Summary
Full Decision
ARBITRAL DECISION
I. - REPORT
A - PARTIES
The A…, SA legal entity no.…, with registered office at Rua…, no.…, …-… - Lisbon, hereinafter referred to as "Claimant", filed a request for constitution of an arbitral tribunal, pursuant to the provisions of subparagraph a) of section 1 of article 2 of Decree-Law no. 10/2011, of 20 January (Legal Regime for Arbitration in Tax Matters, hereinafter referred to as "LRAT"), with a view to considering the following claim which opposes it to the Tax and Customs Authority (which succeeded, among others, the Directorate-General for Taxes) hereinafter referred to as "Respondent" or "TA".
B - CLAIM
1 - The request for constitution of the arbitral tribunal was accepted by the Honorable President of CAAD on 15 June 2015 and, on the same date, notified to the TA.
2 - The Claimant did not proceed to appoint an arbitrator, whereby, pursuant to the provisions of section 1 of article 6 of the LRAT, the undersigned, on 07-08-2015, was designated by the Ethics Council of the Center for Administrative Arbitration as arbitrator of a Single Arbitral Tribunal, having accepted in accordance with the legally provided terms.
3 - The Parties were, on 07-08-2015, duly notified of this designation, having manifested no intention to refuse it, in accordance with the combined provisions of subparagraphs a) and b) of section 1 of article 11 and articles 6 and 7 of the Code of Ethics.
4 - In these circumstances, in accordance with the provisions of subparagraph c) of section 1 of art. 11 of Decree-Law no. 10/2011, of 20 January, in the version introduced by art. 228 of Law no. 66-B/2012, of 31 December, the arbitral tribunal was regularly constituted on 26-08-2015.
5 - On 18 February 2016, the Arbitral Tribunal considered it unnecessary to hold the meeting provided for in art. 18 of the LRAT, taking into account both the orders issued on this matter in the SGP, and the fact that the dispute concerns, fundamentally, a matter of law, as well as the intention of the parties to dispense with said meeting.
6 - The Claimant herein requests that this Arbitral Tribunal:
a) - Declare the illegality and consequent annulment of the 31 assessment acts relating to the Single Vehicle Circulation Tax (hereinafter referred to as IUC), relating to the 19 motor vehicles, as identified in the case file, which are hereby deemed to be fully reproduced herein.
b) - Condemn the Tax and Customs Authority to refund the amount of € 2,789.63, which it indicates as the value of the claim.
c) - Condemn the Tax and Customs Authority to payment of indemnity interest on the amount of € 2,789.63.
C - GROUNDS FOR THE CLAIM
7 - The Claimant, in support of its request for arbitral pronouncement, states, in summary, the following:
8 - That it is a credit financial institution that acquired the set of assets and liabilities held by the company "B…, S.A. - Branch in Portugal". (see Annex C).
9 - That, by means of said acquisition, the financial leasing contracts of "B…, S.A. - Branch in Portugal", came to form part of its asset portfolio, having acquired all the rights and obligations inherent to the position of financier and lessor, resulting from such contracts.
10 - That, as a credit financial institution, it has a strong presence in the national market, with the financing of the automobile sector, among its areas of activity, assuming special relevance.
11 - That it was notified to proceed with the payment of IUC relating to the assessment acts identified in the document attached to the request for arbitral pronouncement, as Annex A.
12 - That the TA, even knowing that financial leasing contracts burdened the mentioned vehicles, understood it should require it to pay the tax in question.
13 - That, although not assuming the status of taxpayer in respect of the tax, it proceeded with its payment, relating to the thirty-one assessments referenced in the case file, relating to the nineteen vehicles, equally, identified in the proceedings, as stated in document no. 1.
14 - That it never enjoyed the use of any of the nineteen vehicles in question, the potential for their use never having belonged to it, which was exclusively effected by the lessees.
15 - That, with respect to all the vehicles at issue in the proceedings, a financial leasing contract was in force at the moment when the corresponding IUC became due, and the Claimant could not be the taxpayer in respect of that tax.
16 - That, in the field of IUC, the legislator chose to burden the taxpayer not according to their wealth, departing from the principle of contributive capacity, but rather in the fair measure of the cost to the environment and to road infrastructure that the taxpayer, through the use of motor vehicles, may generate.
17 - That, in most cases, it will be the owner of the motor vehicle who is the taxpayer in respect of the corresponding IUC, pursuant to section 1 of art. 3 of IUC, on the assumption that they are the individual who uses it and holds its enjoyment.
18 - That, in the financial leasing contract, the right to use the vehicle is subtracted from its owner, as lessor, with the lessee being granted the right to use and enjoy, exclusively, such vehicle.
19 - That, pursuant to the provisions of section 2 of art. 3 of IUC, the lessees have the exclusive enjoyment of the motor vehicle, and they also have the obligation to pay the respective tax.
20 - That, with financial leasing contracts in force, with respect to the nineteen vehicles identified in the proceedings, at the moment when the IUC became due, it is the lessees, and not the lessor, who are responsible for ensuring the payment of that tax.
D - RESPONSE OF THE RESPONDENT
21 - The Respondent, Tax and Customs Authority, (hereinafter referred to as TA), filed its Response on 02-10-2015.
22 - In said Response, the TA considers that the allegations of the Claimant cannot, in any way, succeed, inasmuch as they make an interpretation and application of the legal rules applicable to the case that are notoriously wrong, to the extent that,
23 - They reveal an understanding which incurs, not only in a biased reading of the letter of the law, but also in an interpretation which does not take into account the systematic element, violating the unity of the regime enshrined in the entire IUC and, more broadly, in the entire legal-fiscal system, further resulting from an interpretation which ignores the ratio of the regime enshrined in IUC. (see art. 17 of the Response)
24 - It states that the tax legislator, in establishing in art. 3, section 1 of IUC who are the taxpayers in respect of IUC, established, expressly and intentionally, that these are the owners (or in the situations provided for in section 2, the persons there mentioned), being considered as such the persons in whose name the same are registered. (see art. 21 of the Response)
25 - It emphasizes that the legislator did not use the expression "it is presumed" as it could have done, for example, in the following terms: "the taxpayers in respect 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". (see art. 22 of the Response)
26 - It considers that the wording of art. 3 of IUC corresponds to a clear choice of legislative policy adopted by the legislator and does not entail any legal presumption, whereby to understand that a presumption is enshrined there would unequivocally constitute an interpretation contra legem. (see arts. 31, 33 and 36 of the Response)
27 - It states that said understanding has already been adopted by the Jurisprudence of our courts, transcribing for this purpose part of the judgment of the Administrative and Tax Court of Penafiel, delivered in Case no. 210/13.OBEPNF. (see arts. 34 and 35 of the Response)
28 - On the systematic element of interpretation, it considers that the solution propounded by the Claimant is intolerable, finding no legal support for the understanding favored by it. (see art. 44 of the Response)
29 - On the "ratio" of the regime, it understands that, in light of a teleological interpretation of the regime enshrined in the entire IUC Code, the interpretation propounded by the Claimant, to the effect that the taxpayer in respect of IUC is the effective owner independently of the fact that the registration of such status does not appear in the motor vehicle register, is manifestly wrong, to the extent that it is the very ratio of the regime enshrined in IUC that constitutes clear proof that what the tax legislator intended was to create a tax based on the taxation of the owner of the vehicle, as stated in the motor vehicle register. (see arts. 67 and 68 of the Response)
30 - It adds that IUC carried out a reform of the regime for taxation of vehicles in Portugal, substantially altering the vehicle taxation regime, with the taxpayers in respect of the tax becoming the owners appearing in the property register, regardless of the circulation of vehicles on the public highway. (see art. 70 of the Response)
31 - In this sense, it states that this is the understanding inscribed, in particular, in recommendation no. 6-B/2012 of 22-06-2012, from the Ombudsman addressed to the Secretary of State for Public Works, Transport and Communications.
32 - The interpretation conveyed by the Claimant also shows itself to be inconsistent with the Constitution to the extent that such interpretation translates into the violation of the principle of trust, the principle of legal certainty, the principle of efficiency of the tax system and the principle of proportionality. (see art. 96 of the Response)
33 - It considers that the tax acts in dispute do not suffer from any defect of violation of law, to the extent that in light of the provisions of art. 3, sections 1 and 2, it was the Claimant, in its capacity as owner appearing in the Motor Vehicle Registry Office, who was the taxpayer in respect of IUC.
34 - It understands that in the matter of financial leasing, and for the purposes of art. 3 of IUC, it is necessary that financial lessors, as is the case with the Claimant, comply with the obligation established in art. 19 of said Code, so that they may be relieved of the obligation to pay the tax, whereby, such obligation not having been fulfilled, it is necessary to conclude that the Claimant is the taxpayer in respect of the tax.
35 - Finally, it states that it was not the Respondent who gave rise to the deduction of the request for arbitral pronouncement, but rather the Claimant, and consequently, the Claimant should be condemned to pay the arbitration costs "in accordance with art. 527/1 of the New Civil Procedure Code by virtue of art. 29/1-e) of the LRAT".
36 - It considers, in conclusion, that, in light of all the arguments set forth, the request for arbitral pronouncement should be judged unfounded, with the tax assessment acts in dispute remaining in the legal order, and the Respondent entity being absolved of the claim accordingly.
E - QUESTIONS TO BE DECIDED
37 - It is therefore necessary to consider and decide.
38 - In light of what has been set forth, with respect to the positions of the Parties and the arguments presented, the questions to be decided are, particularly, the following:
a) Whether or not the rule of subjective incidence contained in article 3, section 1, of IUC establishes a presumption.
b) What is the legal value of the motor vehicle register in the economy of IUC, particularly for the purposes of the subjective incidence of this tax.
c) Whether, on the date when the tax becomes due, a financial leasing contract exists which has as its object a motor vehicle, the taxpayer in respect of IUC, for the purposes of the provisions of article 3, sections 1 and 2 of IUC, is the lessee or the leasing entity, owner of the vehicle, in whose name the property right is registered.
F - PROCEDURAL REQUIREMENTS
39 - The Arbitral Tribunal is regularly constituted and is materially competent, pursuant to subparagraph a) of section 1 of article 2 of Decree-Law no. 10/2011, of 20 January.
40 - The Parties enjoy legal personality and capacity, are legitimate and are legally represented (see art. 4 and section 2 of art. 10 of Decree-Law no. 10/2011 and art. 1 of Ordinance no. 112/2011, of 22 March).
41 - The proceedings do not suffer from defects that invalidate it.
42 - Having regard to the administrative tax proceedings, a copy of which was attached to the case file by the TA, and the documentary evidence forming part of the proceedings, it is now necessary to present the factual matter relevant to the understanding of the decision, as fixed in the terms mentioned below.
II - REASONING
G - FACTUAL REASONING
43 - With respect to material facts, this tribunal deems the following facts established:
44 - The Claimant is a credit financial institution that acquired the set of assets and liabilities held by the company "B…, S.A. - Branch in Portugal".
45 - By means of said acquisition, the financial leasing contracts of "B…, S.A. - Branch in Portugal", came to form part of the Respondent's asset portfolio, having the same acquired all the rights and obligations inherent to the position of financier and lessor, resulting from such contracts.
46 - The Claimant was notified to proceed with the payment of IUC relating to the assessment acts relating to the nineteen vehicles identified in the proceedings.
47 - The TA had knowledge that the mentioned vehicles were subject to financial leasing contracts, but understood it should require the Claimant to pay the tax in question.
48 - The Claimant did not assume the status of taxpayer in respect of the tax, but proceeded with its payment, relating to the thirty-one assessments referenced in the case file, relating to the nineteen vehicles, equally, identified in the proceedings.
49 - On the dates relating to when the IUC became due, to which the assessments identified in the case file relating to the years 2013 and 2014 refer, only four, of the nineteen vehicles identified in the case file, were under the force of financial leasing contracts.
REASONING FOR THE PROVED FACTS
50 - The facts deemed proved are based on the documents mentioned, with respect to each of them, to the extent that their conformity with reality was not questioned.
FACTS NOT PROVED
51 - As a matter of fact, with relevance for the decision, this tribunal considers as not proved that, at the time when the IUC relating to the years 2013 and 2014 became due, with respect to the vehicles with the license plates …-…-… (with respect to the year 2014), …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-… and …-…-…, financial leasing contracts were in force.
H - LEGAL REASONING
52 - The factual matter is fixed, and it is now important to proceed with its legal subsumption and determine the applicable law with respect to the underlying facts, in accordance with the questions to be decided set forth in section 38.
53 - The first question, with respect to which there are absolutely opposed understandings between the Claimant and the TA, is whether or not the rule of subjective incidence contained in section 1 of art. 3 of IUC establishes a rebuttable presumption.
54 - The positions of the parties are known. Indeed, for the Claimant, the provisions of section 1 of art. 3 of IUC constitute a rebuttable legal presumption, to the extent that the owner of the motor vehicle is deemed to be the taxpayer in respect of IUC, on the assumption that they are the individual who uses it and holds its enjoyment, also considering that, pursuant to the provisions of section 2 of said article, the lessees have the exclusive enjoyment of the motor vehicle, and they also have the obligation to pay the respective tax.
55 - The Respondent, for its part, considers that the tax legislator, in establishing in art. 3, section 1 of IUC who are the taxpayers in respect of IUC, determined, expressly and intentionally, that these are the owners (or in the situations provided for in section 2, the persons there mentioned), being considered, as such, the persons in whose name the same are registered.
I - INTERPRETATION OF THE RULE OF SUBJECTIVE INCIDENCE CONTAINED IN SECTION 1 OF ARTICLE 3 OF IUC
56 - On this question, namely, whether the rule of subjective incidence contained in section 1 of art. 3 of IUC enshrines a presumption, it should be noted that the jurisprudence established at CAAD points in the direction that said rule enshrines a rebuttable legal presumption. Indeed, from the first Decisions, delivered on this matter, in the year 2013, among which may be mentioned in particular those delivered in the context of Cases nos. 14/2013-T, 26/2013-T and 27/2013-T, to the most recent of which may be indicated the Decisions delivered in the context of Cases no. 69/2015-T, no. 191/2015-T and no. 202/2015 - T, passing through numerous Decisions delivered in the year 2014, of which mention is made, by way of mere example, the Decisions delivered in Cases nos. 34/2014-T, 120/2014-T and 456/2014 - T, all point to the understanding that section 1 of art. 3 of IUC enshrines a rebuttable legal presumption.
In this respect, consideration should also be given to the understanding set forth in the Judgment of the South Central Administrative Court, delivered on 19-03-2015, Case 08300/14, available at: www.dgsi.pt, where it expressly refers to the fact that art. 3, section 1 of IUC "[…] enshrines a legal presumption that the holder of the motor vehicle register is its owner, such presumption being rebuttable by virtue of art. 73 of the LGT".
This is an understanding which we fully endorse and which is deemed, without further ado, as valid and applicable in the present case, it not being considered, therefore, necessary for further developments, in light of the abundant reasoning set forth in the aforementioned Decisions and in said Judgment.
57 - Being this the understanding that, with respect to art. 3, section 1 of IUC, is fully adopted by this tribunal, it is, however, still important to note the lack of justification assisting the Respondent, when, in articles 96 and 99 of its response, it alleges that the interpretation to the effect that a rebuttable legal presumption is enshrined in section 1 of art. 3 of IUC violates the constitutional principles of trust and legal certainty, the efficiency of the tax system and proportionality.
Let us then consider this question.
Let us see,
- On the principle of proportionality it is important to note, first of all, that the same, to the extent that it is materially inherent in the regime of rights, freedoms and guarantees, being inscribed in their protection, aims, in essence, to regulate the action of the Public Administration in order that its activity in its relationship with individuals be guided by the choice of the most equilibrately adequate measures for the pursuit of the public interest.
As Professor Freitas do Amaral teaches, in Course of Administrative Law, Vol II, Almedina, 2002, pp. 127/128 et seq., the "principle of proportionality constitutes a constitutive manifestation of the principle of the Rule of Law", and "[…] the idea is firmly anchored that, in a democratic rule of law State, the measures of public authorities should not exceed what is strictly necessary for the realization of the public interest".
The principle of proportionality, adds the said Professor, ibidem, p.129, means that "[…] the limitation of goods or interests private by acts of public authorities must be adequate and necessary for the concrete purposes that such acts pursue, as well as tolerable when confronted with those purposes".
With respect to the principle of proportionality it is also important to note what J. J. Gomes Canotilho and Vital Moreira tell us, in CONSTITUTION OF THE PORTUGUESE REPUBLIC, ANNOTATED, VOLUME I, 4th Edition, 2007, Coimbra Editora, pp. 392/393, when they consider that the referred principle is unfolded into three sub-principles, namely: "[…] a) principle of suitability (also designated by the principle of suitability); b) principle of necessity (also called principle of necessity or of indispensability); c) principle of proportionality in the strict sense, which means that the restrictive legal means and the ends obtained must be in a "fair measure", preventing the adoption of restrictive, excessive, disproportionate legal measures, in relation to the ends obtained […]".
The referred sub-principles have, all of them, a common denominator, which is that of just equilibrium and permanent coherence between the purposes of the law and the means adopted to achieve such purposes, which, in the circumstances and attempting the transposition of said principle to the case at hand, will imply answering the question of what is the adequate interpretation of section 1 of art. 3, with a view to the pursuit of the legal purposes provided for in art. 1 of IUC, which translate into the tax burden of the effective owners of motor vehicles (and not, necessarily, of those appearing in the register) in the measure of the environmental and road cost that they cause.
As Professor J. J. Gomes Canotilho refers in Constitutional Law and Theory of the Constitution, Almedina - Coimbra, 1998, pp. 264 et seq., the most important field of application of the principle of proportionality or prohibition of excess, which has constitutional grounding in arts. 18, section 2 and 266, section 2 of the CRP, "[…] is that of the restriction of rights, freedoms and guarantees by acts of public authorities. However, the logical domain of application of the principle of proportionality extends to conflicts of legal goods of any kind." The administration, adds the said author, idem, "[…] must always observe, in each concrete case, the requirements of the prohibition of excess […]".
In this same direction points the jurisprudence, namely the judgment of the STA of 01-07-1997, Case no. 041177, available at: www.dgsi.pt, when it considers that the principle of proportionality in the broad sense comprises the congruence, suitability or adequacy of the means or measure to achieve the legally proposed end and, in the strict sense, encompasses the prohibition of excess.
The principle of proportionality is a corollary of the principle of justice, which means and implies that in its action the Public Administration must harmonize the specific public interest that it is responsible for pursuing with the rights and legitimate interests of individuals possibly affected by its acts, interests and rights these which, in the case at hand, fall back on the non-taxation in IUC of persons who are no longer owners of vehicles and who, consequently, in no way contribute to the realization of any road and environmental cost.
What is important is to balance the legal purposes and the means to pursue them, and, within the framework of a balancing judgment, to identify the most adequate means for this effect, which, in this case, translate into the interpretation adopted by the arbitral tribunal.
It will be said, moreover, that the understanding that section 1 of art. 3 of IUC establishes a rebuttable legal presumption corresponds to the only interpretation that coherently combines with said principle of equivalence, and which shows itself to be in line with the principles of justice and proportionality.
The interpretation which understands that a rebuttable legal presumption is enshrined in section 1 of art. 3 of IUC is, therefore, the only one that permits ensuring the pursuit of the purposes envisaged by the law - to burden the owners of motor vehicles in the measure of the environmental and road cost that they cause, - as stated in art. 1 of IUC, which means that the taxpayers in respect of IUC are, presumptively, the persons in whose name the vehicles are registered, that is, the referred taxpayers are, in principle, and only in principle, the persons in whose name such vehicles are registered, there being, therefore, no other interpretation capable of achieving the referred legal purposes, only thus, it is reaffirmed, are the referred principles of proportionality and justice shown to be complied with.
The contrary understanding, that is, that considered by the TA, which interprets section 1 of art. 3 of IUC as not enshrining a rebuttable legal presumption, understanding that the taxpayers in respect of IUC are, definitively, the persons in whose name the vehicles are registered, to the fair extent that it leads to the imposition of a tax burden on one who may no longer be the owner of the vehicle in question and who, in this manner, does not pollute, keeping away from tax liability one who, in reality, is the effective cause of environmental and road damage, resulting from the use of vehicles of which they are the real owners, clear evidence that the legally prescribed purposes would, in no way, be achieved, not respecting, thus, the principle of equivalence which, in the context of IUC, has an absolutely structuring function. Such understanding, that one, does not show itself, in these circumstances, in harmony with the principle of proportionality.
The interpretation made by the tribunal, in the decision which is now being reformed, had exactly in account the principle of proportionality when, contrary to what the Respondent intended, it has, in due measure, that the definitive registration does not have constitutive effect since it is intended to give publicity to the registered act, functioning only as a mere rebuttable presumption of the existence of the right and when, in homage to that principle, it heeds the principle of equivalence, as a fundamental element of IUC.
- With respect to the efficiency of the tax system, it will be said that the efficiency of the Administration in general, or of the TA in particular, in the current sense, will correspond to the capacity/methodology of work oriented toward the optimization of the work executed or of the services provided, which means producing the maximum, in quantity and quality, with the minimum costs and means, having nothing to do with the observance of legally enshrined principles and with respect for the rights of citizens, whether in their capacity as taxpayers or not.
In the technical sense, it will be said that the principle of efficiency of the tax system is commonly held, in the domain of tax procedure, as a corollary of the principle of proportionality, which as is known, imposes an adequate proportion between legal purposes and the means chosen to achieve those ends, or, as Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa refer, in General Tax Law, Annotated and Commented, 4th Edition 2012, Encontro de Escrita, Lda, Lisbon, p. 488, in the annotations to article 55 of the LGT, it is a principle which obliges "[…] the tax administration to refrain from imposing on taxpayers obligations which are unnecessary to satisfy the purposes which it seeks to pursue".
In this framework, the referred principle of efficiency of the tax system will mean the capacity to achieve the legally established objectives with the minimum means, which will also have nothing to do with respect for the rights of citizens, nor with the necessity of observance of other principles to which the tax administration must subordinate its activity, in particular the inquisitorial principle and that of discovery of material truth, it not being possible, obviously, for the application of the mentioned principle of efficiency to be made, either to the detriment of the rights of citizens, or by the failure to observe the legal purposes. [1]
- With respect to the principle of legal certainty and trust it should be noted, first of all, that the latter principle, that of trust, is a concretization of the principle of good faith, which, having enshrinement in our legal order since 1996, came to have express constitutional inscription, as stated in section 2 of art. 266 of the CRP, where it is established that "Administrative bodies and agents are subordinate to the Constitution and the law and must act, in the exercise of their functions, with respect for the principles of equality, proportionality, justice, impartiality and good faith". (emphasis ours)
With respect to good faith it is important to note what Professor Freitas do Amaral refers when, in Course of Administrative Law, Vol. II, Almedina, 2002, pp. 135/136, quoting Professor V. Fausto de Quadros, tells us that "[…] the Public Administration is obliged to obey bona fide in relations with individuals. More: it should even set, also there, the example to individuals of the observance of good faith, in all its manifestations, as the essential nucleus of its ethical behavior. Without this, it will never be possible to affirm that the State (and with it other public entities) is a person of integrity".
On the other hand, the principle of trust is also held to be a consequence of the principle of legal certainty, inseparable from the Rule of Law, which, having to guarantee a minimum of certainty in the rights of persons and in the legal expectations created for them, is a generator of trust of citizens in the legal protection of the Public Administration.
With respect to the principles of legal certainty and protection of trust, Professor J. J. Gomes Canotilho tells us in Constitutional Law and Theory of the Constitution, Almedina - Coimbra, 1998, p. 250 et seq., that the referred principles are closely associated, being considered that "[…] legal certainty is connected with objective elements of the legal order - guarantee of legal stability, security of orientation and realization of law - while protection of trust is more concerned with the subjective components of security, namely the calculability and foreseeability of individuals with respect to the legal effects of acts of public authorities". In any case, adds the referred Professor, idem, that the "[…] general principle of legal certainty in the broad sense (thus encompassing the idea of protection of trust) can be formulated as follows: the individual has the right to be able to trust that to their acts or to the public decisions affecting their rights, positions or legal relations based on legal norms that are in force and valid are attached the legal effects foreseen and prescribed by those same norms".
It follows from this doctrine that persons, in alienating their vehicles, must be sure that, should they proceed to the sale of vehicles of which they are owners, and should the same not be registered in the name of the purchasers, the legal effects resulting therefrom will be those foreseen and resulting from the legal norms in force and their adequate interpretation, in light of the legal purposes of those same norms, which, in this case, led the arbitral tribunal to consider registration as a rebuttable presumption of the existence of the right and that only persons causing road and environmental costs should be taxed.
The best way to, in the case at hand, ensure legal certainty, in the broad sense, is, therefore, that concretized by means of the interpretation made by the arbitral tribunal, when it considers that a rebuttable legal presumption is enshrined in section 1 of art. 3 of IUC, permitting any citizen who proceeds to sell, to a third party, a motor vehicle, the possibility of demonstrating that, when the IUC became due, they were no longer its owner nor responsible for the payment of that tax.
- Beyond what has been stated above, it is also important to know whether the interpretation adopted by the arbitral tribunal, apart from not conflicting with any of the referenced principles, is directly and substantively inscribed in the context of the constitutional order.
On the interpretation of the law in light of the Constitution, or of interpretation in conformity with the Constitution, Professor Jorge Miranda tells us, in Manual of Constitutional Law, TOME II, Introduction to the Theory of the Constitution, 2nd edition, Coimbra Editora, 1987, p. 232 et seq., that what is involved, first of all, is "[…] taking into account, within the systematic element of interpretation, that which relates to the Constitution. Indeed, each legal provision must not only be grasped in the set of provisions of the same law and each law in the set of the legislative order; it must also be considered in the context of the constitutional order [..]". (emphasis ours)
The understanding which considers that a rebuttable legal presumption is enshrined in section 1 of art. 3 of IUC is supported by various elements of interpretation, among which should be mentioned the systematic element, to the extent that interpretation in conformity with the Constitution implies that within the systematic element of interpretation, one take into account that which relates to the Constitution.
On the mentioned systematic element the following should be noted:
a) In the understanding of BAPTISTA MACHADO, in Introduction to Law and to Legitimate Discourse, p. 183, the systematic element "[…] comprises the consideration of other provisions which form the complex normative framework of the institute in which the provision being interpreted is integrated, that is, which regulate the same matter (context of the law), as well as the consideration of legal provisions which regulate parallel normative problems or related institutes (parallel places). It also comprises the systematic place which belongs to the provision being interpreted in the overall legal order, as well as its consonance with the spirit or intrinsic unity of the entire legal order".
b) It is known that a legal principle, in this case the principle of equivalence, does not exist in isolation, but is connected by an intimate nexus with other principles which integrate, at the more global level, the respective legal order, in this case, with the other principles embodied in the system inscribed in IUC, and with other constitutionally enshrined principles. In that sense, each article of a given legal instrument, in this case IUC, will only be understandable if we place it, both before the other articles which follow or precede it, as well as before the constitutional order.
c) With respect to the systematization of IUC, environmental concerns were determining for the mentioned principle of equivalence to be, from the outset, inscribed in the first article of said Code, which, necessarily, leads to the subsequent articles, to the extent that they have grounding in such principle, being influenced by it. This occurred, in particular, with the tax base, which came to be constituted by various elements, particularly those relating to pollution levels, and with the tax rates, established in articles 9 to 15, which were influenced by the environmental component, and, naturally, also with the subjective incidence itself, provided for in article 3 of IUC, which cannot escape the referred influence.
d) The mentioned principle of equivalence, as noted by Sérgio Vasques, in Special Consumption Taxes, Almedina, 2001, p. 122 et seq., implies that "[…] the tax must correspond to the benefit which the taxpayer derives from the public activity; or to the cost which the taxpayer imputes to the community by their own activity". Adds the said author, idem, that "Thus, a tax on automobiles based on a rule of equivalence will only be equal if those who cause the same road wear and the same environmental cost pay the same tax; and those who cause different wear and environmental cost, pay different tax as well." For this reason, as also referred to by the cited author, idem, the concretization of the principle of equivalence dictates special requirements "[…] with respect to the subjective incidence of the tax [..]."
The mentioned principle which informs the current Single Vehicle Circulation Tax, is inscribed in the environmental concerns established in section 2, subparagraph a) of art. 66 of the CRP and in the need - having in view to ensure the right to the environment, in the context of sustainable development - to "Prevent and control pollution and its effects and harmful forms of erosion", concerns these, which are, manifestly, considered in the interpretation defended by the arbitral tribunal.
On the other hand, the provision in subparagraph h) of section 2 of art. 66 of the Constitution, when it establishes that, in the context of sustainable development, it is incumbent upon the State to "ensure that fiscal policy reconciles development with environmental protection and quality of life", carries as a corollary the principle of the polluter - payer, which concretizes the idea, inscribed therein, that whoever pollutes should, for that reason, pay, thus being the interpretation defended by the arbitral tribunal, in perfect accordance with the constitutional order.
e) It is also necessary to leave a brief note, merely to raise the question of why the rules contained in art. 9 of the Civil Code oblige the interpreter of ordinary legislation, when it is certain that said Code occupies no prominent place in the legal system.
To this question responds Professor Jorge Miranda, ibidem, p. 230, when he considers that the "[…] conclusion to which one inclines is that rules such as these are valid and effective, not by virtue of being contained in the Civil Code - for this does not occupy any prominent place in the legal system - but, directly, as such, by translating a legislative intention, not contradicted by any other provisions, with respect to the problem of interpretation (which are not only technical-legal) with which they deal."
Adds the said author, idem, that "rules on these matters may be considered substantially constitutional and it would not even be inappropriate to see them raised to the Constitution in the formal sense."
On the subject of the interpretation problematic and its rules, as is derived from Professor José de Oliveira Ascensão, in The Law, Introduction and General Theory, 2nd edition, Calouste Gulbenkian Foundation, 1980, pp. 352/353, it should be underlined the imperative character of such rules, and their binding nature for the interpreter.
The interpretation which the arbitral tribunal makes of section 1 of art. 3 of IUC and the criteria which, for that purpose, it considered, from the literal element, to the systematic element, passing through the historical and rational (or teleological) element, do not collide, thus, with any constitutional principles.
Section 1 of art. 9 of the CC provides that the search for legislative intent must have "[…] specially in account […] the unity of the legal system, the circumstances in which the law was elaborated and the specific conditions of the time in which it is applied", circumstances and conditions those which, today more than ever, are of sensitivity to the environment and of respect for questions related to it, and which show themselves to be inscribed in the constitutional order.
Thus, in light of what has been stated, it does not seem, with due respect, that the TA has reason, to the extent that the interpretation considered by the arbitral tribunal, as being the only one capable of respecting the legal purposes, does not violate any of the principles in question, that is, the principles of trust and legal certainty, the efficiency of the tax system and proportionality, and, on the other hand, such interpretation is express and substantively in conformity with the principles inscribed in the Constitution.
Thus, it is not apparent that the interpretation made by the tribunal, on section 1 of art. 3 of IUC, clashes with any constitutional norms or principles in force.
J - ACQUISITION OF OWNERSHIP OF THE VEHICLE AND THE VALUE OF REGISTRATION
58 - First and foremost, it should be added, in light of what will, explicitly, be stated below on the value of registration, that the acquirers of vehicles become owners of those same vehicles by means of the execution of the corresponding sales contracts, with registration or without it.
59 - There are three articles of the Civil Code that are important to take into account, with respect to the acquisition of ownership of a motor vehicle. They are, first of all, art. 874, which establishes the notion of a sales contract as being "[…] the contract by which the ownership of a thing, or another right, is transferred, for a price"; art. 879, in whose subparagraph a) it is established, as essential effects of the sales contract, "the transfer of the ownership of the thing or the right", and art. 408, which has as its title contracts with real efficacy, and establishes in its section 1, that "the constitution or transfer of real rights over a determined thing takes place by mere effect of the contract, except for the exceptions provided for in the law". (emphasis ours)
We are, in fact, in the domain of contracts with real efficacy, which means that their execution causes the transfer of real rights, in this case, motor vehicles, determined by mere effect of the contract, as is expressly derived from the aforementioned norm.
60 - With respect to the referred contracts with real efficacy, it is important to note the teachings of Pires de Lima and Antunes Varela, when, in annotations to art. 408 of the CC, they tell us that "From these contracts called real (quoad effectum), because they have as their immediate effect the constitution, modification or extinction of a real right (and not merely the obligations tending to that result) are distinguished the so-called real contracts (quoad constitutionem), which require the delivery of the thing as an element of their formation (see arts. 1129, 1142 and 1185) ".
We are, thus, before contracts in which the ownership of the thing sold is transferred, without further ado, from the seller to the buyer, having, as its cause, the contract itself.
61 - Also from the jurisprudence, in particular from the Judgment of the STJ no. 03B4369 of 19/02/2004, available at: www.dgsi.pt, it is derived that, in light of the provision in art. 408, section 1, of the Civil Code, "the constitution or transfer of real rights over a determined thing takes place by mere effect of the contract, except for the exceptions provided for in the law". This is the case of the sales contract of a motor vehicle (arts. 874° and 879 al. a) of the Civil Code), which does not depend on any special formality, being valid even when executed verbally - conf. Decision of the STJ of 3-3-98, in CJSTJ, 1998, year VI, Volume I, page 117". (emphasis ours)
62 - Having the sales contract, in light of what has been stated, a real nature, with the mentioned consequences, it is necessary to consider, also, the legal value of the motor vehicle register which is the object of that contract, to the extent that the transaction of said property is subject to public registration.
63 - It establishes, in fact, section 1 of art. 1 of Decree-Law no. 54/75, of 12 February, relating to the registration of motor vehicles, that "The registration of vehicles has essentially as its purpose to give publicity to the legal situation of motor vehicles and their trailers, with a view to the security of legal commerce". (emphasis ours)
64 - Being clear, in light of the referred norm, what is the purpose of registration, there is, however, no clarity, within the scope of the referred Decree-Law, on the legal value of that registration, it being important to consider article 29 of the mentioned legal instrument, relating to the registration of motor vehicle property, when it is provided there that "The provisions relating to the land register apply, with the necessary adaptations, to the registration of motor vehicles, […]". (emphasis ours)
65 - In this framework, so that we may reach the sought knowledge on the legal value of the registration of motor vehicle property, it is important to take into account what is established in the Land Register Code, approved by Decree-Law no. 224/84, of 6 July, when it provides in its article 7 that "definitive registration constitutes a presumption that the right exists and belongs to the person entered in the register in the precise terms in which the registration defines it". (emphasis ours)
66 - The combination of the provisions in the articles mentioned above, particularly that established in section 1 of art. 1 of Decree-Law no. 54/75, of 12 February and in art. 7 of the Land Register Code, permits considering, on the one hand, that the fundamental function of registration is to give publicity to the legal situation of vehicles, permitting, on the other hand, to presume that the right exists and that such right belongs to the person to whom the same is registered, in the precise terms in which it is defined in the register.
67 - Thus, definitive registration constitutes nothing more than a presumption that the right exists and belongs to the person entered, in the exact terms of the register, but a rebuttable presumption, admitting, therefore, counterproof, as results from the law and jurisprudence has been pointing out, being able, in this respect, to see, among others, the Judgments of the STJ nos. 03B4369 and 07B4528, respectively, of 19/02/2004 and 29/01/2008, available at: www.dgsi.pt.
68 - The function legally reserved for registration is, thus, on the one hand, that of publicizing the legal situation of goods, in this case, vehicles and, on the other, to permit us to presume that the right exists over those vehicles and that the same belongs to the person, as such entered in the register, which means that registration does not have a constitutive nature with respect to the right of ownership, but only declarative, hence why registration does not constitute a condition of validity of the transfer of the vehicle from the seller to the buyer.
69 - Thus, if the buyers of vehicles, as their "new" owners, do not promote, from the outset, the adequate registration of their right, it is presumed, for the purposes of the provision in art. 7 of the Land Register Code and of section 1 of art. 3 of IUC, that the vehicles continue to be the property of the person who sold them and who remains their owner in the register, such person being the taxpayer in respect of the tax, being sure, however, that such presumptions are rebuttable, either by virtue of that established in section 2 of art. 350 of the CC, or in light of the provision in art. 73 of the LGT. Hence, from the moment in which the presumptions in question are displaced, by means of proof of the said sales, the TA may not persist in considering the seller of the vehicle, who continues to appear in the register as its owner, as the taxpayer in respect of IUC.
L - THE TAXPAYER IN RESPECT OF IUC DURING THE TERM OF THE FINANCIAL LEASING CONTRACT
70 - It is important, first of all, to note that the Legal Regime of the Financial Leasing Contract, approved by Decree-Law no. 149/95, of 24 June, with the last amendment introduced by Decree-Law no. 30/2008, of 25 January, provides in its art. 9 that the obligations of the lessor are, in particular, to grant the enjoyment of the property for the purposes to which it is intended and to sell the property to the lessee, if the latter wishes, at the end of the contract, as respectively, subparagraphs b) and c) of its section 1.
71 - On the other hand, in light of that established in art. 10 of the referred legal instrument, in particular in subparagraphs a) of its sections 1 and 2, we learn that the obligations of the lessee are to pay the rents and to use and enjoy the leased property, which means that, during the term of a financial leasing contract having as its object a motor vehicle, only the lessee has its exclusive enjoyment.
72 - The obligations of the lessee, in light of the referred norms, clearly point in the direction that it is this contractual subject which has the exclusive enjoyment of the vehicle which is the object of the financial leasing contract, being the one who uses it as if they were the true owner of such property.
73 - The interpretation of section 1 of art. 3 of IUC, in light of everything which, in this respect, has been stated above, taking into account, particularly, the legal relevance conferred on the principle of equivalence, does not include the taxation, in IUC, of the lessor who, as the formal owner of the vehicle, has not, consequently, any potential polluting effect, which means that the damages arising to the community, resulting from the use of motor vehicles must be assumed by their real users, as costs which only they should bear. The lessee, on the other hand, has the full use and enjoyment of the vehicle, as is legally established, being its true user and effective generator of environmental damage, and should, thus, respond for the corresponding tax, this being the understanding which, in light of the ratio legis of IUC, should be gathered from the provision in section 2 of art. 3 of that same Code.
74 - Thus, the interpretation of section 2 of art. 3 of IUC will only permit the perspective of the lessee as the responsible for the payment of IUC, it being important, in this respect, to note the provision in art. 19 of IUC, when, precisely, for the purposes of the provision in art. 3 of the referred Code, that is, for the purposes of the subjective incidence, it comes to impose on the entities which proceed to financial leasing the obligation to provide to the TA the data relating to the identification of the users of the leased vehicles, which reveals, in particular, that, for the purposes of said subjective incidence, it was intended to know who were, finally, the real users of the leased vehicles, so that they, and not others, would be responsible for the single vehicle circulation tax.
75 - In light of what has just been stated, it is our understanding that, if a financial leasing contract is in force, on the date when the tax becomes due, which has as its object a motor vehicle, the taxpayer in respect of that tax is not, in light of the provision in section 2 of art. 3 of IUC, the lessor but rather the lessee, given that it is this one that has the enjoyment of the vehicle and, as such, the intrinsic potential for pollution, regardless of the registration of the property right remaining in the name of the lessor.
76 - In this framework, with the exception of the vehicles with the license plates …-…-… (with respect to the year 2013); …-…-…; …-…-… and …-…-…, whose financial leasing contracts were in force on the dates when the corresponding IUC became due, with the payment thereof being the responsibility of the lessees, given that, in light of what has already been stated, they were, at that time, taxpayers in respect of the tax, in all other contracts relating to the remaining vehicles, the payment of the tax fell to the lessor.
M - THE MEANS OF PROOF PRESENTED
77 - The means of proof presented are embodied in the nineteen financial leasing contracts (copies), relating to the same number of vehicles, contracts which, as stated by the Claimant, would be in force on the date when the IUC became due, which, it is noted, is not proved in the proceedings.
78 - In fact, with the exception of the financial leasing contracts relating to the vehicles identified with the license plates …-…-… (with respect to the year 2013); …-…-…; …-…-… and …-…-…, which were in force on the dates when the corresponding IUC became due, the amount of which totals € 1,348.41, in all other situations, namely those relating to contracts concerning vehicles with the license plates …-…-… (with respect to the year 2014), …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-… and …-…-…, such is not the case.
79 - As has already been stated above, although the Claimant considers that all financial leasing contracts were in force on the date when the tax became due, the truth is that such situation falls back on the financial leasing contracts which have as their object vehicles with the license plates …-…-…; …-…-…; …-…-… and …-…-…, it being necessary to understand that such contracts are suitable means to prove the status of the lessees and, as such, taxpayers in respect of IUC, there being, moreover, no elements which permit understanding that the data inscribed in these contracts do not correspond to the contractual truth, and it being also certain that the law, in this case, section 1 of art. 75 of the LGT, attributes to such documents a presumption of truthfulness.
80 - It is thus not proved that the vehicles identified in the case file, all of them, were the object of financial leasing contracts in force on the date when the tax became due (years 2013 and 2014), nor were other documents presented, namely copies of invoices-receipts or receipts as means of proof that, as a consequence of the term of such contracts, the remaining vehicles were sold, that is, the vehicles whose contracts were not in force, to which is referred in the preceding point 78, on a date prior to that when the tax became due, relating to the years 2013 and 2014.
81 - In light of what has just been stated, and taking into account, both the presumption established in section 1 of art. 3 of IUC, and the interpretation of section 2 of that same article and the responsibility of the lessee as taxpayer in respect of the tax, and the legal value of the motor vehicle register in the economy of IUC, and the financial leasing contracts relating to the vehicles identified with the license plates …-…-… (with respect to the year 2013); …-…-…; …-…-… and …-…-…, which were in force on the dates when the corresponding IUC became due, the amount of which totals € 1,348.41, the tax assessment acts relating to these vehicles, cannot merit our agreement, either because an adequate interpretation and application of the legal norms of subjective incidence was not taken into account, which constitutes an error as to the legal requirements, or because the referred acts were based on a matter of fact, clearly divergent from the actual reality, which constitutes an error as to the factual requirements.
82 - In these circumstances, in light of the attachment of copies of the financial leasing contracts, relating to the vehicles with the license plates …-…-… (year 2013); …-…-…; …-…-… and …-…-…, in force on the date when the tax became due, and for the reasons above mentioned, the taxpayers in respect of IUC are, pursuant to the provision in article 3, section 2, of IUC, the lessees identified in those contracts.
83 - In sum, it will be said, in consonance with what has been stated above, that the assessment acts relating to the vehicles identified in the preceding point 82 are deemed illegal, to the extent that, on the date when the IUC became due, financial leasing contracts were in force, the taxpayers in respect of the tax being the respective lessees, and not the Claimant, in light of the provision in section 2 of art. 3 of IUC, it being necessary to note that the amount assessed and paid, with reference to such vehicles, that is, to vehicles with the license plates …-…-… (year 2013); …-…-…; …-…-… and …-…-…, corresponds, respectively, to the sum of € 161.99; € 37.61; € 1,106.42 and € 42.39, which totals € 1,348.41.
N - REFUND OF THE AMOUNT PAID AND INDEMNITY INTEREST
84 - Pursuant to the provision in subparagraph b) of section 1 of art. 24 of the LRAT, and in conformity with what is established there, the arbitral decision on the merits of the claim to which there is no recourse or challenge binds the tax administration from the end of the period provided for recourse or challenge, it being necessary for this - in the exact terms of the success of the arbitral decision in favor of the taxpayer and until the end of the period provided for the spontaneous execution of judgments of the tax courts - to "Restore the situation that would exist if the tax act which is the object of the arbitral decision had not been executed, adopting the acts and operations necessary for that purpose." (emphasis ours)
85 - These are legal commands which are in total harmony with the provision in art. 100 of the LGT, applicable to the case by virtue of the provision in subparagraph a) of section 1 of art. 29 of the LRAT, in which it is established that "The tax administration is obliged, in case of total or partial success of administrative complaints or appeals, or of judicial proceedings in favor of the taxpayer, to the immediate and complete restoration of the situation that would exist if the illegality had not been committed, including the payment of indemnity interest, in the terms and conditions provided for in the law." (emphasis ours)
86 - The case in the present case file raises the manifest application of the mentioned norms, since as a consequence of the illegality of the assessment acts, referenced in this proceedings, it will be necessary, by virtue of such norms, for there to be a refund of the amounts paid, both as to tax, and as to compensatory interest, as a way of achieving the restoration of the situation that would exist if the illegality had not been committed, amounts those which in the case at hand total the sum of € 1,348.41, resulting from the total amount € 2,789.63, which was paid, deducted from the sum of € 1,441.22 associated with the assessments relating to the vehicles with the license plates …-…-… (with respect to the year 2014), …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-… and …-…-….
87 - As to indemnity interest, it appears manifest that, in light of that established in article 61 of the TCPT and the requirements of the right to indemnity interest being met, that is, verified the existence of error attributable to the services which results in the payment of tax debt in an amount greater than legally due, as provided for in section 1 of art. 43 of the LGT, the Claimant has the right to indemnity interest at the legal rate, calculated on the sum of € 1,348.41.
CONCLUSION
88 - It is concluded, thus, that if on the date when the tax becomes due a financial leasing contract is in force which has as its object a motor vehicle, for the purposes of the provision in article 3, sections 1 and 2, of IUC, the taxpayer in respect of IUC is the lessee, even though the registration of the property right of the vehicle appearing in the Motor Vehicle Registry is made in the name of the leasing entity, provided that the latter proves the existence of said contract.
89 - Having the IUC assessment acts relating to the vehicles with the license plates …-…-… (year 2013); …-…-…; …-…-… and …-…-…, been based on the idea that, within the framework of financial leasing contracts in force, when the IUC became due, the taxpayers in respect of the tax are the lessors, in light of that established in article 3, sections 1 and 2, of IUC, the TA makes an erroneous interpretation and application of the referred legal norms, committing an error of law as to the legal requirements, which constitutes a violation of law.
90 - In light of these errors as to the factual and legal requirements on which the assessment acts referred to above are based, the request for arbitral pronouncement which is the object of this proceedings must be judged partially successful, justifying the annulment of such assessment acts, with all legal consequences.
III - DECISION
91 - Therefore, in consideration of all that has been stated, this Arbitral Tribunal decides:
-
To judge as partially successful, as proved, on the grounds of violation of law, the request for arbitral pronouncement insofar as it concerns the annulment of the IUC assessment acts, relating to the vehicles with the license plates …-…-… (year 2013); …-…-…; …-…-… (year 2013/2014) and …-…-…;
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To annul, consequently, the IUC assessment acts, relating to the years 2013 and 2014, relating to the vehicles, as mentioned above;
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To condemn the TA to refund the sum of € 1,348.41, obtained in the terms indicated above, in article 86, relating to the IUC and the compensatory interest which were paid, relating to the years 2013 and 2014, and to the payment of indemnity interest at the legal rate, counted from the date of payment of said sum, until its complete refund;
-
To condemn the Claimant and the Respondent in costs, which are fixed, for each, in the proportion of 52% for Claimant and 48% for the Respondent.
VALUE OF THE PROCEEDINGS
In conformity with the provision in articles 306, section 2 of the CPC (formerly 315, section 2) and 97-A, section 1 of the CPPT and in article 3, section 2 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the proceedings is fixed at € 2,789.63.
COSTS
In accordance with the provision in article 12, section 2, finally, in art. 22, section 4, both of the LRAT, and in art. 4 of the Regulation of Costs in Tax Arbitration Proceedings and the Table I, which is attached thereto, the amount of the total costs is fixed at € 612.00.
Notification ordered.
Lisbon, 25 February 2016
The Arbitrator
António Correia Valente
[1] See the study on the subject, prepared by Prof. Carlos Pestana Barros, in Science and Technical Taxation, 2005, no. 416, pp. 105-126
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