IUC Vehicle Tax Annulment: CAAD Arbitration on Circulation Tax Liquidation 2013-2014

ARBITRAL DECISION

I - REPORT

A - PARTIES

A..., S.A., with tax identification number..., hereinafter designated as "Claimant", with registered office at ..., ..., ..., rooms ... to ..., Porto, filed a request for the constitution of an arbitral tribunal, pursuant to the provisions of subsection a) of paragraph 1 of article 2 and articles 10 and following of Decree-Law no. 10/2011, of January 20 (Legal Framework for Arbitration in Tax Matters, hereinafter designated as "RJAT"), with a view to hearing the following claim opposing it to the Tax and Customs Authority (which succeeded, among others, the General Directorate of Taxes) hereinafter designated as "Respondent" or "AT".

B - CLAIM

1 - The request for constitution of the arbitral tribunal was accepted by the Honorable President of CAAD on July 24, 2015 and notified to AT on that same date.

2 - The Claimant did not proceed with the appointment of an arbitrator, wherefore, pursuant to the provisions of paragraph 1 of article 6 of the RJAT, the undersigned, on September 18, 2015, was designated by the Deontological Council of the Administrative Arbitration Center as arbitrator of a Singular Arbitral Tribunal, having accepted in accordance with legally established provisions.

3 - The Parties were, on September 18, 2015, duly notified of this designation, and did not manifest intent to refuse it, in accordance with the combined provisions of subsections a) and b) of paragraph 1 of article 11 and articles 6 and 7 of the Deontological Code.

4 - In these circumstances, in conformity with the provisions of subsection c) of paragraph 1 of article 11 of Decree-Law no. 10/2011, of January 20, in the wording introduced by article 228 of Law no. 66-B/2012, of December 31, the arbitral tribunal was properly constituted on October 5, 2015.

5 - On March 9, 2016, the Arbitral Tribunal, pursuant to article 16, subsection c) of the RJAT, issued an order dispensing with the hearing provided for in article 18 of the same statute, taking into account both the circumstance that the subject matter of the dispute concerns fundamentally matters of law and the understanding established on this point between the parties, as they did not request any autonomous evidentiary proceedings, the relevant documents being on file and the administrative process (PA) being annexed to the records.

6 - The Claimant herein requests that this Arbitral Tribunal:

a) - Declare the annulment of the assessment acts relating to the Single Vehicle Circulation Tax (hereinafter designated as IUC), referenced in the records, for the years 2013 and 2014, and of the corresponding compensatory interest (hereinafter designated as JC), with respect to the vehicle with registration number ...-...-....

b) - Order the Tax and Customs Authority to reimburse the amount of € 106.51, unduly paid, plus the payment of indemnity interest associated therewith.

c) - Order the Tax and Customs Authority to pay the costs of the present proceeding.

C - GROUNDS FOR CLAIM

7 - The Claimant, in substantiation of its request for arbitral decision, states, in summary, the following:

8 - That it was notified of the assessments relating to the vehicle with registration number ...-...-..., for the years 2013 and 2014, and on July 22, 2015, proceeded to pay the corresponding tax.

9 - That in the context of the aforementioned assessments, it was notified of its right to prior hearing, in the exercise of which it alleged and proved that it had long ceased to be the owner of the said vehicle, and was therefore not liable for the IUC for the years mentioned.

10 - That it was the owner of the vehicle with registration number ...-...-..., but on September 2, 2004, proceeded with its sale to B..., as evidenced by the declaration of sale and corresponding debit note, which it submits to the records.

11 - That in the prior hearing notifications, the Tax Authority relies on the databases, considering that, in light of such elements, the Claimant was the taxpayer of the IUC solely because the vehicle in question was registered in its name, knowing that the same was no longer its property.

12 - That the Tax Authority presumed the ownership of the vehicle in question in the legal sphere of the Claimant, as a criterion for the incidence of the IUC, which, in tax law, does not conform to the inadmissibility of irrebuttable presumptions at the level of tax incidence.

13 - That what is established in paragraph 1 of article 3 of the CIUC constitutes a legal presumption, which is rebuttable by force of the provisions of article 73 of the LGT, when it determines that presumptions established in tax incidence norms always admit contrary proof.

14 - That the means of proof presented, declaration of sale of the vehicle and copy of its respective accounting record, have in their favor the presumption of truthfulness conferred upon them pursuant to paragraph 1 of article 75 of the LGT.

15 - That in the sequence of all the factual information that came to AT's knowledge regarding the vehicle with registration number ...-...-..., it should, in light of the inquisitorial principle that guides its activity, have undertaken the necessary steps to discover the material truth.

16 - That AT should have taken into account the substance of the prior hearing, not stopping at formal truth but endeavoring to ascertain the current ownership of the vehicle in question.

17 - That previously it had been compelled to resort to the Tax Arbitral Tribunal to review the legality of the IUC assessments for the years 2008 to 2012, relating to the vehicle with registration number ...-...-..., which, as AT is aware, were ruled illegal, as shown in the decisions rendered in Cases nos. 264/2013 - T and 215/2014 - T.

D - RESPONSE OF RESPONDENT

18 - The Respondent, the Tax and Customs Authority (hereinafter designated as AT), submitted its Response on November 4, 2015.

19 - In the said Response, AT believes that the reasons of fact and law invoked by the Claimant cannot stand, because and foremost,

20 - The Claimant's allegations make a notoriously incorrect interpretation of the legal norms applicable to the case, showing the Claimant's understanding not only a slanted reading of the letter of the law but also an interpretation that does not attend to the systematic element, violating the unity of the regime established throughout the CIUC and, more broadly, throughout the entire tax legal system, further resulting from an interpretation that ignores the rationale of the regime established in paragraph 1 of article 3 of the CIUC. (see articles 10 and 11 of the Response)

21 - The tax legislator in establishing in article 3, paragraph 1 of the CIUC who are the taxpayers of the IUC expressly and intentionally determined that such taxpayers are the owners, being considered as such the persons in whose name they are registered. (see article 16 of the Response)

22 - It emphasizes that the legislator did not use the expression "it is presumed" as it could have done, for example, in the following terms: "the taxpayers of the tax are the owners of the vehicles, being presumed as such the natural or legal persons, of public or private law, in whose name they are registered". (see article 17 of the Response)

23 - It considers that the understanding that the legislator established a presumption in article 3 of the CIUC, as the Claimant understands, would unequivocally be to make an interpretation against the law. (see article 24 of the Response)

24 - It believes that in light of the wording of article 3, paragraph 1 of the CIUC it is not manifestly possible to invoke that it is a presumption, but rather it is a clear option of legislative policy adopted by the legislator, whose intention, within its freedom of legislative formation, was that for the purposes of the IUC, those considered owners are those who, as such, appear in the register.

25 - It refers that the aforementioned understanding has already been adopted by the jurisprudence of our courts, transcribing for this purpose part of the judgment of the Administrative and Tax Court of Penafiel, rendered in Case no. 210/13.OBEPNF. (see articles 26 and 27 of the Response)

26 - Referring to the systematic element of interpretation, AT considers that the solution advocated by the Claimant is intolerable, in that it has no legal support, neither in article 3, paragraph 1 of the CIUC, nor in other norms established in the said Code.

27 - It also considers that in light of a teleological interpretation of the regime established throughout the IUC Code, the interpretation advocated by the Claimant, to the effect that the taxpayer of the IUC is the beneficial owner regardless of whether the registration of such quality does not appear in the vehicle register, is manifestly incorrect, in that it is the very rationale of the regime established in the CIUC that constitutes clear proof that what the tax legislator intended was to create a tax based on the taxation of the owner of the vehicle, as it appears in the vehicle register. (see article 47 of the Response)

28 - It adds that the CIUC carried out a reform of the regime for taxation of vehicles in Portugal, substantially altering the vehicle taxation regime, with the taxpayers of the tax becoming the owners appearing in the property register, regardless of the circulation of the vehicles on public roads. (see article 48 of the Response)

29 - It also considers that the interpretation conveyed by the Claimant is contrary to the Constitution, in that such interpretation results in a violation of the principle of trust, the principle of legal certainty, the principle of efficiency of the tax system, and the principle of proportionality. (see articles 61 and 63 of the Response)

30 - It further states that it was not the Respondent who gave rise to the filing of the request for arbitral decision, but rather the Claimant, and consequently, the Claimant should be condemned to pay the arbitral costs "in accordance with article 527, paragraph 1 of the New Code of Civil Procedure as applied by article 29, paragraph 1, subsection e) of the RJAT", also referring that the legal requirements granting the right to compensatory interest are not met.

31 - It considers, in conclusion, that in light of all the arguments adduced, the request for arbitral decision should be judged groundless, with the tax assessment acts contested remaining in the legal order, with the Respondent being absolved of the claim accordingly.

E - ISSUES TO BE DECIDED

32 - It falls therefore to appreciate and decide.

33 - In light of the foregoing, regarding the positions of the Parties and the arguments presented, the main issues to be decided are:

a) - Whether the subjective incidence norm contained in article 3, paragraph 1 of the CIUC establishes or does not establish a presumption.

b) - What is the legal value of vehicle registration in the economy of the CIUC, particularly for the purposes of the subjective incidence of this tax.

c) - If, at the date when the taxable event occurs, the vehicle has been previously transferred, although the right of ownership thereof continues to be registered in the name of its previous owner, for the purposes of the provisions of article 3, paragraph 1 of the CIUC, the taxpayer of the IUC is the previous owner or the new owner.

F - PROCEDURAL REQUIREMENTS

34 - The Arbitral Tribunal is properly constituted and materially competent, pursuant to subsection a) of paragraph 1 of article 2 of Decree-Law no. 10/2011, of January 20.

35 - The Parties have legal personality and capacity, are legitimate and properly represented (see article 4 and paragraph 2 of article 10 of Decree-Law no. 10/2011 and article 1 of Order no. 112/2011, of March 22).

36 - The proceeding does not suffer from defects that would invalidate it.

37 - Taking into account both the tax administrative process and the documentary evidence submitted to the records, it now falls to present the factual matter relevant to the understanding of the decision, as established in the terms mentioned below.

II - SUBSTANTIVE DECISION

G - FACTUAL SUBSTANTIATION

38 - In matters of relevant fact, this tribunal establishes the following facts:

39 - The Claimant was notified of the assessments relating to the vehicle with registration number ...-...-..., for the years 2013 and 2014, and on July 22, 2015, proceeded to pay the corresponding tax.

40 - In the context of the aforementioned assessments, the Claimant was notified of its right to prior hearing, in the exercise of which it alleged and proved that it had long ceased to be the owner of the said vehicle.

41 - The Respondent, taking into account that the vehicle with registration number ...-...-... was registered in its name, considered the Claimant the taxpayer of the IUC.

42 - The Claimant was the owner of the vehicle with registration number ...-...-..., and on September 2, 2004, proceeded with its sale to Mr. B..., as evidenced by the respective declaration of sale and corresponding debit note.

43 - The Claimant appealed to the Tax Arbitral Tribunal to review the legality of the IUC assessments for the years 2008 to 2012, relating to the vehicle with registration number ...-...-..., which were ruled illegal, as shown in the decisions rendered in Cases nos. 264/2013 - T and 215/2014 - T.

SUBSTANTIATION OF PROVEN FACTS

44 - The facts established as proven are based on the documents mentioned, in relation to each of them, to the extent that their conformity with reality was not questioned.

UNPROVEN FACTS

45 - There are no facts established as unproven, given that all facts considered relevant for the appreciation of the claim were proven.

H - LEGAL SUBSTANTIATION

46 - The factual matter is established, and it now falls to proceed with its legal subsumption and determine the law applicable to the underlying facts, in accordance with the issues to be decided enumerated in paragraph 33.

47 - The first and decisive issue in the present records, regarding which there are absolutely opposed understandings between the Claimant and AT, concerns whether the subjective incidence norm contained in paragraph 1 of article 3 of the CIUC establishes or does not establish a rebuttable presumption.

48 - The positions of the parties are known. Indeed, for the Claimant what is established in paragraph 1 of article 3 of the CIUC constitutes a legal presumption, which is rebuttable by force of the provisions of article 73 of the LGT, when it determines that presumptions established in tax incidence norms always admit contrary proof.

49 - The Respondent, for its part, considers that the tax legislator in establishing in article 3, paragraph 1 of the CIUC who are the taxpayers of the IUC expressly and intentionally determined that such taxpayers are the owners, being considered as such the persons in whose name they are registered.

I - INTERPRETATION OF THE SUBJECTIVE INCIDENCE NORM CONTAINED IN PARAGRAPH 1 OF ARTICLE 3 OF THE CIUC

50 - On this issue, that is, whether the subjective incidence norm contained in paragraph 1 of article 3 of the CIUC establishes a presumption, it should be noted that the jurisprudence established at CAAD points to the understanding that said norm establishes a legal presumption. Indeed, from the first Decisions, rendered on this matter in the year 2013, among which may be mentioned those rendered in Cases nos. 14/2013-T, 26/2013-T and 27/2013-T, to the most recent of which may be indicated the Decisions rendered in Cases nos. 69/2015-T and 79/2015-T, passing through numerous Decisions rendered in the year 2014, of which are mentioned, by way of mere example, the Decisions rendered in Cases nos. 34/2014-T, 120/2014-T and 456/2014 - T, all point to the understanding that paragraph 1 of article 3 of the CIUC establishes a rebuttable legal presumption.

To this end, should also be considered the understanding contained in the Judgment of the Central Administrative Court of the South, rendered on March 19, 2015, Case 08300/14, available at: www.dgsi.pt, which upholds said jurisprudence, when it expressly states that article 3, paragraph 1 of the CIUC "[…] establishes a legal presumption that the holder of the vehicle register is its owner, and such presumption is rebuttable by force of article 73 of the LGT".

This is an understanding which we wholly rely upon and which is accepted, without further ado, as valid and applicable in the present case, not considering, therefore, necessary further developments, in light of the abundant substantiation contained in the said Decisions and in the said Judgment.

51 - This being the understanding which, regarding article 3, paragraph 1 of the CIUC, is wholly adopted by this tribunal, it is important, however, to also note the lack of merit that, with due respect, assists the Respondent when, in articles 61 and 63 of its response, it argues that the interpretation going towards understanding that a rebuttable legal presumption is established in paragraph 1 of article 3 of the CIUC violates the constitutional principles of trust and legal certainty, of the efficiency of the tax system, and of proportionality.

Let us examine, then, this issue.

Let us see:

• Regarding the principle of proportionality, it should first be noted that the same, to the extent that it is materially inherent to the regime of rights, freedoms and guarantees, being inscribed in their defense, aims essentially to govern the action of Public Administration in order that its activity in the relationship with individuals be governed by the choice of the most equilibriously adequate measures for the pursuit of the public interest.

As Professor Freitas do Amaral teaches, in Course of Administrative Law, Vol II, Almedina, 2002, pp. 127/128 et seq., the "principle of proportionality constitutes a constitutive manifestation of the rule of law principle", with "[…] the idea being strongly anchored that in a democratic rule of law state, the measures of public powers should not exceed what is strictly necessary for the realization of the public interest".

The principle of proportionality, adds the said Professor, ibidem, p. 129, means that "[…] the limitation of goods or private interests by acts of public powers must be adequate and necessary for the concrete purposes pursued by such acts, as well as tolerable when confronted with those purposes".

Regarding the principle of proportionality, it should also be noted what J. J. Gomes Canotilho and Vital Moreira tell us, in CONSTITUTION OF THE PORTUGUESE REPUBLIC, ANNOTATED, VOLUME I, 4th Edition, 2007, Coimbra Editora, pp. 392/393, when they consider that said principle is decomposable into three sub-principles, namely: "[…] a) principle of adequacy (also called principle of suitability); b) principle of exigibility (also called principle of necessity or of indispensability); c) principle of proportionality in the strict sense, which means that the legal restrictive means and the ends obtained must be in a "just measure", preventing the adoption of legal restrictive measures that are disproportionate, excessive, in relation to the ends obtained […]".

The said sub-principles have, all of them, a common denominator, which is that of just equilibrium and permanent coherence between the purposes of the law and the means adopted to achieve such purposes, which, in the circumstance and attempting the transposition of said principle to the case at hand, will entail responding to the question of what is the adequate interpretation of paragraph 1 of article 3, with a view to the pursuit of the legal purposes provided for in article 1 of the CIUC, which translate into the fiscal burden of the effective owners of motor vehicles (and not necessarily those appearing in the register) in proportion to the environmental and road cost they provoke.

As Professor J. J. Gomes Canotilho refers in Constitutional Law and Theory of the Constitution, Almedina - Coimbra, 1998, pp. 264 et seq., the most important field of application of the principle of proportionality or of the prohibition of excess, which is grounded in constitutional articles 18, paragraph 2 and 266, paragraph 2 of the CRP, "[…] is that of the restriction of rights, freedoms and guarantees by acts of public powers. However, the logical domain of application of the principle of proportionality extends to conflicts of legal goods of any kind." The administration, adds the said author, idem, "[…] must always observe, in each concrete case, the requirements of the prohibition of excess […]".

In this same sense points the jurisprudence, namely the judgment of the STA of July 1, 1997, Case no. 041177, available at: www.dgsi.pt, when it considers that the principle of proportionality in the broad sense comprises congruence, adequacy or suitability of the means or measure to achieve the legally proposed end and, in the strict sense, encompasses the prohibition of excess.

The principle of proportionality is a corollary of the principle of justice, which means and implies that in its action the Public Administration must harmonize the specific public interest it has to pursue with the rights and legitimate interests of individuals potentially affected by its acts, interests and rights which, in the case at hand, are reduced to the non-taxation in IUC of persons who are no longer owners of the vehicles and who consequently contribute in no way to the effectuation of any road and environmental cost.

What matters is to balance the legal purposes and the means to pursue them, and, within the framework of a balancing judgment, identify the most adequate means for this effect, which in this case are translated into the interpretation adopted by the arbitral tribunal.

It will be said, moreover, that the understanding that said paragraph 1 of article 3 of the CIUC establishes a rebuttable legal presumption corresponds to the only interpretation that coherently compages with said principle of equivalence, and which is in line with the principles of justice and proportionality.

The interpretation that understands a rebuttable legal presumption to be established in paragraph 1 of article 3 of the CIUC is, therefore, the only one that permits assuring the pursuit of the purposes envisioned by the law - to burden the owners of motor vehicles in proportion to the environmental and road cost they provoke - as set forth in article 1 of the CIUC, which means that the taxpayers of the IUC are, presumably, the persons in whose name the vehicles are registered, that is, the said taxpayers are, in principle, and only in principle, the persons in whose name such vehicles are registered, there being no other interpretation capable of achieving the said legal purposes, only thus, it is reaffirmed, are the said principles of proportionality and justice fulfilled.

The contrary understanding, that is, the one considered by AT, which interprets paragraph 1 of article 3 of the CIUC as not establishing a rebuttable legal presumption, understanding that the taxpayers of the IUC are, definitively, the persons in whose name the vehicles are registered, to the just extent that it leads to the imposition of a fiscal burden on whom may no longer be the owner of the vehicle in question and who in this way does not pollute, removing from fiscal subjection whom in reality is the effective cause of environmental and road damages resulting from the use of vehicles of which they are the real owners, makes evident that the legally prescribed purposes would in no way be achieved, thus not respecting the principle of equivalence which, within the framework of the CIUC, has an absolutely structuring function. Such understanding, that indeed, does not show itself, in these circumstances, in harmony with the principle of proportionality.

The interpretation made by the tribunal regarding paragraph 1 of article 3 of the CIUC took into account the principle of proportionality when, contrary to the understanding of the Respondent, it properly takes into consideration that definitive registration does not have constitutive effect as it is intended to give publicity to the registered act, functioning only as a mere rebuttable presumption of the existence of the right and when, in homage to that principle, it attends to the principle of equivalence, as a fundamental element of the CIUC.

• As to the efficiency of the tax system, it will be said that the efficiency of the Administration in general, or of AT in particular, in the current sense, would correspond to the capacity/work methodology oriented towards the optimization of work executed or services provided, which means producing the maximum, in quantity and quality, with the minimum costs and means, having nothing to do with the observance of legally established principles and with respect for the rights of citizens, whether as taxpayers or not.

In technical sense, it will be said that the principle of efficiency of the tax system is commonly held, in the domain of tax procedure, as a corollary of the principle of proportionality, which as is known imposes an adequate proportion between the legal purposes and the means chosen to achieve these ends, or, as refer Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, in General Tax Law, Annotated and Commented, 4th Edition 2012, Writing Meeting, Lda., Lisbon, p. 488, in the annotations to article 55 of the LGT, it is a principle that obliges "[…] the tax administration to refrain from imposing on taxpayers obligations that are unnecessary for the satisfaction of the purposes it aims to pursue".

In this framework, the said principle of efficiency of the tax system would mean the capacity to achieve the legally fixed objectives with the minimum of means, which will also have nothing to do with respect for the rights of citizens, nor with the need to observe other principles to which the tax administration must subordinate its activity, namely the inquisitorial principle and the discovery of material truth, and obviously the application of the said principle of efficiency cannot be made either with prejudice to the rights of citizens or by the absence of observance of the legal purposes. [1]

• Regarding the principle of legal certainty and trust, it should first be noted that the latter principle, that of trust, is a concretization of the principle of good faith, which, having been recognized in our legal order since 1996, came to have express constitutional inscription, as provided in paragraph 2 of article 266 of the CRP, where it is established that "The organs and agents of the administration are subordinated to the Constitution and to the law and must act, in the exercise of their functions, with respect for the principles of equality, proportionality, justice, impartiality and good faith". (emphasis ours)

Regarding good faith, it should be noted what Professor Freitas do Amaral refers to when, in Course of Administrative Law, Vol. II, Almedina, 2002, pp. 135/136, citing Professor V. Fausto de Quadros, tells us that "[…] the Public Administration is obliged to obey bona fide in relations with individuals. Moreover, it must even set, also there, the example for individuals of the observance of good faith, in all its manifestations, as the essential nucleus of its ethical behavior. Without this, one can never affirm that the State (and with it other public entities) is a person of integrity".

On the other hand, the principle of trust is also held as a consequence of the principle of legal certainty, indissociable from the rule of law, which having to guarantee a minimum of certainty in the rights of persons and in the legal expectations created for them, generates confidence of citizens in the legal protection of the Public Administration.

Regarding the principles of legal certainty and protection of trust, Professor J. J. Gomes Canotilho tells us in Constitutional Law and Theory of the Constitution, Almedina - Coimbra, 1998, p. 250 et seq., that said principles are closely associated, considering that "[…] legal certainty is connected with objective elements of the legal order - guarantee of legal stability, security of orientation and realization of law - while the protection of trust is more connected with the subjective components of security, namely the calculability and predictability of individuals in relation to the legal effects of the acts of public powers". In any case, adds the said Professor, idem, that the "[…] general principle of legal certainty in the broad sense (thus encompassing the idea of protection of trust) can be formulated as follows: the individual has the right to be able to trust that in his acts or in public decisions bearing on his rights, positions or legal relations anchored in legal norms that are in force and valid are linked the legal effects foreseen and prescribed by those same norms".

It follows from this doctrine that persons in alienating their vehicles must be secure that, should they proceed with the sale of vehicles of which they are owners, and such vehicles not being registered in the name of the acquirers, the legal effects resulting therefrom will be those foreseen and resulting from the legal norms in force and their adequate interpretation, in light of the purposes of those same norms, which, in this case, led the arbitral tribunal to consider the register as a rebuttable presumption of the existence of the right and that only persons who provoke road and environmental costs should be taxed.

The best way to, in the case at hand, ensure legal certainty in the broad sense is thus that concretized through the interpretation made by the arbitral tribunal, when it considers established in paragraph 1 of article 3 of the CIUC a rebuttable legal presumption, permitting any citizen who proceeds with the sale to a third person of a motor vehicle the possibility of demonstrating that at the time of the exigibility of the IUC, he was no longer its owner nor responsible for the payment of that tax.

• Beyond what has been mentioned above, it is also important to know whether the interpretation adopted by the arbitral tribunal, in addition to not conflicting with any of the referenced principles, is directly and substantively inscribed in the context of the constitutional order.

Regarding the interpretation of the law in light of the Constitution, or of interpretation in conformity with the Constitution, Professor Jorge Miranda tells us, in Manual of Constitutional Law, TOME II, Introduction to the Theory of the Constitution, 2nd edition, Coimbra Editora, 1987, p. 232 et seq., that what concerns us, above all, is to "[…] take into account, within the systematic element of interpretation, what is reported to the Constitution. Indeed, each legal provision must not only be grasped in the set of provisions of the same law and each law in the set of the legislative order; it must also be considered in the context of the constitutional order [..]". (emphasis ours)

The understanding that considers a rebuttable legal presumption to be established in paragraph 1 of article 3 of the CIUC is supported by various elements of interpretation, among which should be mentioned the systematic element, to the extent that interpretation in conformity with the Constitution implies that within the systematic element of interpretation, account be taken of what is reported to the Constitution.

Regarding the mentioned systematic element, the following should be referred to:

a) In the understanding of BAPTISTA MACHADO, in Introduction to Law and to Legitimating Discourse, p. 183, the systematic element "[…] comprises the consideration of the other provisions that form the complex normative of the institute in which the norm to be interpreted is integrated, that is, that 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 corresponds to the norm to be interpreted in the global legal order, as well as its consonance with the spirit or intrinsic unity of the entire legal order".

b) It is known that a legal principle, in this case the principle of equivalence, does not exist in isolation, but rather is connected by an intimate nexus with other principles that integrate, at the more global level, the respective legal order, in this case, with the other principles embodied in the system inscribed in the CIUC, and with other constitutionally established principles. In that sense, each article of a given legal statute, in this case the CIUC, will only be comprehensible if we situate it both before the other articles that follow or precede it as well as before the constitutional order.

c) With regard to the systematization of the CIUC, the environmental concerns were decisive in that the said principle of equivalence was inscribed from the outset in the first article of said Code, which necessarily leads to the subsequent articles, to the extent that they have a basis in such principle, being influenced by it. This occurred, namely, with the taxable base, which became constituted by diverse elements, particularly those relating to pollution levels, and with the tax rates, established in articles 9 to 15, which were influenced by the environmental component, and naturally also with the subjective incidence itself, provided for in article 3 of the CIUC, which cannot escape the said influence.

d) Said principle of equivalence, as Sérgio Vasques points out, in Special Excise Taxes, Almedina, 2001, p. 122 et seq., implies that "[…] the tax must correspond to the benefit the taxpayer derives from the public activity; or the cost that the taxpayer imputes to society by his own activity". Adds the said author, idem, that "Thus, a tax on automobiles based on a rule of equivalence will be equal only if those that provoke the same road wear and the same environmental cost pay the same tax; and those that provoke wear and different environmental cost pay different tax also." For this reason, as the cited author also refers, idem, the concretization of the principle of equivalence dictates special requirements "[…] regarding the subjective incidence of the tax [..]."

The said principle that informs the current Single Vehicle Circulation Tax is inscribed in the environmental concerns established in paragraph 2, subsection a) of article 66 of the CRP and in the need - with a view to ensuring the right to the environment, within the framework of sustainable development - to "Prevent and control pollution and its effects and harmful forms of erosion", concerns which are manifestly considered in the interpretation advocated by the arbitral tribunal.

On the other hand, the provision in subsection h) of paragraph 2 of article 66 of the Constitution, when it establishes that, within the framework of sustainable development, it is incumbent upon the State to "ensure that fiscal policy reconciles development with environmental protection and quality of life", has as a corollary the principle of the polluter - pays, which concretizes the idea inscribed therein, that whoever pollutes must therefore pay, with the interpretation advocated by the arbitral tribunal thus being in perfect accord with the constitutional order.

To this end, should moreover be noted the recognition admitted by AT regarding the relevance of the relationship existing between the taxpayer of the IUC and the road and environmental costs provoked by the use of vehicles, when in article 55 of its Response it refers that "The spirit of the CIUC, to the extent that this is motivated essentially by an environmental concern, its rationale is to tax the users of the vehicles (whether owners or lessees) who, by force of their respective use provoke an environmental cost." (emphasis ours)

e) It should also be left a brief note, solely to raise the question of why the rules contained in article 9 of the Civil Code oblige the interpreter of ordinary legislation, given that the said Code does not occupy any prominent place in the legal system.

To this question responds Professor Jorge Miranda, ibidem, p. 230, when he considers that the "[…] conclusion towards which one is inclined is that rules such as these are valid and effective, not because they are contained in the Civil Code - since this does not occupy any prominent place in the legal system - but directly, as such, because they translate a legislative will, not contradicted by any other provisions, with respect to the problem of interpretation (which are not only technical-legal) of which they are concerned."

Adds the said author, idem, that "rules on these matters can be considered substantially constitutional and it would not even be repugnant to see them raised to the Constitution in the formal sense."

Regarding the issue of interpretation and its rules, as derived from Professor José de Oliveira Ascensão, in The Law, Introduction and General Theory, 2nd edition, Calouste Gulbenkian Foundation, 1980, pp. 352/353, should be emphasized the imperative character of these rules and their binding nature for the interpreter.

The interpretation that the arbitral tribunal makes of paragraph 1 of article 3 of the CIUC and the criteria which, for this effect, it considered, from the literal element to the systematic element, passing through the historical and rational (or teleological) elements, do not thus collide with any constitutional principles.

Paragraph 1 of article 9 of the CC provides that the pursuit of legislative thought should have "[…] especially in mind […] the unity of the legal system, the circumstances in which the law was elaborated and the specific conditions of the time in which it is applied", circumstances and conditions which today more than ever are of sensitivity for the environment and respect for matters related to it, and which are inscribed in the constitutional order.

Thus, in light of what has been mentioned, it does not seem, with due respect, that the AT is correct, to the extent that the interpretation considered by the arbitral tribunal as being the only one capable of respecting the legal purposes does not violate any of the principles in question, that is, the principles of trust and legal certainty, of the efficiency of the tax system and of proportionality, and that on the other hand such interpretation is express and substantively in conformity with the principles inscribed in the Constitution.

Thus, it is not seen that the interpretation made by the tribunal regarding paragraph 1 of article 3 of the CIUC contends with any constitutional norms or principles in force.

J - ACQUISITION OF OWNERSHIP OF THE VEHICLE AND THE VALUE OF REGISTRATION

52 - First of all, it should be referred that regarding the value of registration, the acquirers of vehicles become owners of the same vehicles through the celebration of the corresponding contracts of purchase and sale, with registration or without it.

53 - There are three articles of the Civil Code that are important to consider with regard to the acquisition of ownership of a motor vehicle. These are, foremost, article 874, which establishes the notion of a purchase and sale contract as being "[…] the contract by which the ownership of a thing, or another right, is transmitted for a price"; article 879, in subsection a) of which it is established, as essential effects of the purchase and sale contract, "the transmission of ownership of the thing or the holding of the right" and article 408, which has as heading contracts with real effect and establishes in paragraph 1 that "the constitution or transfer of real rights over determined thing occurs by mere effect of the contract, except for exceptions provided for in the law". (emphasis ours)

We are, with effect, in the domain of contracts with real effect, which means that their celebration provokes the transmission of real rights, in this case motor vehicles, determined by mere effect of the contract, as expressly follows from the norm previously mentioned.

54 - Regarding the said contracts with real effect, it should be noted the teachings of Pires de Lima and Antunes Varela, when, in annotations to article 408 of the CC, they tell us that "From these contracts called real (quoad effectum), by having as immediate effect the constitution, modification or extinction of a real right (and not merely the obligations tending to this result) are distinguished the so-called real contracts (quoad constitutionem), which require the delivery of the thing as an element of their formation (see articles 1129, 1142 and 1185)".

We are thus faced with contracts in which the ownership of the thing sold is transferred, without more, from the seller to the buyer, having as cause the contract itself.

55 - Also from jurisprudence, namely from the Judgment of the STJ no. 03B4369 of February 19, 2004, available at: www.dgsi.pt, it is derived that, in light of the provision of article 408, paragraph 1 of the Civil Code, "the constitution or transfer of real rights over determined thing occurs by mere effect of the contract, except for exceptions provided for in the law". This is the case of the contract of purchase and sale of a motor vehicle (articles 874 and 879 subsection a) of the Civil Code), which does not depend on any special formality, being valid even when celebrated in verbal form - in accordance with Judgment of the STJ of March 3, 1998, in CJSTJ, 1998, year VI, Volume I, p. 117". (emphasis ours)

56 - The purchase and sale contract, given what has been mentioned, having real nature, with the mentioned consequences, it must also be considered what is the legal value of the vehicle registration that is the subject of that contract, to the extent that the transaction of said good is subject to public registration.

57 - It establishes, with effect, paragraph 1 of article 1 of Decree-Law no. 54/75, of February 12, relating to the registration of motor vehicles, that "The registration of vehicles has essentially the purpose of giving publicity to the legal situation of motor vehicles and respective trailers, with a view to the security of legal commerce". (emphasis ours)

58 - Becoming clear, given the said norm, what is the purpose of registration, there is, however, no clarity within the scope of the said Decree-Law regarding the legal value of that registration, it being important to consider article 29 of the mentioned statute, relating to the registration of motor vehicle ownership, when there it is provided that "There are applicable, with the necessary adaptations, to the registration of automobiles the provisions relating to the registration of immovable property […]". (emphasis ours)

59 - In this framework, so that we may achieve the sought knowledge regarding the legal value of the registration of motor vehicle ownership, it is important to take into account what is established in the Property Registration Code, approved by Decree-Law no. 224/84, of July 6, when it provides in its article 7 that "the definitive registration constitutes a presumption that the right exists and belongs to the registered holder in the precise terms in which the registration defines it". (emphasis ours)

60 - The combination of the provisions in the articles mentioned above, particularly that established in paragraph 1 of article 1 of Decree-Law no. 54/75, of February 12 and in article 7 of the Property Registration Code, permits to consider, on one hand that the fundamental function of registration is to give publicity to the legal situation of the vehicles, permitting on the other hand to presume that the right exists and that such right belongs to the holder for whom the same is registered, in the precise terms in which it is defined in the registration.

61 - Thus the definitive registration constitutes nothing more than the presumption that the right exists and belongs to the registered holder in the exact terms of the registration, but a rebuttable presumption, admitting therefore contrary proof, as follows from the law and jurisprudence has been pointing out, and to this end may be seen, among others, the Judgments of the STJ nos. 03B4369 and 07B4528 of February 19, 2004 and January 29, 2008 respectively, available at: www.dgsi.pt.

62 - The function legally reserved for registration is thus, on one hand to give publicity to the legal situation of the goods, in this case the vehicles and on the other hand to permit us to presume that the right exists over those vehicles and that the same belongs to the holder as such inscribed in the registration, which means that the registration does not have a constitutive nature of the property right but only declarative, hence the registration does not constitute a condition of validity of the transmission of the vehicle from the seller to the buyer.

63 - Thus, if the buyers of vehicles, as their "new" owners, do not forthwith promote the adequate registration of their right, it is presumed, for the purposes of paragraph 1 of article 3 of the CIUC and the provision in article 7 of the Property Registration Code, that the vehicles continue to be the property of the person who sold them and who remains registered as their owner, being that person the taxpayer of the tax, in the certainty, however, that such presumptions are rebuttable, either by force of that established in paragraph 2 of article 350 of the CC or in light of the provision of article 73 of the LGT. Hence, from the moment that the presumptions in question are set aside by means of proof of the respective sale, AT cannot persist in considering as the taxpayer of the IUC the seller of the vehicle who in the register continues to appear as its owner.

L - MEANS OF PROOF PRESENTED

64 - As the written form is not legally required for the transmission of ownership of motor vehicles, proof of that transmission may be made by any means, namely through oral or documentary evidence, in which latter case is included, namely the invoice-receipt, the receipt or the application - declaration for registration of property relating to the sale of vehicles.

65 - As a means of proof that the vehicle with registration number ...-...-... was sold on September 2, 2004 to Mr. B..., the Claimant submitted to the records (see Doc. 5) a copy of the Application - declaration for registration of property which corresponds to the official form in which is inscribed the information relating to the contract of purchase and sale of said vehicle with a view to its registration, where there is written a statement of responsibility in which the said buyer confirms the purchase of the vehicle in question from the Claimant.

66 - The Claimant also proceeded with the submission to the records of a copy of the debit note no. N.../NE... (see Doc. 6), issued on September 15, 2004 and relating to the vehicle with registration number ...-...-....

67 - The information inscribed in the mentioned documents, as means intended to provide proof of the transaction of the vehicle in question, enjoy the presumption of truthfulness that in paragraph 1 of article 75 of the LGT is conferred upon them, and it falls to AT, in light of the provision of article 75, paragraph 2 of the LGT, within the framework of the well-founded and objective reasons that it had, to demonstrate that the same do not correspond to reality.

68 - Such documents appear with sufficient suitability in order to demonstrate said transaction, constituting, in our view, an adequate and capable means of proof, capable of together setting aside the presumption established in paragraph 1 of article 3 of the CIUC.

69 - Nothing permits, moreover, to consider that the elements inscribed in said Documents are contrary to the reality that contractually occurred, which means that the same do not appear as embodying any simulated contract, quite the contrary, everything indicates that they reflect and prove the facts mentioned therein, that is, the effective sale of the vehicle with registration number ...-...-... to B....

70 - The transfer of ownership of the vehicle occurred on September 2, 2004, with the exigibility of the corresponding IUC being for the years 2013 and 2014.

71 - In these circumstances, with AT demanding the IUC for the years 2013 and 2014 and the Claimant not being, in these years, the owner of said vehicle, it is considered that the mentioned documentation constitutes adequate proof capable of setting aside the presumptions at issue in the records, that is, the presumption established in article 7 of the Property Registration Code and that established in paragraph 1 of article 3 of the CIUC, which means that at the time when the tax was exigible in said years (2013 and 2014), the Claimant was not the taxpayer of the IUC.

M - REIMBURSEMENT OF AMOUNT PAID AND INDEMNITY INTEREST

72 - Pursuant to subsection b) of paragraph 1 of article 24 of the RJAT and in conformity with what is established therein, the arbitral decision on the merit of the claim which is not subject to appeal or challenge binds the tax administration as of the end of the period provided for appeal or challenge, and it must - in the exact terms of the success of the arbitral decision in favor of the taxpayer and until the end of the period provided for the spontaneous execution of the sentences of the tax courts - "Restore the situation that would exist if the tax act subject of the arbitral decision had not been performed, adopting the acts and operations necessary for the effect." (emphasis ours)

73 - These are legal commands that are in total harmony with the provision of article 100 of the LGT, applicable to the case by force of the provision in subsection a) of paragraph 1 of article 29 of the RJAT, in which it is established that "The tax administration is obliged, in case of total or partial success of claims or administrative appeals or judicial proceedings in favor of the taxpayer to the immediate and full restoration of the situation that would exist if the illegality had not been committed, including the payment of indemnity interest in accordance with the terms and conditions provided for in the law." (emphasis ours)

74 - The case contained in the present records raises the manifest application of the mentioned norms, given that as a consequence of the illegality of the assessment acts referenced in this proceeding and of the payment of the amount of € 106.51, as results from the documentation comprising the records (Doc. 2, and PA, pp. 15 to 18), reimbursement must be made of the amounts paid as a way of achieving the restoration of the situation that would exist if the illegality had not been committed, amounts which in the case at hand total € 106.51.

75 - As to indemnity interest, it is manifest that given what is established in article 61 of the CPPT and the requirements of the right to indemnity interest being met, that is, verified the existence of error attributable to the services resulting in the payment of the tax debt in an amount superior to that legally due, as provided for in paragraph 1 of article 43 of the LGT, the Claimant has the right to indemnity interest at the legal rate, calculated on the above-mentioned amount of € 106.51.

CONCLUSION

76 - In the circumstantial framework that has been referred to, the AT, in performing the assessment acts at issue in this proceeding, founded on the idea that article 3, paragraph 1 of the CIUC does not establish a rebuttable presumption, makes incorrect interpretation and application of this norm, committing an error regarding the legal assumptions, which constitutes violation of law.

77 - On the other hand, because AT, at the date when the tax facts occurred, considered the Claimant the owner of the vehicle referenced in this proceeding, considering it as such the taxpayer of the tax, when such ownership with respect to the vehicle in question was no longer inscribed in its legal sphere, basing itself thus on factual matter divergent from the effective reality, commits an error regarding factual assumptions and therefore violation of law.

III - DECISION

78 - Accordingly, mindful of all that has been stated, this Arbitral Tribunal decides:

• To judge the claim well-founded, as proven, on the ground of violation of law, the request for declaration of illegality of the IUC assessment acts formulated by the Claimant, relating to the years 2013 and 2014, relating to the vehicle identified in the proceeding;

• To annul consequently the IUC assessment acts for the years 2013 and 2014 relating to the vehicle with registration number ...-...-... as identified in the records;

• To order AT to reimburse the amount of € 106.51 relating to the IUC assessed and paid in accordance with the terms mentioned in the proceeding and to the payment of indemnity interest at the legal rate, calculated from the date of payment of the tax until complete reimbursement of said amount;

• To order AT to pay the costs of the present proceeding.

VALUE OF THE PROCEEDING

In conformity with the provision of articles 306, paragraph 2 of the CPC (formerly 315, paragraph 2) and 97-A, paragraph 1 of the CPPT and article 3, paragraph 2 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the proceeding is set at € 106.51.

COSTS

In accordance with the provision of article 12, paragraph 2, at the end, and article 22, paragraph 4, both of the RJAT, and article 4 of the Regulation of Costs in Tax Arbitration Proceedings and the Table I annexed thereto, the amount of total costs is set at € 306.00.

Notice shall be given.

Lisbon, March 14, 2016

The Arbitrator

António Correia Valente

(The text of this decision was prepared by computer, in accordance with article 131, paragraph 5 of the Code of Civil Procedure (formerly 138, paragraph 5) applicable by referral from article 29, paragraph 1, subsection e) of Decree-Law no. 10/2011, of January 20 (RJAT), its drafting being governed by the spelling preceding the Orthographic Agreement of 1990.)

[1] See the study on the matter, prepared by Prof. Carlos Pestana Barros, in Science and Technical Taxation, 2005, no. 416, pp. 105-126