Process: 302/2013-T

Date: July 15, 2014

Tax Type: IUC

Source: Original CAAD Decision

Summary

CAAD arbitration case 302/2013-T addresses a critical dispute regarding IUC (Imposto Único de Circulação) subjective incidence when vehicles are sold but registration remains unchanged. The claimant contested IUC assessments and compensatory interest for multiple vehicles, arguing they had already sold or lost the vehicles before the tax years in question (2009-2012). The central legal question concerns whether Article 3 of the IUC Code establishes a rebuttable presumption of ownership based on vehicle registration, or creates an absolute rule tying tax liability to registered ownership regardless of actual ownership status. The claimant invoked Article 73 of the General Tax Law, arguing that registration constitutes merely a rebuttable presumption under general principles, and provided sale invoices as contrary evidence. The Tax Authority defended that Article 3(1) uses 'are considered to be' rather than 'are presumed to be,' indicating a deliberate legislative policy choice linking IUC liability to registered ownership as shown in vehicle registration records. The Authority emphasized that Article 6(1) defines the taxable event as ownership 'as attested by registration,' creating systemic coherence requiring taxpayers to update registrations promptly under Article 42 of the Vehicle Registration Regulation. The Authority further argued that allowing rebuttal would undermine legal certainty, administrative efficiency, and proportionality principles, noting that registrations were only cancelled in 2013 despite relating to earlier tax years. This case involves fundamental principles of tax administration, burden of proof, and the relationship between civil law ownership concepts and tax law incidence rules under Portuguese law.

Full Decision

ARBITRAL DECISION

CAAD: Tax Arbitration

Case no. 302/2013-T

Claimant: A

Respondent: Tax and Customs Authority

Subject Matter: Single Vehicle Circulation Tax – subjective incidence – presumption

The Arbitrator Judge Francisco de Carvalho Furtado, appointed by the Deontological Council of the Centre for Administrative Arbitration (CAAD), to form the Arbitral Tribunal constituted on 25 February 2014, decides as follows:

A) Report

  1. On 23 December 2013, A, taxpayer no. …, hereinafter identified as Claimant, presented a request for arbitral ruling, pursuant to the provisions of articles 2, no. 1, subsection a) and 10 of Decree-Law no. 10/2011, of 20 January (Legal Regime for Arbitration in Tax Matters, hereinafter referred to as RJAT), in conjunction with subsection a) of article 99 and subsection d) of no. 1 of article 102 of the Tax Procedure and Process Code (CPPT), applicable under article 10, no. 1, subsection a) of Decree-Law no. 10/2011, of 20 January.

  2. In the aforesaid request for arbitral ruling, the Claimant seeks to have the Arbitral Tribunal declare the illegality of the acts of assessment of Single Vehicle Circulation Tax and, likewise, of the respective acts of assessment of Compensatory Interest better identified in the record.

  3. The request for constitution of the arbitral tribunal was accepted on 26 December 2013 by the Esteemed President of CAAD and was notified to the Tax and Customs Authority (hereinafter identified as Respondent) on the same date.

  4. The Claimant did not appoint an arbitrator, and therefore, pursuant to the provisions of article 6, no. 1 of RJAT, the undersigned was appointed by the President of the Deontological Council of CAAD to serve on this Single Arbitral Tribunal, with the appointment being accepted in accordance with legal provisions. The Tribunal was constituted, pursuant to the provisions of article 11 of RJAT, on 25 February 2014.

  5. On 28 March 2014, the Respondent presented its Reply.

  6. On 22 April 2014, and pursuant to the terms and purposes provided for in article 18 of RJAT, the first meeting of the Arbitral Tribunal took place, and minutes thereof were recorded, which are attached to the record.

  7. At that meeting, the Esteemed Representative of the Claimant waived the examination of the witness called. The esteemed Representative of the Respondent likewise waived the presentation of submissions.

  8. On 22 May 2014, the Claimant presented its submissions.

  9. On 23 June 2014, the Respondent presented its submissions.

The Claimant sustains its request, in summary, as follows:

a) The Claimant was the owner of various motor vehicles better identified in article 4 of the Initial Request;

b) Subsequently, the Claimant was notified of acts of assessment of Single Vehicle Circulation Tax (IUC) with respect to each of the aforementioned vehicles;

c) In the year to which each of the IUC assessments relates, the Claimant was no longer the owner of the vehicles, either through alienation or through total loss as a result of an accident;

d) The taxable event for this tax is constituted by ownership of the vehicle – see article 6, no. 1 of the IUC Code;

e) Registration serves only to make a right public, and is not constitutive of the same;

f) Registration merely operates as a presumption of ownership of a right, a presumption that is capable of being rebutted by contrary evidence;

g) Thus, also for tax purposes, vehicle registration constitutes a mere presumption capable of being dispelled by contrary evidence;

h) Article 3 of the IUC Code constitutes a mere presumption which, given the provisions of article 73 of the General Tax Law, always admits contrary evidence;

i) The Claimant provides proof that it was not, on the date to which each of the acts of assessment whose annulment is sought relates, the owner of the motor vehicles;

j) It accordingly concludes for the illegality of the assessments, requesting their annulment.

In its Reply, the Respondent invoked, in summary, the following:

a) The interpretation and application that the Claimant seeks to assert does not heed the systemic element, violating the unity of the regime established throughout the IUC;

b) The legislator established in article 3, no. 1 of the IUC Code who are the taxpayers of this tax, not using the expression "are presumed to be", but "are considered to be";

c) Thus, it will be imperative to conclude that the legislator has expressly and intentionally established who is subjectively subject to the tax;

d) To consider that the legislator established a presumption would unequivocally amount to conducting an interpretation contrary to law;

e) It is not a presumption, but a legislative policy choice;

f) In the same way, it is necessary to consider the fact that article 6, no. 1 of the IUC Code determines that the taxable event of the tax is ownership as attested by registration or enrollment in national territory;

g) From the articulation between the subjective incidence and the taxable event it results that only legal situations subject to registration give rise to the birth of the tax obligation;

h) There is a direct relationship between the moment from which the tax obligation is constituted and the issuance of the registration certificate;

i) The tax administration assesses the tax on the basis of elements contained in the Vehicle Registration, which contains all the elements necessary for the determination of the taxpayer without needing access to contracts of a private nature that confer such rights;

j) Having regard to the current configuration of the legal system, assessment need not be promoted on the basis of elements that do not appear in public records and documents;

k) The failure to update the registration, pursuant to the provisions of article 42 of the Vehicle Registration Regulation is attributable to the sphere of the IUC taxpayer and not to the state as the active subject;

l) The ratio of the regime points to the fact that it was the legislator's intention to create a Single Vehicle Circulation Tax based on the taxation of the owner of the vehicle as it appears in the vehicle registration;

m) Indeed, the IUC Code carried out a reform of the regime of taxation of vehicles in Portugal, with the owner appearing in the property register becoming the taxpayer of the tax, regardless of the circulation of the vehicles on the public road;

n) This ratio results from parliamentary debates surrounding the approval of Decree-Law no. 20/2008, of 31 January;

o) This conclusion is not affected by the fact that there are environmental concerns, manifested in the taxation of the vehicle user;

p) The interpretation of article 3 of the IUC Code that the Claimant seeks to assert is offensive to the fundamental principle of trust and legal certainty that should inform any legal relationship;

q) In the same way, such interpretation by the Claimant is also offensive to the principle of efficiency of the tax system insofar as it results in an obstruction and increase in costs of the competencies attributed to the Respondent;

r) Finally, the interpretation of the Claimant violates the principle of proportionality insofar as it completely disregards it in confrontation with the principle of contributive capacity, when in reality the Claimant has the legal mechanisms necessary and adequate to safeguard its contributive capacity, without, however, having exercised it in due time;

s) The Claimant does not provide proof of what it alleges because the invoices (by themselves) do not constitute an appropriate document to prove the sale of the vehicles;

t) The cancellation of the registrations only occurred in 2013, while the taxable facts in the record relate to the years 2009 to 2012, so on the date of the taxable facts they were not yet cancelled;

u) The conditions for the Respondent to be condemned to the payment of indemnificatory interest are not met;

v) Even if the Arbitral Tribunal decides for the illegality of the assessments in question, the arbitration costs should be borne by the Claimant pursuant to the provisions of article 527, no. 1 of the New Code of Civil Procedure.

B) Preliminary Matters

The Tribunal is competent and is regularly constituted, pursuant to articles 2, no. 1, subsection a), 5 and 6, all of RJAT. The parties have legal personality and capacity, are legitimate and are represented, pursuant to articles 4 and 10 of RJAT and article 1 of Ordinance no. 112-A/2011, of 22 March.

No nullities and preliminary questions affecting the entire process are found to exist, and therefore it is now necessary to address the merits of the request.

C) Object of the Arbitral Ruling

The following questions are placed before the Tribunal, as described above:

a) Does article 3, no. 1 of the IUC Code, in providing that the taxpayers of this tax are the owners of the vehicles, considered to be natural or legal persons, of public or private law, in whose name the same are registered, establish a presumption or a legislative policy choice?

b) Is an invoice an appropriate document to demonstrate the alienation of the vehicle?

D) Matters of Fact

D.1 – Proven Facts

The following facts are considered as proven with relevance to the decision, on the basis of the documentary evidence attached to the record:

a) The Claimant was notified of the following acts of assessment of IUC and Compensatory Interest: 2011 ..., 2012 ..., 2012 ..., 2012 ..., 2010 ..., 2010 ..., 2010 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2010 ... and 2012 ... (see document attached to the initial request);

b) On 27 January 2011, the Claimant issued invoice no. 6026013199, and sold the vehicle with license plate ...-...-..., of May 2007 (see document attached to the initial request);

c) On 31 August 2011, the Claimant issued invoice no. ... and alienated the vehicle with license plate ...-...-..., of March 2008 (see document attached to the initial request);

d) On 31 August 2011, the Claimant issued invoice no. 6026023380, and sold the vehicle with license plate ...-...-..., of March 2008 (see document attached to the initial request);

e) On 29 February 2012, the Claimant issued invoice no. 6026032361, and sold the vehicle with license plate ...-...-..., of March 2009 (see document attached to the initial request);

f) On 10 April 2009, the Claimant issued invoice no. B..., and sold the vehicle with license plate ...-...-..., of March 2006, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

g) On 20 March 2009, the Claimant issued invoice no. B..., and sold the vehicle with license plate ...-...-..., of March 2006, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

h) On 1 March 2010, the Claimant issued invoice no. B..., and sold the vehicle with license plate ...-...-..., of April 2006, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

i) On 29 May 2004, the Claimant issued invoice no. B…, and sold the vehicle with license plate ...-...-..., of November 2000, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

j) On 13 January 2009, the Claimant issued invoice no. B..., and sold the vehicle with license plate ...-...-..., of December 2005, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

k) On 31 August 2008, the Claimant issued invoice no. B..., and sold the vehicle with license plate ...-...-..., of May 2005, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

l) On 30 September 2008, the Claimant issued invoice no. B..., and sold the vehicle with license plate ...-...-..., of May 2005, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

m) On 30 April 2008, the Claimant issued invoice no. B..., and sold the vehicle with license plate ...-...-..., of August 2004, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

n) On 30 April 2008, the Claimant issued invoice no. B..., and sold the vehicle with license plate ...-...-..., of September 2004, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

o) On 30 April 2008, the Claimant issued invoice no. ..., and sold the vehicle with license plate ...-...-..., of June 2004, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

p) On 1 December 2007, the Claimant issued invoice no. B..., and sold the vehicle with license plate ...-...-..., of March 2004, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

q) On 1 December 2007, the Claimant issued invoice no. B..., and sold the vehicle with license plate ...-...-..., of June 2003, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

r) On 13 January 2009, the Claimant issued invoice no. B…, and sold the vehicle with license plate ...-...-..., of November 2005, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

s) On 15 September 2004, the Claimant issued invoice no. B…, and sold the vehicle with license plate ...-...-..., of September 2000, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

t) On 30 October 2004, the Claimant issued invoice no. B…, and sold the vehicle with license plate ...-...-..., of September 2000, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

u) On 28 October 2004, the Claimant issued invoice no. B…, and sold the vehicle with license plate ...-...-..., of June 2000, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

v) On 31 July 2004, the Claimant issued invoice no. B…, and sold the vehicle with license plate ...-...-..., of June 2000, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

w) On 13 August 2004, the Claimant issued invoice no. B…, and sold the vehicle with license plate ...-...-..., of May 2000, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

x) On 29 May 2004, the Claimant issued invoice no. B…, and sold the vehicle with license plate ...-...-..., of May 2000, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

y) On 6 February 2007, the Claimant issued invoice no. B…, and sold the vehicle with license plate ...-...-..., of March 2003, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

z) On 31 December 2005, the Claimant issued invoice no.…, and sold the vehicle with license plate ...-...-..., of March 2004, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

aa) On 12 October 2004, the Claimant issued invoice no. …, and sold the vehicle with license plate ...-...-..., of October 2001, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

bb) On 31 March 2004, the Claimant issued invoice no. B…, and sold the vehicle with license plate ...-...-..., of May 2000, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

cc) On 30 June 2006, the Claimant issued invoice no. B…, and sold the vehicle with license plate ...-...-..., of June 2003, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

dd) On 30 April 2008, the Claimant issued invoice no. B…, and sold the vehicle with license plate ...-...-..., of June 2004, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

ee) On 5 November 2008, the Claimant issued invoice no. B…, and sold the vehicle with license plate ...-...-..., of April 1996, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

ff) On 30 April 2008, the Claimant issued invoice no. B..., and sold the vehicle with license plate ...-...-..., of September 2004, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

gg) The alienation of the vehicle with license plate ...-...-..., of September 2004 was recorded in the capital gains and losses map of the 2008 tax year, which generated a capital gain of € 7,492.00 (see document attached to the initial request);

hh) On 30 April 2008, the Claimant issued invoice no. B..., and sold the vehicle with license plate ...-...-..., of September 2004, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

ii) On 30 April 2008, the Claimant issued invoice no. B..., and sold the vehicle with license plate ...-...-..., of September 2004, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

jj) On 31 December 2007, the Claimant issued invoice no. B..., and sold the vehicle with license plate ...-...-..., of August 2003, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

kk) On 10 May 2006, the Claimant issued invoice no. B..., and sold the vehicle with license plate ...-...-..., of September 2003, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

ll) On 30 April 2008, the Claimant issued invoice no. B..., and sold the vehicle with license plate ...-...-..., of April 2004, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

mm) On 30 April 2008, the Claimant issued invoice no. B..., and sold the vehicle with license plate ...-...-..., of May 2004, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

nn) On 30 June 2004, the Claimant issued invoice no. B..., and sold the vehicle with license plate ...-...-..., of November 2000, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

oo) On 19 June 2004, the Claimant issued invoice no. B..., and sold the vehicle with license plate ...-...-..., of November 2000, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

pp) On 20 December 2004, the Claimant issued invoice no. B..., and sold the vehicle with license plate ...-...-..., of November 2000, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

qq) On 14 March 2007, the Claimant issued invoice no. B…, and sold the vehicle with license plate ...-...-..., of July 2003, an operation that was recorded in the capital gains and losses map (see document attached to the initial request);

rr) On 13 January 2009, the Claimant issued invoice no. B..., and sold the vehicle with license plate ...-...-..., of December 2005, an operation that was recorded in the capital gains and losses map (see document attached to the initial request).

D.2 – Unproven Facts

a) The vehicle with license plate ...-...-... was declared a total loss on 15 October 2008 as a result of an accident.

E) The Law

In light of what has been set out above, it is important to first verify the nature of article 3, no. 1 of the IUC Code. In fact, the source of the dispute between the Claimant and the Respondent concerns the fact that the Claimant considers that the said legal provision establishes a (rebuttable) presumption and the Respondent considers that it is a manifestation of a legislative policy choice. Consequently, the Respondent considers that from the combination of articles 3 and 6 of the IUC Code it results that the tax is levied on the natural or legal person who appears as the owner in the respective registration. The Claimant, for its part, draws from the said legal provisions the conclusion that the tax must be borne by the real and effective owner independently of who appears as such in the registration, and that the second part of no. 1 of article 3 of the IUC Code establishes a presumption. It is necessary, therefore, to examine this.

The notion of presumption is established in article 349 of the Civil Code, which defines it as "inferences that the law or the judge draws from a known fact to form an unknown fact." Now, the use of presumptions is not unknown within the scope of tax law in the measure that they can confer greater practicability to the system and, likewise, be instruments for combating fraud and evasion. In fact, "facing doubt concerning certain facts or situations to be regulated, the legal rule supposes that these outlines are those of another fact or situations provided for in another legal rule" (Sousa, Marcelo Rebelo de; Galvão, Sofia, Introduction to the Study of Law, Lex, 2000, Lisbon, p. 241).

On the other hand, it is also important to bear in mind that presumptions can be either explicit or implicit. The former are "revealed by the use of the expression 'are presumed to be' or similar (…)" (Sousa, Jorge Lopes de, Tax Procedure and Process Code, Vol. I, 6th Edition, Áreas Editoras, 2011, Lisbon, p. 589).

By contrast with that category of presumptions, there are implicit presumptions, that is, those that do not result directly and expressly from the terminology used by the legislator. Now, as well noted in the learned arbitral decision handed down in Case no. 14/2013-T: "Examining the Portuguese legal order, we find countless provisions that establish presumptions using the verb to consider, many of which employed in the gerund ("considering" or even "considering itself"). Examples include the provisions listed below: In the Civil Code, among others, articles 314, 369 no. 2, 374 no. 1, 376 no. 2, 1629. In the Code of Industrial Property, we refer by way of example to article 98 where the term 'considering' is also used in a presumptive context. Also in the tax legal order one can find the verb 'to consider', in particular the term 'is considered' with a presumptive sense. As explained by Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, in annotation no. 3 to article 73 of the General Tax Law 'presumptions in matters of tax incidence may be explicit, revealed by the use of the expression is presumed to be or similar (…). However, presumptions may also be implicit in provisions of incidence, in particular of objective incidence, when certain values of moveable or immoveable property are considered to constitute taxable matter, in situations where it is not impracticable to ascertain the real value' (emphasis ours), then giving some examples of provisions in which the verb 'to consider' is used as in no. 2 of article 21 of the CIRC occurs, by establishing that 'for the purposes of determining taxable income, the value of acquisition of patrimonial increments obtained free of charge is considered to be their market value, provided it is not less than that resulting from the application of the rules for determining the taxable value provided for in the Stamp Duty Code.' (emphasis ours). (…). Taking into account that the legal system must form a coherent whole, the examples above, accompanied by the doctrine and jurisprudence indicated, by appeal to the systematic element (context of the law and parallel places), authorize the conclusion that it is not only when the verb 'to presume' is used that we are faced with a presumption, but also the use of other terms or expressions can serve as the basis for presumptions, in particular the term 'is considered', thereby showing that the condition established in no. 2 of article 9 of the Civil Code is satisfied, which requires that the legislative thought have in the letter of the law a minimum of verbal correspondence, even if imperfectly expressed." (in www.caad.pt).

In light of what has been set out, it seems clear that one should conclude that article 3, no. 1 of the IUC Code, in considering as owners the natural or legal persons in whose names the vehicles are registered, does nothing more than establish a presumption. In fact, admitting that the real situation to be regulated is unknown (the holder of the property right), resort is made to another situation already known to Law (the registration). It is important to note here that, as constantly stated in jurisprudence, registration is not constitutive of the right but merely declaratory.

What is at issue, therefore, is a true presumption and not a fiction (which could justify a legislative policy choice) in the measure that in the second case law treats in an identical manner facts that are known to be different. In the concrete case, and as results from the first part of no. 1 of article 3 of the IUC Code, the intention is to tax the real owner (unknown fact) and, in the second part of the provision, a relationship is established with another fact of law, the registration (known fact).

And it is understandable that the Legislator followed this course since, as the tax administration well points out in its Reply, for reasons related to the practicability and management of the tax, and even the prevention of escape and fraud, the tax should be assessed on the basis of data known to the active subject of the tax relationship. However, these reasons of practicability cannot be placed above other principles of much greater value to law, in particular the Constitutional, such as that of equality. In fact, the Constitutional Court has come to consider that it is not constitutionally prohibited to use presumptions in tax law, provided that they can be rebutted (see Constitutional Court Decision no. 348/97, published in the Official Journal, II Series, of 25 July 1997 and Decision no. 211/2003, of 28 April 2003). That is, the Constitutional Court considers in its jurisprudence that, although it is legitimate for the tax legislator to make use of presumptions, it is constitutionally limited by the principles of equality, contributive capacity and fair distribution of income and wealth (which is the fundamental objective of the fiscal system, as inferred from article 103, no. 1 of the Constitution of the Portuguese Republic), and it is forbidden to use absolute presumptions. In fact, "the establishment of presumptions with the objective of conferring certainty and simplicity to fiscal relationships, of permitting prompt regular perception of taxes and of preventing evasion and fraud (…) must be compatible with the principle under analysis (of tax equality), which passes, both through the constitutional illegitimacy of absolute presumptions insofar as they prevent the taxpayer from proving the non-existence of the contributive capacity aimed at in the respective Law, and through the requirement of suitability of relative presumptions to present the economic presupposition taken into account" (…) "Presumptions must be based on concretely positive elements that rationally justify them and must admit contrary evidence, so that the tax is linked to an economic presupposition that is certain, proven and not merely probable"" (Constitutional Court Decision no. 348/1997, citing Casalta Nabais, Tax Contracts (Reflections on Their Admissibility), p. 279). Thus, and as sustained by this latter Author in the cited Work, p. 265 et seq., "Taxation in conformity with the principle of contributive capacity will imply the existence and maintenance of an effective connection between the tax obligation and the economic presupposition selected as the object of the tax (…)"

In consonance with the learned jurisprudence of the Constitutional Court and, likewise, the most reputable doctrine, article 73 of the General Tax Law expressly determines that "presumptions established in provisions of tax incidence always admit contrary evidence."

In summary: article 3, no. 1 of the IUC Code establishes a presumption with respect to the subjective incidence of the tax, which is rebuttable. This is the only interpretation that, indeed, permits safeguarding the constitutional principles indicated by the tax administration in its Reply, which, contrary to what it contends, would be prejudiced and violated by the acceptance of the understanding set out by the Respondent in its procedural pleadings.

In light of the conclusion reached, it is important to analyze a second question that the tax administration raises in its Reply. In fact, in the case of a presumption (as is now established), the party benefiting from it (the Respondent) is excused from proving the fact to which it leads, with it being incumbent upon the Claimant to provide proof to the contrary. This is the regime that results from article 350 of the Civil Code.

On this point, the tax administration contends that invoices, by themselves, are not an appropriate document for the proof required. We do not believe, however, that it is correct.

An invoice is, in generic terms, the accounting document through which a merchant specifies the quantity, quality and prices of the goods sold and/or the services rendered. It is, therefore, a title representative of the goods sold and/or the services rendered.

Because we are in the domain of tax law, the provision of article 75, no. 1 of the General Tax Law cannot be obscured. This legal provision confers a presumption of truthfulness to the accounting elements of taxpayers – in which invoices in question are included – and therefore it was incumbent upon the tax administration to rebut that presumption through the demonstration of absence of correspondence between what is declared in such elements and reality – which it did not do, limiting itself to referring in abstract terms that it did not consider that the Claimant had provided proof. Finally, it is important to bear in mind that for the operations indicated in f) through rr) of the proven matters of fact, the Claimant attached the Capital Gains and Losses Map of each of the tax years in which the alienation occurred, also demonstrating by that means, and through an accounting document that benefits from the presumption established in article 75 of the General Tax Law, that on the date to which the acts of assessment whose declaration of illegality and annulment is sought relates, it was no longer the owner of the vehicles.

It is, therefore, necessary to conclude that the proof attached to the record is suitable and sufficient for the demonstration of the facts invoked by the Claimant (with the exception of the fact for which no proof was attached, of course).

From the facts established as proven it results that each of the acts of assessment in question, with the exception of the acts of assessment nos. 2009 ..., 2010 ... and 2012 ..., relating to the years 2009, 2010 and 2012 respectively and to the vehicle with license plate ...-...-..., relates to a tax year in which the Claimant was no longer the owner of each of the vehicles in question. Thus, having regard, as we have already seen, to the fact that the IUC is subjectively levied on the real owner of the vehicle in each year and in the month of registration (see articles 3, 4 and 6 of the IUC Code), it is necessary to conclude that the acts of assessment in question, with the exception of those relating to the vehicle with license plate ...-...-..., violate the provisions of the said legal provisions and must be declared illegal and annulled because they were performed in violation of the applicable legal norms and principles (see article 135 of the Administrative Procedure Code).

With reference to the acts of assessment of IUC whose illegality is declared herein, it is necessary to conclude for the illegality of the respective compensatory interest in the measure that, in the absence of an unpaid tax, the presuppositions to which article 35 of the General Tax Law refers cannot, naturally, be met, in particular by reason of the absence of a delay in the assessment of the tax.

Decision

In light of the foregoing, this Arbitral Tribunal decides to judge the request partially granted and consequently:

a) Declare the illegality of the acts of assessment of IUC and Compensatory Interest nos. 2011 ..., 2012 ..., 2012 ..., 2012 ..., 2010 ..., 2010 ..., 2010 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ..., 2009 ... and 2009 ..., annulling them;

b) Acquit the Respondent of the request with reference to the acts of assessment of IUC and Compensatory Interest nos. 2009 ..., 2010 ... and 2012 ..., in the total value of € 1,702.24;

c) Condemn the Claimant and the Respondent to the payment of costs in proportion to the extent of success, which is fixed at 6% for the Claimant and 94% for the Respondent.

The value of the action is fixed at € 29,640.31 (twenty-nine thousand six hundred forty euros and thirty-one cents), pursuant to the provisions of article 97-A, no. 1, subsection a) of the CPPT, applicable under article 29, no. 1, subsection a) of RJAT.

The value of the Arbitration Fee is fixed at € 1,530.00 pursuant to Table I of the Regulation of Costs of Tax Arbitration Proceedings, to be paid by the Claimant and the Respondent as set out above, pursuant to articles 12, no. 2, 22, no. 4 of RJAT and 4 of the said Regulation.

Let notification be made.

Lisbon, 15 July 2014

The Arbitrator

Francisco de Carvalho

Frequently Asked Questions

Automatically Created

Who is liable for IUC vehicle circulation tax when a vehicle has been sold but remains registered to the former owner?
Under Article 3 of the IUC Code, the person registered as vehicle owner is considered the IUC taxpayer. The Tax Authority argues this creates a definitive rule, not a rebuttable presumption, meaning the registered owner remains liable even after selling the vehicle until registration is updated. The Authority emphasizes that Article 6(1) defines the taxable event as ownership 'as attested by registration,' creating direct linkage between registration records and tax liability. Failure to update registration under Article 42 of the Vehicle Registration Regulation is attributable to the taxpayer's sphere of responsibility. However, the claimant contends that registration serves only as publicity, not as constitutive of ownership rights, and that Article 73 of the General Tax Law allows rebuttal of this presumption with contrary evidence of actual ownership transfer.
Can the registered owner presumption under IUC be rebutted in Portuguese tax arbitration?
This is the core dispute in case 302/2013-T. The claimant argues that Article 3 of the IUC Code establishes a rebuttable presumption under Article 73 of the General Tax Law, allowing proof that actual ownership had transferred through sale or total loss. However, the Tax Authority maintains that the legislative text 'are considered to be' (not 'are presumed to be') creates an absolute rule linking tax liability to registered ownership, forming part of a comprehensive reform establishing a Single Vehicle Circulation Tax based on vehicle registration records. The Authority argues that allowing rebuttal would violate legal certainty, administrative efficiency principles, and the systemic coherence between Article 3 (subjective incidence) and Article 6 (taxable event definition). The tribunal must determine whether registration creates a legal fiction or merely evidential presumption for IUC purposes.
What is the legal basis for challenging IUC tax assessments before the CAAD arbitration tribunal?
Under Article 2(1)(a) and Article 10 of Decree-Law 10/2011 (RJAT - Legal Regime for Arbitration in Tax Matters), taxpayers may challenge IUC assessment acts before CAAD in conjunction with Article 99(a) and Article 102(1)(d) of the Tax Procedure and Process Code (CPPT). The arbitration request must identify the contested liquidation acts and compensatory interest assessments, present legal grounds for illegality, and comply with procedural requirements including acceptance by CAAD's President, notification to the Tax Authority, constitution of the arbitral tribunal under Article 11 RJAT, submission of reply and responses, and a hearing under Article 18 RJAT. The procedure provides an alternative dispute resolution mechanism for tax controversies with binding arbitral decisions on assessment act legality.
How does subjective incidence apply to Imposto Único de Circulação (IUC) liquidation acts?
Subjective incidence under Article 3 of the IUC Code determines who qualifies as the taxpayer obligated to pay IUC. The provision states that vehicle owners 'as they appear in the property register' are considered taxpayers. This subjective incidence rule must be interpreted systematically with Article 6(1), which defines the taxable event (incidência objetiva) as 'ownership as attested by registration or enrollment in national territory.' The Tax Authority argues this creates unified coherence: only legal situations subject to registration trigger tax obligation, with direct relationship between tax obligation constitution and registration certificate issuance. The system enables tax administration to assess IUC based solely on Vehicle Registration elements without accessing private contracts. The 2008 IUC reform shifted from circulation-based taxation to ownership-based taxation tied to registration records, regardless of whether vehicles actually circulate on public roads.
What procedural steps are required to contest IUC and compensatory interest assessments under the RJAT?
To contest IUC and compensatory interest assessments under RJAT, taxpayers must: (1) submit an arbitration request pursuant to Article 10 of Decree-Law 10/2011 identifying contested acts and legal grounds; (2) have the request accepted by CAAD's President who notifies the Tax Authority; (3) appoint an arbitrator or have one appointed by CAAD's Deontological Council under Article 6(1); (4) await tribunal constitution under Article 11; (5) allow the Tax Authority to present its Reply (Resposta); (6) participate in the Article 18 hearing where witness examination and submissions occur; (7) submit written alegações (legal submissions) after the hearing; and (8) await the arbitral decision on assessment act legality. The procedure provides formal rights including witness presentation, documentary evidence submission (such as sale invoices, accident reports, or registration cancellation certificates), and full opportunity to present legal arguments on substantive and procedural grounds for assessment illegality.