IUC Subjective Incidence: Vehicle Tax Liability After Ownership Transfer - CAAD 424/2018-T

ARBITRAL DECISION

I – REPORT

A... BRANCH IN PORTUGAL, hereinafter referred to as the Claimant, a collective entity no...., domiciled at Rua ..., ..., Lisbon, area of the ... Lisbon Tax Authority Office, domiciled at Rua..., ..., ..., Lisbon, in the capacity of incorporating entity, by merger, of the company, meanwhile extinguished, B...– FINANCIAL CREDIT INSTITUTION, SA ("A...", hereinafter), former collective entity no...., which had its registered office at the same address, filed a request for establishment of an Arbitral Tribunal and for arbitral decision on 03.09.2018, which was accepted and automatically notified to the Tax and Customs Authority ("AT"), in its capacity as the Respondent.

The Claimant contests the legality of the partial dismissal dispatch, dated 12.04.2018, of the Lisbon Finance Directorate, which dismissed the request for Official Revision presented against the assessments of Unique Vehicle Tax (IUC) and compensatory interest (JC) relating to the years 2009 to 2014, inclusive, in the total amount of € 20,876.24 – which was processed under the number ...-2017/... (RO .../2018), as well as the legality of these same assessments of IUC and JC, requesting their respective annulment. It further requests the restitution of the tax and compensatory interest paid, as well as the payment of indemnitory interest.

The Claimant bases its request, globally, on the fact that the assessments referred to vehicles whose IUC taxpayer was no longer, at the moment in which the tax fact occurred, A... (the company that incorporated), which, in its view, constitutes an error regarding the factual and legal prerequisites with the consequent violation of article 3 of the IUC Code (CIUC).

The Claimant did not appoint an arbitrator, wherefore pursuant to the provisions of article 6, no. 2, paragraph a) and article 11, no. 1, paragraph a) of RJAT, the President of the Ethics Committee of CAAD appointed the undersigned as arbitrator of the Singular Arbitral Tribunal, which communicated acceptance of the appointment within the applicable time frame.

On 23.10.2018, the parties were notified of this appointment, having manifested no will to refuse it.

In accordance with the requirements of article 11, no. 1, paragraph c) of RJAT, the Singular Arbitral Tribunal was established on 13.11.2018.

On 12.12.2018, the Respondent, duly notified for this purpose, filed its response defending itself by way of opposition.

Through a dispatch of 01.04.2019, the tribunal notified the Claimant to indicate the facts on which it intended to offer testimonial evidence. In response, the Claimant informed the tribunal that upon re-examining the case files, it had concluded that the factual matter relevant to the merit decision was already sufficiently demonstrated through the documentary evidence produced, and that the witnesses indicated had already been heard in other arbitral proceedings, identical to the present case, of which the respective arbitral decisions were attached to the arbitral request, taking advantage in the present case of the testimonial depositions made there, pursuant to article 421, no. 1 of CPC, by virtue of article 29, no. 1, e) of RJAT.

Through a dispatch of 30.04.2019, the Tribunal communicated to the Parties the option to submit written arguments, having granted to the Claimant a time limit of 10 days counted from notification of this dispatch and to the Respondent the same time limit counted from the submission of arguments by the Claimant or the end of the time limit for this purpose. Furthermore, it extended the time limit for decision by two months, until 13.07.2019.

Summary of the Claimant's position

The Claimant argues that the Tax and Customs Authority, in proceeding with the disputed assessments, based itself solely on the information contained in the Vehicle Register (IRN – Institute of Registers and Notary, and IMTT – Institute of Mobility and Land Transport), which would not be current in cases of failure to "note" any lessee and of the vehicles still being registered in the name of A... on the dates of the IUC due dates (anniversary dates of the vehicles in relation to the initial registration date) despite having already been disposed of on those dates.

The Claimant informs that the following documents were attached to the request for Official Revision:

Document no. 1: summary table relating to 492 IUC self-assessments relating to the vehicles identified by their respective registration number;

Document no. 2: copies of the collection notes that were paid;

Document no. 3: dossier relating to each of the vehicles under analysis which includes copy of financial leasing contracts and operational leasing contracts with promise of sale, as well as sale invoices according to the cases;

Document no. 4: table relating to vehicles allocated to financial leasing contracts and operational leasing contracts with promise of sale;

Document no. 5: table relating to vehicles that were disposed of before the date of IUC due date.

The Claimant alleges, on the one hand, the illegality of IUC assessments (by violation of article 3, no. 2 of CIUC) relating to vehicles subject to financial leasing contracts or operational leasing.

On the other hand, it alleges that the tax acts sub judice are based on error regarding the prerequisites, insofar as it was no longer the owner of the motor vehicles at issue here at the moments when the obligation to assess the respective IUC became due, despite the vehicle register indicating the Claimant as the owner thereof.

Summary of the Respondent's position:

The AT understands, generically, that the understanding propounded by the Claimant derives from a biased reading of the letter of the law and the adoption of an interpretation that does not heed the systematic element, violating the unity of the scheme established throughout the CIUC and, more broadly, throughout the entire legal-fiscal system and further derives from an interpretation that ignores the ratio of the scheme established in the article in question, as well as throughout the CIUC.

Regarding the jurisprudence invoked by the Claimant, the AT notes that the same has no value of binding precedent, but merely a persuasive value. On the other hand, it emphasizes that the more recent jurisprudence of arbitral tribunals at CAAD has followed a different orientation, citing by way of example processes no. 126/2014-T and no. 220/2014-T.

The AT further argues the following:

• The application of article 3 of the CIUC must be combined with the provisions of article 19 of the same code, in which it is established that "for the purposes of article 3 of this code (…), entities that proceed with financial leasing, operational leasing or long-term rental of vehicles are obliged to provide the General Tax Authority with data relating to the identification of users of leased vehicles." Thus, were one to follow the thesis propounded by the Claimant regarding the fact that article 3 of the CIUC establishes a rebuttable presumption, then it would necessarily follow that the operation of that article (i.e., the rebuttal of the presumption) equally depends on compliance with what is established in article 19 of the CIUC, as can be inferred from its literal element ("for the purposes of article 3 of this code (…)").

• Regarding the assessments relating to vehicles disposed of before the due date of the tax, the understanding propounded by the Claimant incurs not only a biased reading of the letter of the law, but also the adoption of an interpretation that does not heed the systematic element, violating the unity of the scheme established throughout the CIUC and, more broadly, throughout the entire legal-fiscal system and further derives from an interpretation that ignores the ratio of the scheme established in the article in question, as well as throughout the CIUC.

• The tax legislator, in establishing in article 3, no. 1 who are the taxpayers of the IUC, expressly and intentionally established that these are the owners (or in the situations provided in no. 2, the persons therein named), considered as such the persons in whose name the same are registered.

• Note that the legislator did not use the expression "are presumed," as it could have done, for example, in the following terms: taxpayers of the tax are the owners of the vehicles, presumed as such the natural or legal persons, of public or private law, in whose name the same are registered. In contrast, the tax normative is full of provisions analogous to that established in the final part of no. 1 of article 3, in which the tax legislator, within its freedom of legislative configuration, expressly and intentionally, establishes what should be considered legally, for the purposes of incidence, of income, of exemption, of determination and of periodization of taxable profit, for the purposes of residence, of location, among many others. Therefore, if it were understood that by using the expression "is considered" the tax legislator would have established a presumption, practically all the norms of incidence under Corporate Income Tax would be set aside precisely because the accounting prescribes solutions different from those of the Corporate Income Tax Code, being exactly the purpose of the legislator to set aside such accounting rules.

• Also the systematic element of interpretation of the law demonstrates that the solution propounded by the Claimant is untenable, finding the understanding advocated by it no support in the law. Even assuming that, from the point of view of the rules of civil law and real property registration, the absence of registration does not affect the acquisition of the quality of owner and that registration is not a condition of validity of contracts with real effect, as established in the CIUC (which in the case at hand constitutes special law, which, under general rules of law, derogates from the general norm), the tax legislator intentionally and expressly wanted that those considered as owners, lessees, acquirers with reservation of ownership or holders of the right of purchase option in long-term rental, were the persons in whose name the vehicles are registered.

• In light of a teleological interpretation of the scheme established throughout the CIUC, the interpretation propounded by the Claimant in the sense that the taxpayer of the tax is the effective owner, regardless of not appearing in the vehicle register as the holder of such quality, is manifestly incorrect. And it is an incorrect interpretation insofar as it is the very ratio of the scheme established in the CIUC that constitutes clear proof that what the tax legislator intended was to create a tax based on the taxation of the owner of the vehicle as it appears in the vehicle register. And this precisely because the new scheme of taxation of the IUC came to substantially alter the scheme of motor vehicle taxation, with taxpayers of the tax now being the owners appearing in the property register, regardless of the circulation of the vehicles on the public road.

• Regarding the documents attached to the case files by the Claimant to prove the petitioned, the Respondent understands that the invoices and copies of vehicle rental contract without driver are insufficient. The invoices are not apt to prove the celebration of a synallagmatic contract such as a purchase and sale, as such documents do not reveal by themselves an indispensable and unequivocal declaration of will (i.e., acceptance) on the part of the alleged acquirers. The unequivocal declaration of will of the alleged acquirers could be evidenced through the attachment of a copy of the said official form for registration of motor vehicle property, as it is a document signed by the intervening parties. However, the Claimant did not attach copies of the said official form for registration of motor vehicle property when it could and should have done so, namely in the request for the petition for arbitral decision, and is now precluded from doing so at a later moment. Furthermore, the lack of synallagmatic character of the invoices could be supplied through proof of receipt of the price therein stated by the Claimant. The Claimant did not attach documentary proof of receipt of the price when it could and should have done so, namely in the request for the petition for arbitral decision, and is now precluded from doing so at a later moment, in accordance with [the applicable rules].

• Regarding indemnitory interest and costs, the AT understands that the same are not due or of its responsibility insofar as the IUC is assessed in accordance with the registral information duly transmitted by the Institute of Registers and Notary and not in accordance with the information generated by the Respondent itself. Now, having the Claimant not taken care to update the vehicle register, as it moreover could and was incumbent upon [article 5/1-a) of Decree-Law 54/75, of 12 February, and article 118/4 of the Road Code], and not having ordered the cancellation of the registrations of the vehicles at issue here, it is necessary to conclude that the Claimant did not proceed with the diligence required of it. And in not having proceeded with the diligence required of it, it led inexorably the Respondent to limit itself to giving effect to the legal obligations to which it is bound and, in parallel, to follow the registral information that was provided to it by the competent party. Consequently, the Claimant should be condemned to the payment of arbitral costs arising from the present petition for arbitral decision, pursuant to article 527/1 of CPC by virtue of article 29/1-e) of RJAT, in line, moreover, with a similar issue decided in the context of the process that, under no. 72/2013-T, took place in this arbitration center. The same reasoning applies to the petition for condemnation to the payment of indemnitory interest formulated by the Claimants.

For the reasons set out, the AT concludes for the lack of success of the arbitral request.

II. PROCEDURAL REQUIREMENTS

The Arbitral Tribunal is materially competent and is regularly established, pursuant to articles 2, no. 1, paragraph a), 5 and 6, no. 1, of RJAT.

The parties have legal personality and capacity, are legitimate and are legally represented, as provided in articles 4 and 10 of RJAT and article 1 of Ordinance no. 112-A/2011, of 22.03.

The action is timely and the proceedings do not suffer from any nullities.

Regarding the joinder of claims made by the Claimant, considering the existence of a direct relationship between the tax assessments whose legality is questioned in the present proceedings, nothing prevents the joint consideration of the tax acts in question, given that, in view of what is alleged and the documentation attached, it is found that, essentially, any success of the claim depends on the same factual circumstances and on the interpretation and application of the legal norms relating to the subjective incidence of the IUC. Thus, there will be essentially a matter of consideration of the same factual circumstances and the application of the same legal norms concerning the subjective incidence of the IUC, and the joinder of claims is legal, pursuant to article 3 of RJAT and 104 of CPPT.

III. LEGAL REASONING

A. MATTER OF FACT

A.1. Proven facts

The Claimant incorporated A... by cross-border merger, with global transmission of the patrimony (assets and liabilities) of A..., allocation of the same patrimony to the Claimant (branch in Portugal) and consequent extinction of A....

A... is a Financial Institution which, within the scope of its corporate purpose, engages in operations permitted to Banks, with the exception of deposit-taking.

Within the scope of its corporate purpose, A... enters into contracts with its clients for Long-Term Rental (ALD) and Financial Leasing (leasing) of motor vehicles.

It has also entered into contracts of a different nature with its clients, among which stand out vehicle rental contracts without driver with promise of sale, financial leasing contracts and financing contracts.

A... acquires new vehicles from national importers C... and D... and as a rule leases – leasing (financial leasing) or ALD (long-term rental) – these same vehicles in favor of third parties.

After the end of such contracts, A... proceeds with the transmission of the property of the vehicles to the corresponding lessees or to third parties, at a residual value.

In exceptional cases, A... grants credit/financing to third parties for motor vehicle acquisition, reserving, however, the ownership of the vehicles.

The Claimant was notified of the disputed assessments, relating to the years 2009 to 2014, in the total amount of € 20,876.24.

The Claimant proceeded to pay the disputed assessments, both of tax and compensatory interest, within the respective time limit for payment.

The Claimant submitted a request for official revision relating to the assessments identified in the previous point, on 07.09.2017, which came to be processed under the number ...2017... (RO .../2018).

The request was dismissed by dispatch of 2018-04-12 from the Head of the Tax Justice Division of the Finance Directorate of Lisbon.

The vehicles identified in document 7 attached with the petition for arbitral decision were subject to a financial leasing contract, to a vehicle rental contract without driver with promise of sale or to a vehicle rental contract without driver on the date on which the tax-generating fact occurred.

The remaining vehicles that gave rise to assessments of IUC and compensatory interest at issue in this proceedings, on the date of each of the tax facts at issue in the case files, had already been disposed of by the Claimant.

A.2. Facts not proven

With relevance to the decision there are no alleged facts that should be considered not proven.

A.3. Reasoning regarding the proven and unproven facts

The facts pertinent to the judgment of the case were chosen and delineated in function of their legal relevance, in light of the plausible solutions to the legal questions, pursuant to the combined application of articles 123, no. 2, of the Code of Tax Procedure and Process ("CPPT"), and 596, no. 1 and 607, no. 3 of the Code of Civil Procedure ("CPC"), by referral of article 29, no. 1, paragraphs a) and e) of RJAT.

Allegations made by the parties, presented as facts, consisting of statements that are strictly conclusive, insusceptible of proof and whose veracity is to be assessed in relation to the concrete factual matter established, were not given as proven or unproven.

As regards the proven facts, the conviction of the arbitrator was based on the positions assumed by the parties and on critical analysis of the documentary evidence attached to the case files.

B. ON THE LAW

The fundamental question at issue in the present proceedings consists in ascertaining whether the facts alleged by the Claimant constitute reasons for exclusion of the subjective incidence of tax and if, consequently, it should be considered that the impugned acts suffer from error regarding the prerequisites of the tax fact, which would constitute a defect of violation of law determining its respective annulment, with the due legal consequences.

The Claimant bases its request on the argument that the prerequisites for subjective incidence provided in article 3 of the CIUC are not met, namely because, on the dates of the IUC due date relating to the vehicles in question, A... either (1) had leased those vehicles in favor of third parties, or (2) was not even the owner of the vehicles in question, by having already sold them to the lessees or to third parties.

It invokes the provisions of article 3 of the CIUC, pursuant to which those responsible for the payment of the IUC are the owners of the vehicles on the date of the due date of the IUC, namely, on the date of registration or on the anniversary dates in relation to the date of registration (no. 1 of article 3 of the CIUC), and also the "(…) financial lessees, acquirers with reservation of ownership, as well as other holders of purchase option rights by force of the leasing contract" on the same date, since these are equated with the owners of the vehicles (no. 2 of article 3 of the same statute).

It argues that the sales of A... to third parties occur on the date of the issuance of the invoices by A... to those third-party buyers – invoices that therefore evidence the sales of the vehicles – and that the sale price is paid to A... on the date of the issuance of the sale invoice.

It further argues that the principle of equivalence – provided in article 1 of the CIUC – is the fundamental principle of taxation under the IUC, making clear that taxpayers should be burdened in the measure of the environmental impact they cause to the environment and road network, thus enshrining the polluter-pays principle. To that extent, the burden of tax assessment cannot be reconciled with the mere appearance that the alleged vehicle owners will be the causers of that environmental – and road – damage. Now, A... was never the real polluter and causer of environmental damage, insofar as it merely leased the said vehicles and sold them, in cases where the leasing contracts had already ended.

(1) Vehicles covered by a financial leasing contract, by a vehicle rental contract without driver with promise of sale or by a vehicle rental contract without driver on the date on which the tax-generating fact occurred.

The facts alleged by the Claimant were considered proven regarding this set of assessments, namely, that the vehicles to which the tax assessed through these assessments related were subject to a financial leasing contract on the date on which the tax-generating fact occurred.

The Respondent understands, however, that it was incumbent on the Claimant to demonstrate that it had complied with the ancillary obligation imposed by article 19 of the CIUC. In this regard, see, by way of example, what is stated in the arbitral decision rendered in process no. 14/2013-T, of 15/10/2013: "the financial lessee is equated to the owner for the purposes of no. 1 of article 3 of the CIUC, the same is to say to be taxpayer of the IUC (cfr. no. 2 of art. 3). [...] not having the lessor, by legal and contractual imposition, the potential for use of the vehicle and having the lessee the exclusive enjoyment of the vehicle, [and reaffirming] the conclusion to which we had already arrived that [...] the ratio legis of the CIUC demands that, pursuant to the said no. 2 of article 3 of this Code, the lessee be responsible for the payment of the tax, since it is the lessee who has the potential for use of the vehicle and causes the road and environmental costs inherent thereto. The same conclusion is reached when the importance given to users of leased vehicles in article 19 of the CIUC is verified. In fact, pursuant to the provisions of this article, entities that proceed, namely, with the financial leasing of vehicles are obliged to provide the AT (former DGCI) with the tax identification of users of leased vehicles for the purposes of the provisions of article 3 of the CIUC (subjective incidence), as well as of no. 1 of article 3 of the Law of its approval, since pursuant to this norm of Law no. 22-A/2007, if the revenue generated by the IUC is incident on vehicles subject to long-term rental or operational leasing, it must be allocated to the municipality of residence of the respective user (underlined). [...] [But, despite this obligation, this does not prevent that,] on the date of the occurrence of the tax-generating fact, a financial leasing contract that has as its object a motor vehicle is in force, for the purposes of the provisions of article 3, nos. 1 and 2, of the CIUC, [and that the] taxpayer of the IUC is the lessee even if the registration of the right of property of the vehicle is made in the name of the leasing entity, provided that it proves the existence of the said contract."

The AT's allegation relating to article 19 of the CIUC aims at superimposing a formal obligation on a substantial reality self-demonstrative of the Claimant's condition as a leasing entity in the underlying contracts. However, the fact that the obligation provided in article 19 of the CIUC has not been complied with does not have the effect of obscuring the existence of a leasing contract or the condition that derives from it for the respective parties.

Thus, regarding these assessments, by having been proven that, effectively, on the dates on which the tax-generating facts occurred, the vehicles on which the tax is assessed were covered by contracts in which the Claimant occupied the position of lessor, it is considered, pursuant to the provisions of article 3, no. 2, of the CIUC that the Claimant is correct, and the assessment acts should be annulled, by invalidity resulting from error regarding the factual and legal prerequisites on which they are based.

(2) Vehicles allegedly disposed of before the date of the due date of the tax

Regarding these assessments, the Claimant alleges that the vehicles on which the IUC is assessed had already been disposed of on the date on which the tax-generating fact occurred, seeking to prove such facts through elements it attaches with the designation "dossier of each vehicle" and which contain the following categories of documents:

invoices;

internal documents with the designation "list of terminated contracts," from which appear the client, the registration number, the delivery date, the end date, the financed value, the invoiced value and the residual value in euros and escudos;

documents with the designation "account debit authorization";

copies of promise-to-purchase contracts of motor vehicles and respective bank account debit authorizations;

copies of vehicle rental contracts without driver;

copies of vehicle rental contracts without driver and service provision;

declarations of delivery of vehicles;

declarations of waiver of the reflection period associated with vehicle purchase and sale contracts;

letters indicating receipt of incomplete rental contracts;

payment references via multibanco for the contract values;

adhesion bulletins to substitute vehicle schemes;

standardized information sheets regarding consumer credit (pre-contractual information).

The invoices contain the following alternative indications: "valid as receipt upon successful collection" or "document produced by computer so it does not need signature. Valid as receipt upon successful collection. The regularization of this invoice should be made to A... (Portugal), ..., ...-.... .., assignee of this debit" or "we thank you for noting that on this date we made the following debit entry to your Current Account, concerning the vehicle in question. The regularization of this document should be made to A...– Branch Portugal, Avenue..., ..., ...-... Lisbon, assignee of this debit" or "document produced by computer so it does not need signature. Valid as receipt upon successful collection. Used vehicle sold in the condition it is in and without warranty" or "we thank you for noting that on this date we made the following debit entry to your Current Account, concerning the vehicle in question. The regularization of this document should be made to C...–..., S.A., Av. ..., no...., ...Lisbon, assignee of this debit" or "we thank you for noting that on this date we made the following debit entries to your Current Account. The regularization of this document should be made to A...– Branch Portugal, Avenue..., ...-... Lisbon, assignee of this debit".

The AT understands that invoices are not apt to prove the celebration of a synallagmatic contract such as a purchase and sale, as such documents do not reveal by themselves an indispensable and unequivocal declaration of will (i.e., acceptance) on the part of the alleged acquirers.

The Claimant invokes the provisions of article 3 of the CIUC, which, in its view, establishes an implicit presumption of ownership of the vehicles in favor of the person in whose name they are registered, a presumption that, by virtue of the application of the general rule provided in article 73 of the General Tax Law, is rebuttable through proof to the contrary. For the Respondent, article 3 of the CIUC does not establish any implicit presumption, but a true irrebuttable legal fiction.

At the date of the tax-generating facts assessed through the disputed assessments, no. 1 of article 3 of the CIUC established that:

"Taxpayers of the tax are the owners of the vehicles, considered as such the natural or legal persons, of public or private law, in whose name the same are registered."

The question being discussed regarding this norm is the following: should it be understood that the legislator used the word "considered" as it could have used the word "presumed" or, on the contrary, that the legislator intended to establish a legal fiction, preventing the possibility of presenting proof to the contrary?

Pursuant to the provisions of article 349 of the Civil Code, "presumptions are the inferences that the law or the court draws from a known fact to establish an unknown fact." On the other hand, no. 2 of article 350 of the Civil Code clarifies that legal presumptions may be rebutted through proof to the contrary, save in cases where the law prohibits it.

With regard to presumptions of tax incidence, article 73 of the General Tax Law provides that these always admit proof to the contrary.

"Legal fictions," by contrast, consist "in a legal process that considers a situation or a fact as different from reality in order to attribute legal consequences to it."

Now, contrary to what the Respondent argues, the analysis of the literal element, as well as the historical and teleological elements present in the norm in question lead to the conclusion that the legislator did not intend to establish any legal fiction but only and exclusively a presumption, rebuttable through proof to the contrary pursuant to and for the purposes of the provisions of article 73 of the General Tax Law. Being the norm of incidence provided in no. 1 of article 3 of the CIUC a norm of tax incidence, any other understanding would be clearly contrary to the principles governing the tax legal relationship.

As to the historical element, it is important to note that the CIUC had its genesis in the creation, through Decree-Law 599/72, of 30 December, of the vehicle tax, which already expressly established that the tax was due by the owners of the vehicles, presumed as such the persons in whose name they are registered or recorded. On the other hand, article 2 of the Regulations of Circulation and Heavy Vehicle Taxes (approved by Decree-Law no. 116/94) established that: "taxpayers of the circulation tax and the heavy vehicle tax are the owners of the vehicles, presumed as such, until proof to the contrary, the natural or legal persons in whose name the same are registered."

It is true that, in the CIUC, the legislator substituted the expression "presumed" for the expression "considered," which, in the perspective of the Respondent, constituted the establishment of a legal fiction, irrebuttable. We do not, however, consider this to be the case. The change of verb does not constitute a substantive alteration in the norm of incidence, which, in our view, continues to establish a presumption rebuttable through proof to the contrary – in conformity, moreover, with the provisions of article 73 of the General Tax Law.

As stated by DIOGO LEITE CAMPOS, BENJAMIM SILVA RODRIGUES and JORGE LOPES DE SOUSA, in the annotation to no. 3 of article 73 of the General Tax Law, "presumptions regarding tax incidence may be explicit, revealed by the use of the expression 'is presumed' or similar (…). However, presumptions may also be implicit in norms of incidence, namely of objective incidence, when certain values of movable or immovable property are considered as constituting taxable matter, in situations where it is not impractical to ascertain the real value."

In sum, in the matter of tax incidence, presumptions may be revealed by the expression "is presumed" or by similar expression. By way of example, JORGE LOPES DE SOUSA notes that in article 40, no. 1, of CIRS, the expression "is presumed" is used, whereas in article 46, no. 2 of the same Code the expression "is considered" is used, with no difference between one and the other expression, both meaning, after all, the same thing: a legal presumption.

As to the teleological element, it is important to note that the structuring principle of the reform of motor vehicle taxation is precisely that of the incidence of taxation on the true user of the vehicle, not being reconcilable with this principle a "blind" reading of the letter of the law, which could, after all, lead to taxing the person who is not an owner and, in that way, who is not the subject causing the "environmental and road cost" provoked by the vehicle, to which article 1 of the CIUC alludes.

Thus, as to the subjective incidence of the tax, it is to be concluded that no changes are verified in relation to the situation previously in force under the Municipal Tax on Vehicles, Circulation Tax and Heavy Vehicle Tax, as is moreover widely recognized by doctrine, a rebuttable presumption continuing to apply in this matter. This understanding is, moreover, the only one that appears adequate and in accordance with the principle of material truth and justice, underlying fiscal relationships, with the objective of taxing the real and effective owner and not the person who, by circumstances of diverse nature, is sometimes nothing more than an apparent and false owner, by appearing in the vehicle register.

In this conformity, considering the elements of interpretation of the law referred to, we are led to the conclusion that the expression "is considered" has exactly the same meaning as the expression "is presumed," and should, thus, be understood that article 3, no. 1, of the CIUC, establishes a true presumption of ownership and not any fiction, and thus such presumption is rebuttable. By being so, the party registered in the vehicle register must be afforded the possibility of presenting sufficient probative elements to demonstrate that the effective owner is, after all, a different person from the one appearing in the register.

Finally, it is necessary to consider, in the present analysis, the legal value of the vehicle register. Thus, pursuant to the provisions of no. 1 of article 1 of Decree-Law 54/75, of 12 February, which instituted the Motor Vehicle Property Register, "the registration of vehicles has essentially as its purpose to give publicity to the legal situation of motor vehicles and their respective trailers, with a view to the safety of legal commerce." Furthermore, article 7 of the Property Register Code provides that "definitive registration constitutes a presumption that the right exists and belongs to the registered holder, in the exact terms in which the registration defines it." The motor vehicle property register therefore does not have a constitutive nature, but merely a declarative one, permitting only the inscription in the register to presume the existence of the right and its titularity. Therefore, the presumption resulting from registration may be rebutted through proof to the contrary. And this is so precisely because, pursuant to the provisions of article 408 of the Civil Code, except for the exceptions provided by law, the constitution or transfer of real rights over a determined thing is given by mere effect of the contract, its validity not depending on inscription in the register.

In sum, the vehicle register, in the economy of the CIUC, represents mere rebuttable presumption of the taxpayers of the tax. In the case of a purchase and sale contract of a motor vehicle, where the law does not provide any exception for the same, the contract has real effect, with the purchaser becoming its owner, regardless of registration; in the same way, the person registered in the register will cease to be the owner, despite possibly appearing for some time or even much time in the register as such.

It is also to be noted that the transmissions made are enforceable against the Respondent, despite the provisions of no. 1 of article 5 of the Property Register Code, which provides: "facts subject to registration only produce effects against third parties when registered." The notion of third parties for the purposes of registration is established in no. 4 of the same article 5: third parties, for the purposes of registration, are those who have acquired from a common author incompatible rights, which is manifestly not the case with the AT. Thus, the AT is not a third party for the purposes of registration.

In consequence of the foregoing, the registered owner of a motor vehicle may make proof, for the purposes of taxation under IUC, that it is no longer the effective owner of the vehicle in question, namely by having proceeded with its respective sale. To this end, it is important to note that we are dealing with purchase and sale contracts that, relating to movable property and not being subject to any special formalities pursuant to article 219 of the Civil Code, operate the corresponding transfer of real rights pursuant to no. 1 of article 408 of the same code.

On the other hand, proof of the existence of a purchase and sale contract may be effected by any means, the invoice being an accounting document suitable for this purpose, as for many others, namely fiscal. Invoices evidence sales, transactions or provision of services and, provided they are issued in the legal form, constitute elements supporting entries systematized in a set of accounts organized in accordance with commercial and tax legislation, and the data contained therein are covered by the presumption of truthfulness to which article 75, no. 1, of the General Tax Law refers. In this sense, it is not accepted that the strength of their probative value be questioned solely for the purpose of proof of transmission of vehicle ownership, on pain of falling into the legal absurdity of, from the same document, recognizing that the transaction existed for the purposes of the incidence of income tax, but did not exist for the purposes of IUC. However, being a presumption, nothing prevents the demonstration of its falsity or inadequacy in light of the legal requirements established in article 36 of CIVA. In this case too, it is a rebuttable presumption, and the burden of proof lies with the AT. However, the AT has not contested, nor raised doubts regarding the operations evidenced by the invoices presented by the Claimant, having limited itself to questioning the capacity of the same to evidence sales and provide proof thereof.

It is true that, as the Respondent alleges, the invoices attached "do not reveal by themselves an indispensable and unequivocal declaration of will (i.e., acceptance) on the part of the alleged acquirers." However, the law not providing any specific form for the celebration of a purchase and sale contract of a motor vehicle, and the Respondent not having alleged the falsity of the invoices attached, limiting itself to attempting to discard their probative strength, it will necessarily have to be accepted as proof of the purchase and sale contract the invoice issued in accordance with legal requirements, as is the case with the invoices at issue in the present proceedings.

Also the fact that the attached invoices expressly state that they only serve as receipt upon successful collection and that it has not been demonstrated in the case files the payment of the respective amount is irrelevant for the purposes that matter here. In fact, what is important to ascertain in this regard is the suitability of the invoices to demonstrate the disposal of the vehicle and not their capacity to serve or not as receipt or acknowledgment of receipt of the respective price [which is not even an essential element of the purchase and sale contract, but rather an effect thereof – as results from the provisions of article 879 c) of the Civil Code].

Thus, the sales alleged by the Claimant, occurring at a moment prior to the occurrence of the tax-generating fact, are considered proven. The presumption of ownership derived from the vehicle register provided in article 3 of the CIUC is thus rebutted, and the corresponding assessments identified in a list attached to the present petition for arbitral decision should therefore be annulled, on the grounds of illegality and error in the prerequisites on which they are based.

Pursuant to the provisions of article 6, no. 3 of the CIUC, the tax is considered due on the first day of the taxation period referred to in article 4, no. 2 of the CIUC. On these dates, the Claimant had disposed of all the vehicles at issue in the present proceedings, despite the fact that such disposals have not been reflected in the competent register.

Thus, having regard to the fact that, as already set out, the presumption resulting from the register is rebuttable through proof to the contrary, proof that is considered effected with the presentation of the sale invoices of the vehicles, it is verified that, regarding the vehicles at issue in the present proceedings, the Claimant is not their owner on the date of the tax-generating fact, and is not therefore the taxpayer of the assessed IUC.

From which it clearly results that there is no legal basis for the disputed assessment acts, making necessary their annulment, as well as the annulment of the dispatch dismissing the gracious complaints filed.

On indemnitory interest

The Claimant finally requests that it be recognized as having the right to indemnitory interest, under articles 43 and 100 of the General Tax Law.

Article 100 of the General Tax Law provides that "The tax administration is obliged, in case of total or partial success of complaints or administrative appeals, or judicial proceedings in favor of the taxpayer, to the immediate and full reconstitution of the situation that would have existed if the illegality had not been committed, comprising the payment of indemnitory interest, under the terms and conditions provided by law."

On the other hand, pursuant to no. 1 of article 43 of the General Tax Law, indemnitory interest shall be due "when it is determined, in a gracious complaint or judicial challenge, that there was error attributable to the services resulting in payment of the tax debt in an amount greater than legally due."

In the present case, the annulment of the assessments occurs only by way of challenging the dismissal of the request for official revision filed by the Claimant on 07.09.2017, wherefore it is equally applicable to it the provisions of subparagraph c) of no. 3 of article 43 of the General Tax Law: "3 - Indemnitory interest is also due in the following circumstances: (…) - c) When the revision of the tax act at the initiative of the taxpayer is effected more than one year after the taxpayer's request, except if the delay is not attributable to the tax administration."

The AT issued a dispatch dismissing the request for revision on 12.04.2018, following which the Claimant presented itself before this tribunal. Now, as the STA has already decided, the principle of equality requires similar treatment between the taxpayer whose request for revision succeeds beyond the one-year period with the administration, and the taxpayer who obtains the same result, also beyond that period, before the court. In any event, the delay of more than one year is attributable to the administration and derives from the practice of an unlawful act: either because it took time to rule in favor of the taxpayer or because it did not rule in favor and it came to be revealed that it should have done so. It is therefore verified, in this case, the Claimant's right to indemnitory interest, counted from the end of the one-year period after the filing of the request for official revision and up to the date of restitution to the Claimant of the amounts corresponding to the annulled assessments.

IV – DECISION

By these means, this Arbitral Tribunal decides:

To find in favor of the arbitral request for annulment of the tax acts identified above, relating to IUC and compensatory interest, in the total amount of € 20,876.24;

To find in favor of the request for annulment of the dispatch dismissing the request for official revision filed on 07.09.2017;

To order the restitution to the Claimant of the amount paid as tax and compensatory interest;

To find in favor of the request for payment of indemnitory interest, at the legal rate, counted from the end of the one-year period after the filing of the request for official revision and up to the date of restitution to the Claimant of the amounts corresponding to the annulled assessments.

V – Case value

The case value is set at € 20,876.24 (twenty thousand, eight hundred and seventy-six euros and twenty-four cents), pursuant to article 97-A, no. 1, a), of the Code of Tax Procedure and Process, applicable by virtue of subparagraphs a) and b) of no. 1 of article 29 of RJAT and no. 2 of article 3 of the Regulation of Costs in Tax Arbitration Proceedings.

VI – Costs

The amount of the arbitration fee is set at € 1,224.00 pursuant to Table I of the Regulation of Costs in Tax Arbitration Proceedings, to be borne by the Respondent.

Lisbon, 03 July 2019

The Arbitrator

(Raquel Franco)