Process: 415/2014-T

Date: February 2, 2015

Tax Type: IUC

Source: Original CAAD Decision

Summary

This tax arbitration case (CAAD 415/2014-T) involves a vehicle rental and trading company challenging IUC (Vehicle Tax) assessments for tax years 2009-2013 on vehicles it claims to have sold but which remained registered in its name. The applicant argues that Article 3 of the Vehicle Tax Code creates a rebuttable presumption of ownership based on vehicle registration, which can be overcome by proving actual sale through invoices and purchase agreements. The company invoked Article 73 of the General Tax Law and Article 350(2) of the Civil Code, arguing that since sales contracts transfer ownership by their consensual nature under Portuguese law, the registration presumption should yield to proof of actual ownership transfer. The Tax Authority countered that Article 3 CIUC establishes a definitive legal fiction rather than a rebuttable presumption, arguing the phrase 'considered as such' creates an express legislative determination for tax purposes, similar to provisions throughout Portuguese tax codes. The Authority emphasized systematic interpretation, noting the close connection between IUC and the vehicle registration system, and argued that allowing rebuttal would violate legal certainty, efficiency, and proportionality principles. Additionally, the Tax Authority challenged the probative value of the invoices presented as evidence. The case highlights fundamental tensions between civil law ownership concepts and tax law's reliance on registration systems, raising questions about when taxpayers can challenge registration-based tax liabilities through proof of divergent economic reality.

Full Decision

ARBITRAL DECISION

CAAD: Tax Arbitration

Case no. 415/2014– T

Subject Matter: IUC – subjective scope; legal presumptions

I - REPORT

  1. Application

"A" – Trade and Rental of Motor Vehicles and Equipment, Sole Proprietorship Limited Company, legal entity no. …, with registered office at …, Building …, …, …-… Oeiras, hereinafter referred to as the Applicant, filed, on 04-04-2014, pursuant to the provisions of paragraph a) of article 2, paragraph 1 and article 10 of Decree-Law no. 10/2011, of 20 January, which approves the Legal Framework for Tax Arbitration (RJAT), an application for arbitral pronouncement, in which the Respondent is AT - Tax and Customs Authority, seeking to:

  • Annulment of the decision dismissing the administrative complaint no. … (document no. 2 attached to the initial petition and hereby reproduced), relating to assessments of Vehicle Tax for the years 2009, 2010, 2011, 2012 and 2013;

  • Annulment of the decision partially dismissing the administrative complaint no.… (document no. 3 attached to the initial petition and hereby reproduced), relating to assessments of Vehicle Tax for the years 2009, 2010, 2011, 2012 and 2013;

  • Annulment of the decision dismissing the administrative complaint no.…(document no. 4 attached to the initial petition and hereby reproduced), relating to assessments of Vehicle Tax for the years 2009, 2010, 2011, 2012 and 2013;

  • Annulment of the decision dismissing the administrative complaint no.… (document no. 5 attached to the initial petition and hereby reproduced), relating to assessments of Vehicle Tax for the years 2009, 2010, 2011, 2012 and 2013;

  • Condemnation of the Respondent to refund the amounts of tax and default interest paid relating to the assessments in question and to pay the corresponding compensatory interest, pursuant to articles 43 of the General Tax Law (LGT) and 61 of the Tax Code of Procedure and Process (CPPT).

The Applicant alleges, essentially, the following:

  • The scope rule of article 3 of the Vehicle Tax Code (CIUC), which defines ownership of a vehicle as the taxable event for IUC, is based on motor vehicle registration to ascertain vehicle ownership;

  • However, the presumption of title to the right of ownership resulting from Motor Vehicle Registration is a rebuttable presumption, by virtue of article 350, paragraph 2 of the Civil Code (CCiv), which means that the Applicant may rebut the presumption by proving that it was not the owner of the vehicles on the date of the taxable events;

  • Article 3 of the CIUC also contains a presumption of ownership, based on registration, and this presumption is likewise rebuttable, by virtue of article 73 of the LGT;

  • The Applicant alleged and proved, in the administrative complaints filed, that the vehicles subject to the IUC assessments were not, on the date of the taxable events giving rise to the assessments contested, the property of the Applicant;

  • The Applicant demonstrated that it was not the owner of the vehicles on the date of the taxable events, proving, through invoices issued by it, that it had proceeded to transfer all the vehicles in question;

  • Once the execution of purchase and sale contracts has been proved, and given that the purchase and sale contract is real in nature, operating the transfer of ownership by the mere effect of the contract, the Applicant equally proved that it was not the owner of the vehicles on the date of the taxable events;

  • Having proved that it was not the owner of the vehicles on the date of the taxable events, the Applicant rebutted the presumption resulting from Motor Vehicle Registration;

  • Not being the owner of the vehicles on the date of the taxable events, the Applicant cannot be subject to the tax on those dates.

  1. Response of the Respondent

In response to the application for pronouncement presented by the Applicant, the Respondent AT - Tax and Customs Authority argues for the dismissal of the application, alleging, in summary, the following:

  • The tax legislator, in establishing in article 3, paragraph 1 who are the liable parties to IUC, expressly and intentionally established that these are the owners (or, in the situations provided for in paragraph 2, the persons there listed), being considered as such the persons in whose name the same [vehicles] are registered;

  • The tax provision is replete with provisions analogous to that enshrined in the latter part of paragraph 1 of article 3, in which the tax legislator, within its legislative discretion, expressly and intentionally, establishes what should be considered, for purposes of taxation, of income, of exemption, of determination and of periodization of taxable profit, of residence, of location, among many others;

  • By way of example, the Respondent points to articles 2 of the Code of Tax on Onerous Transfers of Real Property (CIMT), 2, 3 and 4 of the Code of Income Tax on Individuals (CIRS) and 4, 17, 18 and 20 of the Code of Income Tax on Legal Entities (CIRC), in which the expression "is deemed" is used to qualify a situation for tax purposes, without such expression being able to be seen as a presumption;

  • In these terms, it is imperative to conclude that, in the present case of arbitral pronouncement, the legislator expressly and intentionally established that they are considered as such [as owners or, in the situations provided for in paragraph 2, the holders there listed] the persons in whose name the vehicles are registered, inasmuch as this is the interpretation that preserves the unity of the tax-legal system;

  • The consideration of the systematic element of interpretation, taking into account the close dependence that the Vehicle Tax Code establishes with the Motor Vehicle Registration system, equally sustains the conclusion that the tax legislator intentionally and expressly desired that the persons in whose name the corresponding rights are registered be considered as owners, lessees, buyers with reservation of title or holders of the right of option to purchase in long-term rental;

  • The interpretation that the Applicant makes of article 3 violates the principle of confidence and legal certainty, the principle of efficiency of the tax system and the principle of proportionality.

  • The Applicant has failed to prove that the facts resulting from the registration presumption are not true, because the documents presented as evidence - invoices relating to sales of vehicles - do not have sufficient probative force to rebut the registration presumption.

By proposal and with the agreement of both parties, the Tribunal resolved to dispense with the holding of the meeting provided for in article 18 of the RJAT.

  1. Submissions

The Applicant filed written submissions, in which, in addition to reiterating the arguments previously made in the initial petition, also alleged that, given that the Respondent AT – Tax and Customs Authority did not contest the validity of the invoices presented as evidence for purposes of VAT and Corporation Income Tax, it likewise cannot contest their validity as a means of proving the sale of the vehicles.

The Respondent likewise filed written submissions, in which it reiterated all the arguments made in the response, having further, moreover, raised the question of the lack of jurisdiction of the Tribunal concerning administrative violation matters.

II – REMEDY

The singular Arbitral Tribunal was regularly constituted on 07-08-2014, with the arbitrator appointed by the Deontological Council of CAAD, the respective legal and regulatory formalities being complied with (articles 11, paragraph 1, subparagraphs a) and b) of the RJAT and 6 and 7 of the Deontological Code of CAAD), and is competent ratione materiae, in conformity with article 2 of the RJAT.

The parties have legal personality and capacity, are legitimate and are regularly represented.

The joinder of claims is legal, as the prerequisites of article 3, paragraph 1 of the RJAT are met.

No procedural defects were identified.

There are no exceptions or preliminary issues that need to be addressed, so nothing prevents the Tribunal from ruling on the merits of the case.

III – QUESTIONS TO BE DECIDED

Although the Applicant requests only that the Tribunal declare the illegality of the decisions dismissing (totally in some cases and partially in others) the complaints filed against the IUC assessments notified to it in its capacity as owner of the vehicles on which the tax is levied, and not the illegality of the assessments themselves, the basis of the allegation of illegality of the decisions dismissing the administrative complaints is the illegality of the assessments contested. Wherefore the Tribunal cannot assess the legality of the decisions dismissing the complaints without, at the same time, assessing the legality of the assessments contested. And the conclusion to which the Tribunal arrives regarding the legality of the decisions dismissing the said complaints cannot, for the same reasons, fail to be reflected in the judgment of legality regarding the assessments contested.

Thus, the following are the questions to be decided by the Tribunal:

  • Jurisdiction of the Tribunal concerning administrative violation matters;

  • The interpretation of article 3, paragraph 1 of the Code of Vehicle Tax (CIUC) as establishing or not a presumption regarding the qualification, as owner of a vehicle, of the entity in whose name the ownership of the same is registered;

  • To the extent that the provision is characterized as a presumption, its effective rebuttal in the present case.

IV – REASONING

  1. Question of the Tribunal's jurisdiction concerning administrative violation matters

In its application for pronouncement, the Applicant requests the Tribunal to assess and decide on the legality of the acts dismissing the administrative complaints filed against IUC assessments, requesting that, as a consequence of the declaration of illegality of such acts, the Respondent be condemned to refund the amounts of tax paid, the interest accrued on such amounts and the fines notified to the Applicant with the notification of the assessments.

Whereas as to the assessment of the legality of the decisions dismissing the administrative complaints against the IUC assessments no doubt arises regarding the Tribunal's jurisdiction, the same does not apply as regards the refund of fines.

The jurisdiction of the arbitral tribunals constituted under the regime instituted by Decree-Law no. 10/2011, of 20 January is defined by article 2 of this same instrument, which provides:

1 – The jurisdiction of arbitral tribunals comprises the assessment of the following claims:

a) The declaration of illegality of acts of assessment of taxes, self-assessment, withholding at source and payment on account;

b) The declaration of illegality of acts establishing the taxable matter when it does not give rise to the assessment of any tax, of acts determining the taxable matter and of acts establishing asset values.

Accordingly, the jurisdiction of arbitral tribunals does not comprise administrative violation matters in the tax field, so it is forbidden to the Tribunal to rule on the legality of acts applying fines.

  1. On the merits of the case

2.1 Proven facts considered relevant

1st: The Applicant was notified of the IUC assessments identified on pages 6 to 21 of the initial petition and whose copies are attached to the administrative file and there identified as documents numbers 2 to 160 and which are hereby reproduced;

2nd The IUC assessments related to vehicles whose ownership was registered in the name of the Applicant on the date of the taxable events;

3rd The Applicant proceeded to pay the assessed tax and default interest, and also the fines imposed in the total amount of € 54,979.58;

4th The Applicant filed an administrative complaint against the said tax assessments;

5th The administrative complaints were dismissed (one of them partially, as mentioned earlier) and the dismissal notified to the Applicant on 9-4-2014;

6th: The Applicant issued invoices relating to the sale of all the vehicles to which the IUC assessments contested relate.

The facts found to be proven were so on the basis of the documentary evidence submitted by the Applicant and that which constitutes the administrative file submitted by the Respondent.

There are no facts not proven with relevance for the decision of the case.

2.2 Legal Reasoning

a. Regarding the interpretation of article 3, paragraph 1 of the CIUC, in order to determine whether it establishes or not a presumption of ownership of the vehicle

On this question, in the precise terms in which it is presented here, a prior arbitral award pronounced in case no. 63/2014-T, to which full adherence is given and which, for this reason, is now cited:

"Article 3 of the CIUC provides:

Article 3

Subjective scope

1 - The liable parties to the tax are the owners of the vehicles, being deemed as such the natural or legal persons, whether public or private, in whose name the same are registered.

2 - The following are assimilated to owners: financial lessees, buyers with reservation of title, as well as other holders of purchase option rights by virtue of the lease contract.

The liable parties to IUC are, first, the owners of the vehicles, and may also be assimilated to owners the 'financial lessees, buyers with reservation of title, as well as other holders of purchase option rights by virtue of the lease contract.'

The ownership of motor vehicles is subject to compulsory registration (article 5, paragraphs 1 and 2 of Decree-Law no. 54/75, of 12 February).

The obligation to carry out the registration falls on the buyer – the active subject of the fact subject to registration, which is, in this case, the ownership of the vehicle (article 8-B, paragraph 1 of the Real Property Registration Code, applicable to Motor Vehicle Registration by virtue of article 29 of Decree-Law no. 54/75, of 12 February and taken together with subparagraph a) of paragraph 1 of article 5 of Decree-Law no. 54/75)

However, the Motor Vehicle Registration Regulations contain a special regime, in force since 2008, for entities engaged in the commercial activity of selling motor vehicles. According to this regime, which is established in article 25, paragraph 1, subparagraphs c) and d), registration may be promoted by the seller, by means of an application subscribed only by the seller.

Since 2001, the obligation to declare the sale by the seller "to the authority competent for registration" is also expressly established in the Road Code (today in its article 118, paragraph 4).

Registration must be carried out within 30 days from the date of acquisition of the vehicle (article 42 of the Motor Vehicle Registration Regulations (Decree-Law no. 55/75, of 12 February).

The current IUC is designed to function in integration with Motor Vehicle Registration, which is inferred from article 3 itself of the CIUC. The alternative to this articulation would be the obligation to communicate to the AT – Tax and Customs Authority all transfers of vehicles, in the manner of what happens with the IMT Code, a highly bureaucratic solution that the legislator rejected.

In a situation of complete compliance with the law, should the transfer of ownership of the motor vehicle take place, this change of ownership will be registered in due course.

The AT - Tax and Customs Authority may thus, at any moment, know which vehicles are registered in Portuguese territory and who are the respective owners, for purposes of tax assessment.

There is, therefore, a close articulation between Motor Vehicle Registration and Vehicle Tax, so that, if the Tax Administration cannot avail itself of the data contained in Motor Vehicle Registration, this will have an inevitable impact on loss of efficiency, if not paralysis, in the administration of the tax.

For this reason, paragraph 1 of article 3 of the CIUC, after establishing that 'the liable parties to the tax are the owners of the vehicles' adds that they are deemed 'the natural or legal persons, whether public or private, in whose name the same are registered'.

In the present case, in which the Applicant alleges that it has transferred the ownership of all the vehicles to which the contested assessments relate, prior to the dates to which the assessments refer, the same Applicant remained, as of the date of the taxable events, as the holder of the registration of ownership of the allegedly sold vehicles.

But since such transfers were not communicated to Motor Vehicle Registration, the Tax Administration adopted the only procedure it could adopt: it applied article 3, paragraph 1 of the CIUC, considering the Applicant as the owner of the vehicles, by virtue of it being the entity in whose name the vehicles were registered. It should be noted that, even if article 3 of the CIUC did not contain the expression 'being deemed as such the natural or legal persons, whether public or private, in whose name the same are registered', the Tax Administration would always benefit from this presumption of ownership as it results from Motor Vehicle Registration itself.

In fact, article 7 of the Real Property Registration Code (CRPred), applicable to motor vehicle registration by virtue of article 29 of the Motor Vehicle Registration Code, stipulates that 'permanent registration constitutes a presumption that the right exists and belongs to the registered holder, in the precise terms in which the registration defines it.'

The Applicant acknowledges that, during the period to which the assessments relate, it was the holder of the registration of ownership of the vehicles, but argues that it was no longer the actual owner of the same by having meanwhile transferred them.

The question that arises in this situation is that of the value of the second part of the provision, when it determines that 'the liable parties to the tax are the owners of the vehicles, being deemed as such the natural or legal persons, whether public or private, in whose name the same are registered'.

When the law says that 'the natural or legal persons in whose name the same are registered are deemed to be owners of the vehicles', is the law establishing a legal presumption?

Or, conversely, is the law saying that the natural or legal persons in whose name the vehicles are registered are 'owners' for tax purposes, i.e., are liable parties?

The Applicant argues that the law contains a legal presumption, basing itself on the example of various legal provisions in force in the legal order which, employing the verb 'deem', unquestionably contain presumptions.

The Applicant's thesis is also supported by the merely declarative value of Motor Vehicle Registration.

If the Applicant's thesis is correct, then, in accordance with article 73 of the General Tax Law, and because it is a rule of scope, the presumption is necessarily rebuttable, which means it admits proof to the contrary. Which in this case means that the Applicant could prove that it was not the owner of the vehicles during the period to which the assessments refer and, therefore, was not a liable party to the assessed tax.

To the contrary, the Respondent argues that the provision in question does not establish any presumption, and that the legislator expressly and intentionally established that the natural or legal persons in whose name the vehicles are registered are deemed as such ('as owners or, in the situations provided for in paragraph 2, the persons there listed'), inasmuch as this is the interpretation that preserves the unity of the tax-legal system.

The Respondent relies, like the Applicant, on the example of various tax legal provisions which, using the verb 'deem', do not contain presumptions, but non-presumptive qualifications. Examples would be articles 2 of the Code of Tax on Onerous Transfers of Real Property (CIMT), 2, 3 and 4 of the Code of Income Tax on Individuals, and 4, 17, 18 and 20 of the Code of Income Tax on Legal Entities (CIRC).

From the examples provided by both parties, it is evident, from the outset, that it is possible to find in the legal order as many examples of provisions using the verb 'deem' in the sense of 'presume' as examples of legal provisions that use the verb 'deem' to establish non-presumptive legal qualifications, so these arguments are not conclusive.

If a presumption exists in article 3, paragraph 1 of the CIUC, it consists of a presumption regarding the quality of owner: 'the liable parties to the tax are the owners of the vehicles, being deemed as such the natural or legal persons, whether public or private, in whose name the same are registered'.

On the other hand, if it is understood that the provision does not establish a legal presumption, then it must be considered that the law qualifies non-presumptively as owners of vehicles the natural or legal persons in whose name the vehicles are registered.

We would then have a legal fiction, disconnected from the concept of civil law, and which consists of a legal device that considers a situation or a fact as different from reality in order to attribute certain legal consequences to it.

Article 11, paragraph 2 of the General Tax Law constitutes the starting point on this matter, providing that 'whenever, in tax provisions, terms proper to other branches of law are used, they must be interpreted in the same sense as they have therein, unless otherwise directly provided by law'.

It must therefore be ascertained whether it unequivocally results from article 3 of the CIUC that the legislator intended to establish there a concept of 'vehicle owner' proper to tax law, which encompasses persons who are not holders of such right according to the rules of civil law.

Will the 'legislative discretion' that the legislator enjoys, which the Respondent refers to in paragraph 17 of its Response, be able to go so far as to determinatively establish who is the owner of a vehicle, even if only for purely tax purposes, radically dissociating this tax qualification from the qualification of civil law?

And, following the previous question, another question arises: why would the legislator not have simply stipulated - because it would achieve exactly the same useful effect but eliminating any margin of legal insecurity or uncertainty - that 'the liable parties to the tax are the natural or legal persons in whose name the vehicles are registered, whether as owners, whether as financial lessees, as buyers with reservation of title, or as other holders of purchase option rights by virtue of the lease contract'? A question all the more pertinent, and hypothesis all the more attractive, given that the legislator was familiar with the negative experience, and which keeps repeating itself, of the prior Vehicle Tax?

The answer seems evident: because, in this latter hypothesis, which the legislator did not follow, the subjective scope of the tax could become completely disconnected from any economic substance and would depend exclusively on a legal appearance.

Now, if the legislator had, as the Respondent contends, established in law a non-presumptive qualification regarding who is the owner of vehicles (a legal fiction), it would thereby be establishing, through a different formulation, a rule entirely identical to the hypothetical rule mentioned. It would be basing the subjective scope of the tax on a legal fiction, in total disconnection from any economic substance as the basis of subjective scope.

It is true that the efficiency of taxation determines the need for IUC to be based on Motor Vehicle Registration and, accordingly, requires that the tax administration may rely on Motor Vehicle Registration.

But the principle of efficiency of taxation cannot absolutely override the principle of contributory capacity, to the point of eliminating it as a criterion of subjective scope. And it is also true that the tax legislator would have at its disposal other means of making the vehicle seller liable, in failure of its duty to communicate the sale of the vehicle, for payment of the tax, without being as direct contributor (configuring, for example, a case of liability for debt of a third party).

And, if so, it must equally be concluded that article 3, paragraph 1 can only establish a presumption of ownership of the vehicle, even with all the negative consequences that this conclusion will surely bring about, in terms of efficiency of tax administration."

It is thus concluded, in accord with the decision cited, that article 3, paragraph 1 of the CIUC contains a presumption concerning tax scope, relating to the quality of owner of a vehicle.

b. Regarding the rebuttal of the presumption of title to the right of ownership falling upon the Applicant

As mentioned previously, the conclusion that paragraph 1 of article 3 of the CIUC establishes a presumption regarding who is the owner for purposes of the scope of the tax means that the tax provision does not establish a concept of owner disconnected from civil law. For the Vehicle Tax Code, the owner of the vehicle is one who is such under civil law.

Seeking to rebut that presumption, the Applicant must prove that it was not the owner of the vehicles on the date of the taxable events.

Now, given that the ownership of motor vehicles is subject to compulsory registration, Motor Vehicle Registration constitutes a presumption that the holder of the right of ownership is the entity in whose favor the same right is registered. This presumption is expressly established in article 7 of the Real Property Registration Code, applicable to Motor Vehicle Registration by virtue of article 29 of the Motor Vehicle Registration Code.[1]

If it is true that the presumption of article 3, paragraph 1 of the CIUC is established having in view the purposes of taxation, already the presumption established by registration law has in view legal certainty in general, there being no ground for thinking that this presumption does not apply in the context of tax legal relationships.

As is stated in the judgment of the Lisbon Court of Appeal of 24-3-2011 (case no. 195/09.8TBPTS.L1-2), 'property registration pursues, at one and the same time, private and characteristically public purposes. It pursues private purposes, given that it guarantees security in the field of private rights, specifically in the realm of rights with real effect – security of legal commerce (…), globally considered – facilitates traffic and the interchange of goods, and ensures the fulfillment of the social function of real rights; it pursues purposes of public interest, as an instrument of legal certainty, of protection of third parties and of security of legal commerce, and of guarantee of updating the registration in light of the publicized fact'.

Taking advantage of the presumption of truthfulness of the registration falling upon the Respondent, it is the Applicant who has the burden of rebutting that same presumption.

As regards the rebuttal of the presumption of Motor Vehicle Registration, there is established case law to the effect that it is necessary to prove that the ownership of the inscribed right belongs to another (cf. judgment of the Coimbra Court of Appeal of 22-01-2013, case no. 3654/03.2TBLRA.C1; judgment of the Coimbra Court of Appeal of 3-06-2008, case no. 245-B/2002.C1).

The Applicant seeks to rebut the presumption arising from Motor Vehicle Registration by proving that it executed purchase and sale contracts through which it transferred the vehicles in question by presenting invoices issued by it.

The case law of civil courts, however, is unanimous in considering that invoices issued by the seller, being private and unilateral documents, do not prove the purchase and sale.

In a judgment of the Lisbon Court of Appeal of 4-2-2010, (Case no. 224338/08.7YIPRT.L1-8) it is stated, referring to invoices presented as evidence regarding a purchase and sale contract: 'The documents attached are limited to establishing the existence of the statements contained therein, that is, that invoices were issued regarding merchandise supplied to the defendant/appellant with the corresponding delivery note'.

In another judgment of the same Court of 26-11-2009 (Case no. 29158/03.5YXLSB.L1-2), it is stated that 'the probative force of the private document is limited to the statements of its signatory'.

And in yet another judgment of the same Court of 5-6-2008 (Case 1586/2008-8), the Court sentences that 'the requirement of payment by invoice is not sufficient to prove that the contract to which the payment refers was concluded with the entity invoiced.'

If invoices do not prove the purchase and sale for civil purposes, it is not clear why they should be considered to do so for tax purposes. In light of what has been set out, it must be concluded, as in the cited arbitral decision, that the Applicant failed to prove the transfer of the vehicles.

The accounting records that the Applicant protested to attach, should it be considered necessary, are equally unilateral and internal documents. They would not, therefore, add any probative value to the invoices, insofar as it is a matter of proving the existence of a bilateral contract.

Now, while it is unanimously accepted and even a matter of common sense that an invoice or any private and unilateral document is not sufficient to prove the execution of a purchase and sale contract, to this is added the fact that the rebuttal of the presumption of the truthfulness of the registration is particularly demanding.

On the subject, says Mouteira Guerreiro (Mouteira Guerreiro, J. A., Notions of Registration Law, 2nd ed. Coimbra ed.1994, p. 70): 'The protection conferred by registration is translated in our system into a rebuttable presumption. But we cannot forget it, it is a legal presumption. (…) What the registration reveals cannot be impugned, even in court, without simultaneously requesting its cancellation'.

The same author (Ibidem, p. 71) adds: 'It follows from the principle of presumption of truth or accuracy the rule provided for in article 8 of the CRPred. If permanent registration makes presumed that the right exists and belongs to the registered holder 'in the precise terms in which the registration defines it', it would not make sense to judicially attack this publicly advertised truth, without simultaneously attacking the registration itself. For this reason, whoever wishes to contest the truthfulness of the facts recorded in the registry will equally have to request the cancellation of the registration. If they do not do so, the action will not proceed after the pleadings, because there would be the risk of reaching an effective contradiction: on the one hand, having a judgment declaring legally irrelevant or untrue certain facts and, on the other, having a registration making presumed erga omnes the truthfulness and validity of those same facts'.

The understanding set forth is sanctioned by the case law of higher courts. See the judgments previously cited, in which it is stated that, to set aside the presumption of ownership arising from Motor Vehicle Registration, it is necessary to prove that the ownership of the registered right belongs to another, but such being insufficient, it also being necessary to simultaneously request its cancellation (cf. judgment of the Coimbra Court of Appeal of 22-01-2013, case no. 3654/03.2TBLRA.C1; judgment of the Coimbra Court of Appeal of 3-06-2008, case no. 245-B/2002.C1).

Once more, if this is so in the field of civil law relationships, there is no reason why a different solution should apply in the case of tax relationships.

c. Regarding the fact that the truthfulness of the invoices was not contested by the Tax Administration for purposes of Corporation Income Tax and Value Added Tax

What is not in issue, nor does the Tax Administration contest, is the truthfulness of the invoices, as unilateral statements of the issuer. What is in issue is the probative force of invoices, private and unilateral documents, to, by themselves, prove a purchase and sale contract and to rebut the presumption of truthfulness of the content of Motor Vehicle Registration.

Now, neither VAT nor Corporation Income Tax tax the transfer of ownership. Both tax facts that suffice with the unilateral declaration by the liable parties.

Corporation Income Tax taxes profits, which result from the difference between revenues and expenses. As for revenues, these are taxed on an accrual basis, which means it taxes contractual situations that are dynamic and are not necessarily closed at the moment of taxation. That is the nature of profit according to the concept of accrual-based income. For this reason, Corporation Income Tax likewise permits the making of provisions, impairment adjustments and deduction of tax losses, all of which mechanisms permit recovery of tax paid on profits recognized on an accrual basis that did not materialize. Also in the case of VAT there are mechanisms of regularization when invoices were issued and tax assessed on contractual situations that undergo a change. Namely, article 78 of the VAT Code provides for 'the deduction of tax when the operation is cancelled or the taxable value is reduced as a consequence of invalidity, termination, rescission or reduction of the contract, by the return of goods or by the granting of rebates or discounts'.

It is therefore abusive to attempt to withdraw from the acceptance of invoices for purposes of Corporation Income Tax and VAT the validity of those same invoices to prove the transfer of ownership, for purposes of a tax whose taxable event is constituted by ownership, when, moreover, this ownership is subject to registration.

From all the foregoing it results that the Applicant does not rebut the presumption falling upon it regarding the ownership of the vehicles on which the contested IUC assessments are levied, and that, consequently, the contested assessments do not suffer from any illegality.

Therefore, the Applicant's claim regarding the illegality of the contested assessments based on error in the legal prerequisites fails, due to the absence of the prerequisites of the subjective scope of the Vehicle Tax regarding the Applicant.

V. DECISION

For the reasons stated, this Tribunal decides to dismiss the present application entirely.

Economic utility value of the case: The economic utility value of the case is fixed at € 54,741.18.

Costs: Pursuant to article 22, paragraph 4, of the RJAT, the amount of costs is fixed at €

2,142.00, in accordance with Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, to be borne by the Applicant.

Let this arbitral decision be registered and notified to the parties.

Lisbon, Administrative Arbitration Center, 2 February 2014

The Arbitrator

(Nina Aguiar)

Text prepared by computer, pursuant to paragraph 5 of article 131 of the Code of Civil Procedure, applicable by reference from subparagraph e) of paragraph 1 of article 29 of Decree-Law no. 10/2011, of 20/01.

The writing of this decision is governed by the old spelling rules.

[1] Decree-Law no. 54/75, of 12 February.