IUC Subjective Incidence: Vehicle Seller Not Liable After Sale – CAAD 416/2014-T

ARBITRAL DECISION

The Arbitrator Paulino Brilhante Santos, designated by the Deontological Council of the Administrative Arbitration Centre (CAAD) to form the Single Arbitral Tribunal, constituted on 07 August 2014 (order of the President of the Deontological Council of CAAD of 07 August 2014), hereby transmits the following:

I. REPORT

1. On 04 June 2014, taxpayer A, tax identification number …, with residence at Street … Vila do Conde (hereinafter briefly identified as Claimant), requested the constitution of the Single Arbitral Tribunal in tax matters, in accordance with the provisions of articles 2, no. 1, paragraph a) and 10 of Decree-Law no. 10/2011, of 20 January (Legal Regime for Arbitration in Tax Matters, hereinafter briefly referred to as RJAT), in conjunction with articles 1 paragraph a), 2 and 3 of Ordinance no. 112-A/2011, of 22 March.

2. In the request for constitution of the Single Arbitral Tribunal, the Claimant intends that the said Tribunal declare the illegality and consequent annulment of the acts of official assessment of Unique Circulation Tax relating to the years 2010, 2011 and 2012, concerning the vehicle of brand …, model …, with registration …, effected by the Tax and Customs Authority (hereinafter briefly identified as the Respondent Authority).

3. The request for constitution of the Single Arbitral Tribunal was accepted on 05 June 2014, by His Excellency the President of CAAD, with the Parties being notified on 05 June 2014.

4. The Claimant did not proceed to appoint an arbitrator, therefore, under the terms of article 6, no. 1, of the RJAT, the undersigned was designated by His Excellency the President of the Deontological Council of CAAD to form the present Single Arbitral Tribunal, with the appointment having been accepted in accordance with legal provisions and the Parties being notified of this designation on 23 July 2014. The Tribunal was constituted in accordance with article 11 of the RJAT, on 07 August 2014.

5. On 20 October 2014, the Respondent Authority submitted its Response.

6. Having the Parties been notified of the arbitral order issued in accordance with article 18 of the RJAT, considering that all necessary elements were available in the file to decide on matters of fact and law, the Parties opted to waive the first meeting, and also dispensed with oral arguments.

7. Thus, it is important to note that the Claimant sustained, in summary, its request in the following manner:

7.1. The Claimant was the owner of the vehicle of brand …, model …, with registration … until 06 August 2009, the date on which he sold the said vehicle to company B - Vehicle Commerce, Ltd., NIPC …, as a trade-in in the purchase of another vehicle, on the same date and from the same entity;

7.2. Since the purchasing entity did not proceed to regularize the ownership of the mentioned vehicle, on 18 July 2012, the Claimant promoted the registration of acquisition of the vehicle in favor of the said entity, with the Vehicle Registration Office, which was completed on 20 July 2012 with the notation that the date of transfer of ownership was 06 August 2009;

7.3. The Claimant was notified regarding "Official Assessment of UCT", relating to the years 2010, 2011 and 2012, to exercise the right to prior hearing, which he did, alleging that on the date of the birth of the tax obligation he was no longer the owner of the vehicle in question and attaching as proof copies of the Trade-in Responsibility Certificate and the Vehicle Registration proof, submitted through the Online Vehicle service, which gave rise to the Vehicle Registration Request no. …;

7.4. The Claimant, confronted with the acts of "Tax Assessment Demonstration" of UCT relating to the years 2010, 2011 and 2012, proceeded to pay the full amounts thereof.

7.5. The Claimant further submitted a Gracious Appeal as well as exercised the right to prior hearing in relation to the Draft Decision of Total or Partial Dismissal of the Gracious Appeal, reiterating that he is not the passive subject of the tax in question, as on the date of maturity thereof, he was not the owner of the vehicle in question, and emphasizing the failure of the Vila do Conde Finance Service to address the issue raised by the Claimant regarding the presumption of subjective incidence of article 3 of the Code of Unique Circulation Tax (CIUC);

7.6. The Vila do Conde Finance Service maintained the decision of dismissal;

7.7. The Claimant further states, in relation to the documents he attached, that the so-called "Trade-in Responsibility Certificate" attached to the file, regardless of the designation in its heading, unequivocally constitutes a Sales and Purchase Contract, whereby it proves that the now Claimant alienated on the date mentioned in the document (06/08/2009) the vehicle in question;

7.8. And that the "Vehicle Registration Request", submitted on 18 July 2012, which proves the acquisition of the said vehicle by company B, Ltd. on 06/08/2009, was completed by the Vehicle Registration Office on 20 July 2012 and was on that same date ordered to issue the Registration Certificate;

7.9. The Claimant alleged as grounds of substantive law that article no. 3, no. 1 of the CIUC constitutes a legal presumption of tax incidence, capable of being rebutted, in general terms, as provided for in article 73 of the General Tax Law (LGT), further noting that presumptions of tax incidence can be rebutted through gracious appeal or judicial challenge in accordance with article 64 of the Code of Tax Procedure and Process (CPPT);

7.10. In light of the provisions of the aforementioned norms, the Claimant considers that he is not a passive subject of the tax given that he was not the owner of the vehicle on the date when the tax should have been assessed;

7.11. And in accordance with article 408, no. 1 of the Civil Code (CC), the sale of the automobile vehicle in question implied the transfer of ownership;

7.12. Relying on articles 1, no. 1, and 5, no. 1, paragraph a) and no. 2 of Decree-Law no. 54/75, of 12 February, he states that, notwithstanding the right of ownership of automobiles being subject to vehicle registration, this registration has a merely declarative character, aimed at publicizing juridical facts;

7.13. The Claimant also mentions article 7 of the Code of Real Estate Registration (CRP) which establishes that definitive registration constitutes a presumption that the right exists and belongs to the holder registered in the precise terms in which the registration defines it;

7.14. The Claimant considers that the validity of the constitution, acquisition or modification of rights, including the right of ownership, does not depend on its respective registration, and therefore, rights not registered can be invoked by the parties, in accordance with article 4, no. 1 of the CRP, applicable by force of article 29 of Decree-Law no. 54/75 of 12 February;

7.15. He further considers that, although facts subject to registration only produce effects against third parties after their respective registration, in accordance with article 5 of the CRP, only those are third parties who have acquired from a common author incompatible rights, which is not the case of the Tax Authority, therefore, the Tax Authority not being a third party, the transfer of ownership of the vehicle previously held by the Claimant is enforceable against it, even if not registered, namely for the purposes of contesting UCT self-assessments;

7.16. The Claimant also makes reference to article 6 of the CIUC which provides that the tax event is constituted by the ownership of the vehicle, as certified by the registration or registration in national territory;

7.17. However, article 3, no. 1 of the CIUC when it refers to the passive subjects of the tax being the owners of the vehicles, considering as such the persons in whose names the same are registered, constitutes a legal presumption of tax incidence, capable of being rebutted, as per article 73 of the LGT, through gracious appeal or judicial challenge in accordance with article 64 of the CPPT;

7.18. Relying on arbitrary jurisprudence (Cases no. P26_2013T of 19/07/2013, no. P27_2013T of 10/09/2013 and no. 170_2013T, of 14/02/2014, available at https://caad.org.pt/tributario/decisoes/), the Claimant alleges that definitive registration is merely a presumption of the existence of the right that admits proof to the contrary;

7.19. He further alleges that the expressions "is considered" and "is presumed" have been used by the legislator with equivalent meaning;

7.20. He refers as examples various legal norms in which the legislator establishes presumptions using the verb consider, such as article 243, no. 3 of the Civil Code when it establishes that "a third party who acquired the right after the registration of a simulation action is always considered to be acting in bad faith, where such registration has taken place", article 59, no. 1 of the Industrial Property Code when it provides that "Inventions whose patent has been applied for during the year following the date the inventor left the company are considered to have been made during the performance of the employment contract", and article 89-A, nos. 3 and 4 of the LGT when it provides that it is incumbent upon the taxpayer to prove that the declared income corresponds to reality and that, if such proof is not made, it is presumed ("is considered" in the letter of the law) that the income is that which results from the table contained in no. 4 of the said article;

7.21. The Claimant submits that the complete equivalence of meanings between the two expressions satisfies the condition established in article 9, no. 2 of the CC, since the minimum verbal correspondence is assured for purposes of determining legislative intent;

7.22. He further submits that the fiscal law had the objective of taxing the true and effective owner and user of the vehicle;

7.23. The Claimant concludes that the ratio legis of the tax points toward the taxation of actual owner-users of vehicles, therefore the expression "is considered" is used in article 3, no. 1, of the CIUC in a sense similar to "is presumed", constituting a legal presumption that allows the person registered in the registration as owner of the vehicle, and as such considered by the Tax Authority as a passive subject of the tax, to be able to present evidence aimed at demonstrating that the holder of ownership is another person/entity, to whom the ownership was transferred;

7.24. He further concludes by noting that the documents attached to the case, the so-called "Trade-in Responsibility Certificate" which constitutes a Sales and Purchase Contract and the so-called "Vehicle Registration Request" which constitutes proof, enjoy the presumption of truthfulness conferred by article 75 of the LGT and thus have sufficient suitability and force to rebut the presumption that supported the assessments effected;

7.25. Finally, the Claimant petitions for the rebuttal of the presumption of subjective incidence of article 3 of the CIUC with the consequent annulment of the questioned assessments and the restitution of the tax wrongfully paid plus compensatory interest from the date of payment until effective and complete reimbursement.

1. In its Response, the Respondent Authority invoked, in summary, the following:

8.1. Such allegations "cannot at all be sustained, as they make a notably wrong interpretation and application of the legal norms subsumable to the case sub judice";

8.2. According to the Respondent Authority, the position advocated by the Claimant is based not only on a biased reading of the letter of the law, but also on an interpretation that does not take into account the systematic element, violating the unity of the regime enshrined in the entire UCT and, more broadly, in the entire legal-fiscal system, and further results from an interpretation that ignores the ratio of the regime enshrined in the article in question and indeed, in the entire CIUC;

8.3. Developing its position, the Respondent Authority states that the tax legislator in establishing in article 3, no. 1 who are the passive subjects of the UCT, expressly and intentionally established that these are owners, being considered as such the persons in whose names they are registered;

8.4. In defense of its point of view, the Respondent Authority notes that the legislator did not use the expression "are presumed", as it could have done, and that the fiscal regulation is full of provisions analogous to that enshrined in the final part of no. 1 of article 3, in which the tax legislator expressly and intentionally establishes what must be considered legally for purposes of incidence, income, exemption, determination and periodization of taxable profit, for purposes of residence, location, among many others.

8.5. As an example, among others, it refers to article 2 of the Code of Municipal Tax on Onerous Transfers of Real Estate (CIMT) in which the tax legislator does not presume that "there is an onerous transfer for purposes of no. 1 of the article referred to, in the execution of a promise-to-purchase contract of acquisition and alienation of real estate in which it is stipulated in the contract or subsequently that the promissory buyer can assign his contractual position" to a third party. In this case, the legislator expressly and intentionally treats this contract as an onerous transfer of property for IMT purposes;

8.6. It also refers to article 17 of the Code of Tax on Income of Legal Persons (CIRC) in which the legislator also does not establish that the net surpluses of cooperatives are presumed to be the net result of the period, but rather that these are considered as such;

8.7. It adds that the majority of incidence norms in the context of CIRC, have as their underlying ratio, determining what should be considered as income for purposes of this tax, therefore, if it were understood that by using the expression "is considered" the tax legislator would have established a presumption, practically all the incidence norms in the context of CIRC would be disregarded because accounting prescribes solutions different from those of CIRC, which is exactly the legislator's purpose to disregard the accounting rules;

8.8. In sequence, the Respondent Authority concludes that in the case of the present arbitral proceedings, the legislator expressly and intentionally established that those persons in whose names the vehicles are registered are considered as owners, or in the situations provided for in no. 2, because it is the interpretation that preserves the unity of the legal-fiscal system. Therefore, to understand that the legislator established there a presumption would be to make an interpretation contra legem.

8.9. The Respondent Authority notes that this is the understanding of jurisprudence, making reference to a decision of the Administrative and Tax Court of Penafiel which accepted the position sustained by the Tax Authority, determining that the passive subject of the tax is the owner of the vehicle, being considered as such the natural or legal person in whose name the same is registered. Actual ownership and possession is irrelevant to the verification of subjective and objective incidence and the tax event. The failure to register in the name of the new buyer causes the subjective incidence of the UCT to remain with the holder of the property right inscribed in the Vehicle Registration Office and to be responsible for the assessment and payment of UCT, regardless of its actual alienation;

8.10. It further notes that if the Claimant intends to act against the presumption of ownership attributed to him, then he will necessarily have to act through the proper means provided for in the Vehicle Registration Regulation and the ancillary registration laws and against the content of the vehicle registration itself, but it is not through the challenge of UCT assessments that the registration information is rebutted;

8.11. On the other hand, appealing to the systematic element, the Respondent Authority understands that the solution advocated by the Claimant is intolerable and finds no support in law. This is because, in the same sense as article 3, no. 1 of the CIUC, article 6 of the CIUC establishes, under the heading "Tax Event and Enforceability", in its no. 1, that "The tax event is constituted by the ownership of the vehicle, as certified by the registration or registration in national territory";

8.12. That is, the moment from which the obligation of the tax is constituted presents a direct relationship with the issuance of the registration certificate, on which the facts subject to registration must appear (articles 4, no. 2 and 6 no. 3, both of the CIUC, article 10, no. 1 of Decree-Law no. 54/75, of 12 February and article 42 of the Vehicle Registration Regulation). In the same sense, the legislative solution adopted by the tax legislator in no. 2 of article 3 of the CIUC supports this, by making the equiparations enshrined there coincide with the situations in which vehicle registration requires its respective registration;

8.13. The Respondent Authority further submits that such position is evident in the circumstance that the Vehicle Registration that the Tax Administration has or may have access to, and the certificate on which the acts subject to registration must appear, whose display may be required by the same Administration to the interested party, contain all the elements destined for the determination of the passive subject, without the need for access to contracts of a private nature that confer such rights, enumerated by the CIUC as constitutive of the legal situation of passive subject of this tax;

8.14. It alleges that in the absence of such registration, the owner must be notified to fulfill the corresponding tax obligation, as 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 do not appear in registers and public documents and, as such, authentic. Thus, the failure to update the registration, in accordance with article 42 of the Vehicle Registration Regulation, will be imputable within the legal sphere of the Passive Subject of UCT and not in that of the State, as the active subject of this tax;

8.15. The Respondent Authority concludes by alleging that the CIUC proceeded with a reform of the vehicle taxation regime in Portugal, substantially altering the automobile taxation regime, with the passive subjects of the tax becoming the owners listed in the property register, regardless of the circulation of the vehicles on public roads. That is, despite one of the ratios underlying the reform of automobile taxation being environmental concern, the legislator intended to create a UCT based on the taxation of the owner, regardless of the circulation of the vehicles;

8.16. In this sequence, the Respondent Authority alleges that the tax acts in question do not suffer from any defect of violation of law, in that, in light of article 3, nos. 1 and 2, of the CIUC and article 6 of the same Code, it was the Claimant, in the capacity of owner, the passive subject of the UCT.

8.17. Beyond the grounds set forth, the Respondent Authority considers it appropriate to note that the interpretation conveyed by the Claimant is contrary to the Constitution, arguing that the so-called principle of contributory capacity is not the sole or main fundamental principle that informs the fiscal system and that 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;

8.18. The Respondent Authority considers that it is therefore necessary that in the interpretation of article 3 of the CIUC the principle of contributory capacity be articulated or tempered with those principles;

8.19. Concluding that "the interpretation proposed by the Claimant, an interpretation that essentially devalues the registration reality to the detriment of an informal reality and insusceptible to minimum control by the Respondent, is offensive to the basic principle of trust and legal certainty that must inform any legal relationship, here including the tax relationship";

8.20. Finally, although the Tax Authority considers that article 3 of the CIUC does not establish any presumption, the Respondent Authority alleges that the Claimant intends to contradict the full legal proof constituted by the registration through the presentation of unilateral private documents, which have diminished probative value within the scope of substantive evidentiary law, which would make it impossible for the tax administration to administer the UCT;

8.21. Therefore, the Arbitral Tribunal can only conclude that the Claimant does not rebut the presumption that falls upon him as to the ownership of the vehicles on which the UCT assessments challenged incide and that, therefore, the challenged assessments do not suffer from any illegality.

II. PROCEDURAL MATTERS

1. The Tribunal is competent and regularly constituted, in accordance with articles 2, no. 1, paragraph a), 5 and 6, all of the RJAT.

2. The parties have standing and legal capacity, are legitimate and are represented, in accordance with articles 4 and 10 of the RJAT and article 1 of Ordinance no. 112-A/2011, of 22 March.

3. The Claimant, on 11 September 2014, submitted the decision granting legal aid in the form of exemption from court fees and other case expenses.

4. There are no nullities and previous questions that affect the entire case, therefore it is now incumbent to rule on the merits of the claim, all the more so as both parties have dispensed in writing with the first meeting of the Arbitral Tribunal and also with further oral arguments.

III. SUBJECT MATTER OF THE ARBITRAL DECISION

1. The following questions are submitted to the Tribunal in accordance with the terms described above:

13.1. Does the norm of subjective incidence contained in article 3 of the CIUC establish a rebuttable presumption of ownership?

13.2. Understanding that the said norm establishes a rebuttable presumption, do the documents presented by the Claimant constitute sufficient evidence to rebut the above-mentioned legal presumption?

IV. FACTUAL MATTERS

1. To prove the alleged facts, the Claimant attached to the present claim the following documents:

14.1 Doc. 1 - Notification for Prior Hearing prior to Official Assessment of UCT;

14.2 Doc. 2 - Exercise of Prior Hearing prior to Official Assessment of UCT;

14.3 Doc. 3 - Response to Exercise of Prior Hearing – Office Letter no. 6327;

14.4 Doc. 4 - Official Assessment of UCT and compensatory interest;

14.5 Doc. 5 - Reimbursement of Compensatory Interest;

14.6 Doc. 6 - Gracious Appeal;

14.7 Doc. 7 - Draft Decision of Dismissal of Gracious Appeal;

14.8 Doc. 8 - Exercise of Prior Hearing regarding Draft Decision of Dismissal of Gracious Appeal;

14.9 Doc. 9 - Notification of Dismissal of Gracious Appeal;

14.10 Doc. 10 - Trade-in Responsibility Certificate

14.11 Doc. 11 – Vehicle Registration Proof.

1. The following facts relevant to the arbitral decision to be rendered are considered proven, based on the documentary evidence attached to the file:

15.1 The Claimant was the owner of the vehicle of brand …, model …, with registration … (cf. Doc. 10 and 11);

15.2 On 06 August 2009, the said vehicle was sold to company B - Vehicle Commerce, Ltd., as a trade-in in the purchase of another vehicle acquired on the mentioned date and from the same entity by the now Claimant (cf. Doc. 10);

15.3 On 18 July 2012, with the Vehicle Registration Office, a request was made by the Claimant for registration of acquisition of the said vehicle in favor of the entity referred to in the previous point, such registration having been completed on 20 July 2012, but with the date of sale of the vehicle relevant to these proceedings being 06 August 2009 (cf. Doc. 11);

15.4 The Claimant was notified regarding official assessments of UCT for the fiscal years 2010, 2011 and 2012, having been notified to exercise his right to prior hearing (cf. Doc. 1)

15.5 The Claimant exercised the right to prior hearing, alleging in summary that on the date of the birth of the tax obligation, he was no longer the owner of the vehicle in question (cf. Doc. 2);

15.6 The Vila do Conde Finance Service did not agree, in its response to the prior hearing (cf. Doc. 3);

15.7 The Claimant was confronted with the acts of UCT Tax Assessment Demonstration, relating to the said fiscal years 2010, 2011 and 2012 (cf. Doc. 4);

15.8 On 11 December 2013, reimbursement was issued in favor of the Claimant of the value of compensatory interest relating to the years 2010 and 2011 (cf. Doc. 5);

15.9 On 27 March 2014, the Claimant submitted a Gracious Appeal to the Vila do Conde Finance Service reiterating that on the date of the birth of the tax obligation, he was no longer the owner of the vehicle subject to the UCT assessments now under review in the present arbitral proceedings (cf. Doc. 6);

15.10 By Office Letter dated 11 April 2014, the Claimant was notified to, if he wished, exercise the right to prior hearing provided for in art. 60, no. 1, paragraph b) of the LGT in relation to the Draft Decision of Total or Partial Dismissal of his Gracious Appeal (cf. Doc. 7);

15.11 A right which was exercised by the Claimant (cf. Doc. 8);

15.12 The Finance Service by Order of 08 May 2014, dismissed the Gracious Appeal (cf. Doc. 9).

1. As to the facts proven, the conviction of the Tribunal was based on the documentary evidence attached to the request for arbitral decision by the Claimant.

2. No other facts that could affect the merit decision, given the possible legal solutions, were proven, and which, therefore, need to be recorded as unproven.

V. APPLICABLE LAW

(i) Does the norm of subjective incidence contained in article 3, no. 1 of the CIUC establish or not a rebuttable presumption of ownership?

1. As we have seen, the main issue subject of the present decision concerns the interpretation of article 3, no. 1 of the CIUC, namely whether or not it contemplates a rebuttable or non-rebuttable presumption that the passive subjects of the tax are the owners of the vehicles, being considered as such, definitively or not, the persons in whose names the vehicles are registered.

2. Article no. 1 of the said article 3 of the CIUC provides that "The passive subjects of the tax are the owners of vehicles, being considered as such the natural or legal persons, of public or private law, in whose names the same are registered." (underlined)

3. The expression used in the said article, "is considered" raises the question of whether the same can be attributed a presumptive sense, equating it with the expression "is presumed".

4. First and foremost, reference must be made to no. 1 of article 11 of the LGT which establishes that "In determining the meaning of tax norms and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed".

5. In this framework, one cannot fail to also consider article 9 of the CC as a provision that furnishes the fundamental rules and elements for the correct and adequate interpretation of legal norms, including fiscal ones, which, in this respect, do not present any particularity that should be appreciated or weighed, except special care with the observance of the principle of legality, of the non-retroactivity of the fiscal law in certain cases and of adhesion to the principle of the prevalence of material truth over form.

6. The text of no. 1 of the said article 9 of the CC begins by saying that interpretation should not be confined to the letter of the law, but should reconstruct from the texts the legislative intent, taking especially into account the unity of the legal system, the circumstances in which the law was made and the specific conditions of the time in which it is applied.

7. Starting with the literal content of no. 1 of article 3 of the UCT, one must find the legislative intent underlying the sense of knowing whether or not it contemplates the presumption that the passive subjects are the owners of the vehicles, being considered as such, definitively or not, the persons in whose names the vehicles are registered.

8. As mentioned, the expression used in the said article "is considered" thus raises the question of whether such expression can be attributed a presumptive sense equating it with the expression "is presumed".

9. Indeed, from an analysis of our legal order, these are expressions frequently used with equivalent senses, whether at the level of rebuttable or non-rebuttable presumptions.

10. By way of mere example, within the scope of Civil Law we find, among others, article 243, no. 3 of the Civil Code when it provides that: "A third party who acquired the right after the registration of a simulation action is always considered to be acting in bad faith, where such registration has taken place", or article 314 of the same code when it provides that: "A debt is considered confessed if the debtor refuses to testify or take an oath in court, or practices in court acts incompatible with the presumption of performance".

11. Equally by way of example, one could also refer, within the scope of industrial property law, the provision of no. 5 of article 59 of the Industrial Property Code, where it is established that "Inventions whose patent has been applied for during the year following the date the inventor left the company are considered to have been made during the performance of the employment contract" as well as article 98 of the same code where also the term "considering" is used in a presumptive context.

12. Also in the tax legal order we find several legal norms that establish presumptions using the verb "consider".

13. As Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa state in General Tax Law, Annotated and Commented, 4th Edition 2012, Encontro de Escrita, Lda, Lisbon, in annotation no. 3 to article 73: "Presumptions in tax incidence matters can be explicit, revealed by the use of the expression 'is presumed' or similar (…). However, presumptions can also be implicit in incidence norms, namely of objective incidence, when certain values of movable or immovable property are considered to constitute taxable matter, in situations where it is not viable to determine the actual value (…) referring as examples, among others, articles 45, no. 2 and 46, no. 2 of the CIRS, article 21, no. 2 and 58, no. 4 of the CIRC.

14. One could equally refer to the provision of no. 6 of article 45 of the LGT when, for purposes of notification of tax assessment, it is established that "(…) notifications by registered mail are considered validly effected on the 3rd day following registration or on the 1st working day following that, when that day is not working", as well as no. 4 of article 89-A of the same Law, where a presumption is equally established, when it establishes that in situations where the passive subject does not make the proof referred to in no. 3 of the same article, it is considered as taxable income for IRS purposes, the income that results from the table contained in no. 4 of the said article.

15. Again citing Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, it is "[…] imposed on the taxpayer the burden of proving that the declared income corresponds to reality (no. 3 of art. 89-A) and, if it is not made, it is presumed that the income is that which results from the table contained in no. 4 of the same article.". In this respect, and in this same sense, it is important to refer to the Decision of the STA of 02-05-2012, Case 0381/12, and of 17-04-2013, Case 0433/13.

16. In light of the above, it can be concluded that it is not only when the term "presume" is used that we are faced with a presumption. The verb "consider" is recurrently used with a purpose and equivalent meaning, which, in this Tribunal's view, is precisely the case of no. 1 of article 3 of the CIUC, being an understanding that is in complete harmony with the provision of no. 2 of article 9 of the CC, which requires that the legislative intent have in the letter of the law a minimum of verbal correspondence

17. One must also take into account the rational or teleological element. In this regard, article 1 of the CIUC states under the heading "principle of equivalence" that "The Unique Circulation Tax is subject to the principle of equivalence seeking to burden taxpayers in proportion to the environmental and road cost that they cause, in implementation of a general rule of tax equality".

18. Still in this respect, it is worth recalling the explanatory memorandum of Bill no. 118/X of 07 March 2007, which carried out the overall reform of automobile taxation, approving the Code of Tax on Vehicles (ISV) and the UCT, when it mentions that the said reform results from the need not only to bring clarity and coherence to this area of the fiscal system, but above all from the need to subordinate it to the principles and concerns of an environmental and energy order.

19. Indeed, the reform of automobile taxation is implemented through the displacement of part of the fiscal burden from the moment of acquisition of vehicles to the phase of circulation of the same.

20. The same Bill further states that the two new taxes certainly aim to raise public revenue, but raise it in proportion to the cost that each individual causes to the community, adding in Annex II, regarding UCT, that "as a structuring and unifying element (…) the principle of equivalence is established, thus making it clear that the tax, as a whole, is subordinate to the idea that taxpayers should be burdened in proportion to the cost they cause to the environment and the road network, this being the reason for this tax figure".

21. It is thus a structuring principle of the UCT that should be taken into account in the interpretation of article 3 of the UCT relating to subjective incidence, in that it intends to tax the passive subject owner of the vehicle on the premise of being that the real and effective subject causing road and environmental damage.

22. Now taking into account the historical element in the interpretation of article 3 of the UCT, the Respondent Authority alleges in its Response that the tax legislator determined that those persons in whose names the vehicles are registered are considered as owners, not using the expression "are presumed" as it could have done.

23. Indeed, from the creation of the tax by Decree-Law no. 599/72, of 30 December, until the last statute in force before the entry of the current regime, a presumption was established regarding the passive subjects of the tax, these being the owners of the vehicles, being presumed as such the persons in whose names the same were registered.

24. The legislator subsequently chose to use the expression "is considered" instead of the expression "is presumed".

25. Now, as already mentioned, and given various examples, in our legal order, namely in the tax legal order, the said expressions are frequently used with equivalent senses, whether at the level of rebuttable or non-rebuttable presumptions.

26. This occurred in article 3, no. 1 of the CIUC in which a presumption was established revealed by the expression "is considered" and contrary to the position expressed by the Tax Authority, this Tribunal understands that there is merely a semantic question that does not alter the content of the norm in question.

27. Taking into account the various interpretation elements set forth, all point toward the sense that the expression "is considered" has an equivalent sense to the expression "is presumed", and thus should be understood that article 3, no. 1 of the CIUC establishes a legal presumption that, in light of article 73 of the LGT should be considered as a non-rebuttable presumption, and cannot be accepted as the Tax Authority wishes, that the passive subjects of UCT are only those appearing in the vehicle register as owners of the vehicles.

28. Added to this is the fact that Decree-Law no. 54/75, of 12 February, relating to the registration of automobiles (CRA), not providing any norm of a constitutive character regarding vehicle ownership registration, merely establishes in no. 1 of article 1 that "The registration of vehicles has essentially the purpose of publicizing the legal situation of motor vehicles and their respective trailers, with a view to the safety of legal commerce".

29. And, in accordance with article 7 of the CRP applicable supplementarily to vehicle registration by referral of article 29 of the CRA, it determines that registration merely "(...) constitutes a presumption that the right exists and belongs to the person inscribed, in the precise terms in which the registration defines it".

30. In this regard, the Supreme Court of Justice (STJ) has ruled in learned Decisions of 19/02/2004 and 29/01/2008, issued in Cases nos. 03B4369 and 07B4528 respectively, concluding that definitive registration constitutes a rebuttable presumption that the right exists and belongs to the person inscribed, thus admitting proof to the contrary.

31. In these terms, it can be concluded for the situation under analysis that the function of the registration is to publicize the legal situation of vehicles, being presumed that they belong to the person inscribed in the terms in which the registration defines it, with registration not constituting a condition of validity for the transfer of the vehicle from seller to buyer.

32. Buyers thus become owners of vehicles through the execution of sales and purchase contracts, independently of registration.

33. It should also be noted in this regard, article 408, no. 1 CC which establishes that the transfer of real rights over things, in this case automobiles, is determined by the mere effect of the contract.

34. Thus, in light of what has been mentioned, it cannot be overlooked that the provision of article 3, no. 1 of the CIUC constitutes a legal presumption rebuttable by force of article 73 of the LGT, thus allowing that the person who is registered in the register as owner of the vehicle, may present evidence to demonstrate that he is no longer the owner since the ownership of the vehicle in question has been transferred to another person.

35. It should be that other person, properly identified by the presumed owner, to whom the Tax Authority should turn to effect the UCT assessment that is due whenever the person indicated in the register as owner of the vehicle manages to provide sufficient proof of not being and or no longer being, at the date of the occurrence of the tax event, the owner of the vehicle subject to such tax.

36. In this way, in accordance with paragraph a) of no. 1 of article 60 of the LGT, the tax relationship may be reconfigured, if the taxpayer comes to demonstrate in the course of prior hearing, gracious appeal and or another appropriate tax procedure that he is not the true owner of the vehicle, redirecting the appropriate tax procedure to whoever is the true passive subject of the tax in question.

37. Thus, when the Tax Authority considers that the passive subjects of UCT are only the persons in whose names the automobiles are registered, without taking into account the evidentiary elements that may be presented to it, it is proceeding with an improper assessment of the tax based on an erroneous and mistaken interpretation of article 3, no. 1 of the CIUC.

38. One can, naturally, admit that the expression "is presumed" is clearer and more peremptory than the expression "is considered"; but it does not follow either logically or teleologically from this that both expressions must necessarily have a divergent or even different sense.

39. The example given by the Respondent Authority, based on article 17 - we suppose referring to its no. 2 - of the CIRC, is a typical case of such an error of law that leads, in this case, to the invalidity of the UCT assessments in dispute.

40. Let us see: the above-mentioned legal precept of article 17, no. 2 of the CIRC determines exactly the following: "For purposes of the provision of the previous number, the net surpluses of cooperatives are considered as the net result of the fiscal year." (underlined)

41. Read only this norm, it could be a norm of objective incidence or nothing more or a norm establishing a mere rebuttable legal presumption or not.

42. In reality, it is clearly and unequivocally a norm of objective incidence pure and simple.

43. This is because the rule of said no. 2 of article 17 of the CIRC begins by referring to the previous no. 1 of the same article which, in turn, refers us to paragraph a) of no. 1 of article 3 of the same CIRC.

44. This latter precept, using, it should be said en passant, a debatable legislative technique, establishes that the basis of this tax - CIRC - is constituted by "(...) the profit of commercial societies or civil societies in commercial form, of cooperatives (...)." (underlined)

45. Now, in proper terms, cooperatives do not give and cannot even give profit in the legally applicable sense of the term, therefore their results cannot be expressed, contrary to those of commercial societies and or civil societies in commercial form as net results of the fiscal year, in the strict accounting and fiscal sense of the term.

46. Thus, only from the combination of these two legal precepts of CIRC - article 3 no. 1, paragraph a) and article 17, nos. 1 and 2 can the true economic nature of cooperative surpluses which constitute a taxable base in CIRC be achieved.

47. For which reason, in an interpretation not only with literal correspondence, but also teleological and systematic of the said legal precepts of CIRC one can conclusively and unquestionably conclude that the expression "are considered" enshrined in the above-mentioned article 17, no. 2 of the CIRC cannot, in any case, be taken as a presumption, rebuttable or not, but rather and only as part of a norm, as a whole, absolutely prescriptive and imperative.

48. Nor does it seem pertinent, for purposes of understanding the norm of article 3, no. 1 of the CIUC as a prescriptive or imperative disposition, its comparison with the provision of article 6 no. 1 of the same statute, contrary to what was sustained by the Respondent Authority.

49. In truth, while in the example given by the Respondent Authority itself - articles 3, no. 1 paragraph a) and 17, no. 2 of the CIRC - we analyzed and compared, in order to determine the nature of this latter legal precept, norms of objective incidence in both cases, in the situation of the norms of no. 1 of article 3 of the CIUC and article 6 no. 1 of the same statute, the Respondent Authority seeks to clarify the sense of the first rule - norm of subjective incidence – by comparison with the provision of the second – norm of territorial incidence and which aims to determine the tax event.

50. That is, the Respondent Authority seeks to justify its thesis regarding the prescriptive or imperative character, rather than presumptive, of the norm of subjective incidence of no. 1 of article 3 of the CIUC – which determines only the passive subject of the tax, in our view, the owner of the vehicle, being presumed to be the one appearing in the vehicle register, a presumption, in our view, non-rebuttable - with a norm of a completely different nature that allows neither to clarify nor to clarify the sense of the first - the norm of territorial incidence and defining the tax event - which, by definition, clarifies the field of application and the fact that determines the assessment of the tax but neither even remotely and or implicitly its respective passive subject.

51. This is why the Respondent Authority, in our view, has no legal support either for the comparison it seeks to make with the said norm of article 17, no. 2 of the CIRC - and, it should be added, with the other norms of CIRC cited in its, indeed, learned Response – nor with the systematic analysis it sought to make of the CIUC by applying the norm of article 3, no. 1 by comparison with no. 1 of article 6 of that same statute.

52. It is, moreover, enlightening that the Respondent Authority, in its learned Response makes only reference to norms of objective incidence and no reference to norms of subjective incidence, we suppose because it does not occur to it any comparison or relevant analogy in this latter and decisive domain for the question of the present proceedings.

53. Now, it is known that income and or valuations or still determinations of the collectible matter in taxes can, in the absence or extreme difficulty, for reasons of proof and or tax administration, be fixed according to objective criteria determined by tax law, as well as tax law can and must determine objective criteria as to the verification of tax events and the date or moment of such verification and still objective criteria - even if the latter can be subject to the application of conventions to avoid double taxation in certain cases - for the territorial incidence of taxes.

54. But it would seem abusive to us that tax law could fix non-rebuttable presumptions or, worse, prescriptive or imperative norms, about who is the passive subject of a tax based on a mere registration of ownership of a property, it being known that such a registration is itself merely a presumption, clearly rebuttable, of such a title of ownership.

55. We think it must have been for these and other founded reasons that it has been peaceful understanding in arbitral decisions to the effect of concluding, as this Tribunal also now concludes, that no. 1 of article 3 of the CIUC establishes a rebuttable presumption, thus admitting that, notwithstanding the registration of ownership of the vehicle still being in the name of the passive subject, he may demonstrate not to be the owner on the date of tax assessment and, as such, not be responsible for the payment thereof.

(ii) Rebuttal of the presumption

1. As already considered here, presumptions of tax incidence can be rebutted through the appropriate contentious procedure provided for in article 64 of the CPPT or through gracious appeal or judicial challenge of the tax acts based thereon.

2. In the present case, as mentioned in point 13 of this decision regarding the proven facts, the Claimant in the course of prior hearing, and through the presentation of a Gracious Appeal, came to allege with the purpose of setting aside the presumption, that he is not the passive subject of UCT because, on the date of the tax event of that tax and of the maturity of the payment obligation of the same he had already ceased to be the owner of the vehicle in question.

3. To rebut the presumption derived from the vehicle registration entry, the Claimant presented as evidence a "Trade-in Responsibility Certificate", signed by himself and by the legal representative of company B - Vehicle Commerce, Ltd., which confirms that the vehicle in question was sold on 06/08/2009 to the said company.

4. He also presented a "Vehicle Registration Request" submitted on 18/07/2012 and respective proof of completion of registration dated 20/07/2012, in which the date of transfer of ownership of the vehicle is 06/08/2009.

5. Regarding the documents delivered by the Claimant, the Respondent Authority alleges that he intends to "contradict the full legal proof constituted by the registration through the presentation of unilateral private documents, which have diminished probative value within the scope of substantive evidentiary law (…)".

6. Now, with all due respect to a contrary opinion, the Arbitral Tribunal understands that the documents presented by the Claimant constitute a means of proof with sufficient force to rebut the presumption of article 3 of the CIUC.

7. Indeed, in accordance with civil law, article 219 of the CC, in the situation in question, we are faced with sales and purchase contracts of movable things that are not subject to any special formalism.

8. Notwithstanding that we are in situations where registration is mandatory, we cannot conclude that only the model of vehicle registration, signed by both parties, is the sole and exclusive means of proof to rebut the presumption of ownership as the Respondent Authority states.

9. In fact, the Tribunal understands that private documents, unilateral or bilateral, do not have diminished probative value. They only do not make full proof against authentic documents.

10. There is nothing in civil law that leads us to affirm that private documents have a value of diminished proof for purposes of rebutting a legal presumption or for any other probative value against authentic documents or documents drawn from public registers.

11. A different understanding would lead to the result that a public register, such as the vehicle register, instead of establishing a mere rebuttable presumption regarding the facts subject to it, in practice, given the foreseeable scarcity of means of proof to the contrary that would be admitted, would establish a non-rebuttable presumption, which would be contrary to the legal nature of any public register, especially of a register of movable property such as the vehicle register.

12. The aforementioned means of proof presented by the Claimant enjoy the presumption of truthfulness conferred upon them by article 75, no. 1 of the LGT, thus appearing with sufficient force to rebut the presumption based on the register, as enshrined in no. 1 of article 3 of the CIUC.

13. From the documents presented it appears that, on the dates when UCT was exigible – 2010, 2011 and 2012 - the Claimant was already no longer the owner of the vehicle in question, as he had sold it on 06/08/2009.

14. The assessments in question should therefore be subject to annulment with the consequent restitution of the tax wrongfully collected from the Claimant as the said UCT assessments of the proceedings are invalid as they are vitiated by the defect of violation of law by error of fact and of law in the prerequisites of the tax act.

(iii) Right to interest from the date of payment until effective and complete reimbursement

1. The Claimant requests reimbursement of the amounts wrongfully paid "plus compensatory interest" from the date of payment until effective and complete reimbursement.

2. The Arbitral Tribunal gives as mere lapse of writing and or error of law, in any case curable by the Tribunal, the expression "compensatory interest", considering that the Claimant intended to petition for the payment of indemnificatory interest.

3. Pursuant to article 24, no. 5, of the RJAT, the right to the mentioned indemnificatory interest can, moreover, be recognized in the arbitral process.

4. No. 1 of article 43 of the LGT establishes that indemnificatory interest will be due "when it is determined, in gracious appeal or judicial challenge, that there was error attributable to the services from which resulted payment of the tax debt in an amount greater than legally due".

5. Now, the case in question raises the question of determining whether or not there was error attributable to the Tax Authority.

6. Making reference to points 49 to 52 of the present Decision, in considering that article 3, no. 1 of the CIUC establishes a rebuttable presumption, the presumed owner may rebut that presumption by demonstrating that he is no longer the owner of the vehicle in question.

7. The Tax Authority should therefore, before effecting the tax assessment, turn to the other passive subject identified as the true owner of the vehicle.

8. The prior hearing, which takes place at a moment immediately prior to the assessment procedure, is the appropriate time to identify the true passive subject of the tax.

9. Making reference once again to Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, in the already cited General Tax Law, Annotated and Commented, in annotation no. 5 to article 36, the assessment procedure serves solely to render certain the tax obligation and, consequently, exigible.

10. In this respect, the cited authors further state in annotation no. 5 to article 55, that in the domain of tax procedure the principles of justice and impartiality impose on the Tax Administration the duty to be guided by "(…) criteria of impartiality in the investigation of factual situations, carrying out all necessary steps to investigate material truth, regardless of whether the facts to be investigated are contrary to the patrimonial interests that the tax administration is charged with defending".

11. It should also be noted, article 58 of the LGT which determines that "The tax administration must, in the procedure, carry out all necessary steps to satisfy public interest and the discovery of material truth, not being subordinated to the initiative of the party requesting the action".

12. In annotation to this article 58 of the LGT, and making reference once again to Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, in General Tax Law, Annotated and Commented, the said authors note that it is incumbent on the administration a dynamic role in the gathering of elements relevant to the decision, adding that the "(…) lack of diligences deemed necessary for the construction of the factual basis of the decision will affect it not only in the hypothesis of them being mandatory (violation of the principle of equality), but also if the materiality of the facts considered is not proven or if, in that basis, relevant facts alleged by the interested party are missing, by insufficiency of proof that the Administration should have gathered (…)".

13. In the case in question, and following what has been said here, the Tax Authority should have identified the true owner as the passive subject of UCT and not the seller as the virtual owner of the vehicle in question.

14. And faced with the matter of fact given as proven, it is certain that the Claimant did not fail at any moment in his duty of cooperation, having even, in exercise of his right to prior hearing before the UCT assessments in dispute, through gracious appeal and also prior hearing to the draft dismissal of his appeal, clearly and unequivocally identified and produced the proof that was his responsibility to make before the Respondent Authority regarding the sufficient identification of the true and actual owner of the vehicle relevant to these proceedings and the date of the effective transfer of ownership of that property to himself, such date being – 06/08/2009 - clearly anterior to the date of the tax events of the UCT assessments now in dispute – 2010, 2011 and 2012.

15. In light of the above, it can be concluded that we are faced with an error attributable to the Tax Administration and therefore, the claim for condemnation of the Respondent in the payment to the Claimant of indemnificatory interest is decided in favor, in accordance with the terms provided for in article 43, no. 1 of the LGT.

VI. DECISION

1. In light of the above, the Arbitral Tribunal decides:

102.1. To judge as wholly well-founded and proven the claim for arbitral decision submitted by the Claimant regarding the character of mere rebuttable presumption of subjective incidence of article 3 of the CIUC, rendering as well-founded and proven the fulfillment by the Claimant of his burden of rebutting such presumption, through documents and means of proof deemed suitable for that purpose, with the consequent declaration of annulment of the assessments sub judice by invalidity resulting from the defect of violation of law by error of fact and of law in the prerequisites of the tax acts; and also in consequence;

102.2. To condemn the Respondent Authority to restitution or reimbursement within the statutory period to the Claimant of the total amount of taxes wrongfully paid by him in the amount of € 212.27 (two hundred and twelve euros and twenty-seven cents); and, still in consequence,

102.3. To condemn the Respondent Authority to the payment of indemnificatory interest within the statutory period in accordance with the terms and for the purposes of article 43 of the LGT, counted from the date of payment of the taxes of the proceedings until effective and complete reimbursement, to be liquidated in execution of arbitral judgment.

1. The value of the action is fixed at € 212.27 (two hundred and twelve euros and twenty-seven cents), in accordance with the terms of article 97-A, no. 1, paragraph a), of the CPPT, applicable by virtue of article 29, no. 1, paragraph a), of the RJAT.

2. The value of the Arbitration Fee is fixed at € 306.00 (three hundred and six euros) to be paid by the Respondent Authority, in accordance with Table I of the Regulation of Costs of Tax Arbitration Proceedings, of article 12, no. 2.22 and no. 4, of the RJAT and article 4 of the said Regulation.

3. It is determined that the amount of € 153.00 (one hundred and fifty-three euros) paid by the Claimant on 07 August 2014, corresponding to the value of the initial court fee, shall be refunded in accordance with the grant of legal aid in the form of exemption from court fees, granted on 03 September 2014.

Notice to be given.

Lisbon, 30 January 2015.

The appointed Arbitrator,

Paulino Brilhante Santos