Summary
Full Decision
ARBITRAL DECISION
A – REPORT
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A..., SA., legal entity no. ..., with registered office at Rua..., no. ..., ...-... Lisbon, filed, on 22-10-2018, a request for constitution of the arbitral tribunal, pursuant to articles 2º and 10º of Decree-Law no. 10/2011, of 20 January (Legal Regime for Arbitration in Tax Matters, hereinafter referred to only as RJAT), in conjunction with article 102º of the Code of Tax Procedure and Process (CPPT), in which the Tax and Customs Authority is requested (hereinafter referred to only as Respondent, or ATA).
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The Claimant seeks, through its request, a declaration of illegality of the acts of assessment of the Single Vehicle Circulation Tax, relating to the years 2013, in the amount of 19.11 €, and 2018, in the amount of 32.30 €, with reference to motor vehicles registered with the registration numbers ... and ..., respectively, as well as of the act of dismissal of the administrative review claim relating to the first, and of the respective recognition of the right to compensatory interest.
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The request for constitution of the arbitral tribunal was accepted by the President of CAAD and automatically notified to the Tax and Customs Authority on 23-10-2018.
3.1. The Claimant did not proceed to appoint an arbitrator, therefore, pursuant to the provisions of subparagraph a) of article 6º, no. 2 and subparagraph b) of article 11º, no. 1 of the RJAT, the President of the Deontological Council appointed the undersigned as arbitrator of the arbitral tribunal, who communicated acceptance of the appointment within the respective time limit.
3.2. On 12-12-2018 the parties were notified of the appointment of the arbitrator, no objection having been raised.
3.3. In compliance with the provisions of subparagraph c) of article 11º, no. 1 of the RJAT, the arbitral tribunal was constituted on 03-01-2019.
3.4. Accordingly, the Arbitral Tribunal is properly constituted to consider and decide the subject matter of the proceedings.
- To support its request for an arbitral pronouncement, the Claimant alleges, in summary, the following:
The Claimant is a credit institution in which, among its areas of activity, automotive sector financing assumes special relevance; a substantial part of its activity is reduced to the conclusion of – among others – financial leasing contracts ("LSG") intended for the acquisition, by companies and individuals, of motor vehicles.
The motor vehicles referred to in the assessments that are the subject of the arbitral request were given under financial leasing arrangements.
Such contracts were invariably in effect in the year (or, more specifically, in the relevant month of the year) in which the tax obligations associated with each vehicle matured.
In the relevant months of the years to which the tax acts under analysis relate, the Claimant cannot be responsible for the payment of the Single Vehicle Circulation Tax, because, given the conclusion of the aforementioned financial leasing contracts, it was the lessor of the vehicles to which the tax assessments refer.
The Single Vehicle Circulation Tax is the tax intended to burden taxpayers for the environmental and traffic cost associated with the use of motor vehicles, in a logic of equivalence and tax equality (see article 1º of CIUC), being strongly marked by an environmental logic, intended to be charged according to the pollution potential to which a particular motor vehicle is capable of producing.
Hence the burden of the tax belongs, in the first place, to the person or entity that has the potential for use of the motor vehicle in question; that is, that has the potential to produce the pollution that it is, precisely, intended to discourage.
In cases of financial leasing or, for example, acquisition with reservation of ownership, the legislature opted to burden with the tax obligation not the owners, but the individuals to whom exclusive enjoyment (potential for use) of the motor vehicles belongs: the financial lessees, purchasers with reservation of ownership or lessees with purchase option who are deemed, in such cases, to be equivalent to the owner of the motor vehicle in question, for the purposes of no. 1 of article 3º of CIUC, i.e., to be considered as passive subjects of the Single Vehicle Circulation Tax.
Hence, with a financial leasing contract in effect at the moment when the Single Vehicle Circulation Tax becomes payable, it is to the lessee – and not to the lessor (even if the latter holds the legal ownership of the vehicle) – that the obligation to pay it belongs, as he is the passive subject of the tax.
Considering that the motor vehicles in question were already in the possession of their respective lessees by the end of the month of registration – without exception, one should necessarily conclude that tax responsibility belonged not to the lessor entity, here Claimant, but to the lessees.
The Claimant therefore concludes that the assessments that are the subject of the arbitral request are illegal, as is the aforementioned dismissal order.
- In turn, the Respondent came forward in response alleging, in summary:
It should be noted that with the wording given to article 3º of CIUC by DL 41/2016, of 1 August (the Respondent always makes reference throughout the submission to DL 41/2006 which is assumed to be a typographical error), and given that the tax acts in question refer, respectively, to the years 2013 and 2018, there are two – and different – applicable legal regimes.
The Claimant's claim is based on a misunderstanding, which results, not only from a biased reading of the letter of the law, but from the adoption of an interpretation that does not account for the systematic element, violating the unity of the regime enshrined in the entire CIUC and, more broadly, in the entire legal-fiscal system, and finally, derives from an interpretation that ignores the ratio of the regime enshrined in the article in question, and likewise, in the entire CIUC.
Even admitting that, from the perspective of the rules of civil law and land registration, the absence of registration does not affect the acquisition of the quality of owner and that registration is not a condition of validity of contracts with real effect, the fact is that the tax legislature in establishing in article 3º, no. 1 who are the passive subjects of the Single Vehicle Circulation Tax established expressly and intentionally that these are the owners (or in the situations provided for in no. 2, the persons enumerated there), being considered as such the persons in whose names they are registered.
As a result of the jurisprudential controversy generated around article 3º of CIUC – and, in particular, that until the legal amendment that occurred in 2016, in light of the letter of that provision, the taxpayer could demonstrate that, even though he appeared in the motor vehicle register as the holder of the right of ownership over the vehicle in question, he was not effectively the holder of that right on the date of assessment – the tax legislature saw fit to amend that norm, definitively clarifying that taxation falls on the holder of the right of ownership of the motor vehicle, just as it appears in the motor vehicle register.
Therefore, since 2016-08-02 article 3º, no. 1 of CIUC no longer enshrines any legal presumption as jurisprudence had been understanding, that is, by means of the legislative amendment the incidence falls on the person who holds the registration of motor vehicle ownership or, if preferred, the registered owner, that is, the person whose name appears in the motor vehicle register.
As, with regard to the vehicle with registration number ..., the Claimant did not register the alleged financial leasing contract underlying it, nor complied with the obligation to communicate provided for in article 19º of CIUC, there is no registered financial leasing at the date of the tax event that, for the purposes of Single Vehicle Circulation Tax, could equate the lessee to an owner.
And thus it is since, with the aforementioned legislative amendment, the motor vehicle register became the element defining the rules of incidence, with any possibility of elision being excluded.
Even if it were concluded that there is a financial leasing contract, it would still be incumbent on the Claimant to demonstrate having
Therefore, today there is no longer any rebuttable presumption of the provision of that article.
The interpretation defended by the Claimant of article 3º, no. 1 of CIUC, in its current wording, would be unconstitutional, by violation of the principles of trust, legal certainty, efficiency of the tax system and proportionality.
The Respondent concludes that the tax acts in dispute are legal, because they conform to the legal regime in force on the date of the tax events, therefore, no error attributable to the services occurred, in this case.
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By order of 19-03-2019 the holding of the meeting referred to in article 18º of the RJAT was dispensed with.
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Having been granted a time limit for submission of written arguments, only the Claimant submitted them, in which, in addition to sustaining what was set out in the initial request, it defends that article 33º, no. 1 and 2 of CIUC contains, despite the wording introduced by DL 41/2016, a rebuttable presumption.
PRELIMINARY DETERMINATION
The Arbitral Tribunal was properly constituted and is materially competent.
The parties enjoy legal personality and capacity and are entitled (articles 4º and 10º, no. 2, of the RJAT and article 1º of Ordinance no. 112-A/2011, of 22 March).
The joinder of claims is legal (article 3º, no. 1 of the RJAT).
B. DECISION
- FACTUAL MATTERS
1.1. PROVEN FACTS
The following facts are considered proven:
a) The Claimant is a credit institution, assuming special relevance, in its business activity, the financing of the automotive sector, namely through the conclusion of financial leasing contracts and long-term rental contracts.
b) The Claimant was notified of the assessment of Single Vehicle Circulation Tax for the year 2013, with reference to the motor vehicle registered with registration number ..., with regard to which it concluded a bare-use lease contract beginning on 24-05-2007 and ending on 15-06-2013.
c) The Claimant was notified of the assessment of Single Vehicle Circulation Tax for the year 2018, with reference to the motor vehicle registered with registration number ..., with regard to which it concluded a financial leasing contract beginning on 28-08-2017 and ending on 25-08-2024.
c) The Claimant submitted an administrative review claim with respect to the Single Vehicle Circulation Tax relating to registration number ... and, following its dismissal, an administrative appeal to the Directorate of Services for IMT, IS, IUC and CE, which was the subject of a dismissal order by the Director of Central Services on 24-07-2018.
d) The Claimant proceeded to pay the tax to which the present proceedings relate.
1.2. The facts were considered proven based on documents attached to the proceedings by the Claimant, whose authenticity was not disputed by the Respondent.
1.3. UNPROVEN FACTS
There are no facts considered unproven with relevance to the consideration of the request.
1.4. THE LAW
The first substantive issue to be considered in the present proceedings concerns, on the one hand, the interpretation to be given to no. 1 of article 3º of CIUC in order to determine whether the rule of subjective incidence contained therein establishes a rebuttable legal presumption – and, as such, capable of being rebutted or whether, on the contrary, it contains an express and intentional definition of personal incidence, in the sense that it is necessarily a passive subject of the tax he in whose name the motor vehicle is registered as owner. And, on the other hand, whether such understanding was altered with the new wording given to that provision by DL 41/2016, of 1 August.
Before that legislative amendment, no. 1 of article 3º of CIUC provided that "passive subjects of the tax are the owners of vehicles, being considered as such the natural and legal persons, under public or private law, in whose names they are registered".
Based on the wording of this provision, the Respondent - AT - contends that the basis of personal incidence which it defines did not entail any legal presumption, since that provision transmitted in an express and intentional manner the thought of the tax legislature, in the sense of considering, in an irrefutable manner, as passive subjects of the Single Vehicle Circulation Tax the persons in whose names the motor vehicles were registered.
It adduces in support of its thesis hermeneutical reasons for the interpretation of the law, appealing not only to its literality, but to the systematic and teleological elements.
A fully meaningful invocation, insofar as, according to the provisions of article 11º of the General Tax Law, "in determining the meaning of tax norms and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed". For, as Diogo Leite Campos, Benjamim Rodrigues, J. Lopes de Sousa refer – General Tax Law 4th ed., in annotation to such article, "… without departing from the letter of the law, which must be the main reference and starting point of the interpreter, its automatic application is excluded, assuming that in laws there is an operating rationality that the interpreter must strive to reconstruct".
It is, therefore, within this framework of interpretation of tax law, in this case article 3º, no. 1 of CIUC, that we must find the answer to the antagonism of positions between the Claimant and the AT.
For the Respondent, the registration of ownership of the motor vehicle is decisive for determining the passive subject of the Single Vehicle Circulation Tax, in such a way that he in whose name it is registered will be considered as such, in an irreversible manner.
The registration of vehicle ownership is, in view of the provisions of article 5º, no. 1, a) and no. 2 of DL 54/75, of 12 February, mandatory, so that any right of ownership affecting the vehicle is subject to registration, with which it is intended to ensure the security of legal commerce, as well as the publicity of the legal situation thereof.
Such registration enjoys, pursuant to the provisions of article 7º of the Land Registration Code (applicable to motor vehicle registration by virtue of article 29º of the aforementioned DL 54/75), the "… presumption that the right exists and belongs to the registered holder, in the precise terms in which the registration defines it".
We have, therefore, that the registration entry of the vehicle's ownership is, also, a presumption that the right of ownership over it exists in the terms contained in the registration.
That is, the registration of motor vehicle ownership does not constitute any condition of validity of the contracts subject to it, similar to what occurs with land registration (whose regime, as we have already pointed out, is extended to motor vehicle registration); on the contrary, registration has a merely declarative function.
However, article 5º, no. 1 of the Land Registration Code imposes that "facts subject to registration only produce effect against third parties after the date of their registration". From which it appears to follow that that would be enough for the AT to invoke the absence of registration to immediately apply article 3º, no. 1 of CIUC, requiring payment of the tax from he in whose name the vehicle is registered, as the passive subject of the tax.
However, no. 4 of article 5º of the Land Registration Code restricts such understanding, by determining that "third parties, for purposes of registration, are those who have acquired from a common author incompatible rights". From which it follows that, by that route, the AT would never be enabled to invoke the lack of registration, insofar as it does not meet the concept of third party.
Having stated this in general terms, it must be determined whether, despite what has just been said, no. 1 of article 3º of CIUC contained or not, in its original version, a legal presumption.
Everything comes down, in sum, to determining whether the expression "considered as", used there, had the nature of a legal presumption.
Let it be said at once that it seems to us offensive to the unity of the legal-legal system – and even, with the appropriate adjustments, in opposition to no. 2 and 3 of article 11º of the General Tax Law - that an individual should be considered as not the owner of a property for civil purposes and must necessarily be so for tax purposes.
To which is added the fact that the AT must guide its activity by observance of the principles of legality, inquisitorial and discovery of material truth, inherent in the constitutional dictum of contributory capacity.
In any case, it seems evident that, both from the systematic and teleological point of view, the expression "considered as", adopted in no. 1 of article 3º of CIUC unequivocally contemplated a true presumption, to which the apparent literality of the expression is not opposed, nor the tax system.
On this point, Diogo Leite Campos, Benjamim Rodrigues, J. Lopes de Sousa refer – General Tax Law 4th ed., in annotation to article 73º, p. 651: "presumptions in tax incidence matters may be explicit, revealed by the use of the expression "it is presumed" or similar, as occurs, for example, in no. 1 to 5 of article 6º, in subparagraph a) of no. 3 of article 10º, in article 19º and 40º, no. 1, of the Corporate Income Tax Code. However, presumptions may also be implicit in incidence norms, in particular of objective incidence, when certain values of movable or immovable property are considered to constitute taxable matter, in situations where it is not unfeasible to ascertain the real value …", then listing a set of examples.
We understand that it is precisely this case that article 3º, no. 1 of CIUC contemplates: an implicit presumption. A presumption, moreover, that has always existed in the field of the motor vehicle circulation tax, despite previously being defined explicitly.
It is, therefore, for us uncontroversial that article 3º, no. 1 of CIUC enshrined a presumption of subjective incidence. It was, moreover, settled jurisprudential understanding in arbitral matters in that sense (see, by way of merely illustrative examples, the decisions rendered in CAAD proceedings nos. 14/2013, 26/2013, 27/2013, 73/2013, 170/2013 and 154/2014, 539/2016-T, 580/2016-T, 623/2016-T, 109/2017-T, 145/2017-T or 185/2017-T (omitting here the reference to decisions rendered by the undersigned in the same sense), as well as of the state courts (See Court of Appeal ruling of 19-03-2015 – Proc. 08300/14).
However, no. 2 of article 350º of the Civil Code provides that legal presumptions may be rebutted by contrary proof, except in cases expressly provided for by law.
And, regarding the rebuttal of presumptions, we hold to be correct the doctrine to which the Supreme Court of Justice resorted in the foundation of Assento no. 1/91 of 03-04-1991 (Official Gazette no. 114, of 18 May) - to classify as juris tantum a presumption established in a labor law diploma - defended by Vaz Serra [Proofs (material probative law), BMJ 110-112, p. 35], as well as by Mário de Brito (Annotated Civil Code, p. 466) and Mota Pinto (General Theory of Civil Law, p. 429): "… juris tantum presumptions constitute the rule, while jure et de jure presumptions are the exception. In doubt, the legal presumption is juris tantum, because it should not be considered, save reference in the law, that it was intended to prevent the production of contrary proof, imposing a formal truth to the detriment of the real proven".
In turn, within the scope of tax law, article 73º of the General Tax Law provides that "presumptions enshrined in rules of tax incidence always admit contrary proof". Which means that all presumptions in tax incidence matters, such as the one that no. 1 of article 3º of CIUC enshrines, are juris tantum and, as such, rebuttable.
Let it be said, moreover, that the Respondent also, despite the extensive considerations made in its submission, leans toward accepting the same understanding.
But, if this was so before the aforementioned legislative amendment, it must be determined whether the legislature intended a different meaning and scope of article 3º of CIUC.
Following the entry into force of the aforementioned DL 41/2016 of 1 August, no. 1 of article 3º of CIUC now has the following wording:
- "Passive subjects of the tax are the natural or legal persons, under public or private law, in whose names the ownership of vehicles is registered".
In light of this new wording, the Respondent argues that, since 02-08-2016 (date of entry into force of DL 41/2016), "article 3º, no. 1 of CIUC no longer enshrines any legal presumption" and that, by means of the legislative amendment, "the option taken by the legislature was very clear: the incidence falls on the person who holds the registration of motor vehicle ownership or, if preferred, the owner of law or the registered owner".
On the contrary, the Claimant argues, in particular in the arguments it presented, that such legislative amendment brought nothing new beyond a clarification, because, "as a general rule, the ownership of motor vehicles and the registration thereof coincide … and not coinciding the owner of law or the registered owner, he must prove otherwise, with all legal consequences that follow therefrom in the subjective delimitation of the tax". Hence no. 1 and 2 of article 3º of CIUC continue to contemplate a rebuttable presumption of vehicle ownership.
Let us see. We are not unaware of the arbitral decision (Proc. 333/2018-T) that the Claimant invokes to defend its thesis and in which it is concluded that the new wording of that provision alters nothing regarding the sense that it contains a mere rebuttable presumption.
However, we cannot agree with it.
And such conclusion does not conflict with the understanding above endorsed that the registration of vehicle ownership has an effect that is merely declarative and not constitutive of any right.
For the new wording of no. 1 of article 3º of CIUC does not refer, as a rule of subjective incidence, to the concept of ownership - as it did until then by saying that passive subjects of the tax are the owners of vehicles, being considered as such the natural and legal persons, under public or private law, in whose names they are registered – but rather to a factual delimitation: the mere existence of the registration, a circumstance that we understand now became the element defining the subjective incidence of the tax.
And let it be said that precisely because the "emphasis of the tax determining the incidence of the tax has now been shifted to the registration" – "passive subjects are the persons in whose names the ownership is registered" - and not to the institute of ownership itself, as it then was – "passive subjects of the tax are the owners of vehicles" -, the incidence of the tax in its current form is different from what we had before the legislative amendment. We say more. As until then the element delimiting incidence was ownership and as the registration of that same ownership has no constitutive effects but merely declarative ones, obviously that upon proof of non-ownership, the presumption contemplated in article 3º of CIUC would be excluded, which, rightly or wrongly, currently does not exist.
The interpreter must apply the law starting from its literal element without neglecting the others such as historical context, teleological purpose or the unity of the system (article 9º, no. 1 of the Civil Code), but must assume that the legislature knew how to express itself correctly (no. 2).
Now, the very preamble of DL 41/2016 justifies the amendment introduced with the "need to overcome interpretative difficulties that arose with previous wordings of this Code, it is important to clarify who is the passive subject of the tax".
Moreover, not having the legislature intended that it be otherwise, it is not evident what need for amendment or clarification article 3º of CIUC would lack.
It is true that the Single Vehicle Circulation Tax has as its premise the environmental and traffic cost of the actual use of the motor vehicle, intending to burden taxpayers to the extent of the environmental and traffic cost they cause, in implementation of a general rule of tax equality. Which it does by adopting the principles, enshrined in our community and even constitutional order, of polluter-pays and equivalence. Given such concerns of an environmental and energy nature, it would be intended that the costs resulting from environmental damage caused by the use of motor vehicles be borne by the real owners (and not by the presumed owners).
However – given the recognized difficulty in taxing effective owners, resulting from non-compliance with registration obligations - in a balance and weighing of interests the tax legislature will have intended to make the existence of registration prevail, over that of effective ownership, as the element delimiting the incidence of the tax.
We are, therefore, forced to conclude that article 3º of CIUC, in the wording given by DL 41/2016 does not contemplate any presumption, whose rebuttal would remove it from the incidence of the tax.
Wherefore, we find no fault with the Single Vehicle Circulation Tax assessment contested in the proceedings relating to the vehicle with registration number ..., with reference to the year 2018.
As regards the assessment on registration number ... the Respondent argues that, the Claimant not having complied with the communication provided for in article 19º of CIUC, the presumption of ownership could never have been considered as excluded and therefore it will be ineluctably subject to tax.
We summarily reject such thesis, adding that the delimitation of incidence of a tax could never result from the non-compliance with an ancillary tax obligation, as such understanding proposes.
On the other hand, from the evidentiary elements brought to the proceedings by the Claimant, in particular from a written contract – which was not challenged by the Respondent – it results, unequivocally, that the Claimant was the lessor, through a bare-use lease contract, on the date of payment of the assessment relating to 2013.
Proved such circumstance and given that the AT has no standing to oppose the absence of registration, as it is not for such purposes deemed a third party, the annulment of the Single Vehicle Circulation Tax assessment that is the subject of this arbitral request is required.
COMPENSATORY INTEREST
In addition to the restitution of the tax wrongfully paid, the Claimant seeks to have declared the right to payment of compensatory interest.
Such right is enshrined in article 43º of the General Tax Law which has as its premise that it be determined, in administrative review or legal action - or in tax arbitration – that there was error attributable to the services from which resulted payment of the debt in an amount greater than that legally due.
In the case at hand, it is manifest that error attributable to the AT in fact occurred in the assessment in question, which it practiced on its own initiative without legal support.
Therefore, the Claimant has the right to the requested payment of compensatory interest with respect to that tax.
- DECISION
In view of the foregoing, it is decided:
a) To declare partially grounded, due to violation of law, the request for annulment of the tax act corresponding to the assessment of Single Vehicle Circulation Tax for the year 2013, with reference to registration number ..., as well as of the dismissal order rendered in administrative review proceedings;
b) To declare inadmissible the rest of the claims, thereby absolving the Tax and Customs Authority;
c) To condemn the parties to the costs of the proceedings in proportion to their respective failure, with 192.00 € charged to the Claimant and 114.00 € charged to the Respondent.
VALUE OF THE PROCEEDINGS: In accordance with the provisions of article 306º, no. 2 of the Code of Civil Procedure, article 97º-A, no. 1, a) of the Code of Tax Procedure and Process and article 3º, no. 2 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the proceedings is fixed at 51.41 € (fifty-one euros and forty-one cents).
COSTS: Pursuant to the provisions of article 22º, no. 4, of the Regulation of Costs in Tax Arbitration Proceedings, the amount of costs is fixed at € 306.00 € (three hundred and six euros), in accordance with Table I attached to the Regulation of Costs in Tax Arbitration Proceedings.
Let notice be given.
Lisbon, 3 June 2019
The Arbitrator
António Alberto Franco
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