC from falling on the actual owners of the vehicles;

h) Article 3, section 1 of the IUC Code contains a rebuttable presumption;

i) In the case where the vehicle has been subject to a financial leasing contract, the taxpayer is the financial lessee, and the vehicle owner is not a subsidiary responsible for payment of the IUC;

j) Having the financial leasing contract entered into been terminated due to breach by the lessee, neither is its owner a taxpayer of IUC.

The Claimant submitted 26 documents and did not call any witnesses.

In the request for an arbitral award, the Claimant chose not to appoint an arbitrator, therefore, pursuant to the provisions of article 6, section 1 of the JFATM, the undersigned was appointed by the Deontological Council of the Administrative Arbitration Centre, and the appointment was accepted in accordance with legal provisions.

The arbitral tribunal was established on 21 July 2015.

Notified in the terms and for the purposes of the provisions of article 17 of the JFATM, the Respondent submitted its answer, alleging, in summary, the following:

a) With the exception of the assessment relating to the vehicle with registration …-…-…, no other assessment was submitted by the Claimant when filing the petition for the establishment of the arbitral tribunal, therefore timeliness of the petition for the establishment of the Arbitral Tribunal is not demonstrated with respect to the other disputed assessments;

b) The Claimant did not submit documents that could support the theses it defends;

c) The second copies of alleged vehicle sale invoices are not apt to prove the execution of a bilateral contract such as a purchase and sale;

d) The Claimant did not submit documentary proof of receipt of the price;

e) No proof was submitted that the alleged financial leasing contracts were in force on the date of the occurrence of the tax event;

f) In the same way, no proof was made of the breach of the financial leasing contract;

g) The legislator expressly and intentionally established that the taxpayers of the IUC are the owners, considered as such the persons in whose name the vehicles are registered;

h) Article 3 of the IUC Code does not establish any presumption of ownership, but a true fiction of ownership – the legislator does not say that they are presumed to be owners but that they are considered owners;

i) The failure to register in the register the changes of ownership or leasing situations has the consequence that the obligation to pay the IUC falls on the registered owner, and the TCA cannot assess the tax based on elements not contained in the register;

j) The IUC is due by the persons who appear in the register as owners of the vehicles.

It concludes by petitioning for the dismissal of the request for an arbitral award and consequently absolution of the Respondent from the petition and maintenance in the legal order of the disputed tax acts.

The Respondent did not submit any documents and did not call any witnesses.

Following notification for that purpose, the Respondent, by petition of 06/10/2015, informed that it would not proceed to submit the administrative file, as it is not computerized.

By petition of 04/11/2015, the Claimant submitted, in compliance with the order of 02/10/2015, to the proceedings the disputed assessments, the invoices for the vehicles allegedly transferred before the occurrence of the tax event, two financial leasing contracts, a loan agreement and a rental contract.

Given the position assumed by the parties and there being no need for the holding of the meeting referred to in article 18 of the JFATM, the same was dispensed with, and a time limit was set for the submission of written arguments, neither of the parties having submitted arguments.

II. PRELIMINARY EXAMINATION

The Arbitral Tribunal is regularly constituted and materially competent.

The parties have legal personality and capacity, are legitimate and are regularly represented.

The proceedings do not suffer from defects that affect its validity.

III. ISSUES TO BE DECIDED

In view of the positions assumed by the Parties, set forth in the arguments presented, it is necessary:

a. To rule on the timeliness of the request for an arbitral award;

b. To determine who is the taxpayer of the IUC when, on the date of the occurrence of the tax event, the motor vehicle has already been alienated or is subject to a financial leasing contract;

c. To determine what is the legal value of vehicle registration for purposes of IUC, particularly for the purposes of the subjective scope of the tax;

d. To determine whether the failure to update the vehicle register permits considering as taxpayers of the IUC the persons in whose name the vehicles are registered.

IV. MATTERS OF FACT

a. Proven Facts

With relevance to the decision to be rendered in these proceedings, the following facts were found to be proven:

  1. The Claimant is a financial credit institution

  2. Within the scope of its activity, the Claimant grants its clients financing for the purpose of acquiring motor vehicles

  3. The Claimant was notified of the assessments relating to the tax years and vehicles identified in the Table Annexed to the initial petition, which is hereby fully incorporated by reference;

  4. The payment date of the IUC and default interest of the assessments referred to in 1. occurred on 13 March 2015;

  5. None of the vehicles referred to in 1. belong to categories F or G, referred to in article 4 of the IUC Code;

  6. On the date of the occurrence of the tax event, the Claimant had issued sales invoices for the vehicles with registrations …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-… and …-…-…;

  7. The Claimant entered into a loan agreement with respect to the vehicle with registration …-…-…;

  8. The Claimant entered into financial leasing contracts with respect to the vehicles with registrations …-…-… and …-…-…;

  9. The Claimant entered into a rental contract with respect to the vehicle with registration …-…-…;

  10. The Claimant paid the IUC and default interest corresponding to the assessments referred to in 1, in the total amount of € 3,959.67;

  11. The petition for the establishment of the arbitral tribunal in tax matters and request for an arbitral award was presented on 05/05/2015.

b. Unproven Facts

With interest for the proceedings, it was not proven that with respect to the vehicle with registration …-…-… a financial leasing contract was entered into and that it was breached by the lessee.

c. Justification of the Matters of Fact

The conviction regarding the facts taken as proven was formed on the basis of the documentary evidence submitted by the Claimant, indicated with respect to each of the points, and whose conformity with reality was not questioned.

As for the unproven facts, the conviction of the Tribunal was based on the total absence of proof in that sense.

V. LAW

Having established the matters of fact, it is now necessary, by reference thereto, to determine the applicable law.

First and foremost, it is necessary to consider the preliminary issue raised by the Respondent, regarding the timeliness of the request for an arbitral award.

It is true that when the petition for the establishment of the arbitral tribunal was filed, the Claimant only submitted the assessment relating to the vehicle with registration …-…-….

However, notified for that purpose, the Claimant subsequently submitted all disputed assessments.

As appears from the proven facts – see point 4 -, the deadline for payment of all disputed assessments occurred on 13 March 2015, and the submission of the request for an arbitral award occurred on 05/05/2015 – see proven fact 11.

Considering the time limit for submission of the request for an arbitral award referred to in article 10, section 1 a) of the JFATM, it is verified, without need for any other considerations, that the present petition was submitted timely.

The preliminary issue having been ruled upon, we are thus in a position to rule on the merits of the petition, with respect to the remaining issues.

Thus,

Having analyzed the arguments presented by the Parties, it is readily apparent that the core issue lies in the interpretation of the norm contained in article 3, section 1 of the IUC Code and, more specifically, in determining whether it contains or not a legal presumption. This question, as moreover already underlined in other decisions, has given rise to extensive case law – also arbitral – which will be appropriately brought in here.

Under the heading of subjective scope, article 3 of the IUC Code provides that:

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

  1. – Financial lessees are equated with owners, as well as acquirers with retention of ownership, as well as other holders of purchase option rights by virtue of the leasing contract."

Now, dispelling doubts about the meaning and scope to be attributed to a given legal norm implies carrying out an interpretive task that permits extracting from the linguistic statement a concrete meaning or "content of thought"([1]). However, such a task can only be accomplished – thus succeeding in grasping the vis ac potestas legis – through the use of a concrete method, which is based on literal interpretation, on the one hand, and logical or rational interpretation, on the other.

Recall, moreover, that in accordance with the provisions of article 11, section 1 of the General Tax Law, tax norms are interpreted in accordance with the principles of legal hermeneutics commonly accepted, particularly those set forth, among us, in article 9 of the Civil Code. Let us proceed.

Literal interpretation presents itself, then, as the first stage of interpretive activity. As FERRARA states, "the text of the law forms the substrate from which the interpreter must depart and in which must rest"([2]).

In fact, since the law is expressed in words, the verbal meaning they contain must be extracted from them, according to their natural connection and the rules of grammar. However, if the words employed by the Legislator are equivocal or indeterminate, it will be necessary to resort to logical interpretation, which attends to the spirit of the provision to be interpreted.

Logical interpretation, as it has been peacefully understood by doctrine([3]), is based on the rational element, the systematic element, and the historical element; weighing them and deducing from them the value of the legal norm in question.

By rational element is to be understood the raison d'être of the legal norm, i.e., the purpose for which the legislator instituted it. The discovery of the ratio legis presents itself, thus, as a factor of undoubted importance for the determination of the meaning of the norm.

It happens, however, that a given norm does not exist in isolation, but rather coexists with other norms and legal principles in a systematic and complex manner. Thus, it becomes natural that the meaning of a concrete norm results clear from the confrontation of this with others. As BAPTISTA MACHADO states, "this element comprises the consideration of other provisions that form the complex normative framework of the institute in which the norm to be interpreted is integrated, that is, that regulate the same matter (context of the law), as well as the consideration of legal provisions that regulate parallel normative problems or kindred institutes (parallel places). It also comprises the systematic place that belongs to the norm to be interpreted in the overall legal order, as well as its consonance with the spirit or intrinsic unity of the entire legal order."([4]).

As for the historical element, in turn, it must refer to and include materials connected with the history of the norm, such as "the evolutionary history of the institute, of the figure or of the legal regime in question (…); the so-called sources of law, that is, the legal or doctrinal texts that inspired the legislator in the elaboration of the law (…); the preparatory works.".

Let us apply, then, what has been said to the case at hand.

Having examined the arguments of the Claimant and Respondent, and as far as the literal element is concerned, it is readily understood that the focus of disagreement lies in the expression "(…) considered as such (…)", contained in article 3, section 1 of the IUC Code.

The question is raised – as was indeed done in the Arbitral Decision rendered in the context of Case No. 73/2013-T([5]): "Does the fact that the legislator opted for the word "considered" destroy the possibility that we are dealing with a presumption?". No. That is the answer which, we believe, is necessary. And let it not be said that such conclusion is infirmed by the circumstance that the legislator did not use the word "presumed", which was employed in the old Vehicle Tax Regulation.

Again here we cannot fail to emphasize what was stated in that decision: "examining the Portuguese legal order, we find countless norms that establish presumptions using the verb consider, many of which are employed in the gerund ("considering" or even "being considered"). Examples of these are the norms enumerated below: In the Civil Code, among others, articles 314, 369 section 2, 374 section 1, 376 section 2, 1629 (…). Also in the tax legal order one can find the verb "consider", namely the term "is considered" with a presumptive sense. And here is added the teaching of LEITE DE CAMPOS, SILVA RODRIGUES and LOPES DE SOUSA which, for the clarity of exposition, is equally transcribed. Thus, the Authors write that "presumptions in the matter of tax scope can be explicit, revealed by the use of the expression "presumed" or similar (…). However, presumptions can also be implicit in scope norms, namely of objective scope, when certain values of movable or immovable property are considered as constituting taxable matter, in situations where it is not unviable to ascertain the real value".

For this purpose, JORGE LOPES DE SOUSA([6]) notes that in article 40, section 1 of the IRS Code the expression "presumed" is used, whereas in article 46, section 2 of the same statute the word "is considered" is employed, with no difference whatsoever between one and the other expression, both signifying, after all, the same thing: a legal presumption.

Thus, and as far as concerns us, it is admissible to assimilate the verb consider to the verb presume. In fact, we can be dealing with a presumption even when the legislator has opted for other verbs, namely the verb consider. In fact, and contrary to what is advocated by the Respondent, this is the conclusion that least troubles the systematic coherence postulated by the legal order as a whole.

But more: the rational element also authorizes such a conclusion.

Let us invoke the statement of reasons of Draft Law No. 118/X, of 07/03/2007, which gave rise to Law No. 22-A/2007, of 29 June, since from there results clearly the ratio legis.

It was intended to undertake a "global and coherent reform of taxes linked to the acquisition and ownership of motor vehicles" in function of the "imperative necessity of bringing clarity and coherence to this area of the tax system and the need, even more imperative, to subordinate it to the principles and concerns of an environmental and energy nature that today mark the discussion of motor vehicle taxation".

Thus, "the two new taxes that are now created, the tax on vehicles and the single vehicle circulation tax, constitute much more than the technical continuation of the figures created in the 70s and 80s that preceded them, turned predominantly toward the collection of revenue, indifferent to the social cost resulting from motor vehicle circulation. They constitute something different, figures already of the century in which we live, with which it is certainly intended to collect public revenue, but to collect it in the measure of the cost that each individual causes to the community."

In a manner congruent with that motivation, the legislator established, in article 1 of the IUC Code, the principle of equivalence, making clear "that the tax, in its entirety, is subordinated to the idea that taxpayers should be burdened in the measure of the cost they cause to the environment and to the road network, this being the reason for being of this tax figure. It is this principle that dictates the burdening of vehicles in function of their respective ownership and up to the moment of scrapping".

It can, moreover, be said that environmental and energy concerns are so impressive in the context of IUC, that the principle of equivalence molds not only the tax base, but also, and above all, the very subjective scope, provided for in article 3.

Once again we invoke the Arbitral Decision rendered in the context of Case No. 73/2013-T: "Having in mind both the systematic place that the principle of equivalence occupies (article 1 of the IUC Code) – systematic element – as well as the historical element embodied in Draft Law No. 118/X (source of law), as well as the rational (or teleological) element just analyzed, all point in the direction of the preliminary conclusion we reached when analyzing the grammatical element, with only making sense to conceive in the context of article 3 of the IUC Code the expression "considered as such" as revealing the presence of a rebuttable presumption (…). In fact, the ratio legis of the tax rather points in the direction of those who use the vehicles being taxed, the economic owner, in the words of DIOGO LEITE DE CAMPOS, the actual owners or financial lessees, since these are the ones who have the polluting potential causing environmental costs to the community".

Having established the legal nature of the norm contained in article 3, section 1 of the IUC Code, it is now necessary to clarify the question of the subjective scope of the tax when the vehicle, on the date of the occurrence of the tax event, has already been alienated.

Once the purchase and sale contract is concluded, the acquirer will be instituted, ex contractu, in the position of owner, consequently the provisions of article 3, section 1 of the IUC Code will begin to apply to him; that is, the new owner begins to hold, for purposes of IUC, the position of taxpayer of the tax.

And such a solution is necessary from the moment of the perfection of the purchase and sale contract not only because the IUC Code determines it – by affirming that the taxpayers of the tax are the owners –, but also by the fact that among us the principle of consensuality governs, which requires that the transfer of ownership occur by mere effect of the contract; as results firstly from article 408, section 1 of the Civil Code. See also, reinforcing what is said above, paragraph a) of article 879 of that statute.

It should be noted, further, that the understanding set forth in the paragraph that precedes is unanimously advocated by Doctrine([7]) and Case Law([8]), thus not requiring additional development.

And what has just been said is relevant to sustain our position with regard to the legal value of vehicle registration. Recall, however, that in accordance with the general rule seen above the transfer of the right occurs ex contractu, without need for any material act or publicity([9]).

As peacefully accepted by Doctrine and Case Law, given the silence of Decree-Law No. 54/75, of 12 February, on the question of the legal value of vehicle registration, it becomes necessary to resort to the discipline of property registration; an operation moreover authorized by article 29 of that Decree-Law.

Now, considering the Property Register Code – approved by Decree-Law No. 125/13, of 30 August –, particularly its article 7, and combining this norm with article 1 of Decree-Law No. 54/75, it is quickly inferred that the primary function of registration (vehicle): to give publicity to the legal situation of motor vehicles.

It can then be affirmed that registration does not have a constitutive nature, but rather merely declarative, permitting only to presume the existence of the right and its ownership. Note: presume and not fictionally create, thus being able to be rebutted by proof to the contrary.

And this is so precisely because, pursuant to the provisions of article 408 of the Civil Code, and except for exceptions provided by law, the constitution or transfer of real rights over a determined thing occurs by mere effect of the contract, with its validity not depending on any subsequent act, e.g., registration in the register.

In this manner, given that the law provides no exception for the contract of purchase and sale of a motor vehicle, the real efficacy produces its effects normally, with the acquirer becoming its owner, independent of the register.

Now, if independent of the register the acquirer becomes the owner, the registered holder ceases at the same time to be so; although in the register he appears as such.

In the present case, and notwithstanding the lack of registration in the register, the transfers effected are enforceable against the Respondent, and the Respondent cannot avail itself of the provisions of article 5, section 1 of the Property Register Code.

First and foremost, because the Respondent is not, for purposes of the provisions of that norm, considered a third party for purposes of registration.

The notion of third parties for purposes of registration is given to us by article 5, section 4: third parties, for purposes of registration, are those who have acquired from a common ancestor rights incompatible with one another; from which it must be clearly extracted that this is not, manifestly, the case in these proceedings.

The same reasoning must, naturally, be applied to the instances of financial leasing, with respect to which also registration has no constitutive effect, being no more than a presumption that the right exists.

A rebuttable presumption, at the same time, by proof to the contrary.

Now, although on the date of the tax assessments the Claimant still appeared in the register as the owner of the vehicles, the truth is that it alleges that it is not, on the date of the occurrence of the tax event, the owner, because it has already alienated them.

Thus, and since the presumption resulting from the register is, as we have seen, rebuttable, let us see whether the documents submitted by the Claimant are apt to accomplish such an objective.

In order to prove that the vehicles referred to in these proceedings were alienated by it on a date prior to the occurrence of the tax event, the Claimant submitted, with respect to the vehicles to which it refers in 6) of the proven facts, the respective sales invoices.

Let us now examine the evidentiary value of the invoices submitted by the Claimant.

For this purpose, the Respondent invokes that the sales invoices of the vehicles submitted by the Claimant "are not apt to prove the execution of a bilateral contract such as a purchase and sale".

As already set forth, the Claimant submitted, with respect to twenty-one of the motor vehicles in question, sales invoices. On the other hand, as results from the proven facts, none of the vehicles involved in these proceedings belong to categories F or G referred to in article 4 of the IUC Code, therefore the tax event occurs on the date of its registration or on each of its anniversaries.

This means that, on the date of the IUC assessment in question in these proceedings, an invoice of sale for each of the vehicles had already been issued by the Claimant, as appears, moreover, from point 6) of the proven facts.

However, the Respondent challenged all invoices submitted by the Claimant.

Thus, given that these are private documents, without any full evidentiary force, it was incumbent on the Claimant to prove the facts stated therein, which could be accomplished by any other means.

Moreover, the Claimant was expressly notified to submit proof of all facts alleged by it.

In response to this notification, the Claimant merely submitted the disputed assessments, with the respective proof of payment, and the contracts relating to the vehicles with respect to which it alleged financial leasing existed, having submitted nothing more and not having requested of the Tribunal any time limit to submit any other documents.

Thus, in view of the absence of proof in that sense accomplished by the Claimant, on whom rested the respective burden, in view of the express challenge of all invoices submitted, this Tribunal cannot consider that the invoices submitted are apt to prove the sale of the vehicles on a date prior to the occurrence of the tax event.

Therefore, the challenge of the assessments relating to the vehicles with registrations …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-… and …-…-… must not succeed.

Let us now analyze the assessments relating to the remaining vehicles, with respect to which it was proven:

a) Vehicle with registration …-…-…: a loan agreement was entered into – see point 8) of the proven matters of fact;

b) Vehicles with registrations …-…-… and …-…-…: financial leasing contracts were entered into – see point 9) of the proven matters of fact; and

c) Vehicle with registration …-…-…: a rental contract was entered into – see point 10) of the proven matters of fact.

As for the vehicles with registrations …-…-… and …-…-…, what was proven in the proceedings is not the execution of financial leasing contracts, as invoked by the Claimant, but the execution of a loan agreement and a rental contract, respectively.

Although the execution of these contracts, no proof was made that these contracts, on the date of the occurrence of the tax event still remained in force.

Proof which, once again, rested on the Claimant.

With respect to the vehicles with respect to which financial leasing contracts were entered into, as already alleged, the registration of these contracts has no constitutive effect, being no more than a presumption that the right exists.

In the present case, it was not proven that the financial leasing contracts were registered.

But, considering the non-constitutive character of the registration of financial leasing, its lack of registration does not determine the impossibility of proving its existence by any other means.

Proof which the Claimant succeeded in accomplishing with the submission of the respective contracts.

It happens, however, that, although the execution of financial leasing contracts with respect to the vehicles with registrations …-…-… and …-…-… is demonstrated in the proceedings, in the same manner as the vehicles previously analyzed, no proof was made that these contracts, on the date of the occurrence of the tax event, still remained in force, proof which rested on the Claimant.

In view of the foregoing, the challenge of the assessments relating to the vehicles with registrations …-…-…, …-…-…, …-…-… and …-…-… must likewise not succeed.

From all that has been set forth results clear the non-existence of any basis for annulment of the disputed assessments, which shall, thus, remain in the legal order.

VI. OPERATIVE PART:

In view of the foregoing, it is decided to judge unfounded the petition to challenge the assessments and the inherent petitions to condemn the Respondent to refund the amount paid by the Claimant and to pay indemnity interest.

The value of the case is set at € 3,959.67, pursuant to paragraph a) of article 97-A, section 1 of the Code of Tax Procedure and Process, applicable by force of paragraphs a) and b) of article 29, section 1 of the JFATM and of article 3, section 2 of the Regulation of Costs in Tax Arbitration Proceedings.

The value of the arbitration fee is set at € 612.00, pursuant to Table I of the Regulation of Costs in Tax Arbitration Proceedings, as well as the provisions of article 12, section 2 and article 22, section 4, both of the JFATM, and article 4, section 3 of the cited Regulation, to be paid by the Claimant, as the unsuccessful party.

Register and notify.

Lisbon, 21 December 2015.

The Arbitrator,

Alberto Amorim Pereira

Text prepared by computer, pursuant to article 131, section 5 of the Code of Civil Procedure, applicable by reference of paragraph e) of article 29, section 1 of Decree-Law No. 10/2011, of 20/01.

Frequently Asked Questions

Automatically Created

Who is the taxable person for IUC when a vehicle is subject to a financial leasing contract in Portugal?
Under Article 3 of the Portuguese IUC Code, the taxable person is generally the registered owner of the vehicle. However, when a vehicle is subject to a financial leasing contract, the financial lessee (the person using the vehicle) is considered the taxpayer, not the lessor/owner. This reflects the principle that IUC should be paid by the party with actual possession and economic benefit from the vehicle. The financial institution that owns the vehicle as lessor is not subsidiarily responsible for IUC payment during an active leasing period. This interpretation aligns with the economic reality that the lessee, not the lessor, derives the benefit from vehicle circulation.
Can a financial institution challenge IUC tax assessments on vehicles it has already sold to third parties?
Yes, a financial institution can challenge IUC assessments on vehicles it has sold to third parties, provided it can demonstrate the sale occurred before the tax event date (the first day of the vehicle's tax period). The institution must file an arbitration petition with CAAD within the legal deadline and provide evidence of the transfer of ownership, typically through sales invoices and proof of price payment. However, the Tax Authority may argue that without registration transfer in the official vehicle register, the original registered owner remains liable. The success of such challenge depends on whether the tribunal interprets Article 3(1) of the IUC Code as establishing a rebuttable presumption or an irrebuttable legal fiction of ownership based on registration.
Is the presumption of taxable person under Article 3(1) of the Portuguese IUC Code rebuttable?
This is a central dispute in Portuguese IUC law. The claimant argued that Article 3(1) of the IUC Code contains a rebuttable presumption, meaning that while registered owners are presumed to be taxpayers, evidence of actual ownership transfer can overcome this presumption. The Tax Authority countered that Article 3 establishes a legal fiction rather than a presumption—the Code states persons are 'considered' owners (not 'presumed' owners), making registration conclusive for tax purposes. Under the legal fiction interpretation, the registered owner remains the IUC taxpayer regardless of actual ownership changes until registration is officially updated. This interpretation favors administrative efficiency, as tax authorities can rely solely on official registration without investigating actual ownership in each case.
What happens to IUC liability when a financial leasing contract is terminated due to lessee default?
When a financial leasing contract is terminated due to lessee default, the question of IUC liability becomes complex. The claimant in this case argued that upon termination due to breach, the owner/lessor is not the IUC taxpayer, as the vehicle is no longer subject to an active leasing arrangement and the owner is not using it for circulation. However, the Tax Authority's position suggests that the registered owner would remain liable until registration is updated or a new leasing arrangement is established. The resolution depends on whether the terminated contract status and the owner's non-use of the vehicle can overcome the registration-based taxation rule. Practically, the lessor may be temporarily liable until repossession is formalized and the vehicle is re-leased, sold, or registration is updated.
How does CAAD arbitration work for disputing multiple IUC tax assessments and claiming compensatory interest?
CAAD (Centro de Arbitragem Administrativa) arbitration for IUC disputes allows taxpayers to challenge multiple tax assessments in a single proceeding. The claimant must file a petition identifying all disputed assessments within the legal deadline (typically within 90 days of notification or voluntary payment). The petition should include evidence supporting the challenge, such as sales invoices, leasing contracts, and proof of registration status. An arbitral tribunal is constituted (either with party-appointed arbitrators or appointed by CAAD). The Tax Authority submits its defense, and both parties may present documents and witnesses. If no hearing is necessary, the tribunal may decide based on written submissions. If the taxpayer succeeds, the tribunal orders annulment of the illegal assessments and refund of amounts paid, plus compensatory interest calculated from payment date until refund at the legal rate applicable to tax refunds.