Process: 533/2017-T

Date: February 9, 2018

Tax Type: IUC

Source: Original CAAD Decision

Summary

CAAD Process 533/2017-T addresses the critical question of subjective incidence for IUC (Imposto Único de Circulação - Unique Vehicle Circulation Tax) when vehicles under finance lease contracts are acquired by lessees before the tax event date. The case involved A... S.A., a credit institution specializing in automotive financing, which was assessed IUC totaling €1,245.23 for the 2015 tax period on vehicles registered in its name. The company contested these assessments, arguing it was not the taxable person since the lessees had exercised their purchase options and acquired legal ownership by paying the residual values before the IUC liability arose. Despite documentary evidence proving the transfer of ownership through invoicing, the vehicles remained registered in the leasing company's name. The Tax Authority initially dismissed the voluntary tax review applications and subsequent hierarchical appeals, maintaining that the registered owner bears IUC liability. The arbitral tribunal established jurisdiction under Article 2(1)(a) of RJAT and consolidated multiple related claims under Articles 3 RJAT and 104 CPPT given the identity of tax facts and legal grounds. The factual record confirmed that ownership had genuinely transferred to lessees prior to January 1, 2015, the relevant tax event date for IUC purposes. This decision has significant implications for leasing companies and clarifies whether IUC liability follows legal ownership or vehicle registration records, affecting thousands of lease transactions annually in Portugal's substantial automotive financing sector.

Full Decision

ARBITRAL DECISION

I. Report

  1. A..., S.A., corporate person no. ..., with registered office at Rua ..., ..., ...-... Lisbon, requested the constitution of an arbitral tribunal in tax matters, submitting a request for arbitral pronouncement against the acts of dismissal of hierarchical appeals filed against the dismissal of voluntary applications for tax review properly submitted and, consequently, against the acts of assessment of Unique Vehicle Circulation Tax (IUC) relating to the year 2015 and to the motor vehicles identified by their respective registration number in the list and documents annexed to the request (Annex A), the annulment of which it seeks. As a consequence of said annulment, it requests the condemnation of the Tax Administration to reimburse the amount it considers unduly paid, in the total amount of €1,245.23, comprising €1,231.77 of tax and €13.46 of compensatory interest, plus the corresponding indemnity interest counted in accordance with legal terms.

  2. As the basis for the request, submitted on 03-10-2017, the Requesting Party alleges, in summary, that, having submitted voluntary applications for tax review against the IUC assessments in question, these were dismissed, with the same outcome attending the hierarchical appeals properly filed against those decisions (Annexes B to J).

  3. The referred voluntary applications for tax review and subsequent hierarchical appeals against the decisions thereon rendered are grounded in the fact that the Requesting Party is not the taxable person for the IUC obligation relating to the tax period and vehicles to which the assessments now contested pertain.

  4. According to the Requesting Party's allegation, the referred vehicles, although registered in its name at the date to which the tax facts pertain to which those assessments relate, had been delivered to the respective lessees under finance lease contracts, all of which acquired the respective ownership at the end of the contracts by payment of the corresponding residual value at a date prior to the date of occurrence of the tax event and tax liability in question (See Annex A and Docs. 10 to 27).

  5. In response to the request, the Tax and Customs Authority (AT) pronounced itself in the sense of the lack of merit of the present request for arbitral pronouncement, maintaining in the legal system the disputed tax acts and, accordingly, by the acquittal of the required entity.

  6. 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 06-10-2017.

  7. Pursuant to the provisions of paragraph a) of no. 2 of Article 6 and paragraph b) of no. 1 of Article 11 of Decree-Law no. 10/2011, of 20/01, with the wording introduced by Article 228 of Law no. 66-B/2012, of 31/12, the Ethics Council designated as arbitrator of the singular arbitral tribunal the signatory, who communicated acceptance of the appointment within the applicable time period and notified the parties of that designation on 25-11-2017.

  8. Duly notified of that designation, the parties did not manifest any intention to refuse the arbitrator's designation in accordance with the combined provisions of Article 11, no. 1, paragraphs a) and b) of RJAT and Articles 6 and 7 of the Ethics Code.

  9. Thus, in accordance with the provision of paragraph c) of no. 1 of Article 11 of RJAT, with the wording introduced by Article 228 of Law no. 66-B/2012, of 31/12, the singular arbitral tribunal was constituted on 14-12-2017.

  10. The regularly constituted arbitral tribunal is materially competent, given the provisions of Article 2, no. 1, paragraph a), of RJAT.

  11. The parties possess legal personality and capacity and have standing (Articles 4 and 10, no. 2, of RJAT, and Article 1 of Ordinance no. 112-A/2011, of 22/03).

  12. No nullities occur and no prior questions or exceptions were raised, so nothing prevents the judgment on the merits, thus finding the present case in conditions for the final decision to be rendered.

  13. Having regard to the knowledge derived from the procedural documents filed by the parties, specifically from the administrative file, which is deemed sufficient for the decision, the Tribunal decided to dispense with the meeting referred to in Article 18 of RJAT.

  14. No doubts arising regarding the establishment of facts properly proven in light of documentary evidence and considering that exclusively legal matters are at issue, the Tribunal decided to dispense with witness testimony.

II. Factual Matters

  1. With relevance for the assessment of the questions raised, the following factual elements stand out, which, based on the documentary evidence attached to the proceedings, are considered proven:

15.1. The Requesting Party is a credit institution with strong presence in the national market.

15.2. Among its areas of activity, special relevance is assumed by automotive sector financing, with a substantial part of its activity being reduced to the conclusion of finance lease contracts intended for the acquisition, by companies and individuals, of motor vehicles.

15.3. For this purpose, the Requesting Party acquires the vehicles indicated by customers from their respective suppliers and then proceeds to their delivery to the lessees.

15.4. During the period stipulated in the contract, these lessees maintain temporary enjoyment of the vehicle — which remains the property of the Requesting Party — through remuneration to be delivered to the Requesting Party in the form of rents; being able to acquire the vehicle at the end of the contract by payment of a residual value.

15.5. The motor vehicles to which the disputed assessments pertain, identified in a list annexed to the request for arbitral pronouncement (Annex A), were delivered to the respective lessees under finance lease contracts.

15.6. Pursuant to their respective legal regime, the lessees, at the end of their respective contracts, exercised the right to acquire the vehicles by payment of the corresponding residual value.

15.7. For that reason, proven documentarily by the respective invoicing, the vehicles to which the assessments pertain were no longer the property of the Requesting Party at the date of the occurrence of the tax event and the liability of the tax in question (Docs. 18 to 27).

15.8. Regarding the motor vehicles identified in the referred Annex A by their respective registration numbers and the 2015 tax period, the Tax Administration made official assessments of IUC, plus compensatory interest, in the total amount of €1,245.23.

15.9. Upon notification of said assessments, the Requesting Party made voluntary payment of the tax (See Docs. 1 to 9).

15.10. However, it reacted against the said assessment acts through voluntary applications for tax review in which, essentially, it alleges not being the taxable person for the tax obligation since, at the date of the occurrence of the respective tax event, the vehicles to which those pertain had already been transmitted to third parties by purchase and sale contract exercised following finance lease contracts.

15.11. The appeals against the assessment acts, as appears from the elements comprising the present proceedings, were subject to express dismissal.

15.12. Hierarchical appeals were filed against said decisions, also dismissed in their entirety (Annexes B to J).

  1. There are no facts relevant to the decision that were not proven.

III. Joinder of Claims

  1. The present request for arbitral pronouncement pertains to various IUC assessments as well as to various decisions rendered in the hierarchical appeal of decisions of express dismissal of voluntary applications for tax review. However, given the identity of the tax facts, of the tribunal competent to decide and of the grounds of fact and law invoked, the tribunal considers that nothing prevents, pursuant to the provisions of Articles 3 of RJAT and 104 of CPPT, the joinder of claims.

IV. Legal Matters

  1. In the request for arbitral pronouncement, the Requesting Party submits to this tribunal's assessment the legality of acts of express dismissal of hierarchical appeals filed against decisions of dismissal of voluntary applications for tax review (Annexes B to J) and, consequently, the legality of the IUC assessment acts relating to the 2015 period and to the vehicles it identifies in the list appended to the request (Annex A), invoking the circumstance that, at the date to which the tax facts giving rise thereto pertain, the same had already been subject to transmission to third parties, who were previously lessees within the scope of finance lease contracts that exercised their respective purchase right by payment of the residual value, and, consequently, not to assume the status of taxable person for the tax assessed against it (Docs. 10 to 27).

  2. It is therefore a matter of determining whether the Requesting Party should or should not be considered the taxable person for IUC regarding the vehicles and period to which the tax pertains, duly identified in annex to the request, because, at the date of tax liability, they were already transmitted to third parties by purchase and sale contracts, although they remained registered in the name of the Requesting Party.

  3. Regarding this matter, Article 3 of the IUC Code provides, in its numbers 1 and 2, in the wording in force at the date of the facts under analysis:

"1 - The taxable persons for the tax are the owners of the vehicles, being considered as such the natural or legal persons, of public or private law, in whose name the same are registered

  1. Equated to owners are financial lessees, acquirers with reservation of ownership, as well as other holders of purchase option rights by force of lease contract"

  2. According to the understanding of the Respondent, the referred rule does not contain any legal presumption, considering that "The tax legislator, when establishing in Article 3, no. 1, who are the taxable persons for the IUC, expressly and intentionally established that these are the owners (or in the situations provided for in no. 2 the persons listed therein), being considered as such the persons in whose name the same are registered."

  3. On the other hand, the Requesting Party maintains that that rule enshrines a legal presumption, rebuttable under general terms and, in particular, by force of the provision of Article 73 of the General Tax Law, according to which tax incidence presumptions always admit proof to the contrary.

  4. This matter has been the subject of numerous decisions within the framework of arbitral tribunals operating at CAAD, generally in the sense of upholding the respective requests, on the ground that the rule in question, in the wording in force at the date of the facts to which the present request pertains, contains a legal presumption that admits proof to the contrary.[1]

  5. Adhering, therefore, to the position referred to above, the reproduction of the respective reasoning is dispensed with, being unnecessary and tedious, because in the present proceedings nothing new is advanced on that matter.

  6. Thus, concluding, in accordance with the orientation that invariably has been followed by arbitral jurisprudence, that the rule of subjective incidence of IUC enshrines a rebuttable presumption, it is important to analyze the documentation offered by the Requesting Party in order to determine whether it does or does not constitute sufficient proof for its rebuttal.

  7. As referred to above, in the matter of fact, in the situation to which the present request refers, the issue is the taxation in IUC of motor vehicles that, at the date of tax liability, would already be the property of third parties, following and because of purchase and sale contracts concluded with the Requesting Party following and at the end of finance lease contracts.

  8. Regarding the situation referred to, as evidence, copies of the invoices that entitled the respective transmissions as well as the finance lease contracts under which the sale of the vehicles was effected are presented, by payment of a residual value.

Rebuttal of the Presumption

  1. Tax incidence presumptions may be rebutted through the contradictory procedure proper provided for in Article 64 of CPPT or, alternatively, by the means of voluntary application for tax review or judicial challenge of the tax acts based on them.

  2. In the present case, the Requesting Party did not use that proper procedure, so the present request for arbitral decision, following dismissal of voluntary applications for tax review and subsequent hierarchical appeals, is the proper means to rebut the presumption of subjective IUC incidence that supports the tax assessments whose annulment is the object of the request, as it is a matter falling within the scope of the material jurisdiction of this arbitral tribunal (Articles 2 and 4 of RJAT).

  3. The Requesting Party appearing in the Motor Vehicle Register as owner of the vehicles identified in the request in the tax period to which the questioned assessments pertain and alleging that the same had already been transmitted to third parties by purchase and sale contracts, it remains to evaluate the evidence presented, in order to determine whether it is sufficient to rebut the presumption established in no. 1 of Article 3 of the same Code.

  4. With a view to rebutting the said presumption, derived from the motor vehicle register inscription, the requesting party presents, annexed to the present request, a copy of the invoices that entitled the transmissions, issued at a date prior to that of the occurrence of the tax fact and tax liability as well as the finance lease contracts that preceded them.

  5. Pronouncing itself on the documentary evidence presented, the Respondent considers that "The invoices are not apt to prove the conclusion of a synallagmatic contract such as purchase and sale, as such documents do not reveal by themselves an indispensable and unequivocal manifestation of will (i.e., acceptance) by part of the presumed acquirers."

  6. Furthermore, in the Respondent's view, "... the rules of the motor vehicle register (still) have not reached the point where mere unilaterally issued invoices can substitute the motor vehicle registration application, besides an officially approved document ... Now, invoices do not constitute purchase and sale contracts."

  7. In support of this thesis, the Respondent refers to case 63/2014-T of CAAD in which, although with a dissenting opinion, the Arbitral Tribunal considered invoices to be "private, unilateral and internal documents, with insufficient value to, in light of substantive evidentiary law, deny the validity of facts — the ownership of vehicles — on which there is a legal proof — a legal presumption — that exempts the Respondent from any probative burden, and which is not rebuttable through mere counter-evidence that casts doubt on the facts proven by the presumption."

  8. In the same sense of the insufficiency of invoices to set aside the presumption contained in no. 1 of Article 3 of the IUC Code, reference is also made to the arbitral decisions rendered in cases nos. 130/2014-T, 150/2014-T, and 220/2014-T and judgment no. 08300/14 of the Central Administrative Court South.

  9. As is well extracted from the Respondent's position regarding the evidence produced, based on the reasoning of the cited judicial decisions, it would be insufficient to rebut the presumption enshrined in the rule of tax incidence, defined on the basis of ownership, as recorded in the motor vehicle register.

  10. Not being, however, the tribunal's understanding, it is important to evaluate the evidence produced by the Requesting Party in order to determine whether it is sufficient to rebut the presumption derived from the register which, at the level of subjective incidence, is accepted for purposes of IUC.

  11. For this purpose, it is important to bear in mind that, in the situation under analysis, we are dealing with purchase and sale contracts which, relating to movable property and not being subject to any special formalities (Civil Code, Article 219), operate the corresponding transfer of real rights (Civil Code, Article 408, no. 1).

  12. Being contracts that involve the transmission of ownership of movable goods by payment of a price, they have as their essential effects, among others, the delivery of the thing (Civil Code, Articles 874 and 879).

  13. However, being a purchase and sale contract having as its object a motor vehicle, for which registration is mandatory, its punctual performance presupposes the issuance of the declaration of sale necessary for inscription in the register of the corresponding acquisition in favor of the buyer, as has been understood by the jurisprudence of the superior courts.[2] Such declaration, relevant for registration purposes, may constitute proof of the transaction, but is not the only or exclusive means of proof of such fact.

  14. For registration purposes, no special formality is required either, merely the presentation to the competent entity of an application subscribed by the buyer and confirmed by the seller, who, through a declaration of sale, confirms that the ownership of the vehicle was acquired by that party by verbal purchase and sale contract (see Regulation of Motor Vehicle Registration, Article 25, no. 1, paragraph a)).

  15. Notwithstanding these being the rules derived from the provisions of civil law, relating to the informality of transmission of movable property and, as the case may be, of its registration, it cannot fail to be borne in mind that, in the situation under analysis, we are dealing with commercial transactions, effected by a business entity within the scope of the activity that constitutes its corporate purpose.

  16. Within that scope, the company is bound by compliance with specific accounting and tax rules, in which invoicing assumes special relevance.

  17. First, by force of tax rules, the entity transmitting the goods is obliged to issue an invoice for each transmission of goods regardless of the status of the respective acquirer (IVA Code, Article 29, no. 1, paragraph b).

  18. Also in accordance with the provisions of tax rules, the invoice must comply with a certain form, detailed in Articles 36 of the IVA Code and Article 5 of Decree-Law no. 198/90, of June 19.

  19. It is on the basis of this document issued by the supplier of the goods that the acquirer, when an economic operator — as is the case with the generality of the situations referred to in the present proceedings — will deduct the IVA to which it is entitled (IVA Code, Article 19, no. 2) and account for the expense of the operation (CIT Code, Articles 23, no. 6 and 123, no. 2).

  20. On the other hand, it is also on the basis of the invoicing issued by it that the supplier of the goods must account for the respective income, as derived from the provision of paragraph b) of no. 2 of Article 123 of the CIT Code.

  21. Insofar as issued in the legal form and constitute supporting elements of the accounting entries in organized accounting in accordance with commercial and tax legislation, the data contained therein are covered by the presumption of truthfulness to which Article 75, no. 1, of the General Tax Law refers.

  22. Indeed, the said presumption covers not only the accounting books and registers, but also the respective supporting documents, as is, moreover, the settled understanding of the tax administration itself [3] and the established jurisprudence of the superior courts [4].

  23. The presumption of truthfulness of commercial invoices issued in accordance with legal terms may, however, be set aside whenever the operations to which they refer do not correspond to reality, it sufficing for this that the Tax Administration collects and demonstrates founded indications of such fact (General Tax Law, Article 75, no. 2, paragraph a). [5]

  24. In the present case, the Respondent has not challenged, nor raises any doubt regarding the operations entitled by the invoices presented by the Requesting Party, merely challenging the documents themselves presented as means of proof on the ground that "The invoices are not apt to prove the conclusion of a synallagmatic contract such as purchase and sale, as such documents do not reveal by themselves an indispensable and unequivocal manifestation of will (i.e., acceptance) by part of the presumed acquirers."

  25. Not accompanying that position and having regard to the relevance attributed by tax legislation to invoices issued, in accordance with legal terms, by commercial companies within the scope of their business activity and to the presumption of truthfulness of the operations entitled by them, it cannot fail to be considered that they constitute, by themselves, sufficient proof of the transmissions invoked by the Requesting Party, adhering, in this matter, to the majority arbitral jurisprudence. [6]

  26. Considering thus proven documentarily the transmission of the right of ownership of the vehicles in question, there is only to determine the date on which, according to the respective invoice, such transmission shall have occurred, bearing in mind that tax liability, regarding new land vehicles, occurs on the first day of the tax period, which begins on the date of registration, as provided for in Article 6, no. 3, of the IUC Code, such being the moment at which the tax legal relationship is defined.

  27. Based on the documents composing the present proceedings, it is verified that, at the date of tax liability, the vehicles identified therein were no longer the property of the Requesting Party by virtue of having been transmitted by it to third parties.

  28. In view of the foregoing, it is concluded that there is no legal basis for the IUC assessment acts and compensatory interest regarding the vehicles and periods identified in annex to the request for arbitral pronouncement.

  29. In these terms, considering the presumption of ownership derived from the motor vehicle register accepted in Article 3 of the IUC Code — in the wording in force at the date of the facts to which the assessments in question pertain — rebutted, the annulment of the assessments identified in a list annexed to the present request for arbitral pronouncement shall proceed, in the total amount of €1,245.23, on the ground of illegality and error in the premises on which they rest.

Right to Indemnity Interest

  1. In addition to the revocation of the decision dismissing the requests for official review and annulment of the assessments and consequent reimbursement of amounts unduly paid, the requesting party further requests that its right to indemnity interest be recognized, under Article 43 of the General Tax Law.

  2. Indeed, in accordance with the provision of no. 1 of the said article, indemnity interest shall be due "when it is determined, in voluntary application for tax review or judicial challenge, that there was error attributable to the services resulting in payment of the tax debt in an amount superior to the legally due." Beyond the means referred to in the rule transcribed above, we understand that, as derives from no. 5 of Article 24 of RJAT, the right to the mentioned interest may be recognized in the arbitral proceedings and thus the request is accepted.

  3. The right to indemnity interest to which the above-referred rule of the General Tax Law alludes presupposes that tax has been paid in an amount superior to that due and that such derives from error, of fact or of law, attributable to the services of the AT.

  4. In the present case, although it is recognized that the tax assessed to the Requesting Party is not due, because it is not the taxable person for the tax obligation, determining consequently the annulment of the questioned assessments, it is not apparent that, at its origin, there is an error attributable to the services that determines such right in favor of the taxpayer.

  5. Indeed, in promoting the IUC assessments considering the Requesting Party as the taxable person for this tax, the Tax Administration could not proceed differently, merely complying with the rule of no. 1 of Article 3 of the IUC Code, which, as above abundantly referred to, imputes such status to the persons in whose name the vehicles are registered.

  6. On the other hand, also as already concluded, the said rule has the nature of a legal presumption, from which derives, for the AT, the right/duty to assess the tax and demand it from those persons, without need to prove the facts that lead to it, as expressly provided for in no. 1 of Article 350 of the Civil Code.

  7. Not thus being gathered the premises on which the right to indemnity interest rests, the request cannot, therefore, in this aspect, proceed.[7]

  8. However, regarding the assessments that are the object of the present request for arbitral pronouncement, it is important to know whether the act of dismissal of the pretension of the Requesting Party, formulated in the voluntary applications for tax review properly filed, configures or not an error attributable to the Tax Administration for purposes of the exigibility of indemnity interest, under Article 43, no. 1, of the General Tax Law.

  9. In this matter, consideration is given to the orientation derived from the jurisprudence of the Supreme Administrative Court, which goes in the direction of recognizing that a decision of the Tax Administration dismissing a request for annulment of an admittedly illegal assessment and consequent restitution of unduly collected tax constitutes error attributable to the services.

  10. According to the mentioned jurisprudence — stated in a learned judgment of 28-10-2009, in case no. 601/09 — indemnity interest is due from the date of dismissal of the application through the date of processing of the respective credit note, in accordance with Article 61 of CPPT.

  11. Following the cited jurisprudence, the right of the Requesting Party to indemnity interest is recognized, counted in accordance with legal terms, from the date of dismissal of the voluntary applications for tax review relating to the assessments that are the object of the present request for arbitral pronouncement.

VI - Decision

In these terms, and with the grounds set forth, the Arbitral Tribunal decides:

a) To uphold the request for a declaration of illegality of the dismissal of the hierarchical appeals against the decisions of dismissal of the voluntary applications for tax review properly submitted against the assessments now contested;

b) To uphold the request for arbitral pronouncement, insofar as it concerns the rebuttal of the presumption of subjective IUC incidence, with the consequent annulment of the Unique Vehicle Circulation Tax assessments regarding the tax period and vehicles identified in a list annexed to the present request for arbitral pronouncement;

c) To uphold the request insofar as it concerns the recognition of the right to such indemnity interest as is due from the date of dismissal of the voluntary applications for tax review, counted through the date of restitution to the Requesting Party of the amounts of the annulled assessments.

d) To condemn the Respondent to pay the costs of the present proceedings.

Value of the case - In accordance with the provision of Article 315, no. 2 of CPC and Article 97-A, no. 1, paragraph a) of CPPT and Article 3, no. 2 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the case is fixed at €1,245.23.

Costs - Pursuant to Article 22, no. 4 of RJAT, the amount of costs is fixed at €306.00, in accordance with Table I annexed to the Regulation of Costs in Tax Arbitration Proceedings, to be borne by the Tax and Customs Authority.

Lisbon, 09-02-2018.

The Arbitrator, Álvaro Caneira.

(The text of the present decision was drafted by computer, in accordance with Article 131, no. 5 of the Code of Civil Procedure, applicable by referral of Article 29, no. 1, paragraph e) of Decree-Law no. 10/2011 of January 20 (RJAT).

[1] By way of merely exemplary reference, see Cases 14/2013-T, 26/2013-T, 27/2013-T, 73/2013-T, 170/2013-T, 217/2013-T, 256/2013-T, 289/2013-T, 294/2013-T, 21/2014-T, 42/2014-T, 43/2014-T, 50/2014-T, 52/2014-T, 67/2014-T, 68/2014-T, 77/2014-T, 108/2014-T, 115/2014-T, 117/2014-T, 118/2014-T, 120/2014-T, 121/2014-T, 128/2014-T, 140/2014-T, 141/2014-T, 152/2014-T, 154/2014-T, 173/2014-T, 174/2014-T, 175/2014-T, 182/2014-T, 191/2014-T, 214/2014-T, 219/2014-T, 221/2014-T, 222/2014-T, 227/2014-T, 228/2014-T, 229/2014-T, 230/2014-T, 233/2014-T, 246/2014-T, 247/2014-T, 250/2014-T, 262/2014-T, 302/2014-T, 333/2014-T, 414/2014-T, 646/2014-T, all available at www.caad.org.pt.

[2] See Supreme Court of Justice, Judgments of 23.3.2006 and 12.10.2006, Cases 06B722 and 06B2620.

[3] See Opinion of the Tax Studies Center, approved by dispatch of the Director-General of Taxes, of January 2, 1992, published in Tax Science and Technique no. 365.

[4] See Supreme Administrative Court, Judgment of 27.10.2004, Case 0810/04, Central Administrative Court South, Judgment of 4.6.2013, Case 6478/13 and Central Administrative Court North, Judgment of 15.11.2013, Case 00201/06.8BEPNF, among others.

[5] See Supreme Administrative Court, Judgments of 24.4.2002, Case 102/02, of 23.10.2002, Case 1152/02, of 9.10.2002, Case 871/02, of 20.11.2002, Case 1428/02, of 14.1.2004, Case 1480/03, among many others.

[6] To this effect, see, among others, Arbitral Decisions of 19.7.2013, Case 26/2013-T, of 10.9.2013, Case 27/2013-T, of 15.10.2013, Case 14/2013-T, of 5.12.2013, Case 73/2013-T, of 14.2.2014, Case 170/2013-T, of 30.4.2014, Case 256/2013-T, of 2.5.2014, Case 289/2013-T, of 6.6.2014, Case 294/2013-T, of 25.6.2014, Case 42/2014, of 6.7.2014, Case 52/2014-T, of 15.9.2017, Case 173/2017-T and of 4.10.2017, Case 185/2017-T.

[7] To this effect, Arbitral Decisions rendered in Cases 26/2013-T, 170/2013-T, 136/2014-T, 140/2014-T, 230/2014-T and 185/2017-T, among others.

Frequently Asked Questions

Automatically Created

Who is the taxable person for IUC when a vehicle is under a financial leasing contract in Portugal?
Under Portuguese tax law, IUC liability depends on who owns the vehicle on January 1st of the tax year. In finance leasing contracts, while the vehicle remains registered to the leasing company during the contract term, once the lessee exercises the purchase option and pays the residual value, legal ownership transfers. CAAD Process 533/2017-T addresses whether the registered owner or legal owner at the tax event date is the taxable person, particularly when registration updates lag behind actual ownership transfers.
Can a leasing company be required to pay IUC after the lessee has exercised the purchase option and acquired ownership?
No. When a lessee exercises the purchase option in a finance lease contract and acquires ownership before the IUC tax event (January 1st), the leasing company should not be liable for IUC even if the vehicle registration has not yet been updated. CAAD 533/2017-T examined whether continued registration creates tax liability despite proven ownership transfer through documented payment of residual value and issuance of sales invoices prior to the tax event date.
What happens when the vehicle registration has not been updated but ownership has already transferred to the lessee?
A discrepancy between vehicle registration and actual ownership creates uncertainty regarding IUC liability. In Process 533/2017-T, despite documentary proof that ownership transferred to lessees before January 1, 2015 through payment of residual values, the Tax Authority initially assessed the registered owner (the leasing company). This case clarifies whether the Código do IUC's subjective incidence provisions prioritize legal ownership or registration records when these diverge, particularly relevant for the automotive leasing sector.
How does CAAD process 533/2017-T define subjective incidence for IUC on leased vehicles?
CAAD Process 533/2017-T examines subjective incidence by analyzing whether IUC liability attaches to the registered owner or the legal owner when these differ. The tribunal established facts proving vehicles were sold to lessees before the tax event through documented residual value payments and invoicing. The decision addresses whether Article 3 of the IUC Code's definition of taxable person as the vehicle owner refers to registration records or actual legal ownership, with significant implications for finance lease transactions where ownership transfers precede registration updates.
What remedies are available to taxpayers who paid IUC incorrectly, including reimbursement and compensatory interest?
Taxpayers who paid IUC incorrectly can file voluntary tax review applications (reclamação graciosa) within the statutory deadlines, followed by hierarchical appeals if dismissed. If these administrative remedies fail, CAAD arbitration is available under RJAT. Successful challenges result in annulment of the tax assessments and reimbursement of amounts unduly paid, including the principal tax plus compensatory interest (juros compensatórios) paid, and entitlement to indemnity interest (juros indemnizatórios) calculated from payment date until reimbursement, as claimed in Process 533/2017-T for the total of €1,245.23.