IUC Tax Liability in Financial Leasing: Who Pays Vehicle Circulation Tax? (CAAD 335/2014-T)

ARBITRAL DECISION

Case No. 335/2014-T

I. Report[1]

1. A... —..., LDA, with registered office in..., taxpayer identification number...(hereinafter referred to as the Claimant), filed on 15.04.2014, pursuant to articles 2, no. 1, paragraph a) and 10 of Decree-Law No. 10/2011 of 20 January, as amended (hereinafter the Legal Regime for Tax Arbitration or LRTA), a request for an arbitral decision aimed at the annulment of the decisions rejecting the administrative review requests no. ...2014..., no. ...2014..., no. ...2014..., no. ...2014... and no. ...2014..., with the Tax and Customs Authority (hereinafter, the Respondent or TCA) as the defendant.

a) Constitution of the Arbitral Tribunal

1. In accordance with articles 5, no. 2, paragraph a), 6, no. 1 and 11, no. 1, paragraph a) of the LRTA, the Deontological Council of this Centre for Administrative Arbitration (CAAD) appointed as sole arbitrator the signatory, who accepted the appointment.

2. Pursuant to the provisions of paragraph c) of no. 1 and no. 8 of article 11 of the LRTA, as communicated by the President of the Deontological Council of CAAD, the Sole Arbitral Tribunal was constituted on 25.06.2014.

b) Procedural History

1. In the request for an arbitral decision (hereinafter initial petition or IP), the Claimant petitions for the annulment of the decisions rejecting the administrative review requests no. ...2014..., no. ...2014..., no. ...2014..., no. ...2014... and no. ...2014... concerning official assessments of the Single Vehicle Circulation Tax (IUC) for the years 2009, 2010, 2011, 2012 and 2013, hereinafter identified, in the total amount of €41,383.99.

The Claimant further petitions that "as a consequence of the annulment of the decisions of the Tax Authority and the respective IUC collection documents (...), a decision should be rendered ordering the reimbursement of the amounts unduly paid by the claimant as title of IUC, compensatory interest and respective penalties, in the total amount of €53,563.99 (fifty-three thousand five hundred and sixty-three euros and ninety-nine cents), plus the respective indemnity interest, provided for in articles 43 of the LGT and 61 of the CPPT, as well as the unduly paid penalties".

To substantiate the request for an arbitral decision, it argues, in essence, that such decisions are based on "erroneous interpretation of the law, namely the provisions of article 3, no. 1 of the CIUC, since the presumption resulting from that provision admits proof to the contrary, and given the documentation attached in due form by the claimant and which is contained in the respective administrative files, it clearly proves that the ownership of the vehicles at the date of the incidence of the Single Vehicle Circulation Tax belonged to third parties and therefore the claimant should not be considered the taxpayer subject to said tax obligation".

1. The TCA presented a response in which it petitions for the dismissal of the claims formulated by the Claimant, sustaining the legal conformity of the acts subject to the request for an arbitral decision.

2. By order of 15.9.2014, the Sole Arbitral Tribunal, pursuant to the provisions of paragraph c) of article 16 of the LRTA, decided, without opposition from the parties, that it was not necessary to hold the meeting referred to in article 18 of the LRTA, as the circumstances provided for in the various paragraphs of no. 1 of this provision were not present. It further decided, in accordance with no. 2 of article 18 of the LRTA, that oral arguments were not necessary, as the positions of the parties were fully set out in their respective pleadings, and set 3 November 2014 as the date for the arbitral decision.

c) Substantive Issue to be Decided

1. The substantive issue to be assessed and decided regarding the merits of the case, as it emerges from the procedural documents of the parties, concerns the legality of the qualification, made by the tax acts subject to the request for an arbitral decision, of the Claimant (or of company B...-..., SA, taxpayer identification number..., incorporated by it) as the taxpayer subject to the Single Vehicle Circulation Tax regarding the vehicles and taxation periods identified in the IP. To do so, it is necessary to clarify the configuration of the subjective incidence of the IUC that results from article 3, no. 1 of the Code of the Single Vehicle Circulation Tax (CIUC), in particular determining whether the tax liability is based strictly on the registration record of ownership, in which case the person in whose name the vehicle is registered constitutes the taxpayer of the tax, or whether the registration operates only as a presumption of tax incidence, with regard to ownership or another situation considered tax-relevant, which is rebuttable, in accordance with the provisions of article 73 of the General Tax Law, by whoever is not the owner of the vehicle, even if registered as such, by means of proof to the contrary made using the means of proof admitted in law.

It is therefore necessary to assess and decide.

II. Procedural Matters

1. First and foremost, the procedural issues that manifest in the case shall be resolved.

2. The first issue to be assessed in this respect concerns the jurisdiction of this Tribunal given that the Claimant, in its IP, requests the condemnation of the TCA to reimburse the amounts unduly paid as penalties (see above no. 4).

The violation of the rules of jurisdiction ratione materiae determines the absolute incompetence of the court, whose knowledge is official (article 16, nos. 1 and 2 of the Code of Procedure and Tax Process applicable by virtue of article 29, no. 1, paragraphs a) and c) of the LRTA) and must precede that of any other matter (article 13 of the Code of Process of the Administrative Courts applicable by virtue of article 29, no. 1, paragraph c) of the LRTA).

Now, given the provisions of article 2, no. 1 of the LRTA, and the enumeration it contains of the criteria for material determination of the jurisdiction of arbitral tribunals (in the following terms: "a) The declaration of illegality of acts assessing taxes, self-assessment, withholding at source and payment on account; b) The declaration of illegality of acts fixing the taxable matter when it does not give rise to the assessment of any tax, of acts determining the taxable income and of acts fixing patrimonial values"), it is clear that the jurisdiction thereof does not include disputes concerning the application of penalties in the context of tax administrative offense proceedings (see article 101, paragraph c) of the LGT). This is, moreover, a solution already properly noted in the doctrine – see thus JORGE LOPES DE SOUSA, Guide to Tax Arbitration, Coimbra, Almedina, 2013, p. 105: "Thus, outside the jurisdiction of these arbitral tribunals is the assessment of disputes arising (...) in tax administrative offense proceedings".

Accordingly, this Tribunal declares itself incompetent to hear the matter concerning the claim formulated by the Claimant for reimbursement of the amounts paid as penalties in the total amount of €12,180.

1. It is further clarified that the legitimacy of the Claimant to challenge the acts subject to the present proceedings which were issued in relation to company B...-..., SA, taxpayer identification number..., results from the incorporation of this company by merger into the Claimant (as evidenced by the commercial certificate attached as doc. no. 1 to the IP), with the consequent global transmission of the rights and obligations of the merged company, from which results the interest of the Claimant in the annulment of the tax acts at issue herein (articles 97, no. 4, paragraph a) and 112, paragraph a) of the Code of Commercial Companies, article 9, nos. 1 and 4 of the Code of Procedure and Tax Process and article 30, no. 2 of the Code of Civil Procedure).

2. The cumulation of claims relating to the acts of express rejection of the administrative review requests above indicated and to the tax acts of assessment of Single Vehicle Circulation Tax (IUC) and compensatory interest maintained by them subject to the IP is admissible in light of article 3, no. 1 of the LRTA, given that the success of the claims depends on the assessment of the same factual circumstances and the interpretation and application of the same legal rules.

3. Furthermore, the Tribunal was regularly constituted and is competent to assess the substantive issue above indicated (article 2, no. 1, paragraph a) of the LRTA), the parties have legal personality and capacity and have standing (articles 4 and 10, no. 2 of the LRTA and article 1 of Ordinance No. 112-A/2011, of 22 March).

III. Decision on Factual Matters and Its Justification

1. Having examined the documentary evidence produced and the tax administrative files attached relating to the administrative review requests nos. ...2014..., ...2014..., ...2014..., ...2014... and ...2014... (hereinafter referred to as AF1, AF2, AF3, AF4 and AF5), the Tribunal finds proven, with relevance to the decision of the case, the following facts:

I. The Claimant is a commercial limited liability company whose corporate purpose is the purchase, sale and rental of machinery and motor vehicles (as evidenced by the permanent certificate with access code ...-...-... attached as doc. no. 1 to the IP).

II. The Claimant incorporated by merger in 2012 company B...-..., SA, taxpayer identification number... (as evidenced by the certificate attached as doc. no. 1 to the IP).

III. Company B...-..., SA incorporated by the Claimant was subject to official assessments of IUC and compensatory interest as evidenced by documents contained in pages 16 to 141 of AF1, pages 17 to 148 of AF2, pages 17 to 143 of AF3, pages 17 to 164 of AF4 and pages 17 to 143 of AF5, which are hereby deemed reproduced, concerning the vehicles and the years and in the manner set out in tables 1 to 11 presented below:

[Tables referenced but content not fully rendered in source]

IV. All vehicles identified in the tables contained in the preceding point are registered in the name of the Claimant – or of company B...-..., SA incorporated by it – in the Vehicle Registration Record (fact acknowledged in nos. 14 and 28 of the IP).

V. The vehicles identified in the tables contained in point no. III were sold to customers of the Claimant at a time prior to the month and year of taxation relating to the IUC assessed, as evidenced by copies of the invoices/receipts contained in pages 142 to 208 of AF1, pages 149 to 217 of AF2, pages 144 to 205 of AF3, pages 165 to 237 of AF4 and pages 144 to 204 of AF5.

VI. The Claimant proceeded, between July and October 2013, to the payment of the tax and compensatory interest resulting from the assessments identified in the tables reproduced in point no. III, as evidenced by documents contained in pages 16 to 141 of AF1, pages 17 to 148 of AF2, pages 17 to 143 of AF3, pages 17 to 164 of AF4 and pages 17 to 143 of AF5.

VII. The Claimant filed in relation to the assessment acts identified in the tables contained in point no. III, on 3 December 2013, the administrative review requests with the procedure numbers ...2014..., ...2014..., ...2014..., ...2014... and ...2014..., as evidenced by the requests contained in pages 1 to 10 of AF1, pages 1 to 10 of AF2, pages 1 to 10 of AF3, pages 1 to 10 of AF4 and pages 1 to 10 of AF5.

VIII. By order of 27.01.2014, as evidenced by doc. no. 2 attached to the IP and pages 222 to 223 of AF1, which is hereby deemed reproduced, the administrative review request no. ...2014... was rejected, corresponding to 127 official assessments of IUC and compensatory interest in the amount of €8,551.85.

IX. By order of 27.01.2014, as evidenced by doc. no. 3 attached to the IP and pages 232 to 234 of AF2, which is hereby deemed reproduced, the administrative review request no. ...2014... was rejected, corresponding to 132 official assessments of IUC and compensatory interest in the amount of €7,754.34.

X. By order of 27.01.2014, as evidenced by doc. no. 4 attached to the IP and pages 219 to 221 of AF3, which is hereby deemed reproduced, the administrative review request no. ...2014... was rejected, corresponding to 127 official assessments of IUC and compensatory interest in the amount of €8,764.09.

XI. By order of 27.01.2014, as evidenced by doc. no. 5 attached to the IP and pages 254 to 256 of AF4, which is hereby deemed reproduced, the administrative review request no. ...2014... was rejected, corresponding to 149 official assessments of IUC and compensatory interest in the amount of €10,284.90.

XII. By order of 27.01.2014, as evidenced by doc. no. 6 attached to the IP and pages 217 to 219 of AF5, which is hereby deemed reproduced, the administrative review request no. ...2014... was rejected, corresponding to 127 official assessments of IUC and compensatory interest in the amount of €6,028.81.

XIII. The decisions rejecting the administrative review requests referred to in the preceding points were based on the following essential reasoning (point no. 3 of the information contained in docs. no. 2, 3, 4, 5 and 6 attached to the IP):

"The IUC is levied on the ownership of the vehicles, as attested by the registration (cf. no. 1 of article 6 of the CIUC), and not on the use or enjoyment thereof.

On the other hand, the tax is due until the registration is not canceled.

Now, the cancellation of the registration being the administrative act by which authorization for the vehicle to circulate on public roads is withdrawn (cf. paragraph b) of article 2 of DL 128/2006, of 5/7, a contrario), and the IMT being the entity with exclusive competence for the maintenance of the National Registration Record (cf. article of the same ordinance), as long as that institute does not proceed to cancel the registration, the IUC will be due.

Notwithstanding that it may be admitted that, from the perspective of the rules of civil law and property registration, the absence of registration does not affect the acquisition of the status of owner and that registration is not a condition of validity of contracts with real effect, under the terms established in the CIUC (which in the case at hand constitutes special law, which, in view of the general terms of law derogates the general rule), the tax legislator intentionally and expressly wished that those in whose name the vehicles are registered be considered owners thereof".

XIV. The Claimant was notified of the decisions rejecting the administrative review requests above indicated on 29.1.2014 (as evidenced by the receipts contained in the last page of the AFs).

1. The Tribunal's conviction regarding the facts found proven resulted from the recognition of facts assumed in the procedural documents of the parties, from the documents attached to the case by the Claimant and from the documents contained in the AFs, all as specified in the points of the factual matters above stated.

It is noted, in particular, that the sales of the vehicles to which the assessments challenged relate, which was found proven in point no. V, was based on the invoices/receipts issued by the Claimant (or by the company incorporated by it) which constituted sufficient probative evidence to form the Tribunal's conviction as to the reality of the verbal contracts of transfer of ownership of the vehicles to which they refer.

1. There is no factual relevance for the decision of the case found not proven.

IV. On the Law

a) Legal Framework

1. The essential legal framework that is relevant to the decision of the case concerns the provisions of articles 3, 4 and 6, no. 1 of the Code of the Single Vehicle Circulation Tax (CIUC), approved by Law No. 22-A/2007, of 29/06, as amended with subsequent amendments relevant ratione temporis.

Article 3, no. 1 of the CIUC, entitled "Subjective Incidence", thus establishes:

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

For its part, article 4, on "Temporal Incidence" states the following:

"1 - The single vehicle circulation tax is of annual periodicity, being due in full in each year to which it refers.

2 - The taxation period corresponds to the year beginning on the date of registration or on each of its anniversaries, regarding vehicles of categories A, B, C, D and E, and to the calendar year, regarding vehicles of categories F and G.

3 - The tax is due until the cancellation of the registration or record due to the scrapping carried out in accordance with the law".

Article 6, no. 1 of the CIUC, on "Taxable Event and Enforceability", further provides:

"The taxable event of the tax is constituted by the ownership of the vehicle, as attested by the registration or record in national territory".

b) Arguments of the Parties

1. Having regard to this legal framework, the Claimant in its IP alleges, in essence, the following:

i) "The registration of ownership of the motor vehicle is mandatory (cf. articles 1 and 5 of the ordinance regulating Vehicle Registration) and aims only to 'publicize' the legal situation of property. There is no (...) any norm in the Portuguese legal system regarding the constitutive character of vehicle ownership registration" (no. 27).

ii) "The motor vehicles listed in the IUCs above identified are effectively registered in the name of the present claimant, as a result of their acquisition. Therefore, the registration constitutes a presumption that it exists and belongs to the registered holder in the precise terms defined in the registration — cf. article 7 of the Property Registration Code applicable by virtue of article 29 of Vehicle Registration" (no. 28).

iii) "the expression 'considering themselves as such' contained in the wording of no. 1 of article 3 of the CIUC constitutes a legal presumption and the same is rebuttable, having in mind the provisions of article 73 of the LGT, which admits that the presumptions enshrined always admit proof to the contrary" (no. 47).

iv) "to rebut this presumption it is necessary, either to prove the nullity of the registration, or to demonstrate the invalidity of the transaction, or furthermore, that the ownership of the right registered belongs to another" – "it was precisely this demonstration – that the ownership of the vehicle belongs to a third party – that the claimant made, by attaching copies of the invoices for the sale of the vehicles and their salvage, contained in the IUCs, all of them dated months earlier than the tax obligation required" (nos. 30 and 31).

v) "From the copies of the invoices, we can extract that the sale of the vehicles took place at a time prior to when the taxable event occurred and the consequent enforceability of the tax (cf. articles 4 and 6 of the CIUC)", whereby "at the date of enforceability of the tax, the claimant was no longer the owner of the vehicles identified above in the administrative proceedings, as the respective transfers had already taken place, in accordance with the law of civil law" (nos. 53 and 54).

1. For its part, in its response, the TCA argues, in essence, the following:

i) the understanding propounded by the Claimant "results from a biased reading of the letter of the law, as from the adoption of an interpretation that does not heed the systematic element, violating the unity of the regime enshrined in the entire CIUC and, more broadly, in the entire tax-legal system and, lastly, results from an interpretation that ignores the ratio of the regime enshrined in the article at hand, and likewise, in the entire CIUC" (article 12).

ii) "The tax legislator in establishing in article 3, no. 1 who are the taxpayers of the IUC established expressly and intentionally that these are the owners (or in the situations provided for in no. 2, the persons enumerated therein), considering themselves as such the persons in whose name the same are registered"; "Even admitting that, from the perspective of the rules of civil law and property registration, the absence of registration does not affect the acquisition of the status of owner and that registration is not a condition of validity of contracts with real effect), under the terms established in the CIUC (which in the case at hand constitutes special law, which, in accordance with the general terms of law derogates the general rule), the tax legislator wished intentionally and expressly that they be considered as owners, lessees, acquirers with reservation of ownership or holders of the right of purchase option in long-term rental, the persons in whose name [the vehicles] are registered" (articles 13, 20 and 41).

iii) "the legislator did not use the expression 'presumed to be', 'it could have done, for example, in the following terms: 'The taxpayers of the tax are the owners of the vehicles, being presumed as such the natural or legal persons, of public or private law, in whose name the same are registered', whereby 'to understand that the legislator enshrined here a presumption would unequivocally be to carry out an interpretation contra legem" (articles 14 and 21);

iv) "the tax provision is replete with predictions similar to that enshrined in the final part of no. 1 of article 3, in which the tax legislator, within its legislative shaping freedom, expressly and intentionally, enshrines what should be considered legally, for purposes of incidence, of income, of exemption, of determination and of periodization of taxable profit, for purposes of residence, of location, among many others" (article 15).

v) "In light of this wording [of article 3, no. 1 of the CIUC] it is not manifestly possible to invoke that it is a presumption (...). Rather, it is a clear choice of legislative policy embraced by the legislator, whose intention, within its legislative shaping freedom, was that, for purposes of IUC, those who appear as such in the vehicle registration record be considered owners" (article 22).

vi) The systematic element of interpretation, given the provisions of article 6 of the CIUC, reveals that the solution propounded by the Claimant has no foundation, since from "the articulation between the scope of the subjective incidence of the IUC and the constitutive fact of the corresponding tax obligation unequivocally results that only the legal situations subject to registration (without prejudice, the permanence of a vehicle in national territory for a period exceeding 183 days, provided for in no. 2 of article 6) give rise to the birth of the tax obligation" and, on the other hand, results from no. 3 of the same article that "the moment from which the tax obligation is constituted has a direct relationship with the issuance of the registration certificate, in which the facts subject to registration must appear" (articles 25, 27 and 28).

vii) "the very ratio of the regime enshrined in the Code of the IUC (...) constitutes clear evidence that what the tax legislator intended was to create a Single Vehicle Circulation Tax based on the taxation of the owner of the vehicle as it appears in the vehicle registration record", since the "CIUC carried out a reform of the regime for taxation of vehicles in Portugal, substantially altering the motor vehicle taxation regime, making the taxpayers of the tax the owners appearing in the property registration record, regardless of the circulation of the vehicles on public roads" (articles 43 and 45 of the response).

viii) "from the parliamentary debates surrounding the approval of DL No. 20/2008 of 31 January (...) unequivocally results that the IUC is due by the persons appearing in the registration as owners of the vehicles" (articles 47 to 51).

ix) the interpretation conveyed by the Claimant is "contrary to the Constitution, in that it violates the principle of trust and legal certainty, the principle of efficiency of the tax system and the principle of proportionality" since "it devalues the registration reality at the expense of an 'informal reality' and not susceptible to minimal control by the Respondent", translates into "a hindrance and increased cost of the competences attributed to the Respondent, with obvious prejudice to the interests of the Portuguese State", and disregards that "the Claimant has at its disposal the legal mechanisms necessary and adequate to safeguard [its] capacity [to contribute] (e.g., vehicle registration), without, however, having exercised them in due time" (articles 55, 56, 58 and 61).

c) Tribunal's Assessment

1. The disagreement between the parties regarding the substantive legal question above described in no. 7 – which, it should be noted, has been the subject of various decisions of Arbitral Tribunals of this CAAD[2] – is primarily concerned with the "letter of the law" (cf. article 9, nos. 1 and 2 of the Civil Code and article 11, no. 1 of the General Tax Law), more specifically with the semantic content to be attributed to the word "considering-se" which appears, as cited (above no. 16) in no. 1 of article 3 of the CIUC ("The taxpayers of the tax are the owners of the vehicles, considering themselves as such the natural or legal persons, of public or private law, in whose name the same are registered").

For the Respondent, in opposition to the Claimant which considers that article 3, no. 1 enshrines a legal presumption, the use of the expression "considering-se" would render impossible, in an absolute manner, a reading in a presumptive key of the provision of article 3, no. 1 of the CIUC (cf. above no. 18, ii), iii), iv), v)).

1. Now, it is judged that it is not possible to accept the semantic exclusion which the Respondent thus seeks to attribute to the locution "considering-se". This locution, as well as other words with the same lexical base such as "considera-se", "considerar" or "considerando", are frequently adopted in our legal system precisely to enshrine presumptions, possessing, therefore, a presumptive use value. To give an example in the tax field, cite article 191, no. 6 of the CPPT which mentions the following: "Citation is deemed effected on the 25th day following its sending if the taxpayer does not access the electronic mailbox on an earlier date", and then no. 7 of the same provision establishes: "The presumption of the preceding number can only be rebutted by the cited when, by fact not attributable to him, the citation occurs on a date later than the presumed and in cases where it is proven that the taxpayer communicated the alteration thereof in accordance with article 43". Outside the tax field, cite, for example, article 2315, no. 1 of the Civil Code: "If the closed will appears torn or in pieces, it shall be considered revoked, except when it is proven that the fact was practiced by a person other than the testator or that the latter did not intend to revoke it or was deprived of the use of reason".

In this way, as has already been noted in other arbitral decisions issued by this CAAD in relation to the same matter (cf., for example, the decisions issued in cases nos. 14/2013-T, 27/2013-T, 73/2013-T, 170/2013-T, in which it is possible to find examples of legislative provisions, distinct from those invoked above, in which equally the use of the expression "considering-se" or "considera-se" occurs with the meaning of presumption), not only cannot it be said that the attribution of a presumptive meaning to the expression "considering-se" does not possess "a minimum of verbal correspondence, even if imperfectly expressed" (no. 2 of article 9 of the Civil Code), but, more than that, one should even recognize such word an ordinary and normal correspondence to that presumptive sense.

Therefore, it does not assume decisive weight the fact that, differently from what occurred with the literal enunciation "presuming-se" that previously appeared in article 3 of the Regulation of the Tax on Vehicles, the legislator has moved to use in the CIUC the formula "considering-se" which appears in the current article 3 of that Code, since this expression has perfect semantic capacity to involve the enshrinement of a presumption.

Evidently, this same word "considerando" is also normally used outside presumptive contexts, so asserting that it possesses a normal correspondence with that sense does not imply supporting, in any way, that it always has it, quite the contrary. It should be emphasized, therefore, having in mind what the Respondent alleges regarding other normative tax provisions in which the legislator used the formula "considera-se" or "consideram-se" (see above no. 18, iv)), that these expressions possess a plurality of senses, so understanding that, in the specific case of article 3, no. 1 of the CIUC, the expression in question implies a presumption, does not mean that this occurs in every other case. It is a golden rule of interpretation that the sense of a word depends on the context in which it appears, in terms of pragmatic-functional coherence – as OLIVEIRA ASCENSÃO writes: "No provision can be interpreted in isolation from the context"; "To heed the context is to situate a provision".

In this way, nothing prevents, from the point of view of the literal element of interpretation, the understanding that, within the framework of article 3 of the CIUC, is at issue, in the normative segment contained in the second part of no. 1 of that provision, the enshrinement of a presumption.

1. It is thus judged that this understanding regarding the presence of a presumption in no. 1 of article 3 of the CIUC, besides finding, as was said, perfect coverage in the letter of the law, is what should be had as adequate in light of the ratio legis underlying the tax regulation at hand.

As results already from article 1 of the CIUC, according to which the IUC "obeys the principle of equivalence, seeking to burden the taxpayers in the measure of the environmental and road cost that this provokes, in realization of a general rule of tax equality", constitutes a relevant scope to which such tax is directed, beyond the obtaining of revenues, to make bear those holding rights of use of the vehicles (nos. 1 and 2 of article 3 of the CIUC) the road and environmental costs caused by them. See, in this respect, what was recorded in the introductory text of the CIUC attached to Legislative Proposal No. 118/X, which underlies Law No. 22-A/2007, of 29.06 which carried out the global reform of motor vehicle taxation, approving the Code of the Tax on Vehicles and the Code of the Single Vehicle Circulation Tax and abolishing, at the same time, the motor tax, the municipal tax on vehicles, the circulation tax and the haulage tax: "As a structuring and unifying element of these categories, the principle of equivalence is enshrined, thus making clear that the tax, as a whole, is subordinate to the idea that taxpayers should be burdened in the measure of the cost they cause to the environment and the road network, this being the reason for being of this tax figure. It is this principle that dictates the taxation of vehicles according to their respective ownership and until the moment of scrapping, the common use of a specific taxable base, the revision of the framework of current tax benefits and the allocation of a portion of revenue to the municipalities of the respective use".

Now, to claim, as the Respondent does, that the legislator, in article 3, no. 1 of the CIUC, fixed, whatever the underlying technical means, the subjective incidence of the tax on the persons in whose name the vehicles are registered, with total independence of whether they are or are not, in the relevant taxation period, holders of the right to use the vehicle, especially of its ownership, would imply disregarding the indicated purpose that presides over the tax normativity, well manifested in the objective incidence and in the taxable base associated with the various categories of vehicles (cf. articles 2 and 7 of the CIUC). For a registration entry, without correspondence with the underlying ownership, has no value to satisfy and fulfill such purpose, since it is not the persons in whose name the vehicles are registered when they are not holders of rights to their use that cause environmental and road costs, but rather such environmental and road costs are caused by the actual users of the vehicles, according to the substantial legal situations relevant, even if they do not appear, as they should, in the vehicle registration record. The registration, in truth, in no way bears or serves regarding the principle of equivalence established in article 1 of the CIUC.

On the other hand, assuming that the determinative element of the subjective tax incidence is simple and exclusively the vehicle registration also does not allow one to assert a link with any manifestation of relevant taxable capacity, which, as a rule, in taxes not strictly commutative, is indispensable, since there must exist, without prejudice to demands of practicability, some effective link between the tax and an economically relevant presupposition capable of founding the tax.

The reason for being of the tax figure thus excludes the idea that its incidence is tied strictly and exclusively to the registration entry of the ownership of the tax vehicles and not to the substantial situations attributing the right of use of the vehicles (article 3, nos. 1 and 2 of the CIUC) to which the registration is intended to publicize (cf. article 1 and article 5 of Decree-Law No. 54/75, of 12 February, as amended, which regulates vehicle registration).

1. The logic of the tax, the ratio legis of the tax normativity at hand thus leads to the conclusion that the legislator considered as taxpayers of the tax the actual owners of the vehicles or, alternatively, the financial lessees, acquirers with reservation of ownership, as well as other holders of purchase option rights by virtue of the leasing contract, serving the registration simply as a presumption of the ownership or of the other registered rights to which relevance was attributed for purposes of subordination to the tax.

And it is well understood – following, moreover, a solid tradition (recall, merely, the precedent represented by article 3 of the Regulation of the Tax on Vehicles) – that the tax legislator has enshrined such a presumption, for, precisely, that is the essential effect associated with registration. It should be emphasized, in truth, that, according to no. 1 of article 1 of Decree-Law No. 54/75, of 12 February, "the registration of vehicles has essentially as its purpose to publicize the legal situation of motor vehicles and their respective trailers, with a view to the security of legal commerce", and that, in accordance with article 7 of the Property Registration Code, applicable to vehicle registration by virtue of the provisions of article 29 of the aforementioned Decree-Law No. 54/75 (which provides that: "The provisions relating to property registration are applicable, with the necessary adaptations, to the registration of automobiles, but only to the extent indispensable to filling the gaps in its own regulation and compatible with the nature of motor vehicles and the provisions contained in this ordinance and in its regulation"): "The definitive registration constitutes a presumption that the right exists and belongs to the registered holder in the precise terms in which the registration defines it".

Thus, it should be understood that the legislator, in defining the subjective incidence of the tax in article 3, no. 1 of the CIUC, enshrined, in order to prove it, a presumption by which, on the basis of the known fact of registration, is deduced the presumed fact of the ownership or the holding of another right relevant for purposes of the IUC.

1. It is further added that this understanding is also supported by the systematic element of interpretation. For, if it were not at issue in article 3, no. 1 of the CIUC a presumption, relevant, as such, for evidentiary purposes, it would not be understood that in article 18, no. 2 of the CIUC, concerning official assessment, it is said that this is carried out by the TCA "based on the elements it has available", not limiting itself to referring to what results from the registration.

On the other hand, it is clarified, in this respect, that it is not relevant for contradicting the presumptive character thus assumed in the competent normative segment of article 3, no. 1 of the CIUC the provision of article 6, no. 1 of the CIUC. For this provision, in regulating the taxable event of the tax, is directed simply to determine the constitutive moment of the tax legal relationship (cf. article 36, no. 1 of the LGT), the fact from which the tax obligation originates, whose objective foundation (vehicles "registered or recorded in Portugal") and subjective ("owners of the vehicles", "financial lessees", "acquirers with reservation of ownership", "other holders of purchase option rights by virtue of the leasing contract") are established in articles 2 and 3 of the CIUC. Thus, article 6, no. 1 of the CIUC serves strictly to fix the moment from which the subjection to IUC in national territory begins to occur ("the ownership of the vehicle, as attested by the registration or record in national territory").

It should further be said that, as far as the historical element of interpretation is concerned, more specifically in the context of preparatory work, in the Statement of Reasons of Legislative Proposal No. 118/X and in the introductory text to the CIUC no explicit indication is found that the legislator intended that vehicle registration become operative as a constitutive fact of the tax incidence of the IUC and not as a simple presumption of the ownership of the vehicles probatively relevant for purposes of tax subordination. It is true that there is reference, in the introductory text to the CIUC contained in that Statement of Reasons, to "numerous failures and delays in the regularization of the registrations of acquisition or transfer of vehicles or in the cancellations of their registrations, in case of scrapping that had occurred meanwhile" and to the need for "simplified and less costly mechanisms that allow a regularization of the registration of property of the vehicles and ensure the reliability necessary for future assessment of the new tax", but it is not declared that registration does not now operate only as a presumption of the ownership relevant for purposes of taxation. On the contrary, the concern with the adequate functioning and reliability of vehicle registration evidences that, for the legislator, what is decisive is the substantial situations to which registration is intended to publicize and which it makes presumed, not the registration entry in itself as considered.

It should be added that the invocation which the Respondent makes of the parliamentary debates surrounding the approval of Decree-Law No. 20/2008 of 31 January (see above no. 18, viii)) does not seem pertinent, since what is thus invoked are materials that do not directly concern the history of the tax legislation here in application, but rather distinct normativity, since that ordinance was directed to introducing various amendments to the regulations pertaining to the registration certificate and to vehicle registration, but not in the scope of tax matter. In any case, the positions assumed within the scope of those parliamentary debates to which the Respondent alludes in article 51 of its response do not appear conclusive.

In this way, this Tribunal considers that article 3, no. 1 of the CIUC should be interpreted in the sense that it enshrines a legal presumption for purposes of determining the subjective incidence of the tax.

1. It follows, now, to observe that the presumption thus enshrined in article 3, no. 1 of the CIUC is rebuttable.

Legal presumptions, as is well-known, can be rebuttable (iuris tantum) or irrebuttable (iure et de iure) depending on whether they admit or prohibit proof of the contrary fact and, therefore, enable or prevent the demonstration that the presumed fact is not true (article 350, no. 2 of the Civil Code).

Now, as results from no. 2 of article 350 of the Civil Code, as a rule legal presumptions are iuris tantum, with irrebuttable presumptions constituting the exception ("legal presumptions may be rebutted by proof to the contrary, except in cases in which the law prohibits it"). In these terms, when the law does not prohibit proof to the contrary, it should be understood that the presumption is rebuttable.

This very issue is currently the subject of explicit normative prescription in the context of the tax legal system given that, as is known, article 73 of the LGT establishes the necessarily rebuttable character of presumptions in matters of tax incidence by affirming that: "The presumptions enshrined in the norms of tax incidence always admit proof to the contrary".

It should further be added that the consideration as a rebuttable presumption of the provision of article 3, no. 1 of the CIUC should be had as a requirement resulting from an interpretation in conformity with the Constitution, for this Tribunal cannot fail to give relevance to the well-known understanding of the Constitutional Court, affirmed in decision no. 348/97, of 29.4.1997 and reiterated in decision no. 311/2003, of 28.4.2003, regarding the unconstitutionality of "the establishment by the tax legislator of a presumption juris et de jure" since "it completely prevents taxpayers from the possibility of contradicting the presumed fact, subjecting them to a taxation which may be based on a taxable matter fixed in disregard of the principle of tax equality".

In this sequence, it is not understood how one can consider that this understanding contradicts the Constitution, not seeing that the "principle of trust and legal certainty, the principle of efficiency of the tax system and the principle of proportionality" are affected, in reasonable and effective terms.

1. Having regard to the foregoing, it is decided, in summary, that article 3, no. 1 of the CIUC enshrines a rebuttable presumption (iuris tantum), whereby, notwithstanding the registration of the ownership of the vehicle is in the name of the Claimant (or of the company incorporated by it), it is possible to rebut this presumption, by means of the demonstration, by the means of proof admitted in law, that it is not the owner of the vehicle or holder of another situation tax-relevant (article 3, nos. 1 and 2 of the CIUC) at the date of the taxation period (article 4 of the CIUC), not thereby constituting the taxpayer of the IUC and therefore not being liable for the respective payment.

d) Application to the Case at Hand

1. In light of the aforementioned, summarized in the preceding number, it remains to determine, having regard to the factual matters found proven, the qualification as taxpayer of IUC of the Claimant, or of the company incorporated by it (see above no. 10 and fact proven under II) regarding the vehicles subject to the official assessments of IUC at issue in the present proceedings.

Now, in this respect, it is simply necessary to highlight that it was found proven in no. V of the findings that the vehicles to which the IUC assessments at issue in these proceedings relate were sold to customers of the Claimant at a time prior to the month and year of taxation relating to the corresponding assessed IUC.

In this way, it is verified that, in the taxation periods at issue, notwithstanding what may continue to appear in the registration, the motor vehicles to which the challenged assessments relate had already been alienated by the Claimant or by the company incorporated by it.

As, pursuant to articles 408, no. 1, 874 and 879, paragraph a) of the Civil Code, the transfer of ownership operates by mere effect of the contract, it is concluded that the Claimant is not the owner of the vehicles identified on the taxation dates at issue, whereby it does not constitute the taxpayer of the IUC regarding such vehicles in accordance with no. 1 of article 3 of the CIUC.

The presumption established in article 3, no. 1 of the CIUC is thus rebutted.

1. Consequently, the Claimant does not constitute, having regard to the provisions of article 3, no. 1 of the CIUC, the taxpayer of the IUC assessed in relation to the vehicles identified and in the manner set out in the tables contained in no. III of the findings, whereby the decisions rejecting the administrative review requests nos. ...2014..., ...2014..., ...2014..., ...2014... and ...2014..., and the tax acts of assessment of IUC and compensatory interest which these maintained, suffer from the defect of violation of law, which implies their annulment in accordance with article 135 of the Code of Administrative Procedure, as is hereby decided.

e) On Indemnity Interest

1. As a consequence of the annulment of the tax acts subject to the proceedings, the Claimant petitions (see above no. 4) the condemnation of the TCA to reimburse the amounts unduly paid as title of IUC and compensatory interest, the total amount of which is €41,383.99, as well as the payment of the indemnity interest provided for in article 43 of the LGT and article 61 of the CPPT.

Article 24, paragraph b) of the LRTA prescribes that the arbitral decision on the merits of the claim which is not subject to appeal or challenge binds the tax administration from the end of the deadline for appeal or challenge, and that the latter, in the exact terms of the success of the arbitral decision in favor of the taxpayer and until the end of the deadline for voluntary compliance with the decisions of the tax courts, restore the situation that would exist if the tax act subject to the arbitral decision had not been carried out, adopting the acts and operations necessary for the effect, which should be understood, in accordance with article 100 of the LGT, applicable by virtue of paragraph a) of no. 1 of article 29 of the LRTA, as encompassing the payment of indemnity interest, in consonance, moreover, with the provision of no. 5 of this same article 24 of the LRTA.

Article 43, no. 1 of the LGT thus prescribes that "indemnity interest is due when it is determined, in administrative review or judicial challenge, that there was error attributable to the services from which results the payment of the tax debt in an amount greater than legally due", establishing no. 4 of article 61 of the CPPT that "if the decision recognizing the right to indemnity interest is judicial, the period for payment is counted from the beginning of the deadline for its voluntary compliance".

1. In this respect, the Respondent argues (article 107 of the IP) that it merely gave strict compliance to article 3, no. 1 of the CIUC, which imputes the status of taxpayer of the IUC to the persons in whose name the vehicles are registered, whereby the right to payment of indemnity interest should not be recognized.

The right to indemnity interest depends, as was seen, on the determination of error attributable to the services from which results the payment of the tax debt in an amount greater than legally due.

It must be recognized that, with the assessments issued, the Respondent merely proceeded, as it is required to do (articles 55 of the LGT and 10, no. 1, paragraph a) of the CPPT), to give compliance to the provision of article 3, no. 1 of the CIUC, which presumes the status of taxpayer in the entity in whose name the vehicle is registered.

On the other hand, it is verified that the Claimant proceeded to the payment of the tax and compensatory interest, here judged undue, on a date prior to the filing of the administrative review requests (cf. nos. VI and VII of the findings), at a moment, therefore, when no proof to the contrary capable of rebutting the registration presumption and detecting the undue payment had been made before the Respondent (no. 5 of article 61 of the CPPT).

It is therefore necessary to declare that one cannot consider verified error attributable to the services in the undue payment of the tax obligation.

In this way, it is decided, having regard to the provision of no. 1 of article 43 of the LGT, that the Claimant does not have the right to payment of indemnity interest.

V. Operative Part

The Arbitral Tribunal therefore decides:

a) To declare itself incompetent to hear the claim formulated for reimbursement of the amounts paid as penalties in the amount of €12,180;

b) To find well-founded, by established fact, the request for an arbitral decision annulling the tax acts challenged regarding the assessments of IUC and compensatory interest for the years 2009 to 2013 concerning the motor vehicles identified in the proceedings, in the total amount of €41,383.99, and, consequently, to condemn the Respondent to reimburse same to the Claimant, in accordance with articles 24, no. 1, paragraph b) of the LRTA and 100 of the LGT;

c) To find unfounded the claim for condemnation of the Respondent to the payment of indemnity interest;

d) To condemn the Respondent to the costs of the proceedings.

VI. Value of the Proceedings

In accordance with the provisions of article 306, nos. 1 and 2 of the Code of Civil Procedure, article 97-A, no. 1, paragraph a), and no. 2 of the Code of Procedure and Tax Process, applicable by virtue of paragraphs a), c) and e) of no. 1 of article 29 of the LRTA and of no. 2 of article 3 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the proceedings is fixed at €41,383.99, which constitutes the total amount subject to the challenged assessments.

VII. Costs

In accordance with the provisions of articles 12, no. 2, and 22, no. 4, both of the LRTA, and article 4, no. 4 of the Regulation of Costs of Tax Arbitration Proceedings, the value of the arbitration fee is fixed at €2,142.00, in accordance with Table I of the aforementioned Regulation, to be charged to the Respondent, given the success of the request for annulment of the tax acts subject to the proceedings.

Let it be notified.

Lisbon, 3 November 2014.

The Arbitrator

(João Menezes Leitão)

[1] The spelling resulting from the Orthographic Agreement of the Portuguese Language of 1990 is adopted, having been updated, accordingly, the spelling contained in the citations made.

[2] It is noted that the reasoning explained in the decision, signed by the signatory, issued in case 286/2013-T, is taken up here, in whose validity it continues to be believed.