IUC Subjective Incidence: Vehicle Owner Tax Liability in Leasing and Long-Term Rental (CAAD 45/2015-T)

CAAD: TAX ARBITRATION

Case no. 45/2015

Subject Matter: IUC – Subjective Incidence

ARBITRAL DECISION

I. REPORT

A, S.A., Claimant, with registered office at …, corporate entity no. …, came, pursuant to article 10, no. 2, of Decree-Law no. 10/2011, of 20 January (Legal Regime for Arbitration in Tax Matters, hereinafter referred to only as LRAT), to request the constitution of a single Arbitral Tribunal, in which the Tax and Customs Authority is summoned as respondent, hereinafter TA or Respondent, with a view to the declaration of illegality and consequent annulment of the tax acts for assessment of Single Vehicle Circulation Tax identified hereinbelow.

The request for constitution of the Arbitral Tribunal was accepted by His Excellency the President of CAAD and automatically notified to the TA on 28 January 2015.

Pursuant to no. 1 of article 11 of the LRAT, in the wording introduced by article 228 of Law no. 66-B/2012, of 31 December, the single Arbitral Tribunal was constituted on 31 March 2015.

The TA responded, arguing that the request should be ruled inadmissible.

In view of the content of the matter contained in the case file, the meeting referred to in article 18 of the LRAT and the holding of final submissions were dispensed with.

The Arbitral Tribunal is regularly constituted and is substantively competent, pursuant to paragraph a) of no. 1 of article 2 of the LRAT.

The parties have legal standing and legal capacity, are legitimate parties and are represented (article 4, and no. 2 of article 10 of the LRAT and article 1 of Ordinance no. 112/2011, of 22 March).

Pursuant to article 3 of the LRAT, taking into account the principle of simplification and procedural economy, the cumulation of claims is admissible, considering that the merits of the claims depend on the assessment of the same circumstances of fact and on the interpretation and application of the same principles and rules of law. To this end it is no obstacle that the assessment acts in dispute concern different vehicles, with different transfer dates, different grounds for transfer, and different owners, since the circumstances of fact are identical, relating to the transfer of vehicle ownership.

No nullities, exceptions, or preliminary questions exist that impede the immediate consideration of the merits of the case.

II. FACTS

Based on the elements contained in the case file and in the administrative proceedings attached to the file, the following facts are considered proven:

A) The corporate purpose of the Claimant consists of financing acquisitions on credit of consumer goods and equipment (financial leasing and credit), as well as the activity of Long-Term Rental (LTR) of motor vehicles without a driver, motorcycles, and boats;

B) Within the scope of the activity it carries out, the Claimant enters into contracts with its customers for long-term rental and financial leasing contracts, at the end of which the vehicle is transferred to the lessee, which are motor vehicles, and likewise loan contracts for the acquisition of motor vehicles in which a retention of title clause is established in its favour;

C) At the end of financial leasing contracts, as a rule, the lessee acquires the vehicle for a residual value;

D) With regard to the vehicles identified in table 1 of the arbitral petition, the documents submitted by the Claimant, in particular the loan contracts in which the retention of title clause in favour of the Claimant appears, demonstrate that the vehicles to which document no. 295 refers were, in fact, transferred by the Claimant, with the exception of the vehicle ...-...-..., being, therefore, at the date of the tax event giving rise to the IUC, the parties responsible for payment of the IUC are the acquirers of the vehicles, which are identified in document no. 295;

E) With regard to the vehicles identified in table 2 of the arbitral petition, the documents submitted by the Claimant, which constitute the invoices/receipts of the sales carried out, the underlying lease contracts, and the declarations of responsibility of the acquirers for promoting the registration of vehicle ownership effectively suggest the transfer of ownership and use of the vehicles in question, with the exception of the vehicle ...-...-... identified in documents no. 66 and 96, and the vehicle ...-...-... identified in document 86;

F) With regard to the vehicles identified in tables 3 and 5 of the arbitral petition, the documents submitted by the Claimant, which constitute the financial leasing contracts, effectively suggest the transfer of ownership and use of the vehicles in question.

The Tribunal did not consider the following facts proven:

A) Ownership of the vehicle ...-...-..., identified in document 295, of the vehicle ...-...-... identified in documents no. 66 and 96, and of the vehicle ...-...-... identified in document 86 was transferred by the Claimant;

B) Ownership of the vehicles that are the subject of a lease contract identified in table no. 3 was transferred;

C) Ownership of the vehicles identified in table no. 4 of the arbitral petition and in document no. 298 was transferred;

D) Ownership of the vehicles that are the subject of a lease contract identified in table no. 5 was transferred.

This Tribunal formed its conviction on the basis of the documents attached to the file.

III. LAW

The main questions that arise in the present case concern whether the Claimant should be qualified as a taxpayer subject to IUC, with respect to the IUC assessment acts already identified, in the following situations:

1. With regard to vehicles sold with retention of title in favour of the Claimant (identified in table no. 1 of the arbitral petition);

2. With regard to vehicles already alienated on the date of the occurrence of the respective tax event (identified in table no. 2 of the arbitral petition);

3. As regards vehicles that are the subject of financial leasing contracts entered into by the Claimant (identified in table no. 3 of the arbitral petition);

4. As regards vehicles that are total losses or permanently lost (identified in table no. 4 of the arbitral petition).

5. With regard to vehicles that are the subject of financial leasing contracts which have defaulted, with proceedings in litigation and the vehicles not being recovered to date (identified in table no. 5 of the arbitral petition).

To this end the Claimant argues, in summary, the following:

A. In accordance with the provisions of no. 1 of article 3 of the IUC Code, "Taxpayers of the tax are the owners of vehicles, considered as such the natural or legal persons, of public or private law, in whose name the same are registered";

B. The provision also establishes in no. 2 of the same rule that "Financial lessees, acquirers with retention of title, as well as other holders of purchase option rights by force of the lease contract are equated to owners".

C. In the interpretation of the rule on the incidence of IUC, and following the canons of law that govern the interpretation of legal norms, namely article 9 of the Civil Code, it must be taken into account that "Interpretation should not be limited to the letter of the law but should reconstruct the legislative intent from the texts, taking especially into account the unity of the legal system, the circumstances in which the law was enacted and the specific conditions of the time in which it is applied";

D. And that in interpretation "However, the interpreter cannot consider the legislative intent that does not have in the law a minimum of verbal correspondence, even if imperfectly expressed".

E. From what precedes, it follows that the first task to be undertaken with a view to the interpretation of the rule on incidence in question will be to seek to reconstruct the legislative intent underlying the legal text.

F. In article 1 of the IUC Code the legislator established what is called the principle of equivalence.

G. In accordance with this principle, the tax in question here seeks to burden the taxpayers to the extent of the environmental and road cost that they cause, in implementation of a general rule of tax equality.

H. It is, therefore, a principle that imposes, within the scope of the taxation of motor vehicle circulation, the logic of the user-payer.

I. It is, therefore, within this rationale that the rule on subjective incidence of IUC must, from the outset, be interpreted.

J. It should therefore be understood that the taxpayer subject to IUC is the owner of the vehicle only in those cases in which the acquirer is not burdened with a retention of title clause or where there are no other holders of the purchase option right by force of a lease contract.

K. In effect, in those cases, the tax is owed by the one who holds the right of exclusive use of the vehicle, by reason of the user-payer principle that guides the taxation of motor vehicle circulation.

L. With regard to the IUC assessment acts on vehicles with retention of title in favour of the Claimant (Table 1, cf. Doc. no. 295), the acquisition of the vehicles is made through financing granted by the Claimant to the respective acquirers, and a retention of title clause is established in its favour;

M. The existence of retention of title over a determined asset in favour of a third party (in this case the Claimant) allows it to reserve for itself the ownership of the thing (vehicle) until the fulfilment of the obligations that fall on the debtor (the borrower) within the scope of the contract in question (loan);

N. However, the possession of the thing passes immediately, and by force of the contract, to the sphere of the acquirer, being the latter its exclusive user;

O. Recognizing this effect, the legislator provided for the equating to owners, for purposes of determining the status as a taxpayer subject to IUC, of acquirers with retention of title, without, however, providing for the necessity of such retention operating in favour of the transferor;

P. This is sufficient to conclude that, in the cases provided for in no. 2 of article 3 of the IUC Code, the requirements of subjective incidence of the tax event are verified only in the sphere of the acquiring users and only in relation to these, being, therefore, the tax acts identified in Table no. 1 are unlawful.

Q. With regard to the IUC assessment acts relating to vehicles already alienated on the date of the occurrence of the respective tax event (Table no. 2, cf. Doc. no. 296), since the ownership of the motor vehicles was transferred on the date on which the obligation for the Tax fell due, the Claimant was not the owner of the motor vehicles subject to the tax claimed here on the date of the occurrence of the tax event.

R. Such transfers are evidenced by the invoices that document the sales, contemporaneously with the transfers in question (cf. document no. 296);

S. Therefore the tax assessed is the sole responsibility of the respective acquirers, to whom the right of ownership over the vehicles in question was transferred, being these the corresponding taxpayers.

T. As regards the IUC assessment acts on vehicles that are the subject of financial leasing contracts entered into by the Claimant (Table no. 3, cf. Doc. no. 297), on the date of the occurrence of the tax event giving rise to the Tax, the said vehicles were leased under a financial leasing contract, whereby there is likewise no doubt that the respective lessees are the taxpayers subject to the tax;

U. In light of the foregoing, in the cases provided for in no. 2 of article 3 of the IUC Code, one can only conclude that the requirements of subjective incidence of the tax event are verified only in the sphere of the lessees and only in relation to these;

V. As regards the IUC assessment acts on vehicles that are total losses or permanently lost (Table no. 4, cf. Docs. no. 298), the Claimant, as owner of the vehicles referred to, provided its insurer with the documents necessary to prove the occurrence of the loss, and the respective effects, at which time it received, under the corresponding contract, the indemnity owed (doc. no. 298 which is protested to be attached and whose content is given as reproduced);

W. Further, it provided the insurer with the documents necessary for it to request, as is incumbent upon it by force of law (cf. no. 8 of article 119 of the Road Code), the cancellation of the corresponding registration;

X. For this reason, on the date on which the tax in question here became due, the objective incidence requirement no longer applied (cf. articles 2 and no. 3 of article 4 of the IUC Code).

Y. With regard to the IUC assessment acts on vehicles that were the subject of financial leasing contracts which have defaulted, with proceedings in litigation and the vehicles not being recovered to date (Table no. 5, cf. Doc. no. 299), on the date on which the tax in question became due, the taxpayer subject to the tax is the Lessee;

Z. Since, as already mentioned, "the obligation to pay IUC falls directly on the financial lessee and not on the lessor, given the characteristics of its legal position", one can only conclude that the requirements of subjective incidence of the tax event are verified only in the sphere of the lessees and only in relation to these, whereby, given the value of the Vehicle Registry and the circumstance that the vehicles in question were leased on the date of the occurrence of the tax event, it is not the Claimant that is the respective taxpayer, and therefore the tax acts identified in Table no. 5 should be annulled.

For its part, the TA argues, in summary, the following:

A) The tax acts in question do not suffer from any defect of violation of law, in so far as in light of the provisions of article 3, nos. 1 and 2, of the CIUC and of article 6 of the same code, it was the Claimant, in its capacity as owner, that is the taxpayer subject to IUC;

B) As regards the assessments relating to vehicles sold with retention of title, for the Claimant to be able to benefit from the regime of article 3/3 of the CIUC, it would have been necessary that the supposed retentions of title had been registered;

C) However, the Claimant did not minimally demonstrate that such fact (i.e., the existence of retention of title) was brought to the vehicle registration, a burden that was imposed on it;

D) Now, as the Claimant itself confesses in article 13 of its petition – confession which is hereby accepted so as not to be withdrawn again – the alleged acquisitions with retention of title were never registered;

E) As regards the assessments relating to vehicles alienated on the date of the tax event, the Claimant's argument is unfounded, whereby articles 42 to 67 of the petition are hereby contested, as is also contested the documentary amalgam in which Document 296 attached to the petition is embodied, as will hereinafter be demonstrated:

F) In the first place, Document 296 attached to the petition concerns contractual relations established between the commercial companies B, S.A. and C, S.A. and their customers;

G) In the second place, Document 296 attached to the petition does not relate to financial leasing contracts, but rather:

a) In the case of the commercial company B, S.A., to "rental contracts", as results from its title;

b) In the case of the commercial company C, S.A., to "vehicle rental contracts without a driver", as results from its title.

H) In the third place, the purported invoices contained in the amalgam in which Document 296 attached to the petition is embodied are not sufficient to undermine the (supposed) legal presumption established in article 3 of the CIUC;

I) Foremost because the purported invoices appear non-compliant with what tax law requires regarding the legal requirements demanded for their issuance (article 36/5 of the Value Added Tax Code), whereby such documents can never benefit from the presumption of truth to which article 75 of the General Tax Law alludes;

J) In addition, the purported invoices are not apt to prove the execution of a synallagmatic contract such as the sale and purchase, since such documents do not reveal of themselves an essential and unequivocal declaration of intent (i.e., acceptance) on the part of the purported acquirers;

K) As regards the assessments relating to vehicles that are the subject of financial leasing contracts, the Claimant's argument is unfounded, whereby articles 68 to 77 of the petition are hereby contested, as is also contested the documentary amalgam in which Document 297 attached to the petition is embodied, as will hereinafter be demonstrated:

L) In the first place, Document 297 attached to the petition concerns contractual relations established between the commercial companies B, S.A. and C, S.A. and their customers;

M) In the second place, Document 297 attached to the petition does not relate to financial leasing contracts, but rather:

a) In the case of the commercial company B, S.A., to "rental contracts", as results from its title;

b) In the case of the commercial company C, S.A., to "vehicle rental contracts without a driver", as results from its title.

N) In the third place, even if it were concluded that we are dealing with financial leasing contracts granted by the Claimant, it would always have been incumbent upon the latter to demonstrate that it had complied with the accessory obligation imposed by article 19 of the CIUC;

O) In effect, it is important to recall that the application of article 3 of the CIUC must be combined with the provision of article 19 of the same code, in which it is established that "for purposes of article 3 of the present code (…), entities that proceed to the financial leasing, operational leasing or long-term rental of vehicles are required to provide to the Directorate-General for Tax the data relating to the identification of the users of the leased vehicles".

P) In matters of financial leasing and for purposes of the elision of article 3 of the CIUC, it is necessary that the financial lessors (such as the Claimant) comply with the obligation inherent in article 19 of that code in order to exonerate themselves of the obligation to pay the tax;

In light of the foregoing, in relation to the position of the Parties and the arguments presented, to determine whether the Claimant should be qualified as a taxpayer subject to IUC, in relation to the vehicles already identified, it will be necessary to verify:

a) Whether or not the rule on subjective incidence contained in article 3, no. 1 of the IUC Code establishes a presumption;

b) Who is the taxpayer subject to IUC, for purposes of the provision of article 3, nos. 1 and 2 of the IUC Code:

i. With regard to vehicles sold with retention of title in favour of the Claimant;
ii. With regard to vehicles already alienated on the date of the occurrence of the respective tax event;
iii. As regards vehicles that are the subject of financial leasing contracts entered into by the Claimant;
iv. As regards vehicles that are total losses or permanently lost;
v. With regard to vehicles that are the subject of financial leasing contracts which have defaulted, with proceedings in litigation and the vehicles not being recovered to date.

Let us see what should be understood.

a) Interpretation of no. 1 of article 3 of the IUC Code

Article 3 of the IUC Code establishes the following:

"1 - 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.

2 – Financial lessees, acquirers with retention of title, as well as other holders of purchase option rights by force of the lease contract are equated to owners."

It follows from article 11 of the General Tax Law (GTL) that the interpretation of tax law must be carried out in accordance with the general principles of interpretation.

The principal general principles of interpretation are established in article 9 of the Civil Code (CC), in the following terms:

"1. Interpretation should not be limited to the letter of the law, but should reconstruct the legislative intent from the texts, taking especially into account the unity of the legal system, the circumstances in which the law was enacted and the specific conditions of the time in which it is applied.

1. However, the interpreter cannot consider the legislative intent that does not have in the letter of the law a minimum of verbal correspondence, even if imperfectly expressed.

2. In fixing the meaning and scope of the law, the interpreter will presume that the legislator adopted the most correct solutions and was able to express its intent in adequate terms."

It is thus established that there are three elements of interpretation of the Law, namely: the literal element, the historical and rational element, and the systematic element.

Having regard to the literal element of the rule here under discussion, it will be important, in the first place, to reconstruct the legislative intent through the words of the law. It is stated in no. 1 of article 3 of the IUC Code 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."

According to the TA, the expression "considered as" does not constitute a legal presumption, it being the intent of the legislator to establish expressly and intentionally that those are considered as such (as owners) the persons in whose name the same (vehicles) are registered, because it is this interpretation that preserves the unity of the tax legal system.

It occurs that, from the point of view of literal meaning, one observes that the expression "considered as" or "is considered" is often used with a meaning equivalent to the expression "presumed as" or "is presumed".

Thus, by way of example, see article 191, no. 6, of the CPTC, among other articles noted in the arbitral decisions handed down in cases nos. 14/2013-T, 27/2013-T, 73/2013-T, or 170/2013-T.

In this way, it can be said that the expression "considered as" has "a minimum of verbal correspondence, even if imperfectly expressed", and one must recognize that word a current and normal correspondence to that presumptive sense (See the arbitral decision handed down in the context of case no. 286/2013-T).

Nevertheless, and as is emphasized by the TA, the word "considered" is also used outside of presumptive contexts – See article 18 of its response.

For this reason, it is important to submit no. 1 of article 3 of the IUC Code to the control of other elements of interpretation of a logical nature.

Thus, having regard to the historical element of interpretation, it is important to consider that Bill no. 118/X, of 7.03.2007, underlying Law no. 22-A/2007, of 29.06, establishes "as a structuring and unifying element (…) the principle of equivalence, making it thus clear that the tax, as a whole, is subordinated to the idea that the Claimants should be burdened to the extent of the cost that they cause to the environment and the road network, being this the raison d'être of this tax figure."

In this context, it seems clear to us that the legislator intended to tax the real and actual taxpayer causing road and environmental damage and not any mere holder of a vehicle registration.

As has been emphasized on several occasions in various arbitral decisions, the principle of equivalence aims to internalize the negative environmental externalities resulting from the use of motor vehicles, and was established as a fundamental principle of the taxation of vehicles in circulation.

As Sérgio Vasques argues, in "Special Excise Taxes", Almedina, Coimbra, 2001, p. 122, "Thus, a tax on motor vehicles based on a rule of equivalence will be equal only if those that cause the same road wear and the same environmental cost pay the same tax; and those that cause different wear and environmental cost, pay different tax as well", adding that the implementation of the said principle "(…) dictates other requirements also with regard to the subjective incidence of the tax (…)".

Taking into account the grounds underlying the creation of the current IUC Code, in particular the establishment of the principle of equivalence as a structuring and unifying principle of the taxation of vehicles in circulation, it seems to us that no. 1 of article 3 of the IUC Code cannot be interpreted as a closed command, but rather as a rebuttable presumption, which is based on the assumption that in reality the agent responsible for environmental damage is, as a rule, the registered owner of the motor vehicle. An assumption that cannot but be disregarded, should it in reality be another agent responsible, that is, the taxpayer subject to IUC.

From the point of view of the systematic element, it will be important to reinforce again that right from article 1 of the IUC Code it is established that "The single vehicle circulation tax complies with the principle of equivalence, seeking to burden the Claimants to the extent of the environmental and road cost that they cause, in implementation of a general rule of tax equality."

As is argued by A. Brigas Afonso and Manuel T. Fernandes, in "Tax on Vehicles and Single Vehicle Circulation Tax, Annotated Codes, pp. 183, "the legislator seeks to legitimize the taxation of motor vehicles on the basis of the negative externalities caused by them (on public health, the environment, road safety, congestion of communication networks and urban landscape) demystifying the idea that auto taxation is very high in Portugal."

According to Batista Machado, in "Introduction to Law and Legitimizing Discourse", p. 183, the systematic element "comprises the consideration of the other provisions that form the complex regulatory framework of the institute in which the rule being interpreted is integrated, that is, which regulate the same matter (context of the law), as well as the consideration of legal provisions that regulate parallel normative problems or related institutes (parallel places). It also comprises the systematic place that belongs to the rule being interpreted in the overall legal system, as well as its consonance with the spirit or intrinsic unity of the entire legal system."

This is, moreover, the fairest solution if we consider that the unity of the tax system cannot but be found in the principle of material truth and in the principle of proportionality (See Saldanha Sanches, in "Principles of Tax Contentious Proceedings", pp. 21, and Alberto Xavier, in "Concept and Nature of the Tax Act", pp. 147 et seq.).

By the foregoing, the arguments of the TA do not proceed, to the effect that "the presumption of motor vehicle ownership derives solely, directly and exclusively from the vehicle registration regime itself, and not from tax legislation on motor vehicles which constitutes a collateral aspect of that regime."

In truth, the interpretation here defended is not only that which best accords with the principle of material truth, but also the only one that serves the purposes of tax justice.

Equally, contrary to what is argued by the TA, it does not seem defensible to us, in light of the constitutional principles in force, the predominance of the principle of efficiency of the tax system over the principle of material justice. Although the practical difficulties that the elision of the presumption established in article 3, no. 1 of the IUC Code may cause in terms of immediate collection of revenues by the TA cannot but be understood, the interpretation of the Law cannot be adjusted to these needs, but rather the procedures associated with the collection of this tax should be altered efficiently and in conformity with the Law, not forgetting the legal possibility of suspension of the statute of limitations on taxes.

Considering that tax law exists to regulate conflicts of interest between the claims of the State to pursue the public interest of obtaining revenue and the claims of taxpayers to maintain the integrity of their assets, it should not, as a rule, serve as an interpretive criterion for the tax rule, the safeguarding of the patrimonial or financial interest of the State.

In summary: on the basis of article 9 of the CC, it is considered that all elements of interpretation (literal, historical and systematic) point to the fact that article 3, no. 1, of the IUC Code establishes a rebuttable presumption. This means that the taxpayers subject to IUC being, in principle, the owners of the vehicles, considered as such the persons in whose name the same are registered, may, after all, be others, if it is effectively others that are the causers of environmental damage, as users of the vehicles in circulation.

b) Taxpayer subject to IUC, for purposes of the provision of article 3, nos. 1 and 2 of the IUC Code with regard to:

• vehicles sold with retention of title in favour of the Claimant;
• vehicles already alienated on the date of the occurrence of the respective tax event;
• vehicles that are the subject of financial leasing contracts entered into by the Claimant;
• vehicles that are total losses or permanently lost;
• vehicles that are the subject of financial leasing contracts which have defaulted, with proceedings in litigation and the vehicles not being recovered to date.

Having regard to the foregoing in a) above, it is understood that the provision under analysis establishes a presumption of ownership in favour of the persons in whose name the vehicles are registered.

Pursuant to article 73 of the GTL, "Presumptions established in the rules on tax incidence always admit proof to the contrary."

As is argued by Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, in "General Tax Law, Annotated and Commented", pp. 652, 4th Edition, "what is intended 'always' is to tax actual income and not non-existent income, and it is for this reason, of wanting to always tax real values, that article 73 of the GTL permits 'always' the elision of presumptions.

This is the interpretation that is in consonance, on the one hand, with the principle stated in article 11, no. 3, of the GTL that, in cases of doubt about the interpretation of tax rules "attention must be paid to the economic substance of the tax facts" and, on the other hand, with the principle of equality in the distribution of public charges, which imposes that the taxation of the generality of taxpayers, whenever possible, be based on the economic reality underlying the tax facts and is not compatible with the existence of special cases of taxation on the basis of fictitious values in situations in which the real value of the tax facts is known or is ascertainable.

Thus let us see:

• Vehicles sold with retention of title in favour of the Claimant

The Claimant remained registered as owner and lessor of the vehicles identified in table no. 1 – doc. nos. 1 to 18, attached with the arbitral petition, whereby the TA seeks to impute to it the responsibility for payment of the IUC relating to the years 2013 and 2014, pursuant to article 3, no. 1, of the IUC Code.

However, the Claimant argues that, in truth, the vehicles in question were sold with retention of title in favour of the Claimant/transferor.

To prove such transfer of the right of ownership, the Claimant submitted document no. 295, from which the following relevant documents appear, among others:

• Loan contracts or underlying credit contracts;
• Declarations of commitment of the acquirers.

On the basis of the documents submitted, the Claimant argues that at the moment of the constitution of the tax event relevant for purposes of accrual of the respective IUC, that is, in the years 2013 and 2014, the legal ownership of the vehicles in question was no longer in the sphere of the Claimant, since the vehicles had already been transferred, with retention of title in favour of the transferor, now Claimant.

Since it is not legally required that a written form be used for the contract for the sale of motor vehicles, proof of the corresponding sale may be made by any means, that is, by testimony or documentary evidence.

In the case at issue, the documents submitted by the Claimant, in particular the loan contracts in which the retention of title clause in favour of the Claimant appears, demonstrate that the vehicles to which document no. 295 refers were, in fact, transferred by the Claimant, being, therefore, on the date of the tax event giving rise to the IUC, the parties responsible for payment of the IUC are the acquirers of the vehicles, which are identified in document no. 295.

Notwithstanding, with regard to the vehicle ...-...-..., it is considered that such proof was not made, as the Claimant only submitted the credit contract, from which there is no reference to the retention of title or to the acquisition of the vehicle.

Thus, in light of the provision of article 3, nos. 1 and 2 of the IUC Code, it is considered that the Claimant succeeded in proving that the responsibility for payment of the IUC with regard to the vehicles identified in table no. 1 and in document no. 295 is that of the acquirers identified, not having succeeded in making such proof with regard to the vehicle ...-...-..., the responsibility for payment of the tax of which is considered to be that of the Claimant.

The Tribunal is, therefore, convinced that, in light of the proof produced by the Claimant, the IUC assessment acts corresponding to the vehicles identified in documents 1 to 10 and 12 to 17, attached with the arbitral petition, are illegal, in so far as the responsibility for their payment is not imputable to the Claimant, in light of the documents attached with no. 295.

• Vehicles already alienated on the date of the occurrence of the respective tax event;

The Claimant remained registered as owner and lessor of the vehicles identified in table no. 2 – documents nos. 19 to 149, attached with the arbitral petition, whereby the TA seeks to impute to it the responsibility for payment of the IUC relating to the years 2013 and 2014, pursuant to article 3, no. 1, of the IUC Code.

However, the Claimant argues that, in truth, the vehicles in question had already been alienated on the date of the anniversary of their respective registrations.

The Respondent argues, for its part, that the invoices submitted by the Claimant are not sufficient to undermine the (supposed) legal presumption established in article 3 of the CIUC.

The Tribunal understands that the documents submitted by the Claimant, which constitute the invoices/receipts of the sales carried out, the underlying lease contracts, and the declarations of responsibility of the acquirers for promoting the registration of vehicle ownership effectively suggest the transfer of ownership and use of the vehicles in question.

Notwithstanding, it is considered that such proof was not made either with regard to the vehicle ...-...-... identified in documents nos. 66 and 96, nor with regard to the vehicle ...-...-... identified in document 86, since the Claimant does not submit any invoice/receipt of sale or other evidence of transfer of vehicle ownership.

Therefore, on the basis of the documents submitted, the Tribunal is convinced that the IUC assessment acts identified in documents nos. 19 and 65, 67 to 85 and 87 to 95 and 97 to 149 concern motor vehicles that had already been transferred on the date of the tax event giving rise to IUC, being, therefore, the responsibility for their payment imputable to the owners of such vehicles and not to the Claimant, not having the Claimant succeeded in making such proof with regard to the vehicles ...-...-... and ...-...-..., the responsibility for payment of the tax of which is considered to be that of the Claimant.

The Tribunal is, therefore, convinced by the proof produced by the Claimant that the IUC assessment acts contained in documents nos. 19 and 65, 67 to 85 and 87 to 95 and 97 to 149 attached with the arbitral petition, are illegal, in so far as the responsibility for their payment is not imputable to the Claimant, in light of the documents attached with no. 296.

• Vehicles that are the subject of financial leasing contracts entered into by the Claimant

The Claimant remained registered as owner and lessor of the vehicles identified in Table no. 3, as per document no. 297, attached with the arbitral petition, whereby the TA seeks to impute to it the responsibility for payment of the IUC, pursuant to article 3, no. 1, of the IUC Code.

However, the Claimant argues that, in truth, the vehicles were leased under a financial leasing contract.

To prove such fact, the Claimant submitted document no. 297, from which the following relevant documents appear, among others:

• Financial leasing contracts;
• Lease contracts.

On the basis of the documents submitted, the Claimant argues that at the moment of the constitution of the tax event relevant for purposes of accrual of the respective IUC, that is, in the years 2013 and 2014, the requirements of subjective incidence of the tax event are verified only in the sphere of the lessees and only in relation to these.

It occurs that, having analyzed the documents submitted, it is found that the contracts in question constitute financial leasing contracts only with regard to 5 vehicles, all the others being simple lease contracts.

The Tribunal understands that the documents submitted by the Claimant, which constitute the financial leasing contracts, effectively suggest the transfer of ownership and use of the vehicles in question.

Notwithstanding, it is considered that with regard to all vehicles that are the subject of a lease contract, the taxpayer is not the lessee, but rather the owner of the vehicle, pursuant to article 3, no. 1 of the IUC Code, since the content of those contracts does not give rise to purchase option rights (See Decision of CAAD, handed down in case 244/2014-T, of 2.11.2014).

Therefore, on the basis of the documents submitted, the Tribunal is convinced that the IUC assessment acts identified in documents nos. 152, 159, 160, 171, 172 and 175 are illegal, being, therefore, the responsibility for their payment imputable to the lessees and owners of such vehicles and not to the Claimant, as follows from the provision of article 3, no. 2 of the IUC Code, all other assessment acts identified in table 3 being legal.

• Vehicles that are total losses or permanently lost;

The Claimant is registered as owner of the vehicles identified in table no. 4 – doc. no. 298, attached with the arbitral petition, whereby the TA seeks to impute to it the responsibility for payment of the IUC relating to the years 2013 and 2014, pursuant to article 3, no. 1, of the IUC Code.

However, the Claimant argues that, in truth, the vehicles suffered, before the occurrence of the tax event giving rise to the respective tax, losses that caused their total loss, having provided its insurer with the documents necessary to prove the occurrence of the losses.

The Respondent argues, for its part, that the loss or total loss does not necessarily entail the loss of motor vehicle ownership, nor indeed the receipt of indemnity for the loss or the loss by the policyholder.

On the basis of the documents submitted, the Tribunal understands that the Claimant did not prove that the transfer of ownership of the damaged or totally lost motor vehicles took place in favour of the insurer, being, therefore, applicable, in these situations, the presumption of ownership provided for in no. 1 of article 3 of the IUC Code.

In consequence, it is considered that, pursuant to the provision of article 4, no. 3 of the IUC Code, the tax is owed by the owner "until the cancellation of the registration or record by reason of scrapping carried out in accordance with the law."

On the date of the occurrence of the tax event giving rise to IUC, the vehicles contained in table no. 4 had not been transferred by the Claimant, being, therefore, the Claimant responsible for payment of the respective IUC assessment acts.

• Vehicles that are the subject of financial leasing contracts which have defaulted, with proceedings in litigation and the vehicles not being recovered to date

The Claimant remained registered as owner and lessor of the vehicles identified in table no. 5, as per document no. 299, whereby the TA seeks to impute to it the responsibility for payment of the IUC, pursuant to article 3, no. 1, of the IUC Code.

However, the Claimant argues that, in truth, the vehicles were the subject of financial leasing contracts, and the respective lessees defaulted, with the proceedings in litigation.

To prove such facts, the Claimant submitted document no. 299, from which the following relevant documents appear, among others:

• Financial leasing contracts;
• Long-term rental contracts;
• Vehicle rental contracts without a driver;
• Loan contracts

On the basis of the documents submitted, the Claimant argues that at the moment of the constitution of the tax event relevant for purposes of accrual of the respective IUC, that is, in the years 2013 and 2014, the requirements of subjective incidence of the tax event are verified only in the sphere of the lessees and only in relation to these.

It occurs that, having analyzed the documents submitted, it is found that the contracts in question constitute financial leasing contracts only with regard to the vehicles ...-...-..., ...-...-... and ...-...-..., all the others being simple lease contracts.

The Tribunal understands that the documents submitted by the Claimant, which constitute the financial leasing contracts, effectively suggest the transfer of ownership and use of the vehicles in question.

Notwithstanding, it is considered that with regard to all vehicles that are the subject of a lease contract, the taxpayer is not the lessee, but rather the owner of the vehicle, pursuant to article 3, no. 1 of the IUC Code, since the content of the contracts does not give rise to purchase option rights (See Decision of CAAD, handed down in case 244/2014-T, of 2.11.2014).

Therefore, on the basis of the documents submitted, the Tribunal is convinced that the IUC assessment acts identified in documents nos. 229, 237, 269, 274, 270 and 275 are illegal, being, therefore, the responsibility for their payment imputable to the lessees and owners of such vehicles and not to the Claimant, as follows from the provision of article 3, no. 2 of the IUC Code, not having the Claimant succeeded in making such proof with regard to the vehicles ...-...-..., ...-...-... and ...-...-..., the responsibility for payment of the tax of which is considered to be that of the Claimant.

The Tribunal is, therefore, convinced that, in light of the proof produced by the Claimant, the IUC assessment acts corresponding to the vehicles identified in documents nos. 229, 237, 269, 274, 270 and 275 in table 5, attached with the arbitral petition, are illegal, in so far as the responsibility for their payment is not imputable to the Claimant, the remaining acts being legal.

IV. DECISION

Thus, the Tribunal decides:

To rule partially in favour of the arbitral petition, in the following terms:

A) To rule the request unfounded, as not proven, with regard to the following assessment acts:

B) To rule in favour of the petition, as proven, and in consequence to declare illegal and annul all other assessment acts for Single Vehicle Circulation Tax and compensatory interest.

V. VALUE OF THE CLAIM

In accordance with the provision of article 306, no. 2 of the Code of Civil Procedure, 97-A of the CPTC and article 3, no. 2 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the claim is fixed at €18,522.51.

VI. COSTS

Pursuant to the provision of articles 12, no. 2 of the LRAT, and article 4, no. 4 of the Regulation of Costs of Tax Arbitration Proceedings, the value of the arbitration fee is fixed at €1,224, pursuant to Table I of the said Regulation, to be borne by the Respondent and the Claimant, in the proportion of 65% and 35%, respectively, in accordance with article 22, no. 4 of the LRAT.

Let notice be served.

Lisbon, 3 August 2015

The Arbitrator

Magda Feliciano

(The text of this decision was prepared by computer, pursuant to article 131, no. 5, of the Code of Civil Procedure, applicable by referral from article 29, no. 1, paragraph e) of Decree-Law no. 10/2011, of 20 January (LRAT), its drafting being governed by the spelling prior to the Orthographic Agreement of 1990.)