Process: 414/2014-T

Date: November 10, 2014

Tax Type: IUC

Source: Original CAAD Decision

Summary

This arbitration decision (Process 414/2014-T) addresses the subjective incidence of the Single Vehicle Circulation Tax (IUC) following vehicle sales. Company A, operating in road freight transport, contested IUC assessments totaling €6,826.97 for six vehicles covering tax years 2009-2012. The company argued it had sold five vehicles to another company (B, S.A.) in November 2007 and to an individual in Morocco in December 2006, while one vehicle was dismantled in 2001. Despite having issued invoices, collected payment, paid VAT to the Tax Administration, and delivered vehicle documentation including signed registration transfer requests to the purchasers, the company remained registered as the owner in official records. The Tax Authority issued ex officio assessments and subsequently dismissed the gracious claims filed by the taxpayer. The company invoked procedural economy principles under articles 104 of the Tax Procedure Code and article 3 of RJAT to consolidate all six disputes into a single arbitration proceeding, given the identical legal grounds and factual circumstances. The central legal question concerns whether IUC liability follows formal vehicle registration or actual ownership, and what evidence suffices to prove ownership transfer when registration updates were not completed despite the seller's delivery of all necessary documentation to purchasers.

Full Decision

ARBITRAL DECISION

I. Report

  1. On 03-06-2014, the company A, LDA, TIN … , filed a request for the constitution of a sole arbitral tribunal, pursuant to the combined provisions of articles 2º and 10º of Decree-Law no. 10/2011, of 20 January (Legal Regime for Arbitration in Tax Matters, hereinafter referred to simply as LRAT), with a view to the annulment of the assessment acts relating to the Single Vehicle Circulation Tax (hereinafter referred to as SVCT), of the vehicles with registration numbers …, …, …, …, … and …, and the reimbursement of the amount of SVCT, meanwhile paid, in the amount of € 6,826.97, interest and penalties relating to the tax and compensatory interest unduly paid.

  2. Pursuant to no. 1 of article 6º of the LRAT, the Ethics Council of the Arbitration Centre appointed the undersigned arbitrator, notifying the parties.

  3. The tribunal is duly constituted to examine and decide the object of the proceedings.

  4. The allegations supporting the request for arbitral pronouncement of the Claimant are, in summary, as follows:

4.1. The Claimant is engaged in road freight transport, and therefore possesses a fleet of heavy and light vehicles.

4.2. The Claimant was notified of six dismissal orders of gracious claims that it filed against as many ex officio assessments of the Single Vehicle Circulation Tax.

4.3. The grounds for the ex officio assessments, as well as the dismissal of the gracious claims, are exactly identical.

4.4. Considering the number of vehicles in question, as well as the volume of documentation necessary to prove the facts alleged, and also the interpretation and application of the same legal principles or rules by the Tax Authority on the matter, the Claimant, invoking the principle of procedural economy, chose to request the joint examination of the tax acts in question.

4.5. Given the identity of the tax fact, the tribunal competent to decide and the grounds of fact and law invoked, nothing prevents, in view of the provisions of arts. 104º of the NTPC and 3º of the LRAT, the requested joinder of claims.

4.6. The Claimant was notified to, by 04/12/2013, proceed to payment of the sum of 121.15€, allegedly due as Single Vehicle Circulation Tax (SVCT) and respective compensatory interest, relating to the year 2009 due for the category D vehicle, brand …, identified with registration number … .

4.7. On 24/02/2014, the Claimant filed a gracious claim.

4.8. On 19/05/2014, the Claimant was notified of the dismissal of the gracious claim.

4.9. On 21 November 2007, the Claimant sold the vehicle in question to company B, S.A., with registered office … .

4.10. The price of the vehicle amounted to 12,100 €, which was duly paid by B, S.A.

4.11. As a result of the sale and the issuance of the invoice, the amount of VAT was assessed and delivered to the Tax Administration in respect of that same alienation, as well as the profit resulting from the sale was included in the revenues of the year 2007.

4.12. All documents relating to the vehicle were delivered by the Claimant to B, S.A., as well as the motor vehicle registration request, duly signed and stamped to effect the registration.

4.13. The Claimant was notified to, by 04/12/2013, proceed to payment of the sum of 121.85€, allegedly due as Single Vehicle Circulation Tax (SVCT) and respective compensatory interest, relating to the year 2009 due for the category D vehicle, brand …, identified with registration number ….

4.14. On 24/02/2014, the Claimant filed a gracious claim.

4.15. On 19/05/2014, the Claimant was notified of the dismissal of the gracious claim.

4.16. On 21 November 2007, the Claimant sold the vehicle in question to company B, S.A., with registered office ..

4.17. The price of the vehicle amounted to 8,470 €, which was duly paid by JPC B, S.A.

4.18. As a result of the sale and the issuance of the invoice, the amount of VAT was assessed and delivered to the Tax Administration in respect of that same alienation, as well as the profit resulting from the sale was included in the revenues of the year 2007.

4.19. All documents relating to the vehicle were delivered by the Claimant to …, S.A., as well as the motor vehicle registration request, duly signed and stamped to effect the registration.

4.20. The Claimant was notified to, by 04/12/2013, proceed to payment of the sum of 464.77€, allegedly due as Single Vehicle Circulation Tax (SVCT) and respective compensatory interest, relating to the years 2009, 2010, 2011 and 2012 due for the category D vehicle, brand …, identified with registration number … .

4.21. On 24/02/2014, the Claimant filed a gracious claim.

4.22. On 19/05/2014, the Claimant was notified of the dismissal of the gracious claim.

4.23. On 21 November 2007, the Claimant sold the vehicle in question to company B, S.A., with registered office… .

4.24. The price of the vehicle amounted to 3,630 €, which was duly paid by B, S.A. .

4.25. As a result of the sale and the issuance of the invoice, the amount of VAT was assessed and delivered to the Tax Administration in respect of that same alienation, as well as the profit resulting from the sale was included in the revenues of the year 2007.

4.26 All documents relating to the vehicle were delivered by the Claimant to B, S.A., as well as the motor vehicle registration request, duly signed and stamped to effect the registration.

4.27 The Claimant was notified to, by 04/12/2013, proceed to payment of the sum of 3,332.58€, allegedly due as Single Vehicle Circulation Tax (SVCT) and respective compensatory interest, relating to the years 2009, 2010, 2011 and 2012 due for the category C vehicle, brand …, identified with registration number … .

4.28. On 24/02/2014, the Claimant filed a gracious claim.

4.29. On 19/05/2014 was notified of the dismissal of the gracious claim.

4.30. On 14 December 2006, the Claimant sold to C., resident in Morocco, with Passport no. … .

4.31. The price of the vehicle amounted to 1,000 €, which was duly paid by the purchaser.

4.32. As a result of the sale and the issuance of the invoice, the amount of VAT was assessed and delivered to the Tax Administration in respect of that same alienation, as well as the profit resulting from the sale was included in the revenues of the year 2006.

4.34. All documents relating to the vehicle were delivered by the Claimant to the purchaser, as well as the motor vehicle registration request, duly signed and stamped to effect the registration.

4.35. The Claimant was notified to, by 04/12/2013, proceed to payment of the sum of 2,036.22€, allegedly due as Single Vehicle Circulation Tax (SVCT) and respective compensatory interest relating to the years 2009, 2010, 2011 and 2012 due for the category C vehicle, brand Scania, identified with registration number ...-...-....

4.36. On 24/02/2014, the Claimant filed a gracious claim.

4.37. On 19/05/2014, the Claimant was notified of the dismissal of the gracious claim.

4.38. In May 2001, it was dismantled for parts recovery, as is evident from the letter sent by D, Lda. , on 30/05/2001.

4.39. The vehicle ceased to exist in 2001 and, consequently, has not circulated since then, information which is moreover confirmed by the absence of periodic inspections carried out since that date.

4.40. The Claimant was notified to proceed to payment, by 04/12/2013, of the sum of 688.73€, allegedly due as Single Vehicle Circulation Tax (SVCT) and respective compensatory interest relating to the years 2009, 2010 and 2011 due for the category C vehicle, brand …, identified with registration number … .

4.41. On 24/02/2014, the Claimant filed a gracious claim.

4.42. On 19/05/2014, the Claimant was notified of the dismissal of the gracious claim.

4.43. On 19 June 2008, the Claimant sold the vehicle in question to company E. — Transport, Unipessoal, Lda, with registered office … .

4.44. As a result of the sale and the issuance of the invoice, the amount of VAT was assessed and delivered to the Tax Administration in respect of that same alienation, as well as the profit resulting from the sale was included in the revenues of the year 2008.

4.45. All documents relating to the vehicle were delivered by the Claimant to the purchaser, as well as the motor vehicle registration request, duly signed and stamped to effect the registration.

4.46. The Claimant submits that, pursuant to art. 3º CIUC, "the passive subjects of the tax are the owners of the vehicles, being considered as such the natural or legal persons, of public or private law, in the name of which the same are registered".

4.47. And, pursuant to art. 6º, no. 1 CIUC "the tax event is constituted by the ownership of the vehicle, as attested by the registration or entry in national territory".

4.48. According to the Claimant, at the time of the occurrence of the tax event, the vehicle had already been alienated, as was proven, although the registration of the transfer of ownership had not been updated.

4.49. The Claimant considers that it cannot be penalized for an omission of the vehicle's owner.

4.50. Since the registration of the vehicle at the Motor Vehicle Registry Office is not a condition for the transfer of ownership, since such act aims only to publicize the legal status of the assets, as results from the provision in art.º 1º of Decree-Law no. 54/75 of 12/02.

4.51. In fact, D.L. no. 54/75, of 12/02, does not provide - just as the entire Portuguese legal order does not - any rule regarding the constitutive nature of the registration of motor vehicle ownership.

4.52. The presumption that the registered right belongs to the person in whose name it is registered, can be rebutted by contrary evidence.

4.53. The purchase and sale contract has a real nature, being the real effect, in view of the provision in no. 1 of article 408º of the Civil Code, the effect of the contract itself not being dependent on any subsequent act, namely, the registration.

4.54. Founded on the principle of material truth that the law postulates, final registration constitutes nothing more than the presumption that the right exists and belongs to the registered holder, in the exact terms of the registration, but a rebuttable presumption, thus admitting counterproof, as follows from the law and jurisprudence has been pointing out.

4.55. The presumption inherent in article 3º of the CIUC cannot but be understood as, naturally, rebuttable, since our legal and tax order is oriented toward the defense of taxpayers' rights and guarantees and the defense of basic principles of law such as material truth and justice.

4.56. None of these principles or objectives would be achievable if, upon presentation of conclusive proof, which demonstrates, in this case, that the vehicle had been sold before the alleged tax obligation, it were not admitted.

4.57. Art. 73º LGT expressly states that "The presumptions enshrined in the tax incidence rules always admit contrary proof".

4.58. The presumption, without admitting contrary proof, that the natural or legal persons in whose name the vehicles are registered are considered as passive subjects of the tax, is clearly violative of the principles of equality and taxpaying capacity.

4.59. The understanding that the "registered owner" is the passive subject of the tax would imply a true subversion of the legal tax system through the accountability of an apparent and false owner, who has no responsibility for the payment of the tax, but is unjustifiably penalized.

4.60. The Tax Authority itself admits the sales, only that it argues that only the registration matters for tax purposes.

4.61. Therefore, there is no doubt that in the five cases under analysis, the vehicles have already been sold, so the costs they represent, whether for the environment or for the road network, cannot be imputable to the Claimant.

4.62. If the Tax Administration accepts, as it has accepted without any reservation, that the Claimant has assessed and delivered to the State the VAT resulting from the sale of the vehicles,

4.63. Just as it accepts, as it has accepted without any reservation, that the revenue from sales is included for IRC calculation purposes.

4.64. How can it be understood that, for SVCT purposes, the understanding would be, diametrically, contrary?

4.65. It is also important to emphasize an aspect that covers two of the vehicles at issue in the present proceedings.

4.66. The vehicle with registration number … was sold on 14/12/2006 and the vehicle with registration number … was scrapped in the year 2001.

4.67. Law no. 22-A/2007 carried out a comprehensive reform of vehicle taxation, approving the Motor Vehicle Tax Code and the Single Vehicle Circulation Tax Code and simultaneously abolishing automobile tax, municipal vehicle tax, circulation tax and haulage tax.

4.68. This law entered into force on 1 July 2007.

4.69. How can this law be applicable to the Claimant with respect to a sale that was carried out in 2006?

4.70. Just as in relation to a vehicle that has ceased to exist in 2001?

4.71. So how can the Tax Authority claim to tax a reality, clearly, non-existent for so many years?

4.72. It is evident that such could not, nor can, occur, under penalty of violation of the principle of effective taxation and the supremacy and prevalence of material truth over legal-formal reality (rule with corollary in article 11.º, no. 3, of the LGT).

4.73. It is evident that the ex officio assessments are tainted with the defect of violation of law, since the Tax Authority's interpretation finds no support in the articles in question.

4.74. The Claimant will proceed to payment of various sums relating to the debts in question, since it does not wish the enforcement proceedings to proceed.

4.75. Payments that in no way contend with its claim that the additional assessments be annulled and which will, always, be made on a conditional basis.

4.76. Pursuant to art. 43º LGT, indemnification interest is due when there is error attributable to the services, as is manifestly the case.

4.77. With respect to the vehicle with registration number …, on 25/02/2014, the Claimant paid the amount of 140.80 €, relating to SVCT for the year 2009.

4.78. With respect to the vehicle with registration number …, on 25/02/2014, the Claimant paid the amount of 141.51 €, relating to SVCT for the year 2009.

4.79. With respect to the vehicle with registration number …, on 25/02/2014, the Claimant paid the amount of 141.51 €, relating to SVCT for the year 2009.

4.80. As it paid, on 25/02/2014, the sum of 137.92 €, relating to SVCT for the year 2010.

4.81. And it further paid, on 12/05/2014, the sum of 134.78 €, relating to SVCT for the year 2011.

4.82. With respect to the vehicle with registration number …, on 25/02/2014, the Claimant paid the amount of 888.78 €, relating to SVCT for the year 2009.

4.83. As it paid, on 25/02/2014, the sum of 869.89 €, relating to SVCT for the year 2010.

4.84. And it further paid, on 12/05/2014, the sum of 864.83 €, relating to SVCT for the year 2011.

4.85. With respect to the vehicle with registration number …, on 25/02/2014, the Claimant paid the amount of 549.37 €, relating to SVCT for the year 2009.

4.86. As it paid, on 25/02/2014, the sum of 538.01 €, relating to SVCT for the year 2010.

4.87. And it further paid, on 12/05/2014, the sum of 534.91 €, relating to SVCT for the year 2011.

4.88. As for the vehicle with registration number …, on 25/02/2014, the Claimant paid the amount of 203.30 €, relating to SVCT for the year 2009.

4.89. As it paid, on 25/02/2014, the sum of 278.66 €, relating to SVCT for the year 2010.

4.90. And it further paid, on 12/05/2014, the sum of 271.80 €, relating to SVCT for the year 2011.

4.91 The accrued interest amounts, on this date, to 61.67 €.

4.92. Therefore, the Claimant forthwith claims that it be paid the accrued and future interest from the dates of payment until full settlement.

  1. For its part, the Respondent Tax Authority and Customs submitted a response, in which it defended itself in the following terms:

5.1. The first equivocation underlying the interpretation defended by the Claimant relates to a skewed reading of the letter of the law.

5.2. Article 3º, no. 1 of the CIUC establishes that "the passive subjects of the tax are the owners of the vehicles, being considered as such the natural or legal persons, of public or private law, in whose name the same are registered".

5.3. The tax legislator in establishing in article 3º, no. 1 who are the passive subjects of SVCT established expressly and intentionally that these are the owners (or in the situations provided in no. 2, the persons enumerated there), being considered as such the persons in whose name the same are registered.

5.4. Note that the legislator did not use the expression "are presumed".

5.5. On the other hand, the tax regulation is replete with provisions analogous to that enshrined in the final part of no. 1 of article 3º, in which the tax legislator, within its freedom of legislative determination, expressly and intentionally, establishes what must be considered legally, for purposes of incidence, of income, of exemption, of determination and of periodization of taxable profit, for purposes of residence, of location, among many others.

5.6. In these terms, it is imperative to conclude that, in the case of the present arbitral proceedings, the legislator established expressly and intentionally that are considered as such [as owners or in the situations provided in no. 2, the persons enumerated there] the persons in whose name the same [the vehicles] are registered, since this is the interpretation that preserves the unity of the legal tax system.

5.7. To understand that the legislator established here a presumption, would unequivocally be to carry out an interpretation contra legem.

5.8. Let us be concrete: the Claimant argues that Decree-Law 54/75 says nothing about the legal value of motor vehicle ownership registration, so in light of the provision in article 7º of the Real Property Registration Code (legal instrument subsidiarily applicable to that) it must necessarily be concluded that the registration constitutes a mere presumption.

5.9. In fact, it is undeniable that the Real Property Registration Code applies subsidiarily to the Motor Vehicle Registration Regulation.

5.10. However, the Real Property Registration Code is not subsidiary legislation to the SVCT Code.

5.11. This meaning, therefore, that the presumption of motor vehicle ownership derives solely, directly and exclusively from the motor vehicle registration regime itself, and not from the tax legislation on motor vehicles which constitutes a collateral aspect of that regime.

5.12. Therefore, the elimination of the presumption of motor vehicle ownership must necessarily be directed to, or better said, against what appears in the motor vehicle registration itself, and not against the mere tax effect that derives from the motor vehicle registration information, as ultimately the Claimant seeks to do.

5.13. In simpler words, if the Claimant seeks to react against the presumption of ownership attributed to it, then it must necessarily react by the means provided in the Motor Vehicle Registration Regulation and in the registration laws subsidiarily applicable and against the tenor of the motor vehicle registration itself, since it is certainly not through the challenge of SVCT assessments that the registration information is rebutted.

5.14. In these terms, and in the same sense, article 6º of the CIUC establishes, under the heading "Tax Event and Exigibility", in its no. 1, that: "the tax event is constituted by the ownership of the vehicle, as attested by the registration or entry in national territory."

5.15. From the articulation between the scope of the subjective incidence of SVCT and the fact constitutive of the corresponding tax obligation, it unequivocally follows that only the legal situations subject to registration (without prejudice, of the permanence of a vehicle in national territory for a period exceeding 183 days, provided for in no. 2 of article 6º) generate the birth of the tax obligation.

5.16. For its part, no. 3 of the same article provides that "the tax is considered exigible on the first day of the tax period referred to in no. 2 of article 4º".

5.17. That is, the moment from which the tax obligation is constituted has a direct relationship with the issuance of the registration certificate, in which must appear the facts subject to registration.

5.18. In the same sense, the legislative solution adopted by the tax legislator in no. 2 of article 3º of the CIUC, in making the equivalences established there coincide with the situations in which motor vehicle registration requires the respective registration.

5.19. In the absence of such registration, naturally, the Owner will be notified to comply with the corresponding tax obligation, since the Tax Administration, taking into account the current configuration of the legal system, will not have to proceed with the assessment of the Tax based on elements that are not listed in public records and documents and, as such, authentic.

5.20. In these terms, the failure to update the registration, pursuant to the provision in article 42.9 of the Motor Vehicle Registration Regulation, shall be imputable to the legal sphere of the passive subject of SVCT and not to the State, as the active subject of this Tax.

5.21. Even admitting that, from the point of view of civil law rules and land registration, the absence of registration does not affect the acquisition of the quality of owner and that registration is not a condition of validity of contracts with real effect), pursuant to what is established in the CIUC (which in the case at hand constitutes special law, which, under general law principles, derogates the general rule), the tax legislator intentionally and expressly wanted that be considered as owners, lessees, purchasers with reservation of ownership or holders of the right of option to purchase in long-term rental, the persons in whose name the vehicles are registered.

5.22. Finally, it is also important to demonstrate that, in light of a teleological interpretation of the regime established throughout the Single Vehicle Circulation Tax Code, the interpretation advocated by the Claimant to the effect that the passive subject of SVCT is the effective owner, regardless of whether or not it appears in the motor vehicle registration, the registration of that quality, is manifestly wrong, in so far as it is the very ratio of the regime established in the Single Vehicle Circulation Tax Code that constitutes clear proof that what the tax legislator intended was to create a Single Vehicle Circulation Tax based on the taxation of the owner of the vehicle as it appears in the motor vehicle registration.

5.23. Indeed, the CIUC carried out a reform of the vehicle taxation regime in Portugal, altering substantially the automobile taxation regime, with the passive subjects of the tax becoming the owners listed in the property registration record, regardless of the circulation of the vehicles on the public road.

5.24. And this, precisely because, the new taxation regime of the Single Vehicle Circulation Tax has substantially altered the automobile taxation regime, with the passive subjects of the tax becoming the owners listed in the property registration record, regardless of the circulation of the vehicles on the public road.

5.25. It must also be noted that the interpretation conveyed by the Claimant is contrary to the Constitution.

5.26. The ever-touted principle of taxpaying capacity is not the only nor the principal fundamental principle that shapes the tax system.

5.27. Alongside this principle we find others with the same constitutional dignity, such as the principle of trust and legal certainty, the principle of efficiency of the tax system and the principle of proportionality.

5.28. Now, the interpretation proposed by the Claimant, an interpretation that ultimately devalues the registration reality to the detriment of an "informal reality" and incapable of minimal control by the Respondent, is offensive to the basic principle of trust and legal certainty that must shape any legal relationship, here including the tax relationship.

5.29. Finally, the argumentation conveyed by the Claimant represents a violation of the principle of proportionality, in that it completely disregards it in comparison with the principle of taxpaying capacity, when in reality the Claimant has the legal mechanisms necessary and adequate to safeguard that its capacity (e.g., motor vehicle registration), without, however, having exercised them in due time.

5.30. That is, and notwithstanding the Tax Authority considers that art. 3º of the CIUC does not establish any presumption, the claimant seeks to contradict full legal proof constituted by the registration by presenting unilateral private documents, which have reduced probative value within the scope of substantive evidence law, which would make it impossible for the tax administration to administer the Single Vehicle Circulation Tax.

5.31. As mentioned above, SVCT aims to tax the owner of the motor vehicle, with ownership being revealed through its registration.

5.32. However, the competence for motor vehicle registration is not within the sphere of the Respondent, but is assigned to various external entities, namely to the Institute of Registries and Notary, which is responsible for transmitting to the Respondent the changes that may occur regarding the ownership of motor vehicles.

5.33. On the other hand, the transmission of motor vehicle ownership is not capable of being controlled by the Respondent, since there is no declaratory ancillary obligation regarding this matter, unlike the control that can be carried out, for example, by way of the prior payment of Municipal Property Transfer Tax in the matter of transmission of real estate.

5.34. Now, having not the Claimant taken care of the update of the motor vehicle registration, as moreover it could and was incumbent upon it, having had the registration of the vehicle here in question canceled at a time much earlier than when it did, it must be concluded that the Claimant did not proceed with the diligence that was required of it.

5.35. And in not proceeding with the diligence that was required of it, it inexorably led the Respondent to limit itself to giving fulfillment to the legal obligations to which it is bound and, in parallel, to follow the registration information that was supplied to it by the proper party.

5.36. Therefore, it was not the Respondent that gave rise to the filing of the request for arbitral pronouncement, but rather the Claimant itself which, moreover, only now supplied documentary evidence relating to the alleged transfer of ownership, which did not occur in the previous administrative procedure.

5.37. Consequently, the Claimant should be condemned to payment of the arbitral costs arising from the present request for arbitral pronouncement, pursuant to Art.º 527º no. 1 of the New Civil Procedure Code ex vi of Art.º 29º no. 1 letter e) of the LRAT.

5.38. In light of articles 43º of the LGT and 61º of the NTPC, the right to indemnification interest depends on the verification of the following requirements: the tax is paid, the respective assessment has been annulled, totally or partially, in gracious or judicial proceedings, determination, in gracious or judicial proceedings, that the annulment is founded on error attributable to the services.

5.39. From all that is stated above it is clear that the tax acts in question are valid and legal, because in conformity with the legal regime in force on the date of the tax facts, no error attributable to the services having occurred, in this case.

5.40. Thus, the legal requirements conferring the right to the requested indemnification interest are not met.

  1. On 2 October 2014, the Arbitral Tribunal issued, under art. 16º c) of the LRAT, an order dispensing with the meeting provided for in art. 18º of the same instrument because the object of the dispute relates fundamentally to a matter of law, no exceptions have been raised, no independent discovery of evidence procedures have been requested by the parties, and the relevant documents are on the file, admitting, however, to convene it if the parties so wish.

  2. The parties did not request that the meeting provided for in art. 18º of the LRAT be held.

II - Proved Facts

  1. Before proceeding to the merits of the case, it is necessary to present the factual matter relevant for its understanding and decision, which, having examined the documentary evidence and the tax administrative proceedings attached, and in view of the facts alleged, is established as follows:

8.1. The Claimant was notified to, by 04 December 2013, proceed to payment of the sum of 121.15€, for Single Vehicle Circulation Tax (SVCT) and respective compensatory interest, relating to the year 2009 due for the category D vehicle, brand …, identified with registration number … .

8.2. On 21 November 2007, the Claimant sold the vehicle in question to company B., S.A., with registered office …, for the price of 12,100 €.

8.3. The Claimant was notified to, by 04 December 2013, proceed to payment of the sum of 121.85€, for Single Vehicle Circulation Tax (SVCT) and respective compensatory interest, relating to the year 2009 due for the category D vehicle, brand …, identified with registration number … .

8.4. On 21 November 2007, the Claimant sold the vehicle in question to company B., S.A., with registered office …, for the price of 8,470 €.

8.5. The Claimant was notified to, by 04 December 2013, proceed to payment of the sum of 464.77€, for Single Vehicle Circulation Tax (SVCT) and respective compensatory interest, relating to the years 2009, 2010, 2011 and 2012 due for the category D vehicle, brand …, identified with registration number … .

8.6. On 21 November 2007, the Claimant sold the vehicle in question to company B., S.A., with registered office …, for the price of 3,630 €.

8.7. The Claimant was notified to, by 04/12/2013, proceed to payment of the sum of 3,332.58€, for Single Vehicle Circulation Tax (SVCT) and respective compensatory interest, relating to the years 2009, 2010, 2011 and 2012 due for the category C vehicle, brand …, identified with registration number … .

8.8. On 14 December 2006, the Claimant sold to C, resident in Morocco, with Passport no. …, for the price of 1,000 €.

8.9. The Claimant was notified to, by 04 December 2013, proceed to payment of the sum of 2,036.22€, for Single Vehicle Circulation Tax (SVCT) and respective compensatory interest relating to the years 2009, 2010, 2011 and 2012 due for the category C vehicle, brand …, identified with registration number … .

8.10. In May 2001, the vehicle was dismantled for parts recovery.

8.11. The Claimant was notified to proceed to payment, by 04 December 2013, of the sum of 688.73€, for Single Vehicle Circulation Tax (SVCT) and respective compensatory interest relating to the years 2009, 2010 and 2011 due for the category C vehicle, brand …, identified with registration number … .

8.12. On 19 June 2008, the Claimant sold the vehicle in question to company E, UNIPESSOAL, LDA, with registered office …, for the price of 13,500.01€.

8.13. On 24 February 2014, the Claimant filed a gracious claim, relating to the SVCT assessments mentioned above.

8.14. On 19 May 2014, the Claimant was notified of the dismissal of the said gracious claim.

8.15. There are no unproven facts, relevant to the decision of the case.

  1. The proved facts result from the documents attached with the initial petition.

III. On the Law

  1. It is therefore necessary to examine and decide. Let us then analyze whether or not the illegality of the Single Vehicle Circulation Tax (SVCT) assessment acts and compensatory interest, mentioned above, in the total amount to be paid of € 6,826.97 and the recognition of the right to reimbursement of the tax, as well as any right to indemnification interest, exists.

Let us thus examine these matters:

ON THE ILLEGALITY OF SVCT ASSESSMENT ACTS AND COMPENSATORY INTEREST

  1. Article 6º, no. 1 of the CIUC establishes that "The tax event is constituted by the ownership of the vehicle".

  2. According to article 3º, no. 1 of the CIUC, are considered owners "the persons in whose name the same [vehicles] are registered".

  3. Pursuant to article 349º of the Civil Code, "presumptions are the inferences that the law or the judge draws from a known fact to establish an unknown fact."

  4. The Tax Authority submits that, given that the legislator did not use the word "presume" in article 3º of the CIUC, nor is it usual to use the same word in tax rules, through a systematic interpretation of the rule, it could be understood that it is not a presumption.

  5. It is, however, manifest that the qualification as a legal presumption is not ruled out merely because the provision in question does not contain the word "presume".

  6. As stated in the Award 26/2013 of this Arbitration Centre, we are "faced with a mere semantic question", and the concept of presumption cannot be considered restricted to rules that contain the word "presume".

  7. It is further added, in the same Award, that "it is in the sense of the legal concept of presumption and in respect of the constitutional principles of equality and taxpaying capacity that the legislator attributes full effectiveness to the presumption derived from motor vehicle registration by including it, as such, in the definition of the subjective incidence of this tax established in no. 1 of art. 3º of the CIUC. Thus, the expression 'considered as such' contained in the said rule cannot but be understood as configuring a legal presumption, and that this is rebuttable, pursuant to the general terms, and, in particular, by virtue of the provision in art. 73º of the LGT which determines that the presumptions enshrined in the tax incidence rules always admit contrary proof."

  8. It is further stated, in case no. 14/2013-T, that "Addressing again the question of whether no. 1 of article 3º of the CIUC establishes or not a presumption, in view of all the foregoing, we cannot but pronounce ourselves in the affirmative for the reasons that precede (…).Thus, if the purchaser, new owner of the vehicle, does not provide for the registration of its property right, it is presumed that this right continues to belong to the seller and can, however, this presumption be rebutted by means of contrary proof, that is, proof by any means of the respective sale (cfr. arts. 1º of DL no. 54/75, 7º of the Real Property Registration Code and 350º, no. 2, of the Civil Code). In these terms, we are of the opinion that the Tax Authority cannot take advantage of the absence of updating of the registration of the property right, to demand payment of the tax from the former owner in whose name the vehicle is registered if, by any means, sufficient proof of the respective sale is presented to it."

  9. We can therefore understand that we are faced with a rebuttable presumption, so that, if the purchaser does not proceed with its property registration, it is possible to proceed with proof of said acquisition.

  10. This proof was indeed presented by the Claimant, through the respective sales invoices of five vehicles and proof of destruction of a sixth vehicle.

  11. Although the competence relating to registration belongs, in fact, to the Institute of Registries and Notary, from the moment the Respondent becomes aware of the transfer of ownership, it must correct the error and not persist in it.

  12. It is therefore decided that the tax acts in question are illegal and that the value of the tax in question and respective compensatory interest shall be refunded to the Claimant.

ON THE RIGHT TO INDEMNIFICATION INTEREST

  1. The Claimant further requested the payment of indemnification interest, under article 43º of the LGT.

  2. It follows from number 1 of that article that "when it is determined, in gracious claim or judicial challenge, that there was error attributable to the services from which results payment of the tax debt in an amount greater than legally due."

  3. We can further understand that, as follows from no. 5 of art. 24º of the LRAT, the right to indemnification interest can be recognized in arbitral proceedings.

  4. It will be necessary, however, to determine whether or not there was error attributable to the services.

  5. Indeed, the competence in terms of registration does not belong to the Tax Authority.

  6. However, it cannot be imputed to the Claimant that the new owner did not have the diligence to the point of not updating the motor vehicle registration, according to the acquisition.

  7. Being that, not only did the Tax Authority not take into account the transfer of ownership, but also dismissed the gracious claim filed by the Claimant, relating to the SVCT assessments.

  8. We are, in this case, faced with negligence on the part of the Tax Authority, negligence which translates into an "error attributable to the services", as stated in art. 43º of the LGT.

  9. Taking into account what is established in article 61º of the NTPC and having verified the existence of error attributable to the services of the Tax Administration, from which resulted payment of the tax debt in an amount greater than legally due (see art. 43º/1 of the LGT), we can understand that the Claimant has the right to indemnification interest at the legal rate, calculated on the amount of € 6,826.97, which shall be counted from the date of payment of the sum in question, until full reimbursement of that same amount.

IV – Decision

In view of the foregoing, the claim for declaration of illegality of the Single Vehicle Circulation Tax (SVCT) assessment acts and compensatory interest, relating to the six vehicles, in the total amount to be paid of 6,826.97 euros, is upheld.

The claim for condemnation of the Tax Administration to reimbursement of the sum unduly paid, in the amount of 6,826.97 euros, plus indemnification interest at the legal rate, counted from the date of payment, until full reimbursement of the said amount, is equally upheld, condemning the Tax Authority and Customs to effect these payments.

V - Case Value

The case is valued at € 6,826.97 (the value indicated and not contested).

Costs

Pursuant to art. 22º, no. 4, of the LRAT, the amount of costs is fixed at €612.00, pursuant to Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, to be borne by the Respondent.

Lisbon, 10 November 2014

The Arbitrator

(Luís Menezes Leitão)

Frequently Asked Questions

Automatically Created

Who is liable for IUC payment after a vehicle has been sold to another company?
Under Portuguese law, IUC liability generally follows vehicle registration records. When a vehicle is sold, the person registered as owner remains legally liable for IUC until the registration is officially transferred to the new owner. However, the seller may contest assessments by proving the sale occurred and that all necessary documentation for registration transfer (including signed registration requests) was delivered to the purchaser. The key issue is whether the seller fulfilled all legal obligations to enable the transfer, even if the purchaser failed to complete the registration process. Courts and arbitration tribunals examine whether the seller took reasonable steps to transfer ownership and whether continued liability would be unjust given the factual circumstances.
Can a taxpayer challenge multiple IUC assessments in a single arbitration proceeding under RJAT?
Yes, Portuguese law permits consolidation of multiple IUC assessment challenges in a single arbitration proceeding under RJAT (Legal Regime for Arbitration in Tax Matters). According to article 3 of RJAT, combined with article 104 of the Tax Procedure Code (CPPT), taxpayers may request joinder of claims when there is identity of the tax fact, the same competent tribunal, and identical grounds of fact and law. The principle of procedural economy supports this approach, particularly when the same legal interpretation applies to multiple vehicles, the grounds for assessment are identical, and significant documentation overlaps. This avoids duplicative proceedings, reduces costs, and ensures consistent legal interpretation across related cases involving the same taxpayer.
What evidence is required to prove vehicle ownership transfer for IUC exemption purposes?
To prove vehicle ownership transfer for IUC exemption purposes, taxpayers must provide comprehensive evidence including: (1) the sale invoice showing the transaction date, purchaser identification, and vehicle details; (2) proof of payment received; (3) evidence that VAT was assessed and paid to the Tax Administration on the sale; (4) documentation that sale proceeds were included in the seller's accounting records for the relevant tax year; and (5) critically, proof that all vehicle-related documents were delivered to the purchaser, including the signed and stamped motor vehicle registration request (modelo de registo automóvel) necessary to effect the ownership transfer. This evidence demonstrates the seller fulfilled all obligations to enable registration transfer, even if the purchaser failed to complete the process.
How does the CAAD handle disputes over IUC subjective incidence when the vehicle registration has not been updated?
The CAAD (Administrative Arbitration Center) examines IUC subjective incidence disputes involving unupdated registrations by analyzing whether formal registration or material ownership determines tax liability. The tribunal considers: (1) whether the taxpayer completed all legally required steps to transfer ownership, including delivery of signed registration requests; (2) whether the purchaser's failure to update registration should prejudice the seller who acted diligently; (3) the principle that tax liability should reflect economic reality rather than mere formal registrations when the taxpayer proves actual transfer; and (4) whether the Tax Administration has alternative means to identify the actual owner. The tribunal balances legal formalism with substantive justice, examining whether continued liability of the registered owner is reasonable given all circumstances.
What is the procedure for filing a gracious complaint against an official IUC assessment in Portugal?
The procedure for filing a gracious complaint (reclamação graciosa) against an official IUC assessment in Portugal involves: (1) submitting the complaint within the legal deadline specified in the assessment notification (typically within a specific period from notification); (2) filing with the competent tax authority that issued the assessment; (3) presenting grounds of fact and law supporting the challenge, along with supporting documentation; (4) awaiting the Tax Authority's decision on the complaint. If the gracious complaint is dismissed, the taxpayer may then escalate to arbitration under RJAT by filing a request for constitution of an arbitral tribunal within the legal deadline from notification of dismissal. The gracious complaint is typically a prerequisite to judicial or arbitral review, unless legal exceptions apply.