Summary
Full Decision
ARBITRAL DECISION
I. Report
1. On 24 October 2018, the company A... S.A. filed a request for constitution of a sole arbitral tribunal, pursuant to the combined provisions of articles 2 and 10 of Decree-Law No. 10/2011, of 20 January (Legal Regime of Arbitration in Tax Matters, hereinafter referred to only as RJAT), with a view to declaring the illegality and consequent annulment of the decision to reject the request for revision of the tax act and, consequently, of the IUC assessment declarations relating to the year 2015 and the respective reimbursement of amounts paid.
2. Pursuant to Article 6(1) of the RJAT, the Deontological Council of the Arbitration Centre designated the arbitrator who signs this decision, notifying the parties.
3. The tribunal is duly constituted to examine and decide on the subject matter of the proceedings.
4. The allegations supporting the Claimant's request for arbitral pronouncement are, in summary, as follows:
4.1. In accordance with Article 10(1)(a) of the RJAT, a request for constitution of an arbitral tribunal may be submitted within 90 days, calculated from the facts provided for in Articles 1 and 2 of Article 102 of the Code of Tax Procedure and Process.
4.2. The Claimant was notified on 26.07.2018 of the AT decision regarding the request for revision of the tax act submitted to it on 18.11.2016.
4.3. Therefore, the Claimant may request the constitution of an arbitral tribunal until 24.10.2018, so the request now submitted is fully timely.
4.4 The Claimant is a commercial company engaged in the activity of motor vehicle financing leasing.
4.5 In the course of its activity, it holds, for short periods of time, various motor vehicles registered in its name.
4.6. At the end of the lease contract, lessees have the possibility to acquire the leased vehicle, which, in the case of the Claimant, happens frequently.
4.7. The AT assessed IUC in the name of the Claimant for the year 2015 on various motor vehicles.
4.8. The Claimant contested such assessments through a request for revision of the tax act, timely submitted pursuant to Article 78 of the General Tax Law.
4.9. The request for revision of the tax act relating to the IUC assessment for the year 2015 of the vehicles identified by the following registration numbers was rejected:
1) ... 21) ... 41) ...
2) ... 22) ... 42) ...
3) ... 23) ... 43) ...
4) ... 24) ... 44) ...
5) ... 25) ... 45) ...
6) ... 26) ... 46) ...
7) ... 27) ... 47) ...
8) ... 28) ... 48) ...
9) ... 29) ... 49) ...
10) ... 30) ... 50) ...
11) ... 31) ... 51) ...
12) ... 32) ... 52) ...
13) ... 33) ...
14) ... 34) ...
15) ... 35) ...
16) ... 36) ...
17) ... 37) ...
18) ... 38) ...
19) ... 39) ...
20) ... 40) ...
4.10 These vehicles, at the time of the IUC assessment in question, were no longer the property of the Claimant, as they had already been sold at the end of their respective financing lease contracts.
4.11. Although Article 78 of the General Tax Law, concerning official revision of the tax act on the initiative of the taxpayer, refers only to that which takes place within the period of "administrative objection," Article 78(7) of the said article makes reference to "request of the taxpayer" for carrying out official revision, which reveals that this, notwithstanding the impropriety of the designation as "official," may take place on the taxpayer's own initiative.
4.12. It thus follows as unequivocal that it is admitted, alongside the so-called revision of the tax act on the initiative of the taxpayer (within the administrative objection period), that the same may be done, also on the taxpayer's own initiative, within the four-year period provided for in Article 78 of the General Tax Law.
4.13. Thus, it is necessary to conclude that the fact that the period for gracious objection to the assessment in question has elapsed does not prevent the taxpayer from requesting official revision and from contesting the decision rejecting it.
4.14. In the present case, there is an error attributable to the services consisting of a legal error, in that there is an incorrect application of the IUC Code rules, in particular, of Article 3 of this legal instrument.
4.15. The Claimant has always made efforts to alert the AT to the illegality of the amount of the tax that was being assessed to it.
4.16. The Claimant attached to the request for revision of the tax act it submitted various debit notes proving that it was a creditor of amounts owed by the subjects with which it had entered into financing lease contracts.
4.17. It is easily verified, therefore, that the Claimant fully complied with the principle of cooperation between the AT and private parties, legally enshrined in Article 59(1) of the General Tax Law, with the AT failing to comply with the provision of Article 60(7) of the General Tax Law.
4.18. The Claimant cannot, therefore, accept that, given that the AT is constitutionally bound to the pursuit of the public interest (cf. Article 266(2) of the Constitutional Law), it does not conduct a careful and thorough investigation before assessing taxes whose illegality appears manifest, on pain of the principles by which it must guide its actions being irremediably compromised, and which are exemplarily listed in Article 55 of the General Tax Law.
4.19. With the execution of the purchase and sale contracts between the Claimant and the acquirers of the previously leased vehicles, the ownership thereof was transferred to the latter, so the AT can no longer rely on the presumption to consider the Claimant as the passive subject of IUC, pursuant to Article 3 of the IUC Code.
4.20. It follows from Article 8-B(1) of the Real Property Registration Code, applicable by virtue of Article 29 of the Motor Vehicle Registration Code, that it is the active subject of the fact subject to registration on whom the registration obligation falls.
4.21. That is, it is the buyer/acquirer/lessor who must promote the registration.
4.22. The power conferred on the seller pursuant to Article 25 of Decree-Law No. 55/75 does nothing to eliminate this obligation of the buyer, if the seller chooses not to exercise it.
4.23. The function of registration, pursuant to Article 1 of the Real Property Registration Code, is to give publicity to the legal situation of vehicles, with registration not having constitutive effect, but functioning only as a mere rebuttable presumption of the existence of the right, as well as of its respective ownership, all in accordance with what is recorded therein.
4.24. The presumption that the registered right belongs to the person in whose name it is registered may, thus, be rebutted by proof to the contrary.
4.25. The fact that the right of ownership of motor vehicles is subject to registration, pursuant to Article 5 of Decree-Law No. 54/75, of 12 February, as amended, does not alter in any way the real nature quod effectum of the purchase and sale contract.
4.26. Article 5(1) of the Real Property Registration Code establishes that facts subject to registration produce effects against third parties only after the date of the respective registration.
4.27. However, in light of Article 5(4) of the same code, only those "who have acquired from a common author incompatible rights" are considered third parties.
4.28. Now, with the AT not falling within the concept of third party, it cannot invoke the lack of registration to disregard the purchase and sale contracts of motor vehicles and the consequent transfer of ownership either to Customers or to ....
4.29. The motor vehicle purchase and sale contract is subject to the general principle of freedom of form, pursuant to and under the provisions of Article 219 of the Civil Code.
4.30. Therefore, it is possible to execute such a contract in a merely verbal manner.
4.31. The debit notes attached by the Claimant constitute unequivocal proof of the execution of the purchase and sale contracts between it and the subsequent owners of the vehicles in question.
4.32. Such debit notes are relevant not only as communication to the recipient that they owe them a certain amount, but rather prove the existence of commercial relationships that had as their object a given vehicle, specifying the registration number in question, the dates of issuance and maturity and indicating in their description "residual value" or "indemnity relating to contract closure."
4.33. Therefore, there is no doubt that the ownership of the vehicles was transferred by mere effect of the execution of the respective purchase and sale contracts, with these transfers of ownership being not only proven but also the payment of the respective prices.
5. For its part, the Respondent Tax Authority and Customs Authority presented its response, in which it defended itself, in summary, as follows:
5.1. The possibility of revision of the act is ruled out, pursuant to Articles 78(4) and (6) of the General Tax Law.
5.2. Given the first part of Article 78(1) of the General Tax Law, combined with Article 70(1) and Article 102(1)(a), both of the Code of Tax Procedure and Process (CPPT), the revision request submitted by the Claimant is out of time, given the date of the assessment – 2015 – and the date of submission of the request – 2016-11-08, because the 120-day period from the end of the IUC payment period has long since elapsed.
5.3. From the analysis of the revision request submitted, verifying that the same was submitted on 2016-11-08, that is, the 120-day period for submission thereof has long since elapsed, pursuant to Article 78(1) of the General Tax Law and Article 70 and (a) of Article 102(1) of the CPPT, so the said official revision request was considered out of time.
5.4. Having the revision request been submitted when the legal period for submission thereof had already been exceeded, then the period applicable for the objection now presented in this arbitral tribunal is the 90 days after the date of the end of the voluntary payment period of the IUC.
5.5. In the situation at issue, the request for constitution of an arbitral tribunal submitted by the Claimant was filed on 2018-10-24, so it is out of time.
5.6. Being out of time constitutes a peremptory exception, pursuant to Article 576 of the Code of Civil Procedure (applicable subsidiarily by Article 29 of the RJAT), which results in the dismissal of the AT's objection, as it prevents the legal effect of the facts argued by the Claimant.
5.7. The Claimant alleges that it was no longer the owner of the motor vehicles at issue at the moment when the obligation to assess the respective IUC was due, despite the motor vehicle registry indicating the Claimant as the owner thereof, because it sold them directly to customers.
5.8. With the ownership of motor vehicles being subject to mandatory registration, pursuant to Decree-Law No. 54/75, of 12 February, the obligation to proceed with registration falls on the buyer as the active subject of the fact subject to registration (Article 8-B(1) of the Real Property Registration Code, applicable to Motor Vehicle Registration pursuant to Article 29 of Decree-Law No. 54/75 of 12 February).
5.9. However, there is a special regime that allows sellers to promote registration, provided that, by virtue of their commercial activity, they proceed regularly with the transfer of ownership of motor vehicles or proceed with the purchase and sale of vehicles for resale (Article 25 of Decree-Law No. 55/75 of 12 February, as amended by Decree-Law No. 20/2008, of 31 January).
5.10. With the entry into force of Law No. 22-A/2007 of 29 June, which conducted a comprehensive reform of motor vehicle taxation and approved the CISV and CIUC, protocols were entered into for the purpose of exchanging information necessary for the assessment and auditing of such taxes, between the AT, the IRN and the IMT.
5.11. Accordingly, the IUC is assessed in accordance with information duly transmitted by the aforementioned entities, the AT having no competence at the level of registration.
5.12. Thus, at the time of assessment of the IUC at issue, the vehicles were registered in the name of the Claimant, so the assessments objected to were issued in accordance with the rules of subjective and objective incidence of the fact generating the tax.
5.13. The tax legislator, in establishing in Article 3(1) of the IUC Code who the passive subjects of the IUC are, expressly and intentionally established that these are the owners (or in the situations provided for in Article 2, the persons therein mentioned), being considered as such the persons in whose name the same are registered.
5.14. Note that the legislator did not use the expression "are presumed to be."
5.15. If it were understood that by using the expression "are considered" the tax legislator would have enshrined a presumption, practically all rules of incidence under Corporate Income Tax would be set aside precisely because accounting prescribes solutions different from those of the Corporate Income Tax Code, and it is exactly the legislator's purpose to set aside such accounting rules.
5.16. It is imperative to conclude that, in the present case of arbitral pronouncement, the legislator expressly and intentionally established that the persons in whose name the same [the vehicles] are registered are to be considered as such [as owners or in the situations provided for in Article 2, the persons therein mentioned], because this is the interpretation that preserves the unity of the legal-tax system.
5.17. To understand that the legislator enshrined a presumption here would unequivocally be to carry out an interpretation against the law.
5.18. Rather, it is a clear option of legislative policy adopted by the legislator, whose intention, within its freedom of legislative configuration, was that, for the purposes of IUC, those who appear as such in the motor vehicle registry be considered owners.
5.19. This is, moreover, the understanding already adopted by the jurisprudence of our courts.
5.20. The systematic element of interpretation of the law also demonstrates that the solution advocated by the Claimant is intolerable, finding the understanding supported by it no support whatsoever in the law.
5.21. This results not only from the aforementioned Article 3(1) of the IUC Code, but also from other provisions enshrined in the said Code.
5.22. This position is also evident in the circumstance that the motor vehicle registry to which the Respondent has or may have access and the certificate in which the facts subject to registration must appear, the exhibition of which may be required by the same Respondent from the interested party, contain all the elements intended for the determination of the passive subject, without need for access to private contracts that confer such rights, listed by the IUC Code as constitutive of the legal situation of passive subject of this Tax.
5.23. In the absence of such registration, naturally, the owner will be notified to fulfill the corresponding tax obligation, because the Respondent, taking into account the current configuration of the legal system, will not have to proceed with the assessment of the tax based on elements that do not appear in public records and documents and, as such, authentic.
5.24. In these terms, the failure to update the registry, pursuant to Article 42 of the Motor Vehicle Registry Regulation, will be attributable in the legal sphere of the passive subject of the IUC and not in that of the Portuguese State, as the active subject of this Tax.
5.25. Even assuming that, from the point of view of the rules of civil law and real property 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 efficacy, pursuant to what is established in the IUC Code (which in the case at issue constitutes special law, which, in general terms of law, derogates from the general rule), the tax legislator intentionally and expressly wanted to be considered as owners, lessees, acquirers with reservation of ownership or holders of the right to purchase option in long-term leasing, the persons in whose name the vehicles are registered.
5.26. It is important to further demonstrate that in light of a teleological interpretation of the regime enshrined throughout the IUC Code, the interpretation advocated by the Claimant to the effect that the passive subject of the tax is the actual owner, regardless of not appearing in the motor vehicle registry the registration of that quality, is manifestly wrong.
5.27. And it is a wrong interpretation insofar as it is the very ratio of the regime enshrined in the IUC Code that constitutes clear proof that what the tax legislator intended was to create a tax based on the taxation of the vehicle owner as it appears in the motor vehicle registry.
5.28. The IUC Code proceeded to reform the regime of taxation of vehicles in Portugal, substantially altering the motor vehicle taxation regime, with the passive subjects of the tax becoming the owners appearing in the property registry, regardless of the circulation of vehicles on the public road.
5.29. That is, the IUC became due by the persons who appear in the registry as owners of the vehicles.
5.30. The tax acts in dispute do not suffer from any defect of violation of law, insofar as in light of Article 3(1) and (2) of the IUC Code and Article 6 of the same code, it was the Claimant, in the capacity of owner, who was the passive subject of the IUC.
5.31. By virtue of Article 3(1) and (2) of the IUC Code and Article 6 of the same Code, it was the Claimant, in the capacity of owner appearing in the Motor Vehicle Registry Office, who was the passive subject of the IUC.
5.32. To prove transfer of ownership of the vehicles, the Claimant attaches second copies of invoices and second copies of debit notes, which are objected to.
5.33. The Claimant merely attached the invoices and debit notes per se, intending to prove with the same the transfer of ownership of the vehicles.
5.34. In none of these cases did the Claimant attach a receipt or even a check as proof of payment of the price.
5.35. The Claimant, by not attaching other documents, does not prove the payment of the amount shown in those it attached, or, on the contrary, a subsequent dispute due to lack of such payment.
5.36. Now, being the second copies of invoices and debit notes attached, unilateral and internal documents, they are not suitable and sufficient to prove the transfer of ownership, nor do they prove the execution of a synallagmatic contract such as purchase and sale.
6. No response to the exception was submitted by the Claimant.
7. On 18 March 2019, an arbitral order was issued, dispensing with the meeting provided for in Article 18 of the RJAT, unless the parties requested the holding of that meeting.
8. The parties did not request the holding of the meeting provided for in Article 18 of the RJAT.
II – Facts Established
1. The Claimant is a commercial company engaged in the activity of motor vehicle financing leasing.
2. In the course of its activity, it holds, for short periods of time, various motor vehicles registered in its name.
3. At the end of the lease contract, lessees have the possibility to acquire the leased vehicle, which, in the case of the Claimant, happens frequently.
5. With the vehicles registered in the name of the Claimant, the Tax Authority and Customs Authority assessed the IUC to it for the periods of 2015 on various motor vehicles, issuing the corresponding collection notices with payment deadline situated in various months of that year.
6. The Claimant contested such assessments through a request for revision of the tax act, which was submitted on 18.11.2016, made under Article 78(1) of the General Tax Law, alleging that at the date of the corresponding tax fact, the vehicles in question were no longer its property because they had been transferred to the respective lessees, pursuant to the terms of the respective financing lease contracts.
7. To prove the allegation, the Claimant attached to the revision requests copies of debit notes issued to the lessee acquirers.
8. The request for revision of the tax act relating to IUC assessments for the year 2015 of the vehicles identified by the following registration numbers was rejected:
1) … 21) … 41) …
2) … 22) … 42) …
3) … 23) … 43) …
4) … 24) … 44) …
5) ... 25) ... 45) ...
6) ... 26) ... 46) ...
7) ... 27) ... 47) ...
8) … 28) … 48) …
9) … 29) … 49) …
10) ... 30) ... 50) ...
11) ... 31) ... 51) ...
12) ... 32) ... 52) ...
13) ... 33) ...
14) ... 34) ...
15) ... 35) ...
16) ... 36) ...
17) ... 37) ...
18) ... 38) ...
19) ... 39) ...
20) ... 40) ...
9. The Claimant was notified on 26.07.2018 of the AT decision regarding the request for revision of the tax act, having submitted a request for constitution of the Arbitral Tribunal on 24.10.2018.
III – Facts Not Established
No facts not established of interest for the decision of the case were determined.
IV – On the Law
Before addressing the merits, it is necessary to ascertain whether the request for official revision is out of time as set out by the AT.
In its request for official revision, the Claimant invoked Article 78 of the General Tax Law, with the AT considering that this could only be framed in Article 78(1) thereof, which provides that "revision of tax acts by the entity that performed them may be effected on the initiative of the passive subject, within the administrative objection period and on the grounds of any illegality, or, on the initiative of the tax administration, within four years after the assessment or at any time if the tax has not yet been paid, on the grounds of an error attributable to the services."
The AT thus concludes that the request for official revision is out of time, since the assessments objected to had voluntary payment periods in various months of the year 2015 and the requests for official revision were delivered on 28/11/2016, therefore already after the administrative objection period provided for in the first part of Article 78(1) of the General Tax Law has elapsed. It is important to know whether, nevertheless, the requests could be framed in the period provided for in the second part of that same article.
Now, from the information and order issued by the AT it can be inferred that the understanding contained therein, and which grounds the decisions to reject the requests, goes to the effect that, in the cases to which the requests for official revision relate, the error, of fact or of law, attributable to the services, which would justify the four-year period to which that provision refers, is not verified.
The non-existence of an error attributable to the services, in accordance with the information on which the decisions rejecting the requests are based, is founded on the circumstance that, as follows from the applicable law, the assessments objected to were made by the AT in the face of elements made available by the Motor Vehicle Registry Office and by the IMTT.
The Claimant has a different understanding, arguing that an error attributable to the services consisting of a legal error is verified, in that there is an incorrect application of the IUC Code rules, in particular, of Article 3 of this legal instrument.
This understanding is supported by the circumstance that, as the Claimant alleges, it has always made efforts to alert the AT to the illegality of the amount of the tax that was being assessed to it, namely because it attached to the requests for revision of the tax act it submitted various debit notes proving that it was a creditor of amounts owed by the subjects with which it had entered into financing lease contracts.
It is manifest that no error could be attributed to the AT prior to the request for official revision, so the same cannot be invoked to extend the period of objection to the assessments, even if the same could not be correct.
In truth, pursuant to Article 3 of the IUC Code, the AT was obliged to assess the tax in relation to the owner appearing in the motor vehicle registry, so, if the claimant wanted to rebut that presumption, it would have had to submit a request for revision or judicial objection within the legally prescribed period. Thus, by virtue of the existence of the presumption resulting from that article, it cannot be seen that, with regard to the assessments to which the requests for official revision relate and, consequently, the present request for arbitral pronouncement, the existence of an error attributable to the services of the tax administration is verified.
In effect, those assessments were made on the basis of elements available in the databases of the Motor Vehicle Registry Office and the IMTT. Regarding the determination of the passive subject of the tax obligation, it is thus evident that the AT made the assessments in strict observance of the applicable legal rule: the vehicles to which the tax relates were registered in the name of the Claimant, so, according to Article 3(1) of the IUC Code, it was this entity that was the passive subject of the corresponding tax obligation, to whom the assessment of the tax had to be made.
Bound by the principle of legality, the AT could not have acted in any way other than that in which it did, and could not fail to make the assessments and issue the competent collection notices in the name of the owner of the vehicles as per their respective registry.
Given the rebuttable nature of the presumption in Article 3 of the IUC Code, in general terms and, in particular, pursuant to Article 73 of the General Tax Law, the Claimant could, within the legal period, react against it, either by resorting to the contentious procedure provided for in Article 64 of the CPPT, or through gracious objection or judicial objection to the assessment act based thereon.
But, as follows from the elements of the present proceedings, the Claimant did not use any of the legal means at its disposal to rebut the presumption of ownership of the vehicles derived from the motor vehicle registry, which thus remained fully applicable.
Only after the administrative objection and judicial objection periods had elapsed did the Claimant request official revision of the assessments under Article 78(1) of the General Tax Law. However, at the time of submission of the requests to the competent tax service, the four-year period to which the second part of Article 78(1) of the General Tax Law refers was still running. It is noted that, although this latter period refers to the initiative of the tax administration, it is settled case law that such initiative may be raised on request of the passive subject for that purpose.
However, under the second part of the cited provision and within the said period, official revision of assessment acts may only be carried out "on the grounds of an error attributable to the services." Now, as concluded above, it is not verified that the assessments objected to suffer from the error, of fact or of law, attributable to the services of the tax administration, which would make possible the extension of the period for official revision thereof to be carried out. In this sense, cf. the CAAD ruling issued in case 499/2017-T, whose reasoning we follow.
Consequently, the peremptory exception of being out of time is well-founded, as the period for official revision has been exceeded, and there is nothing to censure in the decision of the Tax Authority for having decided in that sense.
IV – Decision
The peremptory exception of being out of time of the request for official revision is upheld and, consequently, the request for arbitral pronouncement is entirely rejected, with the tax act objected to being maintained and the claimant being ordered to pay the costs of the proceedings.
The value of € 3,563.93 (value indicated and not contested) is fixed to the proceedings, and the value of the corresponding arbitration fee is € 612.00 pursuant to Table I of the Regulation of Costs of Tax Arbitration Proceedings.
Lisbon, 6 May 2019
The Arbitrator
(Luís Menezes Leitão)
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