CAAD 503/2017-T: IRC Autonomous Taxation on Company Vehicles - Rebuttal of Presumption of Mixed Use

ARBITRAL DECISION

Parties

Claimant: A…, S.A. (A…), Tax ID PT…,

Respondent: Tax and Customs Authority (AT)

I. REPORT

On 11 September 2017 the Claimant (A…) filed with CAAD a request for arbitral pronouncement (RAP) requesting, under the Legal Framework for Arbitration in Tax Matters (LFATM), the constitution of a single arbitral tribunal (SAT).

THE REQUEST

The Claimant seeks that the SAT declare (1) the illegality and annulment of the decision rejecting the administrative complaint it lodged against the self-assessment of autonomous corporate income tax (IRC) liabilities for the 2015 tax year, and likewise, (2) the illegality and partial annulment of the self-assessment in IRC for the same tax year, relating to expenses and charges with vehicles exclusively allocated to the activity of the companies in the A… Tax Group, more specifically with respect to the amount of €36,563.43, and finally (3) recognition of its right to reimbursement of €36,563.43, plus compensatory interest at the legal rate, calculated from the date of rejection of the administrative complaint, namely from 23 June 2017.

THE CAUSE OF ACTION

Since the autonomous taxation in question concerns a fleet of 25 vehicles that the Claimant has allocated exclusively to the professional scope, given its business purpose, it considers that "they are an essential productive factor to its business activity", essentially for journalists' travel, newspaper and magazine deliveries, and ensuring the presence of employees in meetings with business partners.

Therefore, it concludes that "... regarding the charges incurred with these 25 light passenger vehicles whose use is exclusively professional, ... it considers that these should not have been subject to autonomous taxation, as they have a purely business character and this is capable of proof".

And because "... the case law, namely arbitral case law, ... has almost unanimously understood that autonomous taxation on charges and expenses with vehicles carries implicit a presumption capable of being rebutted, as is the case with all tax presumptions on which a certain taxation is based", it considers that, given the indispensability of having a fleet of vehicles for intermittent use by employees on duty, it has provided proof to the AT, given the control mechanisms for its use that it has adopted, that "it is not verified, demonstrably, the prerequisite of autonomous taxation with respect to the segment of vehicles at issue, in the negative formulation: absence of license and opportunity for "promiscuous" use of the vehicles and in the positive formulation: exclusive use in the productive activity of the A… Tax Group";

Therefore, the self-assessment in question is not, in accordance with the law – article 88, nos. 3 to 6 of the IRC Code – since the ratio of these norms, according to doctrine and case law, is based on the presumption of "partial" business character of the expenses on which they bear, and should – citing Arbitral Decision CAAD 187/2013-T – "this presumption of 'partial business character', ... in coherence, be considered as covered by the possibility of rebuttal resulting from art. 73 of the LGT, whether by the taxpayer or by the Tax Administration. Which appears, moreover, to conform to a proportional and adequate distribution of the burden of proof, insofar as, with autonomous taxation in question bearing on expenses of business character not readily apparent, it will be the taxpayer who will be better positioned to demonstrate that such requirement is met in concreto".

Only thus – citing Arbitral Decision CAAD 628/2014-T – "... is there proper assurance of conformity of the legal regime in question with the principles of tax equality and taxpaying capacity, which would be unnecessarily (and, occasionally, as is the case, disproportionally) truncated, by the establishment of an irrebuttable presumption of the partial business allocation of the expenses in question".

It invokes in its favor the sense and consequences of the following arbitral decisions CAAD "nos. 187/2013-T, 209/2013-T, 210/2013-T, 246/2013-T, 255/2013-T, 260/2013-T, 282/2013-T, 292/2013-T, 298/13-T, 6/2014-T, 36/2014-T, 37/2014T, 59/2014-T, 79/2014-T, 80/2014-T, 93/2014-T, 94/2014-T, 163/2014-T, 166/2014-T, 167/2014-T and 211/2014-T, 659/2014-T, 697/2014-T and 769/2014-T, 113/2015-T, 219/2015-T, 369/2015-T, 370/2015-T, 535/2015-T, 637/2015-T, 673/2015-T, 740/2015-T, 744/2015-T, 781/2015-T, 784/2015-T and 775/2015-T".

REGARDING THE SINGLE ARBITRAL TRIBUNAL (SAT)

The request for constitution of the SAT was accepted by the President of CAAD and automatically notified to the AT on 12-09-2017.

The signatory of this decision was appointed arbitrator by the CAAD Ethics Council, and the parties were notified thereof on 08.11.2017. The parties did not express an intention to refuse the appointment, in accordance with article 11, no. 1, subparagraphs a) and b) of the LFATM and articles 6 and 7 of the Ethics Code.

The Single Arbitral Tribunal (SAT) has been regularly constituted as of 28.11.2017 to examine and decide on the subject matter of this dispute (articles 2, no. 1, subparagraph a) and 30, no. 1, of the LFATM).

All these acts are documented in the records contained in the Case Management System, which are hereby considered reproduced.

On 28-11-2017 the AT was notified in accordance with and for the purposes of article 17-1 of the LFATM. It responded on 07.01.2018, attaching the Administrative File (AF) composed of five computerized files, designated as AF1 (2 pages), AF2 (8 pages), AF3 (1 page), AF4 (7 pages) and AF5 (22 pages).

On 15.02.2018 the parties' meeting was held pursuant to article 18 of the LFATM with examination of two witnesses, namely: B… who testified on matters of items 27 to 32 of the request for arbitral pronouncement (RAP) and C… who testified on matters of articles 34, 36 to 45, 50, 58 and 61 of the RAP. The Tribunal notified the Claimant and the Respondent to, in that order and successively, submit written submissions within 10 days, the Respondent's time period beginning with notification of the joining of the Claimant's submissions, and in compliance with article 18, no. 2 of the LFATM, set 31-03-2018 as the date for rendering the arbitral decision.

On 20.02.2018 the Claimant submitted written submissions and on 08.03.2018 the Respondent submitted its counter-submissions. The parties maintained what they had already stated in the request and in the response.

PROCEDURAL REQUIREMENTS

Legitimacy, capacity and representation – The parties are legitimate, possess legal personality and judicial capacity and are represented (articles 4 and 10, no. 2, of the LFATM and article 1 of Ordinance no. 112-A/2011, of 22 March).

Principle of contradiction – The AT was notified in accordance with subparagraph m) of this Report. All procedural documents and all documents attached to the case were made available to the respective counterpart in CAAD's Case Management System. Both parties were always notified of their attachment. Documents nos. 9 and 10, which had not initially been attached in legible form, were so during the proceedings, and the AT exercised its right of critical appraisal of them in the contradictory stage.

Dilatory exceptions – The arbitral procedure does not suffer from nullities and the request for arbitral pronouncement is timely as it was presented within the time limit prescribed in subparagraph a) of no. 1 of article 10 of the LFATM, as evidenced by the fact that the Claimant presented the request for pronouncement on 11.09.2017 and the date shown in the notification of the decision rejecting the administrative complaint being 27.06.2017.

SUMMARY OF THE CLAIMANT'S POSITION

The Claimant confines the present dispute to autonomous taxation relating to fleet vehicles or service vehicles, a total of 25, which bore on expenses and charges in the amount of €182,817.17 in 2015, resulting in IRC taxation of €36,563.43.

It first argues "the indispensability, resulting from the activity of the A… Tax Group, of having a fleet of vehicles for intermittent use by employees on duty", as it considers that "these 25 service vehicles, so designated because they are allocated exclusively to the company's service and its Tax Group, are an essential productive factor to its business activity", since the activities listed in its business purpose "... in particular ... journalism/press/social media, an activity of national scope, necessarily entails many work-related travels by its employees, whether to conduct a particular report, whether to make newspaper or magazine deliveries, or, simply, to ensure the presence of these employees in meetings with business partners".

And it continues by stating: "the fleet of 25 service vehicles available for use by employees who request them for one of those purposes meets this activity need, generates greater efficiency in managing the time spent, and facilitates and eases the performance and efficiency of the employee in the exercise of their functions and compliance with their obligations to the employer, all of which, in turn, contributes to obtaining the income subject to taxation under IRC", and that "... with respect to the charges incurred by A… with these 25 service vehicles (service pool), it is in a position to demonstrate that, through the internal procedures to which they are subject, the vehicles in question correspond to situations, both in theory (the company's intention and will) and in practice (execution of that business intention and will), are for exclusively professional use".

With respect to the internal rules for management and use of the 25 service vehicles and the mechanisms for monitoring compliance therewith, it states that their use is occasional by workers, follows procedural rules and consists of a Procedures Manual, in which it states, in summary:

"i) Vehicles may only be used upon request for prior authorization from a hierarchical superior (the so-called "authorizer"), for the specific journey in question; ii) this requisition or request for prior authorization is electronically performed, through a platform specifically designed for that purpose;

iii) the requisition includes the indication of the date, the route, namely the destination of the journey, the reason or justification therefor, and the scheduled departure and arrival times;

iv) after the journey is authorized by the hierarchical superior, the vehicle keys are picked up at the Gatehouse of the Lisbon or Porto newsroom, as the case may be, which informs the user where the vehicle is parked and records the mileage upon departure;

v) upon return from the journey, the vehicle key is returned at the Gatehouse of the Lisbon or Porto newsroom, as the case may be, such Gatehouse which, in addition to receiving the vehicle key, inserts the date, time and total mileage upon arrival;

vi) non-compliance with this procedure by an employee results in the application of a penalty to the employee, which, at the limit, may result in a disciplinary process."

The vehicles are parked in the buildings of the Group companies or in parking facilities adjacent thereto, and there is a computerized transport management platform that produces maps of control of the use of service vehicles.

The Claimant proceeds from the invocation of the "ratio" of autonomous taxation, according to various authors and CAAD arbitral case law, to conclude that "... the 'ratio' underlying autonomous taxation consists of subjecting to IRC taxation certain expenses which, although contributing to the formation of taxable income for IRC purposes, could easily give rise to situations of "confusion" between the intersection zone of the personal sphere and the business sphere" and citing "the Constitutional Court in Ruling no. 310/2012 also states that autonomous taxation aims to "(…) on the one hand, to encourage taxpayers subject to it to reduce as much as possible the expenses that negatively affect tax revenue and, on the other hand, to prevent companies from proceeding, through these expenses, to disguised profit distribution, particularly dividends which would thus only be subject to IRC as company profits"".

From the "ratio" of autonomous taxation the Claimant extracts what is contained in arbitral decisions 187/2013-T and 628/2014-T, citing various parts thereof, namely: "This anti-abuse character of autonomous taxation, will be not only coherent with its "anti-systemic" nature (as happens with all norms of this kind), but with a presumptive nature, pointed out both by Prof. Saldanha Sanches and by the case law that cites it.

In this light, autonomous taxation in analysis will then materially have underlying a presumption of "partial" business character of the expenses on which they bear, based on the aforementioned circumstance that such expenses lie on a gray line separating what is business expense, productive, from what is private, consumption expense, and notably, in many cases, the expense will actually have a dual nature (part business, part private). Faced with this difficulty, the legislator, rather than simply removing its deductibility, or reversing the burden of proof of the business character of the expenses in question (imposing, for example, the demonstration that "they do not have an abnormal character or excessive amount", as it does in article 65/1 of the CIRC), chose to establish the regime currently in force, which, nevertheless, has precisely the same basis, the same purpose, and the same type of result, as other forms used in other typical situations of the regime (in this case) of IRC.

This presumption of "partial business character" should, in coherence, be considered as covered by the possibility of rebuttal resulting from art. 73 of the LGT, whether by the taxpayer or by the Tax Administration.

Which appears, moreover, to conform to a proportional and adequate distribution of the burden of proof, insofar as, with autonomous taxation in question bearing on expenses of business character not readily apparent, it will be the taxpayer who will be better positioned to demonstrate that such requirement is met in concreto.

For its part, the Tax Administration itself, if it so wishes and considers that the case justifies the inherent expenditure of means, can always demonstrate that, with respect to the expenses in question, and even though autonomous taxation has been applied thereto, the general requirement of article 23/1 of the CIRC is not met, namely its indispensability for the realization of income subject to tax or for the maintenance of the source of income."

And concludes: "... the interpretation of the norms of nos. 3 and 5 of article 88 of the CIRC (autonomous taxation on expenses and charges with vehicles) in the sense that the implicit presumption of only partial business character of expenses and charges with vehicles would not be rebuttable (fiction-presumption), is unconstitutional for violation of the principle of equality, which requires treating the unequal unequally (save impracticability, which is not prima facie the case) and, for the same reason, for violation of the principle of taxpaying capacity, taxation fundamentally of actual income and proportionality, which likewise require unequal treatment of what is unequal, which is prevented by fictions. Prevention which is not constitutionally acceptable save impracticability, which is not prima facie the case. Violation thus of article 2 (Rule of Law), 13, 18, nos. 2 and 3, 103, no. 1 (fair distribution) and 104, no. 2, of the Constitution".

In submissions the Claimant maintains what it had already submitted in the RAP and refutes the alleged "attribution of environmental objective to autonomous taxation" on expenses generated by vehicles and the "incompatibility between the possibility of rebutting the presumption it invokes and article 23-1 of the IRC Code".

SUMMARY OF THE RESPONDENT'S POSITION

The Respondent advocates a different reading of the law.

It begins by stating that, insofar as it understands that the Claimant's position has no support in the law, the SAT cannot resort to equity to judge this matter, in the sense advocated in the RAP. On this point it concludes: "the interpretation advocated by the Claimant finds in the letter of the law the minimum support that could create in the interpreter any type of doubt in that respect", and that "the persistent emphasis that the Claimant places on the special nature of its commercial activity and the context of the use of its vehicles are not minimally apt arguments to overturn what the tax law expressly and clearly establishes: subjection to autonomous taxation".

And concludes: "with these arguments the Claimant seeks to surreptitiously open recourse to equity, to justify justice in the concrete case, faced with the denial given to it by the principle of legality, by the absence of support in the letter of the law", "equity understood here in the variant of operation in correction of a (purportedly) inadequate law in the concrete case", "however, not only does the tax law not permit equity to function as the basis for correction of inadequate law in the concrete case, but the LFATM clearly forbids the arbitral tribunal from resorting to that figure".

Regarding the presumption of "business character" it recalls that "...in accordance with the wording of nos. 3 to 6 of article 88 of the CIRC, the charges incurred with vehicles subject to the incidence of autonomous taxation encompassed both charges considered deductible under article 23 of that code, as well as non-deductible charges, as, as a result of the amendments introduced by Law no. 55-A/2010, of 31 December, there ceased to be any interrelationship between the regime of deductibility of charges with vehicles and autonomous taxation", adding that "... there is not seen in the letter of nos. 3 to 6 of the aforementioned article 88, nor in any other provision of the CIRC, nor does the Claimant invoke any normative that clarifies the allegation that the charges incurred with vehicles, can be subtracted from the incidence of autonomous taxation as long as the demonstration of their full business character is made".

It also opposes the thesis defended by the Claimant, since the "...interpretive thesis of the norms regulating autonomous taxation, developed in some arbitral case law, notably in the decision handed down in case no. 209/2013-T, according to which the subjection to autonomous taxation of expenses referred to in article 88 would depend on a choice of the taxpayer to be formulated in the following terms: «Autonomous taxation (…) can be viewed as a kind of consensual anti-abuse norm, in which the legislator proposes to the taxpayer one of three alternatives, namely: a) not to deduct the expense; deduct but pay autonomous taxation, exempting itself, and likewise the Tax Administration from discussing the question of the business character of the expense; prove the full business character of the expense, and deduct it fully, not bearing autonomous taxation.»", since "... the formulation of the range of options, ... set out, is the corollary of an alleged, but not justified, similarity detected between the regimes, as well as the concerns and purposes, of autonomous taxation and the anti-abuse clause provided for in article 65/1 [current subparagraph r) of no. 1 of article 23-A of the IRC Code], whose wording, at the time of the facts, was as follows «Amounts paid or due, in any form, to natural or legal persons resident outside the territory of Portugal and subject therein to a clearly more favorable tax regime are not deductible for purposes of determining taxable income, unless the taxpayer can prove that such charges correspond to effectively carried out operations and do not have an abnormal character or excessive amount» which, by being a true special anti-abuse norm and not «a kind of consensual anti-abuse norm», provides for the possibility for the taxpayer to provide evidence that the situation is not abusive (reversal of the burden of proof)."

And continues by stating: "moreover, according to the aforementioned interpretive thesis, autonomous taxation «will then have underlying a presumption of "partial business character" of the expenses on which they bear, based on the aforementioned circumstance that such expenses lie on a gray line separating what is business expense, productive, from what is private, consumption expense, and notably, in many cases, the expense will actually have a dual nature (part business, part private)», but "... it will always be said, in line with what comes stated in arbitral decision no. 148/2016-T, that «there is no norm that establishes the possibility of choice», either in article 88 or in any other provision of the CIRC", "besides which the premises on which the possibility of choice rests have no place, since, the norm of the aforementioned article 65/1 of the CIRC is clearly an anti-abuse norm aimed at addressing profit-shifting to jurisdictions with privileged tax regimes, under cover of fictitious expenses, consequently embedded in the logic of operation of income taxation and in the rules for determining taxable income, whereas autonomous taxation bears on a heterogeneous set of very disparate realities – expenses or charges and income – whose justification points also to distinct purposes which, both doctrine and case law, have abundantly addressed".

In the case of "... autonomous taxation of charges incurred with vehicles, the motivations of autonomous taxation have evolved in the direction of some diversification, which have resulted in the association of reasons of a purely fiscal nature with others of an extrafiscal nature", namely disincentive to the burning of fossil fuels and environmental motivations.

On the other hand, "the understanding according to which the norms of nos. 3 to 6 of article 88 of the CIRC have underlying a presumption, would lead to the rebuttal thereof translating into the production of an authentic "devil's proof", by reason of the near practical impossibility of carrying it out".

And concludes: "...the legislator did not establish, either explicitly nor implicitly, the possibility of avoiding autonomous taxation of charges with vehicles by demonstrating the full allocation of the vehicles to the activity carried out", "but came to depend, as of 2011, in accordance with the provision in the final part of article 88/3 of the CIRC, on the acquisition and use of vehicles powered exclusively by electrical energy", therefore "... given that the Claimant's claim has no support either in the letter of the law, nor in the ratio of nos. 3 to 6 of article 88 of the CIRC, the Respondent could not, in such circumstances, proceed to a corrective interpretation of the law it must apply, once the legally defined prerequisites have been met".

It defends that the norm of article 88 of the IRC Code is of objective incidence, not containing "... in its wording, either explicitly or implicitly, any type of presumption, since the charges taxed autonomously therein are the «effected or incurred by taxpayers»", "more specifically, the norm only requires that taxpayers, whose main activity is of a commercial, industrial or agricultural nature, are not exempt from income tax encompassing all costs incurred with light passenger vehicles or mixed vehicles".

And it further adds that "...the concept of "business character" does not exist in tax law, as it is a random innovation of arbitral case law, without any reference being made to the source of inspiration", therefore "... being the concept non-existent it is to be asked whether the interpreter is not attempting to integrate a supposed gap (which does not exist) in article 88 of the CIRC, that is, to introduce the concept of business character in order to attribute a minimum of logic precisely to the thesis of the "presumption of business character" of the expenses incurred".

Concluding that "since article 88 of the CIRC is not susceptible to analogical integration, the concept of "business character" – which is not read there – should then be eradicated from the present discussion, as it finds no support in tax law or even in any other branch of law".

It further understands that "... the Claimant proposes, from a legal standpoint, a manifest redundancy as, under the diaphanous cloak of "business character", it subjects the charges incurred here in question to a double burden of proof". "Thus, in accordance with article 23 of the CIRC (as worded at the time), in addition to having taxpayers prove the indispensability of costs contributing to the formation of taxable income, they must likewise prove the "business character" of the expenses subject to taxation, in accordance with article 88 of the CIRC".

The AT formulates the following general conclusions on the purposes of autonomous taxation: "... the essential aims of autonomous taxation are three, namely:

• The penalization of evasive or fraudulent behavior (e.g., undocumented expenses);

• The prevention of erosion of the tax base for IRC purposes, by imposing autonomous taxation on certain charges that can be deducted by IRC taxpayers, but which, nevertheless, become an increase in taxation, discouraging spending on such charges;

• Revenue collection".

As for the evidence presented by the Claimant, it states that "... NO concrete material proof, complete and unequivocal, is produced by the Claimant and, probably, nor would it become feasible" for the reason that the joining of a procedures manual to demonstrate that the 25 vehicles can only have exclusively professional use, "does not translate into compliance with those same rules", for the reason that "... it suffices to bring forward a very illustrative example: as is public and notorious, despite the existence of a law establishing that vehicles cannot exceed 120km/h on highways, it is certain that daily practice demonstrates that such limit is disrespected by a considerable number of citizens", concluding that "... control of exclusively professional use of vehicles through this procedures manual is as much as respect for the speed limits established in the Road Code", "it is not by the existence of a mere rule that its compliance is assured".

As for the two movement maps, without entering into scrutiny of the data shown in those two documents, it expresses that "... there does not exist in our legal system «proof by sample»", and that "... no map is minimally apt to demonstrate that the 25 vehicles can only have exclusively professional use, since such maps are merely records", since "... what is at issue here is the existence of a control system", "control that is not capable of existing in maps, since in the course of a professional use of vehicles there is always room for personal use thereof, without such use being revealed through records in maps".

Finally, the Respondent states that "... the interpretation conveyed by the Claimant is shown to be contrary to the Constitution of the Portuguese Republic ("CRP"), insofar as it violates the constitutional principle of legality, shown in article 103, no. 2 of the CRP, in its corollaries of parliamentary reservation of law and typicality and principle of legal certainty and protection of legitimate expectations", and that "there is no doubt that the legislator and the law did not wish to exclude from taxation vehicles belonging to a business fleet, even if their use is restricted exclusively to the professional use of the activity carried out by the taxpayer", therefore "... to permit that, via a presumption – non-existent, it should be noted – taxpayers can avert taxation on a tax reality that was not, either explicitly nor implicitly, excluded from taxation by the legislator, is nothing more, nothing less, than to permit the frontal violation of the constitutional principles we have been developing", "it is to instrumentalize the regime of presumptions with the purpose of, alongside the facts that were excluded from taxation by the legislator, the taxpayer being able, by means of evidentiary elements, to fictition the exclusion from taxation of other facts that, originally, were taxable".

It formulates the following assertion: "... article 88, no. 3 and 5 of the CIRC should ... be judged unconstitutional, for violation of the principles of legality (typicality and parliamentary reservation of law) and of legal protection and legitimate expectations (article 103, nos. 2 and 3 of the CRP), when interpreted in the sense of containing within itself a rebuttable presumption, capable of averting taxation on charges effected or incurred by taxpayers who do not benefit from subjective exemptions and who exercise, as a main activity, an activity of a commercial, industrial or agricultural nature, related to light passenger vehicles, light freight vehicles referred to in subparagraph b) of no. 1 of article 7 of the Vehicle Tax Code, motorcycles or motorcycles, whenever it is possible to prove their indispensability for the efficient operation of companies".

In counter-submissions, the Respondent maintains what it had stated in response to the request for pronouncement. It clarifies that "the question in dispute in the present request for arbitral pronouncement relates to knowing whether subjection to autonomous taxation in IRC of charges related to vehicles, in accordance with nos. 3 to 6 of art. 88 of the IRC Code, is averted when those assets are exclusively allocated to the service of the activity of companies in the A… Tax Group".

It further adds the following:

"There is not seen ... in the current wording and in the ratio underlying these norms of art. 88 of the IRC Code any purpose of discriminatory treatment of charges related to vehicles based on their partial or full use in the economic activity carried out by the taxpayer".

Resulting in that "... the Claimant's insistence on the thesis that autonomous taxation on vehicles, «was instituted to respond to the concern, common to all of them, that these expenses and charges could have mixed use: business, yes, but also personal, private use of the employee or official and their families» reveals an oversimplified, reductive and, above all, ill-adjusted understanding of the very letter of the norms in question, since, neither before 2011, when incidence was limited to deductible charges, nor at present, was it legitimate to infer that the legislator would have wished to establish different treatment based on exclusive or mixed use of vehicles, much less to accept the institution of a rebuttable presumption".

It states: "... the defended thesis adopted in arbitral decisions of CAAD and on which the Claimant now relies, that «this presumption of "partial business character" should, in coherence, be considered as covered by the possibility of rebuttal resulting from article 73 of the LGT, whether by the taxpayer or by the Tax Administration» works in absolute error", since "... the need to prove the invoked "business character" of the charges incurred with vehicles would occur only if the law established the presumption that the expenses do not have business cause, but manifestly such is not the case" and for the reason that "... in the IRC Code the test of deductibility of the charges incurred is performed on the basis of fulfilling the criteria and set out in article 23 and following of the IRC Code, being noted, however, that, in accordance with the current wording of no. 3 of art. 88 – as was stated above – both deductible and non-deductible charges fall within the incidence of autonomous taxation".

It reiterates: "... the interpretation conveyed by the Claimant is shown to be contrary to the Constitution of the Portuguese Republic, insofar as it violates the constitutional principle of tax legality, shown in article 103, no. 2 of the CRP, in its corollaries of parliamentary reservation of law and typicality", "... article 73 [of the LGT] does not require that the taxpayer can rebut the typifications in all cases of incidence in the broad sense (…)», in particular in the context of mass taxation, as long as they do not depart from reality and do not collide with the principle of equality", therefore "...in the concrete case, the alleged production of evidence that the 25 service vehicles in question are indeed exclusively allocated to the service of the company/tax group, with due respect, has no useful effect as regards the subjection of such vehicles to autonomous taxation, by virtue of what is provided in nos. 3 to 6 of article 88, in the wording in force at the time of the relevant facts", all the more since "...the conclusive proof of full allocation to the activity carried out by companies would require a daily, individual and effective control of the use of each of the 25 vehicles, a task that would prove so burdensome and difficult to execute that, in all probability, a serious, prudent and reasonable legislator would abstain from establishing as a means of rebutting a presumption, in view of the principles of practicability and operationality".

Regarding the overall evidence presented by the Claimant (documentary and testimonial) it states that "the two witnesses presented by the Claimant confirmed that the latter pays fines resulting from the use of the same vehicles", which "... demonstrates in itself a serious incoherence: it means, then, that the users of the vehicles are employees extremely diligent with regard to compliance with a mere internal regulation of a company, but totally negligent as regards the laws of the Portuguese Republic, such as the Road Code", "that is, in 5,554 vehicle departures in the course of 2015 according to Documents 9 and 10 of the RAP, the Claimant alleges that in NONE of them did a case of extra-professional use occur, but at the same time admits testimonially that its diligent officials were responsible for dozens of violations of the Road Code regarding speeding and improper parking".

Regarding the "control system" of the use of the 25 motor vehicles in question, adopted by the Claimant, it states: "In reality, it is an internal system of data insertion. Indeed, the two witnesses presented by the Claimant were unanimous in recognizing that it has no way of ensuring that, in the course of the movements of the 25 vehicles, these are not ALSO used for extra-professional purposes, such as, for example, trips to the supermarket, trips to schools, visits to relatives, etc.", "That is, the Claimant's "control system" is nothing more than a mere "records system" made on the basis of hours and kilometers traveled, and such "system" is not even audited by an entity external to the company itself", therefore "it cannot fail to cause perplexity how in 5,554 journeys in 2015 there was not a single alert or indication of abusive use, when the Claimant, via its two witnesses, admitted unequivocally that its officials violate general laws of the country". "Moreover: it cannot fail to cause perplexity how the witnesses were unable to answer the question of what alerts might trigger possible abusive use, beyond a mileage deviation". "the explanation is simple: because, in reality, the "control system" truly controls nothing in the course of the journeys themselves, and it is here, precisely here, the crucial moment at which abusive use can take place".

And concludes: "... the evidence presented by the Claimant is not minimally apt to rebut the (purported) "presumption of business character", and the presumption of truthfulness of accounting documents is not sufficient to rebut that presumption". "To put it categorically: the Claimant cannot seek to rebut the (purported) "presumption of business character" with another presumption (the truthfulness of accounting documents)".

It advocates the dismissal of the request for arbitral pronouncement, maintaining in the legal system the tax act of self-assessment and the decision challenged, absconding, accordingly, the respondent entity of the claim.

II - ISSUES FOR THE TRIBUNAL TO RESOLVE

The first issue that the SAT will examine consists of determining whether "subjection to autonomous taxation in IRC of charges related to vehicles, in accordance with nos. 3 to 6 of article 88 of the IRC Code, is averted when those assets are exclusively allocated to the service of the activity of companies in the A… Tax Group".

Then, should it be concluded that autonomous taxation in IRC of charges related to vehicles, in accordance with nos. 3 to 6 of article 88 of the IRC Code, can be averted when those assets are exclusively allocated to the service of the activity of companies in the A… Tax Group, it is necessary to verify whether sufficient evidence was made, in concreto, on the so-called "business character" of the expenses.

Should it be concluded that the evidence made, beyond reasonable doubt, allows the conclusion of the so-called "business character" of the expenses at issue, the alleged unconstitutionality invoked by the AT will be addressed.

As the request for arbitral pronouncement is well-founded, the remaining claims for reimbursement of the amount corresponding to the self-assessed IRC and any entitlement to compensatory interest should be examined.

III. ESTABLISHED AND UNESTABLISHED FACTS.
GROUNDS FOR THE DECISION

With respect to the facts, the Tribunal is not required to pronounce on everything alleged by the parties; rather, it is its duty to select the facts that matter for the decision and to distinguish established facts from unestablished ones (in accordance with article 123, no. 2, of the Tax Procedure Code (TPC) and article 607, no. 3 of the Civil Procedure Code, applicable ex vi article 29, no. 1, subparagraphs a) and e), of the LFATM).

Thus, the relevant facts for judgment of the case are chosen and outlined according to their legal relevance, which is established in light of the various plausible solutions of the legal question(s) (in accordance with former article 511, no. 1, of the CPC, corresponding to current article 596, applicable ex vi article 29, no. 1, subparagraph e), of the LFATM).

Thus, taking into account the positions assumed by the parties, the documentary evidence provided and the testimonial evidence produced, the following facts were considered established, with relevance to the decision, the facts listed below, indicating, for each point brought to the established facts, the means of evidence that were considered relevant as grounds.

Established Facts

On 27 May 2016 the Claimant filed the Personal Income Tax Return (IRC) Form 22 of its Tax Group for the 2015 tax year, and on 03 October 2016 filed a replacement declaration, having proceeded to self-assess autonomous taxation in IRC for that same year, embodied in document no. … and replacement liquidation no. ... – as per article 2 of the request for arbitral pronouncement (RAP) and article 1 of the AT's response, combined with documents nos. 1 and 2 attached with the RAP;

The Claimant had 76 light passenger vehicles in 2015, alleging the following allocations: (1) 51 light passenger vehicles for non-exclusively professional use, but also personal use, the use of which is taxed under Personal Income Tax (PIT) in the personal sphere of the employees who use them, as income in kind; and (2) 25 light passenger vehicles used exclusively for professional purposes, commonly referred to as "service vehicles" (also called "fleet vehicles"), whose use is subject to the rules established in a Procedures Manual – as per article 29 of the RAP, testimony of witness B… and lack of specific rebuttal, considered under article 110-7 of the TPC;

The total of expenses and charges with vehicles of the A… Tax Group (or whose use was contractually ensured by the A… Tax Group) subject to autonomous taxation in 2015 amounted to a total of €334,725.36, resulting in autonomous taxation liquidated with respect to these expenses and charges of €68,975.75, according to the following table:

• in accordance with articles 22 and 23 of the RAP, document no. 5 attached to the RAP and lack of specific rebuttal, considered under article 110-7 of the TPC;

With respect to the expenses generated in 2015 in the patrimonial sphere of the Claimant by the 25 vehicles referred to in the latter part of no. 2 above, its certified accountant, no. ..., issued certification on 07.11.2017 stating the following: "ii) in the second table the expenses and charges, and corresponding autonomous taxation, with light passenger vehicles subject to a controlled regime of exclusive use in the productive activity of the A… Tax Group (internally called "fleet vehicles" or "service vehicles"), whose final values are those of the first IRC Form 22 declaration (the changes in the replacement declaration did not occur at the level of this portion of autonomous taxation".

"It is further certified that D…, S.A., which was part of the A… Tax Group in 2015, had 76 light passenger vehicles in that year, 51 of which were also used in the personal lives of employees, the charges for which are taxed in PIT as income in kind of Category A, and the remaining 25 used exclusively in the company's activity and the respective Tax Group, in accordance with internal rules, this lot of 25 vehicles called service vehicles to which the autonomous taxation depicted in the second of the above tables corresponds" – in accordance with article 25 of the RAP, document no. 5 attached to the RAP and lack of specific rebuttal, considered under article 110-7 of the TPC;

On 16 September 2016 the Claimant filed an administrative complaint against the self-assessment quantified in the table reproduced in 4. above, relating to the 2015 tax year, on 01 June 2017 exercised the right to prior hearing and on 28 June 2017 was notified of the dismissal order, dated 23 June 2017 – in accordance with articles 3 and 4 of the RAP, documents nos. 3 and 4 attached with the RAP and as per AF2 and AF5 attached by the AT with the response.

The A… Tax Group holds a relevant position in the Portuguese press market, and D…, S.A. (D…), the company to which the fleet of 25 vehicles referred to in 4. is related, is a company whose main activity consists of the production, editing, marketing and distribution of daily and non-daily publications, including electronic, as well as graphic arts, advertising, marketing, organization of initiatives, promotional activities and operation of any audiovisual media and means, and, in general, the exercise of the graphic and social media industry – in accordance with articles 27 and 28 of the RAP, documents nos. 6 and 7 attached with the RAP, testimony of B… and lack of specific rebuttal, considered under article 110-7 of the TPC;

The development of the Claimant's activity of national scope, namely journalism/press/social media, necessarily entails many work-related travels by its employees, whether to conduct a particular report, whether to make newspaper or magazine deliveries, or, simply, to ensure the presence of these employees in meetings with business partners – in accordance with articles 30 and 31 of the RAP, testimony of B… and lack of specific rebuttal, considered under article 110-7 of the TPC;

The choice of creating a fleet of 25 service vehicles, available for use by employees who request them for the purposes referred to in 7. generates greater efficiency in managing the time spent, facilitates and eases the performance and efficiency of the employee in the exercise of their functions – in accordance with article 32 of the RAP, testimony of B… and lack of specific rebuttal, considered under article 110-7 of the TPC;

The 25 vehicles referred to above are for occasional use by company employees, which follows rules and procedures set out in the internal Procedures Manual, and a computerized platform called "Transport Management" has been created – in accordance with articles 36 and 37 of the RAP, document no. 8 attached with the RAP, testimony of C… and lack of specific rebuttal, considered under article 110-7 of the TPC;

It follows from the computerized platform referred to above that: (i) vehicles may only be used upon request for prior authorization from a hierarchical superior (the so-called "authorizer") for the specific journey in question; ii) this requisition or request for prior authorization is electronically performed through a platform specifically designed for that purpose; iii) the requisition includes the indication of the date, the route, namely the destination of the journey, the reason or justification therefor, and the scheduled departure and arrival times; iv) after the journey is authorized by the hierarchical superior, the vehicle keys are picked up at the Gatehouse of the Lisbon or Porto newsroom, as the case may be, which informs the user where the vehicle is parked and records the mileage upon departure; (v) upon return from the journey, the vehicle key is returned at the Gatehouse of the Lisbon or Porto newsroom, as the case may be, such Gatehouse which, in addition to receiving the vehicle key, inserts the date, time and total mileage upon arrival; (vi) non-compliance with this procedure by an employee results in the application of a penalty to the employee, which, at the limit, may result in a disciplinary process" – in accordance with article 38 of the RAP, document no. 8 attached with the RAP, testimony of C… and lack of specific rebuttal, considered under article 110-7 of the TPC;

The parking spaces where, in 2015, the service vehicles were parked between journeys were located in the company's own facilities or on the street at the door of the buildings of E… (E…) in Lisbon and F… (F…) in Porto, with a Municipal Council sign indicating that these spaces are for parking of vehicles of newspapers G…/E…/F…, with some parking spaces rented by the company in the vicinity of the Lisbon Building, more specifically in the public parking lot at …, an area where the E… building is located in Lisbon – in accordance with articles 39 and 40 of the RAP, testimony of C… and lack of specific rebuttal, considered under article 110-7 of the TPC;

Outside normal working hours, during the week, between 19:00 and 09:00 the next day and on weekends and holidays, authorization is recorded in the computerized platform by the Gatehouse (in place of the hierarchical superior), based on prior confirmation by telephone or written message with the hierarchical superior of the same to the journey on duty by the employee requesting the vehicle – in accordance with article 42 of the RAP, testimony of C… and lack of specific rebuttal, considered under article 110-7 of the TPC;

It is possible to obtain from the computerized "Transport Management" platform control maps of the use of the 25 vehicles in question, and it is further possible, by their analysis, to determine that the vehicles are only allocated to any employee during weekends, holidays and at night in cases motivated by the fact that the tasks assigned to them thus require – in accordance with articles 43 and 45 of the RAP, testimony of C… and lack of specific rebuttal, considered under article 110-7 of the TPC;

Fines for road traffic violations attributed to the employees using the vehicles in question are paid by the Claimant and the control system for use of the vehicles is based essentially on the comparative analysis between the kilometers of the route required for the exercise of the functions of the employees, compared to the difference between the kilometers that the vehicle actually showed upon receipt and upon return – overall position resulting from the RAP and document 8 attached to the RAP and also from the testimony of C…;

On 11 September 2017 the Claimant filed the present request for arbitral pronouncement (RAP) – entry in CAAD's Case Management System of the request for arbitral pronouncement.

Unestablished Facts. Grounds for the factual decision.

There is no other alleged factual matter that has not been considered established and that is relevant for the resolution of the procedural dispute.

The observations made by the Respondent regarding the Procedures Manual in articles 114 to 127 of the response and on pages 10 to 13 of the counter-submissions rest on the fact that the Claimant pays traffic violation fines to the users, which in the view of this SAT does not detract from the consistency of the control system for use of vehicles exclusively in service by constituting an assumption of an expense that could not have been assumed by the employer entity, since responsibility for traffic fines will always rest with the driver. This matter was incorporated into the established facts (point 14 of the established facts).

Regarding the so-called "proof by sample" that would result from the Claimant having attached elements of control of some specific uses, the SAT did not include this factuality in the established facts, as it was considered irrelevant to its conviction.

Finally, the observations made by the AT regarding the "control system" of the vehicles, as far as their possible use in trips to "supermarket, trips to school, visits to relatives, etc." is concerned, it was established as a fact that the system rests, essentially, on the comparative analysis between the kilometers of the route required for the exercise of the functions of the employees, compared to the difference in mileage that the vehicle actually shows upon receipt and upon return.

However, it does not appear that the AT has fundamentally questioned the authenticity and effective application of the Procedures Manual, as the Claimant indicates, limiting itself to referring to the situations mentioned above which, from the standpoint of this SAT, are not sufficient to put into question the alleged (in terms of raising reasonable doubt), all the more so because, if a worker uses the vehicle in minor deviations (verifiable by mileage control) to go to a supermarket, to have a meal, to visit a relative in a city where he went on duty, to take or bring a relative on the route, it does not appear to be able to configure itself, by itself, based on criteria of reasonableness and common experience, as improper use of the vehicle, in accordance with the terms referred to in the rules of use.

IV. EXAMINATION OF THE ISSUES FOR THE SINGLE ARBITRAL TRIBUNAL (SAT) TO RESOLVE

This SAT, in coherence with the collegial decision that was signed – CAAD Case 80/2014-T, adheres to what was decided in the collegial arbitral decisions CAAD Cases 187/2013-T and 628/2014-T, both as to the "ratio" of autonomous taxation and as to the implications resulting therefrom, since, as will be attempted to be justified below, it appears to be the most appropriate reading of the law in light of the constitutional principle of isonimy (material equality) and also in light of the combined reading of the norms of articles 23, 88 nos. 3 and 6 of the IRC Code, particularly the combined reading of subparagraph b) of no. 6 of article 88 of the IRC Code with subparagraph 9) of no. 3 of article 2 and with nos. 4 and 5 of no. 24 of the PIT Code.

Thus, adherence is given to what was stated in the collegial arbitral decision CAAD Case no. 628/2014-T, cited by the Claimant, which dealt with a situation entirely similar to the present, namely:

"Thus, and in summary, what is at issue is ascertaining the ratio legis of the provision of article 81/3/a) transcribed above [current article 88], verifying whether the same rests on a presumption and, in case of affirmative answer, whether the same was, or was not, in this case, rebutted.

...

There has been recurrent acceptance in CAAD case law of the understanding that autonomous taxation on deductible charges, such as those at issue in the present proceedings, also integrate the regime of taxes regulated by the codes where they are integrated, aiming, though in a roundabout manner, at the income taxed by those.

...

Understanding that (...) autonomous taxation in question could be configured as a "hybrid" tax, bearing on the income of natural and legal persons and not on consumption or expense, as it does not present the main characteristics of this form of taxation, not likewise bearing on assets, and being framed in a problem of income taxation regarding which the legislator understood to act at two levels (separately or simultaneously): not to accept the deductibility of some expenses, in whole or in part and/or to tax them autonomously.

...

It is then understood that, via the impositions in question, it is also aimed, at least to the same extent, to regulate the use by companies of expenses which may be necessary, in one part, to the pursuit of normal activity, but which – based on a judgment of normality – will also be for the benefit of natural persons who ultimately benefit from them for personal and non-professional purposes. Only that, not having the Tax Administration any "measuring tape" to make such separation, the legislator has been opting, for quite some time, for the introduction in the IRC Code of this portion which already considered, objectively, at the time of the proceedings, an imposition, at the minimum, similar to the IRC, even if such provision is considered questionable (as is the current wording, with respect to the inclusion in the IRC, of autonomous taxation in article 23A of the IRC Code).

...

It is considered unfavorably certain expenses in which it is recognized that it is not easy to determine the exact measure of the component that corresponds to private consumption, and regarding which the general practice of abuse in their recording is known.

...

This anti-abuse character of autonomous taxation now at issue will be not only coherent with its "anti-systemic" nature (as happens with all norms of this kind), but with a presumptive nature, pointed out both by Prof. Saldanha Sanches and by the case law that frequently cites it.

...

From the standpoint that has just been exposed, autonomous taxation in analysis will then materially have underlying a presumption of "partial business character" of the expenses on which they bear, based on the aforementioned circumstance that such expenses lie on a gray line separating what is business expense, productive, from what is private, consumption expense, and notably, in many cases, the expense will actually have a dual nature (part business, part private). Faced with this difficulty, the legislator, rather than simply removing its deductibility, or reversing the burden of proof of the business character of the expenses in question (imposing, for example, the demonstration that "they do not have an abnormal character or excessive amount", as it does in article 65/1 of the CIRC), chose to establish the regime currently in force, which, nevertheless, has precisely the same basis, the same purpose, and the same type of result, as other forms used in other typical situations of the regime (in this case) of IRC.

This presumption of "partial business character" should, in coherence, be considered as covered by the possibility of rebuttal resulting from art. 73 of the LGT, whether by the taxpayer or by the Tax Administration.

Which appears, moreover, to conform to a proportional and adequate distribution of the burden of proof, insofar as, with autonomous taxation in question bearing on expenses of business character not readily apparent, it will be the taxpayer who will be better positioned to demonstrate that such requirement is met in concreto.

For its part, the Tax Administration itself, if it so wishes and considers that the case justifies the inherent expenditure of means, can always demonstrate that, with respect to the expenses in question, and even though autonomous taxation has been applied thereto, the general requirement of article 23/1 of the CIRC is not met, namely its indispensability for the realization of income subject to tax or for the maintenance of the source of income.

...

Face to the conclusion that has just been made, it is then necessary to ascertain whether the presumption identified is, or is not, susceptible to being rebutted.

On this point, article 350/2 of the Civil Code provides: "Legal presumptions may, however, be rebutted by proof to the contrary, except in cases where the law prohibits it."

In coherence, article 73 of the LGT provides: "Presumptions established in norms of tax incidence always admit proof to the contrary."

In light of the legal framework pointed out, it must be concluded that the presumption of "partial business character" in question should, in coherence, be considered as covered by the possibility of rebuttal generically established in art. 350/2 of the Civil Code and 73 of the LGT, whether by the taxpayer or by the Tax Administration, which appears, moreover, to conform to a proportional and adequate distribution of the burden of proof, insofar as, with autonomous taxation in question bearing on expenses of business character not readily apparent, it will be the taxpayer who will be better positioned to demonstrate that such requirement is met in concreto. For its part, the Tax Administration itself, if it so wishes and considers that the case justifies the inherent expenditure of means, can always demonstrate that, with respect to the expenses in question, and even though autonomous taxation has been applied thereto, the general requirement of article 23/1 of the CIRC is not met, namely its indispensability for the realization of income subject to tax or for the maintenance of the source of income.

...

The recognition of this presumptive nature of autonomous taxation in question in the proceedings, as set out above, will be, beyond everything else, a safeguard of its constitutionality, insofar as it will be guaranteed both the possibility of its full deduction by the taxpayer and its non-deduction, depending on which side the presumption underlying it is, concretely and in each case, rebutted, thus ensuring, properly, the conformity of the legal regime in question with the principles of tax equality and taxpaying capacity, which would be unnecessarily (and, occasionally, as is the case, disproportionally) truncated, by the establishment of an irrebuttable presumption of the partial business allocation of the expenses in question.

...

It would then remain to verify whether, in fact, as was stated above, this use of motorcycles in the exercise of the Claimant's activity is demonstrated, beyond reasonable doubt, as occurring in a context exclusively of business, with no room for its employees, corporate bodies or partners to draw benefits from their availability for personal purposes.

...

Now, if it is true that in small companies, of family size, with greater personalization of managers and workers and knowledge by those of the particular needs of these, it is likely that there is some promiscuity in the use of motorcycles for company purposes and private purposes, left to the discretion of the managers to use the vehicles, it is understood that this will have to be considered a remote hypothesis when a company of national and multinational size is at issue, in which employees and their needs for personal transport are presumably unknown by a remote board of directors and it is credible that it has a regulation on the generality of matters, not leaving it to the discretion of anonymous employees to use the assets for their private purposes".

The answer to the first of the questions that arise in this proceeding is thus found: "the presumption of 'partial business character' in question (contained in the norms contained in article 88 nos. 3 to 6 of the CIRC), should, in coherence, be considered as covered by the possibility of rebuttal generically established in art. 350/2 of the Civil Code and 73 of the LGT, whether by the taxpayer or by the Tax Administration".

The AT places emphasis on the possible lack of support in the letter of the law and lack of ratio in nos. 3 to 6 of article 88 of the IRC Code of the reading of the law that has just been adopted.

We believe, however, that in the combined reading of the norm of subparagraph b) of no. 6 of article 88 of the IRC Code with that of subparagraph 9) of no. 3 of article 2 and with those of nos. 4 and 5 of no. 24 of the PIT Code, support may be found that can assist in the perception of the assertiveness of the thesis here advocated, in terms of law.

In fact, the question of the so-called "promiscuous" use of motor vehicles in companies will result from the very tax regime established in the norm contained in subparagraph 9) of no. 3 of article 2 of the PIT Code which states as follows:

"Income from dependent employment ... includes income resulting from personal use by the employee or member of a corporate body of a motor vehicle which generates charges for the employer entity, when there is a written agreement between the employee or member of the corporate body and the employer entity on the allocation to that person of the said motor vehicle".

That is, it is entirely within the discretion of the employer entity (particularly companies) to consider that the use of a certain vehicle registered in its name, and as such generating more or fewer costs in its patrimonial sphere (article 23 of the IRC Code)

• is included in the employee or member of corporate bodies' remuneration (in kind), by preparing a simple private document, allocating the vehicle to the interested party, resulting in taxation in accordance with no. 5 of article 24 of the PIT Code: "when it is the attribution of the use of a motor vehicle by the employer entity, the annual income corresponds to the product of 0.75% of its market value, as of 1 January of the year in question, by the number of months of use thereof". In this case, autonomous taxation is excluded in IRC, in the company, in accordance with subparagraph b) of no. 6 of article 88 of the IRC Code.

• does not include the employee or member of corporate bodies' remuneration (in kind), by refraining from preparing a written document (regardless of the actual and real use of the vehicle), allocating the vehicle to the interested party, which leads to taxation under no. 3 of article 88 of the IRC Code.

This regime appears to immediately contain the perversity of the executive management bodies of the companies being able to decide whether or not to adopt, with respect to themselves, the tax regime that suits them, choosing, in most situations, the exclusion of taxation under PIT and choosing to burden the companies under autonomous taxation.

That is, by overloading companies with an additional cost corresponding to autonomous taxation, which, in the present case, does not occur, as is evidenced by the established facts in 2 of the established facts.

The charges effected or incurred related to vehicles referred to in no. 3 of article 88 of the IRC Code will be, in the absence of a written agreement for allocation of the vehicle, considered

• deductible costs in accordance with article 23 of the CIRC, certainly as transport expenses or equivalent;

• and because their use outside the strictly business sphere is presumed (which results from a norm that the company agility in a discretionary manner: existence or lack of written agreement) they are taxed under autonomous taxation rates.

On the other hand, when there is a written agreement for allocation of the vehicle (as will be the case of the 51 vehicles of the Claimant referred to in 2 of the established facts), the charges generated by the vehicle are considered

• deductible costs in accordance with article 23 of the CIRC, because they correspond to "remuneration", though in kind, given the different classification of the expense;

• and by virtue of subparagraph b) of no. 6 of article 88 of the IRC Code, there is no subjection to autonomous taxation rates in IRC of no. 3 of article 88 of the CIRC, since the taxation of the use of the vehicle is carried out under PIT.

Faced with this framework, it cannot fail to be verified, regarding the concrete case, that it would be untenable for the respondent company, invoking criteria of efficiency in management, could not have at its disposal a fleet of vehicles for exclusively business use, with a view, moreover, to obtaining greater profitability, aiming at the reduction and control of costs, being applicable to it the same tax regime (under autonomous taxation) of other companies that do not choose these management efficiency criteria, generating, indeed, higher income subject to IRC, in terms of company profit.

Unless it is as advocated in this decision, it would result in equal treatment for differentiated situations: a company that chose the use of vehicles in exclusively business terms, without so-called "promiscuous" use for personal purposes, would be subject to the same tax regime as one that did not choose this management efficiency and cost control regime.

And in this line of thought, it appears that to the extent that nos. 3 to 6 of article 88 of the CIRC do not contain the possibility of rebutting the presumption of "partial business character", such would correspond to a violation of the principle of material equality, which requires treating the unequal unequally in material terms (save impracticability, which is not prima facie the case) and, for the same reason, by violation of the principle of taxpaying capacity, taxation fundamentally of actual income and proportionality, which likewise require unequal treatment of what is unequal. This understanding is not constitutionally acceptable save impracticability, which is not the case. Violated thus are article 2 (Rule of Law), 13, 18, nos. 2 and 3, 103, no. 1 (fair distribution) and 104, no. 2, of the Constitution.

Neither does it appear to be sustainable in this case that the evidence tending to rebut the presumption be "devil's proof", as the Claimant, in these proceedings, succeeded in doing so, with relative ease, as is derived from the established facts.

The possibility of rebutting the presumption of "partial business character", inherent in the norms of incidence of article 88 nos. 3 to 6 of the CIRC, results from article 73 of the LGT, which expressly rules out, in the domain of tax incidence norms, the possibility of the existence of irrebuttable presumptions, a prohibition that encompasses norms of subjective incidence, as well as norms of objective or real incidence, and it is certain that this provision encompasses both explicit and implicit presumptions, as is the case (on this point see the annotations to article 73 of the LGT, pages 649 to 651, of the General Tax Law by Diogo Leite de Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, 4th edition 2012, Editor "Encontro da Escrita").

It should be noted that the AT itself states in article 92 of the response that one of the essential aims of autonomous taxation will be the "penalization of evasive behavior", a situation that is configured as occurring in the case of use of company vehicles, by virtue of the mere existence or lack of discretionary existence of a written private document (whose burden of proving existence ultimately falls on the AT) unnecessary costs are created for companies, via autonomous taxation. From this assertion by the AT cannot but result the need, in light of constitutional principles, for the existence of a tax regime that does not penalize companies that choose to create auditable models of transparent use of motor vehicles, for the exclusive benefit of the source generating income, that is, in exclusively business manner.

Given the foregoing, we do not see how it can be sustained that, by adopting in this decision a reading of the law that considers the norms of incidence of article 88 nos. 3 to 6 of the CIRC as containing a presumption of "partial business character", susceptible to being rebutted by virtue of article 73 of the LGT, by taxpayers, can be considered as a judgment resorting to equity or to integration of gaps.

Neither is it sustainable, the alleged ratio of the norm of incidence of article 88 no. 3 of the CIRC, based on the penalization of vehicles using fossil fuels or environmental protection, insofar as vehicles powered exclusively by electrical energy are excluded from this taxation, since it will be from the rules of common experience that, at the current historical moment and in 2015, vehicles powered solely by electrical energy, given the high cost, the short range and the insufficient refueling network existing, do not yet constitute a viable alternative, particularly for a company in the field of social media that requires other types of transport solutions, such as the Claimant.

It now falls to examine whether the Claimant succeeded in rebutting the presumption inherent in article 88-3 of the IRC Code.

The relevant facts that the Claimant succeeded in proving are contained in nos. 7 to 14 of the established facts, namely:

• The development of the Claimant's activity of national scope, namely journalism/press/social media, necessarily entails many work-related travels by its employees, whether to conduct a particular report, whether to make newspaper or magazine deliveries, or, simply, to ensure the presence of these employees in meetings with business partners