Process: 340/2018-T

Date: February 25, 2019

Tax Type: IUC

Source: Original CAAD Decision

Summary

This CAAD arbitral decision (Process 340/2018-T) addresses the subjective incidence of IUC (Imposto Único de Circulação) on vehicles subject to financial leasing agreements. The claimant, a financial leasing company, challenged IUC assessments totaling €46,495.82 for 494 vehicles across tax years 2009-2015, arguing it should not be liable as the passive subject of IUC after transferring ownership to lessees through purchase agreements. The core legal issue involves interpreting Article 3 of the IUC Code, which establishes a legal presumption that the registered owner is the taxpayer. The claimant contended that ownership transferred upon conclusion of purchase contracts under Article 879 of the Civil Code, making the acquirers/lessees the proper taxpayers, regardless of vehicle registration status. The company argued the Tax Authority committed an error of law by relying uncritically on registration data from IMTT and IRN without proper investigation. The claimant requested revision of tax acts (revisão do ato tributário) within the four-year limitation period, seeking reimbursement of amounts unduly paid. The decision examines whether the legal presumption in Article 3 can be rebutted when ownership has transferred but registration remains unchanged, the declaratory versus constitutive nature of vehicle registration, and the allocation of tax liability between lessor and lessee in financial leasing arrangements. This case is significant for financial institutions and leasing companies regarding IUC compliance obligations and the interplay between civil law ownership transfers and tax law presumptions based on registration records.

Full Decision

ARBITRAL DECISION

I - Report

  1. A... S.A., collective entity no. ..., with registered office at ..., ..., ..., ...-... ... (hereinafter referred to as the "Claimant"), submitted, on 16-07-2018, a request for arbitral pronouncement, pursuant to article 2, no. 1, paragraph a) and article 10, nos. 1 and 2 of the Legal Regime for Tax Arbitration, provided for in Decree-Law no. 10/2011, of 20 January, as amended by article 228 of Law no. 66-B/2012, of 31 December (hereinafter abbreviated as "LRTA") and articles 1 and 2 of Portaria no. 112-A/2011, of 22 March.

  2. The Claimant seeks the pronouncement of the Arbitral Tribunal to declare the illegality of the assessment acts for the Unique Circulation Tax (IUC), relating to the years 2009, 2012, 2013, 2014 and 2015, in the total amount of € 46,495.82 (forty-six thousand four hundred and ninety-five euros and eighty-two cents), relating to 494 (four hundred and ninety-four) motor vehicles, identified by the Claimant in article 22 of the request for arbitral pronouncement, and, likewise, of the acts of rejection of the requests for revision of the tax act submitted by the Claimant relating to the aforementioned assessment acts and, consequently, to determine the reimbursement of the amount unduly paid.

  3. The Respondent is the Tax and Customs Authority (hereinafter referred to as the "Respondent").

  4. The request for constitution of the arbitral tribunal was accepted by the President of CAAD and was automatically notified to the Tax and Customs Authority, on 17-07-2017.

  5. The Claimant, on 17-07-2018, pursuant to article 144, no. 1, of the Code of Civil Procedure, applicable ex vi by article 29, no. 1, paragraph e), of the LRTA, attached to the case files documents nos. 11 to 15, which constituted an integral part of the request for arbitral pronouncement.

  6. Pursuant to paragraph a) of no. 2 of article 6 and paragraph b) of no. 1 of article 11 of the LRTA, as amended by article 228 of Law no. 66-B/2012, of 31 December, the Deontological Council of CAAD appointed as arbitrator of the singular arbitral tribunal His Excellency Dr. Olívio Mota Amador who, within the applicable time limit, communicated acceptance of the appointment.

  7. The Claimant was notified, on 05-09-2018, of the appointment of the arbitrator and did not manifest any intention to challenge the appointment, in accordance with the combined provisions of article 11, no. 1, paragraphs a) and b) of the LRTA and articles 6 and 7 of the Code of Ethics.

  8. In accordance with the provisions of paragraph c) of no. 1 of article 11 of the LRTA, as amended by article 228 of Law no. 66-B/2012, of 31 December, the Arbitral Tribunal was constituted on 25-09-2018.

  9. The Respondent, duly notified through the arbitral order of 25-09-2018, submitted, on 24-10-2018, its Response and the Administrative Case File.

  10. The Arbitral Tribunal, by order of 29-10-2018, granted to the Claimant a period of ten days to submit observations on the exception raised by the Respondent in its Response. The Claimant did not submit any observations.

  11. The Arbitral Tribunal, by order of 17-12-2018, determined: (i) to dispense with the holding of the meeting provided for in article 18 of the LRTA, in accordance with the principle of the Tribunal's autonomy in conducting the proceedings and in order to promote celerity, simplification and informality thereof, pursuant to the provisions of articles 19 and no. 2 and 29 of the LRTA, and considering that a time limit was previously granted to the Claimant to exercise the right to be heard regarding the exception invoked by the Respondent, and furthermore there was no need for witness testimony; (ii) should the parties wish to submit written arguments, these must be presented within 10 days from notification of this order; (iii) to set 31 January 2019 as the final deadline for issuing the arbitral decision, and by that date, the Claimant must proceed with payment of the subsequent arbitral fee, pursuant to no. 3 of article 4 of the Regulation of Costs in Tax Arbitration Proceedings, and communicate such payment to CAAD.

  12. The Claimant and the Respondent did not submit arguments.

  13. The Arbitral Tribunal, through the order of 30-01-2019, changed the final deadline for issuing the arbitral decision to 22-02-2019.

  14. The position of the Claimant, in accordance with the provisions of the request for constitution of the Arbitral Tribunal, is, in summary, as follows:

14.1. The essential question in the present arbitral proceedings consists of determining whether, in view of the existing legal norms, the Claimant should be considered, irrevocably and definitively, the passive subject of IUC, which was assessed and paid by it, relating to the underlying motor vehicles or whether, instead, the passive subjects of said tax should be considered the owners, on the date of the taxable event, of the vehicles in question, who acquired them from the now Claimant within the scope of the vehicle financial leasing contracts concluded between them, and thus the amount that the Claimant unduly paid as tax should be reimbursed to it.

14.2. The Claimant considers that there occurred a situation of error attributable to the [tax] services, consisting of an error of law due to incorrect application of the norms of the IUC Code, in particular its article 3, for which reason it has legitimacy to request the Tax Authority to proceed with revision of the tax acts now in question. Thus, the present request for arbitral pronouncement is fully timely, since four years have not yet elapsed since the date on which the act that is the subject thereof was issued.

14.3. In accordance with the applicable legal framework, the Tax Authority should, based on the information provided by the Claimant, investigate and gather the means of proof necessary for a correct final decision, not limiting itself to taking for granted, in an uncritical manner, the information provided to it by the IMTT and the IRN. Thus, it is not acceptable that the Tax Authority does not carry out a careful and thorough investigation before assessing taxes whose illegality appears manifest.

14.4. Article 3, no. 1, of the IUC Code, in the wording in force at the time of formation of the taxable facts sub judice, using the expression "considered as", establishes a legal presumption, presuming that the passive subjects of the tax (in this case, the owners) are the persons, natural or legal, of public or private law, in whose names the vehicles are registered.

14.5. One of the essential effects of the conclusion of a purchase and sale contract is, pursuant to article 879, paragraph a), of the Civil Code "The transfer of ownership of the thing or the ownership of the right." Thus, with the conclusion of the purchase and sale contracts between the Claimant and the acquirers of the previously leased vehicles, ownership was transferred from the former to the latter. Whereby the Tax Authority can no longer avail itself of the presumption to consider the Claimant as the passive subject of IUC, pursuant to article 3 of the IUC Code.

14.6. It follows from the provisions of article 8-B, no. 1, of the Land Register Code, applicable by virtue of article 29 of the Motor Vehicle Register Code, that it is the buyer/acquirer/lessor who must promote registration. The faculty granted to the seller pursuant to article 25 of Decree-Law no. 55/75, in no way eliminates this burden on the buyer, should the seller choose not to exercise it.

14.7. The fact that the right of ownership of motor vehicles is subject to registration does not alter in any way the real nature quoad effectum of the purchase and sale contract. Registration has a merely declaratory and not constitutive effect, and the status of owner is not affected by the absence of registration.

14.8. The purchase and sale contract for motor vehicles is subject to the general principle of freedom of form, pursuant to and under the provisions of article 219 of the Civil Code. However, if the law permits the conclusion of a given contract even in verbal form, it cannot simultaneously require that proof of its conclusion be made by document.

14.9. The debit notes attached by the Claimant constitute unequivocal proof of the conclusion of the purchase and sale contracts between it and the subsequent owners of the vehicles sub judice. Such debit notes prove the existence of commercial relations that had as their object a given vehicle, specifying the registration number in question, the dates of issuance and maturity and indicating in their description "residual value" or "compensation relating to the closure of the contract". Being evident that such documents refer to the conclusion of purchase and sale contracts.

14.10. In summary, the ownership of the vehicles was transferred by mere effect of the conclusion of the respective purchase and sale contracts, with such transfers of ownership being proved not only as well as payment of their respective prices.

  1. The position of the Respondent, expressed in its Response and in its arguments, may be summarized as follows:

15.1. From analysis of the requests for revision submitted, it is verified that, having been submitted on 2016-10-12, 2016-10-13, 2016-10-14 and 2016-11-21, that is, the period of 120 days for submission thereof being largely exceeded, pursuant to no. 1 of article 78 LGT and article 70 and paragraph a) of no. 1 of article 102 CPPT, the said ex officio revision requests were considered untimely. However, the Claimant can never seek to justify the timeliness of the request for arbitral pronouncement based on the rejections of the revision requests, which were untimely.

15.2. In this manner, having the revision requests been submitted when the legal period for their submission had already been exceeded, the period that applies to the challenge, now presented in this arbitral tribunal, is the 90 days following the date of the end of the period for voluntary payment of IUC. In the case at hand, the request for constitution of arbitral tribunal submitted by the Claimant was received on 2018-07-16, whereby it is untimely.

15.3. Lack of timeliness constitutes a peremptory exception, pursuant to article 576 of the Code of Civil Procedure (applicable subsidiarily by article 29 of the LRTA), which entails the absolution of the Tax Authority as to the claim, since it prevents the legal effect of the facts argued by the Claimant.

15.4. Regarding financial leasing and for purposes of rebutting article 3 of the IUC Code, it is necessary that financial lessors (such as the Claimant) comply with the obligation inherent in article 19 of that Code to exempt themselves from the obligation to pay the tax. However, the Claimant presented no proof as to compliance with this obligation with respect to the motor vehicles now under analysis.

15.5. As is known, the law establishes periods for the attachment of documents intended to constitute proof, with article 423 of the new CPC providing that such documents must be presented with the statement in which the corresponding facts are alleged. Thus, following the presentation of the request for arbitral pronouncement, a period of preclusion arose for the Claimant with respect to subsequent presentation of documentary evidence.

15.6. Notwithstanding the Claimant's allegation that it concluded financial leasing contracts, it is certain that the Claimant is responsible for payment of the respective IUC, since it did not communicate the existence of the financial leasing referred to in article 19 of the IUC Code.

15.7. On the date of assessment of the IUC here at issue, the vehicles were registered in the name of the Claimant, whereby the assessments challenged were issued in accordance with the rules of subjective and objective incidence of the taxable event. In summary, article 3 of the IUC Code does not contain any legal presumption.

15.8. Even admitting that, from the perspective of the rules of civil law and motor vehicle 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, as established in the IUC Code (which in the case at hand constitutes special law, which, under general rules of law, derogates the general norm), the tax legislator deliberately and expressly intended that the persons in whose names the vehicles are registered be considered as owners, lessees, acquirers with reservation of ownership or holders of the right of purchase option in long-term rental.

15.9. The Claimant, to prove the transfer of the motor vehicles, whose IUC assessments it seeks to have declared illegal and annulled, attaches second copies of debit notes. All debit notes attached contain the inscription in the lower left corner "Document valid after proper collection". The Claimant did not attach any document proving such proper collection.

15.10. Debit notes are internal and unilateral documents which, unaccompanied by any other document, do not constitute proof of the transfer of ownership of the vehicle. Nor did it attach any financial leasing, purchase and sale contract or even mere correspondence exchanged with insurance companies. For all legal purposes, all documents attached are challenged as proof of transfer of ownership.

II - Case Management

  1. The parties have legal personality and capacity, demonstrate themselves to be legitimate and are regularly represented (articles 4 and 10, no. 2, of the LRTA and article 1 of Portaria no. 112-A/2011, of 22 March).

  2. The tribunal is competent and has been regularly constituted.

  3. The Respondent raised the exception of lack of timeliness of the request for arbitral pronouncement on the grounds that it was formulated based on the untimely submission of the requests for revision of the tax act (see, 15.2 to 15.4. supra). Effectively, the Respondent alleged that the period for the ex officio revision of the acts of assessment of IUC was 120 days after the end of the period for respective voluntary payment, which would already have been exceeded on the date of submission by the Claimant of the ex officio revision requests.

The Claimant did not submit observations regarding the exception within the time limit granted through the arbitral order of 29-10-2018, although in the request for arbitral pronouncement it does submit observations on the timeliness of the revision requests of the tax act submitted (see, nos. 25 to 59 of the request for arbitral pronouncement).

It is appropriate to assess this.

The Supreme Administrative Court has consistently held that, while the Tax Authority may, on its own initiative, proceed with ex officio revision of the tax act within the period of 4 years following assessment or at any time if the tax has not yet been paid, on the grounds of error attributable to the services, so too may the taxpayer, within that period, request ex officio revision on the grounds of error attributable to the services.

Furthermore, error in factual and legal assumptions should be considered error attributable to the services, with such attribution of error to the services being independent of the demonstration of fault on the part of the officials involved in the issuance of the act in question.

Thus, it is verified that the Claimant submitted the request for ex officio revision of the acts of assessment of IUC within the period of 4 years provided for in article 78, no. 1, of the LGT. Subsequently, the Claimant, following notification of the orders of the Tax Authority that decided on the revision requests (see, paragraph E) of no. 22.2. below), submitted the request for constitution of the arbitral tribunal within the legal period of 90 days for such purpose.

For the reasons set forth, the lack of timeliness of the request for arbitral pronouncement is not verified.

In these terms, the peremptory exception invoked by the Respondent is unfounded.

  1. Beyond the exception of lack of timeliness of the request for arbitral pronouncement, raised by the Respondent and ruled unfounded by this Tribunal, no other exceptions have been raised that it is necessary to address.

  2. There are no nullities nor any other circumstances that impede the consideration of the merits of the case.

  3. In these terms, the Arbitral Tribunal is regularly constituted to consider and decide the object of the proceedings.

III - Merits

III.1. Statement of Facts

  1. Established Facts

22.1. Facts with relevance to the assessment and decision of the questions raised are given as established and proven as follows:

A) The Claimant is a commercial company that, within the scope of its activity, is engaged in the activity of vehicle financial leasing.

B) The Tax Authority assessed the IUC, relating to the years 2009, 2012, 2013, 2014 and 2015, relating to 494 (four hundred and ninety-four) motor vehicles, whose registration numbers are identified in the case file, with the Claimant being the passive subject of said tax (see, no. 22 of the Request for Arbitral Pronouncement and Documents nos. 1 to 6 attached to said request).

C) The Claimant proceeded with payment of the IUC, identified in the preceding paragraph, as verified by the Certificates evidencing payment, which appear in Documents nos. 1 to 6 attached to the Request for Arbitral Pronouncement and which are given as fully reproduced for all legal purposes.

D) With respect to the assessments identified in paragraph B), the Claimant submitted, at the Finance Office of ..., requests for revision of the tax act, pursuant to article 78 of the LGT, as shown in Documents nos. 1 to 6 attached to the Request for Arbitral Pronouncement and which are given as fully reproduced for all legal purposes.

E) The requests for revision of the tax act, referred to in the preceding paragraph, were the subject of the following orders:

i) Order of the Deputy Finance Director of the Finance Directorate of Lisbon, by subdelegation, dated 14-05-2018, relating to Ex Officio Revision no. ...2016... regarding IUC 2013;

ii) Order of the Deputy Finance Director of the Finance Directorate of Lisbon, in substitution, dated 11-04-2018, relating to Ex Officio Revision no. ...2016... regarding IUC 2015;

iii) Order of the Deputy Finance Director of the Finance Directorate of Lisbon, by subdelegation, dated 19-04-2018, relating to Ex Officio Revision no. ...2016... regarding IUC 2014;

iv) Order of the Deputy Finance Director of the Finance Directorate of Lisbon, by subdelegation, dated 19-04-2018, relating to Ex Officio Revision no. ...2016... regarding IUC 2014;

v) Order of the Deputy Finance Director of the Finance Directorate of Lisbon, in substitution, dated 20-04-2018, relating to Ex Officio Revision no. ...2016... regarding IUC 2015;

vi) Order of the Deputy Finance Director of the Finance Directorate of Lisbon, in substitution, dated 20-04-2018, relating to Ex Officio Revision no. ...2016... regarding IUC 2014;

vii) Order of the Deputy Finance Director of the Finance Directorate of Lisbon, by subdelegation, dated 26-04-2018, relating to Ex Officio Revision no. ...2016... regarding IUC 2012;

viii) Order of the Deputy Finance Director of the Finance Directorate of Lisbon, dated 26-04-2018, relating to Ex Officio Revision no. ...2016... regarding IUC 2013.

(See, Documents nos. 7 to 15 attached to the Request for Arbitral Pronouncement and which are given as fully reproduced for all legal purposes).

22.2. There are no other facts with relevance to the consideration of the merits of the case that have not been proven.

22.3. Basis for the Statement of Facts

As to the statement of facts given as proven, the conviction of the Arbitral Tribunal was based on free assessment of the documentary evidence attached to the case file.

The Respondent challenges the documents presented by the Claimant to constitute proof of transfer of ownership to third parties (see, no. 112 of the Response). However, treating these as private documents, it was incumbent upon the Respondent to challenge the veracity of the handwriting or signature. But, having failed to do so and not having alleged the falsity of said documents, the documents attached by the Claimant have full probative force, pursuant to and for the purposes of the provisions of article 376 of the Civil Code.

22.4. Joinder of Claims

The present request for arbitral pronouncement relates to IUC assessments concerning four hundred and ninety-four motor vehicles, identified by the Claimant in no. 22 of the request for arbitral pronouncement, and, likewise, acts of rejection of the requests for revision of the tax act submitted by the Claimant relating to the aforementioned acts of assessment of IUC.

Having regard to the provisions of articles 3 of the LRTA and 104 of the CPPT and taking into account the identity of the taxable facts and the identical grounds of fact and law invoked, the tribunal considers that nothing prevents the joinder of the present claims.

III.2. Legal Issues

  1. In view of the foregoing, the principal question to be decided in the present proceedings consists of determining whether, for purposes of the provisions of article 3, no. 1, of the IUC Code, the passive subject of IUC is the lessor or the new owner, in the event that it is verified that, on the date of occurrence of the taxable event, the vehicle remains registered in the name of the lessor (its former owner) despite the sale having already occurred.

It is appropriate to assess this.

  1. Article 3 of the IUC Code, in its numbers 1 and 2, in the wording in force on the date of the facts to which the present request relates, provides as follows:

"1 - The passive subjects of the tax are the owners of the vehicles, considered as such the natural or legal persons, of public or private law, in whose names they are registered.

  1. Financial lessees, acquirers with reservation of ownership, as well as other holders of rights of purchase option by virtue of a lease contract are treated as equivalent to owners."

  2. Several decisions, in arbitral tribunals functioning at CAAD, have held that the norm cited in the preceding number contains a legal presumption that admits proof to the contrary.

In this regard, Arbitral Decision no. 145/2017-T (to whose content we hereby refer) states:

"On this question, that is, whether the norm of subjective incidence contained in no. 1 of article 3 of the IUC Code establishes a presumption, it should be noted that the case law established at CAAD points in the direction that said norm establishes a rebuttable legal presumption. Indeed, since the first Decisions issued on this matter, in the year 2013, among which may be mentioned, in particular, those issued in the context of Proceedings nos. 14/2013-T, 26/2013-T and 27/2013-T, to the most recent of which Decisions issued in the context of Proceedings nos. 69/2015-T, no. 191/2015-T and no. 202/2015-T may be cited, passing through numerous Decisions issued in the year 2014, of which Decisions issued in Proceedings nos. 34/2014-T, 120/2014-T and 456/2014-T are mentioned by way of mere example, all point to the understanding that no. 1 of article 3 of the IUC Code establishes a rebuttable legal presumption.

In this regard, reference should also be made to the recent Decision of the Tax Court of Lisbon, issued on 23-01-2017, in Proc. No. 463/13.4BELRS, where it is considered that the '[...] claimant succeeded in rebutting the presumption established in article 3, no. 1 of the IUC Code.'

Consideration should also be given to the understanding contained in the Judgment of the Central Administrative Court South, issued on 19-03-2015, Proceedings 08300/14, available at: www.dgsi.pt, which endorses said case law, when it is expressly stated therein that article 3, no. 1 of the IUC Code '[...] establishes a legal presumption that the holder of the motor vehicle registration is its owner, and such presumption is rebuttable by virtue of article 73 of the LGT'."

  1. The position contained in the Arbitral Decision cited above merits our agreement and the reproduction of its reasoning is dispensed with, being unnecessary, in the present proceedings.

  2. Due to the conclusion of the purchase and sale contract, the owner with full rights becomes directly covered by no. 1 of article 3 of the IUC Code. In accordance with article 408, no. 1, of the Civil Code, the constitution or transfer of real rights over a determinate thing occurs by mere effect of the contract, save for the exceptions provided by law. This is the case with the purchase and sale contract for a motor vehicle (see, articles 874 and 879, paragraph a), of the Civil Code), which does not depend on any special formality, being valid even when concluded in verbal form.

  3. The right of ownership of motor vehicles is subject to registration, pursuant to the provisions of Decree-Law no. 54/75, of 12 February, with subsequent amendments, and whose purpose, in accordance with article 1, no. 1, consists in "...giving publicity to the legal situation of motor vehicles and their respective trailers, having in view the security of legal commerce". Effectively, the absence of registration does not affect the validity of the purchase and sale contract, but only its efficacy, and, even this, only vis-à-vis third parties acting in good faith for purposes of registration.

  4. Concluding, in accordance with the foregoing in the preceding numbers, that the norm of subjective incidence of IUC, contained in article 3 of the IUC Code, establishes a rebuttable presumption, it is important to verify whether the facts alleged by the Claimant, in the present arbitral proceedings, constitute, or do not constitute, sufficient proof for its rebuttal. Thus, the Claimant must prove that it was not the owner of the vehicles identified in the case file, because their respective transfers of ownership had previously occurred. In these terms, we conclude that, being a rebuttable presumption, it falls to the entity that is inscribed in the register as owner of the vehicle, and for that reason was considered by the Tax Authority as the passive subject of the tax, to present elements of proof to demonstrate that the holder of ownership is another person, by effect of the transfer of ownership.

  5. The Claimant, to make the proof referred to in the preceding number, presents copies of debit notes. The said debit notes in the "Description/Services" identify the contract number and contain the following expressions: "Residual value (identification of the registration number) on the date of ..." or "compensation relating to the closure of the contract".

It is verified that, in the present case, the debit notes, due to their unilateral nature, do not prove the transfer of ownership of the vehicle. Also, the debit notes attached to the case file do not prove their respective payment by the buyer, indeed the debit notes themselves contain the reference: "Document valid as Receipt after proof of proper collection". However, the Claimant does not provide proof that the amounts indicated in the debit notes were actually collected.

The Claimant did not attach to the case file the contracts identified in the debit notes, nor the invoices of the alleged sales of the motor vehicles identified in the case file, which would certainly be means of proof susceptible to contributing to demonstrate the alleged transfer of ownership of the vehicles in question.

In this sense, the debit notes attached to the case file by the Claimant do not constitute, in themselves, sufficient means of proof to exclusively demonstrate that the Claimant was not, on the date of assessment of IUC, the owner of the motor vehicle.

Given the foregoing, the means of proof presented by the Claimant prove to be insufficient to rebut the presumption contained in article 3, no. 1, of the IUC Code, which, as a consequence, results in the unfoundedness of the Claimant's claim.

  1. The Arbitral Tribunal, in accordance with the foregoing, ruled the Claimant's claim unfounded and, therefore, in accordance with nos. 1 and 2 of article 527 of the Code of Civil Procedure, applicable by virtue of paragraph e) of no. 1 of article 29 of the LRTA, the responsibility for payment of the arbitral fee is unequivocally that of the Claimant.

IV – Decision

In view of the foregoing, it is decided in this Arbitral Tribunal:

a) To rule unfounded the exception of lack of timeliness of the request for arbitral pronouncement raised by the Respondent;

b) To rule the request for arbitral pronouncement unfounded and, in consequence, to absolve the Respondent of the claim, with the appropriate legal consequences.

V - Value of the Proceedings

Having regard to the provisions of articles 32 of the CPTA, 306, no. 2, of the Code of Civil Procedure and 97-A of the CPPT, applicable by virtue of the provisions of article 29, no. 1, paragraphs a) and b), of the LRTA, and article 3, no. 2, of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT), the value of the proceedings is fixed at € 46,495.82 (forty-six thousand four hundred and ninety-five euros and eighty-two cents).

VI - Costs

The amount of costs is fixed at € 2,142.00 (two thousand one hundred and forty-two euros) to be borne by the Claimant, in accordance with Table I of the RCPAT, in compliance with the provisions of articles 12, no. 2, and 22, no. 4, both of the LRTA, as well as the provisions of article 4, no. 4, of the RCPAT.

Notify.

Lisbon, Centre for Administrative Arbitration, 25 February 2019

The Arbitrator

Olívio Mota Amador

Frequently Asked Questions

Automatically Created

Who is liable for IUC (Imposto Único de Circulação) on vehicles under a financial leasing agreement in Portugal?
Under Article 3(1) of the IUC Code, liability for IUC on vehicles under financial leasing agreements is presumed to fall on the person in whose name the vehicle is registered. However, this is a rebuttable legal presumption. When ownership transfers from the leasing company to the lessee through a purchase agreement (as occurs at the end of many leasing contracts), the actual owner becomes liable regardless of registration status. The Civil Code (Article 879) provides that ownership transfers upon conclusion of the purchase contract, making the acquirer/lessee the proper taxpayer even before registration is updated, since vehicle registration has declaratory rather than constitutive effect.
How do legal presumptions affect the subjective incidence of IUC tax on leased vehicles?
Legal presumptions significantly affect IUC subjective incidence by creating a prima facie determination of who owes the tax. Article 3 of the IUC Code establishes that the registered owner is 'considered as' the passive subject, creating a legal presumption linking registration to tax liability. However, as a presumption rather than an irrebuttable rule, it can be overcome with contrary proof. In financial leasing contexts, this means the Tax Authority may initially assess IUC against the registered owner (typically the leasing company), but this assessment can be challenged if evidence demonstrates ownership transferred to another party through valid purchase agreements, even when registration has not yet been updated due to administrative delays or the acquirer's failure to register.
Can a financial leasing company challenge IUC tax assessments through arbitral proceedings at CAAD?
Yes, financial leasing companies have full standing to challenge IUC tax assessments through CAAD arbitral proceedings under the Legal Regime for Tax Arbitration (LRTA - Decree-Law 10/2011). Companies can request arbitration pursuant to Articles 2(1)(a) and 10 of the LRTA when seeking declaration of illegality of tax assessments and rejection of revision requests. The company must demonstrate it paid IUC amounts and has legitimate interest in contesting the assessments. In this case, the claimant properly invoked CAAD jurisdiction, arguing the Tax Authority committed an error of law in applying Article 3 of the IUC Code. The arbitral tribunal has competence to review both the underlying tax assessments and the administrative decisions rejecting revision requests, and can order reimbursement of amounts unduly paid if assessments are found illegal.
What is the procedure for requesting a review of IUC tax assessments (revisão do ato tributário) in Portugal?
The procedure for requesting revision of IUC tax assessments (revisão do ato tributário) is governed by general tax procedure rules. Taxpayers must submit a formal revision request to the Tax Authority within the applicable limitation period, which is generally four years from the date of the contested act when based on error attributable to tax services. The request must identify the specific assessments challenged, provide legal grounds (such as error of law in applying Article 3 of the IUC Code), and submit supporting documentation. The Tax Authority must investigate the claim rather than rely solely on registration data from IMTT (vehicle authority) or IRN (property registry). If the revision request is rejected, taxpayers can appeal through administrative channels or initiate arbitral proceedings at CAAD. The claimant must demonstrate the Tax Authority incorrectly applied legal norms, such as failing to recognize ownership transfer despite vehicle registration not being updated.
Are IUC refunds available when tax was incorrectly charged to the registered owner instead of the lessee?
Yes, IUC refunds are available when tax was incorrectly charged to the registered owner instead of the actual liable party, including in lessee situations. When the Tax Authority assesses IUC against the registered owner (typically the leasing company) but ownership had actually transferred to the lessee/acquirer through a valid purchase agreement, the assessment is illegal due to incorrect identification of the passive subject under Article 3 of the IUC Code. The registered owner who paid can request revision of the tax act based on error attributable to tax services (error of law), seeking reimbursement of amounts unduly paid. The legal basis is that ownership transfers upon conclusion of purchase contracts (Article 879, Civil Code), making the acquirer liable regardless of registration delays. Since vehicle registration is declaratory not constitutive, the Tax Authority cannot rely exclusively on registration records but must investigate actual ownership, particularly when presented with purchase agreements demonstrating transfer of ownership to lessees.