Process: 45/2014-T

Date: August 13, 2014

Tax Type: IUC

Source: Original CAAD Decision

Summary

CAAD Case 45/2014-T addressed whether a bank (lessor) must pay IUC (Single Circulation Tax) on vehicles subject to financial leasing agreements. Banco A challenged eight additional IUC assessments totaling €374.94 for tax years 2009-2012, arguing that lessees with exclusive vehicle use should bear IUC obligations, not the registered owner-lessor. The bank contended that vehicle ownership transfer to lessees was effective against tax authorities regardless of registration status, as registration is neither a contract validity condition nor required for translative effect. The claimant argued the AT cannot invoke registration absence since it does not qualify as a 'third party' under registration law, and any ownership presumption is rebuttable. The Tax Authority countered that Article 3(1) of IUC legislation explicitly defines taxpayers as registered owners, establishing a factual determination rather than a rebuttable presumption. The AT argued the bank's position undermines legal certainty, efficiency, and proportionality principles by prioritizing informal reality over registered ownership while ignoring available legal mechanisms to register transfers. The Authority also contended sales invoices alone fail to prove ownership transfer. This arbitration illustrates the fundamental tension between registered ownership and economic substance in financial leasing taxation, with significant implications for banks' IUC obligations on leased vehicle portfolios.

Full Decision

ARBITRAL DECISION

CAAD: Tax Arbitration

Case No. 45/2014 – T

Subject Matter: IUC – Financial Lease

Claimant: BANCO A, Sa

Respondent: Tax and Customs Authority

   I.             REPORT

  1.  On 22 January 2014, the company Banco A, Sa, collective entity no. …, hereinafter identified as Claimant, filed a request for arbitral decision, in accordance with the provisions of articles 2, no. 1, paragraph a) and 10 of Decree-Law no. 10/2011, of 20 January (Legal Framework for Arbitration in Tax Matters, hereinafter referred to as RJAT).

  2.   In the said request for arbitral decision, the Claimant seeks that the Arbitral Tribunal declare the illegality of 8 additional assessments of Single Circulation Tax (IUC), in the total amount of € 374.94, relating to the years 2009 to 2012, hereinafter better identified (cf. Annex A, attached to the request for constitution of the Arbitral Tribunal):



                                                 i.            Demonstration of IUC and JC assessment no. …, relating to the year 2009 and to the vehicle with registration number …, resulting in the amount of € 19.01 to be paid, which amount was paid on 31 October 2013;

                                               ii.            Demonstration of IUC and JC assessment no. …, relating to the year 2010 and to the vehicle with registration number …, resulting in the amount of € 32.16 to be paid, which amount was paid on 31 October 2013;

                                             iii.            Demonstration of IUC and JC assessment no. …, relating to the year 2011 and to the vehicle with registration number …, resulting in the amount of € 32.67 to be paid, which amount was paid on 29 October 2013, on the payment deadline;

                                             iv.            Demonstration of IUC and JC assessment no. …, relating to the year 2009 and to the vehicle with registration number …, resulting in the amount of € 33.81 to be paid, which amount was paid on 29 October 2013, on the payment deadline;

                                               v.            Demonstration of IUC and JC assessment no. …, relating to the year 2012 and to the vehicle with registration number …, resulting in the amount of € 35.60 to be paid, which amount was paid on 31 October 2013;

                                             vi.            Demonstration of IUC and JC assessment no. …, relating to the year 2011 and to the vehicle with registration number …, resulting in the amount of € 37.18 to be paid, which amount was paid on 29 October 2013, on the payment deadline;

                                           vii.            Demonstration of IUC and JC assessment no. …, relating to the year 2009 and to the vehicle with registration number …, resulting in the amount of € 38.12 to be paid, which amount was paid on 29 October 2013, on the payment deadline;

                                         viii.            Demonstration of IUC and JC assessment no. …, relating to the year 2011 and to the vehicle with registration number …, resulting in the amount of € 146.39 to be paid, which amount was paid on 29 October 2013.

  3.  The Claimant further petitions for the reimbursement of the amount paid - € 374.94 – and, likewise, the payment of compensatory interest, in accordance with article 43 of the General Tax Law.

  4.  The request for constitution of the arbitral tribunal was accepted on 23 January 2014, by the Honourable President of CAAD and was notified to the Tax and Customs Authority (hereinafter identified as Respondent), on 24 January 2014.

  5.  The Claimant did not proceed with the appointment of an arbitrator, wherefore, pursuant to the provisions of article 6, no. 1, of the RJAT, the undersigned was appointed by the President of the Deontological Council of CAAD as arbitrator of the present Singular Arbitral Tribunal, the appointment having been accepted in accordance with legal provisions.

  6.  On 30 May 2014, and in accordance with the terms and effects provided for in article 18 of the RJAT, the first meeting of the Arbitral Tribunal was held, minutes of which are attached to the case file, from which it appears, among other things, that the Claimant attached to the case file the financial lease contracts relating to the contested assessments.

  7.  On 19 June 2014, the Claimant submitted its arguments.

  8.  The Claimant supports its claim, in summary, on the understanding that on the date when the IUCs in question became due, it no longer held ownership of the vehicles in question and therefore was not in all respects the taxpayer, adding that during the validity of the respective financial lease contracts, as lessor entity, it was also not considered a taxpayer in respect of IUC, given that as the lessees had exclusive use of the motor vehicle which is the subject of the contract, it is they who also bear the obligation to pay the tax.

  9.  The Claimant further contends that the failure to register the transfer effected between the Claimant and the lessees does not render it unenforceable against the ATA, since registration is neither a condition of validity of the sales contract nor a condition for production of its translative effect, further adding that since the ATA does not fall within the concept of third parties for purposes of registration, as it does not acquire from the same transferor rights wholly or partially incompatible with the rights of the buyer, it cannot rely on the absence of registration of the transfer to demand payment of the tax due by the previous owner, whether the latter be a lessor or any other entity.

  10. The Claimant concludes that if the owner does not effect registration of ownership of the vehicle in its name, it is presumed that ownership continues to belong to the debtor, but that this presumption may be rebutted by proof to the contrary, which may be made by any means (e.g. by witness testimony or documents).

  11. In its Response, the Respondent invoked, in summary, that the tax legislator in establishing in article 3, no. 1, who are the taxpayers in respect of IUC established expressly and intentionally that these are the owners, being considered as such the persons in whose names the same are registered, that is, the Respondent understands that there is no presumption in question, because the IUC became due by the persons appearing in the registry as owners of the vehicles.

  12. The Respondent further understands that the position put forward by the Claimant violates the principle of trust and legal certainty, to the extent that it devalues the registered reality to the detriment of an informal reality, insusceptible to minimal control by the ATA and, likewise, violates the principle of efficiency of the tax system to the extent that by ignoring the registered reality, it generates for the ATA and for the Portuguese State additional administrative costs and obstruction of its services and, finally, violates the principle of proportionality to the extent that the Claimant has at its disposal the legal mechanisms necessary and appropriate to safeguard its contributory capacity (e.g. motor vehicle registration) without having exercised them in due time.

  13. The Respondent further contends that, even if this were not the case, the Claimant in presenting only the sales invoices for each of the vehicles did not prove the transfer of ownership of those same vehicles.

II.              PRELIMINARY DECISION

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

  2. The parties have legal personality and 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. No nullities and preliminary issues affecting the entire process are verified, wherefore it is now necessary to address the merits of the claim.

III. SUBJECT MATTER OF THE ARBITRAL DECISION

  1. The following questions are presented to the Tribunal for consideration and decision:

                               i.            to determine whether the norm of no. 1 of article 3 of the IUC Code permits that the person in whose name the vehicle is registered in the Registry Office may demonstrate, through the means of proof admitted in law, that notwithstanding such fact, he is not owner of the vehicle in the period to which the tax relates and thus rule out the obligation to pay the tax which falls upon him;

                         ii.            whether the sales invoice of the vehicle is a sufficient document to prove the transfer.

FACTUAL MATTERS

Proven Facts

  1. The Claimant is a credit institution whose activities include the conclusion of financial lease contracts for the acquisition, by companies and individuals, of motor vehicles (cf. motor vehicle rental contracts without driver attached at the arbitral meeting).

  2. The Claimant concluded the following motor vehicle rental contracts without driver:

                                          i.            no. …, with B, with reference to the vehicle with registration number …, on 7 September 2006 (cf. motor vehicle rental contract without driver attached at the arbitral meeting);

                                    ii.            no. …, with C, SA, with reference to the vehicle with registration number …, on 28 December 2005 (cf. motor vehicle rental contract without driver attached at the arbitral meeting);

                                  iii.            no. …, with D, with reference to the vehicle with registration number …, on 6 June 2007 (cf. motor vehicle rental contract without driver attached at the arbitral meeting);

                                  iv.            no. …, with E, with reference to the vehicle with registration number …, on 18 July 2005 (cf. motor vehicle rental contract without driver attached at the arbitral meeting);

                                    v.            no. …, with company F, Lda, with reference to the vehicle with registration number …, on 13 December 2006 (cf. motor vehicle rental contract without driver attached at the arbitral meeting);

                                  vi.            no. …, with G, with reference to the vehicle with registration number …, on 2 April 2007 (cf. motor vehicle rental contract without driver attached at the arbitral meeting);

                                vii.            no. …, with company H, Sa, with reference to the vehicle with registration number …, on 11 August 2000 (cf. motor vehicle rental contract without driver attached at the arbitral meeting);

                              viii.            no. …, with I, with reference to the vehicle with registration number …, on 2 August 2007 (cf. motor vehicle rental contract without driver attached at the arbitral meeting).

  3. The Claimant issued the following Invoices/Receipts with reference to the following contracts:

                                          i.            no. … - Invoice/Receipt no. …, issued on 21 August 2009, in the name of B with reference to the vehicle with registration number … (Month of registration: September - cf. invoice attached with the request for constitution of the Arbitral Tribunal);

                                    ii.            no. … – Invoice/Receipt no. … issued on 1 February 2010, in the name of C, SA, with reference to the vehicle with registration number … (Month of registration: December - cf. invoice attached with the request for constitution of the Arbitral Tribunal);

                                  iii.            no. … - Invoice/Receipt no. …, issued on 24 January 2011, in the name of D with reference to the vehicle with registration number … (Month of registration: June - cf. invoice attached with the request for constitution of the Arbitral Tribunal);

                                  iv.            no. … - Invoice/Receipt no. …, issued on 9 April 2009, in the name of E with reference to the vehicle with registration number … (Month of registration: July - cf. invoice attached with the request for constitution of the Arbitral Tribunal);

                                    v.            Invoice/Receipt no. …, issued on 26 October 2012, in the name of J, Lda with reference to the vehicle with registration number … (Month of registration: December - cf. invoice attached with the request for constitution of the Arbitral Tribunal);

                                  vi.            no. … - Invoice/Receipt no. …, issued on 1 February 2011, in the name of G, with reference to the vehicle with registration number … (Month of registration: March - cf. invoice attached with the request for constitution of the Arbitral Tribunal);

                                vii.            Invoice/Receipt no. …, issued on 29 May 2009, in the name of company K, Lda with reference to the vehicle with registration number … (Month of registration: August - cf. invoice attached with the request for constitution of the Arbitral Tribunal);

                              viii.            no. … - Invoice/Receipt no. …, issued on 24 November 2011, in the name of L (Heirs of I), with reference to the vehicle with registration number … (Month of registration: July - cf. invoice attached with the request for constitution of the Arbitral Tribunal).

  4. The Claimant was notified of 8 additional assessments of Single Circulation Tax (IUC), in the total amount of € 374.94, relating to the years 2009 to 2012, hereinafter better identified (cf. Annex A, attached with the request for constitution of the Arbitral Tribunal):

i)                    Demonstration of IUC and JC assessment no. …, relating to the year 2009 and to the vehicle with registration number …, resulting in the amount of € 19.01 to be paid, which amount was paid on 31 October 2013;

ii)                  Demonstration of IUC and JC assessment no. …, relating to the year 2010 and to the vehicle with registration number …, resulting in the amount of € 32.16 to be paid, which amount was paid on 31 October 2013;

iii)                Demonstration of IUC and JC assessment no. 2011 …, relating to the year 2011 and to the vehicle with registration number …, resulting in the amount of € 32.67 to be paid, which amount was paid on 29 October 2013, on the payment deadline;

iv)                Demonstration of IUC and JC assessment no. …, relating to the year 2009 and to the vehicle with registration number …, resulting in the amount of € 33.81 to be paid, which amount was paid on 29 October 2013, on the payment deadline;

v)                  Demonstration of IUC and JC assessment no. …, relating to the year 2012 and to the vehicle with registration number …, resulting in the amount of € 35.60 to be paid, which amount was paid on 31 October 2013;

vi)                Demonstration of IUC and JC assessment no. …, relating to the year 2011 and to the vehicle with registration number …, resulting in the amount of € 37.18 to be paid, which amount was paid on 29 October 2013, on the payment deadline;

vii)              Demonstration of IUC and JC assessment no. …, relating to the year 2009 and to the vehicle with registration number …, resulting in the amount of € 38.12 to be paid, which amount was paid on 29 October 2013, on the payment deadline;

viii)            Demonstration of IUC and JC assessment no. …, relating to the year 2011 and to the vehicle with registration number …, resulting in the amount of € 146.39 to be paid, which amount was paid on 29 October 2013.
  1. The factual matters given as proven are based on the documentary evidence presented.

Unproven Facts

  1. The Claimant indicates in the request for arbitral decision that the vehicle with registration number … (Month of registration: July) was transferred on 24 May 2011, which was not demonstrated.

IV. THE LAW

  1. As stated, the first question which in the present process is important to clarify concerns determining whether the norm of no. 1 of article 3 of the IUC Code permits that the person in whose name the vehicle is registered in the Registry Office may demonstrate, through the means of proof admitted in law, that notwithstanding such fact, he is not owner of the vehicle in the period to which the tax relates and thus rule out the obligation of the tax which falls upon him.

  2. Article 3, no. 1, of the IUC Code provides that "the taxpayers of the tax are the owners of the vehicles, being considered as such the natural or legal persons, of public or private law, in whose names the same are registered."

  3. In accordance with this legal provision, the taxpayers of the tax are, thus, the owners of the vehicles.

  4. Indeed, in accordance with the IUC Code, the tax is due by the owner of the vehicle until the cancellation of the registration or registration as a result of scrapping in accordance with the law (cf. article 4, no. 3 of the IUC Code), with the property of the vehicles being taxed, irrespective of their respective use or enjoyment.

  5. For the purposes of implementing the subjective scope of taxation, persons are considered as owners, whether natural or legal persons, in whose names the vehicles are registered.

  6. In this context, the ATA assesses the tax in accordance with the elements that constitute the basis of the IUC database, the updating of which is carried out based on the elements provided by IRN – I.P. and by IMTT.

  7. Article 3, no. 1, of the IUC Code thus establishes a legal presumption in accordance with which the person who is inscribed in the registry as owner of the vehicle is considered as a taxpayer of the tax.

  8. The use of the expression "being considered" instead of the expression "being presumed" does not rule out this conclusion.

  9. As better developed in the Arbitral Decision rendered in Case No. 14/2013-T "Examining the Portuguese legal system, we find countless norms that establish presumptions using the verb to consider, many of which are used in the gerund form ("considering" or even "being considered"). Examples of this are the following enumerated norms: In the Civil Code, among others, articles 314, 369 no. 2, 374 no. 1, 376 no. 2, 1629. In the Code of Industrial Property, we refer by way of example to article 98 where also the term "considering" is used in a presumptive context. Also in the tax legal system, the verb "to consider" can be found, namely the term "is considered" with a presumptive sense. As explained by Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, in the annotation no. 3 to article 73 of the LGT "the presumptions in matters of 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 impossible to ascertain the actual value" (emphasis ours), then giving some examples of norms in which the verb "to consider" is used as in no. 2 of article 21 of the IRC Code happens, when it establishes that "for purposes of determining taxable profit, the value of acquisition of capital increments obtained gratuitously is considered to be their market value, not being able to be less than that which results from the application of the rules for determining the taxable value provided for in the Tax Stamp Code". (emphasis ours). (…). Bearing in mind that the legal system must form a coherent whole, the examples above referred to, accompanied by the doctrine and jurisprudence indicated, by appeal to the systematic element (context of the law and parallel provisions), authorize the conclusion that it is not only when the verb "to presume" is used that we are faced with a presumption, but also the use of other terms or expressions may serve as a basis for presumptions, namely the term "is considered", thus showing that the condition established in no. 2 of article 9 of the CC is met, which requires that the legislative thought have in the letter of the law a minimum of verbal correspondence, even if imperfectly expressed." (in www.caad.pt).

  10. As also noted in the said arbitral Decision, the ratio legis of the IUC points towards taxing the effective owners or users of the vehicles, such as financial lessees, since they are the ones who have the polluting potential that causes environmental costs to the community (cf. article 3, no. 1 and 2, of the IUC Code).

  11. Indeed, the IUC seeks to burden the taxpayers in the measure of the environmental and road costs that they cause, in implementation of a general rule of tax equality, as expressed in its article 1.

  12. It is not apparent that the taxation of previous owners could contribute to this objective, which will only be fulfilled if the taxation targets the effective owner or user.

  13. Moreover, registration in our legal system does not have constitutive effect, having rather a merely declarative function (cf. Judgment of the Supreme Court of Justice rendered in Case No. 00A217, of 20-06-2000 and Judgment of the Supreme Court of Justice rendered in Case No. 087725, of 13-02-1996, in www.dgsi.pt).

  14. The "final registration constitutes a presumption that the right exists and belongs to the registered holder, in the precise terms in which the registration defines it. But, as the appellant well states, this registration presumption is rebuttable – although not by counterevidence, but rather through proof to the contrary – since registration, even if final, constitutes a mere presumption juris tantum." (cf. Judgment of the Supreme Court of Justice, in Case No. 07B4528, of 29-01-2008, in www.dgsi.pt), which means that also the nature of registration in our system does not rule out the conclusion reached that we are faced with a presumption in the case at hand.

  15. Finally, the ATA not falling within the concept of third party for purposes of registration, "since it does not acquire from the same transferor rights wholly or partially incompatible with the rights of the buyer, it is readily concluded that it cannot rely on the absence of registration of the transfer to demand payment of the tax due by the previous owner, whether the latter be a lessor or any other entity" (cf. Opinion of Professor Agostinho Cardoso Guedes, attached to the case file).

  16. Now, since article 3, no. 1, of the IUC Code establishes a presumption, this presumption is a rebuttable presumption by conflicting with a norm of (subjective) incidence of the tax.

  17. Indeed, the presumptions established in the norms of tax incidence always admit proof to the contrary, since the provision of article 73 of the General Tax Law expressly rules out, in the field of norms of tax incidence, the possibility of the existence of irrebuttable presumptions.

  18. The "prohibition of irrebuttable presumptions that emanates from art. 73 of the LGT is limited to the norms of tax incidence, but encompassing both those of subjective incidence and those of objective or real incidence. Norms of incidence, in a broad sense, are those which "define the plane of incidence or that is, the complex of presuppositions whose combination results in the birth of the obligation of tax, as well as the elements of that same obligation. In this sense, norms of incidence are those which determine the active and passive subjects of the tax obligation, those which indicate what is the taxable matter, the rate and tax benefits" (cf. SOUSA, Jorge Lopes de - Code of Tax Procedure and Process – Annotated and Commented, Áreas Editora, 6th edition, 2011, vol. I, p. 586).

  19. Thus, since article 3, no. 1 of the IUC Code establishes a rebuttable presumption, the entity which is inscribed in the registry as owner of the vehicle and which, for that reason was considered by the ATA as a taxpayer of the tax, may present elements of proof aiming to demonstrate that the holder of ownership is another person, to whom the property was transferred.

I – Of the assessments identified in paragraphs i) to vii), of point 2 of the Report

  1. The IUC is of annual periodicity, being due in full in each year to which it relates, corresponding the taxation period to the year which begins on the date of registration or on each of its anniversaries, in relation to vehicles of categories A, B, C, D and E (cf. article 4, no. 1 and 2 of the IUC Code).

  2. In the case at hand, the Claimant disposed of the vehicles in question on dates prior to those of the months of registration, in the years to which the assessments in question relate, in accordance with the Invoices/Receipts attached to the request for constitution of arbitral tribunal.

  3. Article 29, no. 1, paragraph b), of the VAT Code, in its current wording, determines the obligation to issue an invoice for each transfer of goods or provision of services, irrespective of the quality of the purchaser of the goods or recipient of the services, even if these do not request it, as well as for payments made to them before the date of transfer of goods or provision of services.

  4. The expression "invoice or equivalent document" previously used in the VAT Code was replaced by the term "invoice".

  5. As appears from the Preamble to Decree-Law no. 197/2012, of 24 August, which introduced amendments to the invoicing rules regarding VAT "It is further evident that taxpayers cannot issue and deliver documents of a nature different from an invoice to evidence the transfer of goods or provision of services to their respective purchasers or recipients, under penalty of application of the legally provided penalties".

  6. Following these amendments, only the "Invoice" or "Invoice-receipt" and the "Simplified Invoice" fulfil the invoicing obligation, insofar as they contain the requirements of no. 5, of article 36 or no. 2 of article 40, respectively, both of the VAT Code, as recognised by the ATA in Circular Letter no. 30141/2013, of 4 January 2013, whereas previously the figure of the "Invoice-receipt" was peacefully accepted.

  7. For its part, in accordance with paragraph f), of no. 5, of article 36 of the VAT Code, the date on which the goods were placed at the disposal of the purchaser must necessarily appear on the invoice, if that date does not coincide with that of the issuance of the invoice, that is, if that mention does not appear on the invoice, it is presumed that the goods were placed at the disposal of the purchaser on the date of issuance of the invoice.

  8. In the case at hand, in which the issuance of an Invoice/Receipt is in question, this proves the transfer of the good and the respective payment (cf. articles 476 of the Commercial Code and 123, no. 2, paragraph a) of the IRC Code).

  9. Moreover, the Claimant benefits from the presumption of veracity of the transactions inscribed in its accounting and in the respective supporting documents.

  10. Indeed, it expressly results from no. 1, of article 75 of the General Tax Law that "The declarations of taxpayers presented in accordance with the provisions laid down in law are presumed to be true and in good faith, as well as the data and calculations inscribed in their accounting or record, when these are organised in accordance with commercial and tax legislation, without prejudice to the other requirements upon which the deductibility of expenses depends".

  11. In this context, it was then incumbent upon the ATA to bring elements of proof to the process which would enable this presumption to be rebutted and, having not done so (insofar as it merely asserts that the invoice is not an appropriate document to prove the sale of the vehicles), the documents attached by the Claimant, more specifically the Invoices/Receipts, prove the transfer of the vehicles in question.

  12. And, having such transfers occurred on dates prior to those of the months of registration, in the years to which the assessments in question relate, the Claimant was no longer a taxpayer with reference to the assessments in question, whose annulment, consequently, is ordered.

II – Of the assessment identified in paragraph viii) of point 2 of the Report

  1. The Demonstration of IUC and JC assessment no. …, relating to the year 2011 and to the vehicle with registration number … (of the month of July), resulting in the amount of € 146.39 to be paid, corresponds to Invoice/Receipt no. … .

  2. From the said Invoice/Receipt no. …, issued on 24 November 2011, it further appears that the same has a due date of 24 May 2011.

  3. The due date being in the month of May and the issuance date in November, both of the year 2011, and the vehicle with registration number … being of the month of July, it does not result unequivocally demonstrated that the transfer of the vehicle occurred on a date prior to the month of registration, reason for which, as to this last assessment, the respective annulment is not ordered, being, consequently, as to this assessment the Claimant's claim is unfounded.

V.            DECISION

In light of the foregoing, it is decided to partially uphold the request for arbitral decision, with the consequent annulment, with all legal effects, of the IUC assessments contested, better identified in paragraphs i) to vii), of point 2 of the Report, condemning the Respondent Entity to the reimbursement of the amount paid - € 228.55 - and, likewise, to the payment of compensatory interest, in accordance with article 43 of the General Tax Law, with reference to the annulled amount.

Furthermore, it is decided that the request for arbitral decision is unfounded in the remaining part.

The value of the case is set at € 374.94 (three hundred seventy-four euros and ninety-four cents), in accordance with art. 32 of the CPTA and art. 97-A of the CPPT, applicable by virtue of the provision of art. 29, no. 1, paragraphs a) and b), of the RJAT, and of art. 3, no. 2, of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT).

The costs are set at € 306, to be borne by the Claimant (2/5) and by the Respondent (3/5), in the amount of € 122.4 and € 183.6, respectively, in proportion to the extent of non-success, in accordance with Table I of the RCPAT, and in compliance with the provisions of articles 12, no. 2, and 22, no. 4, both of the RJAT, and the provision of art. 4, no. 4, of the cited Regulation.

Notify.

Lisbon, 13 August 2014

[Text prepared by computer, in accordance with article 131, no. 5 of the Code of Civil Procedure (CPC), applicable by reference of article 29, no. 1, paragraph e) of the RJAT, with blank spaces and reviewed by the undersigned arbitrator].

The Arbitrator

(Ana Moutinho Nascimento)

Frequently Asked Questions

Automatically Created

Who is liable for paying IUC (Imposto Único de Circulação) on vehicles under a financial leasing agreement in Portugal?
Under Portuguese IUC legislation, liability falls on registered vehicle owners according to Article 3(1). In financial leasing arrangements, this creates disputes between lessors (typically banks appearing as registered owners) and lessees (who have exclusive use). The Tax Authority maintains that registered ownership determines IUC liability regardless of lease agreements, while lessors argue that economic substance—where lessees enjoy exclusive use and benefits—should determine tax obligations. The key issue is whether registration establishes conclusive ownership for IUC purposes or merely a rebuttable presumption.
Can a bank challenge additional IUC tax assessments through CAAD tax arbitration proceedings?
Yes, banks and other entities can challenge IUC assessments through CAAD (Centro de Arbitragem Administrativa) under the Legal Framework for Arbitration in Tax Matters (RJAT - Decree-Law 10/2011 of January 20). Case 45/2014-T demonstrates this process: Banco A filed an arbitration request on January 22, 2014, which was accepted within one day. The procedure involves filing a request for arbitral decision under Articles 2(1)(a) and 10 RJAT, appointment of arbitrators under Article 6, a first tribunal meeting per Article 18, submission of written arguments, and the respondent's reply. This provides an alternative dispute resolution mechanism to traditional court litigation.
What years and amounts were covered in the IUC additional tax assessments in CAAD Case 45/2014-T?
The dispute covered eight IUC additional assessments spanning four tax years (2009-2012) totaling €374.94. Specifically: three assessments for 2009 (€19.01, €33.81, and €38.12), two for 2010 (€32.16), three for 2011 (€32.67, €37.18, and €146.39), and one for 2012 (€35.60). All amounts were paid by the bank in October 2013, mostly on payment deadlines. The bank additionally sought reimbursement of the full amount plus compensatory interest under Article 43 of the General Tax Law. Each assessment related to different vehicles identified by registration numbers, with the largest single assessment being €146.39.
How does Portuguese tax law distinguish between vehicle ownership and use for IUC purposes in financial leasing?
Portuguese IUC law creates tension between legal ownership and economic use in financial leasing. The Tax Authority's position, based on Article 3(1), treats IUC as strictly linked to registered ownership—the person appearing in vehicle registries. This formal approach prioritizes legal certainty and administrative efficiency. Banks argue for substance-over-form, contending that lessees with exclusive use and economic benefits should bear IUC obligations. The fundamental dispute is whether IUC follows registered legal title (favoring lessors' arguments) or economic substance and beneficial use (favoring lessees' obligations). This distinction has major implications for financial leasing operations and banks' tax exposure.
What is the legal procedure for requesting arbitral pronouncement against the Portuguese Tax Authority (AT) under Decree-Law 10/2011 (RJAT)?
Under Decree-Law 10/2011 (RJAT), the procedure requires: (1) Filing a request for arbitral decision with CAAD under Articles 2(1)(a) and 10; (2) CAAD President's acceptance and notification to the Tax Authority within 1-2 days; (3) Appointment of arbitrator(s) under Article 6—if claimant doesn't appoint, the President of CAAD's Deontological Council designates; (4) Acceptance of appointment by arbitrator(s); (5) First tribunal meeting per Article 18 where procedural issues are resolved and evidence submitted; (6) Claimant's written arguments; (7) Respondent's written response; (8) Arbitral decision. The framework provides expedited tax dispute resolution compared to traditional courts, with specific timelines and procedures designed for efficiency.