Summary
Full Decision
ARBITRAL DECISION
I. - REPORT
A - PARTIES
The A…, SA legal entity no…., with registered office at Street …, no…., …-… - Lisbon, hereinafter referred to as the "Claimant," submitted a request for establishment of an arbitral tribunal, pursuant to the provisions of article 2(1)(a) of Decree-Law no. 10/2011, of 20 January (Legal Regime of Arbitration in Tax Matters, hereinafter referred to as "LRATM"), with a view to considering the following claim brought against the Tax and Customs Authority (which succeeded, among others, the General Directorate of Taxes) hereinafter referred to as the "Respondent" or "TCA".
B - REQUEST
1 - The request for establishment of the arbitral tribunal was accepted by the Most Excellent President of CAAD on 18 January 2017 and, on 27 January, notified to the TCA.
2 - The Claimant did not proceed to appoint an arbitrator, wherefore, pursuant to the provisions of article 6(1) of the LRATM, the undersigned was, on 13-03-2017, designated by the Deontological Council of the Centre for Administrative Arbitration as arbitrator of a Single Arbitral Tribunal, having accepted in accordance with the legally established terms.
3 - The Parties were, on 13-03-2017, duly notified of such designation and manifested no intention to refuse it, in accordance with the combined provisions of articles 11(1)(a) and (b) and articles 6 and 7 of the Deontological Code.
4 - Under these circumstances, in accordance with the provisions of article 11(1)(c) of Decree-Law no. 10/2011, of 20 January, in the wording introduced by article 228 of Law no. 66-B/2012, of 31 December, the arbitral tribunal was duly constituted on 28-03-2017.
5 - On 12 July 2017, the Arbitral Tribunal, pursuant to article 16(c) of the LRATM (Decree-Law no. 10/2011, of 20 January), and taking into account the content of the order issued on 28 June 2017, considered dispensable the holding of the meeting provided for in article 18 of the aforementioned act.
6 - The Claimant now requests that the present Arbitral Tribunal:
a) - Declare the illegality and consequent annulment of the 21 assessment acts relating to the Single Circulation Tax (hereinafter referred to as IUC) and compensatory interest (CI), as identified in the case file (Annex A), relating to the 12 motor vehicles, equally identified in the said Annex, which are hereby deemed to be fully reproduced, totaling the amount of € 939,89;
b) - Declare the illegality of the acts of dismissal of the hierarchical appeals filed against the acts which dismissed the gracious complaints presented against the IUC assessment acts, aforementioned and identified in the aforementioned Annex A;
c) - Condemn the Tax and Customs Authority to reimburse the amount of € 939,89;
d) - Condemn the Tax and Customs Authority to payment of compensatory interest for deprivation of the sum of € 939,89.
C - CAUSE OF ACTION
7 - The Claimant, in the substantiation of its request for arbitral pronouncement, states, in summary, the following:
8 - That it is a credit financial institution with a strong presence in the national market.
9 - That, as a credit financial institution, in the financing of the automobile sector, it has one of its most relevant areas of activity, entering into, within this framework, among others, financial leasing contracts intended for the acquisition, by companies and individuals, of motor vehicles.
10 - That the twelve vehicles identified in the list, which it appends as Annex A, were given in financial leasing to its customers, as is also identified in that Annex.
11 - That a key point of the said contracts resides in the fact that the lessees, during the term of the contracts, hold their exclusive enjoyment, being able, at the end of the contractual term, to acquire the vehicle, by payment of a residual value.
12 - That it was notified to proceed to payment of the IUC relating to the assessment acts identified in the document attached to the request for arbitral pronouncement, as Annex A, concerning the twelve vehicles, equally identified in the said Annex.
13 - That the TCA, even knowing that financial leasing contracts were in effect concerning the mentioned vehicles, and even knowing the identity of the lessees, understood that it should require it to pay the tax in question.
14 - That, although unable to assume the status of tax debtor of the tax, it proceeded to its payment, relating to the twenty-one assessments referenced in the case file, concerning the twelve vehicles, equally identified in the proceedings, in the total amount of € 939,89.
15 - That, regarding all vehicles involved in the proceedings, a financial leasing contract was in effect at the moment when the corresponding IUC became due, and the Claimant could not be responsible for payment of such tax.
16 - That, with respect to the IUC, the legislator chose to burden the tax debtor, not in accordance with its wealth, setting aside the principle of contributive capacity, but rather in the just measure of the cost to the environment and to road infrastructure that the tax debtor, through the use of motor vehicles, might generate.
17 - That, in the majority of cases, the owner of the motor vehicle will be the tax debtor of the IUC, in accordance with article 3(1) of the IUC Code, to the extent that the rule is that, together with ownership of the vehicle, the individual also holds its usufruct.
18 - That, being subject to financial leasing, the motor vehicles identified in the case file were, at no moment, used by it, but rather by the respective lessees, who had the exclusive use of any one of the twelve vehicles in question, to whom belonged the potential of its use.
19 - That, in financial leasing contracts, the right to use the vehicle is withdrawn from its owner, as lessor, being attributed to the lessee the right to use and enjoy, exclusively, such vehicle.
20 - That, in accordance with the provisions of article 3(2) of the IUC Code, the exclusive enjoyment of the motor vehicle belongs to the lessees, and likewise the obligation to pay the respective tax.
D - RESPONDENT'S RESPONSE
21 - The Respondent, Tax and Customs Authority, (hereinafter referred to as TCA), submitted its Response on 08-05-2017, in which, in summary, it alleged the following:
BY WAY OF EXCEPTION
22 - The illegibility of the documentation (financial leasing contract) concerning the vehicle with registration plate …-…-…, which made impossible its exercise of the right to respond, it being necessary to note, in this regard, that, taking into account, both the arbitral order of 25-05-2017, requesting from the Claimant such legible documentation, and the submission to the case file, on 05-06-2017, of that same documentation, and the TCA's knowledge, on that date, of the said legible documentation, the exception in question should be deemed appreciated and decided.
BY WAY OF IMPUGNATION
23 - The Respondent alleges that the Claimant makes a manifestly incorrect interpretation and application of the legal norms applicable to the case, to the extent that,
24 - It reveals an understanding that incurs, not only in a skewed reading of the letter of the law, but also in an interpretation that does not heed the systematic element, violating the unity of the regime enshrined throughout the IUC Code and, more broadly, throughout the entire legal-fiscal system, further stemming from an interpretation that ignores the ratio of the regime enshrined in article 3(1) of the IUC Code. (cf. article 12 of the Response)
25 - It states that the tax legislator, in establishing, in article 3(1) of the IUC Code, who are the tax debtors of the IUC, established expressly and intentionally that these are the owners (or in the situations provided for in article 3(2) the persons mentioned therein), being considered as such the persons in whose name the same are registered. (cf. article 26 of the Response)
26 - It emphasizes that the legislator did not use the expression "it is presumed" as it could have done, for example, in the following terms: "the tax debtors of the tax are the owners of the vehicles, being presumed as such the natural or legal persons, of public or private law, in whose name the same are registered". (cf. article 27 of the Response)
27 - It considers that the wording of article 3 of the IUC Code corresponds to a clear choice of legislative policy adopted by the legislator and does not entail any legal presumption, so that understanding that a presumption is enshrined therein would unequivocally be effecting an interpretation contrary to law. (cf. articles 36, 37 and 38 of the Response)
28 - It states that the aforementioned understanding has already been adopted by the jurisprudence of our courts, transcribing, for this purpose, part of the judgment of the Administrative and Tax Court of Penafiel, delivered in Case no. 210/13.OBEPNF. (cf. article 40 of the Response)
29 - Regarding the systematic element of interpretation, it considers that the solution advocated by the Claimant is intolerable, the understanding supported by this finding no legal support. (cf. article 41 of the Response)
30 - Regarding the "ratio" of the regime, it understands that, in light of a teleological interpretation of the regime enshrined throughout the IUC Code, the interpretation advocated by the Claimant, to the sense that the tax debtor of the IUC is the actual owner independent of whether such status does not appear in the automobile register, is manifestly incorrect, to the extent that it is the very ratio of the regime enshrined in the IUC Code which constitutes clear proof that what the fiscal legislator intended was to create a tax based on the taxation of the owner of the vehicle, as it appears in the automobile register. (cf. articles 64 and 65 of the Response)
31 - It adds that the IUC Code proceeded to a reform of the regime of taxation of vehicles in Portugal, substantially altering the regime of automobile taxation, such that the tax debtors of the tax are the owners appearing in the property register, independent of the circulation of the vehicles on the public road. (cf. article 67 of the Response)
32 - In this sense, it states that this is the understanding inscribed, particularly, in recommendation no. 6-B/2012 of 22-06-2012, from the Ombudsman addressed to the Secretary of State for Public Works, Transport and Communications.
33 - It adds that the interpretation conveyed by the Claimant also appears to be out of conformity with the Constitution to the extent that such interpretation results in the violation of the principle of trust, the principle of legal certainty, the principle of efficiency of the tax system, and the principle of proportionality. (cf. articles 117 to 119 of the Response)
34 - It understands that in the matter of financial leasing, and for purposes of article 3 of the IUC Code, it is necessary that the financial lessors, as is the case with the Claimant, comply with the obligation established in article 19 of the said Code, so that they can exempt themselves from the obligation to pay the tax, so that, such obligation not having been complied with, it is to be concluded that the Claimant is responsible for payment of the IUC.
35 - It considers that the financial leasing contracts, concerning the vehicles with registration plates …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-… and …-…-…, had already terminated by the date of the tax accrual events of the corresponding IUC.
36 - Finally, it states that it was not the Respondent who gave rise to the deduction of the request for arbitral pronouncement, but rather the Claimant, and should, consequently, the Claimant be condemned to the arbitration costs "in accordance with article 527(1) of the New Code of Civil Procedure ex vi article 29(1-e) of the LRATM".
37 - It considers, in conclusion, that, in light of all the arguments presented, the request for arbitral pronouncement should be judged unfounded, the tax acts in question being deemed valid and legal, absolving, accordingly, the entity Respondent of the claim.
E - ISSUES TO BE DECIDED
38 - It is therefore necessary to appreciate and decide.
39 - In light of the foregoing, regarding the positions of the Parties and the arguments presented, the issues to be decided are, particularly, the following:
a) - Whether or not the rule of subjective incidence contained in article 3(1) of the IUC Code establishes a presumption.
b) - What is the legal value of the automobile register in the economy of the IUC Code, particularly for purposes of the subjective incidence of this tax.
c) - Whether, on the date of tax accrual, a financial leasing contract exists that has as its object a motor vehicle, the tax debtor of the IUC, for purposes of the provisions of article 3(1) and (2) of the IUC Code, is the lessee or the lessor entity, owner of the vehicle, in whose name the property right is registered.
d) - Whether the documents presented, relating to the leasing of the vehicles identified in the proceedings, are suitable to prove the leasing of such vehicles.
F - PROCEDURAL ASSUMPTIONS
40 - The Arbitral Tribunal is duly constituted and materially competent, in accordance with article 2(1)(a) of Decree-Law no. 10/2011, of 20 January.
41 - The Parties enjoy legal personality and capacity, are legitimate and are legally represented (cf. article 4 and article 10(2) of Decree-Law no. 10/2011 and article 1 of Ordinance no. 112/2011, of 22 March).
42 - The proceedings do not suffer from defects that invalidate it.
43 - Taking into account the documentary evidence forming part of the proceedings, it is now necessary to present the factual matter relevant to the understanding of the decision, as it is established in the terms mentioned below.
II - LEGAL REASONING
G - FACTUAL REASONING
44 - Regarding material facts, the present tribunal considers the following facts as established:
45 - The Claimant is a credit financial institution with a strong presence in the national market.
46 - As a credit financial institution, in the financing of the automobile sector, the Claimant has been entering into, within this framework, among others, vehicle rental agreements without driver, with promise of sale, and financial leasing contracts.
47 - The twelve vehicles identified in the list, attached to the case file, as Annex A, were given to its customers in leasing - vehicle rental without driver, with promise of sale, and financial leasing - as is also identified in that Annex.
48 - The Claimant was notified to proceed to payment of the IUC concerning the assessment acts identified in a document attached to the request for arbitral pronouncement, relating to the twelve vehicles aforementioned.
49 - The TCA had knowledge that the mentioned vehicles were the object of vehicle rental agreements without driver, with promise of sale, and financial leasing contracts, but understood that it should require the Claimant to pay the tax in question.
50 - The Claimant, although not assuming the status of tax debtor of the tax, proceeded to its payment, in the total amount of € 939,89, relating to the twenty-one assessments referenced in the case file, concerning the twelve vehicles, equally identified in the proceedings.
51 - The Claimant alleges the validity of the mentioned contracts of vehicle rental without driver, with promise of sale and financial leasing, on the date of tax accrual, copies of which it submits to the case file, aiming to prove that, in light of the provisions of article 3(1) and (2) of the IUC Code, it was not the tax debtor of the IUC.
52 - On the dates relating to the accrual of the IUC, to which the assessments identified in the case file, relating to the years 2009 to 2014, refer, only six of the twelve vehicles identified in the case file were covered by vehicle rental agreements without driver, with promise of sale and financial leasing contracts, namely the vehicles with registration plates …-…-…; …-…-…; …-…-…; …-…-… (regarding the assessments of 2010 and 2011); …-…-… and …-…-….
REASONING OF PROVEN FACTS
53 - The facts deemed proven are based on the documents mentioned, regarding each of them, to the extent that their correspondence with reality was not questioned.
UNPROVEN FACTS
54 - Regarding factual matters with relevance to the decision, the present tribunal considers that only the vehicles with registration plates …-…-…; …-…-…; …-…-…; …-…-… (regarding the assessments of 2010 and 2011); …-…-… and …-…-… were covered by vehicle rental agreements without driver, with promise of sale and financial leasing contracts, in effect at the time of accrual of the corresponding IUC.
H - LEGAL REASONING
55 - The factual matter is established, it being now necessary to proceed to its legal subsumption and to determine the Law applicable to the underlying facts, in accordance with the issues to be decided set out in article 39.
56 - The first issue, regarding which there are absolutely opposing understandings between the Claimant and the TCA, is to know whether or not the rule of subjective incidence contained in article 3(1) of the IUC Code establishes a rebuttable presumption.
57 - The positions of the parties are known. Indeed, for the Claimant, the provisions of article 3(1) of the IUC Code configure a rebuttable legal presumption, to the extent that the owner of the motor vehicle is deemed to be the tax debtor of the IUC, on the assumption that he is the individual who uses it and holds its usufruct, also considering that, in accordance with the provisions of article 3(2) of the said article, the exclusive enjoyment of the motor vehicle belongs to the lessees, and likewise the obligation to pay the respective tax.
58 - The Respondent, for its part, understands that the tax legislator, in establishing in article 3(1) of the IUC Code who are the tax debtors of the IUC, determined, expressly and intentionally, that these are the owners (or in the situations provided for in article 3(2), the persons mentioned therein), being considered, as such, the persons in whose name the same are registered.
I - INTERPRETATION OF THE RULE OF SUBJECTIVE INCIDENCE CONTAINED IN ARTICLE 3(1) OF THE IUC CODE
59 - On this matter, that is, whether the rule of subjective incidence contained in article 3(1) of the IUC Code enshrines a presumption, it should be noted that the established jurisprudence in CAAD points to the sense that the said rule enshrines a rebuttable legal presumption. Indeed, from the first Decisions, delivered on this matter, in the year 2013, among which may be mentioned, in particular, those delivered in the framework of Cases nos. 14/2013-T, 26/2013-T and 27/2013-T, to the most recent ones which may be indicated the Decisions delivered in the scope of Cases nos. 69/2015-T, no. 191/2015-T and no. 202/2015-T, passing through numerous Decisions delivered in the year 2014, of which mention is made, by way of mere example, the Decisions delivered in Cases nos. 34/2014-T, 120/2014-T and 456/2014-T, all point to the understanding that article 3(1) of the IUC Code enshrines a rebuttable legal presumption.
In this regard, reference should also be made to the recent Decision of the Lisbon Tax Court, delivered on 23-01-2017, in Case No. 463/13.4BELRS, where it is considered that the "[…] appellant succeeded in rebutting the presumption established in article 3(1) of the IUC Code."
The understanding inscribed in the Judgment of the Central Administrative Court of the South, delivered on 19-03-2015, Case 08300/14, available at: www.dgsi.pt, should also be considered, which seconds the said jurisprudence, when therein it is expressly stated that article 3(1) of the IUC Code "[…] enshrines a legal presumption that the holder of the automobile register is its owner, such presumption being rebuttable by force of article 73 of the TCA".
This is an understanding on which we rely entirely and which is given, without further ado, as valid and applicable in the present case, not being considered, consequently, necessary further developments, in light of the abundant reasoning contained in the mentioned Decisions and in the said Judgment.
60 - Being this the understanding which, regarding article 3(1) of the IUC Code, is entirely adopted by this tribunal, it is, however, still important to note the lack of merit that assists the Respondent, when, in articles 117 to 119 of its response, it alleges that the interpretation which goes to the sense of understanding that a rebuttable legal presumption is enshrined in article 3(1) of the IUC Code violates the constitutional principles of trust and legal certainty, of the efficiency of the tax system and of proportionality.
Let us therefore appreciate that matter.
Let us see:
- Regarding the principle of proportionality, it is first important to emphasize that it, to the extent that it is materially inherent to the regime of rights, freedoms and guarantees, being inscribed in their defense, aims, in essence, to regulate the conduct of Public Administration in order that its activity, in its relationship with individuals, be guided by the choice of the most equilibrately appropriate measures for the pursuit of the public interest.
As taught by Prof. Freitas do Amaral, in Course of Administrative Law, Vol II, Almedina, 2002, pp. 127/128 and segs, the "principle of proportionality constitutes a constitutive manifestation of the principle of the Rule of Law", with "[…] the idea being strongly anchored that, in a democratic Rule of Law state, the measures of public authorities should not exceed what is strictly necessary for the realization of the public interest".
The principle of proportionality, adds the aforementioned Professor, ibidem, p. 129, means that "[…] the limitation of goods or interests of individuals by acts of public authorities must be adequate and necessary for the concrete purposes pursued by such acts, as well as tolerable when confronted with those purposes".
Regarding the principle of proportionality, it should also be noted, what J. J. Gomes Canotilho and Vital Moreira tell us, in CONSTITUTION OF THE PORTUGUESE REPUBLIC, ANNOTATED, VOLUME I, 4th Edition, 2007, Coimbra Editora, pp. 392/393, when they consider that the said principle is divisible into three sub-principles, namely: "[…] a) principle of adequacy (also designated as principle of suitability); b) principle of necessity (also called principle of necessity or indispensability); c) principle of proportionality in the strict sense, which means that the restrictive legal means and the ends obtained should be in a "just measure", preventing the adoption of restrictive legal measures disproportionate, excessive, in relation to the ends obtained […]".
The aforementioned sub-principles have, all of them, a common denominator, which is that of just balance and permanent coherence between the purposes of the law and the means adopted to achieve such purposes, which, in the circumstance and attempting the transposition of the said principle to the case at hand, will imply responding to the question of what is the adequate interpretation of article 3(1), with a view to the pursuit of the legal purposes provided for in article 1 of the IUC Code, which translate to the fiscal burden of the actual owners of motor vehicles (and not, necessarily, those in the register) in the measure of the environmental and road cost that they cause.
As Professor J. J. Gomes Canotilho states in Constitutional Law and Theory of the Constitution, Almedina - Coimbra, 1998, pp. 264 and segs, the most important field of application of the principle of proportionality or prohibition of excess, which has constitutional basis in articles 18(2) and 266(2) of the Portuguese Constitution, "[…] is that of the restriction of rights, freedoms and guarantees by acts of public authorities. However, the logical field of application of the principle of proportionality extends to conflicts of legal interests of any kind." The administration, adds the aforementioned author, idem, "[…] must always observe, in each concrete case, the requirements of the prohibition of excess […]".
In this same sense points the jurisprudence, namely the judgment of the Supreme Administrative Court of 01-07-1997, Case no. 041177, available at: www.dgsi.pt, when it considers that the principle of proportionality in the broad sense comprises the congruity, adequacy or suitability of the means or measure to achieve the end legally proposed and, in the strict sense, encompasses the prohibition of excess.
The principle of proportionality is a corollary of the principle of justice, which means and implies that in its conduct the Public Administration should harmonize the specific public interest that it pursues with the rights and legitimate interests of individuals possibly affected by its acts, interests and rights which, in the case at hand, are reduced to the non-taxation in IUC of persons who are no longer owners of vehicles and who, consequently, in no way contribute to the implementation of any road and environmental cost.
What matters is to balance the legal purposes and the means to pursue them, and, within a framework of balancing, to identify the most appropriate means for this purpose, which, in the case, translate to the interpretation adopted by the arbitral tribunal.
It would also be said that the understanding that the said article 3(1) of the IUC Code establishes a rebuttable legal presumption corresponds to the only interpretation that consistently accords with the said principle of equivalence, and which is in line with the principles of justice and proportionality.
The interpretation that understands that a rebuttable legal presumption is enshrined in article 3(1) of the IUC Code is, therefore, the only one that permits assuring the pursuit of the purposes sought by the law - to burden the owners of motor vehicles in the measure of the environmental and road cost that they cause - as stated in article 1 of the IUC Code, which means that the tax debtors of the IUC are, presumably, the persons in whose name the vehicles are registered, that is, the said tax debtors are, in principle, and only in principle, the persons in whose name such vehicles are registered, there being, therefore, no other interpretation capable of achieving the said legal purposes, only thus, it is reaffirmed, are the said principles of proportionality and justice fulfilled.
The contrary understanding, that is, the one considered by the TCA, which interprets article 3(1) of the IUC Code as not enshrining a rebuttable legal presumption, understanding that the tax debtors of the IUC are, definitively, the persons in whose name the vehicles are registered, in the just measure that it leads to the imposition of a fiscal burden on who may already not be the owner of the vehicle in question and who, in this manner, does not pollute, removing from fiscal subjection who, in reality, is the effective cause of environmental and road damage resulting from the use of vehicles of which they are the true owners, makes clear that the legally prescribed purposes would not, at all, be achieved, not respecting, thus, the principle of equivalence which, within the framework of the IUC Code, has an absolutely structuring function. Such understanding, that indeed, is not in harmony with the principle of proportionality.
The interpretation adopted here takes, absolutely, into account the principle of proportionality, when, contrary to the understanding of the Respondent, it considers that definitive registration does not produce constitutive effect as it is intended to give publicity to the registered act, functioning only as a mere rebuttable presumption of the existence of the right, and when, in homage to that principle, it attends to the principle of equivalence, as a fundamental element of the IUC Code.
- As to the efficiency of the tax system, it would be said that the efficiency of Administration in general, or of the TCA in particular, in the common sense, would correspond to the capacity/work methodology oriented toward the optimization of the work performed or services provided, which means producing the maximum, in quantity and quality, with the minimum of costs and means, having nothing to do with the observance of legally enshrined principles and with respect for the rights of citizens, whether as taxpayers or not.
In technical sense, it would be said that the principle of efficiency of the tax system is commonly held, in the field of tax procedure, as a corollary of the principle of proportionality, which, as is known, imposes an adequate proportion between legal purposes and the means chosen to achieve those purposes, or, as referred to by Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, in General Tax Law, Annotated and Commented, 4th Edition 2012, Encontro de Escrita, Lda, Lisbon, p. 488, in the annotations to article 55 of the General Tax Law, it is a principle that requires "[…] the tax administration to refrain from imposing on taxpayers obligations that are unnecessary to the satisfaction of the purposes that it seeks to pursue".
In this framework, the said principle of efficiency of the tax system would mean the capacity to achieve the legally fixed objectives with the minimum of means, which will also have nothing to do with respect for the rights of citizens, nor with the need to observe other principles to which the tax administration must subordinate its activity, namely that of the inquisitorial nature and the discovery of material truth, and obviously, the application of the aforementioned principle of efficiency cannot be effected, either to the detriment of the rights of citizens, or by the failure to observe the legal purposes. [1]
- As to the principle of legal certainty and trust it should be noted, first of all, that the latter principle, that of trust, is a concretization of the principle of good faith, which, having received recognition in our legal system, since 1996, came to have express constitutional inscription, as stated in article 266(2) of the Portuguese Constitution, where it is established that "Administrative organs and agents are subordinated to the Constitution and to law and must act, in the exercise of their functions, with respect for the principles of equality, proportionality, justice, impartiality and good faith". (emphasis ours)
Regarding good faith it should be noted what Prof. Freitas do Amaral states, when, in Course of Administrative Law, Vol. II, Almedina, 2002, pp. 135/136, citing Prof. V. Fausto de Quadros, tells us that "[…] the Public Administration is obliged to obey good faith in its relations with individuals. More: it should itself even give, also there, the example to individuals of the observance of good faith, in all its manifestations, as the essential nucleus of its ethical behavior. Without this, it can never be affirmed that the State (and with it other public entities) is a person of integrity".
On the other hand, the principle of trust is also held to be a consequence of the principle of legal certainty, inseparable from the Rule of Law, which having to guarantee a minimum of certainty in the rights of persons and in the legal expectations created for them, generates confidence of citizens in the legal protection of Public Administration.
Regarding the principles of legal certainty and protection of trust, Professor J. J. Gomes Canotilho tells us in Constitutional Law and Theory of the Constitution, Almedina - Coimbra, 1998, p. 250 and segs, that the said principles are closely associated, it being considered that "[…] legal certainty is connected with objective elements of the legal order - guarantee of legal stability, security of orientation and realization of law - while protection of trust is more linked with the subjective components of security, namely the calculability and predictability of individuals in relation to the legal effects of acts of public authorities". In any case, adds the aforementioned Professor, idem, that the "[…] general principle of legal certainty in the broad sense (thus encompassing the idea of protection of trust) can be formulated as follows: the individual has the right to be able to trust that to his acts or to the public decisions affecting his rights, positions or legal relations based on legal norms in force and valid are linked the legal effects provided and prescribed by those same norms".
It follows from this doctrine that persons, when alienating their vehicles, must be sure that, should they proceed to the sale of the vehicles of which they are owners, and such being not registered in the name of the acquirers, the legal effects resulting therefrom will be those provided and arising from the legal norms in force and their adequate interpretation in light of the legal purposes of those same norms, which, in this case, leads the arbitral tribunal to consider the existence of a rebuttable presumption enshrined in article 3(1) of the IUC Code and that only persons who cause road and environmental costs should be taxed.
The best way to ensure, in the case at hand, legal certainty, in the broad sense, is thus the one achieved by way of the interpretation made by the arbitral tribunal, when it considers that a rebuttable legal presumption is enshrined in article 3(1) of the IUC Code, allowing any citizen who proceeds to the sale of a motor vehicle, to a third person, the possibility of demonstrating that, at the time of the accrual of the IUC, he was no longer its owner nor responsible for payment of such tax.
- Beyond what is stated above, it will also be important to know whether the interpretation adopted by the arbitral tribunal, in addition to not conflicting with any of the aforementioned principles, is directly and substantively inscribed in the context of the constitutional order.
Regarding the interpretation of law in light of the Constitution, or of interpretation in conformity with the Constitution, Professor Jorge Miranda tells us, in Manual of Constitutional Law, TOME II, Introduction to the Theory of the Constitution, 2nd edition, Coimbra Editora, 1987, p. 232 and segs, that what is involved, first and foremost, is "[…] taking into account, within the systematic element of interpretation, that which concerns the Constitution. Indeed, each legal provision must not only be understood in the set of provisions of the same law and each law in the set of the legislative order; it must also be considered in the context of the constitutional order [..]". (emphasis ours)
The understanding that considers that a rebuttable legal presumption is enshrined in article 3(1) of the IUC Code is supported by various elements of interpretation, among which should be mentioned the systematic element, to the extent that interpretation in conformity with the Constitution implies that within the systematic element of interpretation, one takes into account that which concerns the Constitution.
Regarding the aforementioned systematic element the following should be stated:
a) In the understanding of BAPTISTA MACHADO, in Introduction to Law and Legitimating Discourse, p. 183, the systematic element "[…] comprises the consideration of other provisions that form the complex regulatory scheme of the institute in which the norm to be interpreted is integrated, that is, which regulate the same matter (context of the law), as well as the consideration of legal provisions that regulate parallel normative problems or related institutes (parallel places). It also comprises the systematic place that belongs to the norm to be interpreted in the overall legal system, as well as its consonance with the spirit or intrinsic unity of the entire legal system".
b) It is known that a legal principle, in this case the principle of equivalence, does not exist in isolation, but rather is linked by an intimate nexus with other principles that integrate, at a more global level, the respective legal system, in this case, with the other principles embodied in the system inscribed in the IUC Code, and with other constitutionally enshrined principles. In this sense, each article of a given legal enactment, in this case the IUC Code, will only be comprehensible if we place it, both before the other articles that follow or precede it, and before the constitutional order.
c) Regarding the systematization of the IUC Code, environmental concerns were decisive for the aforementioned principle of equivalence to be, from the outset, inscribed in the first article of the said Code, which necessarily leads to subsequent articles, to the extent that they are based on such principle, being influenced by it. This occurred, in particular, with the taxable base, which came to be constituted by various elements, particularly those relating to pollution levels, and with the rates of the tax, established in articles 9 to 15, which were influenced by the environmental component, and, naturally, also with the subjective incidence itself, provided for in article 3 of the IUC Code, which cannot escape the aforementioned influence.
d) The aforementioned principle of equivalence, as pointed out by Sérgio Vasques, in Special Consumption Taxes, Almedina, 2001, p. 122 and segs, implies that "[…] the tax must correspond to the benefit which the taxpayer derives from public activity; or to the cost which the taxpayer imputes to the community by his own activity". Adds the aforementioned author, idem, that "Thus, a tax on automobiles based on a rule of equivalence will only be fair if those who cause the same road wear and the same environmental cost pay the same tax; and those who cause different wear and environmental cost, pay different tax also." For this reason, as also states the cited author, idem, the implementation of the principle of equivalence dictates special requirements "[…] regarding the subjective incidence of the tax [..]."
The aforementioned principle that informs the current Single Circulation Tax is inscribed in the environmental concerns established in article 66(2)(a) of the Portuguese Constitution and in the need to - having in view to ensure the right to environment, within a framework of sustainable development - to "Prevent and control pollution and its effects and harmful forms of erosion", concerns which are manifestly considered in the interpretation adopted by this arbitral tribunal.
On the other hand, the provision in article 66(2)(h) of the Constitution, when establishing that, within a framework of sustainable development, it is the State's duty to "ensure that fiscal policy makes development compatible with environmental protection and quality of life", entails, as a corollary, the polluter-pays principle, which concretizes the idea, inscribed therein, that whoever pollutes must, therefore, pay, being thus the interpretation here defended in perfect accord with the constitutional order.
e) It is also important to leave a brief note, solely to raise the question of why the rules contained in article 9 of the Civil Code oblige the interpreter of ordinary legislation, when it is certain that the said Code does not occupy any prominent place in the legal system.
To this question answers Professor Jorge Miranda, ibidem, p. 230, when he considers that the "[…] conclusion to which it is leaning is that rules such as these are valid and effective, not because they are contained in the Civil Code - for this does not occupy any prominent place in the legal system - but, directly, as such, because they translate a legislative will, not contradicted by any other provisions, regarding the problem of interpretation (which are not only technical-legal) of which they cure."
Adds the aforementioned author, idem, that "rules on these matters can be considered substantially constitutional and it would not even be strange to see them raised to the Constitution in formal sense."
Regarding the problem of interpretation and its rules, as can be gathered from Prof. José de Oliveira Ascensão, in Law, Introduction and General Theory, 2nd edition, Calouste Gulbenkian Foundation, 1980, pp. 352/353, the imperative character of these rules should be emphasized, and their binding nature for the interpreter.
The interpretation that this arbitral tribunal makes of article 3(1) of the IUC Code and the criteria which, for this purpose, it considered, from the literal element, to the systematic element, passing through the historical and rational (or teleological) element, do not collide, thus, with any constitutional principles.
Article 9(1) of the Civil Code provides that the search for legislative thought should have "[…] especially in mind […] the unity of the legal system, the circumstances in which the law was elaborated and the specific conditions of the time in which it is applied", circumstances and conditions which, today more than ever, are of sensitivity by the environment and of respect for the issues related to it, and which are shown to be inscribed in the constitutional order.
Thus, in light of what is stated above, it does not seem, with all due respect, that the TCA is right, to the extent that the interpretation here considered, as being the only one capable of respecting the legal purposes, does not violate any of the principles in question, that is, the principles of trust and legal certainty, of the efficiency of the tax system and of proportionality, and that, on the other hand, such interpretation is expressed and substantively in conformity with the principles inscribed in the Constitution.
Under these circumstances, it is not seen that the interpretation made by this arbitral tribunal, on article 3(1) of the IUC Code, contends with any constitutional norms or principles in force.
J - OF THE VALUE OF THE AUTOMOBILE REGISTER
61 - Article 1(1) of Decree-Law no. 54/75, of 12 February, relating to the registration of motor vehicles, establishes that "The registration of vehicles has essentially the purpose of giving publicity to the legal situation of motor vehicles and their trailers, with a view to the security of legal commerce". (emphasis ours)
62 - While it is clear, in light of the said norm, what the purpose of registration is, there is, however, no clarity, within the framework of the said Decree-Law, regarding the legal value of that registration, it being important to consider article 29 of the mentioned legal enactment, relating to the registration of automobile property, when therein it is provided that "The provisions relating to real property registration are applicable, with the necessary adaptations, to the registration of automobiles, […]". (emphasis ours)
63 - In this framework, in order to be able to achieve the legal value of the registration of automobile property, it is important to take into account what is established in the Code of Real Property Registration, approved by Decree-Law no. 224/84, of 6 July, when it provides in its article 7 that "definitive registration constitutes a presumption that the right exists and belongs to the holder inscribed in the precise terms in which the registration defines it". (emphasis ours)
64 - The combination of the provisions mentioned above, that is, in article 1(1) of Decree-Law no. 54/75, of 12 February and in article 7 of the Code of Real Property Registration, allows one to consider, on one hand, that the fundamental function of registration is to give publicity to the legal situation of vehicles, allowing, on the other hand, to presume that the right exists and that such right belongs to the holder in whose favor it is registered, in the precise terms in which it is defined in the register.
65 - Thus, definitive registration constitutes nothing more than the presumption that the right exists and belongs to the holder inscribed, in the exact terms of the register, but a rebuttable presumption, admitting, therefore, evidence to the contrary, as follows from the law and jurisprudence has been noting, and in this regard may be seen, among others, the Judgments of the Supreme Court of Justice nos. 03B4369 and 07B4528, respectively, of 19/02/2004 and 29/01/2008, available at: www.dgsi.pt.
66 - The function legally reserved to registration is, thus, on one hand, to publicize the legal situation of goods, in the case, of vehicles, and on the other, to allow us to presume that there exists the right over those vehicles and that it belongs to the holder, as such inscribed in the register, which means that registration does not have a constitutive nature of the right of ownership, but only a declarative one, being such presumptions rebuttable, either by force of what is established in article 350(2) of the Civil Code, or in light of the provisions of article 73 of the General Tax Law. Whence, from the moment in which the said presumptions are set aside, by means of adequate proof, the TCA cannot persist in considering as the tax debtor of the IUC the person in whose name the vehicle remains registered.
L - OF THE TAX DEBTOR OF THE IUC DURING THE TERM OF THE FINANCIAL LEASING CONTRACT
67 - It is important, first of all, to note that the Legal Regime of the Financial Leasing Contract, approved by Decree-Law no. 149/95, of 24 June, with the last amendment introduced by Decree-Law no. 30/2008, of 25 January, provides in its article 9 that are, namely, obligations of the lessor those to grant the enjoyment of the property for the purposes to which it is intended and that of selling the property to the lessee, should the latter wish, at the end of the contract, as respectively the sub-paragraphs b) and c) of article 9(1).
68 - On the other hand, in light of what is established in article 10 of the said legal enactment, namely in the sub-paragraphs a) of its articles 10(1) and (2), we learn that are obligations of the lessee to pay the rents and to use and enjoy the leased property, which means that, during the term of a financial leasing contract that has as its object a motor vehicle, only the lessee has its exclusive enjoyment.
69 - The obligations of the lessee, in light of the referred norms, point clearly to the sense that it is this contractual subject who has the exclusive enjoyment of the property object of the financial leasing contract, being the one who uses it as if he were the true owner of that property.
70 - The interpretation of article 3(1) of the IUC Code, in light of everything that, in this regard, has been stated above, taking into account, particularly, the legal relevance conferred on the principle of equivalence, does not entail the taxation, in IUC, of the lessor who, as formal owner of the vehicle, does not consequently have any potential polluting effect, which means that the damages arising to the community, resulting from the use of motor vehicles must be assumed by their real users, as costs that only they should bear. The lessee, on the other hand, has the full use and enjoyment of the vehicle, as legally established, being its true user and effective generator of environmental damage, and should thus respond for the corresponding tax, being this the understanding which, in light of the ratio legis of the IUC Code, should be gathered from the provisions of article 3(2) of that same Code.
71 - Thus, the interpretation of article 3(2) of the IUC Code will only permit viewing the lessee as responsible for payment of the IUC, it being important, in this regard, to note the provisions of article 19 of the IUC Code, when, precisely, for purposes of the provisions of article 3 of the said Code, that is, for purposes of subjective incidence, it comes to impose on entities that proceed to financial leasing the obligation to provide the TCA with data relating to the fiscal identification of the users of the leased vehicles, which reveals, in particular, that, for purposes of the said incidence, it is intended to know who are, ultimately, the true users of the leased vehicles, so that they, and not others, bear the single circulation tax, which, moreover, is shown to be in total harmony with the principle of equivalence, as a structuring principle of the IUC Code.
72 - In light of what has just been stated, it is our understanding that, should a financial leasing contract exist, on the date of tax accrual, that has as its object a motor vehicle, the tax debtor of such tax is not, in light of the provisions of article 3(2) of the IUC Code, the lessor but rather the lessee, given that it is this one who has the enjoyment of the vehicle and, as such, the intrinsic potential for pollution, independently of the registration of the property right remaining in the name of the lessor.
73 - In this framework, with the exception of vehicles with registration plates …-…-…; …-…-…; …-…-…; …-…-… (regarding the assessments of 2010 and 2011); …-…-… and …-…-…, whose vehicle rental contracts without driver, with promise of sale and financial leasing contracts, were in effect on the dates of accrual of the corresponding IUC, the payment thereof being the responsibility of the lessees, given that, in light of what has already been stated, they were, then, tax debtors of the tax, in all other contracts relating to the remaining vehicles, the payment of the tax fell to the lessor.
74 - As for the remaining vehicles, that is, the vehicles with registration plates …-…-…; …-…-…; …-…-…; …-…-…; …-…-… and …-…-…, as indeed pointed out by the Respondent, and also concerning the vehicle with registration plate …-…-… (regarding the assessment of 2012); the termination of the said contracts occurred, respectively on 24-08-2006, 21-11-2007, 07-08-2006, 09-11-2011, 08-09-2010, 25-03-2012 and 30-01-2012, being that the accrual of the corresponding IUC is reported, respectively, to August 2009/2010/2011/2012, September 2013, August 2013, June 2013/2014, August 2013, February 2014 and June 2012.
75 - The amount assessed and paid, with reference to the vehicles identified in the preceding paragraph 73, that is, to the vehicles with registration plates …-…-…; …-…-…; …-…-…; …-…-… (regarding the assessments of 2010 and 2011); …-…-… and …-…-…, corresponds, respectively, to the sum of € 55.59; € 147.85; € 36.85; € 116.42; € 54.06 and € 33.64, totaling € 444.41.
M - OF THE MEANS OF EVIDENCE PRESENTED
76 - The means of evidence presented are embodied in the twelve vehicle rental contracts without driver, with promise of sale and financial leasing contracts, (copies), relating to the same number of vehicles, contracts which, as stated by the Claimant, would be in effect on the date of accrual of the IUC, which, it should be noted, is not proven in the proceedings.
77 - Indeed, with the exception of the contracts relating to the vehicles identified with registration plates …-…-…; …-…-…; …-…-…; …-…-… (regarding the assessments of 2010 and 2011); …-…-… and …-…-…, which were in effect on the dates of accrual of the corresponding IUC, whose assessments total a total tax amount of € 444.41, in all other situations, namely those relating to the contracts concerning vehicles with registration plates …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-… and …-…-… (regarding the assessment of 2012), this is not the case.
78 - As mentioned above, although the Claimant considers that all leasing contracts were in effect on the date of accrual of the tax, the fact is that such situation is reduced to the leasing contracts which have as their object vehicles with registration plates …-…-…; …-…-…; …-…-…; …-…-…; …-…-… and …-…-… (regarding the assessments of 2010 and 2011), it being necessary to understand that such contracts are suitable means to prove the status of the lessees and, as such, tax debtors of the IUC, there being, moreover, no elements that would permit understanding that the data inscribed in such contracts do not correspond to the contractual truth, it being also certain that the law, in this case, article 75(1) of the General Tax Law, attributes to such documents a presumption of truthfulness.
79 - It is not thus proven that the vehicles identified in the case file, all of them, were the object of financial leasing contracts in effect on the date of accrual of the tax, nor were there submitted to the case file other documents, particularly copies of invoices-receipts or receipts as means of proof that, following the term of such contracts, there was proceeded to the sale of the remaining vehicles, that is, of the vehicles whose contracts were not in effect, at the time of the dates relating to the accrual of the tax.
80 - In light of what has just been stated, and taking into account, both the presumption established in article 3(1) of the IUC Code, and the interpretation of article 3(2) of that same article and the responsibility of the lessees as tax debtors of the tax, and the legal value of the automobile register in the economy of the IUC Code, and the leasing contracts concerning the vehicles identified with registration plates …-…-…; …-…-…; …-…-…; …-…-…; …-…-… and …-…-… (regarding the assessments of 2010 and 2011), which were in effect on the dates of accrual of the corresponding IUC, whose assessments total a total tax of € 444.41, the tax acts relating to these vehicles cannot merit our agreement, either because an adequate interpretation and application of the legal norms of subjective incidence was not taken into account, which constitutes an error regarding the legal assumptions, or because the said acts were based on a matter of fact clearly divergent from the actual reality, which constitutes an error regarding the factual assumptions.
81 - Under these circumstances, in light of the submission of copies of vehicle rental contracts without driver, with promise of sale and financial leasing contracts, relating to vehicles with registration plates …-…-…; …-…-…; …-…-…; …-…-…; …-…-… and …-…-… (regarding the assessments of 2010 and 2011), in effect on the date of accrual of the tax, and for the reasons above mentioned, tax debtors of the IUC are, in accordance with the provisions of article 3(2) of the IUC Code, the lessees identified in such contracts.
82 - In summary, it would be said, in harmony with what is stated above, that the assessment acts relating to the vehicles identified in the preceding paragraph 81 are considered illegal, to the extent that, on the date of accrual of the IUC, leasing contracts were in effect, the tax debtors of the tax being the respective lessees, and not the Claimant, in light of the provisions of article 3(2) of the IUC Code, it being noted that the amount assessed and paid, with reference to such vehicles, totals € 444.41.
N - REIMBURSEMENT OF THE AMOUNT PAID AND COMPENSATORY INTEREST
83 - Pursuant to the provisions of article 24(1)(b) of the LRATM, and in accordance with what is established therein, the arbitral decision on the merits of the claim of which there is no recourse or challenge binds the tax administration from the end of the period provided for recourse or challenge, and it should - in the exact terms of the procedural success of the arbitral decision in favor of the tax debtor and until the end of the period provided for the spontaneous execution of the sentences of tax courts - "Restore the situation that would have existed if the tax act subject to the arbitral decision had not been practiced, adopting the acts and operations necessary for this purpose." (emphasis ours)
84 - These are legal commands that are in total harmony with the provisions of article 100 of the General Tax Law, applicable to the case by force of the provisions of article 29(1)(a) of the LRATM, in which it is established that "The tax administration is obliged, in case of total or partial success of claims or administrative appeals, or of judicial proceedings in favor of the tax debtor, to the immediate and full restoration of the situation that would have existed if the illegality had not been committed, comprising the payment of compensatory interest, in the terms and conditions provided for in the law." (emphasis ours)
85 - The case contained in the present case file raises the manifest application of the mentioned norms, since as a consequence of the illegality of the assessment acts referenced in this proceedings, there must, by force of such norms, be the reimbursement of the amounts paid, whether as tax or compensatory interest, as a way to achieve the restoration of the situation that would have existed if the illegality had not been committed, amounts which in the case at hand total the sum of € 444.41, resulting from the total amount € 939.89, which was paid, minus the sum of € 495.48 associated with the assessments relating to vehicles with registration plates …-…-…; …-…-…; …-…-…; …-…-…; …-…-…; …-…-… and …-…-… (regarding the assessment of 2012).
86 - As to the compensatory interest, it is manifest that, in light of what is established in article 61 of the Code of Administrative Tax Procedure and the requirements for the right to compensatory interest being met, that is, verifying the existence of error attributable to the services from which results payment of the tax debt in an amount greater than legally due, as provided for in article 43(1) of the General Tax Law, the Claimant is entitled to compensatory interest at the legal rate, calculated on the sum of € 444.41.
CONCLUSION
87 - It is thus concluded that if, on the date of accrual of the tax, a vehicle rental contract without driver, with promise of sale or financial leasing contract exists, which has as its object an automobile, for purposes of the provisions of article 3(1) and (2) of the IUC Code, the tax debtor of the IUC is the lessee, even though the registration of the property right of the vehicle in the Motor Vehicle Registration Bureau is made in the name of the lessor entity, provided that the latter provides proof of the existence of the said contract.
88 - Having the assessment acts of IUC relating to vehicles with registration plates …-…-…; …-…-…; …-…-…; …-…-…; …-…-… and …-…-… (regarding the assessments of 2010 and 2011), been supported in the idea that, within the framework of vehicle rental contracts without driver, with promise of sale and financial leasing contracts in effect, at the time of accrual of the IUC, the tax debtors of the tax are the lessors, in light of the provisions of article 3(1) and (2) of the IUC Code, the TCA makes an incorrect interpretation and application of the said legal norms, committing an error of law regarding the assumptions, which constitutes a violation of law.
89 - In light of these errors regarding the factual and legal assumptions on which the said assessment acts are based, the request for arbitral pronouncement underlying the present proceedings must be judged partially founded, justifying the annulment of such assessment acts, with all legal consequences.
III - DECISION
90 - Wherefore, in light of all the foregoing, this Arbitral Tribunal decides:
-
To judge partially founded, as proven, on the ground of violation of law, the request for arbitral pronouncement insofar as it concerns the annulment of the IUC assessment acts, relating to vehicles with registration plates …-…-…; …-…-…; …-…-…; …-…-…; …-…-… and …-…-… (regarding the assessments of 2010 and 2011);
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To annul the acts of dismissal of the hierarchical appeals filed against the acts which dismissed the Gracious Complaints referenced in the case file, with the nos …2016…; …2014…; …2014…; …2014… (regarding the assessments of 2010 and 2011); …2016… and …2015….
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To annul the IUC assessment acts, relating to the years 2009 to 2013, relating to the vehicles, as aforementioned above;
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To condemn the TCA to reimburse the sum of € 444.41, obtained in the terms indicated above, in paragraph 85, relating to the IUC and compensatory interest that were paid, relating to the years 2009 to 2013, and to the payment of compensatory interest at the legal rate, counted from the date of payment of the said sum, until the full reimbursement of the same;
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To condemn the Claimant and the Respondent to costs, which are fixed, for each of them, in the proportion of 53% for Claimant and 47% for Respondent.
VALUE OF THE CASE
In accordance with the provisions of articles 306(2) of the Code of Civil Procedure (former 315(2)) and 97-A(1) of the Code of Administrative Tax Procedure and article 3(2) of the Regulation of Costs in Proceedings of Tax Arbitration, the value of the case is fixed at € 939,89.
COSTS
In accordance with the provisions of article 12(2), in fine, in article 22(2)(4), both of the LRATM, and in article 4 of the Regulation of Costs in Proceedings of Tax Arbitration and Table I, which is annexed thereto, the amount of total costs is fixed at € 306.00.
Let notification be made.
Lisbon, 13 July 2017
The Arbitrator
António Correia Valente
[1] See the study on the matter, prepared by Prof. Carlos Pestana Barros, in Science and Fiscal Technique, 2005, no. 416, pp. 105-126
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