IUC Subjective Incidence: Vehicle Owner Liability After Transfer or Financial Lease (CAAD 455/2017-T)

ARBITRAL DECISION

I. Report

1. A…, legal entity no.…, with registered address at Rua…, lot …, Lisbon, in its capacity as the incorporating entity, by merger, of company B…, S.A, legal entity no.…, (Doc.1), meanwhile dissolved, requested the constitution of an arbitral tribunal in tax matters, raising a request for arbitral decision against the act of partial dismissal of a discretionary appeal and, consequently, against the acts of assessment of Single Motor Vehicle Tax (IUC) and compensatory interest, relating to the taxation periods from 2012 to 2016 and to the motor vehicles identified by their respective registration numbers in a document attached to the request (Doc.4). As a consequence of the aforementioned annulment, it requests the condemnation of the Tax Administration to reimburse the amount it considers to have been unduly collected, in the total amount of € 59,453.93, plus the corresponding indemnity interest accrued in accordance with legal terms.

2. As the basis for the request, presented on 31-07-2017, the Claimant alleges, in summary, that, although the vehicles in question were registered in its name on the date to which the facts relate upon which the questioned assessments are based, these vehicles were, in some cases, no longer its property, having been transferred to third parties or, in others, being leased to third parties under financial leasing contracts, in which the now Claimant assumed the position of lessor.

3. In response to the request, the Tax and Customs Authority (AT) pronounced itself in the sense of the lack of merit of the present request for arbitral decision, maintaining in the legal order the contested tax acts and, accordingly, by the absolution of the respondent entity. However, it raises the exception of untimeliness of the discretionary appeal, and consequently, of the present request for arbitral decision regarding assessments concerning some of the vehicles, which it identifies by their respective registration numbers.

4. The request for constitution of the arbitral tribunal was accepted by the President of CAAD and automatically notified to the Tax and Customs Authority on 29-08-2017.

5. In accordance with the provisions of paragraph a) of no. 2 of article 6 and paragraph b) of no. 1 of article 11 of Decree-Law no. 10/2011, of 20/01, as amended by article 228 of Law no. 66-B/2012, of 31/12, the Deontological Council appointed the undersigned as arbitrator of the single arbitral tribunal, who communicated acceptance of the appointment within the applicable term, and notified the parties of this appointment on 15-09-2017.

6. Duly notified of this appointment, the parties did not express an intention to refuse the appointment of the arbitrator, in accordance with the combined provisions of article 11, no. 1, paragraphs a) and b) of the Tax Arbitration Rules (RJAT) and articles 6 and 7 of the Deontological Code.

7. Thus, in accordance with the provision in paragraph c) of no. 1 of article 11 of RJAT, as amended by article 228 of Law no. 66-B/2012, of 31/12, the single arbitral tribunal was constituted on 19-10-2017.

8. Properly constituted, the arbitral tribunal is materially competent in view of the provision in articles 2, no. 1, paragraph a), of RJAT.

9. The parties have legal personality and capacity and have legitimacy (articles 4 and 10, no. 2, of RJAT, and article 1 of Administrative Order no. 112-A/2011, of 22/03).

10. No nullities have occurred, although an exception has been raised regarding the untimeliness of the present request for arbitral decision with reference to assessments relating to various vehicles duly identified by their respective registration numbers.

11. Considering the knowledge that derives from the procedural documents submitted by the parties, which is deemed sufficient for the decision, the Tribunal decided to dispense with the meeting referred to in article 18 of RJAT, as well as the examination of the witnesses called by the Claimant.

II. Statement of Facts

1. With relevance for the appreciation of the questions raised in the present request for arbitral decision, the following factual elements are highlighted, which, based on the documentary evidence attached to the case file, are considered proven:

12.1. The Claimant is a financial institution which, in the scope of its business purpose, practices all operations and provides all services permitted to banks, with the exception of the reception of deposits;

12.2. Within the scope of its activity, it enters into contracts with its customers for long-term rental (ALD), short-term rental (renting) and financial leasing contracts (leasing) of motor vehicles.

12.3. For this purpose, the Claimant acquires new vehicles from the respective national importers, the ownership of which, at the end of the aforementioned contracts, is transferred to the corresponding lessees or to third parties.

12.4. Although disagreeing with the IUC assessments relating to the taxation periods from 2012 to 2016 and to the vehicles identified by their respective registration numbers in documents attached to the present request (Doc. 4), the Claimant, on 19-09-2016, made full payment of the tax and compensatory interest contained therein, in the total amount of € 59,453.93.

12.5. However, it reacted against the aforementioned acts of assessment through a discretionary appeal filed on 01-01-2017 (Doc. 2) in which, in essence, it alleges that it is not the taxpayer of the tax obligation inasmuch as, on the date of the occurrence of the respective tax event, the vehicles to which these relate had already been transferred to third parties or were leased to the respective lessees under financial leasing contracts or long-term rental (ALD) with a promise of sale.

12.6. By administrative decision of 21-04-2017, the appeal was:

a) Granted regarding the assessments relating to the vehicles with registration numbers …, …, …, … and …, since on the date of the tax due date, the financial leasing contracts were registered, and consequently, the annulment of the tax and compensatory interest assessed was determined;

b) Dismissed, for untimeliness, regarding the remaining vehicles leased under financial leasing contracts, since the most recent payment date is 22-06-2016 and the discretionary appeal was presented on 10-01-2017. The assessments covered by the decision to dismiss for untimeliness of the appeal relate to vehicles with the following registration numbers: …, …, …, …, …, …, … and …, to the periods indicated in the appendix to the request for arbitral decision, with the respective tax totaling € 1,063.69.

c) Dismissed, regarding all the remaining vehicles identified in the attached list, on the ground that, on the date of the tax due date relating to the assessments, these were registered in the name of the Claimant, whereby it was the taxpayer of the tax, in accordance with article 3 of the IUC Code (Doc. 2).

12.7. In the present request for arbitral decision, the Claimant expresses its disagreement regarding the decision referred to above as well as with the aforementioned acts of assessment, with the grounds already set out in the discretionary appeal proceedings, summarized above, and seeks their annulment as well as that of the assessments in question, identified in the appendix to the petition (Doc.4), and further, the recognition of the right to indemnity interest.

1. There are no facts relevant to the decision that have not been proven.

III. Cumulation of Claims

1. The present request for arbitral decision concerns various IUC assessments. However, considering the identity of the tax facts, of the tribunal competent to decide and of the grounds of fact and law invoked, the tribunal considers that nothing prevents, in light of the provisions of articles 3 of RJAT and 104 of CPPT, the cumulation of claims.

IV. Exception of Untimeliness

1. Considering that lack of timeliness constitutes a peremptory exception, in accordance with article 576 of the Code of Civil Procedure - applicable subsidiarily by article 29 of RJAT - which imports the partial absolution of AT regarding the claim, since it prevents the legal effect of the facts raised by the Claimant, the Respondent raises this exception regarding the present request submitted on the basis of the dismissal of a discretionary appeal subject to partial dismissal for untimeliness of the petition.

2. Basing the understanding it expresses, the Respondent alleges that:

"9. From the analysis of the discretionary appeal filed, it appears that, having been presented on 2017-01-10 and the most recent payment date relating to the IUC assessments for vehicles with registration numbers …, …,…, …, …, …, … and … being 2016-06-22, the 120-day period (article 102, no. 1 of CPPT, by virtue of article 70, no. 1 of the same Code) for the presentation of the same has been far exceeded.

1. All other assessments of vehicles bound by financial leasing contracts whose final payment date was 2016-09-19 are timely.

2. Now, the Claimant can never seek to justify the timeliness of the request for arbitral decision based on the dismissal of a partially untimely discretionary appeal.

3. Otherwise, the path would be open to continue discussing the legality of tax acts regarding which the respective periods for contesting have already ended.

4. That is, the Claimant cannot base the timeliness of the recourse to the arbitral tribunal on the presentation of a discretionary appeal petition in the untimely segment.

5. Nor can the tribunal fail to appreciate the question of the timeliness of the discretionary appeal, for purposes of appreciation and decision regarding the timeliness of the request for arbitral decision, which AT contests, in accordance with the documents contained in the administrative case file."

6. The Claimant's understanding is different, sustaining that:

"16. The Finance Directorate of Lisbon considers that the Discretionary Appeal is untimely regarding vehicles with registration numbers …, …, …, …, …, …, … and … – and timely regarding all others.

1. Now, contrary to what is recommended in the administrative decision of partial dismissal of the Appeal, this is not untimely regarding the vehicles specified in the previous point.

2. In fact, the Discretionary Appeal was presented against the self-assessments of IUC, within the 2-year period set out in article 131, no. 1 of CPPT.

3. It being certain that, in accordance with article 16, no. 2 of the IUC Code, "2 - The assessment of the tax (IUC) is made by the taxpayer itself through the Internet, under the conditions for registration and access to electronic declarations.

4. In accordance with no. 3 of the same legal provision, "3 - The assessment of the tax can also be made at any finance service, upon request by the taxpayer (…).".

5. In accordance with article 17, nos. 1 and 2 of the IUC Code (Period for assessment and payment) "1 - In the year of registration or registration of the vehicle in national territory, the tax is assessed by the taxpayer within 30 days following the end of the period legally required for its registration. 2 - In subsequent years the tax must be assessed by the end of the month in which it becomes due, in accordance with no. 2 of article 4".

6. As results from article 18 of the IUC Code, only exceptionally, when the taxpayer does not self-assess the IUC, does AT proceed to the official assessment of this tax.

7. It is, therefore, indisputable that we are faced with a case of tax self-assessment.

8. Moreover, AT itself understands this, namely in the conclusion of Binding Information no. 2012000309 – IVE no. 3221, with concordant administrative decision, of 19.04.2012, of the Legal Substitute of the Director-General of Taxes, according to which "With the self-assessment of IUC via the Internet and application of the exemption provided in paragraph a) of no. 2 of article 5 of the Single Motor Vehicle Tax Code (IUC Code), the right of the holder who acquires a new vehicle whose registration or anniversary of registration occurs still in the taxation period to which the first exemption relates is prejudiced to obtain in that taxation period a new exemption regarding such vehicle. Another solution would only be possible if the holder of the benefit could appeal discretionarily or renounce the first exemption. Now, the discretionary appeal aims at the annulment of tax acts on the ground of their illegality, not being the proper means of renouncing exemptions legally obtained. With self-assessment with exemption of IUC, which presupposes non-exercise of the right to renounce, the legal possibility of renouncing the exemption was precluded. Thus, there is no place for the annulment of the IUC assessment with exemption for the year 2011 of the vehicle with registration number X, since the assessment was made without any illegality and with recognition of the exemption, with the scope of the exemption of paragraph a) of no. 2 of article 5 of the IUC Code having been exhausted.".

9. It being certain that AT, by requirement of the principles of equality, good faith, legal certainty, protection of confidence and the legitimate expectations of taxpayers is legally bound by its own doctrine on the interpretation of tax norms (articles 55 and 68-A of the General Tax Law, 55 of CPPT, 6 and 10 of CPA and 266, no. 2 of the Constitution of the Portuguese Republic).

10. Whereby the period for discretionary appeal, in this case, was 2 years and not merely 120 days, given that a discretionary appeal against self-assessment of IUC is at stake, as results from the text of the appeal itself.

11. Therefore, the Discretionary Appeal is timely regarding all the self-assessments of IUC and compensatory interest in question."

12. Regarding the untimeliness of the appeal filed against the IUC assessments relating to the vehicles above identified, which constitutes the ground of the respective decision to dismiss, the only issue at stake is to determine whether the assessment of this tax is configured as "self-assessment", as the Claimant contends or, differently, whether it is configured as a tax act within the competence of the tax services, as the Respondent argues.

13. Sustaining the position that motivates the exception invoked, the Respondent states:

"15. Article 16 of the IUC Code provides in its no. 1 that the assessment of the tax is the competence of the Tax Administration.

1. Although no. 2 of the same article refers that the assessment of the tax is made by the taxpayer itself, we are not faced with "self-assessment" in the true sense, since it is the Tax Administration that makes the calculation of the amount to be paid by the taxpayer who merely prints the payment voucher for the tax due, not performing any calculation operation.

2. Thus, we are not faced with self-assessment, with the Claimant merely proceeding to payment of the amounts calculated by the Tax Administration and corresponding to the IUC to be paid.

3. In this way, the Claimant could not resort to the procedure provided for in article 131 CPPT, as we are not faced with self-assessment, nor with error imputable to the services, but rather with tax assessment.

4. Now, if it is a tax assessment, the period that the Claimant had to present the discretionary appeal is 120 days, after the end of the period for voluntary payment of tax obligations legally notified to the taxpayer, in accordance with the combined provisions of articles 68, 70 and 102 of CPPT.

5. The discretionary appeal no. …2017… that the Claimant presented on 2017-01-10 covered the IUC assessments relating to the years 2012 to 2016.

6. The end of the period for voluntary payment most recent and relating to the IUC assessments of vehicles bound by financial leasing contracts (with the exception of vehicles whose tax payment deadline was 2016-09-19) occurred on 2016-06-16.

7. Thus, the 120-day period that the Claimant had to appeal discretionarily regarding the assessments for vehicles with registration numbers …, …, …, …, …, …, … and … referred to (had been exceeded, making the aforementioned appeal untimely regarding the same)."

8. From this it follows that the arbitral request presented by the Claimant regarding the IUC assessments for vehicles with registration numbers …, …, …, …, …, …, … and … is untimely."

9. In general terms, this matter has already been appreciated in a decision that we rendered in the arbitral process no. 115/2014-T, relating to an identical situation, to the same tax and Claimant, where it was sustained that:

"46. Regarding acts of self-assessment, article 131 of CPPT provides that, except in cases where it is exclusively a matter of law and self-assessment has been made in accordance with general guidelines issued by the tax administration, the respective contestation depends on the prior filing of a discretionary appeal.

1. Self-assessment, carried out by the taxpayer itself on the basis of the elements it calculates and declares to AT for purposes of control, depends on a legal provision that expressly grants it such competence.

2. This is not the case with IUC. Completely computerized, the procedure for assessing this tax is based on the use, by the Tax and Customs Authority, of elements contained in the databases of vehicles and motor vehicle ownership, as has, moreover, been clearly affirmed by the tax administration itself [1].

3. As a rule, the assessment of this tax is carried out through the internet, via the Tax Authority Portal, under the conditions for registration and access to electronic declarations, with the use of this means being mandatory for legal entities, except in cases where, due to lack of elements, the assessment cannot be carried out electronically. This is the case, in particular, in cases where the vehicle is not contained in those databases, because it is not registered in Portuguese territory or "whenever there is error or omission of taxable vehicle in the database, which does not allow the taxpayer to assess the tax via the internet." (IUC Code, art. 16, nos. 2 and 3).

4. Excepting the cases referred to in the previous number, and whenever the taxpayer is a natural person, recourse to assessment via the tax authority portal on the internet may be set aside, and assessment may be requested by the taxpayer at any finance service, in customer service (IUC Code, art. 16, 3).

5. Taking as reference the elements contained in the database, relating to the identification of the vehicle and characteristics relevant for the objective definition of the tax scope and application of the corresponding rate as well as the subjective scope, the assessment is carried out by electronic means, and immediately issued, by the same means, the competent collection document, of which, in addition to other elements relevant for payment, the demonstration of the respective assessment appears (IUC Code, art. 16, no. 4).

6. In normal situations, as may possibly be the case of those that are evident in the present process, it is the taxpayer who bears the initiative to provoke the assessment, via the internet, in the manner referred to above or at any finance service, if such possibility is not viable as a consequence of error or omission of the database or whenever the use of such means is not mandatory.

7. The reference to the circumstance that the assessment is made by the taxpayer itself via the internet does not imply that there is a situation in which the assessment of the tax in question - calculation of the amount of tax due based on the elements relevant for its quantification - is deferred to the taxpayer. What happens is that the assessment operations are carried out by electronic means, managed by the Tax and Customs Authority, and the taxpayer is not permitted to alter in any way any of the elements that are relevant to them.

8. This is what clearly results from the text of the law: in case of error or omission in the database, the taxpayer must request the assessment at any finance service (IUC Code, art. 16, no. 3, al. c).

9. However, the legislator's choice for the intensive use of electronic means in the assessment procedure for this tax, resorting to the use of databases relating to the registration and registration of ownership of the vehicles subject to it, and to the electronic channel made available to taxpayers as a means of compliance with the obligation, could not fail to raise some doubts as to the functional competence to carry out the assessment, in particular, regarding the guarantees of taxpayers.

10. This question was immediately decisively resolved in no. 1 of article 16 of the IUC Code, which peremptorily establishes that "The competence for assessment is of the Tax and Customs Authority". And, to dispel any doubts that might remain, the aforementioned norm would subsequently be clarified, through Law no. 83-C/2013, of 31/12, in the sense that, "for all legal purposes, it is considered that the tax act is practiced at the finance service of the residence or head office of the taxpayer."

11. Thus, we are not faced with acts of self-assessment, whose contestation requires prior recourse under article 131 of CPPT ..." [2]

12. Since, then, acts of assessment within the competence of AT are at stake, the period for discretionary appeal is that provided for in article 70, no. 1, of CPPT, as correctly understood in the decision for partial dismissal of the appeal, with the 2-year period referred to in article 131 of the same Code not being applicable to this case. The exception invoked by the Respondent thus proceeds.

V. On the Merits of the Claim

1. Deciding on the lack of merit of the claim regarding the situations covered by the exception referred to in the previous point, it is necessary to appreciate its merits regarding the remaining assessments covered by the dismissal of the appeal, although with reasoning different from untimeliness.

2. In the request for arbitral decision the Claimant submits to the appreciation of this tribunal the act of express dismissal of the discretionary appeal and, consequently, the legality of the IUC assessment acts, relating to the periods 2009 and 2012 to 2015 and to the vehicles that it identifies in a list attached to the request (Doc.4), invoking the circumstance that, on the date to which the tax facts that gave rise to them relate, these had already been transferred to third parties or were leased to the lessees under financial leasing contracts or other leasing contracts, with a purchase option for the respective lessees, and consequently, did not assume the quality of taxpayer of the tax assessed to it.

3. It is, therefore, necessary to determine whether the Claimant should or should not be considered a taxpayer of IUC regarding the vehicles and periods to which the tax relates, duly identified in the appendix to the request (Doc.4), because, on the date of the tax due date, they had already been sold to third parties or regarding which leasing contracts or other leasing contracts with a purchase option were in effect, even though such contracts had not been registered with the Motor Vehicle Registry, wherein it remained identified as owner, the lessor.

4. Regarding this matter, article 3 of the IUC Code provides, in its numbers 1 and 2, in the wording in force on the date of the facts under analysis, that:

"1 - 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.

1. Financial lessees, acquirers with reservation of ownership, as well as other holders of purchase option rights by virtue of a leasing contract are equated to owners"

2. According to the understanding of the Respondent, the aforementioned norm does not contain any legal presumption, considering that "The tax legislator in establishing in article 3, no. 1, who are the taxpayers of IUC established expressly and intentionally that these are the owners (or in the situations provided for in no. 2 the persons stated therein), being considered as such the persons in whose names the same are registered.

3. For its part, the Claimant sustains that the aforementioned norm enshrines a legal presumption, defeasible in accordance with general terms and, in particular, by virtue of the provision in article 73 of the General Tax Law according to which presumptions of tax scope always admit proof to the contrary.

4. This matter has been the subject of numerous decisions within the scope of arbitral tribunals operating at CAAD, generally in the sense of the merit of the respective claims, on the ground that the norm in question, in the wording in force on the date of the facts to which the present request relates, contains a legal presumption that admits proof to the contrary.[i]

5. Adhering, therefore, to the position referred to above, it is dispensed, as unnecessary and tedious, the reproduction of the respective reasoning, since in the present process nothing new is advanced on this matter.

6. However, the conclusion that the norm of subjective tax scope of IUC enshrines a defeasible presumption does not rule out another question which, for the present case, is important to clarify, namely that of determining whether the verification of the circumstance provided for in no. 2 of article 3 IUC Code rules out or not the scope rule enshrined in no. 1 of the same article, in the case where compliance with the provision in article 19 of the IUC Code has not been given.

7. This provision, in force on the date of the facts to which the present request relates, established that "For purposes of the provision in article 3 of this code, as well as in no. 1 of article 3 of the law of its approval, the entities that proceed with financial leasing, operational leasing or long-term rental of vehicles are obligated to provide the Tax Directorate-General with data relating to the tax identification of the users of the leased vehicles."

8. From the norm of no. 2 of article 3 of the IUC Code, combined with the cited article 19 of the same Code, there are no doubts that, with vehicles leased to third parties under financial leasing or other leasing contracts with a purchase option, the taxpayer of this tax will be the lessee and not the respective owner, thus ruling out the rule of subjective tax scope in no. 1 of that article, provided that sufficient proof is made to rebut the presumption it contains.

9. This, however, will not be the understanding of the Respondent which, moreover, notes that "... regarding financial leasing the Claimant could only exempt itself from the tax if it had complied with the specific obligation provided for in that norm of the IUC Code.. ...

In this quest, that is, the Claimant not having complied with such obligation, it must be concluded that it is the taxpayer of the tax."

1. It is noted that the relevance of the non-compliance with such obligation regarding the scope of the tax in question has been the subject of several arbitral decisions, recalling in this connection the Arbitral Decision, of 14-07-2014, in Proc. 136/2014-T:

"Indeed, the provision of art. 3, no. 2 of the IUC Code is very clear regarding the subjective scope of IUC, in the duration of financial leasing contracts, subjecting the lessee to that obligation, when it equates the lessee to the owner for this purpose.

Thus, the law not attributing such obligation to the owner-lessor, there will be no place for any exemption on the part of the latter, with the communication provided for in said art. 19 of the IUC Code, for the simple reason that it was never subject to the payment of the tax.

The subjective scope of IUC is established, in all its elements, in art. 3 of the IUC Code, and it is through the application of this provision that the taxpayer will be determined, not being relevant for purposes of the scope of the tax the failure to comply with the aforementioned ancillary obligation." [ii]

1. It is, therefore, to this jurisprudential orientation, to which, without reservation, we adhere, not following, thus, the understanding of the Respondent expressed above.

On the Rebuttal of the Presumption

1. Presumptions of tax scope can be rebutted through the contradictory procedure specifically provided for in article 64 of CPPT or, alternatively, by means of discretionary appeal or judicial contestation of the tax acts based on them.

2. In the present case, the Claimant did not use such procedure, whereby the present request for arbitral decision, following partial dismissal of discretionary appeal, is the proper means to rebut the presumption of subjective tax scope of IUC that supports the tax assessments whose annulment is the object of the request, as this is a matter that falls within the material competence of this arbitral tribunal (articles 2 and 4 of RJAT).

3. With the Claimant appearing in the Motor Vehicle Registry as the owner of the vehicles identified in the request during the taxation periods to which the questioned assessments relate and alleging that the same had already been transferred on the date of the tax due date or were leased to third parties under leasing contracts without compliance with the provision in article 19 of the IUC Code, it remains to evaluate the evidence presented, in order to determine whether it is sufficient to rebut the presumption established in no. 1 of article 3 of the same Code.

4. With a view to rebutting the aforementioned presumption, derived from the entry in the motor vehicle registry, the claimant presents, attached to the present request, copies of the invoices for the sale of the vehicles as well as financial leasing contracts and other leasing contracts with purchase options, those issued and these entered into on a date prior to that of the occurrence of the tax event and the due date of the tax.

5. Pronouncing itself on the evidence presented, the Respondent considers that these are not, by themselves, sufficient to provide conclusive proof of the transfer of the vehicles in question and that, regarding the leased vehicles, the Respondent understands that the Claimant could only exempt itself from the tax if it had complied with the specific obligation provided for in article 19 of the IUC Code.

On the Rebuttal of the Presumption Based on Commercial Invoices

1. Regarding the copies of invoices presented as proof of the transfer of vehicles prior to the date of the tax due date, the Respondent alleges that invoices, in general, are not suitable documents to provide the proof sought in the sense that it is not the Claimant that is the owner of the vehicles during the taxation periods to which the assessments in question relate.

2. In that sense, the Respondent sustains that "Invoices are not apt to prove the celebration of a synallagmatic contract such as sale and purchase, as such documents do not reveal by themselves an essential and unequivocal declaration of will (i.e., acceptance) on the part of the alleged acquirers."

3. Moreover, according to the Respondent, "the rules of motor vehicle registration (still) have not reached the point where mere invoices unilaterally issued by the Claimant can substitute the motor vehicle registration request, furthermore, a document approved by official form.".

4. It is, therefore, necessary to determine whether invoices that evidence commercial transactions constitute an element of proof for rebuttal of the presumption contained in article 3 of the IUC Code and, if this is admitted, whether the copies of invoices presented by the Claimant constitute sufficient proof for this purpose.

5. For this purpose, it is important to keep in mind that, in the situation under analysis, we are faced with contracts of sale and purchase which, relating to movable property and not being subject to any special formality (Civil Code, article 219), operate the corresponding transfer of real rights (Civil Code, article 408, no. 1).

6. Being contracts that involve the transfer of ownership of movable goods, through the payment of a price, these have, as essential effects, among others, that of delivering the thing (Civil Code, articles 874 and 879).

7. However, since contracts of sale and purchase of motor vehicles are at stake, where registration is mandatory, their due performance presupposes the issuance of the declaration of sale necessary for inscription in the registry of the corresponding acquisition in favor of the buyer, as has been understood by the jurisprudence of the superior courts.[iii] Such declaration, relevant for registration purposes, may constitute proof of the transaction, but is not the only or exclusive means of proof of such fact.

8. For registration purposes, no special formality is required either, merely the presentation to the competent entity of a request subscribed by the buyer and confirmed by the seller, who, through a declaration of sale confirms that the ownership of the vehicle was acquired by the latter by a verbal contract of sale and purchase (see. Motor Vehicle Registry Regulation, article 25, no. 1, paragraph a).[iv]

9. Notwithstanding these being the rules arising from the provisions of civil law, relating to the informality of the transfer of movable property and, where applicable, its registration, one cannot fail to also keep in mind that, in the situation under analysis, we are faced with commercial transactions, carried out by a company within the scope of its business activity.

10. Within that scope, the selling company is bound by the compliance with specific accounting and tax norms, in which invoicing assumes special relevance.

11. Immediately, by virtue of tax norms, the entity transferring the goods is obligated to issue an invoice for each transfer of goods, regardless of the quality of the respective acquirer, whether it be a company, taxpayer of VAT, or a final consumer (IVA Code, article 29, no. 1, paragraph b).

12. Also in accordance with the provision in tax norms, the invoice must conform to a certain form, detailed regulated in articles 36 of the VAT Code and 5 of Decree-Law no. 198/90, of 19/06.

13. It is on the basis of that document issued by the supplier of the goods that the acquirer, when it is an economic operator, will deduct the VAT to which it is entitled (VAT Code, article 19, no. 2) - except if the tax borne on the acquisition of the vehicle, by the characteristics thereof, is not deductible - and account for the expense of the operation (Corporate Income Tax Code, articles 23, no. 6 and 123, no. 2).

14. For its part, it is also on the basis of the invoicing issued that the supplier of the goods should account for the respective income, as results from the provision in paragraph b) of no. 2 of article 123 of the Corporate Income Tax Code.

15. Provided they are issued in the legal form and constitute supporting elements of accounting entries in accounting organized in accordance with commercial and tax legislation, the data contained in them are covered by the presumption of truthfulness referred to in article 75, no. 1, of the General Tax Law.

16. Indeed, the aforementioned presumption covers not only the books and accounting records, but also the respective supporting documents, as is, moreover, a settled understanding of the tax administration itself [v] and the established jurisprudence of the superior courts [vi]

17. The presumption of truthfulness of commercial invoices issued in accordance with legal terms can, however, be set aside whenever the operations to which they refer do not correspond to reality, it being sufficient for that the Tax Administration gather and demonstrate founded indicia of that fact (General Tax Law, article 75, no. 2, al. a).[vii]

18. In the present case, although the Respondent affirms, in general terms, the irrelevance of invoices as a means of proof sufficient to overturn the presumption of article 3 of the IUC Code, it does not raise any doubts regarding the specific operations evidenced by the invoices presented by the Claimant.

19. Considered, therefore, the relevance attributed by tax legislation to invoices issued, in accordance with legal terms, by commercial companies within the scope of their business activity and the presumption of truthfulness of the operations evidenced by them, one cannot fail to consider that these can constitute, by themselves, sufficient proof of the transfers invoked by the Claimant.

20. In the situation under analysis, it appears that the invoices that evidence the transactions in question identify the selling company, the buyer and, by their respective registration number, the vehicle transacted and the price of the sale, as well as the date on which they were issued, fulfilling the formal requirements imposed by tax law.

21. In these terms, it is considered that the invoices presented by the Claimant constitute sufficient proof of the facts alleged for purposes of rebuttal of the presumption in question, being thus considered rebutted the presumption of ownership derived from the motor vehicle registry contained in article 3 of the IUC Code, regarding the vehicles to which those refer.

On the Rebuttal of the Presumption Based on Copies of Contracts

1. As regards financial leasing contracts or lease contracts with purchase options, as evidence capable of overturning the presumption of article 3 of the IUC Code, it is noted that these are configured as private documents which, when duly signed by the parties involved, have probative force. The legal requirement, relevant for the purpose of granting them formal probative force, is satisfied by the signature of its author, being considered this genuine when recognized, or not contested, by the party against whom the document is presented (Civil Code, articles 373 and 374, no. 1).

2. In the present case, with the documents offered by the Claimant as evidence properly signed and the signatures affixed thereto not having been contested and such documents not having been subject to an argument and proof of falsity by the Respondent, they make full proof as to the declarations attributed to their author (Civil Code, article 376, no. 1).

3. Thus, the formal validity of the contracts submitted by the Claimant not being questioned, it is considered documentarily proven that on the date of the tax due date the vehicles to which they refer, although being the property of the Claimant, were by the latter given under a regime of financial leasing or leasing with purchase option.

4. As has already been concluded above, in situations where the vehicles, on the date of the occurrence of the tax event, are leased to the lessees, under financial leasing contracts or other leases involving purchase option, the taxpayer of the tax obligation is not the lessor owner but, in accordance with no. 2 of article 3 of the IUC Code, the respective lessee, as the one who has the use of the vehicle. And this is the case regardless of whether or not compliance has been made with the provision in article 19 of that Code and the circumstance that the ownership registry remains in the name of the lessor, without the leasing contract having been inscribed therein.

5. In light of the foregoing, it is concluded that there is no legal basis for the acts of assessment of IUC and compensatory interest regarding the vehicles and periods identified in the appendix to the request for arbitral decision which, on the date of the tax due date, were leased to the respective lessees under leasing contracts with purchase option.

6. With the facts alleged by the Claimant documentarily proven, it is considered unnecessary the examination of the witnesses called by it, whereby their examination is dispensed with.

7. In these terms, considering rebutted the presumption of ownership derived from the motor vehicle registry contained in article 3 of the IUC Code - in the wording in force on the date of the facts to which the assessments in question relate - the annulment of the assessments identified in the appendix to the present request for arbitral decision (Doc.4) – with the exception of those relating to vehicles with registration numbers …, …, …, …, …, …, … and ... – in the total amount of € 58,390.65, should be proceeded with, on the ground of illegality and error in the assumptions on which they are based.

On the Right to Indemnity Interest

1. Together with the annulment of the assessments, and consequent reimbursement of the amounts unduly paid, the Claimant also requests that it be recognized the right to indemnity interest, under article 43 of the General Tax Law.

2. Indeed, in accordance with the provision of no. 1 of the aforementioned article, indemnity interest shall be due "when it is determined, in discretionary appeal or judicial contestation, that there was error imputable to the services from which results payment of the tax debt in an amount greater than legally due." Beyond the means referred to in the norm that is transcribed, we understand that, as results from no. 5 of article 24 of RJAT, the right to the aforementioned interest can be recognized in the arbitral process and, thus, the claim is known.

3. The right to indemnity interest referred to in the aforementioned norm of the General Tax Law presupposes that tax has been paid in an amount greater than due and that this results from error, of fact or law, imputable to the services of AT.

4. In the present case, although it is recognized that the tax paid by the Claimant is not due, as it is not the taxpayer of the tax obligation, determining, consequently, its reimbursement, one does not see that, in its origin, there is error imputable to AT that determines such right in favor of the taxpayer.

5. Indeed, in promoting the official assessment of IUC and considering the Claimant as taxpayer of this tax, AT could not proceed otherwise, merely giving compliance to the norm of no. 1 of article 3 of the IUC Code which, as abundantly referred to above, imputes such quality to the persons in whose names the vehicles are registered.

6. On the other hand, also as has already been concluded, the aforementioned norm is of the nature of a legal presumption, from which results, for AT, the right to assess the tax and demand it from such persons, without need to prove the facts that lead to it, as expressly provided for in no. 1 of article 350 of the Civil Code.

7. However, regarding the assessments that are the object of the present request for arbitral decision, it is necessary to determine whether the act of dismissal of the claim of the now Claimant, made in the discretionary appeal duly filed, constitutes, or not, error imputable to AT for purposes of the exigibility of indemnity interest, under article 43, no. 1, of the General Tax Law.

8. In this matter, the orientation resulting from the jurisprudence of the Supreme Administrative Court is considered, which goes in the sense of recognizing that a decision of the Tax Administration that dismisses a request for annulment of a recognized illegal assessment and consequent restitution of tax unduly collected, constitutes error imputable to the services.

9. According to the aforementioned jurisprudence – expressed in a learned judgment of 28-10-2009, in proc. 601/09 – indemnity interest is due from the date of dismissal of the appeal until the date of processing of the respective credit note, in accordance with article 61 d CPPT.

V. Decision

In these terms, and with the grounds stated, the Arbitral Tribunal decides:

a) To hold the exception of untimeliness invoked by the Respondent well-founded with reference to the contest of the acts of assessment relating to vehicles with registration numbers …, …, …, …, …, …, … and … to which the assessment notices and taxation periods indicated in document 4 attached to the request for arbitral decision refer, in the total amount of € 1,063.28;

b) To hold the request for arbitral decision well-founded, regarding the illegality of the assessments of tax and compensatory interest relating to the remaining vehicles and periods identified in the appendix to the request for arbitral decision (Doc.4), determining their annulment and consequent reimbursement of the amounts unduly paid;

c) To hold the request for recognition of the right to indemnity interest well-founded, accrued from the date of dismissal of the discretionary appeal until the date of actual reimbursement of the taxes and compensatory interest unduly collected.

Value of the case: € 59,453.93

Costs: Under article 22, no. 4, of RJAT, and in accordance with Table I attached to the Regulation of Costs in Tax Arbitration Processes, I fix the amount of costs at € 2,142.00, to be borne by the Respondent (AT) and the Claimant, in proportion to their success, being € 2,103.69 and € 38.31, respectively.

Lisbon, 29 January 2018

The Arbitrator, Álvaro Caneira

[1] See According to binding information, made available on the AT website, approved by Administrative Decision of the Sub-Director General of the Property Tax Area, of 18-04-2011: "The DGCI only assesses IUC regarding vehicles that are within the objective scope of the tax, in accordance with the elements provided by the IRN, IP (respective Motor Vehicle Registry Offices) and by IMTT (former-DGV), which constitute the IUC database".

[2] In the same sense, see CAAD, Procs. 182/2014-T, 604/2014-T and 727/2014-T

[i] By way of merely exemplary, cfr. procs.14/2013-T, 26/2013-T, 27/2013-T, 73/2013-T, 170/2013-T, 217/2013--T, 256/2013-T, 289/2013-T, 294/2013-T, 21/2014-T, 42/2014-T, 43/2014-T, 50/2014-T, 52/2014-T, 67/2014-T6, 68/2014-T, 77/2014-T, 108/2014-T, 115/2014-T, 117/2014-T, 118/2014-T, 120/2014-T, 121/2014-T, 128/2014-T, 140/2014-T, 141/2014-T, 152/2014-T, 154/2014-T, 173/2014-T, 174/2014-T, 175/2014-T, 182/2014-T, 191/2014-T, 214/2014-T, 219/2014-T, 221/2014-T, 222/2014-T, 227/2014-T, 228/2014-T, 229/2014-T, 230/2014-T, 233/2014-T, 246/2014-T, 247/2014-T, 250/2014-T. 262/2014-T, 302/2014-T, 333/2014-T, 414/2014-T, 646/2014-T, all available at www.caad.org.pt.

[ii] Cfr., among others, procs. 128/2014-T, 134/2014-T, 136/2014-T, 137/2014-T, 224/2014-T, 228/2014-T, 232/2014-T, 233/2014-T and 341/2014-T

[iii] Cfr. STJ, judgments of 23.3.2006 and 12.10.2006, Procs. 06B722 and 06B2620.

[iv] It is noted that, under the special procedure for the registration of motor vehicle ownership acquired by verbal contract of sale and purchase, approved by Decree-Law no. 177/2014, of 15/12, the invoice constitutes, among others, a document that indicates the actual sale and purchase of the vehicle, provided that it contains the registration number of the vehicle as well as name of the seller and the buyer.

[v] Cfr. Opinion of the Tax Studies Center, approved by administrative decision of the Director-General of Taxes, of 2 January 1992, published in Ciência e Técnica Fiscal no. 365.

[vi] Cfr. STA, judgment of 27.10.2004, Proc. 0810/04, TCAS, judgment of 4.6.2013, Proc. 6478/13 and TCAN, judgment of 15.11.2013, Proc. 00201/06.8BEPNF, among others.

[vii] Cfr. STA, judgments of 24.4.2002, Proc. 102/02, of 23.10.2002, Proc. 1152/02, of 9.10.2002, Proc. 871/02, of 20.11.2002, Proc. 1428/02, of 14.1.2004, Proc. 1480/03, among many others.