Summary
Full Decision
ARBITRAL DECISION
I - REPORT
A - PARTIES
The company A… - …, LDA, legal entity no. …, with registered office at …, Building …, Floor …, Paço de Arcos - …, hereinafter referred to as "Claimant", filed a request for the constitution of an arbitral tribunal, pursuant to the provisions of article 2(1)(a) and articles 10 et seq. of Decree-Law no. 10/2011, of 20 January (Legal Framework for Arbitration in Tax Matters, hereinafter referred to as "RJAT"), with a view to examining the following dispute between itself and the Tax and Customs Authority (which succeeded, among others, the General Tax Directorate), hereinafter referred to as "Respondent" or "AT".
B - REQUEST
1 - The request for constitution of the arbitral tribunal was accepted by His Excellency the President of CAAD on 2 January 2015 and notified to AT on 15 January 2015.
2 - The Claimant failed to appoint an arbitrator, whereupon, pursuant to the provisions of article 6(1) of RJAT, the undersigned was designated by the Deontological Council of the Centre for Administrative Arbitration on 27-02-2015 as arbitrator of a Singular Arbitral Tribunal and accepted in accordance with the legally established terms.
3 - The Parties were, on 27-02-2015, duly notified of this appointment and did not express any intention to challenge it, pursuant to the combined provisions of articles 11(1)(a) and (b) and articles 6 and 7 of the Code of Deontology.
4 - Under these circumstances, in accordance with the provisions of article 11(1)(c) of Decree-Law no. 10/2011, of 20 January, in the wording introduced by article 228 of Law no. 66-B/2012, of 31 December, the arbitral tribunal was regularly constituted on 16-03-2015.
5 - On 7 September 2015, the Arbitral Tribunal, pursuant to article 16(c) of RJAT (Decree-Law no. 10/2011, of 20 January), considered the meeting provided for in article 18 of the aforementioned decree to be dispensed with, taking into account both the fact that the subject matter of the dispute concerned fundamentally matters of law, the absence of exceptions to be examined and decided, the orders issued for this purpose in SGP, as well as the will of the parties to dispense with the said meeting.
6 - The present Claimant requests that this Arbitral Tribunal:
a) - Declare the illegality and consequent annulment of the assessment acts relating to the Single Circulation Tax (hereinafter referred to as IUC), recorded in the assessment notifications referenced in the proceedings, relating to the years 2009, 2010, 2011 and 2012 and concerning the vehicles identified in the court record, which are hereby given as fully reproduced;
b) - Condemn the Tax and Customs Authority to pay compensation for the provision of undue guarantee provided for the purposes of suspension of the enforcement proceedings instituted for the compulsory collection of the amount associated with the said assessment acts.
C - CAUSE OF ACTION
7 - The Claimant, in the grounds of its request for arbitral pronouncement, states, in summary, the following:
8 - That it is a commercial company whose activity consists in the rental of motor vehicles, and that, upon the termination of these rental contracts, it proceeds on various occasions to sell the vehicles to its customers.
9 - That it was notified to exercise the right of prior hearing with respect to the IUC assessments and the compensatory interest associated with them, as identified in the court record, relating to the years 2009, 2010, 2011 and 2012, concerning the vehicles contained in the proceedings, and was subsequently notified of these assessments in the amount of €40,025.75.
10 - That against these assessment acts it timely filed administrative appeals and, in order to prevent future enforcement proceedings, proceeded to provide guarantees for the purposes of suspension of the enforcement proceedings instituted for the compulsory collection of the amount associated with the said assessments, having incurred costs with the provision of such guarantees.
11 - That it was notified of the decisions dismissing the administrative appeals presented, which made final the draft decisions of which it had already been notified, on the grounds that the vehicles in question in the proceedings, on the date when the tax obligation became due, were registered in the name of the Claimant, and that it was therefore necessary to conclude that such entity was the passive subject of the tax.
12 - That when it filed the aforementioned administrative appeals and also in the context of the corresponding prior hearings, it proceeded to demonstrate that the transfer of the used vehicles to third parties occurred at times prior to the dates of the tax obligation, as results both from the invoices for the sale of those vehicles and from the sale of salvage, copies of which it then attached and which now form part of the court record.
13 - That article 3 of CIUC establishes a legal presumption that those listed in the motor vehicle registry as owners will, in principle and presumptively, be the current owners of the vehicles.
14 - That the ratio legis of CIUC points in the direction that concerns of an environmental order, embodied in the principle of equivalence, aim to tax the real owners and users of vehicles.
15 - That if the taxpayer demonstrates that he is not the owner of the vehicle, regardless of the registry, the tax administration services must recognize the real situation that comes to their knowledge, under penalty of distorting the purposes of the tax.
16 - That, from the combination of the provisions of article 1 of Decree-Law no. 54/75, of 12 February and article 7 of the Property Registry Code, it is concluded that the function of the registry is to give publicity to the situation of vehicles, with such registry not having a constitutive nature of the right of ownership, but only declarative, with the registry not constituting a condition of validity of the transfer of the vehicle from seller to buyer.
17 - That the provision in article 3(1) of CIUC establishes a presumption juris tantum or rebuttable, thus allowing the person who in the registry is inscribed as owner of the vehicle to present evidence intended to demonstrate that such ownership is inscribed in the legal sphere of another person.
18 - That the documents attached, intended to rebut the said presumption - invoices for the sale of vehicles and communications from insurance companies regarding vehicles declared as Total Loss - enjoy the presumption of truthfulness provided in article 75 of LGT.
19 - That, from the moment the insurance company communications regarding Total Loss of the vehicles occurred, responsibility for the cancellation of the registrations fell upon those insurance companies.
20 - That it was never owner of the vehicle with registration number …-…-…, and consequently the corresponding IUC cannot be demanded from it.
21 - That all vehicles referenced in the request for arbitral pronouncement were sold to third parties, either as used vehicles, as results from the sales invoices attached to the court record, or as vehicles declared as Total Loss, at dates prior to the tax-generating facts in the years 2009 to 2012.
D - RESPONSE OF THE RESPONDENT
22 - The Respondent, the Tax and Customs Authority (hereinafter referred to as AT), filed its Response on 24-04-2015, in which it considers that the allegations of the Claimant cannot, in any way, proceed, inasmuch as they make a manifestly wrong interpretation and application of the legal norms applicable to the case, insofar as, first of all,
23 - They embody an understanding that incurs not only a biased reading of the letter of the law, but also an interpretation that fails to attend to the systematic element, violating the unity of the regime established throughout the CIUC and, more broadly, throughout the entire legal-tax system, further resulting from an interpretation that ignores the ratio of the regime established in article 3(1) of CIUC. (See article 7 of the Response)
24 - It refers that the tax legislator, when establishing in article 3(1) of CIUC who the passive subjects of IUC are, expressly and intentionally established that these are the owners (or in the situations provided in number 2 the persons mentioned there), being considered as such the persons in whose name the same are registered. (See article 11 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 passive subjects of the tax are the owners of vehicles, presumed as such the natural or legal persons, of public or private law, in whose name the same are registered". (See article 12 of the Response)
26 - It considers that the wording of article 3 of CIUC corresponds to a clear option of legislative policy adopted by the legislator, so that to understand that a presumption is established there would unequivocally constitute an interpretation contra legem. (See articles 21 and 23 of the Response)
27 - It refers that the aforementioned understanding has already been adopted by the case law 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 articles 24 and 25 of the Response)
28 - On the systematic element of interpretation, it considers that the solution advocated by the Claimant is intolerable, not finding the understanding supported by it any legal support. (See article 34 of the Response)
29 - On the ignorance of the "ratio" of the regime, AT considers that, in light of a teleological interpretation of the regime established throughout the IUC Code, the interpretation advocated by the Claimant, to the effect that the passive subject of IUC is the effective owner regardless of whether the registry of that quality does not appear in the motor vehicle registry, is manifestly wrong, insofar as it is the very ratio of the regime established in CIUC 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 recorded in the motor vehicle registry. (See articles 57 and 58 of the Response)
30 - It adds that CIUC undertook a reform of the regime for taxation of vehicles in Portugal, substantially altering the regime for motor vehicle taxation, with the passive subjects of the tax being the owners listed in the property registry, regardless of the circulation of vehicles on public roads. (See article 60 of the Response)
31 - In this sense, it refers that this is the understanding inscribed, notably, in recommendation no. 6-B/2012 of 22-06-2012, from the Ombudsman addressed to the State Secretary for Public Works, Transportation and Communications.
32 - The interpretation conveyed by the Claimant also shows itself, beyond what has already been referred to, to be at odds with the Constitution, insofar as such interpretation results in 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 article 112 of the Response)
33 - It adds that invoices, as documents unilaterally issued by the Claimant, do not clearly constitute sufficient proof to "undermine the (supposed) legal presumption established in article 3 of CIUC", also noting that the vehicle with registration number …-…-… is registered in the name of the Claimant.
34 - It also refers that the Claimant did not attach copies of the official model for registration of motor vehicle ownership, which it should have done.
35 - Finally, it states that it was not the Respondent who gave rise to the filing of the request for arbitral pronouncement, but rather the Claimant, and consequently the Claimant should be condemned to pay the arbitral costs "in accordance with article 527(1) of the New Code of Civil Procedure by virtue of article 29(1-e) of RJAT".
36 - It considers, in conclusion, that, in light of all the arguments set out, the tax acts in issue are valid and lawful, and the request for arbitral pronouncement underlying the present proceedings should be judged unfounded, maintaining the tax assessment acts challenged in the legal system, and accordingly absolving the Respondent entity from the request.
E - QUESTIONS TO BE DECIDED
37 - It is therefore necessary to examine and decide.
38 - In light of the foregoing, regarding the positions of the Parties and the arguments presented, the questions that are essential to examine are:
a) Whether the Arbitral Tribunal is materially competent to examine the claim for compensation for the costs associated with the provision of bank guarantees.
b) Whether the rule governing subjective incidence contained in article 3(1) of CIUC establishes or does not establish a presumption.
c) What is the legal value of the motor vehicle registry in the economy of CIUC, particularly for the purposes of subjective incidence of this tax.
d) If, on the date of occurrence of the tax-generating fact, the vehicle had already been previously alienated, although the right of ownership thereof continues to be registered in the name of its previous owner, for the purposes of article 3(1) of CIUC, is the passive subject of IUC the previous owner or the new owner.
F - PROCEDURAL REQUIREMENTS
39 - The Arbitral Tribunal is regularly constituted and is materially competent, pursuant to article 2(1)(a) of Decree-Law no. 10/2011, of 20 January.
40 - The Parties have legal capacity and standing, are legitimate and are legally represented (see article 4 and article 10(2) of Decree-Law no. 10/2011 and article 1 of Ordinance no. 112/2011, of 22 March).
41 - The proceedings do not suffer from defects that would invalidate them.
42 - Taking into account the administrative tax proceedings, a copy of which was attached to the court record by AT, 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 established in the terms mentioned below, but it is first necessary to address the tribunal's competence regarding the claim for compensation for the costs associated with the provision of bank guarantees.
G - CLAIM FOR COMPENSATION FOR COSTS ASSOCIATED WITH BANK GUARANTEES PROVIDED
43 - Taking into account, on the one hand, the provisions of article 13 of the Code of Procedure in Administrative Courts (CPTA) and considering, on the other hand, the provisions of articles 97, 577 and 578 of the CPC, applicable here by force of articles 29(1-c) and (e) of RJAT respectively, it is necessary to address first of all the question related to the claim for compensation for the costs associated with the provision of bank guarantees, insofar as the same raises the question of whether the arbitral tribunal has competence for this purpose, since, in light of the aforementioned CPTA rule, examination of this question precedes that of any other matter.
44 - The Claimant, in its request for arbitral pronouncement, in addition to requesting that the illegality be declared and the consequent annulment of the assessment acts relating to the Single Circulation Tax, relating to the years 2009, 2010, 2011 and 2012 and concerning the vehicles identified in the court record, which are hereby given as fully reproduced, also makes a claim for compensation for the costs associated with the provision of bank guarantees, with a view to the suspension of the enforcement proceedings instituted for the compulsory collection of the amount associated with the said assessments.
45 - The compensation claimed, resulting from the costs arising from the bank guarantees provided for the purposes of suspension of the enforcement proceedings instituted for the compulsory collection of the amount associated with the assessments already referred to above, although having a remote and indirect origin in the assessment acts referenced, does not, however, correspond to a dispute arising out of a tax legal relationship tout court, and is indeed manifestly subsequent to the said tax acts.
46 - It is known that the tax legal relationship, as notably results from the provisions of article 1(2) and (3) of LGT and article 30 of that same law, implies, in addition to the active and passive subjects of that relationship, that its object concerns the assessment and collection of taxes.
47 - The scope of the competence of tax arbitral tribunals comprises precisely the claims that are inscribed in the aforementioned tax legal relationship. Article 2(1) of RJAT, as amended by Law no. 64-B/2011, of 30 December, establishes that the competence of the said tribunals comprises: a) The declaration of illegality of assessment acts for taxes, self-assessment, withholding at source and advance payment; b) The declaration of illegality of acts determining the taxable matter, acts determining the taxable amount and acts fixing property values, which shows and corresponds to the disputes in which the tax tribunals are focused, not having thus competence for purposes of examining the aforementioned compensation claim.
48 - What the law manifestly favored with regard to the competence of arbitral tribunals in tax matters was the judgment of cases that in the administrative and tax courts take the procedural form of judicial challenge, in accordance with article 101(a) of LGT and articles 97(1)(a) to (f) of CPPT, noting that even in this domain there are limitations, as results notably from the provisions of article 2 of Ordinance no. 112-A/2011, of 22 March.
49 - In this regard, it should be noted the understanding of Jorge Lopes de Sousa, in Commentary on the Legal Framework for Tax Arbitration, part of the Guide to Tax Arbitration, Almedina, March 2013, pp. 105/106, when he refers that "Thus, regarding the scope of the matters whose examination can be submitted to the arbitral tribunals, RJAT fell short of the legislative authorization on which it was based, granted by Law no. 3-B/2010, of 28 April, which indicates that the tax arbitral process should constitute an alternative procedural means not only to judicial challenge proceedings, but also to an action for recognition of a right or legitimate interest in tax matters […]".
50 - Thus, the aforementioned claim for compensation for the costs associated with the provision of bank guarantees for the purposes of suspension of the enforcement proceedings instituted for the compulsory collection of the amount associated with the assessments referenced in the court record must be filed autonomously, within the framework of other rules, not those of tax law.
51 - Under these circumstances, no competence is perceived for this Arbitral Tribunal to examine, ratione materiae, the aforementioned compensation claim.
II - GROUNDS FOR DECISION
H - FACTUAL GROUNDS
52 - With regard to relevant factual matters, this tribunal establishes the following facts:
53 - The Claimant is a commercial company whose activity consists in the rental of motor vehicles, and upon the termination of these rental contracts, it proceeds on various occasions to sell the vehicles to its customers.
54 - The Claimant was notified to exercise the right of prior hearing with respect to the IUC assessments and the compensatory interest associated with them, as identified in the court record, relating to the years 2009, 2010, 2011 and 2012, concerning the vehicles contained in the proceedings, and was subsequently notified of these assessments in the amount of €40,025.75.
55 - The Claimant, against the said assessments, timely filed administrative appeals, and in order to prevent future enforcement proceedings, proceeded to provide guarantees for the purposes of suspension of the enforcement proceedings instituted for the compulsory collection of the amount associated with the said assessments, having incurred costs with the provision of such guarantees.
56 - The Claimant was notified of the decisions dismissing the administrative appeals presented, which made final the draft decisions of which it had already been notified, on the grounds that the vehicles in question in the proceedings, on the date when the tax obligation became due, were registered in the name of the Claimant, and that it was therefore necessary to conclude that such entity was the passive subject of the tax.
57 - The Claimant, when it filed the aforementioned administrative appeals and also in the context of the corresponding prior hearings, with a view to rebutting the presumption that it understood to be established in article 3(1) of CIUC, proceeded to demonstrate that the transfer of the used vehicles and vehicles considered as Total Loss to third parties occurred at times prior to the dates of the tax obligation, as results both from the invoices for the sale of those vehicles and the documentation issued by the Insurance Companies, copies of which it then attached and which now form part of the court record.
58 - The vehicles referenced in the request for arbitral pronouncement were, some, sold as vehicles declared as Total Loss, others, allegedly sold as used, at dates prior to the tax-generating facts in the years 2009 to 2012.
59 - On the dates relating to the tax-generating facts and their due date, to which the IUC assessments in the present proceedings relate, the ownership of some of the vehicles in question belonged to persons other than the Claimant, as identified in the court record.
GROUNDS FOR PROVED FACTS
60 - The facts established as proved are based on the documents mentioned, regarding each of them, insofar as their correspondence to reality was not disputed.
UNPROVED FACTS
61 - With regard to factual matters relevant to the decision, this tribunal considers as unproved the sale, prior to the due date of the tax, of vehicles with registration numbers …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-… and …-…-….
I - GROUNDS OF LAW
62 - The factual matter is established, and it is now necessary to proceed with its legal subsumption and determine the law applicable to the underlying facts, in accordance with the questions to be decided stated in number 38.
63 - The question that, in light of the foregoing, emerges as essential, regarding which there are absolutely opposing positions between the Claimant and AT, is translated into whether the rule governing subjective incidence contained in article 3(1) of CIUC establishes or does not establish a rebuttable presumption.
64 - The positions of the parties are known. Indeed, for the Claimant, article 3 of CIUC establishes a rebuttable legal presumption, allowing persons registered in the registry as owners of vehicles to present evidence intended to demonstrate that such ownership is inscribed in the legal sphere of other persons.
65 - The Respondent, for its part, considers the interpretation defended by the Claimant to be manifestly wrong, insofar as it is the very ratio of the regime established in CIUC 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 recorded in the motor vehicle registry.
J - INTERPRETATION OF THE RULE OF SUBJECTIVE INCIDENCE CONTAINED IN ARTICLE 3(1) OF CIUC
66 - On this matter, that is, whether the rule of subjective incidence contained in article 3(1) of CIUC establishes a presumption, it should be noted that the established case law of CAAD points to the fact that the said rule establishes a legal presumption. Indeed, from the first decisions delivered on this matter in the year 2013, among which reference may be made, notably, to those delivered in the context of Cases nos. 14/2013-T, 26/2013-T and 27/2013-T, to the most recent ones, including the Decision delivered in Case no. 69/2015-T, passing through numerous Decisions delivered in the year 2014, of which mention may be 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 article 3(1) of CIUC establishes a rebuttable legal presumption.
On this matter, consideration should also be given to the understanding recorded in the Judgment of the Central Administrative Court of the South, delivered on 19-03-2015, Case 08300/14, available at: www.dgsi.pt, which endorses the aforementioned case law, when it expressly states that article 3(1) of CIUC "[…] establishes a legal presumption that the holder of the motor vehicle registry is its owner, and such presumption is rebuttable by force of article 73 of LGT".
This is an understanding which we fully embrace and which is given, without further ado, as valid and applicable in the present case, not considering it therefore necessary further developments, given the abundant reasoning contained in the aforementioned decisions and in the said Judgment.
67 - Being this the understanding which, with regard to article 3(1) of CIUC, is fully adopted, it is still necessary, however, to note the lack of merit in the Respondent's allegation when it argues that the interpretation according to which a rebuttable legal presumption is established in article 3 of CIUC violates the constitutional principles of trust and legal certainty, the efficiency of the tax system and proportionality.
Let us see:
- On the principle of proportionality it is first necessary to emphasize that the same, to the extent that it is materially inherent in the regime of rights, liberties and guarantees, being inscribed in their defense, aims, in essence, to regulate the conduct of the Public Administration so that its activity in its relationship with individuals is marked by the choice of the most appropriately balanced measures for the pursuit of the public interest.
As Prof. 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", being "[…] strongly anchored the idea that, in a democratic rule of law state, the measures of the public powers should not exceed the 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 private interests by acts of the public powers must be adequate and necessary to the concrete ends pursued by such acts, as well as tolerable when confronted with those ends".
With regard to the principle of proportionality, it should also be noted 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 said principle is divisible into three subprinciples, namely: "[…] a) principle of suitability (also called principle of appropriateness); 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 "just measure", preventing the adoption of disproportionate legal measures, excessive, in relation to the ends obtained […]".
The said subprinciples have, all of them, a common denominator, namely that of just equilibrium and permanent coherence between the purposes of the law and the means adopted to achieve such purposes, which, in the present circumstances and attempting to transpose the said principle to the case at hand, will imply responding to the question of which interpretation of article 3(1) is most appropriate, with a view to achieving the legal purposes provided for in article 1 of CIUC, that is, the tax burden on the owners of motor vehicles in measure of the environmental and road cost that they cause.
The principle of proportionality thus has, in the case, the inherent need to seek to achieve the necessary balance between the sense legally attributed to the principle of equivalence, as a structuring and unifying principle of the IUC system and the sense that should be given to the owners of vehicles, to which article 3(1) of CIUC alludes, and the said principle of equivalence, as set forth in the explanatory memorandum of the Bill no. 118/X of 07/03/2007, underlying Law no. 22-A/2007 of 29/06, postulates that IUC "[…] is subordinated to the idea that taxpayers should be burdened in measure of the cost that they cause to the environment and to the road network, and this is the raison d'être of this tax figure".
The aforementioned principle of equivalence, which informs and shapes the CIUC, is recorded from the outset in article 1 of the said Code, where it provides that "The single circulation tax obeys the principle of equivalence, seeking to burden taxpayers in measure of the environmental and road cost that they cause, in realization of a general rule of tax equality". (emphasis ours) This principle clearly has underlying it the principle of polluter-pays, and embodies the idea, inscribed in it, that whoever pollutes must, therefore, pay.
It might be said, in fact, that the understanding that the aforementioned article 3(1) of CIUC establishes a rebuttable legal presumption corresponds to the only and appropriate interpretation that coherently aligns with the said principle of equivalence, and that is consistent with the principle of proportionality.
The interpretation that understands a rebuttable legal presumption to be established in article 3(1) of CIUC 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 measure of the environmental and road cost that they cause, - as established in article 1 of CIUC, which means that the passive subjects of IUC are, presumptively, the persons in whose name the vehicles are registered, that is, the said passive subjects 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 said legal purposes.
The contrary understanding, that is, one that considers that article 3(1) of CIUC does not establish a rebuttable legal presumption, understanding that the passive subjects of IUC are, definitively, the persons in whose name the vehicles are registered, to the extent that it leads to the imposition of a tax burden on those who do not at all pollute, nor can pollute, removing from tax liability those who, in reality, are the causers of the environmental and road damage resulting from the use of vehicles of which they are the effective owners, shows that the legally established purposes would not at all be achieved, not respecting, therefore, the principle of equivalence which, within the framework of CIUC, has an absolutely structuring function. Such understanding, that very one, does not show itself, under these circumstances, to be in harmony with the principle of proportionality.
- As to the efficiency of the tax system, it might be said that the efficiency of the Administration in general, or of AT in particular, in the ordinary sense, would correspond to the capacity/work methodology 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 of costs, having nothing to do with compliance with legally established principles and respect for the rights of citizens, whether in the capacity of taxpayers or not.
In the technical sense, it might be said that the principle of efficiency of the tax system is commonly held, in the domain of tax procedure, to be a corollary of the principle of proportionality, which, as is known, imposes an adequate proportion between the legal purposes and the means chosen to achieve those ends, or, as stated by Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, in General Tax Law, Annotated and Commented, 4th Edition 2012, Encontro de Escrita, Lda, Lisbon, p. 488, in the annotations to article 55 of LGT, it is a principle that obliges "[…] the tax administration to refrain from imposing on taxpayers obligations that are unnecessary to the satisfaction of the purposes that it seeks to pursue".
In this framework, the said principle of efficiency of the tax system would mean the capacity to achieve the legally established objectives given the available means, or better, with the minimum of means, which will also have nothing to do with respect for the rights of citizens, nor with the need to observe the principles to which the tax administration must subordinate its activity, particularly the inquisitorial principle and the discovery of material truth, and the application of the aforementioned principle of efficiency cannot, obviously, be made, either to the detriment of citizens' rights, or with non-observance of legal purposes.
- As to the principle of legal certainty and trust it should be noted, first of all, that the latter principle, that of trust, is a realization of the principle of good faith, which, having enshrined in our legal system since 1996, was expressly inscribed in the Constitution, as provided in article 266(2) of CRP, which establishes that "The administrative bodies and officials are subordinated to the Constitution and to 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 regard to good faith, it should be noted what Prof. Freitas do Amaral refers to when, in Course of Administrative Law, Vol II, Almedina, 2002, pp. 135/136, citing Prof. V. Fausto de Quadros, tells us that "[…] the Public Administration is obliged to obey good faith in relations with individuals. Moreover, it should even set, there as well, the example for individuals of the observance of good faith, in all its manifestations, as the essential nucleus of its ethical conduct. Without this, it can never be affirmed that the State (and with it other public entities) is a person of good repute".
On the other hand, the principle of trust is also held to be a consequence of the principle of legal certainty, indissociable 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, generates the confidence of citizens in the legal protection of the Public Administration.
Thus, in light of what is stated above, it does not appear, with due respect, that AT has merit, either because the principles in question aim to ensure that Public Entities, in the use of their public powers, do not take measures that exceed the strictly necessary for the realization of public purposes, which does not appear to concern the central issue of this case, or because, even if they were applied to the said issue, the interpretation adopted by AT, with regard to article 3(1) of CIUC, according to which the passive subjects of IUC are, definitively, the persons in whose name the vehicles are registered, does not show itself to be coherent with such principles.
- In these terms, it is not perceived that the interpretation made above by the tribunal regarding article 3(1) of CIUC contends with the constitutional rules and principles in force.
L - ACQUISITION OF OWNERSHIP OF THE VEHICLE AND THE VALUE OF THE REGISTRY
68 - First of all, it should be added, given what will below be explicitly stated about the value of the registry, that the acquirers of vehicles become owners of those same vehicles through the celebration of the corresponding contracts of purchase and sale, with or without registration.
69 - There are three articles of the Civil Code that are important to consider with respect to the acquisition of ownership of a motor vehicle. They are, first, article 874, which establishes the notion of a contract of purchase and sale as being "[…] the contract by which ownership of a thing, or another right, is transferred for a price"; article 879, in which subparagraph a) establishes, as essential effects of the contract of purchase and sale, "the transfer of ownership of the thing or the holding of the right" and article 408, which bears the heading of contracts with real effect, and establishes in its number 1 that "the constitution or transfer of real rights over a determined thing occurs by mere effect of the contract, except for the exceptions provided in the law". (emphasis ours)
We are, in fact, in the domain of contracts with real effect, which means that their celebration produces the transfer of real rights, in this case, motor vehicles, determined by the mere effect of the contract, as expressly results from the aforementioned rule.
70 - With regard to the aforementioned contracts with real effect, it should be noted the teachings of Pires de Lima and Antunes Varela, when, in annotations to article 408 of the Civil Code, they tell us that "From these so-called real contracts (quoad effectum), as they have as 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, therefore, before contracts in which the ownership of the thing sold is transferred, without more, from the seller to the buyer, having as cause the contract itself.
71 - Also from case law, specifically from the Judgment of the STJ no. 03B4369 of 19/02/2004, available at: www.dgsi.pt, it is drawn that, in light of the provisions of article 408(1) of the Civil Code, "the constitution or transfer of real rights over a determined thing occurs by mere effect of the contract, except for the exceptions provided in the law". This is the case of the contract of purchase and sale of a motor vehicle (articles 874° and 879 al. a) of the Civil Code), which does not depend on any special formality, being valid even when celebrated verbally - conf. Judgment of the STJ of 3-3-98, in CJSTJ, 1998, year VI, Volume I, page 117". (emphasis ours)
72 - Having the contract of purchase and sale, given what is stated above, a real nature, with the aforementioned consequences, it is necessary to consider also the legal value of the motor vehicle registry that is the object of that contract, to the extent that the transaction of the said good is subject to public registration.
73 - Article 1(1) of Decree-Law no. 54/75, of 12 February, relating to the registry of motor vehicles, provides that "The registry 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)
74 - While the purpose of the registry becomes clear from the aforementioned rule, there is, however, no clarity, within the scope of the said Decree-Law, about the legal value of that registry, making it necessary to consider article 29 of the said legal diploma, relating to the registry of motor vehicle ownership, when it provides that "The provisions relating to the land registry are applicable, with the necessary adaptations, to the registry of automobiles […]". (emphasis ours)
75 - In this framework, so that we can reach the sought knowledge about the legal value of the motor vehicle ownership registry, it is necessary to take into account what is established in the Property Registry Code, approved by Decree-Law no. 224/84, of 06 July, when it provides in its article 7 that "the final registration constitutes a presumption that the right exists and belongs to the registered holder in the precise terms in which the registration defines it". (emphasis ours)
76 - The combination of the provisions of the aforementioned articles, particularly what is established in article 1(1) of Decree-Law no. 54/75, of 12 February and in article 7 of the Property Registry Code, permits considering, on the one hand, that the fundamental function of the registry is to give publicity to the legal situation of vehicles, allowing, on the other hand, to presume that the right exists and that such right belongs to the holder in whose favor it is registered, in the precise terms in which it is defined in the registry.
77 - Thus, the final registration constitutes no more than the presumption that the right exists and belongs to the registered holder, in the exact terms of the registry, but a rebuttable presumption, admitting therefore countervailing proof, as results from the law and case law has been pointing out, and reference may be made in this regard, among others, to the Judgments of the STJ nos. 03B4369 and 07B4528, respectively, of 19/02/2004 and 29/01/2008, available at: www.dgsi.pt.
78 - The function legally reserved for the registry is, therefore, on the one hand, to publicize the legal situation of the goods, in this case vehicles, and on the other hand, to allow us to presume that the right over those vehicles exists and that it belongs to the holder, as such registered in the registry, which means that the registry does not have a constitutive nature of the right of ownership, but only declarative, hence the registry does not constitute a condition of validity of the transfer of the vehicle from seller to buyer.
79 - Thus, if the purchasers of vehicles, as their "new" owners, do not promptly promote the appropriate registration of their right, it is presumed, for purposes of article 3(1) of CIUC and of the provisions of article 7 of the Property Registry Code, that the vehicles continue to be the property of the person who sold them and who remains their owner in the registry, and that person is the passive subject of the tax, in the certainty, however, that such presumptions are rebuttable, either by force of the provision in article 350(2) of the Civil Code, or in light of the provisions of article 73 of LGT. Hence, from the moment when the presumptions in question are displaced, through proof of the said sales, AT cannot persist in considering as the passive subject of IUC the seller of the vehicle, who in the registry continues to be listed as its owner.
M - EVIDENCE PRESENTED
REGARDING VEHICLES CONSIDERED AS TOTAL LOSS
80 - As written form is not legally required for the transfer of ownership of motor vehicles, proof of such transfer may be made by any means, including by witness or documentary evidence, in the latter being included, in particular, invoices-receipts relating to the sale of vehicles.
81 - As evidence that the forty-seven vehicles identified in the court record as salvage were not the Claimant's property on the date the tax became due, the Claimant attached various documents, in particular correspondence/letters between the Insurance Companies and the Claimant, relating to the recognition of the loss as Total Loss, "Communications" from the Insurance Companies relating to the vehicles in question, as well as internal documentation of the insurance companies regarding each of the vehicles.
82 - With regard to the said documentation, it should be emphasized that it displays various information, which is embodied, in particular, in the following: identification of the vehicle; the amount relating to the value of the Salvage and the value of the indemnity for Total Loss; identification of the insurance company and the Claimant, as well as an indication of the VAT charged on the value of the Salvage.
83 - Insurance companies, in accordance with article 8 of Decree-Law no. 94-B/98 of 17.04, «[…] are financial institutions whose exclusive purpose is the exercise of direct insurance activity and/or reinsurance activity, except for those branches or modalities that are legally reserved for certain types of insurers, and may also exercise insurance or reinsurance activities connected or complementary, namely with respect to acts and contracts relating to salvage […]»; (emphasis ours)
84 - The acquisition of salvage by insurance companies and their subsequent disposal, normally to scrap dealers, is an activity complementary to insurance operations, as results from the aforementioned rule, to the extent that what is in question is that in the context of situations resulting from losses inscribed in the concept of Total Loss of vehicles, such companies are required to indemnify the injured parties financially, in accordance with the insurance contract celebrated with them, when the vehicle is deemed not repairable, taking on the other hand the damaged vehicles and subsequently proceeding to the sale of the same in the condition in which they acquired them.
85 - In fact, within the framework of the Mandatory System of Motor Vehicle Civil Liability, contained in Decree-Law no. 291/2007, of 21 August, it is understood that a vehicle involved in an accident is considered in a situation of Total Loss, as provided in article 41(1) of the said legal diploma, when the obligation to indemnify is fulfilled in cash and not through the repair of the vehicle, whenever it is found that repair is materially impossible or technically inadvisable.
86 - In the case at hand this is what happened, to the extent that, on the one hand, the insurance companies, following the respective expert assessments, understood to formalize the situation of the damaged vehicles as Total Loss and, on the other, as results from the combination of the various relevant documents forming part of the court record, the Salvage in question, by force of the motor vehicle insurance contract, left the legal sphere of the Claimant.
87 - With regard to the payment of the amounts recorded in the aforementioned documentation, relating to the vehicles in question, taking into account that the "vehicles" did not remain in the possession of their owner, it is important to emphasize that such amounts are made up of two components, namely: the value of the Salvage and the value of the indemnity for Total Loss, which evidences the transfer of title of the Salvage from the Claimant to the insurance companies.
88 - The combination of the various information contained in the several documents forming part of the court record reveals, as has already been noted, that all the events that occurred and to which reference has been made above, in particular the transfer of title of the Salvage to the insurance companies occurred at dates prior to those of the due date of the tax.
89 - With regard to the facts recorded in the various aforementioned documents, it is also important to note that, given the presumption of truthfulness conferred on them by article 75(1) of LGT, it would have been incumbent upon AT, in light of the provisions of article 75(2) of LGT, in the framework of the well-founded and objective reasons it might have had, to demonstrate that the information recorded in them does not correspond to reality.
90 - Under these circumstances, given that on the dates when IUC became due the Claimant was not the owner of the vehicles in question, it is understood that the combination of the various documents relating to the case and contained in the proceedings, to which are added the corresponding account statements and the maps of gains and losses attached to the court record, permits considering that evidence capable of rebutting the presumptions in question has been presented in the court record, that is, the presumption established in article 7 of the Property Registry Code and the one established in article 3(1) of CIUC, which means that, at the time when the tax was due, in all these cases, the Claimant was not the passive subject of IUC.
REGARDING THE INVOICES
91 - As stated above, proof of the sale of motor vehicles may be made by any means, including by way of invoices-receipts.
92 - In this regard, it should be noted what Professor Augusto Cardoso Guedes tells us when, in an Opinion found in the court record, refers that "Proof of the sale of the vehicle may be made […] by document (including the presentation thereof) of an invoice/receipt relating to that sale".
93 - In the same sense, consideration should also be given to the understanding recorded in the Judgment of the Central Administrative Court of the South, delivered on 19-03-2015, Case 08300/14, available at: www.dgsi.pt, when it refers that "[…] The invoice should be viewed as the accounting document through which the seller sends to the buyer the general conditions of the transaction carried out (appearing) in the phase of settlement of the amount payable by the buyer [ ] not providing proof of payment of the price by the same buyer and, as a consequence, proof that the purchase and sale was concluded (only the issuance of an invoice/receipt or receipt provides proof of payment and discharge) [ ]".
94 - The Claimant, as evidence that it proceeded to sell all the other vehicles, as identified in the present proceedings, at a date prior to that of the tax becoming due, attached copies of invoices relating to the said alleged sales.
95 - It should in fact be emphasized that nothing permits considering that the invoices presented, as support for the sales of the vehicles in question in the court record, do not reflect and correspond to the sales that allegedly were concluded.
96 - The invoices attached to the court record, as proof of the alienation of the vehicles, taking into account the corporate purpose of the Claimant and its business activity, embodied notably in the purchase and sale of vehicles and the celebration of long-term rental contracts for motor vehicles, show themselves to be completely adjusted to the aforementioned business reality, and the sale of the vehicles that the invoices presented aim to prove is absolutely plausible, no elements being identified that embody any simulated contract, rather permitting the conclusion that we are dealing with invoices that reproduce the real and true sale of the vehicles to the persons indicated in them.
97 - It might even be said that, in the case at hand, given the economic activity of the Claimant embodied and centered on the purchase, sale and long-term rental of machines and motor vehicles, it would not be surprising, quite the contrary, the transfer of ownership of the vehicles identified in the court record.
98 - Having, however, taken into account, notably, what is referred to in the previous numbers 92 and 93, the tribunal, with a view to ascertaining the truth regarding the facts, promoted steps to the effect that such invoices, presented as proof of the said sales, were complemented with other information, aiming in particular at the corroboration of the effective receipt of the amounts relating to the sales of the vehicles in question.
99 - The Claimant, within the time limits granted for this purpose, came to complement the said invoices with other evidence, in particular with the correlative accounting statements, reinforced with the attachment of the maps of gains and losses, capable of proving that the amounts relating to the sales of the said vehicles were effectively received by it, which demonstrates the transfers of ownership of those goods occurring at dates prior to those of the tax becoming due.
100 - The said documents, just as, moreover, the invoices that they complement, relating to the sale of the vehicles, to the extent that they enjoy the presumption of truthfulness conferred on them by article 75(1) of LGT, with it being incumbent upon AT, in light of the provisions of article 75(2) of LGT, in the framework of the well-founded and objective reasons it might have had, to demonstrate that the information recorded in them does not correspond to reality, permit considering that such documentation constitutes a sufficient means of proof to rebut the presumptions in question in the court record, that is, the presumption established in article 7 of the Property Registry Code and the one established in article 3(1) of CIUC, which means that, at the time when the tax was due, the Claimant was not the owner of the vehicles in question.
101 - Having arrived at this point, it is important to state that the aforementioned understanding is not valid for vehicles with registration numbers …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-… and …-…-….
102 - For the aforementioned vehicles, no documents have been presented capable of providing proof regarding the transfer of their ownership at a time prior to the date the corresponding IUC became due.
103 - The total amount resulting from the assessments associated with the aforementioned vehicles, numbering thirteen, totals the sum of €2,453.03.
104 - Under these circumstances, and in summary, taking into account that the presumption established in article 3(1) of CIUC was rebutted, both as regards the salvage vehicles referenced in the present proceedings, which were alienated at dates prior to those of the tax becoming due, that is, at the time when the Tax Administration can exact the tax performance, and as regards the other vehicles sold as used, except for the thirteen vehicles aforementioned, it should be considered that the Claimant, with respect to the said vehicles, was not, on the date to which the assessments in question refer, the passive subject of the tax in question.
105 - AT, when it understands that the passive subjects of IUC are, definitively, the persons in whose name the motor vehicles are registered, without considering that article 3(1) of CIUC embodies a presumption, nor taking into account the evidentiary elements that were presented to it, as results notably from the administrative proceedings, is proceeding to the illegal assessment of IUC, with regard to the vehicles identified in the court record, with the exception of the thirteen vehicles aforementioned, based on the wrong interpretation and application of the rules of subjective incidence of the Single Circulation Tax contained in the said article 3 of CIUC, which configures the practice of tax acts lacking in legality due to error as to the factual and legal presuppositions, determining the annulment of the corresponding tax acts, due to violation of law.
N - ARBITRAL COSTS
106 - With regard to arbitral costs, more specifically on the responsibility for their payment, which AT, to the extent that it did not give rise to the request for arbitral pronouncement, considers to be owed by the Claimant, "in accordance with article 527(1) of the New Code of Civil Procedure by virtue of article 29(1-e) of RJAT", it is only necessary to note that, in light of the provision in article 527(2) of the CPC, the "losing party is responsible for the costs of the proceedings in the proportion in which it is", and this is therefore what will apply in the case at hand.
CONCLUSION
107 - In the circumstantial framework that has been referred to, AT, in practicing the assessment acts that are the subject of the present proceedings, based on the idea that article 3(1) of CIUC does not establish a rebuttable presumption, makes a wrong interpretation and application of this rule, committing an error as to the legal presuppositions, which constitutes a violation of law.
108 - On the other hand, because AT, on the date of occurrence of the tax facts, considered the Claimant to be the owner of all the vehicles identified in the court record, considering it as such the passive subject of the tax, when, except for the thirteen vehicles referenced in number 101, such ownership was no longer inscribed in its legal sphere, basing itself thus on factual matters divergent from the actual reality, commits an error as to the factual presuppositions, and therefore a violation of law.
III - DECISION
109 - Therefore, in light of all the foregoing, this Arbitral Tribunal decides:
-
To judge partially well-founded, as proved, on the grounds of a defect of violation of law, the request for arbitral pronouncement with respect to the annulment of the assessment acts relating to IUC, relating to the years 2009 to 2012, concerning all the vehicles identified in the court record, with the exception of the thirteen vehicles aforementioned;
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To annul accordingly the assessment acts relating to IUC, relating to the years 2009 to 2012, concerning the vehicles previously indicated, the tax assessed for which totals the sum of €37,572.72;
-
To condemn the Claimant and the Respondent in costs, which are fixed, for each, in the proportion of 6% for the Claimant and 94% for the Respondent.
VALUE OF THE PROCEEDINGS
In accordance with the provisions of articles 306(2) of the CPC (ex-315(2)) and 97-A(1) of CPPT and article 3(2) of the Regulation of Costs in Tax Arbitration Proceedings, the value of the proceedings is fixed at €40,025.75.
COSTS
In accordance with the provisions of article 12(2), final part and article 22(4), both of RJAT, and article 4 of the Regulation of Costs in Tax Arbitration Proceedings and Table I annexed thereto, the amount of total costs is fixed at €2,142.00.
Notification ordered.
Lisbon, 13 November 2015
The Arbitrator
António Correia Valente
(The text of this decision was prepared by computer, in accordance with article 131(5) of the Code of Civil Procedure (ex-138(5)), applicable by reference to article 29(1-e) of Decree-Law no. 10/2011, of 20 January (RJAT), and its wording is governed by the spelling prior to the Orthographic Agreement of 1990.)
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