IUC Subjective Incidence: Vehicle Owner vs Possessor – Rebuttable Presumption Ruling 515/2016-T

ARBITRAL TAX JURISPRUDENCE

Case No. 515/2016-T

Date of decision: 2023-09-07
IUC

Claimed amount: € 30,503.79

Topic: IUC – Subjective Scope – Unconstitutionality – Review of Arbitral Decision (attached to the decision).
*Replaces the Arbitral Decision of 11 May 2017.

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SUMMARY:

1. Considering the equivalence principle enshrined in Article 1 of the IUC Code, the taxpayer of the tax should not be the formal owner of the vehicle, but rather the possessor/user of the automobile, because it is they who hold its use and enjoyment.

2. Contracts for leasing with purchase option or purchase and sale contracts, accompanied by the issuance of an invoice in the legal form evidencing the transfer of the vehicle, constitute sufficient proof to demonstrate the transfer of motor vehicles subject to registration.

3. The principles of legality and tax justice, taxpaying capacity, equality, certainty and legal security were not susceptible to being violated by Article 3, No. 1, of the CIUC, in the wording prior to Decree-Law No. 41/2016, of 1.08, when interpreted in the sense that it established a rebuttable presumption.

ARBITRAL DECISION

In compliance with the Decision of the Central Administrative Court of the South of 16-02-2023, which declared the nullity of the Arbitral Decision of 11-05-2017, rendered, the undersigned arbiter designated by the Ethics Council of the Administrative Arbitration Center hereby presents a new decision, which, in agreement, shall follow closely what has already been considered and decided, which was not the subject of the respective proceedings and Decision.

1. REPORT

1.1 – A… PORTUGAL LDA., with the TIN: …, Claimant in the tax proceedings, above and marginally referenced, hereinafter referred to as "Applicant," came, invoking the provisions of numbers 1 and 2 of Article 10 of Decree-Law No. 10/2011, of 20 January (hereinafter RJAT), Article 99 of the Code of Tax Procedure and Process (CPPT) and number 1 of Article 95 of the General Tax Law (LGT), to request the constitution of the Singular Arbitral Tribunal, with a view to:

• The annulment of the acts of assessment of the Unique Motor Vehicle Tax (hereinafter designated as IUC), carried out by the Tax and Customs Authority (hereinafter TA), relating to the years: 2011 and 2012, concerning vehicles listed in evidentiary document No. 1 which forms an integral part of the Request for Tax Arbitral Pronouncement.

• The request for reimbursement of the total amount of €30,503.79, unduly paid by the Applicant, plus indemnificatory interest provided for in Articles 43 of the LGT and Article 61 of the CPPT, ex vi, Article 29 of the RJAT.

1.2 - Pursuant to the provisions of subparagraph a) of No. 2 of Article 6 and subparagraph b) of No. 1 of Article 11 of Decree-Law No. 10/2011, of 20 January, in the wording introduced by Article 228 of Law No. 66-B/2012, of 31 December, the Ethics Council appointed as sole arbiter Maria de Fátima Alves, who communicated acceptance of the appointment within the applicable timeframe:

• On 03-11-2016 the parties were duly notified of this appointment, having manifested no intention to refuse the arbiter's appointment, pursuant to the combined provisions of Article 11 No. 1 subparagraphs a) and b) of the RJAT and Articles 6 and 7 of the Code of Ethics,

• Therefore, the arbitral tribunal was constituted on 18-11-2016, as stipulated in subparagraph c) of No. 1 of Article 11 of Decree-Law No. 10/2011, of 20 January, in the wording introduced by Article 228 of Law 66-B/2012, of 31 December.

1.3 - The Applicant, in the substantiation of its request for arbitral pronouncement, asserts, in summary, the following:

• The acts of assessment, to which the unique motor vehicle taxes correspond, assessed, cf., document No. 7, attached to the PI and which are itemized in document No. 1, also attached to the PI, were directed directly at the Applicant;

• The Applicant is engaged in the importation, admission and commercialization of motor vehicles of the brands "…" and "…", "predominantly in new condition," whereby the "vehicles subject to the contested assessments fall within its activity of selling new vehicles to the network of its dealers to which it grants the right to commercialize, proceeding to the commercialization of vehicles with financial entities of the B… Group in Portugal, which shall be subject to financial leasing contracts or long-term rental;

• "Being the dealers who, in their own name and for their own account, proceed to the commercialization of vehicles to the general public";

• "Subsequently, the Applicant proceeds to the physical delivery of the vehicles to the respective dealers, so that they may proceed to resell them to the end client" (docs. Nos. 2 and 4, attached to the PI);

• Within the scope of its status as a Registered Operator, the Applicant initiates procedures tending toward the introduction into consumption of the said vehicles, requesting the assignment of registration and, simultaneously, proceeding to the initial registration of ownership of the vehicles in the name of the corresponding end client, pursuant to Article 42 Nos. 1 and 2 of Decree-Law 55/75, of 12 February;

• Now, at the moment when registration is assigned to the vehicles that it commercializes in new condition, the Applicant has already transferred the respective ownership to third parties (docs. Nos. 2, 4 and 5, attached to the record);

• It is to be considered that the Applicant always respected the initial registration of ownership of the vehicles in the name of end clients, respecting the legally prescribed timeframes for this purpose (the 60 days counted from the date of assignment of registration, pursuant to No. 1 and 2 of Article 42 of Decree-Law No. 55/75, of 12 February);

• However, at the end of 2015, the Applicant was notified of the IUC assessments and respective compensatory interest, whereupon the Applicant, within the voluntary payment period, proceeded to full payment, as evidenced by copies contained in document No. 7, attached to the PI;

• However, "not accepting the said assessments, the Applicant contested the legality thereof, requesting its annulment, in the course of an Administrative Appeal, from which it obtained dismissal (docs. Nos. 15 and 16, attached to the record);

• Now, in this context, and, regarding the vehicles in question, the Applicant acted as an intermediary between the manufacturers of the brands and the dealers and it was they (and are they) who proceeded to the respective sale (cf. 2, 3 and 4) attached to the record)

• Furthermore, the Applicant proceeded to the issuance of sales invoices until the date of assignment of registrations to the vehicles in Portugal (doc. 1, 2, 5) attached in the record;

• In the case of the Applicant's sales to dealers, the issuance of invoices occurs prior to the date of the respective registrations, being these identified by chassis numbers and subject to subsequent debit note of the Vehicle Tax, already with the corresponding registrations;

• Which, in the case sub judice, precludes any responsibility of the Applicant regarding payment of the IUC, since it was never owner of any of the vehicles in question, as was demonstrated and proven in the facts, documentarily, presented and attached to the record, because, at the moment of the year of the registration, the assessment of the tax on the vehicles in question no longer belonged to the Applicant;

• It is thus verified, from the foregoing, that "the vehicles in question were all sold to dealers prior to the date of the tax facts embodied in the exigibility of the tax (IUC)," and it is also to be considered that the Applicant "proceeded to the invoicing of the vehicles in question, prior to the assignment of registration, cf., documents No. 2, 5 and 7, attached to the record;

• Therefore, on the date of the tax facts, the Applicant could not be considered the taxpayer of the tax, a fact that precludes any subjective responsibility for its payment.

1.4 - The Respondent, Tax and Customs Authority (hereinafter referred to as TA), initially presented a reply, from which it is clear that the disputed tax acts do not suffer from any defect of violation of Law, pronouncing in favor of the dismissal of the reply and the maintenance of the questioned assessment acts, defending, summarily, the following:

• It questions the formal presentation of the PI submitted by the Applicant, considering it a "documentary amalgamation," which prevents understanding the "cause of action";

• Considering thus the request for arbitral pronouncement to be defective, alleging insufficient evidence of the facts invoked by the Applicant;

• Which embodies a "dilatory exception" preventing the examination of the merits of the case, pursuant to Article 576 Nos. 1 and 2 of the CPC, ex vi, Article 29 No. 1, subparagraph e, of the RJAT;

• "Which leads to the dismissal of the instance of the Respondent, pursuant to Article 576 No. 2 and 577, subparagraph b) of the CPC, ex vi, Article 29 No. 1 subparagraph e, of the RJAT;

• Subsequently, on 11-04-2017, it presented its closing arguments, questioning the arguments invoked by the Applicant, due to the fact that it makes: "a mistaken interpretation and application of the legal norms subsumable to the case, sub judice, notoriously erroneous";

• That the cited "arguments have no support whatsoever in law";

• It questions: "the taxable event of the tax, arguing that it is constituted by the ownership of the vehicle, as well as evidenced by the registration or registration in national territory, cf., Article 6 of the CIUC;

• It argues that the Applicant violates Article 3 No. 1 of the CIUC, when it questions both the request for registration and the request for registration of the said vehicles;

• That by virtue of the fact that the first registration of each automobile is carried out in the name of the importer, the Applicant must necessarily appear as owner of the motor vehicles;

• For it is peremptory that pursuant to Article 24 of the RRA, the importer, by appearing as first owner, is, in accordance with "what is established in Articles 3 and 6 of the CIUC," the taxpayer of the disputed tax;

• Furthermore, the completion of the DAV and payment of the Vehicle Tax are sufficient elements "to satisfy the taxable event of the IUC and, concomitantly, the subjective scope of the tax";

• It also questions "the purported sales invoices," as it considers that these "are not suited to prove the celebration of a synallagmatic contract";

• Faced with the facts summarily set out, the Respondent makes a general and objective interpretation of what is expressly provided in the articles it invokes, not considering the presumption of Article 3 of the CIUC, nor the presumption of the respective registrations, thus disregarding Article 73 of the LGT;

Not, moreover, considering the equivalence principle provided for in Article 1 of the CIUC, a corollary of the polluter-pays principle, with basis in No. 2 of Article 66 of the CRP;

Nor considering the procedures carried out by the Applicant upon its first registration of registration or registration in national territory, which comply with the permitted timeframes, in light of the combination of No. 2 of Article 42 of the RRA, with No. 1 of Article 17 of the CIUC.

1.4.1 - In the course of closing arguments, the Respondent invoked, among other things, the following:

"In addition to all that has been set out above, it should also be noted that the interpretation put forward by the Applicant is contrary to fundamental law.

The understanding advocated by the Applicant with a view to precluding the subjective scope and taxation of the IUC has no legal basis and violates the constitutional principles of legality and tax justice, taxpaying capacity, equality, certainty and legal security.

First of all, the preclusion of subjective scope in taxation under the IUC proposed by the Applicant contradicts the principle of legality and typicality established in Article 8 of the LGT and Article 103 of the CRP, since such understanding is not grounded in law.

In no circumstance did the tax legislator conceive of the preclusion of taxation in case of registration, neglecting the taxable event embodied in registration.

That is, at no point did the legislator conceive of in law the position that the Applicant advocates.

In accordance with the cited norms, the scope is subject to the principle of tax legality.

Therefore, having the tax legislator not expressly established in law the preclusion of subjective scope of taxation under the IUC in the cases to which the Applicant points, it is unequivocal that such understanding frontally violates the principle of tax legality enshrined in Article 103 of the Constitution and Article 8 of the LGT.

But furthermore: such understanding also collides with the principle of taxpaying capacity established in Article 104 of the Constitution and Article 4 of the LGT.

Regarding taxpaying capacity, the Constitutional Court has come to consider that the principle of taxpaying capacity, also frequently referred to as ability to pay – ability to pay – or economic capacity – wirtschaftliche Leistungsfähigkeit) as "the basic criterion of our 'fiscal Constitution' – concretizing the duty of all to pay taxes according to the same criterion, taxpaying capacity is the unitary criterion of taxation.

Thus, the principle of taxpaying capacity constitutes a prerequisite and measure of taxes, constituting the economic suitability to bear the tax burden, that is, it requires that the legal type of tax contain reference only to economic-financial elements.

Now, the understanding endorsed by the Applicant in attempting to preclude the subjective scope of the IUC, while also precluding IUC payment, frontally collides with the principle of taxpaying capacity.

By a fortiori and because intrinsically associated with the principle of taxpaying capacity, such understanding violates the principle of tax equality, set forth in Article 13 of the Constitution.

Finally, it is indubitable that the understanding endorsed by the Applicant collides with the principle of certainty and legal security."

2. ISSUES TO BE DECIDED

2.1 - Faced with what is set out in the foregoing numbers, regarding the presentation of the parties and the arguments presented, the main issues to be decided are the following:

• The allegation made by the Applicant regarding the substantive assessment of the assessment acts, relating to the years 2011 and 2012, concerning the IUC, paid on the vehicles above-referenced in document No. 7 and related in document No. 1, attached to the PI;

• The preliminary issue of the exception invoked by the TA;

• The preliminary issue of exception invoked by the Applicant;

• The mistaken interpretation and application of the norms of subjective scope of the unique motor vehicle tax assessed and collected, which constitutes the central issue to be decided in the present proceedings;

• The legal value of the registration of motor vehicles.

• The alleged violation of constitutional principles.

3. FACTUAL BASES

3.1 - As regards facts relevant to the decision to be rendered, this Tribunal takes as established, in light of the elements in the record, the following facts:

The Applicant is a commercial company under Portuguese law, with registered office and effective management in national territory, encompassed in the general regime for corporate income tax and VAT purposes, engaged in the importation, admission and commercialization of motor vehicles of the brands "…" and "…", predominantly in new condition.

To commercialize said vehicles in Portugal, the Applicant makes use of a network of dealers to whom it grants the right to commercialize, at the retail stage, motor vehicles of the brands in question, and may also, in certain cases, proceed to the commercialization of vehicles with financial entities of the B… Group in Portugal, which shall be subject to financial leasing contracts or long-term rental.

It is the dealers who, in their own name and for their own account, proceed to the commercialization of vehicles to the general public.

As a general rule, purchasers of vehicles of the brand "…" or "…" direct themselves to the said dealers in order to choose the vehicle to acquire (model, color, equipment, etc.) and the latter, in turn, proceed to order the respective vehicle from the Applicant.

Subsequently, the Applicant proceeds to the physical delivery of the vehicle to the dealer so that it may proceed to resell it to the end client. At that moment, the Applicant issues to the dealer the respective invoice for the sale of the motor vehicle, transferring to it the ownership and the risk of loss of the vehicle in question.

In the context of the procedure set out above, the Applicant now effectively receives payment of the price due to it for the sale of vehicles it commercializes through its dealers.

In the following days, in its capacity as a registered operator for purposes of Vehicle Tax, the Applicant initiates procedures tending toward the introduction into consumption of the vehicle - i.e., the request for assignment of registration - and the Applicant also proceeds, simultaneously, to the initial registration of ownership of the vehicle in the name of the end client, pursuant to what is provided in Article 42, Nos. 1 and 2, of Decree No. 55/75, the decree approving the Motor Vehicle Registration Regulations.

In cases where the Applicant does not proceed to the initial registration of ownership of the vehicle in the name of end clients, it is registered with the motor vehicle registration with respect to those vehicles since, in its capacity as a registered operator for purposes of Motor Vehicle Tax, it introduced the vehicles into consumption.

At the moment when registration is assigned to the vehicles it commercializes in new condition, the Applicant has already transferred their respective ownership to third parties.

Within the voluntary payment period, the Applicant proceeded to full payment of the IUC assessments and compensatory interest.

Not accepting the said IUC assessments and compensatory interest, the Applicant contested the legality thereof before the Tax Administration, requesting its annulment, in the course of an administrative appeal.

By Office No. …, of 10 March 2016, the Applicant was notified of the cumulation of the various administrative appeals in four proceedings, pursuant to Article 71 of the CPPT.

Following the exercise of its right to prior hearing, the Applicant was notified of the dismissal of the said administrative appeals Nos. …, …, on 27 May 2016.

On 4 July 2016, also following the exercise of its right to prior hearing, the Applicant was notified of the dismissal of administrative appeals Nos. … and …,

The Applicant presented evidentiary elements contained in documents Nos.; 1, 2, 5, 6 and 7, attached to the PI, which are given as fully reproduced for all legal purposes;

3.1.1 - SUBSTANTIATION OF PROVEN FACTS

• The facts given as proven are based on documents attached to the request for arbitral pronouncement of the above-mentioned PI, and on evidentiary documents presented by the Respondent in the context of the exception of "defectiveness of the cause of action" and on evidentiary documents throughout the entire procedural course and in closing arguments, as well as evidentiary documents presented by the Applicant, whether embodied in the already cited PI and Reply, which also embodies the exception of "untimeliness," as well as in the corresponding evidentiary elements embodied in the respective invoices and contracts which are given as fully reproduced for all legal purposes.

3.1.2 - UNPROVEN FACTS

• There are no facts given as unproven, given that all facts deemed relevant to the examination of the petition were proven.

4. LEGAL GROUNDS

4.1 - The Tribunal is materially competent and is duly constituted, pursuant to Articles 2 No. 1, subparagraph a), 5 No. 2, subparagraph a), 6 No. 1, 10 No. 1, subparagraph a) and No. 2 of the RJAT:

• The parties enjoy legal personality and capacity and are legitimate, ex vi, Articles 4 and 10, No. 2, of the RJAT and Article No. 1 of Regulation No. 112-A/2011, of 22 March;

• The proceedings do not suffer from any nullities;

• There being two preliminary issues on which the Tribunal must pronounce.

5- PRELIMINARY ISSUE 1

• The Tax Authority; Respondent in the proceedings above cited, comes, in the context of its Reply presented, pursuant to what is provided and for the purposes provided in No. 1 and 2 of Article 17 of the RJAT, to invoke a dilatory exception that is embodied in the "defectiveness of the initial petition," due to alleged insufficient evidence of the facts invoked by the Applicant;

• It requests the dismissal of the instance of the Respondent, pursuant to Articles 576, No. 2 and 577, subparagraph b) of the CPC, ex vi Article 29 No. 1, subparagraph e of the RJAT.

CONSIDERING THE FACTS SUMMARILY SET OUT,

This Tribunal Considers:

That there is not verified in the PI, in casu, the lack of indication of "the cause of action," all the more so because there would always be the possibility, pursuant to No. 2 of Article 98 of the CPPT, ex vi, Article 29, No. 1, subparagraph e) of the RJAT, and pursuant to No. 2 of Article 6 of the CPC, also, ex vi, Article 29 No. 1, subparagraph e) of the RJAT, that in the event the recurring nullity of defectiveness of the initial petition is verified, to be, ex officio, "deduced at any time until the passage into res judicata of the final decision," thus determining "the performance of the acts necessary to the regularization of the instance," however, this Tribunal did not deem it necessary to resort to such legal mechanism, since the invoices and contracts presented as documents Nos. 2, 5 and 7, which refer to document No. 1, all attached to the PI, are intelligible;

In any event, it is understood that the factual formulation presented has some documentary repetitions that may, possibly, confuse some relational facts set out, but it nonetheless remains evident in the PI that the Applicant requests the annulment of the IUC assessment acts challenged by the TA, in the four "Administrative Appeals" (cf. documents attached to the record), on the ground that, at the moment of the tax assessment acts, the Applicant is not the taxpayer of the IUC, hence it is to be considered that "the cause of action" is in no way obscure, as it clearly determines its meaning, and the legal effects that the Applicant seeks to obtain are well understood: "which are the annulments of the acts of the assessments carried out by the TA, on the ground that it does not consider itself the taxpayer of the respective IUC (factual-legal matters that constitute the cause of action and the legal reasons that substantiate the action), it being understood, in this context, that the sales carried out by the Applicant, through dealers to end consumers, are expressed in sales invoices (document No. 2 and No. 5, attached to the record);

In any event, the facts contained in documents attached with the pleadings (cf., Decision, Court of First Instance, of 14-10-2008, case No. 2377/07.8TBVIS.CI, p. 7), can be used to integrate the description of the "cause of action," when they are expressly or implicitly referred to, which, in casu, the disputed PI expressly refers to;

According to the understanding of J. Alberto dos Reis (in Decision, Court of First Instance-case No. 2377/07.8TBVIS.CI, p.7), the document attached with the Petition should be considered an integral part thereof and, as such, able to supply lacunae from which the Petition suffers (as regards facts, obviously);

It is further to be noted that, also, J. Alberto dos Reis refers, in Commentary on the CPC, II, p. 371 (in Decision, Court of First Instance-case No. 2377/07.8TBVIS.CI, p.8), that there is a defect of unintelligibility of the cause of action when the plaintiff sets out the facts source of the petition in terms so confused, ambiguous or unintelligible that it is not possible to ascertain with certainty the cause of action;

Now, the PI of the Applicant is not obscure, as it permits to "clearly determine its meaning," it therefore does not suffer from unintelligibility, whereby this Tribunal did not deem it necessary to correct the procedural document (PI).

Faced with the foregoing, the alleged exception of defectiveness of the request for arbitral pronouncement is judged unfounded, as it is not verified that the cause of action suffers from unintelligibility, as it permits with certainty to ascertain "the cause of action," whereby the criteria of subparagraph a) of No. 1 and, consequently, what is provided in No. 2 of Article 98 of the CPPT, ex vi, Article 29, No. 1, subparagraph c) of the RJAT are considered precluded.

6- PRELIMINARY ISSUE 2

Regarding the exception of Untimeliness invoked by the Applicant, in the context of the alleged presentation of the Reply outside the timeframe, this dilatory exception was legally well defended by the Respondent, considering all timeframes, including Christmas holidays;

Whereby this Tribunal refers to Article 132 of the CPC, ex vi, Article 29 of the RJAT,

And judges the Reply presented by the Respondent to be timely, considering the said dilatory exception unfounded.

7 - ISSUE OF MISTAKEN INTERPRETATION AND APPLICATION OF THE SUBJECTIVE SCOPE NORM OF THE IUC

7.1 Considering that it is uncontroversial in legal doctrine that in the interpretation of tax laws the general principles of interpretation apply fully, which shall be only and naturally limited by the exceptions and particularities dictated by the law itself that is the object of interpretation. This is an understanding that has come to receive acceptance in the General Tax Laws of other countries and that has also come to have a place in Article 11 of our General Tax Law, which is, moreover, frequently underscored by case law.

It is consensually accepted that in order to apprehend the meaning of the law, interpretation resorts, a priori, to reconstructing legislative intent through the words of the law, which means seeking its literal meaning, evaluating it and assessing it in light of other criteria, with the intervention of elements of a logical, rational or teleological nature and of a systematic order:

• Regarding the interpretation of tax law, jurisprudence is to be considered, namely, the Decisions of the STA of 05-09-2012, case No. 0314/12 and of 06-02-2013, case 01000/12, available at www.dgsi.pt, the importance of what is provided in Article 9 of the Civil Code (CC), as a fundamental element of legal hermeneutics;

• Article 3 No. 1 of the CIUC provides that "The taxpayers of the tax are the owners of vehicles, being considered as such natural or legal persons, of public or private law, in whose name the same are registered";

• The formulation used in said article resorts to the expression "being considered" which raises the question of whether such expression can be attributed a presumptive meaning, equating it with the expression "is presumed," these are expressions frequently used with equivalent meanings;

• As Jorge Lopes de Sousa teaches, in the Code of Tax Procedure and Process, Annotated and Commented, Volume I 6th Edition, Área Editora, SA, Lisbon 2011, p. 589, that in the matter of tax scope, presumptions can be revealed by the expression "is presumed" or by similar expression, mentioning various examples of such presumptions, referring to the one contained in Article 40, No. 1 of the Personal Income Tax Code, in which the expression "is presumed" is used and the one contained 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 thereto and, also embodying a presumption;

• In the legal formulation set out in No. 1 of Article 3 of the CIUC, in which a presumption is enshrined, revealed by the expression "being considered," of meaning similar to and of equivalent value to the expression "is presumed," in use since the creation of the tax in question (it not being, however, to be considered the current interpretive changes of said Article No. 3 of the CIUC, since the facts in question are not covered by the legal provisions in force);

• The use of the expression "being considered" sought to do nothing more than establish a more emphatic and clear approximation between the taxpayer of the IUC and the effective owner of the vehicle, which is in harmony with the emphasis given to vehicle ownership, which came to constitute the taxable event of the tax, pursuant to Article 6 of the CIUC;

• The relevance and interest of the presumption in question, which historically was revealed through the expression "is presumed" and which now serves the expression "being considered," lies in the truth and justice that, by this means, is conferred on tax relations and that embody fundamental tax values, permitting the taxation of the true and effective owner and not he who, due to circumstances of a different nature, sometimes is nothing more than an apparent and false owner. If the case were not thus considered, not admitting and relevance given to the presentation of evidentiary elements intended to demonstrate that the true and effective owner is, in fact, a person different from the one appearing in the register and who was initially, and, in principle, presumed to be the true owner, those values would be objectively subordinated.

7.2 - It is also to be considered the equivalence principle, inscribed in Article 1 of the CIUC, which has underlying it the polluter-pays principle, and concretizes the idea inscribed therein that whoever pollutes must, for that reason, pay. The said principle has constitutional basis, in that it represents a corollary of what is provided in subparagraph h) of No. 2 of Article 66 of the Constitution, having also basis in community law, whether at the level of original law, Article 130-R of the Maastricht Treaty (Treaty on European Union, of 07-02-1992), where the said principle came to appear as support for Community Policy in the environmental field and which aims to make responsible he who contributes to the prejudices that arise to the community, resulting from the use of motor vehicles, that are assumed by their owners-users, as costs that only they should bear.

7.3 - Considering the facts above described, it is important to note that the elements of interpretation already referred to, whether those related to literal interpretation, supported in the words legally used, whether those respecting elements of logical interpretation, of a historical nature or of a rational order, all point in the direction that the expression "being considered" has a meaning equivalent to the expression "is presumed," it being thus understood that what is provided in No. 1 of Article 3 of the CIUC enshrines a legal presumption which, in light of Article 73 of the LGT, where it is established that "Presumptions enshrined in the norms of tax scope always admit contrary proof," will necessarily be rebuttable, which means that the taxpayers are, in principle, the persons in whose name such vehicles are registered. They shall, therefore, be those persons, identified in such conditions to whom the TA must necessarily address itself;

• But it shall be, in principle, given that in the context of mandatory prior hearing, in light of what is provided in subparagraph a) of No. 1 of Article 60 of the LGT, the tax relationship may be reconfigured, validating the initially identified taxpayer or redirecting the procedure in the direction of he who is, in fact, the true and effective taxpayer of the tax in question;

• The taxpayer has the right to be heard, through prior hearing (José Manuel Santos Botelho, Américo Pires Esteves and José Cândido de Pinho, in the Code of Administrative Procedure, Annotated and Commented, 4th edition, Almedina, 2000, annotation 8 of Article 100);

• The prior hearing which, naturally, shall have to materialize in a moment immediately prior to the assessment procedure, corresponds to the proper place and time to, with certainty and security, identify the taxpayer of

• That in the proceedings in question, the Applicant demonstrated to the TA, in the course of prior hearing, that the facts fell within the scope of sales and contracts to dealers, whereby, through documents attached to the record, never could the Applicant be responsible for payment of the IUC.

8 - REGARDING THE LEGAL VALUE OF REGISTRATION

8.1 - Regarding the legal value of registration, it is important to note what is established in No. 1 of Article 1 of Decree-Law No. 54/75, of 12 February (amended several times, most recently by Law No. 39/2008, of 11 August), when it establishes that "vehicle registration has essentially the purpose of giving publicity to the legal situation of motor vehicles and their trailers, with a view to the security of legal commerce":

• Article 7 of the Property Registration Code (CRP), applicable, supplementarily, to motor vehicle registration, by virtue of Article 29 of the CRA, provides that "Definitive registration constitutes a presumption that the right exists and pertains to the registered holder, in the precise terms in which the registration defines it";

• Definitive registration constitutes nothing more than a rebuttable presumption, thus admitting counterproof, as follows from the law and jurisprudence has been signaling, being able to see, among others, the Decisions of the Supreme Court of Justice No. 03B4369 of 19-02-2004 and No. 07B4528, of 29-01-2008, available at: www.dgsi.pt;

• Therefore, the function legally reserved to registration is on the one hand to publicize the legal situation of assets, in the case in question; of vehicles and, on the other hand, permits us to presume that the right exists regarding such vehicles and that it pertains to the holder, as so registered in the register, it does not have a constitutive nature of the right of ownership, but only declaratory, hence registration does not constitute a condition of validity of the transfer of the vehicle from seller to buyer;

• Purchasers of vehicles become owners of those same vehicles by way of the celebration of the respective purchase and sale contracts, with or without registration;

• In this context it should be recalled that, in light of what is provided in No. 1 of Article 408 of the CC, the transfer of real rights over things, in the case sub judice, motor vehicles, is determined by mere effect of the contract, and pursuant to what is provided in subparagraph a) of Article 879 of the CC, among the essential effects of the purchase and sale contract, the transfer of the thing stands out;

• Faced with the foregoing, it becomes clear that the legislative intent points in the direction that what is provided in No. 1 of Article 3 of the CIUC enshrines a "juris tantum" presumption, consequently rebuttable, thus permitting that the person who, in the register, is registered as owner of the vehicle, can present evidentiary elements intended to demonstrate that such ownership is inscribed in the legal sphere of another person, to whom the ownership has been transferred;

• Which regarding the disputed facts, there exist, attached to the record, documents which were proven by the Applicant, both in the course of prior hearing and in the request for arbitral pronouncement, thus configuring certainty that it pertains to the respective owners/users of the vehicles, the subjective responsibility for the IUCs, pursuant to No. 1 and 2 of Article 3 of the CIUC

9 - THE PRESUMPTION OF ARTICLE 3 OF THE CIUC AND THE DATE ON WHICH THE IUC IS EXIGIBLE

9.1 - DATE ON WHICH THE IUC IS EXIGIBLE

• The IUC is a tax of periodic taxation, the periodicity of which corresponds to the year which begins on the act of registration or in each of its anniversaries, as provided in Nos. 1 and 2 of Article 4 of the CIUC;

• It is exigible pursuant to No. 3 of Article 6 of the said Code;

• It being to be noted that, regarding the assessment of the IUC taxed to the Applicant regarding the vehicles above-referenced, in the year 2011 and 2012 it is to be considered that at the moment of the tax facts, the vehicles in question were in the legal sphere of the owners/users of the said automobiles, because it is they who hold the use and enjoyment of the said vehicles, whereby pursuant to No. 1 and 2 of Article 3 of the CIUC, they must be made responsible for payment of the obligation of the said tax.

9.1.1 - As regards the burden of proof, Article 342 No. 1 of the CC provides "he who invokes a right is charged with proving the constitutive facts of the alleged right";

9.1.2 - Also Article 346 of the CC (counterproof) determines that "to the proof produced by the party on whom the burden of proof rests can the other party oppose counterproof regarding the same facts, intended to render them doubtful; if it succeeds, the matter is decided against the party charged with proof." (As Anselmo de Castro asserts, A., 1982, ED. Almedina Coimbra, "Civil Declaratory Procedural Law", III, p. 163, "if the burden of proof falls on one of the parties, it is sufficient for the other party to oppose counterproof, being such a proof intended to render doubtful the facts alleged by the first party".

Thus, in the case of the record, what the Applicant has to prove in order to rebut the presumption that flows from both Article 3 of the CIUC and the Motor Vehicle Register itself, is that it Applicant was not owner of the vehicles in question in the period to which the disputed assessments relate. It proposes to prove, as results from the record, that the ownership of the vehicles did not pertain to it in the periods to which the assessments relate. Thus presenting the sales invoices contained in documents Nos. 1, 7, attached to the record, which are given as fully reproduced for all legal purposes.

9.2 - REBUTTAL OF THE PRESUMPTION

• The Applicant, as is referred to in 3.1, regarding the proven facts, alleged, with the purpose of rebutting the presumption, not to be the taxpayer of the tax at the time of the occurrence of the tax facts, offering for that purpose the following documents;

• Sales invoices to dealers and to end consumers, documents attached to the record with Nos. 1,2, 4, 5 and 7;

• Now, those documents enjoy the presumption of truthfulness provided for in No. 1 of Article 75 of the LGT. Following from this that on the date when the IUC was exigible those holding ownership of the motor vehicles were the legitimate owners and not the Applicant.

10 - OTHER ISSUES RELATING TO THE LEGALITY OF THE ASSESSMENT ACTS

• Regarding the existence of other issues pertaining to the legality of the assessment acts, considering that it is inherent in the establishment of an order of knowledge of defects, such as that provided for in Article 124 of the CPPT, that proceeding from the request for arbitral pronouncement based on defects that prevent the renewal of the disputed assessments, knowledge of other defects is rendered moot because it is useless, it does not seem necessary to examine the other issues raised.

11. REGARDING INTERPRETATION CONTRARY TO THE CONSTITUTION

The Respondent invokes that the interpretation of Article 3 of the CIUC, in the sense considered, is unconstitutional, as it constitutes a violation of the principles of legality and tax justice, taxpaying capacity, equality, certainty and legal security.

Let us examine.

1.1- It is Article 103 of the CRP that enshrines the principle of tax legality, as one of the structuring elements of the constitutional rule of law, which translates into the rule of reserve of law for the creation and definition of the essential elements of taxes, which cannot fail to appear in legislative enactment. The universality of legal doctrine signals two corollaries thereto: the principle of preeminence of law and the principle of reserve of law.

Thus, pursuant to the constitutional enshrinement of the principle of tax legality, taxes must be created by Law, and formal Law emanating from the Assembly of the Republic, which, pursuant to Article 103 No. 2 of the CRP must determine the scope, the rate, tax benefits and general guarantees of taxpayers.

As Casalta Nabais refers, the principle of fiscal legality expresses a material reserve of formal law that breaks down into two aspects or (sub)principles: 1) in the principle of reserve of formal law, which implies the reservation to law or to authorized decree-law of the fiscal matter referenced; 2) in the principle of material or substantive reserve, generally referred to on the basis of German legal science, by the principle of typicality, which requires that the law or authorized decree-law contain complete regulation of the reserved matter.

Also Ana Paulo Dourado, law is the point of departure to guarantee legal security, because it is approved by parliamentary representatives. Law also serves equality, for being general and abstract, although it is not sufficient to guarantee the latter.

In the 1976 Portuguese Constitution, it continues, the principle of fiscal legality is the subject of five articles that encompass:

• The aspect of competencies and vertical division of tax powers that includes the distribution of competencies between the Assembly of the Republic and Government and competencies of the Autonomous Regions and Local Authorities in fiscal matters (Articles 165, No. 1 subparagraph i) and No. 2, 227, No. 1 subparagraph i), 232 No. 1 and 238 No. 4);

• The object of the reserve of law, which includes the creation of taxes and tax system (of which form part the essential elements of the tax, tax benefits and guarantees of taxpayers), and the general regime of taxes and other financial contributions in favor of public entities (Articles 165, No. 1 subparagraph i) and 103 No. 2);

• The material aspect, in the sense of requirements for densification of tax law as to the essential elements of taxes – requirements established in the first part of Article 103 No. 2 (scope and rate), guaranteeing a principle of substantive legality or principle of fiscal typicality;

• A principle of preference or precedence of law, in Article 103 No. 3, and the enshrinement of a right of resistance to taxation that violates the Constitution or law.

9.1.1- Now, it is not seen that the non-express enshrinement in law of the "preclusion of subjective scope of taxation," in the case under analysis, minimally touches the principle of tax legality, in any of its dimensions or aspects, as the Respondent argues.

9.2- On the other hand, the Constitutional Court has indeed come to advocate the preclusion of merely negative control of tax equality, coming to adopt the principle of taxpaying capacity as the appropriate criterion for the distribution of taxes" and that, not excluding from such principle the possibility of equally resorting to the (negative) principle of prohibition of arbitrariness, the principle of tax equality thus ends "by being able to be concretized in the following three aspects: generality, uniformity, (to be assessed through the principle of taxpaying capacity) and the prohibition of arbitrariness.

It is referred to in Decision No. 53/2018, (...) the principle of tax equality can be concretized through different aspects: a first is in the generality of the tax law, in its application to all without exception; a second, in the uniformity of the tax law, in treating equally taxpayers who find themselves in equal situations and differently those who find themselves in different situations, to the extent of the difference, to be assessed by taxpaying capacity;

A last is in the prohibition of arbitrariness, in precluding the introduction of discriminations between taxpayers that are devoid of rational foundation.

In sum, the principle of taxpaying capacity requires that taxpayers contribute to public charges in accordance with their respective taxpaying capacity (ability to pay), acting as a prerequisite and, at the same time, as a limit on taxation, in the sense that he who does not dispose of taxpaying force is not taxed – positive dimension – and he who disposes can only be taxed up to the limit that his taxpaying capacity permits him, that is, it is not permitted that the taxpayer contribute to tax charges in a measure superior to that which is his taxpaying capacity – negative dimension.

9.2.1- Also here it is not seen - considering the reasoning and structure referred - in what way the interpretation followed violates the principles of equality and productive capacity.

9.3- Finally

It is agreed with what is understood in Decision 740/2016-T:

(…) Consider, regarding the principle of confidence and the principle of legal security, what is referred to by the Decision of the Supreme Administrative Court of 18 June 2003, Case No. 01188/02:

"One of the corollaries of the principle of good faith consists of the principle of protection of legitimate confidence, incorporating in good faith the ethical value of confidence. See, Marcelo Rebelo de Sousa and José de Melo Alexandrino, in "Constitution of the Portuguese Republic Commented," pages 396, Margarida Olazabal Cabral, in "The public competition in administrative contracts," pages 92, Jesus Gonzalez Perez, in "The general principle of good faith in administrative law," 2nd edition, pages 52, Frederico Castilho Blanco, in "The protection of confidence in administrative law," pages 77 and following and Sainz Moreno, in "Good faith in the relations of Administration with those administered," in Journal of Public Administration", No. 89, pages 314. It can be said, in a synthetic formulation, that the Administration violates good faith when it fails in the confidence it aroused in a Private Party by acting in nonconformity with what its previous conduct made foreseeable, and that, as a general principle of law, good faith means "that any person must have correct, loyal and unreserved conduct when entering into relations with other persons" – quoted by M. Esteves de Oliveira, Pedro Gonçalves and Pacheco Amorim, in "Code of Administrative Procedure," 2nd edition, pages 108 -, presenting itself as aimed at, namely, preventing the occurrence of disloyal and incorrect conduct (obligation of loyalty). Moreover, the requirement of protection of confidence is also a consequence of the principle of legal security, inherent in the Rule of Law. However, the application of the principle of protection of confidence is dependent on various prerequisites, first of all, what is related to the need to be faced with a "legitimate" confidence, which passes, in particular, by its adequacy to Law, not being able to invoke the violation of the principle of confidence when it is based on a prior act clearly illegal, being such illegality perceptible by he who seeks to invoke it in his favor of the said principle. On the other hand, for one to validly and relevantly invoke such principle it is necessary furthermore that the interested party seeks not to base it only in his mere psychological conviction but rather it requires the enunciation of external signs produced by the Administration sufficiently conclusive for a normal recipient and where one can reasonably anchor the invoked confidence. See, in this sense, Jesus Gonzalez Perez, in "Comments on the law of administrative procedure," pages 982-983. Furthermore another prerequisite to be taken into account relates to the need for the Private Party to have serious reasons to believe in the validity of the prior acts or conduct of the Administration to which it has adjusted its conduct." (emphasis ours).

In the concrete case, it does not seem possible that such interpretation puts at risk the protection of confidence and legal security. Indeed, it follows quite clearly from Article 3 of the CIUC that the legislator intended to enshrine a presumption, being that the dominant jurisprudence. As to the fact that it is a rebuttable presumption, this derives from what is expressly provided in Article 73 of the LGT.

Now, the principles of confidence and legal security derive from the need for there to be a minimum of certainty and security in the rights of private parties, as well as in the expectations legally created by them. The reason for the existence of these principles is related to the protection of the confidence of private parties in the conduct of the State.

In the concrete case, there is no possibility whatsoever of creation of an expectation of confidence created by the private party in the sense that Article 3 of the CIUC does not enshrine a presumption. Quite the contrary, one could even argue that the principle of confidence and legal security would legitimize the expectation of the private party that considers that Article 3 of the CIUC configures a rebuttable presumption, as it has always come to be interpreted.(…).

9.3.1- In the same sense, case 109/2017-T:

(…) It is not perceived, however, with due respect, how the position that sustains that Article 3, No. 1, of the CIUC enshrines a rebuttable presumption, could put at risk the principles of confidence and legal security, it being that the same impose duties and restrictions on juridical-public conduct.

Indeed, as Jorge Bacelar Gouveia refers, the principle of legal security requires "the publicity of the acts of public power, as well as the clarity and determinability of the sources of law" and that the principle of protection of confidence requires "that the normative framework in force not change in a way as to frustrate the expectations generated in citizens regarding its continuity, with the prohibition of an intolerable retroactivity of laws, as well as the need for its alteration in conformity with expectations that are constitutionally protected" (Manual of Constitutional Law, Almedina, 4th Ed., Vol. II, p. 821).

In turn, Jorge Reis Novais writes, regarding these principles that "Without the possibility, legally guaranteed, of being able to calculate and predict the possible developments of the conduct of the powers public action susceptible to repercussion in his legal sphere, the individual would convert, ultimately with violation of the fundamental principle of human dignity, into mere object of state occurrence." (The Structural Constitutional Principles of the Portuguese Republic, Coimbra Editora, 2004, p. 261-262)

These legal principles thus aim to control and limit the conduct of public powers toward private parties. By their very nature, they can be invoked by the latter toward public powers, because it is the interests of private parties, toward the conduct thereof, that the principles in question aim to protect and not the public powers toward their own conduct, globally considered.

It is therefore manifest that the interpretation of the norm sustained by the Applicant and accepted by the first arbitral decision does not violate the principles in question.

Thus, it is concluded that the interpretation proposed by the Applicant of Article 3, No. 1, of the CIUC, in the wording as of the date of the facts, is not contrary to the Constitution of the Portuguese Republic, whereby the allegation of unconstitutionality raised by the Respondent fails.(…).

In conformity with the foregoing

9.4- In the case, contrary to what is argued by the Respondent, this Tribunal does not perceive that the interpretation assumed in the judgment, (namely the application of Article 3 of the CIUC, suffers from the defect of unconstitutionality (violation of law), thus placing no obstacle to what is understood regarding the merits of the disagreement.

12- REIMBURSEMENT OF TOTAL AMOUNT PAID

Pursuant to what is provided in subparagraph b) of No. 1 of Article 24 of the RJAT and in conformity with what is established therein, the arbitral decision regarding the merits of the petition of which there is no recourse or challenge binds the tax administration from the end of the period prescribed for recourse or challenge, the latter having to, in the exact terms of the success of the arbitral decision in favor of the taxpayer and up to the end of the period prescribed for the spontaneous execution of judgments of the judicial tax tribunals "Restore the situation that would exist if the tax act subject of the arbitral decision had not been practiced, adopting the acts and operations necessary for such purpose";

These are legal commands that are in total harmony with what is provided in Article 100 of the LGT, applicable to the case, ex vi, what is provided in subparagraph a) of No. 1 of Article 29 of the RJAT, in which it is established that "The tax administration is obliged, in case of total or partial success of administrative appeals or challenges or judicial proceedings in favor of the taxpayer, to the immediate and full reconstitution of the situation that would exist if the illegality had not been committed, with payment of indemnificatory interest corresponding to the terms and conditions provided for in law";

The case contained in the present record raises the manifest application of the mentioned norms, in that following the illegality of the assessment acts referenced in these proceedings, there shall necessarily be reimbursement of the amounts paid, whether as to the tax paid, whether of the corresponding compensatory interest, as a way of achieving the reconstitution of the situation that would exist if the illegality had not been committed.

13 - REGARDING THE RIGHT TO INDEMNIFICATORY INTEREST

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

In the context of tax assessment, its annulment confers on the taxpayer the right to restitution of the tax paid and, as a rule, the right to indemnificatory interest, pursuant to No. 1 of Article 43 of the LGT and Article 61 of the CPPT.

Therefore the Applicant has the right to indemnificatory interest on the amount of tax paid pertaining to the annulled assessments.

DECISION

Faced with the foregoing, this Singular Arbitral Tribunal decides:

• To judge as well-founded the petition for declaration of illegality of the dismissal of the Administrative Appeals, as well as of the assessment of the IUC, concerning the years 2011 and 2012, regarding the motor vehicles identified in the present proceedings, thus annulling the corresponding tax acts;

• not to consider any defect of unconstitutionality verified, as required.

• To judge as well-founded the petition for condemnation of the Tax Administration to reimbursement of the amount unduly paid, in the amount of 30,503.79 (thirty thousand five hundred and three euros and seventy-nine cents), condemning the Tax and Customs Authority to make these payments;

• The TA must also make payment corresponding to the amount due for indemnificatory interest on the tax paid, pertaining to the annulled assessments, pursuant to No. 1 of Article 43 of the LGT, ex vi, No. 2 of Article 61 of the CPPT (Wording of Law No. 55-A/2010, of 31-12, effective date 2011-01-01.

VALUE OF THE CASE: In conformity with what is provided in Articles 306 No. 2 of the CPC and 97-A, No. 1 of the CPPT and Article 3, No. 2 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the case is set at €30,503.79.

COSTS: In accordance with No. 4 of Article 22 of the RJAT, the amount of costs is set at € 1,836.00, pursuant to Table I, attached to the Regulation of Costs in Tax Arbitration Proceedings, borne by the Tax and Customs Authority.

Notify the parties.

Lisbon, 07-09-2023

The Arbiter

Fernando Miranda Ferreira

CAAD: Tax Arbitration

Case No.: 515/2016-T
Topic: IUC - Subjective Scope - Legal Presumptions.
*Replaced by the arbitral decision of 07 September 2023.

ARBITRAL TAX DECISION

REPORT

– A… LDA., with the TIN: …, Claimant in the tax proceedings, above and marginally referenced, hereinafter referred to as "Applicant," came, invoking the provisions of numbers 1 and 2 of Article 10 of Decree-Law No. 10/2011, of 20 January (hereinafter RJAT), Article 99 of the Code of Tax Procedure and Process (CPPT) and number 1 of Article 95 of the General Tax Law (LGT), to request the constitution of the Singular Arbitral Tribunal, with a view to:

To annul the acts of assessment of the Unique Motor Vehicle Tax (hereinafter designated as IUC), carried out by the Tax and Customs Authority (hereinafter TA), relating to the years: 2011 and 2012, concerning vehicles listed in evidentiary document No. 1 which forms an integral part of the Request for Tax Arbitral Pronouncement.

To request reimbursement of the total amount of € 30,503.79, unduly paid by the Applicant, plus indemnificatory interest provided for in Articles 43 of the LGT and Article 61 of the CPPT, ex vi, Article 29 of the RJAT.

Pursuant to the provisions of subparagraph a) of No. 2 of Article 6 and subparagraph b) of No. 1 of Article 11 of Decree-Law No. 10/2011, of 20 January, in the wording introduced by Article 228 of Law No. 66-B/2012, of 31 December, the Ethics Council appointed as sole arbiter Maria de Fátima Alves, who communicated acceptance of the appointment within the applicable timeframe:

On 03-11-2016 the parties were duly notified of this appointment, having manifested no intention to refuse the arbiter's appointment, pursuant to the combined provisions of Article 11 No. 1 subparagraphs a) and b) of the RJAT and Articles 6 and 7 of the Code of Ethics,

Therefore, the arbitral tribunal was constituted on 18-11-2016, as stipulated in subparagraph c) of No. 1 of Article 11 of Decree-Law No. 10/2011, of 20 January, in the wording introduced by Article 228 of Law 66-B/2012, of 31 December.

The Applicant, in the substantiation of its request for arbitral pronouncement, asserts, in summary, the following:

The acts of assessment, to which the unique motor vehicle taxes correspond, assessed, cf., document No. 7, attached to the PI and which are itemized in document No. 1, also attached to the PI, were directed directly at the Applicant;

The Applicant is engaged in the importation, admission and commercialization of motor vehicles of the brands "…" and "…", "predominantly in new condition," whereby the "vehicles subject to the contested assessments fall within its activity of selling new vehicles to the network of its dealers to which it grants the right to commercialize, proceeding to the commercialization of vehicles with financial entities of the A… Group in Portugal, which shall be subject to financial leasing contracts or long-term rental;

"Being the dealers who, in their own name and for their own account, proceed to the commercialization of vehicles to the general public";

"Subsequently, the Applicant proceeds to the physical delivery of the vehicles to the respective dealers, so that they may proceed to resell them to the end client" (docºs Nos. 2 and 4, attached to the PI);

Within the scope of its status as a Registered Operator, the Applicant initiates procedures tending toward the introduction into consumption of the said vehicles, requesting the assignment of registration and, simultaneously, proceeding to the initial registration of ownership of the vehicles in the name of the corresponding end client, pursuant to Article 42 Nos. 1 and 2 of Decree-Law No. 55/75, of 12 February;

Now, at the moment when registration is assigned to the vehicles that it commercializes in new condition, the Applicant has already transferred the respective ownership to third parties (docºs Nos. 2, 4 and 5, attached to the record);

It is to be considered that the Applicant always respected the initial registration of ownership of the vehicles in the name of end clients, respecting the legally prescribed timeframes for this purpose (the 60 days counted from the date of assignment of registration, pursuant to No. 1 and 2 of Article 42 of Decree-Law No. 55/75, of 12 February);

However, at the end of 2015, the Applicant was notified of the IUC assessments and respective compensatory interest, whereupon the Applicant, within the voluntary payment period, proceeded to full payment, as evidenced by copies contained in document No. 7, attached to the PI;

However, "not accepting the said assessments, the Applicant contested the legality thereof, requesting its annulment, in the course of an Administrative Appeal, from which it obtained dismissal (docºs Nos. 15 and 16, attached to the record);

Now, in this context, and, regarding the vehicles in question, the Applicant acted as an intermediary between the manufacturers of the brands and the dealers and it was they (and are they) who proceeded to the respective sale (cf. 2, 3 and 4) attached to the record);

Furthermore, the Applicant proceeded to the issuance of sales invoices until the date of assignment of registrations to the vehicles in Portugal (docº 1, 2, 5) attached in the record;

In the case of the Applicant's sales to dealers, the issuance of invoices occurs prior to the date of the respective registrations, being these identified by chassis numbers and, subject to subsequent debit note of the Vehicle Tax, already with the corresponding registrations;

Which, in the case sub judice, precludes any responsibility of the Applicant regarding payment of the IUC, since it was never owner of any of the vehicles in question, as was demonstrated and proven in the facts, documentarily, presented and attached to the record, because, at the moment of the year of the registration, the assessment of the tax on the vehicles in question no longer belonged to the Applicant;

It is thus verified, from the foregoing, that "the vehicles in question were all sold to dealers prior to the date of the tax facts embodied in the exigibility of the tax (IUC)," and it is also to be considered that the Applicant "proceeded to the invoicing of the vehicles in question, prior to the assignment of registration, cf., documents No. 2, 5 and 7, attached to the record;

Therefore, on the date of the tax facts, the Applicant could not be considered the taxpayer of the tax, a fact that precludes any subjective responsibility for its payment.

The Respondent, Tax and Customs Authority (hereinafter referred to as TA), initially presented a reply, from which it is clear that the disputed tax acts do not suffer from any defect of violation of Law, pronouncing in favor of the dismissal of the reply and the maintenance of the questioned assessment acts, defending, summarily, the following:

It questions the formal presentation of the PI submitted by the Applicant, considering it a "documentary amalgamation," which prevents understanding the "cause of action";

Considering thus the request for arbitral pronouncement to be defective, alleging insufficient evidence of the facts invoked by the Applicant;

Which embodies a "dilatory exception" preventing the examination of the merits of the case, pursuant to Article 576 Nos. 1 and 2 of the CPC, ex vi, Article 29 No. 1, subparagraph e, of the RJAT;

"Which leads to the dismissal of the instance of the Respondent, pursuant to Article 576 No. 2 and 577, subparagraph b) of the CPC, ex vi, Article 29 No. 1 subparagraph e, of the RJAT;

Subsequently, on 11-04-2017, it presented its closing arguments, questioning the arguments invoked by the Applicant, due to the fact that it makes: "a mistaken interpretation and application of the legal norms subsumable to the case, sub judice, notoriously erroneous";

That the cited "arguments have no support whatsoever in law";

It questions: "the taxable event of the tax, arguing that it is constituted by the ownership of the vehicle, as well as evidenced by the registration or registration in national territory, cf., Article 6 of the CIUC;

It argues that the Applicant violates Article 3 No. 1 of the CIUC, when it questions both the request for registration and the request for registration of the said vehicles;

That by virtue of the fact that the first registration of each automobile is carried out in the name of the importer, the Applicant must necessarily appear as owner of the motor vehicles;

For it is peremptory that pursuant to Article 24 of the RRA, the importer, by appearing as first owner, is, in accordance with "what is established in Articles 3 and 6 of the CIUC," the taxpayer of the disputed tax;

Furthermore, the completion of the DAV and payment of the Vehicle Tax are sufficient elements "to satisfy the taxable event of the IUC and, concomitantly, the subjective scope of the tax";

It also questions "the purported sales invoices," as it considers that these "are not suited to prove the celebration of a synallagmatic contract";

Faced with the facts summarily set out, the Respondent makes a general and objective interpretation of what is expressly provided in the articles it invokes, not considering the presumption of Article 3 of the CIUC, nor the presumption of the respective registrations, thus disregarding Article 73 of the LGT;

Not moreover considering the equivalence principle provided for in Article 1 of the CIUC, a corollary of the polluter-pays principle, with basis in No. 2 of Article 66 of the CRP;

Nor considering the procedures carried out by the Applicant upon its first registration of registration or registration in national territory, which comply with the permitted timeframes, in light of the combination of No. 2 of Article 42 of the RRA, with No. 1 of Article 17 of the CIUC.

The meeting provided for in Article 18 of the RJAT was dispensed with, as it involved issues already sufficiently debated both in the record and in jurisprudence, this Singular Arbitral Tribunal understanding it unnecessary to hold closing arguments and dispensed with the examination of witnesses;

Therefore in this context, the Tribunal, in compliance with what is provided in Article 18, No. 2 of the RJAT, designated, presumably, until 27-02-2017, the rendering of the arbitral decision.

However, in the context of the Arbitral Decision above mentioned, the Respondent came to this Tribunal to say that it had not been given the opportunity of the right to be heard, pursuant to No. 3 of Article 3 of the CPC, ex vi, Article 29 of the RJAT;

Now, when the TA Reply was presented, in which a dilatory exception was invoked, considering the cause of action defective, requesting for that reason the dismissal of the instance, the Applicant presented a Counter-Reply, contesting the disputed facts and alleging a dilatory exception of untimeliness of the Reply presented by the Respondent "outside the prescribed period";

In this sequence, the Respondent only pronounced and, correctly, on the timeliness of the Respondent's Request, abstaining from making any allusion to its right to be heard when it could have done so;

Which, faced with this "absence" of argumentations on the part of the Respondent, led this Tribunal to consider that the Respondent was abstaining from arguing further evidentiary facts in its defense;

In any event, this oversight, on the part of the Tribunal, was corrected, giving opportunity to the parties (Applicant and Respondent) the possibility of pronouncing themselves on any matters of fact and law raised in the proceedings, thus ensuring the right to be heard and equality of the parties, pursuant to Article 16, subparagraphs: a) and b) of the RJAT, based on the prerequisites of subparagraphs c) and e) of the same legal provision, principles combined with what is provided in Articles 6 and Article 7 No. 1, and Article 9 No. 1, all of the CPC, ex vi, Article 29 of the RJAT;

In this procedural context, it was ensured by this Tribunal throughout the entire proceedings, the substantial equality of the parties, fostering their means of defense", pursuant to Article 4 of the CPC, ex vi, Article 29 of the RJAT;

Therefore, although the fact that the Applicant did not present anything new for the decision of the merits of the case beyond the evidentiary facts already presented, the Respondent came to present its closing arguments on 11-04-2017, which were carefully analyzed and applicable to the present Arbitral Tax Decision, pursuant to Article 123, No. 2 of the CPPT, ex vi Article 29 of the RJAT, based "on the free assessment of facts and the free determination of necessary diligences for production of proof," subparagraph e) of Article 16 of the RJAT.

Faced with the foregoing, this Singular Arbitral Tribunal, based on Articles 6 of the CPC "Duty of Procedural Management,"

Rectifies

the present Arbitral Tax Decision, in the context of case No. 515/2016-T, pursuant to No. 2 of Article 613 and No. 1 of Article 414, both of the CPC, ex vi Article 29 of the RJAT.

ISSUES TO BE DECIDED

Faced with what is set out in the foregoing numbers, regarding the presentation of the parties and the arguments presented, the main issues to be decided are the following:

The allegation made by the Applicant regarding the substantive assessment of the assessment acts, relating to the years 2011 and 2012, concerning the IUC, paid on the vehicles above-referenced in document No. 7 and related in document No. 1, attached to the PI;

The preliminary issue of the exception invoked by the TA;

The preliminary issue of exception invoked by the Applicant;

The mistaken interpretation and application of the norms of subjective scope of the unique motor vehicle tax assessed and collected, which constitutes the central issue to be decided in the present proceedings;

The legal value of the registration of motor vehicles.

FACTUAL BASES

As regards facts relevant to the decision to be rendered, this Tribunal takes as established, in light of the elements in the record, the following facts:

The Applicant presented evidentiary elements contained in documents Nos.; 1, 2, 5, 6 and 7, attached to the PI, which are given as fully reproduced for all legal purposes;

4.1.1 SUBSTANTIATION OF PROVEN FACTS

The facts given as proven are based on documents attached to the request for arbitral pronouncement of the above-mentioned PI, and on evidentiary documents presented by the Respondent in the context of the exception of "defectiveness of the cause of action" and on evidentiary documents throughout the entire procedural course and in closing arguments, as well as evidentiary documents presented by the Applicant, whether embodied in the already cited PI and Counter-Reply, which also embodies the exception of "untimeliness," as well as in the corresponding evidentiary elements embodied in the respective invoices and contracts which are given as fully reproduced for all legal purposes.

3.1.2 UNPROVEN FACTS

There are no facts given as unproven, given that all facts deemed relevant to the examination of the petition were proven.

LEGAL GROUNDS

The Tribunal is materially competent and is duly constituted, pursuant to Articles 2 No. 1, subparagraph a), 5 No. 2, subparagraph a), 6 No. 1, 10 No. 1, subparagraph a) and No. 2 of the RJAT:

The parties enjoy legal personality and capacity and are legitimate, ex vi, Articles 4 and 10, No. 2, of the RJAT and Article No. 1 of Regulation No. 112-A/2011, of 22 March;

The proceedings do not suffer from any nullities;

There being two preliminary issues on which the Tribunal must pronounce.

PRELIMINARY ISSUE

The Tax Authority, Respondent in the proceedings above cited, comes, in the context of its Reply presented, pursuant to what is provided and for the purposes provided in No. 1 and 2 of Article 17 of the RJAT, to invoke a dilatory exception that is embodied in the "defectiveness of the initial petition," due to alleged insufficient evidence of the facts invoked by the Applicant;

It substantiates the dilatory exception on the ground that there exist evidentiary elements documentary that confuse "the cause of action," pursuant to Article 98 No. 1, subparagraph a) of the CPPT, ex vi Article 29 of the RJAT, which prevents the examination of the merits of the case, pursuant to Article 576, Nos. 1 and 2 of the CPC, ex vi, Article 29 No. 1, subparagraph e, of the RJAT;

It requests for that reason the dismissal of the instance of the Respondent, pursuant to Articles 576, No. 2 and 577, subparagraph b) of the CPC, ex vi Article 29 No. 1, subparagraph e of the RJAT.

CONSIDERING THE FACTS SUMMARILY SET OUT,

• This Tribunal Considers:

That there is not verified in the PI, in casu, the lack of indication of "the cause of action," all the more so because there would always be the possibility, pursuant to No. 2 of Article 98 of the CPPT, ex vi, Article 29, No. 1, subparagraph e) of the RJAT, and pursuant to No. 2 of Article 6 of the CPC, also, ex vi, Article 29 No. 1, subparagraph e) of the RJAT, that in the event the recurring nullity of defectiveness of the initial petition is verified, to be, ex officio, "deduced at any time until the passage into res judicata of the final decision," thus determining "the performance of the acts necessary to the regularization of the instance," however, this Tribunal did not deem it necessary to resort to such legal mechanism, as the invoices and contracts presented as: documents Nos. 2, 5 and 7, which refer to document No. 1, all attached to the PI, are intelligible;

In any event, it is understood that the factual formulation presented has some documentary repetitions that may, possibly, confuse some relational facts set out, but it nonetheless remains evident in the PI that the Applicant requests the annulment of the IUC assessment acts challenged by the TA in the four "Administrative Appeals" (cf., documents attached to the record), on the ground that, at the moment of the tax assessment acts, the Applicant is not the taxpayer of the IUC, hence it is to be considered that "the cause of action" is in no way obscure, as it clearly determines its meaning, and the legal effects that the Applicant seeks to obtain are well understood: "which are the annulments of the acts of the assessments carried out by the TA, on the ground that it does not consider itself the taxpayer of the respective IUC (factual-legal matters that constitute the cause of action and the legal reasons that substantiate the action), it being understood in this context that the sales carried out by the Applicant, through dealers to end consumers, are expressed in sales invoices (document No. 2 and No. 5, attached to the record);

In any event, the facts contained in documents attached with the pleadings (cf., Decision, Court of First Instance, of 14-10-2008, case No. 2377/07.8TBVIS.CI, p. 7), can be used to integrate the description of the "cause of action," when they are expressly or implicitly referred to, which in casu the disputed PI expressly refers to;

According to the understanding of J. Alberto dos Reis (in Decision, Court of First Instance-case No. 2377/07.8TBVIS.CI, p. 7), the document attached with the Petition should be considered an integral part thereof and as such able to supply lacunae from which the Petition suffers (as regards facts, obviously);

It is further to be noted that also J. Alberto dos Reis refers in Commentary on the CPC, II, p. 371 (in Decision, Court of First Instance-case No. 2377/07.8TBVIS.CI, p. 8), that there is a defect of unintelligibility of the cause of action when the plaintiff sets out the facts source of the petition in terms so confused, ambiguous or unintelligible that it is not possible to ascertain with certainty the cause of action;

Now the PI of the Applicant is not obscure as it permits "clearly determine its meaning," it therefore does not suffer from unintelligibility, whereby this Tribunal did not deem it necessary to correct the procedural document (PI).

Faced with the foregoing, the alleged exception of defectiveness of the request for arbitral pronouncement is judged unfounded, as it is not verified that the cause of action suffers from unintelligibility, as it permits with certainty to ascertain "the cause of action," whereby the criteria of subparagraph a) of No. 1 and consequently what is provided in No. 2 of Article 98 of the CPPT, ex vi, Article 29, No. 1, subparagraph c) of the RJAT are considered precluded.

2ª PRELIMINARY ISSUE

Regarding the exception of Untimeliness invoked by the Applicant, in the context of the alleged presentation of the Reply outside the prescribed period, this dilatory exception was legally well defended by the Respondent, considering all prescribed periods including Christmas holidays;

Whereby this Tribunal refers to Article 132 of the CPC, ex vi, Article 29 of the RJAT,

And judges the Reply presented by the Respondent to be timely, considering the said dilatory exception unfounded.

The petition, object of the present proceedings is the declaration of annulment of the acts of assessment of the IUC relating to the motor vehicles better identified in the record;

Condemnation of the TA to reimbursement of the amount of the tax relating to such assessments in the amount of € 30,503.79 (thirty thousand five hundred and three euros and seventy-nine cents);

Condemnation of the TA to payment of indemnificatory interest on the same amount.

The factual matter is fixed as set out in No. 3.1 above, it being now important to determine the applicable Law to the facts underlying the matter, in accordance with the issues to be decided, identified in No. 2.1 above, it being certain that the central issue at hand in the present record regarding which there are absolutely opposed understandings between the Applicant and the TA consists in whether No. 1 of Article 3 of the CIUC relative to the subjective scope of the unique motor vehicle tax enshrines or does not enshrine a rebuttable presumption.

Everything analyzed and considering, on one hand, the positions of the parties in confrontation, mentioned in points 1.3 and 1.4 above and considering on the other hand that the central issue to be decided is whether No. 1 of Article 3 of the CIUC enshrines or does not enshrine a legal presumption of tax scope, it is incumbent in this context to examine and render a decision.

ISSUE OF MISTAKEN INTERPRETATION AND APPLICATION OF THE SUBJECTIVE SCOPE NORM OF THE IUC

Considering it to be uncontroversial in legal doctrine that in the interpretation of tax laws the general principles of interpretation apply fully, which shall be only and naturally limited by the exceptions and particularities dictated by the law itself that is the object of interpretation. This is an understanding that has come to receive acceptance in the General Tax Laws of other countries and that has also come to have a place in Article 11 of our General Tax Law, which is moreover frequently underscored by jurisprudence.

It is consensually accepted that in order to apprehend the meaning of the law, interpretation resorts a priori to reconstructing legislative intent through the words of the law, which means seeking its literal meaning, evaluating it and assessing it in light of other criteria, with the intervention of elements of a logical, rational or teleological nature and of a systematic order:

• Regarding the interpretation of tax law, jurisprudence is to be considered, namely the Decisions of the STA of 05-09-2012, case No. 0314/12 and of 06-02-2013, case 01000/12, d[istribution continues but truncated...]