CAAD Decision 49/2015-T: IUC Subjective Incidence and Legal Presumptions in Vehicle Tax

Arbitral Decision

CAAD: Tax Arbitration

Case No. 49/2015 – T

Subject: IUC – Subjective scope of application and legal presumptions

I – Report

1.1. A…, S.A., with registered office at …, Lisbon (hereinafter referred to as the "Claimant"), having been notified of the official assessments of IUC and respective compensatory interest, relating to the years 2013 and 2014, in the combined amount of €101,048.25, filed, on 29/1/2015, a request for constitution of an arbitral tribunal, in accordance with the provisions of Articles 2, No. 1, paragraph a), and 10, No. 1, paragraph a), both of Decree-Law No. 10/2011, of 20/1 (Legal Framework for Arbitration in Tax Matters, hereinafter designated solely as "LFATM"), in which the Tax and Customs Authority (TA) is the Respondent, with a view to the "declaration of illegality of the aforementioned acts of official assessment of IUC and CI."

1.2. On 13/4/2015, the present Collective Arbitral Tribunal was constituted.

1.3. In accordance with Article 17, No. 1, of the LFATM, the TA was notified, as Respondent party, to present its reply, in accordance with the aforementioned article, on 13/4/2015. The TA presented its reply on 12/5/2015, having argued, in summary, in the direction of total dismissal of the Claimant's claim. It further requested waiver of witness examination, as well as waiver of the meeting provided for in Article 18 of the LFATM and of the production of oral or written submissions.

1.4. On 26/5/2015, the herein Claimant presented a request requesting the attachment to the present proceedings of Arbitral Decision No. 688/2014-T, rendered on 20/5/2015, "a process also relating to the Claimant and in which equal matters to those of the present proceedings were discussed, in similar fashion to what occurred with the learned Judgment rendered in case No. 250/2014-T, a copy of which has already been attached to the record."

1.5. Also on 26/5/2015, the Respondent presented a request following up on the request presented by the herein Claimant "[clarifying that] with respect to what was stated by the Claimant in Article 153 of the initial petition, as well as in the request in response, the arbitral decision rendered in case No. 250/2014 was only partially favorable to it."

1.6. By order dated 14/8/2015, the present Tribunal considered the meeting of Article 18 of the LFATM and the production of evidence beyond the documentary evidence already contained in the record to be dispensable, and that the case was ready for decision. The date of 21/9/2015 was further set for the rendering of the arbitral decision.

1.7. On 28/8/2015, the herein Claimant again requested the production of witness evidence, considering that its production would be relevant for the assessment and determination of the merits. On 7/9/2015, the herein Claimant attached proof of payment of the subsequent arbitration fee.

1.8. The Arbitral Tribunal was duly constituted and is materially competent (see Articles 2, No. 1, paragraph a), 5, No. 2, paragraph a), 6, No. 1, 10, No. 1, paragraph a), and No. 2, of the LFATM), the case does not suffer from vices that would render it invalid, and the Parties have standing and legal capacity (see Articles 4 and 10, No. 2, of the LFATM, and Article 1 of Order No. 112-A/2011, of 22/3), rendering them legitimate.

II – Submissions of the Parties

2.1. The herein Claimant submits, in its initial petition, that: a) "it is obvious that IUC does not aim to tax importers of vehicles, as is the case of the Claimant, for the simple reason that these are not the users of the vehicles that the tax intended to burden – in that the Claimant, in its activity as importer of the vehicles, does not produce any 'environmental and road costs,' not being the 'polluter-payer' that the legislator intended to tax"; b) "IUC does not intend and did not intend to burden importers or dealers of vehicles – rather the users"; c) "the Claimant, as national importer of vehicles of brand 'B', does not cause any 'wear of public goods' as a result of its activity – it is not the user of the vehicles"; d) "From the provisions of Articles 3, No. 1, and No. 2, and 6, No. 1, of the IUC Code, it is extracted that IUC applies to the owner or purchaser with reservation of title at the date of vehicle registration – it being presumed that the owner (or purchaser with reservation of title) on that date is that in whose name the vehicle is then registered or matriculated"; e) "the vehicles in question, listed in the list now attached as document 2906 [...], were not the property of the Claimant on the dates of their respective registrations, contrary to what was presumed by the TA"; f) "on the dates of registration of these vehicles, the Claimant had already sold them to third parties (to the aforementioned concessionaires), as demonstrated from copies of their respective sales invoices"; g) "consequently, the official assessments here challenged, relating to these vehicles, are illegal, either by error in the factual assumptions, or by defect of violation of law, namely of the provisions of Articles 1, 2, No. 1, a) and d), 3, 4, 6 and 11 of the IUC Code"; h) "although IUC is due by the owners of the vehicles – in the case, on the date of registration, because it concerns the IUC relating to the year of registration – it is unanimous jurisprudence of the CAAD that the persons in whose names the vehicles are registered or recorded may rebut the (mere) legal presumption of ownership that flows from that registration or vehicle record [...] allowing the interested party to allege and prove that, despite that presumption derived from the record, they are not the effective owner of the vehicles on the dates considered in the official records"; i) "from the foregoing, there also results unanimity of understanding to the effect that Article 3, No. 1, of the IUC Code establishes a legal presumption iuris tantum (and not iure et de iure) – that is to say, rebuttable by contrary proof"; j) "the Claimant benefits from the presumption of veracity and good faith enjoyed by the documents presented as proof of the transfer of ownership of the vehicles – as is the case of the sales invoices of the vehicles here attached (see Article 75, No. 1, of the General Tax Law); l) "by means of the sales invoices attached hereto, the Claimant demonstrates that it sold the vehicles in question before the date of their registration"; m) "all the sales invoices in question are within the official knowledge of the TA, because duly communicated to the TA via SAF-T (see Article 74, No. 2, of the General Tax Law) [...] whereby the TA has official knowledge of the date of the sales of the vehicles in question, as well as of their final customers"; n) "some of the vehicles in question, clearly a minority [...], were the property of the Claimant on the dates of assignment of their registrations, having nonetheless been sold within 60 days following the dates of assignment of their registrations"; o) "those cases are evidenced in the listing attached here as document 2907, representing 60 vehicles, which correspond, in the assessments challenged here, to a total of IUC and CI assessed by the TA of €4,718.10"; p) "[such] vehicles, listed in the list now attached as document 2907 [...], were sold by the Claimant within the 60th day following the dates of their registrations [...] as demonstrated from copies of their respective sales invoices [...], whose reference is specified, by vehicle, in the listing attached here as document 2907"; q) "contrary to the understanding of the TA, in the year of registration of the vehicle the Claimant cannot be the taxpayer of IUC when it demonstrates that, despite being the owner of the vehicle on the date of its registration, it sold it within the period of 60 days following that registration date – that is what can be deduced from the provisions of, among others, Articles 17 and 18 of the IUC Code"; r) "the IUC Code is clear in determining that, in the year of registration, the tax only becomes due after the period allowed for registration – 60 days counted from the date of assignment of the registration (see Article 42, No. 2, of the Motor Vehicle Registration Regulation)"; s) "[in the case of] vehicles sold by the Claimant in the period of 60 days after the date of registration, [the respective assessments] suffer from a defect of violation of law, namely of the provisions of the aforementioned Articles 17 and 18 of the IUC Code"; t) "the assessments challenged here suffer [...] from a defect of violation of the principles of the inquisitorial and discovery of material truth, embodied in Article 58 of the General Tax Law"; u) "the assessments challenged here do not explicitly set out the IUC amounts concretely due for each vehicle [...] they only explicitly set out the demonstration of the assessment of compensatory interest"; v) "the procedure [...] adopted by the TA is contrary to the taxpayer's fundamental rights, making the correction in question suffer from an elementary defect of form – lack or defect of legally required reasoning – which generates its voidability (see Articles 268, No. 3, of the Constitution, 77, No. 2, of the General Tax Law, 99, c), of the Tax Procedures Code, 124, 125 and 135 of the Administrative Procedure Code)"; x) "in the factual circumstances [...] described there is no discernible censurable behavior of the Claimant – such that no compensatory interest is due"; z) "given that the assessments challenged here were paid, beyond the refund of the taxes improperly paid, the Claimant is entitled to indemnificatory interest, for error of fact and law of the TA in the issuance of the assessments, in accordance with Article 43 of the General Tax Law."

2.2. The herein Claimant, in summary, requests the Arbitral Tribunal: "the annulment of the IUC and CI assessments challenged here, with the consequent restitution of all taxes improperly paid; the recognition of the Claimant's right to indemnificatory interest, in accordance with legal terms; and the condemnation of the Respondent to the payment of the costs of the present litigation."

2.3. For its part, the TA submits, in its defense: a) that "from the articulation between the scope of the subjective application of IUC and the constitutive fact of the corresponding tax obligation, there flow, unequivocally, from Article 6 of the IUC Code, the legal situations that generate the birth of the tax obligation, namely, the assignment of registration or the registration in national territory"; b) that "the initial registration of ownership of vehicles authorized (as is the case herein), is based on the respective request and proof of compliance with the tax obligations relating to the vehicle. That is, the issuance of a registration certificate implies the presentation of a DAV (Vehicle Declaration) by the Claimant and the payment of the corresponding ISV (Vehicle Transfer Tax) and automatically results in the registration of ownership of the vehicle under Article 24 of the Motor Vehicle Registration Regulation in the name of the entity that proceeded with its importation and requested its registration, namely, the Claimant"; c) that, under "Article 24 of the Motor Vehicle Registration Regulation, the importer appears in the register as first owner of the vehicle and in that sense is, in accordance with what is established in Article 3 and Article 6, both of the IUC Code, the taxpayer of the tax"; d) that "the assignment, to the Claimant, of a registration certificate constitutes, in accordance with the provision of Article 6 of the IUC Code, the generating fact of the tax, whereby, having the Claimant requested the issuance of a registration certificate [and] the same being registered in the name of the Claimant, the assumptions of the generating fact of IUC are met, as well as of its exigibility, the Claimant being the taxpayer of the tax"; e) that "the tax legislator did not fiction that the tax would be due by the owner of the vehicle who was registered within the 60 days to which Article 42, No. 2, of the Motor Vehicle Registration Regulation alludes, which would be paid in the 30 days thereafter in accordance with Article 17 of the IUC Code. And much less did the legislator fiction that importers, notwithstanding that they proceed with the sale of the vehicles before the assignment of the registration certificate, could thus see the subjective application of IUC excluded. What the legislator established is that the generating fact of the tax is determined by registration or by the recording, expressly establishing Article 24 of the Motor Vehicle Registration Regulation that having been paid the ISV and registration requested, the vehicle is automatically registered in the name of the importer, namely, the Claimant"; f) that "independently of the Claimant proceeding with the sale of the vehicle to its concessionaires before the assignment of the registration certificate, such fact, in light of the generating fact established in Article 6 of the IUC Code, is manifestly inconsequential, in that the legislator expressly established that the generating fact is evidenced by the assignment of the registration"; g) that "although the Claimant alleges that on the date of assignment of the registration it had already sold the vehicles to its concessionaires, such fact is irrelevant for purposes of application of the provision of Article 6 of the IUC Code"; h) that "the position advocated by the Claimant with a view to excluding the subjective scope and taxation of IUC has no legal basis and violates the constitutional principles of legality and tax justice, of contributive capacity, of equality, of certainty and of legal security"; i) that "the invoices are not apt to prove the conclusion of a bilateral contract such as purchase and sale, as that document does not itself reveal an essential and unequivocal declaration of will (i.e., the acceptance) on the part of the alleged acquirer"; j) that "the notifications in question complied with all legal requirements established, namely clearly and sufficiently revealing all the relevant elements for the calculation of the tax due, explicating the entire logical and legal process of each of the acts, such that there is no, as pointed to and alleged, formal defect"; l) that "the elements presented by the Claimant in the course of the tax procedure were not capable of removing the fact and evidence relevant to it being the same, on the date of the exigibility of the taxes, the owner of the vehicles and the debtor of the tax, in accordance with the motor vehicle register and with the IUC Code, whereby the thesis presented by the Claimant of there not having been action taken by the Tax Authority is refuted"; m) "[the payment of compensatory interest for delay in IUC is] provided for in Article 35 of the General Tax Law, and it cannot fail to be considered negligently attributable to the Claimant the alleged non-updating of the register of ownership of the vehicles and the delay in the tax assessments"; n) that "IUC is assessed in accordance with the registration information timely transmitted by the Institute of Registries and Notaryship [whereby] IUC is not assessed in accordance with information generated by the Respondent itself. [...] the Respondent limited itself to giving effect to the legal obligations to which it is bound and, in parallel, to following the registration information that was provided to it by those with authority to do so"; o) that "the Claimant should be condemned to the payment of the arbitration costs arising from the present request for arbitral pronouncement"; p) "that "there did not occur, in this case, any error attributable to the [tax authorities] [whereby] the legal assumptions that confer the right to indemnificatory interest are not met"; q) "nor in [the LFATM], nor in the Regulations of Costs in Tax Arbitration Proceedings, is there any eventual payment of 'litigation costs', neither by the part of the Tax Authority, nor by the part of the Claimant."

2.4. The TA concludes, finally, that "the present request for arbitral pronouncement should be dismissed, with the tax acts of assessment challenged being maintained in the legal order and the Respondent entity being absolved of the claim."

III – Factual Findings, Proven and Unproven

3.1. The following facts are considered proven:

i) The Claimant is a company that is the exclusive importer of all vehicles of brand B for the national market, having as its corporate purpose the trade in automobiles, respective parts and accessories.

ii) Once imported, the vehicles are immediately sold to the concessionaires of the brand, some of them part of the same economic group, who, in turn, sell them to final customers who are the users thereof.

iii) Considering that the vehicles were sold to the concessionaires before the date of their registration, the sales invoices do not contain the respective registrations but rather the "chassis" numbers of the vehicles sold to the concessionaires, as appears from the content of the invoices presented by the herein Claimant.

iv) At a moment prior to the year and month of the taxation of the tax in question, the vehicles in question were the object of sale to third parties, not being, thus, the property of the Claimant, as demonstrated by the reading of copies of the sales invoices of the vehicles to the former lessees, contained in the documents attached to the initial petition (which, given their length, are considered here as reproduced in full). The Claimant further presented copies of financial leasing contracts and copies of accounting extracts, with respect to each of the customers. The aforementioned elements embody means of evidence with sufficient force and adequate for rebutting the presumption based on the Register.

v) Although not in conformity, the herein Claimant proceeded with the payment in full of the IUC assessments and compensatory interest here in question, relating to the years 2013 and 2014, in the total amount of €101,048.25 (see the list of assessments challenged, attached to the initial petition of the herein Claimant and which, given its length, is also considered here as reproduced in full).

vi) Not in conformity with the aforementioned decisions, the herein Claimant presented the present arbitral request on 29/1/2015.

3.2. There are no facts given as unproven, since all facts deemed as relevant for the assessment of the claim were proven.

IV – Justification of the Proven Facts

1. The facts considered proven are based on the probative elements aforementioned and attached in the administrative complaints (contained in the procedural file), which are here considered as fully reproduced for all legal purposes.

V – Justification: Legal Matters

5.1. Summary of the Positions of the Parties

The herein Claimant, in the justification of its request for arbitral pronouncement, affirms, in summary, the following:

• The 41 vehicles to which the IUC assessed and here in question relate, were not, on the date of the tax facts (temporal gap of 2013 and 2014) the property of the herein Claimant, as per documents Nos. 1924 to 2902, whose content is given as fully reproduced for all legal purposes; facts that allow to ascertain that the same cannot be a taxpayer of the tax, prohibiting it, thus, any subjective responsibility for its payment;

• The Claimant bases its position on the fact that the 37 motor vehicles taxed were sold to third parties in a period prior to 2013 and 2014, transferring their ownership to the former lessees (see the aforementioned sales invoices and attached to the Administrative Complaints contained in the procedural file, which are given as fully reproduced for all legal purposes);

• The herein Claimant adds, furthermore, that it does not consider itself a taxpayer of IUC relating to the remaining 4 vehicles, given that these were covered by financial leasing contracts, in accordance with No. 2 of Article 3 of the IUC Code, with the said lessees being treated as lessees.

Given the facts presented, the Claimant concludes that it cannot be attributed ownership of the aforementioned vehicles, and cannot be a taxpayer of the tax, in view of the letter and spirit of Article 3 of the Code of the Single Circulation Tax (hereinafter designated as IUC Code) and that the taxation, in this regard, cannot apply only to those appearing in the register as owners of the vehicles, there being a need to consider their actual owners.

The herein Respondent proceeded with the attachment of the procedural file and presented its Reply, from which it is understood that, in its view, the tax acts in question do not suffer from any defect of violation of Law, having pronounced for the dismissal of the Claimant's claims and for the maintenance of the assessment acts questioned, defending, in summary, that:

• The taxpayers of IUC are the persons who appear in the register as being the owners of the vehicles, as provided for in No. 1 of Article 3 of the IUC Code, which in the case sub judice applies to the Claimant;

• The registration of the vehicles in the name of a certain person embodies the position of that person as a taxpayer of the IUC tax obligation;

• The interpretation that the Claimant makes of the provision in Article 3 of the IUC Code is notoriously wrong, in that it incurs in a "skewed interpretation of the letter of the law" and in the adoption "of an interpretation that does not attend to the systematic element, aiming at the unity of the regime established throughout the IUC Code and, more broadly, throughout the entire legal-tax system," the Claimant following an "interpretation that ignores the rationale of the regime established in the article in question and, as well as throughout the IUC Code."

5.2. Questions to be Decided

Given the foregoing in the preceding numbers, regarding the written submissions of the parties, and the arguments presented therein, the principal questions to be decided are as follows: a) The challenge made by the herein Claimant regarding the material assessment of the assessment acts, relating to the years 2013 and 2014, and concerning the IUC on the vehicles aforementioned in the procedural file; b) The alleged erroneous interpretation and application of the norms of subjective application of the IUC assessed and collected, which constitutes the central question to be decided in the present case; and c) The legal value of the registration of motor vehicles.

The claim object of this case is the declaration of annulment of the assessment acts of IUC relating to the motor vehicles better identified in the case, the condemnation of the TA to the reimbursement of the amount of the tax relating to such assessments in the amount of €101,048.25 and the condemnation of the TA to the payment of indemnificatory interest on the same amount.

According to the understanding of the TA, it suffices that, in the register, the vehicle appears as being the property of a certain person for that person to be the taxpayer of the tax obligation.

The factual matters are fixed (as appears from point 3.1. above), being important, now, to determine the Law applicable to the underlying facts, in accordance with the questions to be decided, aforementioned, being certain that the central question in question in the present proceedings, as to which there are absolutely opposed understandings between the Claimant and the TA, consists of knowing whether No. 1 of Article 3 of the IUC Code, relating to the subjective scope of the single circulation tax, establishes or not a rebuttable presumption.

Everything analyzed and, taking into account, on the one hand, the positions of the parties in confrontation and, considering, on the other hand, that the central question to be decided is whether No. 1 of Article 3 of the IUC Code establishes or not a legal presumption of tax application, it is necessary, in this context, to assess and render a decision.

5.3. The Question Relating to the Alleged Erroneous Interpretation and Application of the Norm of Subjective Application of IUC

Considering that it is settled understanding, in the doctrine, that in the interpretation of tax laws the general principles of interpretation are fully valid, which will be, only and naturally, limited by the exceptions and particularities required by the Law itself, subject matter of interpretation. This is an understanding that has come to receive acceptance in the General Tax Laws of other countries and which also came to be established in Article 11 of our General Tax Law, which has, moreover, been frequently underscored by jurisprudence.

It is consensually accepted that in order to grasp the meaning of the law, interpretation seeks, a priori, to reconstruct the legislative thought through the words of the law, which means, to interpret its literal sense, evaluating and assessing it in light of other criteria, intervening in what are called elements of a logical, rational or teleological nature and of a systematic order.

With respect to the interpretation of tax law, one must consider the jurisprudence, for example, of the Administrative Supreme Court Judgments of 5/9/2012, case No. 0314/12 and of 6/2/2013, case No. 01000/12, regarding the importance of the provision of Article 9 of the Civil Code, as a fundamental element of legal hermeneutics. In that sense, it should be borne in mind that:

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

ii) The formulation used in the aforementioned article makes use of the expression "being considered," which raises the question of whether to such an expression can be attributed a presumptive sense, equating it to the expression "being presumed," these are expressions frequently used with equivalent senses.

iii) It is taught by Jorge Lopes de Sousa, in the Tax Procedure and Process Code, Annotated and Commented, Volume I, 6th Edition, Área Editora S.A., Lisbon, 2011, p. 589, that, in matters of tax application, presumptions can be revealed by the expression "is presumed" or by a similar expression, with various examples of such presumptions being mentioned therein, referring to that which appears in Article 40, No. 1, of the Corporate Income Tax Code, in which the expression "is presumed" is used, and to that which appears in Article 46, No. 2, of the same Code, in which use is made of the expression "is considered," as an expression with an effect similar to that of the former one and, equally embodying a presumption.

iv) In the legal formulation set forth in No. 1 of Article 3 of the IUC Code, a presumption was established, revealed by the expression "being considered," of meaning similar and of equivalent value to the expression "being presumed," in use since the creation of the tax in question.

v) The use of the expression "being considered" aimed at nothing more than the establishment of a more pronounced and clear approximation between the taxpayer of IUC and the actual owner of the vehicle, which is in harmony with the reinforcement given to the ownership of the vehicle, which came to constitute the generating fact of the tax, in accordance with Article 6 of the IUC Code.

vi) The relevance and interest of the presumption in question – which historically was revealed through the expression "being presumed" and which now employs the expression "being considered" – lies in the truth and justice which, by this means, is conferred upon tax relations and which embody fundamental tax values, making it possible to tax the real and actual owner and not the one who, through circumstances of a diverse nature, is sometimes merely an apparent and false owner. If the case were not thus considered, not admitting and valuing the presentation of probative elements intended to demonstrate that the actual owner is, after all, a person different from the one appearing in the register and who, initially, and in principle, was supposed to be the true owner, those values would be objectively set aside.

vii) There is also to be considered the principle of equivalence, inscribed in Article 1 of the IUC Code, which has underlying it the principle of the polluter-payer and concretizes the idea inscribed therein that whoever pollutes should, for that reason, pay. The aforementioned principle has constitutional basis, in that it represents a corollary of the provision of paragraph h) of No. 2 of Article 66 of the Constitution of the Portuguese Republic, having also basis in Community Law, whether at the level of primary law, Article 130-R of the Treaty of Maastricht (Treaty on European Union), where the aforementioned principle came to be included as support for Community Policy in the environmental field and which aims to hold responsible those who contribute with the damages that accrue to the community, arising from the use of motor vehicles, in a manner such that they be assumed by their owner-users, as environmental and road costs, which only they should bear, thus contextualizing the principle of the "polluter-payer."

Considering the arguments above described, it is important to emphasize that the aforementioned elements of interpretation, whether those related to literal interpretation, supported by the legally used words, or those relating to the logical elements of interpretation, of a historical nature or of a rational order, all point in the direction that the expression "being considered" has a sense equivalent to the expression "being presumed," and thus should be understood that the provision in No. 1 of Article 3 of the IUC Code establishes a legal presumption which, in light of Article 73 of the General Tax Law, where it is established that "The presumptions established in the norms of tax application always admit contrary proof," will necessarily be rebuttable, which means that the taxpayers are, in principle, the persons in whose names such vehicles are registered. They will be, thus, these persons, identified under these conditions, to whom the TA must necessarily address itself.

But they will be only in principle, given that, within the framework of prior hearing, of a mandatory character, in light of the provision in paragraph a) of No. 1 of Article 60 of the General Tax Law, the tax relationship could be reconfigured, either validating the taxpayer initially identified or redirecting the procedure towards the one who is, after all, the true and actual taxpayer of the tax in question.

The taxpayer has the right to be heard, through prior hearing (see José Manuel Santos Botelho, Américo Pires Esteves and José Cândido de Pinho, in Tax Procedure Code, Annotated and Commented, 4th edition, Almedina, 2000, annotation 8 of Article 100). Prior hearing – which naturally must be realized at a moment immediately prior to the assessment procedure – corresponds to the place and the proper time to, with certainty and security, identify the taxpayer of IUC.

5.4. On the Legal Value of the Register

With respect to the legal value of the register, it is important to note what is established in No. 1 of Article 1 of Decree-Law No. 54/75, of 12/2 (amended several times, the last being by way of Law No. 39/2008, of 11/8), when it provides that "the registration of vehicles has essentially as its purpose to give publicity to the legal situation of motor vehicles and respective trailers, with a view to the security of legal commerce."

For its part, Article 7 of the Code of Land Registry, applicable, supplementarily, to the registration of automobiles, by force of Article 29 of the Motor Vehicle Registration Code, provides 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."

Definitive registration constitutes nothing more than a rebuttable presumption, admitting, therefore, contrary proof, as flows from the law and jurisprudence has been noting, as can be seen, among others, in the Administrative Supreme Court Judgments No. 03B4369, of 19/2/2004 and No. 07B4528, of 29/1/2008, also available at www.dgsi.pt.

Therefore, the function legally reserved to the register is, on the one hand, to give publicity to the legal situation of the goods (in the case now in question, of the vehicles) and, on the other hand, permits us to presume that the right exists over those vehicles and that the same belongs to the holder, as such inscribed in the register – which does not have a constitutive nature of the right of ownership, but only a declarative one, hence the registration does not constitute a condition of validity of the transfer of the vehicle from the seller to the buyer. The same is to say, the acquirers of the vehicles become owners thereof by way of the conclusion of the respective purchase and sale contracts, with registration or without it.

In this context, it is fitting to recall that, in light of the provision in No. 1 of Article 408 of the Civil Code, the transfer of real rights over things (in the case sub judice, motor vehicles) is determined by the mere effect of the contract, and in accordance with the provision in paragraph a) of Article 879 of the Civil Code, among the essential effects of the purchase and sale contract, the transfer of the thing stands out.

Given the foregoing, it becomes clear that the legislative thought points in the direction that in No. 1 of Article 3 of the IUC Code a presumption "iuris tantum" is established, consequently rebuttable, permitting, thus, that the person who, in the register, is inscribed as owner of the vehicle, may present probative elements intended to demonstrate that such ownership is inserted in the legal sphere of another person, to whom ownership was transferred.

5.5. The Presumption of Article 3 of the IUC Code and the Date on Which IUC Becomes Due

5.5.1. The Presumption of Article 3 of the IUC Code

The TA considers that the presumption that exists in No. 1 of Article 3 of the IUC Code is decurrent of an interpretation contra legem, decurrent of a skewed reading of the letter of the law and, therefore, in violation of the unity of the legal system. However, and saving the respect due, the understanding of the jurisprudence goes in the direction that the existence of a legally rebuttable presumption should be considered, whereby consequently it serves the values and interests questioned, both at the level of material tax justice and at the level of the environmental objectives aimed at by IUC.

With regard to the unity of the legal system it is to be noted everything above cited, in particular, about the rationale of Article 1 of the IUC Code, about the norms and principles of the General Tax Law, about the pertinent norms and applicable to the registration of motor vehicles, about the interpretation that better serves and achieves the aforementioned unity and ensures the connection of those same norms, considering the legal presumption that is provided for in Article 3 of the IUC Code.

5.5.2. The Date on Which IUC Becomes Due

IUC is a tax of periodic taxation, whose periodicity corresponds to the year which begins at the moment of registration or in each one of its anniversaries, in accordance with the provisions of Nos. 1 and 2 of Article 4 of the IUC Code, being due in accordance with No. 3 of Article 6 of the aforementioned Code.

As for the assessment of IUC levied on the Claimant regarding the vehicles aforementioned above, relating to the years 2013 and 2014, the same is not justified because, at the moment of the tax facts, the vehicles no longer belonged to it – the 37 aforementioned vehicles were sold to third parties before the years 2013 and 2014 (see the probative documents already aforementioned above and attached to the administrative complaints contained in the procedural file and which are given, once again, as fully reproduced for all legal purposes; and the situation of the four vehicles which were covered by financial leasing contracts, in accordance with No. 2 of Article 3 of the IUC Code).

With respect to the burden of proof, Article 342, No. 1, of the Civil Code provides that "he who invokes a right is incumbent upon to make proof of the constitutive facts of the right alleged." Also Article 346 of the Civil Code (contrary proof) determines that "to the proof that is produced by the party upon whom the burden of proof falls can the contrary party oppose contrary proof with respect to the same facts, intended to render them doubtful; if it succeeds in doing so, the question is decided against the party burdened with the proof." (As stated by A. Anselmo de Castro, in Civil Procedural Law, III, Almedina, 1982, p. 163: "falling upon one of the parties the burden of proof, the contrary party is sufficient to oppose contrary proof, this being a proof intended to render doubtful the facts alleged by the first.")

Thus, in the case at hand, what the herein Claimant has to prove, in order to rebut the presumption that flows, whether from Article 3 of the IUC Code or from the Motor Vehicle Register itself, is that it (Claimant) was not the owner of the vehicles in question in the periods to which the assessments challenged relate. Now, the same makes proof, as appears from the present proceedings, that the ownership of the vehicles did not belong to it in the periods to which the assessments relate (see documents attached to the Administrative Complaints contained in the procedural file, which are given as fully reproduced for all legal purposes).

5.6. Rebuttal of the Presumption

The Claimant alleged, with the purpose of removing the presumption, not to be the owner of the vehicles at the time of the occurrence of the tax facts, offering, for that purpose, the following documents [see above, point 3.1.iv)]: copies of the sales invoices of the vehicles to the former lessees; copies of the financial leasing contracts; copies of the accounting extracts, with respect to each of the customers.

In this manner, the ownership of the aforementioned vehicles no longer belonged to it, and thus could not benefit from its use from a date prior to that on which IUC was due, embodying those documents means of evidence with sufficient and adequate force to rebut the presumption based on the register, in accordance with the provision in No. 1 of Article 3 of the IUC Code (documents, those, which enjoy the presumption of veracity provided for in No. 1 of Article 75 of the General Tax Law). It results from the foregoing that, on the date on which IUC was due, those who held ownership of the motor vehicles was not the herein Claimant.

5.7. Other Questions Relating to the Legality of the Assessment Acts

As for the existence of other questions pertaining to the legality of the assessment acts, taking into account that it is inherent in the establishment of the order of knowledge of the defects (see Article 124 of the Tax Procedures Code), it is concluded that, the request for arbitral pronouncement being based on defects that impede the renewal of the assessments challenged, the knowledge of other defects is prejudiced, because useless, and it is not justified to know of the other questions raised.

5.8. Reimbursement of the Amount Paid

In accordance with the provision in paragraph b) of No. 1 of Article 24 of the LFATM, and in conformity with what is established therein, the arbitral decision on the merit of the claim of which there is no recourse or challenge, binds the tax administration from the end of the period provided for recourse or challenge, and the latter 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 voluntary execution of the sentences of the tax courts "restore the situation that would exist if the tax act, object of the arbitral decision, had not been undertaken, adopting the acts and operations necessary for that effect."

These are legal commands that are in total harmony with the provision of Article 100 of the General Tax Law, applicable to the present case ex vi of the provision in paragraph a) of No. 1 of Article 29 of the LFATM, in which it is established that "the tax administration is obligated, in case of total or partial success of complaints or administrative appeals or of judicial process in favor of the taxpayer, to the immediate and full restoration of the situation that would exist if the illegality had not been committed, corresponding to the payment of indemnificatory interest, in accordance with the terms and conditions provided for in law."

The case contained in the present proceedings raises the manifest application of the aforementioned norms given that – as a result of the illegality of the assessment acts referred to in this case – there will necessarily be required the reimbursement of the amounts paid, whether by title of the tax paid or of the corresponding compensatory interest, as a way of achieving the restoration of the situation that would exist if the illegality had not been committed.

5.9. On the Right to Indemnificatory Interest

The declaration of illegality and consequent annulment of an administrative act confers upon the recipient of that act the right to reintegration of the situation in which the same would have found itself before the execution of the annulled act.

In the scope of the assessment of the tax, the annulment thereof confers upon the taxpayer the right to the restitution of the tax paid and, as a rule, the right to indemnificatory interest, in accordance with No. 1 of Article 43 of the General Tax Law and Article 61 of the Tax Procedures Code.

Whereby the herein Claimant has the right to indemnificatory interest on the amount of tax paid, relating to the annulled assessment.

VI – Decision

In view of the foregoing, it is decided:

• To dismiss as successful the claim for declaration of illegality of the assessment of IUC, relating to the years 2013 and 2014, and concerning the motor vehicles identified in the present case, hereby annulling, consequently, the corresponding tax acts.

• To dismiss as successful the claim for condemnation of the Tax Administration to the reimbursement of the sum improperly paid, in the amount of €101,048.25 euros, plus the respective indemnificatory interest, legally due, condemning the TA to effect these payments.

The value of the case is fixed at €101,048.25 (one hundred and one thousand, forty-eight euros and twenty-five cents), in accordance with Article 32 of the Code of Tax Procedures and Article 97-A of the Tax Procedures Code, applicable by force of the provision in Article 29, No. 1, paragraphs a) and b), of the LFATM, and Article 3, No. 2, of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT).

Costs are charged to the TA, in the amount of €3,060.00 (three thousand and sixty euros), in accordance with Table I of the RCPAT, and in compliance with the provision in Articles 12, No. 2, and 22, No. 4, both of the LFATM, and of the provision in Article 4, No. 4, of the aforementioned Regulation.

Notify.

Lisbon, 21 September 2015.

The Arbitrators

José Poças Falcão (President)

Miguel Patrício

Maria de Fátima Alves Ribeiro

Text prepared by computer, in accordance with the provision in Article 131, No. 5, of the Civil Procedure Code, applicable by referral of Article 29, No. 1, paragraph e), of the LFATM.

The wording of the present decision is governed by the spelling prior to the Spelling Agreement of 1990.