IUC Subjective Incidence: Financial Institution Liability for Leased Vehicles (CAAD 598/2016-T)

ARBITRAL DECISION

I – Report

1.1. A… Branch in Portugal, Legal Entity No. …, domiciled at Rua …, …, Lisbon (hereinafter referred to as "claimant"), in its capacity as merging party of the company, meanwhile extinguished, B… – Financial Credit Institution, S.A. (hereinafter referred to as "B…"), comes to contest the dismissal order dated 27/6/2016 of the Tax Directorate of Lisbon, which dismissed the administrative appeal filed by B… against the self-assessments of IUC and compensatory interest relating to the years 2009 to 2013, inclusive, in the total amount of €54,579.23, having for that purpose filed, on 6/10/2016, a request for constitution of an arbitral tribunal and arbitral pronouncement, in accordance with the provisions of Articles 2, No. 1, paragraph a), and 10, No. 1, paragraph a), of Decree-Law No. 10/2011, of 20/1 (Legal Regime of Arbitration in Tax Matters, hereinafter only referred to as "LRAT"), in which the Tax and Customs Authority (TCA) is requested, with a view to: "a) the annulment, for illegality, of the dismissal order of the Administrative Appeal; b) the annulment of the self-assessments of IUC and CI here contested, with the consequent restitution of the totality of the IUC/CI improperly paid by B…, Euro 54,579.23; c) the acknowledgment of the Claimant's right to indemnificatory interest, in accordance with legal provisions; d) the condemnation of the Defendant to payment of the arbitral fee and other charges, if any."

1.2. On 19/12/2016 the present Singular Arbitral Tribunal was constituted.

1.3. In accordance with Article 17, No. 1, of the LRAT, the TCA was summoned, as defendant party, to file its answer, in accordance with and for the purposes of the aforementioned article. The TCA filed its answer on 2/2/2017, having argued, in summary, the total lack of merit of the Claimant's request. In the said answer, it also raised an exception based on alleged untimeliness of the request for constitution of the Arbitral Tribunal: "given that the administrative appeal was filed when the legal deadline for its presentation had already been exceeded, the deadline governing the challenge now presented in this arbitral tribunal is 90 days following the date of expiry of the voluntary payment period for IUC. In the situation at issue, the request for constitution of an arbitral tribunal filed by the Claimant was received on 2016-10-06, for which reason it is untimely. Untimeliness constitutes a peremptory exception, in accordance with Article 576 of the Code of Civil Procedure (applicable subsidiarily by Article 29 of the LRAT), which results in the dismissal of the TCA from the claim, since it prevents the legal effect of the facts alleged by the Claimant."

1.4. The claimant, notified of the TCA's answer, responded, in writing, to the exception raised, in a request of 16/2/2017, which was notified to the Defendant.

1.5. Considering that the parties had already pronounced themselves, in writing, on any exceptions, the present Tribunal considered, under the provisions of Article 16, paragraph c), of the LRAT, that the meeting of Article 18 of the LRAT was dispensable and that the case should proceed to decision. In accordance with the provisions of Articles 16, paragraphs c) and e), and 19, of the LRAT, the Tribunal also considered, in its order of 13/3/2017, that the production of testimonial evidence was dispensable, understanding that there were in the file sufficient elements, both of fact and of law, to render a decision. Accordingly, it was fixed, by arbitral order of 16/3/2017, the date of 27/3/2017 for the rendering of the arbitral decision.

1.6. The Arbitral Tribunal was duly constituted.

1.7. Considering that an exception based on alleged untimeliness was raised (referred to above), it is justified, previously, to examine the same, i.e., it is justified to ascertain whether, as the Defendant alleges, "the request for constitution of an arbitral tribunal filed by the Claimant [...] is untimely" – which, if it occurred, would result in "the dismissal of the TCA from the claim, since it prevents the legal effect of the facts alleged by the Claimant."

Let us then examine this. The Claimant filed, on 9/10/2015, an administrative appeal against the said self-assessments of IUC and compensatory interest, appeal which was dismissed by order dated 27/6/2016, based on alleged untimeliness. As can be read in the final information that served as the basis for the aforementioned dismissal order (see Administrative File attached), it was understood there that, "given that of the assessments appealed the most recent payment date is 13/11/2013 and taking into account that the appeal was filed on 09/10/2015", the "period of 120 days" would apply (on the understanding that it was "an appeal of an assessment of a tax, in accordance with Article 68 of the Tax Procedural Code"), whereby it was concluded that "it is easy to verify that the period [of 120 days] is far exceeded."

However, it so happens that, contrary to what is stated in the final information that served as the basis for the dismissal order, the then appellant could "avail itself of Article 131 of the Tax Procedural Code," since here we are dealing with self-assessments of tax (see, in this respect, Article 16, No. 2, of the IUC Code), whereby, being the period two years, the said appeal was not untimely – and, consequently, the present arbitral request cannot be considered untimely (since it was filed within the period of 90 days from the date of dismissal of the administrative appeal).

1.8. From the above (in 1.7.), it is concluded that the Arbitral Tribunal is competent, the case has no vices that invalidate it, and the Parties have legal personality and capacity, being legitimately constituted.

II – Allegations of the Parties

2.1. The Claimant comes to allege, in its petition, that: a) "the dismissal order of the administrative appeal here contested, as well as those self-assessments of IUC and CI, suffer from error in factual assumptions and are vitiated by breach of law - whereby the illegality of that order and those self-assessments should be declared"; b) "contrary to what was advocated in the dismissal order of the Appeal, this is not untimely, wholly or partially. Indeed, the Administrative Appeal was filed against the self-assessments of IUC, within the period of 2 years provided for in Article 131, No. 1, of the Tax Procedural Code. [...]. It is [...] unquestionable that we are faced with a case of self-assessment of tax"; c) "the period for administrative appeal, in this case, was 2 years and not merely 120 days, given that it concerns an appeal against the self-assessment of IUC, as results from the text of the appeal itself. Therefore, the Administrative Appeal is timely with respect to all self-assessments of IUC and CI here specifically under discussion"; d) "in the leasing contracts the users of the vehicles in question are clearly identified. Therefore, the provisions of Article 19 of the IUC Code were scrupulously complied with"; e) "B… is [...] a financial institution specialized in the automotive branch. Accordingly, it acquires new vehicles from national importers … and … and typically carries out leases – financial leasing, ALD (long-term rental) or renting/AOV/lease or operational leasing – of those same vehicles in favor of third parties. Following the termination of such contracts, as a rule B… proceeds to transfer the ownership of the vehicles to the respective lessees or to third parties, for a residual value. In the remaining leasing contracts, the vehicle is sold to a third entity upon the cessation of those contracts. [...]. Now, it happens that on the dates of the due date of the IUC relating to the vehicles in question, B… either (1) had leased those vehicles in favor of third parties, or (2) was not even the owner of the vehicles in question, having already sold them to the lessees or to third parties, as it alleged and demonstrated in the said Administrative Appeal, a copy of which is attached hereto as doc. 5 and whose content is hereby given as fully reproduced for all legal purposes"; f) "in the periods at issue, and for the vehicles covered by the notes of (self) assessment now contested, it is verified that B… was not the owner of the same on the date of the due date of the tax, or then, was on the same date merely the financial lessor or the lessor in contracts of operational leasing with promise of sale - as is possible to observe from the copies of the contracts and the sales invoices, among other documents, which are part of the file relating to each of the vehicles under analysis and which are attached hereto as doc. 6, the law considering that, in these latter cases, for the purposes of IUC the "owners" of the vehicles are the financial lessees or the holders of purchase option rights by virtue of leasing contract, as the case may be"; g) "B… does not accept the self-assessments of IUC and CI in question, to the extent that it was not the taxpayer of the tax on the respective due dates. Indeed, on those dates B… had already sold the vehicles in question to third parties, or had already leased them to third parties – third parties, who were thus the users of the vehicles and in whose interest the vehicles entered road circulation. [...]. The sales invoices of the vehicles to the respective purchasers are attached hereto, which document and demonstrate precisely the sale of the vehicles at a time prior to the date of the due date of the IUC - the date of registration or their respective anniversary dates"; h) "also in cases where B… leased the vehicles in favor of third parties, and granted them the option to purchase the respective vehicles by virtue of the leasing contracts, B… was not responsible for payment of the IUC. [...]. [...] the taxpayers of the IUC are the owners of the vehicles, to whom are equated the financial lessees, the purchasers with reservation of ownership in favor of the seller and any other holders of the right of purchase option by virtue of the leasing contract. Being certain that, after selling them to third parties, B… never recovers ownership of the vehicles"; i) "with regard to motor vehicles covered by financial leasing contracts or operational leasing contracts with promise of sale - which are detailed in the table attached hereto as doc. 7, two [...] characteristics [...] divergent from traditional operational leasing and/or rental contracts emerge: (a) the financial lessee of motor vehicles is equated to owner according to legislation on licensing of motor vehicles and their trailers – see Decree-Law No. 11/84, of 7 January; and (b) the IUC Code, in No. 2 of its Article 3, equates financial lessees to owners, as well as holders of purchase option rights by virtue of leasing contracts, for purposes of the subjective incidence of the IUC"; j) "now, attending to the characteristics listed, one achieves the meaning of the equation, in the realm of subjective incidence of the IUC, of financial lessees and holders of purchase option rights by virtue of leasing contracts, to owners of the vehicles"; l) "considering the literal, logical and teleological element of the norm set out in No. 2 of Article 3 of the IUC Code, it is all too evident that tax law considers financial lessees, as well as holders of purchase option rights by virtue of leasing contract as taxpayers of IUC, equating them to owners of the vehicles. Indeed, during the validity of a financial leasing contract, although the lessor continues to be the legal owner of the asset in question, only the lessee has the exclusive enjoyment of the leased asset, using it as if he were the true owner. [...]. On the other hand, as previously mentioned, the operational leasing contract with promise of sale is closer to the contract of purchase and sale and of loan than to the "common" operational leasing contract, e.g., of rental, provided for in Articles 1022 and following of the Civil Code, ending up being equated to the financial leasing regime. [...]. [...] the said self-assessments of IUC are illegitimate, illegal, for breach of Article 1 and No. 2 of Article 3, both of the IUC Code, and should therefore be annulled and reimbursed to B… the respective IUC improperly paid"; m) "the registration of the automobile by the purchaser is nothing more than the presumption that the right of ownership belongs to the subject who registered it. However, such presumption is rebuttable"; n) "in light of the provision of No. 1 of Article 3 of the IUC Code, the legislator demonstrates – in a clear and evident manner – that the value of registration is declarative, i.e., its objective is merely to publicize the ownership and is not constitutive of the right. Indeed, limiting the taxpayers of IUC only to the owners of the vehicles in whose names the same are registered – ignoring situations where these no longer coincide with the real owners or the real users of the same, - constitutes a restriction which, in light of the purposes of the IUC, finds no basis for support"; o) "being manifest the opening that tax law gave to the taxpayer to prove that it is not a holder of the right of ownership, through the sales invoices of the vehicles at issue [those alleged to have been disposed of prior to the date of the due date of the tax], the presumption of ownership by B… over those vehicles is, undoubtedly, rebutted"; p) "now B… can never be considered as being the taxpayer of the tax, in accordance with No. 1 of Article 3 of the IUC Code, since on the due dates of the tax it was not the owner of the vehicles at issue. Indeed, if we look at the table attached as doc. 7, it is easy to conclude, through comparison of the dates mentioned in columns 4 and 11 ("Date of due date of tax" and "Date of sales invoice," respectively) that B… on the date of the due date of the tax was no longer the owner of the said vehicles. Consequently, the due date of the tax in the tax periods to which the said self-assessments relate should be attributed to the actual owner of the said vehicles, on those dates, which was not B…"; q) "the said self-assessments of IUC are illegal, for breach of Articles 1 and No. 1 of Article 3 of the IUC Code, and should therefore be annulled and reimbursed to B… the respective IUC improperly paid"; r) "the documentary evidence produced also demonstrates that on those dates the vehicles had already been sold or had already been leased to third parties. Therefore, the self-assessments here contested, relating to these vehicles, are illegal, either for error in factual assumptions or for breach of law, namely the provisions of Articles 1, 2 No. 1, a) and d), 3, 4, 6 and 11 of the IUC Code"; s) "B… benefits from the presumption of truthfulness and good faith enjoyed by the documents presented to prove the transfer of ownership or leasing of the vehicles – such as the leasing contracts and the sales invoices of the vehicles attached hereto (cf. Article 75, No. 1, of the General Tax Law)"; t) "the self-assessments here contested suffer [...] from a breach of the principles of inquisitorial inquiry and discovery of material truth, enshrined in Article 58 of the General Tax Law"; u) "being tax not due, for the reasons above stated, neither are any CI, accessories to the main tax, based on which they are assessed and on which they depend, due. [...]. [...] the compensatory interest, in the concrete case, suffer from a breach of the provisions of Articles 94 of the Corporate Income Tax Code and 35 of the General Tax Law"; v) "given that the self-assessments here contested were paid, in addition to the return of the IUC and CI improperly paid, B… has the right to indemnificatory interest, for error of fact and of law of the TCA in demanding such IUC and CI from B…, in accordance with Articles 43 and 100 of the General Tax Law."

2.2. The Claimant requests, in view of the above stated: "a) the annulment, for illegality, of the dismissal order of the Administrative Appeal; b) the annulment of the self-assessments of IUC and CI here contested, with the consequent restitution of the totality of the IUC/CI improperly paid by B…, Euro 54,579.23; c) the acknowledgment of the Claimant's right to indemnificatory interest, in accordance with legal provisions; d) the condemnation of the Defendant to payment of the arbitral fee and other charges, if any."

2.3. For its part, the TCA alleges, in its defense, that: a) "from the analysis of the administrative appeal filed, it is verified that, having the same been filed on 2015-10-09 and the most recent payment date being 2013-11-13, the period of 120 days (Article 102, No. 1, of the Tax Procedural Code, by virtue of Article 70, No. 1, of the same Code), for the presentation thereof, is far exceeded. Now, the Claimant can never seek to justify the timeliness of the request for arbitral pronouncement based on the dismissal of an administrative appeal untimely, in its entirety. [...]. That is, the Claimant cannot base the timeliness of recourse to the arbitral tribunal on the filing of an administrative appeal petition wholly untimely. Nor can the tribunal fail to examine the issue of the timeliness of the administrative appeal, for purposes of examination and decision regarding the timeliness of the request for arbitral pronouncement, which the TCA contests, in accordance with the documents contained in the administrative file. [...]. [...] given that the administrative appeal was filed when the legal deadline for its presentation had already been exceeded, the deadline governing the challenge now presented in this arbitral tribunal is 90 days following the date of expiry of the voluntary payment period for IUC. In the situation at issue, the request for constitution of an arbitral tribunal filed by the Claimant was received on 2016-10-06, for which reason it is untimely. Untimeliness constitutes a peremptory exception, in accordance with Article 576 of the Code of Civil Procedure (applicable subsidiarily by Article 29 of the LRAT), which results in the dismissal of the TCA from the claim, since it prevents the legal effect of the facts alleged by the Claimant"; b) "even if it were concluded that we are dealing with financial leasing contracts granted by the Claimant, it was always incumbent on the latter to demonstrate that it had complied with the ancillary obligation imposed by Article 19 of the IUC Code. Now, the Claimant made no proof regarding compliance with this obligation with respect to the motor vehicles now under analysis. [...]. Notwithstanding, the Claimant alleges having celebrated financial leasing contracts, it is certain that it is responsible for payment of the respective IUC, since it did not communicate the existence of financial leasing to which it alludes Article 19 of the IUC Code"; c) "the understanding advocated by the Claimant not only incurs a skewed 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 enshrined in the entire IUC Code and, more broadly, in the entire legal-tax system and also stems from an interpretation that ignores the ratio of the regime enshrined in the article in question, and likewise, in the entire IUC Code"; d) "it is imperative to conclude that, in the case of the present arbitral proceedings, the legislator established expressly and intentionally that be considered as such [as owners or in the situations provided for in No. 2, the persons listed there] the persons in whose names the same [the vehicles] are registered, because this is the interpretation that preserves the unity of the legal-tax system. To understand that the legislator enshrined here a presumption would be unequivocally to perform an interpretation contra legem. In light of this wording it is manifestly not possible to invoke that it is a presumption, as the Claimant contends"; e) "Article 3 of the IUC Code does not contain any legal presumption"; f) "also the systematic element of interpretation of the law demonstrates that the solution advocated by the Claimant is intolerable, the understanding suffraged by this not finding any support in the law"; g) "in light of a teleological interpretation of the regime enshrined in the entire IUC Code, the interpretation advocated by the Claimant, to the effect that the taxpayer of the tax is the actual owner, regardless of whether this quality is not shown in the automobile register, is manifestly wrong"; h) "the tax acts in dispute do not suffer from any breach of law, to the extent that in light of the provision of Article 3, Nos. 1 and 2, of the IUC Code and Article 6 of the same code, it was the Claimant, in its capacity as owner, the taxpayer of the IUC"; i) "invoices are not suitable to prove the celebration of a synallagmatic contract such as purchase and sale, as such documents do not by themselves reveal an indispensable and unequivocal declaration of intent (i.e., acceptance) on the part of the alleged purchasers. [...]. [...] the Claimant did not attach copies of the said official model for registration of automobile ownership when it could and should have done so, that is, in the petition for request for arbitral pronouncement, finding itself now barred from the possibility of doing so at a later time. It further follows that the lack of the synallagmatic character of the invoices could have been supplied by proof of receipt of the price contained therein by the Claimant"; j) "the competence for automobile registration is not found in the sphere of the Defendant, but is rather assigned to various external entities, namely to the Institute of Registers and Notaryship who is responsible for transmitting to the Defendant the alterations that may occur with respect to the ownership of motor vehicles. [...]. On the other hand, the transfer of ownership of motor vehicles is not susceptible to being controlled by the Defendant, as there is no ancillary obligation declaratory with respect to this matter, contrary to the control that is capable of being carried out, for example, by way of the prior payment of Municipal Tax on Transfer of Immovable Property regarding the transfer of real property. This means, therefore, that the IUC is assessed in accordance with the registration information duly transmitted by the Institute of Registers and Notaryship. In other words, the IUC is not assessed in accordance with information generated by the Defendant itself"; l) "the Claimant should be condemned to payment of the arbitral costs arising from the present request for arbitral pronouncement, in accordance with Article 527/1 of the Civil Procedure Code by virtue of Article 29/1-e) of the LRAT"; m) "from all that has been stated above it is clear that the tax acts in dispute are valid and lawful, because in conformity with the legal regime in force at the date of the tax facts, whereby, it does not occur, in this case, any error attributable to the services [...]. Thus, the legal prerequisites that confer the right to indemnificatory interest are not met. But even if this were not the case [...] it is undeniable that the Defendant merely gave effect to Article 3/1 of the IUC Code [...], for which reason also necessarily must the recognition of the right to payment of indemnificatory interest fail."

The TCA concludes that "the exception raised should be judged well-founded, as proven, in accordance with the provision of Article 577-e) of the Civil Procedure Code, as amended by Law 41/2013 of 26 June, which gives rise to the dismissal of the case in accordance with Article 278/1-d) of the same diploma; [and that] the present request for arbitral pronouncement should still be judged to lack merit, the tax acts of assessment contested remaining in the legal system and the Defendant being accordingly absolved from the claim."

III – Proven, Unproven Factuality and Respective Grounds

3.1. The following facts are considered proven:

i) The Claimant is a financial institution specialized in the automotive branch. In this context, it acquires new vehicles from national importers … and … and typically carries out leases – financial leasing, ALD or renting/AOV/rental or operational leasing – of those same vehicles in favor of third parties. Following the termination of such contracts, the Claimant now typically proceeds to transfer the ownership of the vehicles to the respective lessees or to third parties, for a residual value. In the remaining leasing contracts, the vehicle is sold to a third entity upon the cessation of those contracts.

ii) The Claimant now proceeded to payment of allegedly overdue IUC relating to the vehicles identified in the request for arbitral pronouncement and relating to the years 2009 to 2013, in the total amount at issue of €54,579.23 (see Doc. No. 4 attached to the file).

iii) Prior to the date to which the tax related, the vehicles here in question were not the property of the Claimant now, as can be seen from reading Doc. No. 6 attached to the initial petition – which, given its length, is here deemed reproduced. All sales are supported by the respective sales invoices, which are duly identified (copies of the contracts were also attached).

iv) The Claimant now filed, on 9/10/2015, an administrative appeal against the said self-assessments of IUC and compensatory interest, appeal which was dismissed by order of 27/6/2016, based on alleged untimeliness. As can be read in the final information that served as the basis for the said dismissal order (see Administrative File attached), it was understood that, "given that of the assessments appealed the most recent payment date is 13/11/2013 and taking into account that the appeal was filed on 09/10/2015", the "period of 120 days" would apply (on the understanding that it was "an appeal of an assessment of a tax, in accordance with Article 68 of the Tax Procedural Code"), whereby it was concluded that "it is easy to verify that the [aforementioned] period [...] is far exceeded." However, it so happens that, contrary to what is stated in the final information, the then appellant could "avail itself of Article 131 of the Tax Procedural Code," since we are dealing with self-assessments of tax (see Article 16, No. 2, of the IUC Code), whereby, being the period two years, the said appeal was not untimely and, consequently, the present arbitral request cannot be considered untimely (since it was filed within the period of 90 days from the date of dismissal of the administrative appeal).

3.2. There are no facts unproven relevant to the decision of the case.

3.3. The facts considered pertinent and proven (v. 3.1) are grounded in the analysis of the positions exposed by the parties and the documentary evidence attached to the file.

IV – Law

In the present case, there are four contested legal issues: 1) to know if Article 3 of the IUC Code contains a presumption and if the rebuttal of the same was made; 2) to know if, as the TCA alleges, the Claimant's interpretation does not attend to the systematic and teleological elements of interpretation of law; 3) to know if, as the TCA alleges, for purposes of the rebuttal of the presumption of Article 3 of the IUC Code, it is necessary that financial lessors (such as the Claimant now) comply with the obligation inherent in Article 19 of the IUC Code to exonerate themselves from the obligation to pay the tax; and 4) to know if indemnificatory interest is due to the Claimant.

Let us then examine this.

1. and 2) The two first legal issues converge in the direction of the interpretation of Article 3 of the IUC Code, for which it is necessary: A) to know if the norm of subjective incidence, contained in the said Article 3, establishes or not a presumption; B) to know if, when considering that this norm establishes a presumption, this violates the "unity of the regime," or disregards the systematic element and the teleological element; C) to know – admitting that the presumption exists (and that the same is juris tantum) – if the rebuttal of the same was made.

A) Article 3, Nos. 1 and 2, of the Vehicle Registration Tax Code, has the following wording, which is reproduced here:

"Article 3 – Subjective Incidence

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

2 - Financial lessees, purchasers with reservation of ownership, as well as other holders of purchase option rights by virtue of leasing contract are equated to owners".

The interpretation of the cited legal text is, naturally, essential for the resolution of the case under analysis. In that measure, it is necessary to resort to Article 11, No. 1, of the General Tax Law, and, by referral of this, to Article 9 of the Civil Code.

Now, in accordance with the said Article 9 of the Civil Code, interpretation starts from the letter of the law and aims, through it, to reconstruct the "legislative thought." The same is to say (regardless of the objectivism-subjectivism dispute) that literal analysis is the basis of the interpretive task and the systematic, historical or teleological elements are guides for orientation of the said task.

The literal apprehension of the legal text in question does not generate - although the separation of this from the ascertainment, even minimal, of the respective meaning is highly debatable - the notion that the expression "considered as such" means something different from "presumed as such." Indeed, we would hardly find authors who, in a task of pre-understanding of the said legal text, instinctively rejected the identity between the two expressions.

Confirming the indistinction (both literal and of 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 particular interest, the case of the expression "is considered," contained in Article 21, No. 2, of the Corporate Income Tax Code. As noted by Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, with respect to that article of the Corporate Income Tax Code: "apart from this norm evidencing that what is at issue regarding the taxation of capital gains is to ascertain the real value (that of the market), the limitation to the ascertainment of real value derived from the rules for determination of taxable value provided for in the Corporate Income Tax Code cannot fail to be considered as a presumption in matters 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 merely some examples that permit the conclusion that it is precisely for reasons related to the "unity of the legal system" (the systematic element) that one cannot assert that only when the verb "presume" is used is one faced with 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 has been seen, prominence.

If literal analysis is merely the basis of the task, it naturally appears essential to evaluate the text in light of the other elements (or subelements of the so-called logical element). Indeed, the TCA also alleges that the Claimant's interpretation does not attend to the systematic element and that, in light of a teleological interpretation of the regime enshrined in the entire IUC Code, the interpretation advocated by the Claimant now is wrong.

It is therefore justified to ascertain whether the interpretation that considers the existence of a presumption in Article 3 of the IUC Code conflicts with the teleological element, i.e., with the purposes (or with the sociological relevance) of what was intended with the rule in question. Now, such purposes are clearly identified at the beginning of the IUC Code: "The vehicle registration tax follows 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 IUC Code).

What can be inferred from this Article 1? It can be inferred that the close connection of the IUC to the principle of equivalence (or principle of benefit) does not permit the exclusive association of the "taxpayers" mentioned there with the figure of owners but rather with the figure of users (or economic owners). As was well noted in the Arbitral Decision rendered in process No. 73/2013-T: "in truth, the ratio legis of the tax [IUC] rather points in the direction that the users of the vehicles are to be taxed, the "economic owner" in the words of Diogo Leite de Campos, the actual owners or the financial lessees, since these are the ones that have the polluting potential causing the environmental costs to the community."

C) From the foregoing, the conclusion is drawn that limiting the taxpayers of this tax only to the owners of the vehicles in whose names the same are registered - ignoring situations where these no longer coincide with the real owners or the real users of the same -, constitutes a restriction which, in light of the purposes of the IUC, finds no basis for support. And, even if the intention of the legislator is alleged to have been that, for purposes of IUC, be considered as owners those who, as such, appear in the automobile register, it is necessary to keep in mind that such register, in light of what was said previously, generates only a rebuttable presumption, i.e., a presumption that can be set aside by the presentation of evidence to the contrary. In this sense, see, for example, the Decision of the Court of Appeal for Tax Matters of 19/3/2015, process 8300/14: "Article 3, No. 1, of the IUC Code, enshrines a legal presumption that the holder of the automobile 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 could actually be and would have remained proven; and, on the other hand, to thwart the duty of the TCA to compliance with the inquisitorial principle established in Article 58 of the General Tax Law, i.e., the duty to carry out 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 actual owner of the vehicle).

Furthermore, if the seller were not permitted to rebut the presumption contained in Article 3 of the IUC Code, one would be benefiting, without a plausible reason, the purchasers who, in possession of correctly completed and signed contract forms, and enjoying the advantages associated with their condition as owners, sought to exempt themselves, by way of "registration formalism," from the payment of tolls or penalties.

In this regard, it is also worth noting that vehicle registration has no constitutive effect, functioning, as was previously stated, as a rebuttable presumption that the holder of the register is, effectively, the owner of the vehicle. In this sense, see, for example, the Decision of the Supreme Court of Justice of 19/2/2004, process 03B4639: "Registration does not produce constitutive effect, since it is intended to give publicity to the registered act, functioning (merely) as a mere rebuttable presumption, (presumption "juris tantum") of the existence of the right (Articles 1, No. 1 and 7 of the Constitution and Article 350, No. 2, of the Civil Code) as well as of the respective ownership, all in accordance with what is contained therein."

In the same sense, referred, in this regard, the Arbitral Decision rendered in process No. 14/2013-T, in terms that are here endorsed: "the essential function of the automobile register is to give publicity to the legal situation of the vehicles, the register not producing constitutive effect, functioning (merely) as a mere rebuttable presumption of the existence of the right, as well as of the respective ownership, all in accordance with what is contained therein. The presumption that the right registered belongs to the person in whose name it is inscribed can be rebutted by evidence to the contrary. Not fulfilling the TCA the requirements of the notion of third party for purposes of registration [a circumstance that could prevent the full efficacy of the contracts of purchase and sale celebrated], it cannot avail itself of the absence of updating of the registration of the right of ownership to call into question the full efficacy of the contract of purchase and sale and to require the seller (prior owner) to pay the IUC due by the purchaser (new owner) as long as the presumption of the respective ownership is rebutted through sufficient proof of the sale."

As is well noted in the Arbitral Decision rendered in process 845/2015-T, of 30/10/2015, "Article 72 of the General Tax Law permits the use "for knowledge of the facts necessary for the decision of the procedure of all means of proof admitted in law." The Defendant did not raise any incident of contest of the truthfulness of these means of proof. Moreover, the same did not allege that this means of proof was false, in this case, but only that "the invoices attached are not documents suitable to prove, by themselves, the alleged sales of the vehicles here in question, since they are merely documents unilaterally issued by the Claimant." Not specifically referring to any case in which the sales had not been made. Furthermore, all invoices must be prepared using certified software, in accordance with Ordinance No. 22-A/2012, of 24 January. Being that the same are used for accounting of VAT and Corporate Income Tax. Therefore, if for purposes of these taxes invoices are accepted by the Tax Authority, there is no reason to, in this case, not permit their use as a means of proof, on the basis of generic speculations."

Note, also, with respect to the probative force of invoices, the Arbitral Decision rendered in process No. 27/2013-T, of 10/9/2013, where it is noted that "the documents presented, particularly the copies of the invoices that support, in the first place, the sales [of] vehicles [...] referenced, [...] embody means of proof with sufficient force and suitable to rebut the presumption founded on the register, as enshrined in No. 1 of Article 3 of the IUC Code, documents that, moreover, enjoy the presumption of truthfulness provided for in No. 1 of Article 75 of the General Tax Law."

In this same sense, see, lastly, the Arbitral Decision rendered in process No. 230/2014-T, of 22/7/2014: "the documentary elements, constituted by copies of the respective sales 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 transfer of ownership are enforceable against the Tax and Customs Authority, because, although facts subject to registration only produce effects in relation to third parties when registered, given the provision of Article 5, No. 1, of the Real Property Registration Code [applicable by referral of the Automobile Registration Code], the Tax and Customs Authority is not a third party for purposes of registration, since it is not in the situation provided for in No. 2 of the said Article 5 of the Real Property Registration Code, applicable by force of the Automobile Registration Code, that is: did not acquire from a common author rights incompatible with each other. As for proof of sale of vehicles, it can be made by any means, since the Law does not require a specific form, namely, written form."

In this sequence, it is further justified to add that it is also evident, in light of the documentary evidence presented, that the Claimant should not be deemed an owner, as can be observed from reading Doc. No. 6 attached to the initial petition – which, given its length, is here deemed reproduced. All sales are supported by the respective sales invoices, which are duly identified (copies of the contracts were also attached) – given that this documentary evidence is decisive for purposes of applying the provision of Article 3, No. 2, of the IUC Code. Indeed, the documentary evidence was made and the truthfulness of those documents was not challenged by the Defendant, although this one understands that the Claimant now should have demonstrated compliance with the obligation inherent in (then current) Article 19 of the IUC Code [on this argument, see below, 3)].

It is worth noting, further, that, although in the case of financial leasing the lessor is obliged to acquire the asset to be leased (and, in ALD, the lessor is only obliged to provide enjoyment of the thing), and the lessee, at the end of the contract, has the potestative right to acquire the leased asset at the previously fixed price (and, in ALD, this does not occur) – see, in this regard these differences, e.g., the Decision of the Supreme Court of Justice of 20/11/2003, process 03B3725 –, it is certain that, in light of the final part of No. 2 of Article 3 of the IUC Code, are equated to the condition of owner subjects of tax, the "financial lessees," "purchasers with reservation of ownership," and "other holders of purchase option rights by virtue of leasing contract" (it may be a leasing, an ALD or a renting, but always with the aforementioned purchase option right associated). In sum: if the said rental contracts contain this purchase option right (and this occurs in the present case, as the Claimant well noted in point 54 of its initial petition), the provision of the final part of No. 2 of Article 3 of the IUC Code is applicable to them.

In this sense, see, for example, Agostinho Cardoso Guedes (in "The subjective incidence of vehicle registration tax in the context of financial leasing contracts or other leasing contracts with purchase option," in: Journal of Business and Legal Sciences, 23, 2013, pp. 17-18): "The financial lessee is treated by law as a quasi-owner. [...]. It is thus understood that the obligation to pay the IUC falls on the financial lessee and not on the lessor given the characteristics of his legal position. The same applies with respect to the purchaser with reservation of ownership. [...]. Also similar to the position of the financial lessee is that of the lessee with purchase option. Also here the lessee has exclusive enjoyment of the leased asset and has the right to acquire the respective ownership (without the lessor being able to object to that acquisition). That is, in the three situations referred to by the legislator in Article 3, No. 2, of the IUC Code, we have two common aspects: the lessee/purchaser has exclusive enjoyment of the asset and has the right (or the expectation) of becoming owner in the short or medium term."

In the same sense, see the Arbitral Decision rendered in process No. 244/2014-T, of 2/10/2014: "Despite the existence of rental contracts relating to these vehicles, the contracts in question do not fall within No. 2 of Article 3 of the IUC Code, since from the content of the same no purchase option rights emerge, a circumstance provided for in the norm in question for purposes of its application, whereby, in such cases, the taxpayer is not the lessee but rather the owner of the vehicle, in accordance with No. 1 of this article."

1. The Defendant also alleges (see points 30 et seq. of its answer) that, for purposes of the rebuttal of the presumption of Article 3 of the IUC Code, it is necessary that the financial lessors (such as the Claimant now) comply with the obligation inherent in Article 19 of the IUC Code to exonerate themselves from the obligation to pay the tax.

However, this understanding of the TCA does not hold, given that, as was well noted, for example, in the Arbitral Decision rendered in process No. 14/2013-T, of 15/10/2013, "the financial lessee is equated to owner for purposes of No. 1 of Article 3 of the IUC Code, the same is to say to be a taxpayer of the IUC (cf. No. 2 of Article 3). [...] not having the lessor, by legal and contractual imposition, the potential for use of the vehicle and the lessee having exclusive enjoyment of the automobile, [and reaffirming the] conclusion to which we had already arrived that [...] mandates the ratio legis of the IUC that, in accordance with the said No. 2 of Article 3 of this Code, it be the lessee who is responsible for payment of the tax, once it is he who has the potential for use of the vehicle and causes the road and environmental costs inherent to it. The same conclusion is reached when one verifies the importance given to the users of the leased vehicles in Article 19 of the IUC Code. Indeed, in accordance with the provision of this article, the entities that proceed, namely, to the financial leasing of vehicles are obliged to provide to the TCA (ex-DGCI), the tax identification of the users of the leased vehicles for purposes of the provision of Article 3 of the IUC Code (subjective incidence), as well as of No. 1 of Article 3 of the Law of their approval, since in accordance with this norm of Law No. 22-A/2007, if the revenue generated by the IUC is incident on vehicles subject to long-term rental or operational leasing, it should be allocated to the municipality of residence of the respective user (underscored). [...] [But, despite this obligation, this does not prevent that,] on the date of the occurrence of the tax-generating event, a financial leasing contract is in force that has as its object an automobile, for purposes of the provision of Article 3, Nos. 1 and 2, of the IUC Code, [being that the] taxpayer of the IUC is the lessee even if the registration of the right of ownership of the vehicle is registered in the name of the leasing entity, provided that this makes proof of the existence of the said contract." (Italics ours.)

From the foregoing, the allegation of the TCA regarding Article 19 of the IUC Code does not hold, since the same aims to superimpose a formal obligation on a substantial reality clearly demonstrative of the condition of the Claimant as leasing entity in the underlying contracts.

1. A final note to examine, under Article 24, No. 5, of the LRAT, the request for payment of indemnificatory interest in favor of the Claimant (Article 43 of the General Tax Law and Article 61 of the Tax Procedural Code).

In this regard, the Arbitral Decision rendered in process No. 26/2013-T, of 19/7/2013 (which dealt with a situation similar to that now under examination) notes: "The right to indemnificatory interest referred to in the above norm of the General Tax Law presupposes that tax has been paid in an amount greater than that owed and that such derives from error, of fact or of law, attributable to the services of the TCA. [...] even if it is recognized that tax is not owed paid by the claimant, by not being the taxpayer of the tax obligation, determining, in consequence, the respective refund, it is not obliged that, in its origin, is found the error attributable to the services, which determines such right [to indemnificatory interest] in favor of the taxpayer. Indeed, in promoting the official assessment of the IUC considering the claimant as the taxpayer of this tax, the TCA merely gave effect to the norm of No. 1 of Article 3 of the IUC Code, which, as was abundantly referred to above, attributes such quality to the persons in whose names the vehicles are registered." In the same sense, see, for example, the Arbitral Decisions rendered in processes: 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 reached, it is concluded, equally in the present case, by the lack of merit of the said request for payment of indemnificatory interest.

V – DECISION

In view of the foregoing, it is decided:

• The request for arbitral pronouncement is judged well-founded, with the consequent annulment, with all legal effects, of the assessment acts in question and the refund of the amounts improperly paid;

• The request is judged to lack merit insofar as it concerns the acknowledgment of the right to indemnificatory interest in favor of the claimant.

The value of the case is fixed at €54,579.23 (fifty-four thousand five hundred seventy-nine euros and twenty-three cents), in accordance with Article 32 of the Administrative Procedure Code and Article 97-A of the Tax Procedural Code, applicable by force of the provision of Article 29, No. 1, paragraphs a) and b), of the LRAT, and of Article 3, No. 2, of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT).

Costs to the charge of the Defendant, in the amount of €2,142.00 (two thousand one hundred forty-two euros), in accordance with Table I of the RCPAT, and in compliance with the provisions of Articles 12, No. 2, and 22, No. 4, both of the LRAT, and of the provision of Article 4, No. 4, of the cited Regulation.

Notify.

Lisbon, 27 March 2017.

The Arbitrator

(Miguel Patrício)

Text prepared by computer, in accordance with the provision of Article 131, No. 5, of the Code of Civil Procedure, applicable by referral of Article 29, No. 1, paragraph e), of the LRAT.

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