IUC Subjective Incidence: Vehicle Seller Not Liable After Sale Despite Registration (CAAD 572/2015-T)

ARBITRAL DECISION

I. REPORT

1. A..., Ltd., legal entity no. ..., with registered office in ..., ..., ..., in ..., requested the constitution of the arbitral tribunal in tax matters, raising a request for arbitral pronouncement against the acts of assessment of the Unique Vehicle Circulation Tax (IUC) relating to the period of 2014 and the motor vehicles identified by their respective registration number, as well as against the implied act of dismissal of a gracious complaint duly presented with reference to the assessments in question. As a consequence of the said annulment, it requests the condemnation of the Tax and Customs Authority (AT) to refund the amount which it considers wrongfully paid, in the total amount of € 1,374.55, plus the corresponding indemnification interest.

2. As the basis of the request, presented on 1 September 2015, the Claimant alleges, in summary, that, although the vehicles in question were registered in its name at the date to which the tax facts to which the questioned assessments relate are referred, it does not assume, with respect to them, the status of taxpayer of the tax obligation, inasmuch as the vehicles to which the assessments relate had already been transferred to third parties by contracts of sale and purchase.

3. In response to what was requested, the Tax and Customs Authority (AT) pronounced itself in the sense of the inadmissibility of the present request for arbitral pronouncement, maintaining in the legal order the impugned tax acts and, accordingly, for the absolution of the Respondent entity.

4. The request for constitution of the arbitral tribunal was accepted by the President of CAAD and automatically notified to the Tax and Customs Authority (AT) on 21 September 2015.

5. Pursuant to the provisions of letter a) of no. 2 of article 6 and letter b) of no. 1 of article 11 of Decree-Law no. 10/2011, of 20 January, as amended by article 228 of Law no. 66-B/2012, of 31 December, the Deontological Council appointed as arbitrator of the single arbitral tribunal the undersigned, who communicated acceptance of the duty within the applicable period, and notified the parties of this appointment on 4 November 2015.

6. Duly notified of this appointment, the parties did not manifest any will to refuse the appointment of the arbitrator, in accordance with the combined provisions of article 11, no. 1, letters a) and b) of the RJAT and articles 6 and 7 of the Deontological Code.

7. Thus, in accordance with the provisions of letter c) of no. 1 of article 11 of the RJAT, as amended by article 228 of Law no. 66-B/2012, of 31 December, the single arbitral tribunal was constituted on 17 November 2015.

8. The regularly constituted arbitral tribunal is materially competent, in light of the provisions of articles 2, no. 1, letter a), of the RJAT.

9. The parties have judicial personality and capacity and have standing (articles 4 and 10, no. 2, of the RJAT, and article 1 of Regulation no. 112-A/2011, of 22/03).

10. Considering that only a matter of law is at issue, and given the knowledge that flows from the procedural documents, the Tribunal considered dispensable the meeting provided for in article 18 of the RJAT.

11. No preliminary questions were raised nor were exceptions invoked that would prevent the examination of the merits of the case.

II. FACTUAL MATTER

1. With relevance to the examination of the merits of the request, the following factual elements stand out which, based on the documentary evidence attached to the file, are considered proven:

12.1. The Claimant is a commercial company that engages in the activity of rental of motor vehicles and provision of related services.

12.2. Within the scope of its activity, it enters into contracts for the rental of motor vehicles at the end of which it sometimes proceeds to the sale of the vehicles to customers.

12.3. In execution of the provisions of article 16 of the CIUC, the Claimant took the initiative to proceed with the assessment of the tax relating to the period of 2014 and the motor vehicles identified in the request.

12.4. The tax assessed was duly paid, as evidenced by the documents attached to the petition (Doc. 1) as well as by the administrative file submitted by the Respondent.

12.5. On 9 January 2015, invoking the provisions of articles 70 and 131 of the Code of Tax Procedure and Process, the now Claimant filed a gracious complaint against the questioned assessments (Doc. 2).

12.6. Until the date on which the request for constitution of the arbitral tribunal was presented, the said gracious complaint had not been the subject of a decision, and the presumption of implied dismissal was formed.

1. There are no factual elements relevant to the decision on the merits that have not been proven.

III. TIMELINESS OF THE REQUEST

1. On 9 January 2015, a gracious complaint was timely filed against the assessments now questioned, under the provisions of articles 131 and 68 and following of the Code of Tax Procedure and Process (CPPT).

2. On the said complaint, no express decision was issued within the period provided for in article 57, no. 1, of the General Tax Law, so that, as results from the provisions of no. 5 of the same article and article 106 of the CPPT, the presumption of implied dismissal was formed.

3. In accordance with article 102, no. 1, letter d), of the CPPT, applicable in the context of tax arbitration by express reference in article 10, no. 1, letter a), of the Legal Regime of Arbitration in Tax Matters (RJAT), the period for presenting a request for constitution of the arbitral tribunal is 90 days counted from the formation of the presumption of implied dismissal.

4. As results from article 57, no. 3, of the LGT, the periods in tax procedure are continuous and are counted in accordance with the Civil Code. For its part, article 20 of the CPPT provides that "the periods of tax procedure and judicial challenge are counted in accordance with article 279 of the Civil Code".

5. In these terms, having the gracious complaint been received by the competent service of the Tax Authority (cf. LGT, art. 57, no. 5) on 9 January 2015, the deadline for decision - four months - occurred on 9 May 2015 (cf. LGT, art. 57, no. 1 and Civil Code, art. 279, letter d), and on this date the presumption of implied dismissal was formed.

6. The period of 90 days for presentation of the request for constitution of the arbitral tribunal, provided for in article 10 of the RJAT, would terminate on 7 August 2015. However, as a period of judicial holidays was running, this period was transferred to the first working day following the end of these, that is, to 1 September following, as provided in article 279, letter e), of the Civil Code.

7. Consequently, the present request for constitution of the arbitral tribunal, delivered on 1 September 2015, is timely.

IV. CUMULATION OF CLAIMS

1. The present request for arbitral pronouncement relates to various IUC assessments. However, given the identity of the tax facts, the tribunal competent to decide, and the factual and legal grounds invoked, the tribunal considers that nothing prevents, in light of the provisions of articles 3 of the RJAT and 104 of the CPPT, the cumulation of claims.

V. MATTERS OF LAW

1. In the request for arbitral pronouncement, the Claimant submits to this tribunal's examination the legality of the acts of assessment of IUC relating to the period of 2014 and to the vehicles it identifies in the request, invoking the circumstance that, at the date to which the tax facts from which they originated are referred, it was not the owner of the same and, consequently, does not assume the status of taxpayer of the tax which was assessed against it.

2. Regarding the scope of the subjective incidence of IUC, diametrically opposed positions are evident between the Respondent and the Claimant: for the latter (AT), the taxpayer of this tax is the person in whose name the vehicle is registered in the Motor Vehicle Registry; while for the former (Claimant), the incidence rule establishes a presumption, derived from such registration, capable of being rebutted in accordance with general terms and, in particular, by virtue of the provisions of article 73 of the LGT.

3. Thus, with respect to the status of taxpayer of the tax obligation imputed to it, the Claimant alleges that at the date of the occurrence of the tax facts, it was not the owner of the vehicles to which the questioned assessments relate, since they had already been the subject of sale.

4. However, as the registration of the identified vehicles was not updated, the Claimant continued to appear in it as the owner, a situation that was maintained at the date when the questioned tax assessments were made.

5. According to the understanding of the AT, expressed in its respective response, it is sufficient that the registration of the vehicle be verified in the name of a certain person for that person to qualify as taxpayer of the tax obligation of IUC.

6. In effect, it results from article 3, no. 1, of the CIUC, that taxpayers are the owners of the vehicles, being considered as such the persons in whose names they are registered.

7. With relevance to the decision to be issued in the present proceeding, the question to be analyzed focuses, first, on the interpretation of the rule of no. 1 of that article 3 of the CIUC, in the sense of determining whether the rule of subjective incidence inscribed in it admits, or not, that the person in whose name the vehicle is registered in the Motor Vehicle Registry can demonstrate, through the means of proof admitted in law, that notwithstanding this fact, they are not the owner of the vehicle in the period to which the tax relates and thus eliminate the tax obligation that falls upon them.

8. In summary, it is a matter of knowing whether such rule establishes a legal presumption of tax incidence, capable of rebuttal, as the Claimant claims, or whether, differently, as the AT understands, "the tax legislator, when establishing in article 3, no. 1 (of the CIUC), who are the taxpayers of the IUC, expressly and intentionally established that these are the owners (or, in the situations provided for in no. 2, the persons enumerated there), being considered as such the persons in whose names they are registered."

This being the central question to decide in the present request for arbitral pronouncement, it is important to analyze in more detail the positions in confrontation.

Position of the Claimant

1. On this matter and as the basis of the request for arbitral pronouncement, the Claimant alleges, in summary, that:

a) On the dates to which the facts of the IUC tax that gave rise to the questioned assessments are referred, it was not the owner of the vehicle and, consequently, does not assume the status of taxpayer of the tax which was assessed against it;

b) In light of the provisions of article 73 of the LGT, which provides that presumptions established in the rules of tax incidence always admit proof to the contrary, the subjective incidence of the tax in question, based on the presumption of ownership derived from the registration, can be set aside through proof to the contrary;

c) It is not sufficient, therefore, that the registration in the vehicle register be verified in the name of a certain person for that person to qualify as taxpayer of the tax obligation;

d) The rule of no. 1 of article 3 of the CIUC admits that the person in whose name the vehicle is registered in the Registry can demonstrate, through the means of proof admitted in law, that they are not the owner of the vehicle in the period to which the tax relates and thus eliminate the tax obligation that falls upon them;

e) Invoking the arbitral jurisprudence issued on this matter, of which it highlights, among others, the decisions in arbitral proceedings no. 141/2014, 170/2013 and 265/2013 and, more recently, in arbitral proceedings no. 446/2014 and 680/2014, the Claimant considers it sufficiently evident the presumptive nature of article 3 of the CIUC.

f) In order to rebut the presumption resulting from the registration in the motor vehicle register, the Claimant presents a copy of the invoices for the sale of the vehicles to which the questioned assessments relate, issued at a date prior to the date of the tax liability (Doc. 3).

Position of the Respondent (AT)

1. In response to what was alleged by the Claimant, the AT responded in the sense that "the understanding proposed by the Claimant not only incurs a biased reading of the letter of the law, but also the adoption of an interpretation that does not take into account the systematic element, violating the unity of the regime established throughout the CIUC and, more broadly, throughout the entire legal-fiscal system, and also results from an interpretation that ignores the ratio of the regime established in the article in question, and likewise, throughout the CIUC."

2. In effect, no. 1 of article 3 of the CIUC establishes that "Taxpayers of the tax are the owners of the vehicles, being considered as such the natural or legal persons, of public or private law, in whose names they are registered."

3. Developing its position, the Respondent says, in summary, that "The tax legislator, when establishing in article 3, no. 1, who are the taxpayers of the IUC, expressly and intentionally established that these are the owners (...) being considered as such the persons in whose names they are registered."

4. In defense of this point of view, the Respondent emphasizes that "the legislator did not use the expression 'are presumed' as it could have done". It further notes the circumstance that "the fiscal rule is full of provisions analogous to that established in the final part of no. 1 of article 3, in which the fiscal legislator, within its legislative freedom of conformation, expressly and intentionally, establishes what should be considered legally for purposes of incidence, income, exemption, determination and periodization of taxable profit, residence and location, among many others."

5. As an example, among others, it refers to the rule of article 2/3-a), CIMT, in which the tax legislator does not presume that "there is place for paid transfer in the grant of promise contract for acquisition and alienation of real property in which it is stipulated in the contract or subsequently that the promissory purchaser can cede its contractual position to a third party." In this case, "the fiscal legislator expressly and intentionally assimilates this contract to a paid transfer of property for purposes of IMT". Likewise, in the case of article 17, no. 2 of the CIRC, the legislator also does not establish that the net surpluses of cooperatives are presumed as net profit of the period but that these are considered as such. After noting that most of the incidence rules of the IRC have as underlying ratio the determination of what should be considered income for purposes of this tax, it would have to be concluded that by using the expression "is considered" the fiscal legislator would have established a presumption in practically all of the incidence rules of the IRC which would be set aside precisely because accounting prescribes different solutions from those of the CIRC, being exactly the aim of the legislator to set aside accounting rules.

6. Following this reasoning, the Respondent concludes that "it is imperative to conclude that, in the case of the present arbitral pronouncement proceedings, the legislator expressly and intentionally established that they are to be considered as such (as owners...) the persons in whose names they (the vehicles) are registered, since this is the interpretation that preserves the unity of the legal-fiscal system. Therefore," to understand that the legislator established here a presumption would unequivocally be to carry out an interpretation contra legem."

7. On the other hand, appealing to the systematic element, the Respondent understands that "the solution proposed by the Claimant is intolerable, not finding the understanding suffragated by it any support in law." This is because, in the same sense as provided in no. 1 of article 3 of the CIUC, "article 6 of the CIUC establishes, under the heading 'Tax Event and Taxability', in its no. 1, that 'The tax event of the tax is constituted by the ownership of the vehicle, as attested by the license plate or registration in national territory.' That is, "the moment from which the tax obligation is constituted presents a direct relationship with the issuance of the registration certificate, in which must appear the facts subject to registration.... In the same sense, the legislative solution adopted by the fiscal legislator in article 3, no. 2 of the CIUC, by making the equalities there established coincide with the situations in which the motor vehicle register requires its respective registration".

8. The Respondent further contends that "Such a position is still evident in the circumstance that the motor vehicle register to which the Respondent has or may have access, and the certificate in which must appear the acts subject to registration, whose exhibition may be required by the same Respondent from the interested party, contain all the elements destined to the determination of the taxpayer, without need of access to contracts of a private nature that confer such rights, enumerated by the CIUC as constitutive of the legal situation of taxpayer of this tax. In the absence of such registration, naturally, the owner will be notified to comply with the corresponding tax obligation, since the Respondent, taking into account the current configuration of the legal system, will not have to proceed with the assessment of the Tax based on elements that do not appear in registers and public documents and, as such, authentic. In these terms, the failure to update the registration, in accordance with the provisions of article 42 of the Regulations of the Motor Vehicle Register, shall be imputed to the legal sphere of the taxpayer of the IUC and not to that of the Portuguese State, as the active subject of this Tax."

9. Exposed, in summary and with partial transcription, the positions of the Claimant and Respondent, will be clearly defined:

• for the Claimant, the subjective incidence of IUC is based on a presumption of ownership, derived from the motor vehicle register, capable of rebuttal in accordance with legal terms; and

• for the Respondent, the rule of the CIUC does not establish any presumption, expressing understanding in the sense that the legislator defined as the taxpayer of this tax, expressly and intentionally, the owner of the vehicle identified in the respective register.

On the Subjective Incidence of IUC

1. With the exception of the provisions of no. 2, relating to situations of sales with reservation of title and leases that assume the nature of financing, article 3 of the CIUC establishes that taxpayers of this tax are the owners of the vehicles, being considered as such the persons in whose names the vehicles are registered.

2. The recourse to the motor vehicle register as the structuring element of the system of assessment of this tax is evident throughout the respective Code. Refer, in particular, to its article 6 relating to the definition of the tax event of the tax obligation, whose no. 1 provides for it to be constituted by the ownership of the vehicle, as attested by the license plate or registration in national territory. From this provision it follows that motor vehicles which are not, nor should be, registered in Portuguese territory are only covered by the objective incidence of this tax if they remain there for a period exceeding 183 days, as provided in no. 2 of the same article. It is, therefore, a rule which, using the registral element, simultaneously establishes the tax event of the tax and the respective fiscal nexus. It is also from the elements of the motor vehicle register that the moment of the beginning of the period of taxation and constitution of the tax obligation is extracted and, in a general manner, all the elements necessary for the assessment of the tax in question, as, moreover, well emphasized in the response prepared by the AT.

3. However, from the dependence of the regime of taxation of the IUC in relation to the motor vehicle register, one cannot extract, as an immediate conclusion, that the rule of subjective incidence, in the segment in which it considers as owner the person in whose name the vehicle is registered, does not constitute a presumption of incidence. There will, therefore, be a need to resort to other interpretive elements, with special relevance to the legal notion of presumption.

On the Notion of Presumption

1. According to the notion contained in article 349 of the Civil Code, presumptions are the inferences which the law, or the judge, draws from a known fact to establish an unknown fact. Presumptions constitute means of proof, which has the function of demonstrating the reality of facts (article 341 of the Civil Code). Thus, whoever has in their favor the legal presumption is excused from proving the fact to which it leads (article 350, no. 1, of the Civil Code). However, presumptions, except where the law prohibits it, can be rebutted, through proof to the contrary (article 350, no. 2, of the Civil Code). In the case of presumptions of tax incidence, these are always rebuttable, as expressly provided by article 73 of the LGT.

2. In addition to presumptions, used in tax law principally as a means of preventing the possibility of fraud and evasion or for reasons of simplification and practicality of fiscal laws, the legislator also resorts, with some frequency, to fictions. Unlike presumption, which starts from a known fact to establish an unknown fact, fiction, on the other hand, "is translated into a legal process that considers a situation or a fact as distinct from reality in order to attribute legal consequences to it." There is, therefore, a notable difference between one and the other of these figures, used, with some frequency, in the rules of tax codes and laws. This difference, which is not emphasized in the reasoning of the AT's position, will be particularly relevant in the examination of the present case.

3. Taking as reference the exemplification presented by the Respondent in support of its thesis, we could consider the case of no. 2 of article 17 of the CIRC, which for purposes of this tax determines that "the net surpluses of cooperatives are considered as net profit of the fiscal year." Not ignoring the legislator of the CIRC that cooperatives, by virtue of their respective principles and legal regime applicable to them, cannot have as their objective the achievement of profit, it imputes to those surpluses a nature distinct from reality, in order to attribute a legal consequence, namely that of net profit of the fiscal year for purposes of applying the rules for determining taxable profit of enterprises.

4. On the other hand, the existence, in parallel, of presumptions and fictions in the legal rules of tax incidence is even more evident, for example, in article 2 of the CIMT, referred to in the response of the AT. According to the body of no. 3 of this article "It is also considered that there is place for paid transfer for purposes of no. 1 (rule that defines the general rule of incidence of this tax, consisting of the paid transfer of the right of ownership over real property) in the grant of the following acts or contracts:

a) Celebration of a promise contract for acquisition and alienation of real property in which it is stipulated in the contract or subsequently that the promissory-purchaser can cede its contractual position to a third party."

and

e) Cession of contractual position or resale agreement, by part of the promissory purchaser in a promise contract for acquisition and alienation, with the definitive contract coming to be celebrated between the original promissory alienor and the third party."

1. In the first of the referred cases, one is in the presence of a fiction, since the legislator does not ignore that the possibility of cession of contractual position in a promise contract does not imply the transfer of the right of ownership, the object of the general incidence of the said municipal tax. But, for tax purposes, it attributes the corresponding consequences. In the second case - resale agreement, to which letter e) of the same number refers - one has a situation somewhat more complex, but which, according to the consistent jurisprudence of the higher courts, translates into a presumption.

2. How is this conclusion reached, if both rules have the objective and effect of taxing as transfers of property of real property realities that they are not? The answer is, precisely, in the recourse to the legal concept of presumption. The rule of letter e) of no. 3 of article 2 of the CIMT, with respect to the "resale agreement" was already provided for, in identical terms, in paragraph 2 of article 2 of the prior Sisa Code: the promissory purchaser who would adjust, with a third party, the sale of the real property which they had promised to acquire would be subject to the tax, based on the presumption that the property had been delivered to them and that they had acted on it as an owner, by virtue of the cession of their contractual position in that contract, but only if the translative contract were to be realized between the original promissory seller and that third party. In this case, the legislator created the presumption of economic transfer (tradition), covered by the incidence of the tax, whenever the promissory purchaser acted, before a third party and with the consent of the original promissory seller, as a true owner, arranging the resale of the property in question. It is the existence of the "legal tradition" - delivery of the property object of the promise contract - that the rule presumes, in order to tax it. And here too, the legislator starts from known facts - the contractual position and the legal transfer of the property to a third party - to establish an unknown fact, the resale arrangement. A presumption which is rebuttable, by virtue of the provisions of article 73 of the LGT.

Explicit and Implicit Presumptions

1. The Respondent argues that the fiscal legislator, "within its legislative freedom of conformation," expressly and intentionally determines that those in whose name the vehicles are registered shall be considered as owners, not using the expression "are presumed" as such, as it could have done.

2. In effect, in the definition of the subjective incidence of the ICI, ICA and IMV, taxes which the current IUC came to replace, this was the expression used by the legislator. In the context of the abolished taxes, it is established that "the tax is due by the owners of the vehicles, being presumed as such, until proof to the contrary, the persons in whose names they are registered or matriculated."

3. In the same sense, article 3, no. 1, of the Regulations of the Vehicle Circulation and Haulage Taxes, approved by Decree-Law no. 116/94, of 3/05, establishes that taxpayers of these taxes are "the owners of the vehicles, being presumed as such, until proof to the contrary, the natural or legal persons in whose names they are registered."

4. With respect to the IUC, the legislator opted to use a formulation different from the rule of subjective incidence. As in the abolished taxes, it continues to attribute to the owners of the vehicles the status of taxpayers. However, it abandons the expression "being presumed as such, until proof to the contrary, the persons in whose names they are registered" in favor of "being considered as such the persons (...) in whose names they are registered".

5. Contrary to the position expressed by the AT, we understand that this is a mere semantic matter, which minimally alters the content of the rule in question and for two reasons: In order for one to be in the presence of a legal presumption, it is necessary that the rule which establishes it conforms to its respective legal concept, contained in article 349 of the Civil Code, being for such purposes irrelevant that it be explicit, revealed by the use of the expression "are presumed" or only implicit. On the other hand, the legislative freedom of conformation is limited by fundamental principles enshrined in the Constitution of the Republic, of which, with relevance to the present case, stands out the principle of equality. In the fiscal sphere, this principle is translated into the generality and abstraction of the norm which creates the essential elements of the tax, in accordance with the contributive capacity of each one. According to what is extracted from the Constitutional Court ruling no. 343/97, of 29-04-97 "Taxation in conformity with the principle of contributive capacity will imply the existence and maintenance of an effective connection between the tax payment and the economic circumstance selected as the object of the tax, requiring, for this reason, a minimum of logical coherence of the diverse concrete cases of tax provided for in the law with the corresponding object of the same".

6. It is in the sense of the legal concept of presumption and in respect of the constitutional principles of equality and contributive capacity that the legislator attributes full efficacy to the presumption derived from the motor vehicle register, embracing it, as such, in the definition of the subjective incidence of this tax established in no. 1 of article 3 of the CIUC.

7. It is further noted that Decree-Law no. 54/75, of 12/02, which regulates the registration of motor vehicles, not providing any rule concerning the constitutive character of the registration of motor vehicle ownership, establishes, in no. 1 of its article 1, that the motor vehicle register aims only to give publicity to the legal situation of the property. In accordance with article 7 of the Real Property Registry Code, supplementarily applicable to the motor vehicle register, by reference in article 29 of that diploma, it determines that the registration only "(...) constitutes a presumption that the right exists and belongs to the registered holder, in the precise terms in which the registration defines it."

8. Pronouncing itself on this matter, the STJ, in a ruling of 19-02-2004, issued in proceeding no. 3B4369, concludes that "(...) the registration does not have constitutive effect, since it is intended to give publicity to the registered act, functioning (only) as a mere presumption, rebuttable (presumption 'juris tantum') of the existence of the right (articles 1, no. 1, and 7, of the CRP84 and 350, no. 2, of the Civil Code) as well as of the respective title, in the terms contained in it (...)".

9. Thus, accompanying the reiterated arbitral jurisprudence relating to identical situations, one cannot but understand that the expression "being considered as such" contained in the said rule, configures a legal presumption, and that this is rebuttable, in accordance with general terms, and, in particular, by virtue of the provisions of article 73 of the LGT, which determines that presumptions established in the rules of tax incidence always admit proof to the contrary.

Rebuttal of Presumptions

1. Presumptions of tax incidence can be rebutted through the proper contradictory procedure provided for in article 64 of the CPPT or, alternatively, by way of gracious complaint or judicial challenge of the tax acts that are based on them.

2. In the present case, the Claimant did not use that proper procedure, having instead opted for the present request for decision arbitration which, thus, constitutes a proper means to rebut the presumption of subjective incidence of IUC on which the tax assessments whose annulment is the object of it are based, since this is a matter that falls within the scope of the material competence of this arbitral tribunal (articles 2 and 4 of Decree-Law 10/2011).

3. To rebut the presumption derived from the registration in the motor vehicle register, the Claimant offers, as a means of proof, copies of documents which supposedly would correspond to the invoicing issued with reference to the transfer of the vehicles to which the questioned assessments relate (Doc. 3).

4. Pronouncing itself on the documentary evidence presented, the Respondent alleges that "it is the Claimant, in the capacity of owner appearing in the Motor Vehicle Registry, the taxpayer of the IUC, with respect to the vehicles enumerated by it in the initial petition for arbitral request... Therefore, the entire reasoning proposed by the Claimant is tainted with error, and it is not possible to rebut the legal presumption established."

5. However, it adds the Respondent, "even if this were not the case - which is only admitted by mere academic hypothesis - and accepting that rebuttal of the presumption is admissible in light of jurisprudence already established in this arbitration center, it will still be necessary to examine the evidentiary documents presented by the Claimant and their value, with a view to such rebuttal."

6. Referring to the copies of the documents presented by the Claimant as proof of the sale of the vehicles in question (Doc. 3), the Respondent considers that one is before mere documents of an internal nature which, for all legal purposes, it challenges.

7. As the basis of the challenge of the said documents, the Respondent alleges, "it does not correspond to reality that Document 3 attached to the initial petition aggregates invoices, since what results from the heading of the documents is that it is a matter of 'internal movements'."

8. It is, therefore, a matter of knowing whether invoices which document commercial transactions constitute an element of proof for rebuttal of the presumption contained in article 3 of the CIUC and, if this is admitted, whether the documents presented by the Claimant constitute sufficient proof for this purpose.

9. For this purpose, it is important to bear in mind that, in the situation under analysis, one is before contracts of sale and purchase which, relating to movable property and not being subject to any special formalism (Civil Code, article 219), operate the corresponding transfer of real rights (Civil Code, article 408, no. 1).

10. Given that these are contracts involving the transfer of ownership of movable property, through the payment of a price, they have, as essential effects, among others, that of delivering the thing (Civil Code, articles 874 and 879).

11. However, as contracts of sale and purchase which have motor vehicles as their object are concerned, in which registration is mandatory, their proper performance presupposes the issuance of the declaration of sale necessary for registration in the register of the corresponding acquisition in favor of the purchaser, as has been understood by the jurisprudence of the higher courts. Such declaration, relevant for registration purposes, may constitute proof of the transaction, but is not the only or exclusive means of proof of the transaction.

12. For registration purposes, no special formalism is required either, it being sufficient to submit to the competent entity a request subscribed by the purchaser and confirmed by the seller, who, through declaration of sale, confirms that the ownership of the vehicle was acquired by the latter through a verbal contract of sale and purchase (see Motor Vehicle Registry Regulations, article 25, no. 1, letter a)).

13. Notwithstanding these being the rules flowing from the provisions of civil law relating to the informality of the transfer of movable property and, as the case may be, its registration, one cannot but also bear in mind that, in the situation under analysis, we are before commercial transactions, carried out between companies.

14. In that context, the selling company is bound to comply with specific accounting and fiscal rules, in which invoicing assumes special relevance.

15. First and foremost, by virtue of fiscal rules, the entity transferring the goods is obliged to issue an invoice with respect to each transfer of goods, regardless of the quality of the respective purchaser (CIVA, article 29, no. 1, letter b).

16. Also in accordance with the provisions in tax rules, the invoice must comply with a determined form, detailed in articles 36 of the VAT Code and 5 of Decree-Law no. 198/90, of 19/06.

17. It is on the basis of that document issued by the supplier of the goods that the purchaser, when a business operator, will deduct the VAT to which they are entitled (CIVA, article 19, no. 2) - unless the tax borne in the acquisition of the vehicle, due to its characteristics, is not deductible - and account for the expense of the operation (CIRC, articles 23, no. 6 and 123, no. 2).

18. For its part, it is also on the basis of the invoicing issued that the supplier of the goods should account for the respective revenues, as results from the provisions of letter b) of no. 2 of article 123 of the CIRC.

19. Provided they are issued in the legal form and constitute supporting elements of accounting entries in accounts organized in accordance with commercial and fiscal legislation, the data contained in them are covered by the presumption of truthfulness to which article 75, no. 1, of the LGT refers.

20. Considering, therefore, the relevance attributed by tax legislation to invoices issued, in accordance with legal terms, by commercial companies in the context of their business activity and the presumption of truthfulness of the operations evidenced by them, one cannot but consider that these can constitute, in themselves, sufficient proof of the transfers invoked by the Claimant.

21. In the present case, however, it is found that the documents which the Claimant presents as elements of proof of the transactions in question do not correspond to invoices issued in the legal form.

22. In effect, whether they are mere documents relating to "internal movements", as the Respondent alleges, or "Debit Notes" as appears in their heading, it can be concluded with certainty that such documents do not constitute - nor do they substitute - the invoices which, in accordance with fiscal law, must be issued with reference to each transaction.

23. Thus, accompanying the position of the Respondent with respect to the reasoning of the challenge of the documents presented by the Claimant, it is considered that these do not constitute sufficient proof of the alleged fact for purposes of rebuttal of the presumption in question.

VI. DECISION

In these terms, and with the bases set out, the Arbitral Tribunal decides to judge the request for arbitral pronouncement inadmissible, maintaining in the legal order the impugned tax acts.

Value of the proceeding: € 1,374.55

Costs: Pursuant to article 22, no. 4, of the RJAT, and in accordance with Table I attached to the Regulations of Costs in Tax Arbitration Proceedings, I fix the amount of costs at € 306.00, charged to the Claimant.

Lisbon, 12 March 2016,

The Arbitrator, Álvaro Caneira.

[1] Cf. Francisco Rodrigues Pardal, "The Use of Presumptions in Tax Law", in Tax Science and Technique no. 325-327, p. 20

[2] In this sense, see, among others, STA, Rulings of 21.4.2010, 3.11.2010, 2.5.2012 and 6.6.2012, Procs. 924/09, 499/10, 895/11 and 903/11, respectively.

[3] See article 3, no. 1 of the Regulations of the Municipal Tax on Vehicles, approved by Decree-Law no. 143/78, of 12 June.

[4] Cf. Jorge de Sousa, CPPT, 6th Edition, Áreas Editora, Lisbon, 2011, p. 586 and STA, Rulings of 29.2.2012 and 2.5.2012, Procs. 441/11 and 381/12.

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

[i] Cf. STJ, Rulings of 23.3.2006 and 12.10.2006, Procs. 06B722 and 06B2620.

[ii] It is noted that, within the scope of the special procedure for registration of ownership of vehicles acquired through a verbal contract of sale and purchase, approved by Decree-Law no. 177/2014, of 15 December, the invoice constitutes, among others, a document that evidences the effective sale and purchase of the vehicle, provided that it contains the license plate of the vehicle as well as the name of the seller and the purchaser.