IUC Vehicle Tax Liability Under Art. 2(1)(a) - CAAD Arbitration 566/2015-T Decision

Arbitral Decision

I – Report

1.1. A…, S.A. (hereinafter referred to as the "Claimant"), with registered office at Rua …, …-…, …, …-… Porto, with TAX ID No. …, having been notified of the acts of assessment of IUC identified in the tables set out in point 3 of the initial petition (tables which are considered reproduced here given their length), filed on 1/9/2015 a request for constitution of an arbitral tribunal and for an arbitral ruling, pursuant to the provisions of articles 3, no. 1, and 10, no. 2, of Decree-Law no. 10/2011, of 20/1 (Legal Regime of Arbitration in Tax Matters, hereinafter only referred to as "LRATM"), as well as articles 1 and 2 of Ordinance no. 112-A/2011, of 22/3, in which the Tax and Customs Authority (TCA) is summoned, seeking the appraisal of "the legality of the acts of rejection which fell upon the [...] proceedings [of administrative appeal nos. …2013…, …2015… and …2015…] and [...], consequently, [the annulment of the] assessments there contested, as well as assessments relating to the month of December 2013 and 2014 and to the months of January, February and March 2015".

1.2. On 17/11/2015 the present Sole Arbitral Tribunal was constituted.

1.3. Pursuant to article 17, no. 1, of the LRATM, the TCA was summoned, as respondent party, to submit its reply, pursuant to the said article. The TCA submitted its reply on 22/12/2015, having argued for the complete dismissal of the Claimant's request, and having further raised an exception of alleged illegal cumulation of claims, as well as an exception of alleged untimeliness of the request for arbitral ruling.

1.4. The now Claimant, in a pleading dated 13/1/2016, made submissions on the exceptions raised by the TCA, having, in summary, considered them "lacking merit, as not substantiated".

1.5. By order of 10/3/2016, the Tribunal considered that, as the now Claimant had already made submissions on the exceptions raised by the Respondent – thereby fulfilling what is provided in article 18, no. 1, para. b), of the LRATM –, it was dispensable, pursuant to article 16, para. c), of the LRATM, to hold the hearing provided for in the said article 18 and that the case was ready for decision. Pursuant to the provisions of articles 16, paras. c) and e), and 19 of the LRATM, the Tribunal considered it also dispensable to produce testimony evidence (sought by the Claimant), given that there were sufficient evidentiary elements in the case file to render the decision. In these terms, the date of 29/3/2016 was lastly set for the delivery of the arbitral decision.

1.6. The Arbitral Tribunal was properly constituted, is materially competent, the case does not suffer from defects that would invalidate it (see infra, "preliminary issues") and the Parties have legal personality and capacity, being duly represented.

II – Parties' Allegations

2.1. The now Claimant alleges, in its initial petition, that: a) "[it should] be understood that the person liable for IUC is the vehicle owner only in those cases in which the acquirer is not burdened with a clause reserving ownership or there are no other holders of the right to purchase option by virtue of a lease contract. In effect, in those cases, the tax is owed by whoever holds the right to exclusive use of the vehicle, in accordance with the user-payer principle which guides the taxation of motor vehicle circulation"; b) "[as regards the] assessments of IUC on vehicles subject to Long-Term Rental (Lease) contracts (Table 1, cf. Documents nos. 4 to 60) [...] it is evident from the documentary evidence (cf. Documents nos. 4 to 60) that [the Claimant, simultaneously with the execution of the leases of the vehicles subject to the tax whose assessments are identified in Table no. 1, was a beneficiary of an irrevocable purchase promise, relevant for purposes of applying no. 2 of article 3 of the IUC Code. Therefore, the person liable for the tax owed is the respective lessee, and not the Claimant, which affects the tax acts in question in Table 1 with illegality, and they should be revoked and the sum paid to the Claimant should be refunded together with the accrued interest"; c) "[as regards the] assessments of IUC on vehicles with reservation of ownership in favor of the Claimant (Table 2, cf. Documents nos. 61 to 70) [...] [it is found that] the legislator provided for the assimilation to owners, for purposes of determining subjective tax liability of IUC, of acquirers with reservation of ownership, without however providing for the necessity that such reservation operate in favor of the alienator. This is sufficient to conclude that, in the cases provided for in no. 2 of article 3 of the IUC Code, not the requirements of subjective tax incidence are met only in the sphere of acquiring users and only in relation to these"; d) "[as regards the] assessments of IUC on [vehicles] already alienated on the date of the occurrence of the respective tax event (Table no. 3, cf. Documents nos. 71 to 288) [it is important to note that] given that the ownership of the automobiles identified in Table no. 3 was transferred on the date when the tax obligation accrued, it is important to clarify the scope of the final part of no. 1 of article 3 and whether a true legal presumption is established therein regarding tax incidence. [...]. [...] concluding that the norm inherent in no. 1 of article 3 of the IUC Code establishes a true legal presumption within the scope of subjective tax incidence, the Claimant now proceeds to demonstrate, pursuant to and for the purposes of article 73 of the General Tax Law, that it was not the owner of the motor vehicles subject to the tax here challenged on the date of the occurrence of the tax event. [...]. [...] having the Claimant already proceeded to alienate the vehicles identified in Table no. 3 on the date of the anniversary of their respective registrations, it cannot be considered liable for the IUC owed. As follows from the invoices contained in Documents nos. 71 to 288, on the date of the tax event in question here, the ownership of the vehicles in question had already been transmitted by the Claimant. Therefore, the tax assessed is the sole responsibility of the respective acquirers, to whom the right of ownership over the vehicles in question was transferred, these being the corresponding liable parties"; e) "[as regards the] assessments of IUC on vehicles that suffered loss or total loss (Table no. 4, cf. Documents nos. 289 to 336) [it is found that] the vehicles identified in Table no. 4 suffered, before the occurrence of the tax event in question, accidents that caused their total loss. At that time, the Claimant, as owner of the vehicle, provided its insurer with the documents necessary to prove the occurrence of the accident and its respective effects, on which occasion it received, pursuant to the respective contract, the indemnity owed [...]. It further provided the insurer with the documents necessary for it to request, as is incumbent upon it by virtue of law (cf. no. 8 of article 119 of the Road Code), the cancellation of the respective registration. For this reason, on the date when the tax in question here became due, there no longer existed the respective assumption of objective tax incidence (cf. articles 2 and no. 3 of article 4 of the IUC Code)"; f) "[as regards the] assessments of IUC on vehicles subject to financial lease contracts entered into by the Claimant (Table no. 5, cf. Documents nos. 337 to 342) [it is found that,] on the date of the occurrence of the tax event, the vehicles were leased under a financial lease contract, as is the case with those identified in Table no. 5, pursuant to Documents nos. 337 to 342, [therefore,] there is likewise no doubt that it is the respective lessees who are liable for the tax. Even if that their quality of lessees [was not] subject to registration, [...] from the registration there only follows a presumption – which the Claimant has already rebutted before the TCA – that the right belongs to that person in whose name it is registered"; g) "[as regards the] assessments of IUC on vehicles that were subject to financial lease contracts that entered into default, with proceedings in contention and not having, to date, recovered the said vehicles (Table no. 6, cf. Documents nos. 343 to 471) [it is emphasized that] the respective lessees entered into default, with proceedings in contention (cf. Documents 343 to 471 already attached). Furthermore, to date, and notwithstanding the Claimant's efforts in that direction, the vehicles in question have not yet been recovered. For the reason mentioned above, on the date when the tax in question here became due, the liable party for the tax is the Lessee. Since, as already mentioned, «the obligation to pay IUC falls directly on the financial lessee and not on the lessor, given the characteristics of its legal position.»"; h) "[as regards the] assessments of IUC on vehicle that was subject to immediate return by the Claimant to the respective supplier, because it presented a defect and was promptly exchanged for another vehicle, whereby it was not even subject to a contract, or put into circulation (Table no. 7, cf. Document no. 472) [it is found that] the vehicle [in question] was never subject to any contract on the part of the Claimant or used by it for any purpose. In short, the vehicle never circulated and was returned immediately by the Claimant [which is the reason why] no tax liability whatsoever for the IUC in question can be attributed to the Claimant". It further alleges that, having proceeded to voluntary payment of the assessments, and considering that these should be annulled, the "TCA should proceed to reimburse the amount thereby improperly paid, which, deriving from an error imputable to the services, should, pursuant to articles 43 and 100 of the General Tax Law, be increased with the corresponding compensatory interest."

2.2. In light of the foregoing, the now Claimant seeks, in summary, the annulment of the "identified acts of assessment of IUC", as well as the refund of the amount deemed improperly paid, plus compensatory interest.

2.3. For its part, the TCA alleges, in its reply: a) that "in the present case the requirement of coincidence of facts [is not] found, for which reason the cumulation made by the Claimant is illegal, whereby the learned Arbitral Tribunal should not permit the present cumulation of claims, since the success or failure of the requests for declaration of illegality of the assessments does not derive from the appraisal of the same factuality. A circumstance that constitutes an unnamed dilatory exception that prevents the learned tribunal from knowing the merits of the case and determines the absolution of the Public Treasury from the arbitral proceedings, pursuant to the provisions of no. 1 and 2 of article 576 of the Code of Civil Procedure, applicable by virtue of article 29, no. 1, para. e) of the LRATM"; b) that "the Claimant [...] identifies as the object of the request the present request for arbitral ruling the declaration of illegality of the acts of assessment of Single Circulation Tax identified in tables nos. 1 to 7 of the initial petition. [...]. However, the legally defined deadline for challenging acts of assessment in arbitration has [clearly] been exceeded. Article 10 of the LRATM establishes, regarding acts of assessment/self-assessment, that the deadline for submitting the request for arbitral ruling is 90 (ninety) days, referring, as to the moment of the beginning of the count, to what is provided for in article 102, nos. 1 and 2, of the Tax Procedure and Process Code (TPPC). From that norm, and with relevance to the case at hand, it is extracted that the stipulated period of 90 (ninety) days would have as its starting point the day following the end of the deadline for voluntary payment of the tax obligation – cf. article 102, no. 1, para. a), of the TPPC. However, the request for constitution of the arbitral tribunal was submitted on 2015-09-01, that is, after the deadline had expired. Therefore, the request filed is untimely and the Tribunal cannot know of it"; c) that "it is manifest that the act (directly) being challenged is the assessments of tax, that is, these constitute the immediate object of the request. [Furthermore, the now Claimant] does not identify/formulate, in its request, any reference to challenging the act of partial approval/rejection of the administrative appeal. In sum, as results clear and unequivocally from the learned initial petition the direct challenge of the acts of tax assessment, the request formulated (leading to the declaration of illegality of those acts and, consequently, to their annulment) should be declared lacking merit, as untimely, and, consequently, the Respondent Entity should be absolved from the proceedings – cf. para. e), of no. 1, of article 278 of the Code of Civil Procedure in force, applicable by virtue of article 29, no. 1, para. e), of Decree-Law no. 10/2011, of 20 January"; d) that "the understanding advocated by the Claimant incurs not only a biased reading of the letter of the law, but also the adoption of an interpretation that does not attend to the systematic element, violating the unity of the regime established throughout the SIUC and, more broadly, throughout the entire tax-legal system and further derives from an interpretation that ignores the ratio of the regime established in the article in question, and likewise, throughout the SIUC"; e) that "article 3 of the SIUC does not contain any legal presumption, it being certain that the far-fetched thesis advocated by the Claimant directs its objective to the wrong target"; f) that "the tax legislator intentionally and expressly wished that persons in whose names the vehicles are registered be considered as owners, lessees, acquirers with reservation of ownership or holders of the right to purchase option in long-term rental"; g) that, "in light of a teleological interpretation of the regime established throughout the SIUC, the interpretation advocated by the Claimant in the sense that the liable party for the tax is the effective owner, regardless of not appearing in the vehicle registration the registration of that quality, is manifestly wrong"; h) that, "accepting it to be admissible to rebut the presumption in light of the jurisprudence that has meanwhile been established in this arbitration center, it will nonetheless be necessary to appraise the documents filed by the Claimant and their probative value with a view to such rebuttal. [In that sense, it is emphasized that] even if it were concluded that we are before long-term rental contracts by the Claimant, it would still be up to the latter to demonstrate having fulfilled the ancillary obligation imposed by article 19 of the SIUC. [...]. However, the Claimant made no proof regarding compliance with this obligation, as was incumbent upon it, whereby the intended rebuttal of article 3 in question here must necessarily fail"; i) that, "as regards the assessments relating to vehicles sold with reservation of ownership", "from the documents filed by the Claimant the existence of reservations of ownership in favor of the Claimant cannot be inferred. Second, for the Claimant to be able to benefit from the regime of article 3/3 of the SIUC, it would have been necessary for the supposed reservations of ownership to have been brought to the register. [...]. However, as the Claimant itself confesses in article 14 of its initial petition – a confession which is hereby accepted and shall not be withdrawn again –, the alleged acquisitions with reservation of ownership were never brought to the register"; j) that, "as regards the assessments relating to vehicles alienated on the date of the tax event", "the documents, namely the supposed invoices are not sufficient to affect the (supposed) legal presumption established in article 3 of the SIUC. Firstly because the supposed invoices are non-conforming to what tax law requires regarding the legal requirements required for their issuance (article 36/5 of the Value Added Tax Code), whereby such documents can never benefit from the presumption of truth to which article 75 of the General Tax Law alludes. Additionally, the supposed invoices are not apt to prove the execution of a synallagmatic contract such as purchase and sale, as such documents do not reveal in themselves an essential and unequivocal declaration of intention (i.e., acceptance) on the part of the supposed acquirers"; l) that "the Claimant did not attach documentary proof of receipt of the price when it could and should have done so, that is, in the pleading of the request for arbitral ruling, and is now barred from the possibility of doing so at a later moment, pursuant to the interlocutory decision rendered above within the scope of arbitration proceedings no. 75/2012-T"; m) that, "as regards the assessments relating to vehicles damaged or totally lost", "the accident or total loss of vehicles does not determine, by itself or merely by that fact, the end of ownership over the damaged or totally lost vehicle. [Furthermore,] the Claimant made no proof of the supposed transfer of ownership of the damaged or totally lost automobiles in favor of the insurance company(ies) when it could and should have done so, that is, in the pleading of the request for arbitral ruling, and is now barred from the possibility of doing so at a later moment"; n) that, "as regards the assessments relating to vehicles subject to financial lease contracts", "even if it were concluded that we are before financial lease contracts granted by the Claimant, it would still be up to the latter to demonstrate having fulfilled the ancillary obligation imposed by article 19 of the SIUC. [...]. However, the Claimant made no proof regarding compliance with this obligation, as was incumbent upon it, whereby the intended rebuttal of article 3 in question here must necessarily fail."; o) that, likewise, "as regards the assessments relating to financial leasing subject to default/contention", "even if it were concluded that we are before financial lease contracts granted by the Claimant, it would still be up to the latter to demonstrate having fulfilled the ancillary obligation imposed by article 19 of the SIUC. [...] having not complied with that obligation, the Claimant, it is unavoidable to conclude that it is the liable party for the tax"; p) that, "as regards the assessments relating to the vehicle subject to return", "Document no. 472 only proves payment of tax for the year 2003, whereby it does not prove what was alleged by the Claimant, nor is it sufficient to affect the (supposed) legal presumption established in article 3 of the SIUC"; q) that "the interpretation conveyed by the Claimant [...] is contrary to the Constitution, in that such interpretation translates into a violation of the principle of trust, the principle of legal certainty, the principle of efficiency of the tax system and the principle of proportionality"; r) that "IUC is assessed according to the registration information duly transmitted by the Institute of Registries and Notaries [whereby] IUC is not assessed according to information generated by the Respondent itself. [...] the Respondent [limited itself] to giving effect to the legal obligations to which it is bound and, in parallel, to following the registration information provided to it by those entitled to do so".

2.4. The TCA concludes, finally, that "the above-mentioned exceptions should be judged to have merit, absolution of the Respondent accordingly; or, should that not be understood, judged to lack merit in the present request for arbitral ruling, maintaining in the legal order the tax act of assessment being challenged and absolving, accordingly, the Respondent from the request."

III – Proven Facts, Unproven Facts and Their Respective Justification

3.1. The following facts are considered proven:

i) The corporate object of the Claimant consists of financing acquisitions on credit of consumer goods and equipment (financial leasing and credit), as well as the activity of Long-Term Rental (LTR) of motor vehicles without driver, motorcycles and boats.

ii) Within the scope of the activity it develops, the Claimant executes with its clients long-term rental contracts and financial lease contracts, at the end of which the vehicle is transferred to the lessee, whose object is motor vehicles and, likewise, loan contracts for acquisition of motor vehicles in which a reservation of ownership clause is established in its favor.

iii) The assessments now in question concern a tax whose tax event occurred, provably: either 1) during the pendency of LTR contracts (see Table no. 1 and Docs nos. 4 to 60); or 2) at a moment when the Claimant was a beneficiary of a reservation of ownership clause stipulated in the loan contract (see Table no. 2 and Docs nos. 61 to 70); or 3) at a moment when the Claimant had already proceeded to sell the vehicle (see Table no. 3 and Docs nos. 71 to 288); or 4) at a moment when the total loss of the vehicles in question had occurred, by accident covered by an insurance contract (see Table no. 4 and Docs nos. 289 to 336); or 5) during the pendency of financial lease contracts (see Table no. 5 and Docs nos. 337 to 342); or 6) as to vehicles subject to financial lease contracts that entered into default, with proceedings in contention and not having, to date, been recovered (see Table no. 6 and Docs nos. 343 to 471).

iv) The assessments now in question amount to €37,734.41, being the same apportioned, pursuant to the tables contained in point 3 of the initial petition of the now Claimant, as follows: €2,966.11 (as a result of expressed partial rejection of Administrative Appeal no. …2013…, relating to 2008, and notified to the Claimant on 6/7/2015); €8,526.92 (as a result of expressed partial rejection of Administrative Appeal no. …2015…, relating to 2013 and 2014, and notified to the Claimant on 20/7/2015) [this value includes the IUC assessments for 2013 and 2014 relating to the vehicle with license plate …-…-… (which will be mentioned in the unproven facts)]; €9,861.89 (as a result of tacit rejection of Administrative Appeal no. …2015…, relating to the years 2013 and 2014); €5,471.00 (IUC assessments relating to the year 2014 and relating to the month of December of that year); €10,908.49 (IUC assessments relating to the year 2015 and relating to the months of January, February and March of that year).

v) The now Claimant proceeded to payment of all the assessments mentioned above.

vi) The cumulation of claims underlying the present request for arbitral ruling has legal basis, since, in light of article 3, no. 1, of the LRATM, and article 104 of the TPPC, there is verified, as to all of them, identity of tax, circumstances and grounds of fact and law invoked for their appraisal and decision.

3.2. As to the vehicle which allegedly was returned by the Claimant to the respective supplier (license plate …-…-…), because it presented a defect (see Table no. 7 and Doc. no. 472), it is not proven, based on the tenor of said Doc. no. 472, the alleged return.

3.3. The facts considered pertinent and proven (see 3.1) are based on the analysis of the positions exposed by the parties and the documentary evidence attached to the case file. The fact considered unproven is based on the absence of documentary evidence demonstrating the allegation made.

IV – Preliminary Issues

As mentioned in the report of the present decision, the Respondent raised, in its reply of 22/12/2015, two exceptions: exception of alleged illegal cumulation of claims; and exception of alleged untimeliness of the request for arbitral ruling.

It falls, therefore, to ascertain whether they should be considered to have merit, attending also to what is contained in the pleading of the now Claimant dated 13/1/2016, in which it makes submissions on the said exceptions.

As to the first of the exceptions, it is worthwhile to bear in mind, first of all, what article 3, no. 1, of the LRATM states: "The cumulation of claims even if relating to different acts and joinder of claimants are admissible when the success of the claims depends essentially on the appraisal of the same circumstances of fact and on the interpretation and application of the same principles or rules of law."

In the present case, the Respondent considers that the requirement of coincidence of circumstances of fact is not met, since "the success or failure of the requests for declaration of illegality of the assessments does not derive from the appraisal of the same factuality". It is verified, however, that the Respondent is not right. As the Claimant well emphasized, in the pleading of 13/1/2016, making reference to arbitral decisions relating to cases in which similar cumulations were requested, it is verified, also in this case, that "«the success of the claims depends on the appraisal of the same circumstances of fact and on the interpretation and application of the same principles and rules of law. This is not prevented by the fact that the acts of assessment sub judice concern different vehicles, with different transmission dates, different grounds for transmission and different owners, as the circumstances of fact are identical, relating to the transmission of ownership of vehicles.»"

In light of the foregoing, attending to the identity of the tax events in question (which is not equal to the absolute identity of factual situations, as well emphasized by Jorge Lopes de Sousa in "Commentary to the Legal Regime of Tax Arbitration", in Guide to Tax Arbitration, 2013, p. 147), of the tribunal competent for decision and of the grounds of fact and law invoked, nothing prevents, in view of the provisions of article 104 of the TPPC and article 3 of the LRATM, the requested cumulation (see supra, point vi) of the matter of proven facts).

As to the second of the exceptions, the Respondent alleges that "the Claimant [...] identifies as the object of the present request for arbitral ruling the declaration of illegality of the acts of assessment of Single Circulation Tax identified in tables nos. 1 to 7 of the initial petition. [Whereby] the legally defined deadline for challenging acts of assessment in arbitration has [clearly] been exceeded. [...]. Therefore, the request filed is untimely and the Tribunal cannot know of it".

Also here the Respondent is not right, given that, despite the formulation contained at the beginning of point 7 of the initial petition of the now Claimant, there is express indication of the object of the present request for arbitral ruling when it refers, in express and unequivocal manner, in point 3 of the mentioned initial petition, that, "in the case in question, [what it seeks is that] the Tribunal appraise the legality of the acts of rejection which fell upon the following proceedings and that, consequently, annul the assessments there contested, as well as assessments relating to the month of December 2013 and 2014 and to the months of January, February and March 2015". And, the claimant further adds, "[it] only did not [make a request for appraisal of the illegality of acts of rejection] as to certain assessments, because regarding those, the Claimant proceeded to the direct challenge of the same to the CAAD, within the deadline provided by law for that purpose."

In light of the foregoing – and considering the natural necessity of including in the request for arbitral ruling the acts of assessment resulting from acts of rejection; and attending to the express reference contained in point 3 of the initial petition, as well as to the indication, also made there, to the acts of rejection –, the invoked exception of untimeliness of the request for arbitral ruling is judged to lack merit.

V – On the Law

In the present case, there are six disputed legal issues: 1) whether article 3 of the SIUC contains a presumption and whether rebuttal thereof was made; 2) whether, as the TCA alleges, the interpretation of the now Claimant does not attend to the systematic and teleological elements of interpretation of law; 3) whether, as to IUC assessments on vehicles with reservation of ownership in favor of the Claimant, as well as to assessments of damaged/totally lost vehicles on the date of the tax, and, finally, to assessments relating to the vehicle subject to return, the disputed IUC is owed; 4) whether, as the TCA alleges, for purposes of rebuttal of the presumption of article 3 of the SIUC, it is necessary that financial lessors (such as the now Claimant) comply with the obligation inherent in article 19 of the SIUC to exempt themselves from the obligation to pay the tax; 5) whether, as the TCA also alleges, "the interpretation conveyed by the Claimant [...] is contrary to the Constitution"; and 6) whether compensatory interest is owed to the Claimant.

Let us then proceed.

1. and 2) The first two legal issues converge towards the interpretation of article 3 of the SIUC, whereby it is necessary: A) to determine whether the norm of subjective tax incidence, contained in said article 3, establishes or not a presumption; B) to determine whether, considering that this norm establishes a presumption, it violates the "unity of the regime", or disregards the systematic element and the teleological element; C) to determine – admitting that the presumption exists (and that it is a rebuttable presumption) – whether rebuttal thereof was made.

A) Article 3, nos. 1 and 2, of the Single Circulation Tax Code has the following wording, which is here reproduced:

"Article 3 – Subjective Tax Incidence

1 - Liable parties for the tax are the owners of vehicles, being considered as such the natural or legal persons, of public or private law, in whose names the same are registered.

2 - Financially lessees, acquirers with reservation of ownership, as well as other holders of purchase option rights by virtue of the lease contract are assimilated to owners".

The interpretation of the cited legal text is, naturally, essential for the resolution of the case under analysis. To that extent, it is necessary to resort to article 11, no. 1, of the General Tax Law, and, by reference thereof, to article 9 of the Civil Code (CC).

Now, pursuant to said article 9 of the CC, interpretation starts from the letter of the law and aims, through it, to reconstitute the "legislative intent". That is to say (regardless of the objectivism-subjectivism debate) that literal analysis is the basis of the interpretive task and the systematic, historical or teleological elements are guides for the conduct of said task.

The literal apprehension of the legal text in question does not generate - even if the separation of this from the determination, even if minimal, of its respective meaning is very debatable - the notion that the expression "considering as such" means something different from "presuming as such". In fact, it would be very difficult to find authors who, in a task of pre-comprehension of the said legal text, would instinctively reject the identity between the two expressions.

Confirming the indistinction (both literal and in meaning) of the words "considering" and "presuming" (presumption), see, for example, the following articles of the Civil Code: 314, 369 no. 2, 374 no. 1, 376 no. 2, and 1629. And, with special interest, the case of the expression "is considered", contained in article 21, no. 2, of the CIRC. As point out Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, with respect to that article of the CIRC: "beyond this norm evidencing that what is in question in the taxation of capital gains is to determine the real value (the market value), the limitation to the determination of real value derived from the rules of determination of taxable value provided for in the CIS cannot fail to be considered as a presumption in the matter of incidence, whose rebuttal is permitted by article 73 of the General Tax Law" (General Tax Law, Annotated and Commented, 4th ed., 2012, pp. 651-2).

B) These are just some examples that allow concluding that it is precisely for reasons related to the "unity of the legal system" (the systematic element) that one cannot affirm that only when the verb "presume" is used is one before a presumption, given that the use of other terms or expressions (literally similar) can also serve as the basis for presumptions. And, among these, the expressions "is considered as" or "considering as" assume, as was seen, prominence.

If the literal analysis is only the basis of the task, it is naturally essential to evaluate the text in light of the other elements (or sub-elements of the so-called logical element). Indeed, the TCA also alleges that the interpretation of the Claimant does not attend to the systematic element, violating the unity of the regime established throughout the SIUC and, more broadly, throughout the entire tax-legal system, and that in light of a teleological interpretation of the regime established throughout the SIUC, the interpretation advocated by the now Claimant is wrong.

It is therefore worthwhile to ascertain whether the interpretation that considers the existence of a presumption in article 3 of the SIUC conflicts with the teleological element, that is, with the objectives (or the sociological relevance) of what was intended with the rule in question. Such objectives are clearly identified at the beginning of the SIUC: "The single circulation tax obeys the principle of equivalence, seeking to burden taxpayers in the measure of the environmental and road cost that they cause, in implementation of a general rule of tax equality" (see article 1 of the SIUC).

What can be inferred from this article 1? It can be inferred that the close connection of IUC to the principle of equivalence (or benefit principle) does not allow the exclusive association of the "taxpayers" referred to therein with the figure of owners but rather with the figure of users (or economic owners). As was well emphasized in the Arbitral Decision rendered in proceedings no. 73/2013-T: "in truth, the legislative intent of the tax [IUC] rather points in the direction of taxing the users of the vehicles, the «economic owner» in the words of Diogo Leite de Campos, the effective owners or the financial lessees, as it is these who have the polluting potential causing environmental costs to the community."

In effect, if the said legislative intent were different, how to understand, for example, the obligation (on the part of entities that proceed to lease vehicles) - and for purposes of the provisions of article 3 of the SIUC and article 3, no. 1, of Law no. 22-A/2007, of 29/6 - of supply to the Tax Authority of data relating to the fiscal identification of the users of the said vehicles (see article 19)? Should where it says "users", one rather read, disregarding the systematic element, "owners registered in their names"...?

C) From the above it follows the conclusion that limiting the liable parties for this tax only to the owners of vehicles in whose names they are registered - ignoring situations in which these no longer coincide with the actual owners or actual users thereof -, constitutes a restriction which, in light of the purposes of IUC, does not find basis for support. And, even if it is alleged the legislator's intention was that, for purposes of IUC, those who, as such, appear in the vehicle register be considered owners, it is necessary to bear in mind that such register, in view of what was said previously, generates only a rebuttable presumption, that is, a presumption that can be defeated by the presentation of contrary proof. In this sense, see, for example, the Judgment of the Court of Appeal of Administrative Law of 19/3/2015, proceedings 8300/14: "The [...] article 3, no. 1, of the SIUC, establishes a legal presumption that the holder of the vehicle register is its owner, such presumption being rebuttable".

It would, moreover, be unjustified to impose a kind of irrebuttable presumption, since, without an apparent reason, one would be imposing a (admittedly debatable) formal truth to the detriment of what really could and would have been proven; and, on the other hand, to disregard the duty of the TCA to comply with the inquisitorial principle established in article 58 of the General Tax Law, that is, the duty to take the necessary steps for a correct determination of the factual reality on which its decision must be based (which means, in the present case, the determination of the current and effective owner of the vehicle).

Furthermore, if the seller were not permitted to rebut the presumption contained in article 3 of the SIUC, one would be benefiting, without a plausible reason, acquirers who, in possession of correctly filled out and signed contract forms and enjoying the advantages associated with their condition as owners, would attempt to exempt themselves, by way of a "registral formalism", from payment of tolls or fines.

In this regard, it is also worth noting that the registration of vehicles does not have constitutive effect, functioning, as was said before, as a rebuttable presumption that the holder of the register is, indeed, the owner of the vehicle. In this sense, see, for example, the Judgment of the Supreme Court of Justice of 19/2/2004, proceedings 03B4639: "Registration does not have constitutive effect, as it is intended to give publicity to the registered act, functioning (merely) as a mere presumption, rebuttable, (presumption «juris tantum») of the existence of the right (articles 1, no. 1 and 7 of the Constitution and 350, no. 2, of the Civil Code) as well as of its respective title, all as per its terms."

In the same sense, the Arbitral Decision rendered in proceedings no. 14/2013-T stated, in terms that are here endorsed: "the essential function of vehicle registration is to give publicity to the legal situation of vehicles, with registration not having constitutive effect, functioning (merely) as a mere rebuttable presumption of the existence of the right, as well as of its respective title, all as per its terms. The presumption that the registered right belongs to the person in whose name it is inscribed can be rebutted by contrary proof. Not fulfilling the TCA the requirements of the notion of third party for purposes of registration [a circumstance that could prevent the full effectiveness of the purchase and sale contracts executed], cannot it prevail itself of the lack of updating the register of the right of ownership to challenge the full effectiveness of the purchase and sale contract and to demand from the seller (previous owner) payment of the IUC owed by the buyer (new owner) provided that the presumption of its title is rebutted through sufficient proof of sale."

Now, in the case here under analysis, it is verified that the rebuttal of the presumption was made as to the vehicles contained in Table no. 3 of the initial petition (see Docs 71 to 288 attached to the case file), since, contrary to what the TCA alleges, the invoices presented by the Claimant are sufficient to rebut the presumption established in article 3 of the SIUC.

Indeed, as is well emphasized in the Arbitral Decision rendered in proceedings 845/2015-T, of 30/10/2015, "article 72 of the General Tax Law permits the use «for the knowledge of facts necessary to the decision of the procedure all means of proof admitted in law». The Respondent did not raise any incident of challenging the truthfulness of these means of proof. Indeed, it did not allege that this means of proof was false, in this case, but only that «the invoices attached are not documents apt to prove, by themselves, the supposed sales of the vehicles here in question, once they are merely documents unilaterally issued by the Claimant» [an argument identical to that used in the present proceedings: see points 138 and 143 of the Respondent's reply]. Not specifically referring to any case in which the sales had not been carried out. Furthermore, all invoices must be prepared through certified software, pursuant to Ordinance no. 22-A/2012, of 24 January. Being that they are used for accounting of VAT and CIT. Therefore, if for purposes of these taxes the invoices are accepted by the Tax Authority, there is no reason why, in this case, they should not be permitted to be used as proof, being based on generic speculation."

Note, further, regarding the probative force of invoices, the Arbitral Decision rendered in proceedings no. 27/2013-T, of 10/9/2013, where it is emphasized that "the documents presented, particularly the copies of the invoices that support, immediately, the sales [of the] vehicles [...] referenced, [...] embody means of proof with sufficient force and apt to rebut the presumption founded on the register, as established in no. 1 of article 3 of the SIUC, documents that also enjoy, moreover, the presumption of truthfulness provided for in no. 1 of article 75 of the General Tax Law."

In this same sense, see, finally, the Arbitral Decision rendered in proceedings no. 230/2014-T, of 22/7/2014: "the documentary elements, consisting of copies of the respective sale invoices [...] enjoy the probative force provided for in article 376 of the Civil Code and the presumption of truthfulness that is conferred by article 75, no. 1, of the General Tax Law, having, thus, suitability and sufficient force to rebut the presumption that supported the assessments made. These operations of transmission of ownership are opposable to the Tax and Customs Authority, since, although facts subject to registration only produce effects in relation to third parties when registered, given the provisions of article 5, no. 1, of the Land Register Code [applicable by reference of the Vehicle Register Code], the Tax Authority is not a third party for purposes of registration, as it is not in the situation provided for in no. 2 of said article 5 of the Land Register Code, applicable by virtue of the Vehicle Register Code, that is: it did not acquire from a common predecessor rights incompatible with each other. As to proof of sale of vehicles, it can be made by any means, once the Law does not require a specific form, namely, written."

In this sequence, it is further worthwhile to add that it is also evident, in light of the documentary evidence presented, that the Claimant should not be held to be the owner, given the lease contracts of the vehicles subject to the tax whose assessments are identified in Tables nos. 1 and 5, as these are decisive for purposes of applying the provision of article 3, no. 2, of the SIUC. Indeed, the documentary evidence was made (see contracts contained in Docs. 4 to 60 and Docs. 337 to 342, all attached to the case file) and was not put in issue by the Respondent (see points 110 and 167 of its reply), even though it understands – both in the cases contained in Table no. 1 (point 167), and in the cases contained in Table no. 5 (point 110) – that the Claimant should have demonstrated compliance with the obligation inherent in article 19 of the SIUC [on this argument, see infra, 4)].

1. In this regard, it is verified that: i) as to IUC assessments on vehicles with reservation of ownership in favor of the Claimant (see Table no. 2 and Docs nos. 61 to 70 attached to the case file), the legislator provided, in article 3, no. 2, of the SIUC, for the assimilation to owners, for purposes of determining subjective liability for IUC, of acquirers with reservation of ownership (with no requirement of registration having been added there, contrary to what the Respondent alleged, whereby where the law does not distinguish we should not distinguish); and that, ii) relating to IUC assessments on damaged/totally lost vehicles on the date of the tax (see Table no. 4), it is verified that, as the now Claimant emphasizes, on the date of the tax, it had already provided the Insurance Company with the necessary documents (see Docs. 289 to 336 attached to the case file) for it to request the respective cancellation of the registration, which constitutes sufficient proof to conclude that the tax was no longer owed to it in light of the provision of article 4, no. 3, of the SIUC.

Differently, as to the assessments relating to the vehicle subject to return, in the overall amount of €38.56 (see Table no. 7 and Doc. 472 attached), agreement is had with the Respondent, since, as it well points out, said Doc. 472 "only proves payment of tax for the year 2003, whereby it does not prove what was alleged by the Claimant [that is, proof of the return of the vehicle to the supplier, "because it presented a defect, and exchanged for another"], nor is it sufficient to affect the (supposed) legal presumption established in article 3 of the SIUC."

1. The Respondent further alleges that – as to assessments relating to vehicles subject to LTR (see Table no. 5 and points 108 et seq. of its reply); as to assessments relating to vehicles subject to financial lease contracts (Table no. 1 and points 165 et seq.); and as to assessments relating to vehicles subject to financial lease contracts in the phase of default/contention (Table no. 6 and points 182 et seq.) –, for purposes of rebuttal of the presumption of article 3 of the SIUC, it is necessary that financial lessors (such as the Claimant) comply with the obligation inherent in article 19 of the SIUC to exempt themselves from the obligation to pay the tax.

Such understanding of the TCA does not, however, proceed, given that, as was well stated in the Arbitral Decision rendered in proceedings no. 14/2013-T, of 15/10/2013, "the financial lessee is assimilated to owner for purposes of no. 1 of article 3 of the SIUC, that is to say for being the liable party for IUC (See no. 2 of article 3). [...] not having the lessor, by legal and contractual imposition, the potential for use of the vehicle and having the lessee the exclusive enjoyment of the automobile, [and reaffirming] the conclusion to which we had already arrived that [...] the legislative intent of the SIUC commands that, pursuant to said no. 2 of article 3 thereof, it be the lessee who is responsible for payment of the tax, since it is the one who has the potential for use of the vehicle and causes the road and environmental costs inherent thereto. To the same conclusion is arrived when the importance given to users of leased vehicles in article 19 of the SIUC is verified. Indeed, pursuant to the provisions of this article, entities that proceed, in particular, to the financial lease of vehicles are obliged to provide the Tax Authority (ex-Tax General Directorate), the fiscal identity of the users of the leased vehicles for purposes of the provision of article 3 of the SIUC (subjective incidence), as well as of no. 1 of article 3 of the Law of their approval, since pursuant to this norm of Law no. 22-A/2007, if the revenue generated by IUC is incident on vehicles subject to long-term rental or operational lease, it should be assigned to the municipality of residence of the respective user (underlined by us). [...] [But, despite that obligation, this does not prevent that,] on the date of the occurrence of the tax event, there exist[s] a financial lease contract which has a motor vehicle as its object, for purposes of the provision of article 3, nos. 1 and 2, of the SIUC, [being that the] liable party for IUC is the lessee even if the registration of the right of property of the vehicle is made in the name of the lessor entity, provided that the latter makes proof of the existence of the said contract." (Underlines by us.)

In light of the foregoing, the allegation of the TCA relating to article 19 of the SIUC does not proceed, since it aims to superimpose a formal obligation on a substantial reality clearly demonstrative of the Claimant's condition as lessor entity in the underlying contracts.

1. It is concluded, in view of what is set out above [see 1) and 2), to which reference is here made], that there has not been "interpretation [...] contrary to the Constitution", contrary to what was alleged by the Respondent in points 198 to 206 of its reply.

2. A final note to appraise, pursuant to article 24, no. 5, of the LRATM, the request for payment of compensatory interest in favor of the Claimant (article 43 of the General Tax Law and 61 of the TPPC).

In this regard, the Arbitral Decision rendered in proceedings no. 26/2013-T, of 19/7/2013 (which dealt with a situation similar to the one now under appraisal), emphasizes: "The right to compensatory interest to which the norm of the General Tax Law above referred alludes presupposes that tax has been paid in an amount greater than that owed and that such derives from an error, of fact or of law, imputable to the services of the TCA. [...] even if it is acknowledged that the tax paid by the claimant is not owed, because it is not the liable party for the tax obligation, thereby determining, in consequence, its respective refund, it is not seen that, at its origin, is found the error imputable to the services, which determines such right [to compensatory interest] in favor of the taxpayer. Indeed, by promoting the official assessment of the IUC considering the claimant as the liable party for this tax, the TCA limited itself to giving effect to the norm of no. 1 of article 3 of the SIUC, which, as abundantly referred to above, imputes such quality to persons in whose names the vehicles are registered." In the same sense, see, for example, the Arbitral Decisions rendered in proceedings: no. 170/2013-T, of 14/2/2014; no. 136/2014-T, of 14/7/2014; no. 230/2014-T, of 22/7/2014; and no. 140/2014-T, of 29/8/2014.

Attending to the justification cited, and with which agreement is had, it is likewise concluded, in the present case, for the lack of merit of said request for payment of compensatory interest.

VI – DECISION

In light of what is set out above, the decision is rendered as follows:

• Judge the request for arbitral ruling to have merit, with the consequent annulment, with all legal effects, of the acts of assessment of IUC above identified – with the exception of the acts of assessment relating to the vehicle with license plate …-…-… – and, correspondingly, the refund of the amounts improperly paid.

• Judge the request for arbitral ruling to lack merit as to the recognition of the right to compensatory interest in favor of the Claimant.

The value of the case is fixed at €37,734.41 (thirty-seven thousand seven hundred and thirty-four euros and forty-one cents), pursuant to article 32 of the Administrative Procedure Code and article 97-A of the TPPC, applicable by virtue of the provisions of article 29, no. 1, paras. a) and b), of the LRATM, and article 3, no. 2, of the Regulation of Costs in Tax Arbitration Proceedings.

Costs to be borne by the Respondent, in the amount of €1,836.00 (one thousand eight hundred and thirty-six euros), pursuant to Table I of the Regulation of Costs in Tax Arbitration Proceedings, and in compliance with the provisions of articles 12, no. 2, and 22, no. 4, both of the LRATM, and the provision in article 4, no. 4, of the cited Regulation.

Notify.

Lisbon, 29 March 2016.

The Arbitrator

(Miguel Patrício)

Text prepared by computer, pursuant to the provisions of article 131, no. 5, of the Code of Civil Procedure, applicable by reference of article 29, no. 1, para. e), of the LRATM.

The drafting of the present decision is governed by the spelling prior to the Agreement Orthographic of 1990.