Process: 332/2018-T

Date: April 24, 2019

Tax Type: IUC

Source: Original CAAD Decision

Summary

This CAAD arbitral decision (Process 332/2018-T) addresses the subjective incidence of Portugal's Single Circulation Tax (IUC) on vehicles under financial leasing contracts. The claimant, a credit institution, challenged 137 IUC assessments totaling €14,024.40 for tax years 2013-2018, arguing it should not be liable as it had sold the vehicles to third parties before the tax became due, despite lacking registration updates. The core legal issue involved interpreting Article 3(1) of the IUC Code (CIUC), which underwent significant amendment in August 2016. Prior to this date, the provision established a rebuttable presumption that the registered owner was the taxable person. After the amendment, IUC liability attached directly to whoever appears in the vehicle registration, eliminating the presumption structure. The claimant contended that sale invoices should rebut the registration presumption for pre-2016 assessments and that the Tax Authority cannot be considered a 'third party' requiring registration opposability. The Tax Authority argued that invoices alone do not prove valid sale contracts, that the claimant failed to rebut the evidentiary force of registration, and that post-2016 assessments are legally sound under the new framework. The tribunal examined whether registration serves merely evidentiary purposes or constitutes a substantive requirement for IUC liability, and whether financial institutions maintaining leasing portfolios can escape tax liability through unregistered vehicle transfers. This decision has significant implications for leasing companies, financial institutions engaged in vehicle financing, and the broader interpretation of registration requirements in Portuguese tax law.

Full Decision

ARBITRAL DECISION

REPORT:

A..., S.A., a company with registered office at Rua ..., n.º..., ...-... Lisbon, holder of the unique registration and identification number for a legal entity ..., hereinafter simply referred to as the Claimant, filed a request for the establishment of an arbitral tribunal in tax matters and a request for arbitral pronouncement, pursuant to the provisions of articles 2º no. 1 a) and 10º no. 1 a), both of Decree-Law no. 10/2011, of 20 January (Legal Regime for Arbitration in Tax Matters, hereinafter referred to as RJAT), petitioning for the declaration of illegality and consequent annulment of 137 (one hundred and thirty-seven) tax acts for the assessment of Single Circulation Tax (IUC) relating to the tax years 2013 to 2018, in the amount of € 14,024.40 and respective compensatory interest, in the amount of € 233.43 and, furthermore, the declaration of illegality of the acts of rejection of the administrative complaints filed against part of the aforementioned IUC assessment acts, as well as the condemnation of the Respondent to the reimbursement of an equal amount, further petitioning the payment of the corresponding indemnity interest.

To support its request, it alleges, in summary:

The Claimant is a credit institution, and in the context of its activity, financing of the motor vehicle sector assumes special relevance;

The motor vehicles whose assessments are being challenged were all subject to financial leasing contracts or long-term rental agreements;

The Claimant is not a taxable person for Single Circulation Tax purposes, because on the date when the tax became due, it was not the owner of the respective vehicles, as it had already sold them, notwithstanding the fact that such transfer was not registered;

The registration of vehicle ownership is not a condition for the validity of the purchase and sale contract, not preventing the production of the transfer effect;

The lack of registration only prevents full effectiveness when entities considered third parties for registration purposes are involved;

The Tax Authority cannot be considered a third party for registration purposes, through the means that the purchase and sale contracts would be unopposable to it;

The presumption derived from vehicle registration is rebuttable, admitting proof to the contrary;

The invoices submitted by the Claimant prove the transfers of the vehicles in question, enjoying the presumption of truthfulness resulting from article 29º of the CIVA;

The challenged assessments are not substantiated;

The Claimant paid the tax in question in the present proceedings, as well as the corresponding compensatory interest;

The Claimant filed an administrative complaint against part of the assessments in question in the present proceedings, which complaints were partially rejected;

The Claimant submitted 4 annexes, 274 documents and an opinion, and listed two witnesses.

In the request for arbitral pronouncement, the Claimant opted not to designate an arbitrator, wherefore, pursuant to the provisions of article 6º no. 1 of the RJAT, the signatory was designated by the Ethics Council of the Centre for Administrative Arbitration, and the appointment was accepted as legally provided.

The arbitral tribunal was constituted on 24 September 2018.

Notified pursuant to and for the purposes of the provisions of article 17º of the RJAT, the Respondent presented a response, invoking, in summary:

As from 02/08/2016, article 3º no. 1 of the CIUC ceased to provide for any legal presumption, with the tax now being levied on the person in whose name the vehicle is registered;

Wherefore the tax acts challenged relating to the tax years 2016 to 2018 are free from any error;

The tax acts are sufficiently substantiated;

As regards the tax acts challenged relating to the tax years 2013 to 2015, to which the previous wording of article 3º no. 1 of the CIUC applies, the Claimant failed to rebut the evidentiary force resulting from the registration;

The invoices submitted by the Claimant do not constitute any purchase and sale contract nor are they capable of proving the conclusion of a purchase and sale contract;

It is not demonstrated in the proceedings that the invoices submitted by the Claimant were paid nor the date on which such payment occurred;

The interpretation of article 3º no. 1 of the CIUC, in the wording in force until 02/08/2016, defended by the Claimant, is non-conforming with the Constitution, by violation of the principles of confidence, legal certainty, efficiency of the tax system and proportionality;

The failure to comply with the obligation to update the registers creates responsibility for the Claimant for the arbitration costs.

It concludes, petitioning the rejection of the request for arbitral pronouncement.

The Respondent submitted a copy of the administrative file, and did not list any witnesses.

Given the position assumed by the parties and the absence of any need for additional production of evidence, the holding of the meeting referred to in article 18º of the RJAT was dispensed with.

The Claimant did not waive the holding of submissions, wherefore the proceedings advanced to the submissions phase, successive submissions, and consequently the deadline for rendering the decision was extended by one month.

Both parties presented submissions, with the Claimant responding to the submissions presented by the Respondent, which request was struck from the record.

CASE MANAGEMENT:

The Arbitral Tribunal was regularly constituted and is materially competent.

There are no defects that invalidate the proceedings.

The parties have legal personality and capacity and are legitimate, with no defects in representation.

There are no exceptions or preliminary issues that prevent the examination of the merits and which it is necessary to examine ex officio.

QUESTIONS TO BE DECIDED:

Given the positions assumed by the parties, set forth in the arguments presented, it is necessary to:

Determine the scope of the amendment to article 3º no. 1 of the CIUC effected by Decree-Law 41/2016, of 01 August;

Determine the legal value of vehicle registration for purposes of IUC, particularly regarding the subjective scope of the tax;

Determine whether the failure to update vehicle registration permits considering, as taxable persons for IUC purposes, the persons in whose names the vehicles are registered;

Determine whether the invoices submitted by the Claimant are or are not capable of proving the alleged alienations.

FACTS:

Facts Established

With relevance for the decision to be rendered in the present proceedings, the following facts were established as proven:

The Claimant is a credit institution;

In the context of its activity, financing of the motor vehicle sector assumes special relevance;

A substantial part of the Claimant's activity is reconducible to the conclusion of financial leasing contracts or long-term rental agreements;

During the execution period of those contracts, the Claimant maintains the legal position of lessor;

The Claimant was notified of the 137 IUC assessment acts identified in Annex A attached to the request for arbitral pronouncement, relating to the tax years 2013 to 2018, in the global amount of € 14,024.40 and respective compensatory interest, in the amount of € 233.43;

The Claimant filed an administrative complaint against the assessments relating to the years 2013 to 2016, which complaints were subject to partial rejection;

By official letters dated 13/04/2018 and 17/04/2018, the Claimant was notified of the partial rejection of the administrative complaints filed;

The assessments in question relate to vehicles in relation to which, on the date of the occurrence of the tax event, an invoice for sale to a third party had been issued by the Claimant;

The Claimant paid the tax assessed by the Respondent and reflected in the assessments now being challenged, as well as the respective compensatory interest.

The request for establishment of the arbitral tribunal in tax matters and for arbitral pronouncement was filed on 13/07/2018.

Facts Not Established

With interest for the proceedings, no other fact was established as proven.

Grounds for the Facts

The conviction regarding the facts established as proven was formed on the basis of documentary evidence submitted by the parties, indicated with respect to each of the points, and whose conformity with reality was not questioned, as well as the allegations made and not contested.

ON THE LAW:

The first of the questions to be analyzed concerns the interpretation of the norm contained in no. 1 of article 3º of the CIUC, either in the wording in force before the entry into force of Decree-Law 41/2016, of 01 August, or in the wording given by this legislation.

This is because, given that the present proceedings concern IUC assessment acts relating to the tax years 2013 to 2018, both versions of the cited provision are applicable to the challenged assessments.

But, as we shall see, for the case at hand the amendment that occurred is perfectly irrelevant.

Let us see:

Article 3º no. 1 of the CIUC provided, in the wording in force until the entry into force of Decree-Law 41/2016, of 01 August:

"Taxable persons for the tax are the owners of the vehicles, these being considered to be the natural or legal persons, of public or private law, in whose names they are registered."

Before the entry into force of the aforementioned Decree-Law 41/2016, the question of whether the cited provision provided for a legal fiction or rather a legal presumption was widely debated, and the case law was practically unanimous in defending that article 3º no. 1 of the CIUC established a true legal presumption, rebuttable, therefore, through proof to the contrary.

The Respondent, although invoking disagreement with this line of case law, does not attempt to contradict it, limiting itself to alleging that the documents submitted by the Claimant – invoices for alienation of the vehicles – are not capable of rebutting such presumption.

A question on which we shall pronounce ourselves further below.

Following the entry into force of the aforementioned Decree-Law 41/2016, article 3º no. 1 of the CIUC came to have the following wording:

"Taxable persons for the tax are the natural or legal persons, of public or private law, in whose names the ownership of the vehicles is registered."

Regarding the amendment made, the Respondent invokes that, from the entry into force of the new wording of article 3º no. 1 of the CIUC, there is no doubt that currently taxation is levied on the holder of the ownership right of the motor vehicle, "exactly as it is found in the vehicle register."

In turn, the Claimant argues that, despite the aforementioned amendment, article 3º no. 1 of the CIUC continues to establish a rebuttable presumption of ownership of the vehicles.

In this, we believe the Claimant is correct.

In fact, as has been increasingly defended by more recent case law, including arbitral case law, notably in the decision rendered in case 333/2018-T (available at www.dgsi.pt), cited by the Claimant, which we follow, "the amendment introduced in article 3º, no. 1 by referring that 'taxable persons for the tax are the persons (…) in whose names the ownership of the vehicles is registered' in place of 'taxable persons for the tax are the owners of the vehicles, these being considered to be the persons (…), in whose names they are registered', sought to go beyond the legal notion of ownership, shifting the determining emphasis of the tax incidence to the registration of ownership.

However, the registration of the right of ownership of a vehicle has a merely declarative effect and not a constitutive effect of any registered right, wherefore it is configured as a presumption of the existence of the right, in the terms in which it is registered, which can be rebutted, that is, it admits proof to the contrary." (emphasis ours).

Concluding in that decision: "as stated in Arbitral Decision no. 16/2018-T, 'the final registration constitutes nothing more than the presumption that the right exists and belongs to the registered owner, in the exact terms of the registration (…), admitting (…) counterproof, as follows from the law and case law exemplarily pointing to the Judgments of the Supreme Court of Justice nos 03B4369 and 07B4528, respectively, of 19/02/2004 and 29/01/2008'".

Wherefore, we understand that, despite the wording enacted by Decree-Law 41/2016, it remains possible to rebut the presumption of ownership resulting from the registration.

This is, in our view, the interpretation that is in line, on the one hand, with the principle enunciated in article 11º no. 3 of the General Tax Law, according to which, in cases of doubt regarding the interpretation of tax norms, "regard must be had to the economic substance of the tax facts" and, on the other hand, with the principle of equality in the distribution of public charges, which requires that the taxation of the generality of taxpayers, insofar as possible, be based on the economic reality underlying the tax facts[1].

Indeed, any other interpretation would violate, in addition to the principles of confidence, legal certainty and proportionality, the principle of equivalence enshrined in article 1º of the CIUC, pursuant to which it is established that IUC seeks to "burden taxpayers to the extent of the environmental and road cost which they cause, in implementation of a general rule of tax equality".

It is not apparent, contrary to what is advocated by the Respondent, that such interpretation is non-conforming with the Constitution, particularly regarding the principles of confidence, legal certainty, efficiency of the tax system and proportionality.

On the contrary, the interpretation defended by the Respondent would be violative of the cited principles.

Having thus been established,

Once the purchase and sale contract is concluded, the purchaser will be placed, ex contractu, in the position of owner, consequently becoming applicable to them no. 1 of article 3º of the CIUC; that is, the new owner comes to hold, for purposes of IUC, the position of taxable person for the tax.

And such a solution is required from the moment of the perfection of the purchase and sale contract not only because the CIUC so determines, but also due to the fact that among us the principle of consensuality prevails, which entails that the transfer of ownership occurs by mere effect of the contract – cf. article 408º no. 1 of the Civil Code.

And what has just been stated is relevant to support our position regarding the legal value of vehicle registration. However, it is recalled that according to the general rule seen above the transfer of the right occurs ex contractu, without the need for any material act or publicity[2].

Combining the norms contained in articles 1º of Decree-Law no. 54/75, of 12 February and 7º of the Real Estate Registration Code (applicable ex vi article 29º of Decree-Law no. 54/75, of 12 February) it is easily inferred that the primary function of vehicle registration is: to provide publicity to the legal situation of motor vehicles.

The registration does not, therefore, have a constitutive nature, rather merely declarative, serving only to presume the existence of the right and its ownership. Note: presume and not fictionally establish, thus being capable of being rebutted through proof to the contrary.

And this is so precisely because, pursuant to the provisions of article 408º of the Civil Code, and save for the 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 being dependent on any subsequent act, e.g., registration in the register.

Thus, as the law does not provide for any exception for the contract of purchase and sale of a motor vehicle, the real effect normally produces its effects, with the purchaser becoming its owner, independently of the registration.

Now, if independently of the registration the purchaser becomes the owner, the registered owner ceases concomitantly to be so, notwithstanding that in the register they appear as such.

In the present case, and notwithstanding the lack of registration, the alleged transfers effected may be opposable to the Respondent, given the fact that the latter cannot be considered as a third party for registration purposes, pursuant to and for the purposes of the provisions of no. 1 of article 5º of the Real Estate Registration Code.

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

Thus, and since the presumption resulting from the registration is, as we have seen, rebuttable, let us examine whether the evidence produced by the Claimant is capable of fulfilling such a goal.

In order to prove that the vehicles in question in the present proceedings were alienated on a date prior to the occurrence of the tax event, the Claimant submits invoices for the sale of each of the vehicles.

Regarding the invoices submitted by the Claimant, the Respondent alleged that these are not capable of proving the conclusion of a purchase and sale contract, "because such documents do not by themselves reveal an indispensable and unequivocal declaration of intent (i.e., acceptance) on the part of the alleged purchasers".

Further alleging that, as results from the invoices submitted, "these only serve as receipt after good collection", "collection that the Claimant rigorously does not demonstrate".

Concluding that, not being demonstrated the payment of the respective price, the invoices submitted cannot be capable of demonstrating the transfer of ownership of the motor vehicles.

It is true that, as the Respondent alleges, the invoices submitted "do not by themselves reveal an indispensable and unequivocal declaration of intent (i.e., acceptance) on the part of the alleged purchasers". But, as already explained, as the law does not provide for any specific form for the conclusion of a purchase and sale contract of a motor vehicle, and the Respondent has not argued the falsity of the invoices submitted, limiting itself to attempting to set aside their evidentiary force, it must necessarily be accepted as proof of the purchase and sale contract the invoice issued in accordance with the law, as is the case with the invoices in question in the present proceedings.

On the other hand, the fact that the invoices submitted expressly state that they only serve as receipt after good collection and that the payment of the respective amount is not demonstrated in the proceedings is, as is evident, manifestly irrelevant.

First of all, because what is at issue here is the capability of the invoices to demonstrate the alienation of the vehicle and not their capacity to serve or not as receipt or acknowledgment of receipt of the respective price.

And above all because, as is known, the payment of the price is not an element of the purchase and sale contract but an essential effect thereof, as results from the provisions of article 879º c) of the Civil Code.

Wherefore, even if the respective price had not been paid, this would not prevent there from being a purchase and sale contract, whose first essential effect is the transfer of ownership of the good – cf. 879º a) of the Civil Code.

Thus, it must inevitably be considered that all vehicles in relation to which an invoice for sale to a third party was issued were alienated by the Claimant on the dates of issuance of the invoices.

Having said this, pursuant to the provisions of article 6º no. 3 of the CIUC, the tax is deemed to be due on the first day of the assessment period referred to in article 4º no. 2 of the CIUC.

Whereby it is verified that, on the first day of the assessment period referred to in article 4º no. 2 of the CIUC (date of registration or each of its anniversaries), the Claimant had alienated all the vehicles in question in the present proceedings, notwithstanding the fact that the aforementioned alienations were not reflected in the competent register.

Thus, given the fact that, as already explained, the presumption resulting from the registration is rebuttable through proof to the contrary, proof which is considered to have been produced with the presentation of the invoices for sale of the vehicles, it is verified that, regarding the vehicles in question in the present proceedings, the Claimant is not their owner on the date of the tax event, and is therefore not a taxable person for the IUC assessed.

From which results clear the absence of legal basis for the challenged assessment acts, necessitating their annulment, as well as the annulment of the decision rejecting the administrative complaints filed.

Finally, the Claimant further petitions the condemnation of the Respondent to the payment of indemnity interest.

Regarding indemnity interest, article 43º no. 1 of the General Tax Law provides that "indemnity interest is due when it is determined, in administrative complaint or judicial challenge, that there was error attributable to the services which resulted in payment of the tax debt in an amount higher than that legally due."

In the case now under review, the error affecting the challenged assessments, whose illegality has been declared, is attributable to the Tax Authority, wherefore there is no doubt that the Claimant has the right to receive indemnity interest.

It remains, however, to determine, from which date the same shall be due.

This is because, if it is certain that the error is attributable to the Tax Authority, it is no less certain that, in light of the failure to update the vehicle register by the Claimant, the Tax Authority could only become aware of that error and remedy it when properly alerted by the Claimant.

And such an alert on the part of the Claimant arose, as regards the assessments relating to the tax years 2013 to 2016, with the administrative complaints filed, in which the Claimant submitted documentary evidence capable of setting aside the presumption of ownership of the vehicles whose assessments are now being challenged.

Now, given the inquisitorial principle contained in articles 58º of the General Tax Law and 69º e) of the Tax Procedure and Procedure Code, the Tax Authority was required to proceed with the analysis of the documents submitted by the Claimant, which, as came to be verified, were to be essential for the resolution of the dispute.

Wherefore, as regards the assessments relating to the tax years 2013 to 2016, the Tax Authority could and should have altered its decision and corrected the error upon examination of the respective complaints, an examination which took place on 13/04/2018 (tax year 2016) and 17/04/2018 (tax years 2013 to 2015).

Having failed to do so, it should be condemned to the payment of indemnity interest from the indicated dates, from which, it is stressed, it could and should have remedied the error.

This cannot, however, be said regarding the assessments relating to the tax years 2017 and 2018, as regards which no administrative complaint was filed by the Claimant, wherefore only upon notification of the filing of the request for establishment of the arbitral tribunal could the Respondent have knowledge of the documents submitted by the Claimant and which came to determine the resolution of the dispute.

Having the Respondent been notified of the filing of the request for establishment of the arbitral tribunal on 19/07/2018 and having 30 days to proceed with the revocation, ratification, amendment or conversion of the tax act whose illegality was raised, indemnity interest shall be due from the 30th day counted from the day following 19/07/2018, that is, from 18/08/2018.

OPERATIVE PART

In light of the foregoing, it is decided:

To judge as well-founded, by proof, the petition for declaration of illegality of the decisions rejecting the administrative complaints filed and of the 81 IUC assessment acts and compensatory interest thereto underlying, as well as of the other 56 IUC assessment acts and compensatory interest autonomously challenged;

To condemn the Respondent to reimburse the Claimant of the tax and indemnity interest unduly paid, in the global amount of € 14,257.83, plus indemnity interest at the legal rate, counted from 13/04/2018 (assessments for 2016), 17/04/2018 (assessments for 2013 to 2015) and 18/08/2018 (assessments for 2017 and 2018), until full payment to the Claimant of the amounts assessed.

The value of the case is set at € 14,257.83, pursuant to subparagraph a) of no. 1 of article 97º-A of the Tax Procedure and Procedure Code, applicable by virtue of subparagraphs a) and b) of no. 1 of article 29º of the RJAT and no. 2 of article 3º of the Regulation of Costs in Tax Arbitration Proceedings.

The value of the arbitration fee is set at € 918.00, pursuant to Table I of the Regulation of Costs in Tax Arbitration Proceedings, as well as no. 2 of article 12º and no. 4 of article 22º, both of the RJAT, and no. 4 of article 4º, of the cited Regulation, to be paid by the Respondent, as the unsuccessful party.

Register and notify.

Lisbon, 24 April 2019.

The Arbitrator,

Alberto Amorim Pereira

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

[1] JORGE LOPES DE SOUSA, In "Tax Procedure and Procedure Code", Volume I, 6th Edition, Áreas Editora, Lisbon, 2011, pp. 590 et seq.

[2] Cf. HEINRICH EWALD HÖRSTER, in "The General Part of the Portuguese Civil Code", 2nd Reprint of the 1992 Edition, Almedina, p. 467

Frequently Asked Questions

Automatically Created

Who is the subjective taxpayer for IUC on vehicles under financial leasing or long-term rental contracts in Portugal?
Under Portuguese law, the subjective taxpayer for IUC depends on the applicable timeframe. For vehicles under financial leasing or long-term rental contracts before August 2, 2016, Article 3(1) of the CIUC established a rebuttable presumption that the person in whose name the vehicle was registered was the taxable person. The lessor/financial institution would be liable unless this presumption was rebutted with proof that ownership had transferred. After the 2016 amendment by Decree-Law 41/2016, the IUC is levied directly on the person in whose name the vehicle is registered, eliminating the presumption structure and making registration determinative rather than merely evidentiary.
Can the vehicle registration presumption for IUC liability be rebutted with proof of sale such as invoices?
The ability to rebut the vehicle registration presumption for IUC liability depends on the tax year in question. For assessments relating to 2013-2015, the previous version of Article 3(1) CIUC allowed taxpayers to rebut the presumption arising from registration by providing contrary evidence. However, mere invoices documenting sales may be insufficient; the Tax Authority argued that invoices alone do not constitute or prove a valid purchase and sale contract, especially when payment and transfer of possession are not demonstrated. The claimant must prove the actual transfer of ownership occurred before the tax became due. For assessments from 2016 onward, the amended provision eliminates the rebuttable presumption entirely, making the registered owner liable regardless of contrary evidence.
Is the Portuguese Tax Authority considered a third party for purposes of vehicle registration in IUC disputes?
The Portuguese Tax Authority's status as a 'third party' for vehicle registration purposes is central to IUC disputes. The claimant argued that under Portuguese civil law, registration is not required for the validity of sale contracts but only affects opposability to third parties, and that the Tax Authority should not be considered a third party. This would mean unregistered transfers should be recognized for tax purposes. The Tax Authority implicitly rejected this position by enforcing IUC against registered owners. The issue involves reconciling civil law principles (where contracts are valid between parties without registration) with tax law requirements (where registration serves as the basis for tax liability). Portuguese legal doctrine generally treats registration as having evidentiary value, but the 2016 CIUC amendment strengthened registration's role in determining tax liability.
What happens when a financial institution sells a leased vehicle but the ownership transfer is not registered?
When a financial institution sells a leased vehicle without registering the ownership transfer, IUC liability consequences vary by timeframe. Before the August 2016 amendment, the institution could potentially escape liability by proving the sale occurred before the tax became due, rebutting the registration presumption with evidence such as invoices, payment records, and delivery documentation. However, this requires comprehensive proof of the completed transaction, not merely invoices. After the 2016 amendment to Article 3(1) CIUC, the financial institution remains liable for IUC as long as it appears as the registered owner, regardless of any unregistered sale. This creates a strong incentive for institutions to promptly update vehicle registrations upon sale. Failure to do so may create liability for IUC assessments and expose the institution to responsibility for arbitration costs.
How can taxpayers challenge IUC tax assessments through CAAD arbitration and claim reimbursement with compensatory interest?
Taxpayers can challenge IUC assessments through the CAAD (Centro de Arbitragem Administrativa) by filing a request for arbitral proceedings under Articles 2(1)(a) and 10(1)(a) of the RJAT (Regime Jurídico da Arbitragem em Matéria Tributária). The process involves: (1) filing a request for establishment of an arbitral tribunal and arbitral pronouncement; (2) submitting supporting documentation such as invoices, contracts, and expert opinions; (3) optionally designating an arbitrator or allowing the CAAD Ethics Council to appoint one; (4) awaiting the Tax Authority's response; and (5) proceeding through submissions if not waived. If successful, taxpayers can obtain declarations of illegality and annulment of tax assessments, reimbursement of amounts paid, compensatory interest for amounts paid under illegal assessments, and indemnity interest. The claimant paid €14,024.40 in IUC plus €233.43 in compensatory interest, seeking full reimbursement with additional indemnity interest through arbitration.