IUC Subjective Incidence: CAAD 624/2015-T Vehicle Importer Liability

Process: 624/2015-T

Date: April 28, 2016

Tax Type: IUC

Summary

CAAD Decision 624/2015-T addressed IUC (Unique Circulation Tax) self-assessments totaling €98,304.76 for the year 2011 against a vehicle importing company. The case involved 795 separate IUC assessments: 160 for vehicles sold to concessionaires, 619 for exported vehicles, 11 sold to car rental companies, and 5 used vehicles. The central legal issue concerned subjective incidence - determining who bears IUC liability when an importer registers vehicles in Portugal but subsequently sells or exports them to other EU Member States or third countries. The claimant argued that as a commercial importer temporarily registering vehicles for business and contractual reasons with manufacturers, it should not be liable for IUC on vehicles no longer in its possession. After the Tax Authority rejected the administrative review, the company initiated arbitration proceedings at CAAD. The case demonstrates the possibility of cumulation of claims, allowing taxpayers to challenge multiple related tax assessments in a single arbitration procedure. The proceeding raised fundamental questions about when IUC liability transfers from importers to subsequent owners, particularly relevant for businesses engaged in international vehicle trade within the EU single market framework.

Full Decision

ARBITRAL DECISION

CLAIMANT: A…, S.A

RESPONDENT: Tax and Customs Authority

The arbitrators Dr. Judge José Poças Falcão (arbitrator-president), Dr. António Manuel Melo Gonçalves and Prof. Dr. Maria do Rosário Anjos, appointed by the Deontological Council of the Administrative Arbitration Centre to constitute the Arbitral Tribunal, agree as follows:

I REPORT

A) The Parties and Constitution of the Arbitral Tribunal

A…, S.A., formerly B…, S.A., legal person no.…, with registered office at Rua…, no. …B, parish of … and …, …-… Porto, notified by means of Office no.…, of 25 June 2015, from the order of the Head of Administrative Justice Division, of the Finance Directorate of Lisbon, which rejected the administrative review filed against the self-assessments of Unique Circulation Tax, relating to the year 2011, in the total amount of € 98,304.76, described in detail in the petition of the arbitral application filed, all contained in the documents and referenced in the administrative review decision and respective administrative proceedings (AP), which are hereby deemed fully reproduced, filed a request for constitution of a collective Arbitral Tribunal, in accordance with and for the purposes of the provisions of article 2, paragraph 1, letter a) and articles 10 et seq., all of the Legal Regime of Tax Arbitration ("LRTA"). With this request, the Claimant seeks to challenge the order of the Head of Administrative Justice Division, of the Finance Directorate of Lisbon, of 24 June 2015 which rejected the administrative review filed, as well as the self-assessments of UCT, relating to the year 2011, mentioned above, petitioning for their annulment.

The request for constitution of the Arbitral Tribunal was submitted on 28-09-2015, was accepted by His Excellency the President of the Administrative Arbitration Centre (CAAD) and notified to the Respondent on 30-06-2015. The Claimant chose not to appoint an arbitrator, and therefore, under the provisions of article 6, paragraph 1 of the LRTA, the arbitrators mentioned above were appointed by the Deontological Council of the Administrative Arbitration Centre on 23-11-2015 to constitute the Collective Arbitral Tribunal. The appointment was accepted and the parties were notified of the appointment of the arbitrators, and did not manifest any intention to refuse the appointment.

Thus, in accordance with the provisions of article 11, paragraph 1, letter c), of Decree-Law no. 10/2011, of 20 January, as amended by article 228 of Law no. 66-B/2012, of 31 December (LRTA), the Collective Arbitral Tribunal was constituted on 15-12-2015. The respondent entity, Tax and Customs Authority (TA) was notified on 12-01-2016 to submit its reply within the legal timeframe, in accordance with and for the purposes of the provisions of articles 17, paragraphs 1 and 2 of the LRTA.

The TA submitted its reply on 12-02-2016, which is hereby deemed fully reproduced. Taking into account the content of the arbitral application and the reply submitted, the following arbitral order was issued on 22-02-2016:

"The Respondent, Tax and Customs Authority (TA), presents in its learned Reply a defence by impugnation and by exception.

Therefore, it becomes necessary for the Claimant to be heard strictly on matters that do not constitute defence by impugnation (articles 16-a) and 18-1/b) and 19-1, at the end, of the LRTA and 571-2/2nd part, of the CPC by virtue of article 29, of the LRTA).

It is understood that such pronouncement should be made in writing and within a period of 10 days.

II - On the other hand, it is also important that both parties pronounce themselves on the possible waiver, due to futility, of the meeting provided for in article 18, of the LRTA, without prejudice to presenting final arguments in writing at the appropriate time.

Timeframe: 10 days

III – In light of the principle of cooperation with the Tribunal (article 7, of the CPC) and with a view to facilitating the task of preparing the final decision, the parties are requested to send to CAAD their respective pleadings in editable format."

On 23-02-2016 the Claimant pronounced on the matter of the exception invoked by the Respondent, as per the request that was submitted to the record and is hereby deemed fully reproduced. On the same date, the Respondent TA also pronounced in the record in favor of waiving the meeting provided for in article 18 of the LRTA.

On 09-03-2016 an Arbitral Order was issued with the following content:

"The meeting is waived, taking into account:

a) The agreement of the parties;

b) that this is, in the case, a proceeding not susceptible to the definition of specific procedural rules, different from those commonly followed by CAAD in the generality of arbitral proceedings;

c) that, with regard to the exception/preliminary issue raised by the TA – which will be decided finally when assessing the merit of the application - the principle of contradictory procedure has already been satisfied (see the claimant's reply) and

d) that there is no apparent need for correction of procedural documents.

II – Testimonial evidence

Having examined the procedural documents of both parties and the position of the TA regarding the factual framework invoked, the Tribunal considers that there is no controversy regarding the essential facts alleged for the proper decision of the case, and that documentary evidence not contested is sufficient.

Therefore, considering the futility of the requested diligence of examining witnesses and having regard to the provisions of articles 16-c), of the LRTA and 130, of the CPC, applicable by virtue of article 29-1/e) of the LRTA, the request for production of testimonial evidence submitted by the claimant is dismissed.

III – Final arguments

Both parties shall submit, within a successive period of 15 (fifteen) days (beginning with the claimant), written arguments of fact and law.

IV – Date for issuance and notification of the final decision

6-6-2016 is set as the deadline for the issuance and notification of the final arbitral decision.

V – Outstanding arbitration fee

The claimant must comply with the provisions of article 4-3 of the Regulation on Costs in Tax Arbitration Proceedings."

The Claimant submitted its arguments on 24-03-2016 and the Respondent on 12-04-2016, which are hereby deemed fully reproduced.

B) THE APPLICATION FILED BY THE CLAIMANT:

The Claimant files this request for arbitral pronouncement seeking the illegality, with the consequent annulment, of all UCT assessments identified in article 5 of the PI, relating to the year 2011, all attached to the administrative review proceeding file and contained in the Administrative Proceedings (AP), which is hereby deemed fully reproduced.

In summary, the claimant alleges that in the course of its activity it imports vehicles which, for commercial and contractual reasons established with manufacturers, sometimes registers in Portugal but which are, subsequently, sold and shipped to other Member States of the European Union or, in certain cases, exported to third countries. Also in the course of its commercial activity, it imports vehicles which, sometimes, are registered and, subsequently, sold to car rental companies, to its concessionaire companies and to final customers, as well as, sometimes, it commercializes used vehicles.

The situations under discussion in the present proceedings translate to self-assessments of Unique Circulation Tax, with reference to the year 2011, which consist of 160 assessments of UCT relating to vehicles sold to concessionaires, 619 assessments relating to exports, 11 sold to car rental companies and 5 used vehicles, all in the total amount of €98,304.76.

All these assessments are properly identified and itemized in the table presented in article 5 of the petition of the arbitral application, with identification of the registration plate of the vehicle to which they relate, the legal situation in which they were found at the time the taxable event occurred and the respective assessed amount, whereby the contents are deemed fully reproduced. Although it has paid them for economic reasons, the claimant disagrees with all these assessments as it considers that it is not the passive subject of UCT regarding the vehicles and periods in question, because in relation to all these vehicles, on the date of the taxable event, the Claimant was no longer their owner. Thus, there is a ground for exclusion from the subjective scope of the tax. It understands that the requirements of subjective tax incidence provided for in article 3 of the CIUC are not satisfied, combined with articles 4 and 6 of the said Code.

The claimant alleges that article 3 of the CIUC establishes a rebuttable presumption, whereby the owner of the vehicle is presumed to be that natural or legal person who appears as such in the vehicle register. Once the presumption is rebutted, as it seeks to have achieved in the present proceedings, it must be considered that the claimant was not a passive subject of the tax on the date when the taxable event occurred. To the same effect pronounced the Arbitral Tribunal in the context of an application filed by the herein Claimant against the self-assessments of Unique Circulation Tax relating to the year 2012 and which was processed under no. 595/2014-T. In this proceeding, the arbitral tribunal decided that "limiting the passive subjects of this tax only to the owners of the vehicles in whose name they are registered – ignoring situations in which these no longer coincide with the actual owners or actual users – constitutes a restriction which, in light of the purposes of the UCT, finds no basis for support. The register thus generates only a rebuttable presumption, i.e., a presumption that may be rebutted by contrary evidence (evidence that the register no longer produces, at the moment the tax obligation becomes due, the material truth which would have given rise to it)."

It concludes for the illegality of the assessment acts due to error regarding the assumptions of the taxable event, which constitutes a defect of violation of law. It invokes diverse case law in favor of the interpretation it advocates. It alleges that, due to the need to regularize its tax situation, it has paid all the disputed assessments, and that, as a result of the annulment of the tax self-assessments, it should be reimbursed of the sums indebted, plus compensatory interest. It invokes as support for its application the provisions of article 43, paragraph 1, of the General Tax Law, whereby "compensatory interest is due when it is determined, in administrative review or judicial impugnation, that there was error attributable to the services resulting in payment of the tax debt in an amount greater than legally due." Establishing paragraph 2 of the aforementioned provision that it is "also considered that there is error attributable to the services in cases in which, although the assessment is made on the basis of the taxpayer's declaration, this has followed, in completing it, the general guidelines of the tax administration, duly published."

Regarding the subjective incidence of the Unique Circulation Tax and the enforceability of this tax, the TA has always sustained, through Circular Offices and binding rulings that the passive subjects of the Unique Circulation Tax are always the owners of the vehicles, considering as such the persons, natural or legal, in whose name the vehicles are registered. Thus, the TA has always maintained that the presumption derived from the Vehicle Register is an irrebuttable presumption, not admitting contrary evidence. To this end, it invokes, among others, the Binding Ruling issued in Case no. 2012… which received the concordant Order of 19 April 2012, of the Legal Substitute of the Director-General of Taxes, according to which, "In the context of UCT, vehicle ownership is taxed, regardless of its respective use or enjoyment. Thus, as long as the situation of the said vehicle is not regularized with the said entities, the respective tax will continue to be assessed in the name of the applicant, registered as owner of the same in the Motor Vehicle Registry Office. Indeed, pursuant to the Code of the UCT, the tax is due by the owner of the vehicle until its cancellation or scrapping under the law. In these terms, as long as IMTT does not cancel the registration, the tax continues to be due by its owner, who is the same as appears in the databases of the Vehicle Registry Office and IMTT."

It is observed that the error affecting the disputed assessments is based on diverse general guidelines of the TA, whereby it results in the understanding that the passive subject of the Unique Circulation Tax is the person in whose name the vehicle is registered, independently of the use or enjoyment of the vehicle or even after its transfer at a moment prior to the tax becoming enforceable, or, in the absence thereof, the passive subject of the Vehicle Tax. By way of example, it cites Circular Office no. 40096, of 16 October 2009.

The claimant thus concludes that the order dismissing the administrative review, as well as the self-assessments of Unique Circulation Tax at issue in the present proceedings are illegal and were carried out in accordance with the general guidelines of the TA, and therefore it must be concluded that the success of the present Request for Arbitral Pronouncement materializes the "error attributable to the services," for purposes of the provisions of article 43, paragraph 2, of the General Tax Law. Thus, the claimant seeks that, as a result of the annulment of the self-assessment acts, the amount of tax improperly paid be reimbursed to the Claimant, plus compensatory interest at the legal rate, in accordance with article 43, paragraph 2, of the General Tax Law.

C – THE RESPONSE OF THE RESPONDENT

The Respondent TA, duly notified for this purpose, timely filed its response in which it contested, by exception and by impugnation, the arbitral application filed by the claimant. By exception, it alleges that the procedural requirements for the continuation of the proceedings are not satisfied, in that therein are illegally accumulated requests, in that the requirements for such accumulation are not met.

Even if this is not accepted, the respondent alleged by impugnation, in summary, that the Claimant's position has no merit, which position is based on an incorrect interpretation and application of legal norms applicable to the case sub judice, notoriously, erroneous. From the TA's perspective, article 3 of the CIUC does not contain any legal presumption, and therefore the passive subject of the tax is the owner of the vehicle, as results from the databases that serve as the basis for the TA to carry out the assessment, namely, the database of the Institute of Land Transport Mobility (IMTT) and the Registry Institute and Notary/Vehicle Registration Office (IRN). It also alleges that the position defended by the claimant incurs a distorted reading of the letter of the law, corresponds to 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 tax-legal system and further results from an interpretation that ignores the rationale of the regime established in the article in question, and indeed, throughout the CIUC.

According to the TA, the legislator expressly and intentionally established that "they are to be considered as such the persons in whose name they are registered," because it is this interpretation that preserves the unity of the tax-legal system and any other interpretation would be to ignore the teleological element of statutory interpretation: the rationale of the regime established in the article in question, and indeed, throughout the CIUC.

It thus seeks, in summary, the success of the exception invoked or, should that not be the understanding, the total failure of the arbitral application. It understands that, in no case, even if the tribunal decides for the success of the application, should the TA be held responsible for the payment of compensatory interest, nor for the payment of procedural costs, as it is entirely attributable to the Claimant the issuance of the assessments.

II - CASE MANAGEMENT

The Arbitral Tribunal is regularly constituted and is materially competent, in accordance with article 2, paragraph 1, letter a) of Decree-Law no. 10/2011, of 20 January.

The Parties have standing and legal capacity, are properly parties to the proceedings and are legally represented in accordance with the provisions of articles 4 and 10, paragraph 2, of DL no. 10/2011 and article 1, of Regulation no. 112/2011, of 22 March.

Given this, it is necessary to decide:

The preliminary issue of the exception for illegal accumulation of requests;
The issue of merit raised in the proceedings, depending on the decision to be given to the preliminary issue raised by way of exception.

With regard to the alleged exception of illegality of accumulation of requests, it is necessary to decide:

In the reply of the Respondent, the issue of illegal accumulation of requests is raised. Thus, the following situations are identified:

Vehicles that were shipped or exported and invoiced before the end of the registration period (619);
Vehicles that were shipped or exported and invoiced within 30 days granted for assessment and payment (109);
Vehicles that were sold to car rental companies, which were transferred to these companies by the end of the legally granted registration period (11);
Vehicles that were sold to concessionaire companies, up to 60 days counted from the grant of registration (160);
Vehicles that were sold to third parties, before the taxable event and
Used vehicles, which were sold up to 60 days after registration (5).

In the TA's view, the same factual circumstances do not exist, and even though it "may be conjectured that the factual procedures may be transversal to all assessments, what is certain is that we are faced with disparate factual situations embodied in different vehicles, with different sales dates, different procedures, on different dates and to totally disparate owners, by completely differentiated amounts," quoting in support the Arbitral Decision 691/2014-T where, it argues, in a situation of identical factual configuration, it was decided "it must be concluded that the success of the 391 accumulated requests does not essentially depend on the assessment of the same factual circumstances nor are the same tax-legal questions to be assessed. There is no single common tax-legal question to all requests."
It concludes that the same should not be admitted by the arbitral tribunal, and the claimant should be notified in accordance with and for the purposes of the previous article 47, paragraph 5 of the CPTA, under the threat of dismissal of the appeal.
Heard the Claimant, in the context of contradictory procedure, it came to the same to defend that the legal requirements on which the accumulation of requests depends are satisfied, having emphasized that the TA followed such understanding in the context of administrative review, when it considered, within the discretionary powers conferred on it by Law, that the accumulation of requests would result in no prejudice to the celerity of the decision. The TA itself makes an implicit recognition by admitting in its reply that "… although the Claimant proceeds with the fractionation of the issues to be reviewed within the scope of the present request for arbitral pronouncement … the issues are transversal to the applicable legal norms, the assessment of the Claimant's arguments will proceed in block, and not individually."
Assessing, article 3, paragraph 1 of the LRTA provides that "The accumulation of requests, even if relating to different acts and the joinder of claimants are admissible when the success of the requests depends essentially on the assessment of the same factual circumstances and on the interpretation and application of the same principles or rules of law."
For its part, article 104 of the CPPT provides that the admission of requests is admissible in case of identity of the nature of the taxes, the factual and legal grounds invoked and the tribunal competent to decide.
In this matter, the Collective Arbitral Tribunal sees no reason to depart from the understanding expressed in Arbitral Decision no. 13/2015 – T, of 30 October 2015, and in which two of its participating arbitrators are equally participants in the formation of the present decision.

In it the following was written:

"In the case of the proceedings, although the facts relate, as the TA argues, to different vehicles, with different sales dates, different procedures of sales made to concessionaires and sales on different dates and to totally disparate owners, by completely differentiated amounts, the truth is that it is not apparent how such circumstance could prevent the accumulation of requests."

Indeed, irrespective of the different factual situation existing, as the TA argues, the truth is that there is total identity (i) of the nature of the taxes (ii) of the factual and legal grounds invoked and (iii) of the tribunal competent to decide.

Let us see:

In all the situations invoked by the Claimant, the tax in question is the UCT.
Furthermore, it will always be said that, in the context of a request for arbitral pronouncement, the identity of taxes is not required for this purpose, given the fact that such identity is not provided for in article 3, paragraph 1 of the LRTA and the norms provided for in the CPPT are of subsidiary application, as results from the provisions of article 29, paragraph 1 a) of the LRTA.
Likewise, the factual and legal grounds invoked by the Claimant are exactly the same in all situations, the former being reduced to the alleged transfer of the vehicles at a moment prior to the date of the taxable event and the latter to the assessment of the legal norms relating to the subjective incidence of UCT.
The identity of the tribunal competent to decide appears evident in all the situations listed by the Claimant, the present tribunal being materially competent for this purpose.
Whereupon it necessarily follows the verification of the requirements upon which the law makes the possibility of initial accumulation of requests depend.

Nor shall it be said, as the TA does, that the fact that the situations invoked relate to different vehicles, with different sales dates, different procedures of sales made to concessionaires and sales on different dates and to totally disparate owners, by completely differentiated amounts, would prevent accumulation. Were it so, the Claimant would be forced to challenge each UCT assessment separately, which manifestly cannot be defended.

Whereby, considering the verification of the legal requirements on which the accumulation of requests depends, the notified notification of the Claimant is not justified in accordance with and for the purposes of the provisions of article 47, paragraph 5 of the CPTA."

In light of the above, it further follows that:

The proceeding does not suffer from voidities that invalidate it or that obstruct the judgment of the merit of the case, and therefore the Tribunal is in a position to decide the issue of merit under discussion in the present arbitral proceedings.

III. MATTER OF FACT

A) Proven Facts

As a matter of fact relevant to the decision to be issued, the Tribunal establishes the following facts as established:

The Claimant, A…, S.A., formerly B…, S.A., legal person no.…, with registered office at Rua…, no. … B, parish of … and …, …-…, in Porto, is a commercial company that is engaged, in the course of its activity, in the importation of vehicles which, for commercial and contractual reasons established with manufacturers, sometimes registers in Portugal but which are subsequently sold and shipped to other Member States of the European Union or, in certain cases, exported to third countries;
Still in the exercise of its commercial activity, the claimant imports vehicles which, sometimes, are registered and subsequently sold to car rental companies, to its concessionaire companies and to final customers;
Sometimes, the claimant also commercializes used vehicles;
The Claimant found that on the finance portal there was UCT relating to the year 2011, attributable to a large number of vehicles, which are properly identified and detailed in the table contained in article 5 of the arbitral application, which is hereby deemed fully reproduced;
The claimant proceeded, in accordance with the information contained in the portal, to the self-assessments in question and proceeded to pay them, to avoid the negative consequences, with direct impact on its activity, arising from the institution of tax enforcement proceedings;
The Claimant proceeded to pay all these self-assessments, in the total amount of 98,304.76; as results from the receipts attached to the record and is accepted by the Respondent; (see doc. 6 Parts I and II attached to the record)
The factual situations underlying the self-assessments of Unique Circulation Tax relating to the year 2011 disputed herein, contained in the table referred to in d) can be synthesized into five distinct groups, as follows:

i. 160 self-assessments of UCT relating to vehicles sold to concessionaires, all sold up to 60 days after registration;

ii. 619 self-assessments of UCT relating to vehicles exported, all sold up to 60 days after registration;

iii. 11 self-assessments relating to vehicles sold to car rental companies;

iv. 5 self-assessments relating to used vehicles, all sold up to 60 days after registration;

v. 1 self-assessment relating to a vehicle sold to a concessionaire and 109 self-assessments relating to vehicles exported, all sold between 60 to 90 days after registration;

The claimant was notified by the TA to pronounce, in the context of prior hearing, on the draft for official assessment of Unique Circulation Tax relating to the years 2009, 2010, 2011 and 2012, which was exercised on 14 October 2013; (doc. no. 5 and 7 attached to the record)
The Respondent issued a final decision and maintained all the self-assessments relating to the year 2011 disputed in the present proceedings; (doc. 7 attached to the record).
The Claimant filed an administrative review against the said self-assessments, as appears from the AP attached to the record by the Respondent and from document no. 4 attached to the record by the claimant.
By means of Office no.…, of 12 May 2015, the Administrative Justice Division of the Finance Directorate of Lisbon notified the claimant to pronounce in the context of the right to be heard on the draft decision of the administrative review, which was not exercised;
By Office no.…, of 25 June 2015, of the Administrative Justice Division, of the Finance Directorate of Lisbon, the Claimant was notified of the decision dismissing the administrative review filed against the assessments at issue herein;
The transfers to the concessionaires, the exports, as well as to the car rental companies and/or final customers are documented by invoices issued in accordance with legal provisions, which the claimant attached to the record (docs. 11 to 19 attached to the record);
All exports are documented with the respective shipping documents, attached to the record, as well as the evidence of the declarations made with the Directorate General of Customs and Special Taxes on Consumption for the purpose of compliance with the corresponding declarative and tax obligations that it fulfilled;
The vehicles upon entering Portugal are deposited in the installations of the concessionaires or car rental companies, the corresponding Vehicle Tax (VT) is processed, which is passed on to the final price to be paid by the purchasers, and the respective registration in Portugal is promoted;
Thus, at the moment when the vehicles are registered, the Claimant has already sold them to third parties, only then proceeding with the registration in accordance with commercial practice and legally established rules;
It results from the procedure described above that the first holder of the vehicle register is the Claimant;
All vehicles contained in the assessments disputed in the present proceedings have a first property registration in the name of the Claimant;
The tax assessments disputed were paid by the claimant, which attached the respective receipts, and total the global amount of €98,304.76;
The Respondent maintained, throughout all the tax proceedings described above and despite the interventions of the Claimant and all the documentation attached despite this, its initial purpose and promoted the issuance of the respective official UCT assessments;
At the date of the disputed tax acts of assessment, the respondent TA had all the sufficient information elements regarding the situation of the vehicles at issue in the present proceedings, both from those it initially had and from those delivered to it by the Claimant in exercising the right to be heard.

B) JUSTIFICATION OF PROVEN FACTS

The decision regarding the matter of fact as described above is based on the documentary evidence that the Parties attached to the present proceeding, the claimant as an annex to the application filed and the Respondent with the attachment of the Administrative Proceedings.

The Tribunal took into account especially the factual reality described in the arbitral application regarding the business situations relating to the various vehicles, substantiated by the documents attached as an annex to the arbitral application and also by the information contained in the administrative proceeding carried in the record.

C) UNPROVEN FACTS

There are no other facts recorded as unproven, since all facts relevant to the assessment of the application were recorded as proven.

IV - Merit Decision: Legal Justification

Having regard to the positions of the Parties assumed in the arguments presented, the Tribunal must decide the issue of merit, which concerns the interpretation of the norms of incidence of the UCT and its application to the specific case described in the present proceedings. Essentially, the legal issue on which the arbitral tribunal must pronounce consists of assessing the terms of the configuration of the subjective incidence of the UCT in light of the provisions of article 3 of the Code of the Unique Circulation Tax (CIUC), namely, the question of whether subjective incidence is based strictly on the entry of vehicle ownership in the Vehicle Register, or whether the register operates only as a presumption of tax incidence, rebuttable, in accordance with the provisions of article 73 of the General Tax Law. On this matter, there is already abundant and well-defined arbitral jurisprudence expressed in several arbitral decisions.

Let us then consider what the appropriate decision is on this question.

On Subjective Incidence: The Taxable Event and the Effects of the Vehicle Register in the Context of UCT Incidence

The question to be decided is strictly related to the requirements of UCT incidence, relating to the specific case and, in that measure, requires examining the alleged illegality due to defect of violation of law due to error regarding the assumptions that led the TA to issue the disputed assessments.
Having analyzed the matter of fact carried in the record, the applicable legal regime resulting from the combined provisions of the CIUC, the VT and the Road Code, it is necessary to determine its application to the specific case to be able to conclude whether the disputed UCT assessments are or are not illegal.

Given the provisions of the CIUC, it establishes, as a rule of incidence, that passive subjects are the owners of vehicles, considering as such the persons in whose name they are registered. The fundamental legal framework applicable in this matter is provided for in articles 1 to 6 of the CIUC, approved by Law no. 22-A/2007, of 29 June. Article 2 of the CIUC defines the objective incidence of the tax, distinguishing vehicles by specified categories, a provision which appears clear and without difficulties of application. However, the same is not the case with the norm of subjective incidence contained in paragraph 1 of article 3 of the CIUC, which is at the origin of the present dispute and constitutes, therefore, the question to be decided in the case under consideration. The analysis of both provisions (articles 2 and 3) allow concluding that in the operation of the UCT the vehicle register plays a fundamental role, but the correct application of the regime proposed by the legislator imposes recourse to other interpretative elements. It is therefore necessary to determine the meaning and scope of the norm of subjective incidence, contained in article 3, paragraph 1, of the CIUC and the possible existence or not of a rebuttable presumption, connected with the question of the legal effects of the vehicle register, raised by the Claimant.

Article 3 of the CIUC provides:

"ARTICLE 3

SUBJECTIVE INCIDENCE

1 – The passive subjects 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 name they are registered.

2 – Financial lessees are equated to owners, acquirers with reservation of ownership, as well as other holders of purchase option rights by force of a lease contract."

Article 11, paragraph 1, of the GTL establishes that:

"In determining the meaning of tax norms and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed."

The interpretation and application of the legal norm presupposes the realization of an interpretative activity, which must be objective, balanced, and in accordance with the letter and spirit of the law. Any text, and the law is no exception, contains multiple meanings and frequently contains ambiguous or obscure expressions. For this reason, although the letter of the law is "the guiding thread" of the interpreter, it must be interpreted having regard to the underlying objectives, "the ratio" or the motivation of the legislator in establishing the norm in question. To these elements is added another according to which the interpretation of the legal norm must respect the "unity of the legal system," its coherence and intrinsic logic. Article 9 of the Civil Code (CC) provides the rules and fundamental elements for the interpretation of the legal norm, to which tax law interpretation must also obey, which begins by stating that interpretation should not be confined to the letter of the law, but should reconstruct from it the "legislative intent." To these general principles are added the principles contained in the GTL, namely in article 73, which establishes that presumptions contained in tax incidence norms always admit contrary evidence.
With regard to the question under analysis, it is important to highlight the contribution of the arbitral decisions already issued in cases nos. 14/2013-T, of 15 October, 26/2013-T of 19 July, 27/2013-T, of 10 September, 217/2013-T of 28 February and, more recently, in the decisions issued in cases 286/2013-T, of 2 May 2014, 293/2013-T, of 9 June 2014, 46/2014-T of 5 September, 212/2014 – T of 23 February 2015, 250/2014 – T, of 17 November 2014, 43/2014 – T and 13/2015 T of 28 October 2015, which, among others, reveal refined consideration of the fundamental question under consideration. To the arbitral decisions mentioned are added the jurisprudence of the Central Administrative Court South (TCAS), reflected in the Judgment of 19 March 2015, issued in case no. 08300/14, available at www.dgsi.pt.
It is, therefore, in this background, using the fundamental hermeneutical principles just referred to, embraced by the jurisprudence of our higher courts, that we should seek to find the appropriate interpretation of the norms in question.

Thus, it is verified that the taxable event under the CIUC consists of the ownership of the vehicle, as evidenced by registration in Portuguese territory, in the year of its importation or introduction into the national market (article 3, paragraph 1, of the CIUC). The tax is considered enforceable on the first day of the taxation period (article 6, paragraph 3, of the Code of the UCT), which corresponds to the year beginning on the date of registration (cf. article 4, paragraph 2, of the Code of the UCT).

Now, in the case of the present proceedings it is verified that, due to the applicable legal rules and the procedures necessary for the claimant's commercial activity, the first registration was made in the name of the herein Claimant. But in all the concrete cases of vehicles at issue in the present proceedings, a substantial part of the vehicles were shipped, exported and invoiced before the registration period or within the 30 days granted for assessment and payment, until the legal period granted for registration or, still, sold up to sixty days after registration, in any case, before the taxable event.

In the absence of vehicle property registration carried out within the legal period, the tax is due in the year of vehicle registration, assessed and required of the passive subject of the Vehicle Tax (VT) based on the vehicle customs declaration, or based on the supplementary vehicle declaration on which that tax assessment is based, even though it is not due (article 18, paragraph 1, letter a), of the CIUC).

Now, in the case at issue in the present proceedings is at issue the UCT due for the year 2011, relating to:

a. 619 vehicles shipped or exported and invoiced up to 60 days after registration (before the registration period);

b. 109 vehicles shipped or exported and invoiced within the 30 days granted for assessment and payment, and a used vehicle sold to a concessionaire, in any case, all sold between 60 to 90 days after registration;

c. 11 vehicles sold to car rental companies up to the legally granted end period for registration;

d. 160 vehicles sold to concessionaire companies up to 60 days from the grant of registration;

e. 5 used vehicles sold to third parties within 60 days after registration and a used vehicle sold to a concessionaire up to sixty days after registration.

This shows that, although the vehicles in question had a first registration in favor of the Claimant (in some cases at a moment long before the year 2011) as is understood from the legally established procedure to which it is subject, the vehicles were, on the date of the taxable event, property of other owners, having been sold, invoiced and shipped or exported, in accordance with the documentation attached to the record and mentioned in the factual basis described above.

The documentation attached to the present arbitral application, supported by the administrative proceeding attached to the record by the Respondent, contains all the information relating to the date of sale/contractual transfer, date of registration and registration of each of the vehicles. These facts were, moreover, invoked, described and documented in the administrative review filed and dismissed.

Thus, if the Claimant was not the effective owner on the date of occurrence of the taxable facts (2011) that determine the tax obligation, given that they had already been sold to the respective concessionaires or to third parties, shipped or exported on a date prior to the occurrence of the taxable event, in accordance with the invoices issued, which it attaches as probative evidence, it is not understood nor justified the assessment of the UCT, relating to the year 2011, to the Claimant.
This conclusion also results from the interpretation of the provisions of article 17, paragraph 1 and article 18 of the CIUC, relating to the period of payment of the tax and official assessment, respectively, which are based on the assumption that "in the year of vehicle registration the passive subject of the UCT is the owner of the vehicle on the date the 60 days counted from the date of grant of registration expire, which must assess and pay it to the State within 60 days thereafter." Now, in the case of the present proceedings, it is certain that all vehicles were sold within sixty days after registration (the majority of vehicles in question) or between sixty and ninety days after registration. And, being so, all vehicles had already been sold within the legally established period, and there was sufficient documentation to prove all such sales (invoices, shipping/export documents, customs documents, among others which are attached to the record). It is demonstrated that the Claimant was not, on the date of the taxable event, the passive subject of UCT.
Any other understanding would be manifestly contrary to the principles underlying the reform of the UCT and even to its nature as a tax on vehicle circulation. In fact, in the activity developed by the herein Claimant, the transfer of vehicle ownership operates, normally, even before the date of registration. This is because the Claimant proceeds to admit into Portuguese territory new vehicles which, at a moment prior to their respective registration, transfers to its customers, concessionaires. However, due to applicable legal norms, the registration of the vehicles in question is carried out in the name of the Claimant, although, at the moment it is made effective, it is no longer the owner thereof. This procedure, moreover, results from the provisions of articles 117, paragraph 4, of the Road Code, which imposes on the person, natural or legal, who proceeds to the admission, importation or introduction into consumption in Portuguese territory, the obligation to request the registration of the vehicles, as well as from the provisions of article 24, paragraph 1, of the Vehicle Registration Regulation, which determines that the initial property registration of imported, admitted, assembled, constructed or reconstructed vehicles is based on the respective request. From the said provisions results, therefore, that the Claimant, as a registered operator who proceeds to admit new vehicles into Portuguese territory, necessarily appears in the respective initial register as their owner, although at the moment this is made effective, the ownership of the same has already been transferred to third parties. And, if this is so, by imposition of the legislator, this aims at the control of the activity by the competent authorities so as to control who comes to acquire such vehicles and when. From this flow, among others, various tax obligations.
In this regard, we are faced with the question of whether the issue is the interpretation of article 3, paragraph 1, of the CIUC, in order to determine whether it establishes, or not, a presumption regarding the qualification as owner, and consequently, as a passive subject of this tax, the person, natural or legal, in whose name the property of the vehicle is registered and, in case such conclusion is reached, its rebuttal based on the probative elements that comprise it.
Notwithstanding the Code of the UCT erecting as a structuring principle of this tax the principle of equivalence, understood as compensation for the nefarious effects in environmental and energy terms resulting from vehicle circulation, the said Code elects, regarding subjective incidence, the owner of the vehicle, considering as such the person in whose name the same is registered (article 3, paragraph 1, of the CIUC). Despite this, the legislator preserved certain particular cases in which the formal or legal property of the vehicle was subordinated to its use, assigning to the latter the obligation to pay the UCT, as occurs with financial lessees, acquirers with reservation of ownership, as well as other holders of purchase option rights by force of lease contracts (article 3, paragraph 2, of the CIUC) [1].
Certain it is that the norm of incidence, by referring to the elements of the vehicle register, does not distinguish between the initial registration of the vehicle and subsequent registrations: the passive subject of the tax is the owner of the vehicle, being considered as such the person, natural or legal in whose name the vehicle is registered. It is, therefore, on the interpretation of the provision of paragraph 1 of article 3 that, as already referred, the different positions expressed by the Claimant and the Respondent are evident. According to the Claimant, the said provision establishes a presumption of ownership, based on registration, rebuttable under general terms and, in particular, by force of the provisions of article 73 of the General Tax Law. For the Respondent, establishing the CIUC the passive subject as well as the taxable event obligation, by reference to elements contained in the vehicle register, as results from articles 3 and 6 of the CIUC and being the Claimant requesting the issuance of the registration certificate and with the vehicles registered in its name in the taxation periods the requirements of the taxable event of the UCT are met, as well as its enforceability, being the Claimant the passive subject of the tax with reference to the period in question.
This matter has been the subject of several arbitral decisions which, repeatedly and uniformly, have pronounced in the sense of considering that the provision of paragraph 1 of article 3 of the CIUC establishes a presumption, rebuttable, under general terms and, in particular, by force of the provisions of article 73 of the GTL. This tribunal shall also follow closely that orientation[2].
Indeed, recourse to the vehicle register as a structuring element of the system of assessment of this tax is evident throughout its entire Code. But it is necessary to have regard to the provisions of article 6 thereof, relating to the definition of the taxable event obligation, whose paragraph 1 provides that the taxable event obligation is "the ownership of the vehicle, as evidenced by registration in Portuguese 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 therein for a period exceeding 183 days, in accordance with paragraph 2 of the same article. There is no doubt that the legislator resorted to the vehicle register as a fundamental support for operationalizing the tax. Despite this, one cannot conclude, as an immediate conclusion, that the norm 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. According to the notion contained in article 349 of the C. Civil, presumptions are the inferences which the law or the judge draws from a known fact to establish an unknown fact. It is added that article 341 of the Civil Code establishes that presumptions constitute means of proof, having the function of demonstrating the reality of facts, such that whoever has in its favor the legal presumption is excused from proving the fact to which it leads (cf. paragraph 1 of article 350 of the Civil Code).

Said this, it is added that presumptions, which can be explicit or implicit, except in cases where the law forbids it, can be rebutted by contrary evidence, as indeed results from the express provision of paragraph 2 of article 350 of the Civil Code.

Finally, and with manifest relevance for the decision of the concrete case, it is convenient to bear in mind that, in the case of presumptions of tax incidence, these are always rebuttable, as expressly provided by article 73 of the GTL.

The controversy around this question arose in the context of the new law, because the expression "being presumed" was replaced by the expression "being considered." In the same sense, article 3, paragraph 1, of the Regulation of Circulation and Haulage Taxes, approved by DL no. 116/94, of 3/05, establishes that the passive subjects of these taxes "are the owners of the vehicles being presumed as such, pending contrary evidence, the natural or legal persons in whose name they are registered."

We understand, however, that this is merely a semantic question, which does not in any way alter the content of the provision in question.

Thus, regarding the question of whether, given the literal wording of paragraph 1 of article 3 of the CIUC, what is the scope of the expression "being considered as such," given that in the current version the legislator did not use the term "being presumed" (which was contained in the extinct Regulation of the Vehicle Tax), the Tribunal understands that it can only be the following: the legislator presumes (considers) that the owners are the persons in whose name the vehicles are registered (emphasis ours). This means that such presumption, implicit, is naturally rebuttable in the terms provided for in article 73 of the GTL.

In the current version of the Code, only the verb changed, with the legislator now opting for the expression "being considered." Certain it is that between the previous legislative versions and the current version the GTL came into force, which expressly enshrined the principle contained in article 73, from which it results that in the matter of tax incidence any presumption always admits contrary evidence. Therefore, it becomes irrelevant the adoption of an express or implicit presumption, because, one like the other, are equally rebuttable.

It is understood, in this way, that the fact that the legislator, in the current version of the CIUC, opted for an implicit presumption (using the expression "being considered") instead of an express presumption (with recourse to the expression "being presumed"), as happened previously, does not translate a substantial change in regard to the subjective incidence of the tax. It is not, therefore, the ownership contained in the vehicle register a condition, by itself decisive of tax incidence, but rather the ownership as it results from the register, which results in a mere rebuttable presumption. It is added that we can easily point to various examples, extracted from the tax legal system, in which the legislator opted for the use of the verb "consider," with presumptive sense. Besides which, as already said above, in the case of a norm of tax incidence, an irrebuttable presumption would never be admissible. As state, Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa (General Tax Law, annotation to paragraph 3 of article 73 of the GTL), "presumptions in the matter of tax incidence can be explicit, revealed by the use of the expression 'is presumed' or similar (…). However, presumptions can also be implicit in norms of incidence, specifically of objective incidence, when certain values of movable or immovable property are considered as constituting taxable matter, in situations in which it is not unfeasible to ascertain the actual value" [3].
There are many examples of norms in which the verb "consider" is used to establish rebuttable presumptions, as occurs with the provision in paragraph 2 of article 21 of the CIRC, in article 89-A of the GTL or in article 40, paragraph 1 of the CIRS among others. Taking into account that the legal system must form a coherent whole, the examples referred to above, as well as the doctrine and jurisprudence indicated, allow concluding that it is not only when the verb "presume" is used that we are faced with a presumption, but also the use of other terms or expressions, such as the term "is considered" can serve as the basis for presumptions. And, as referred to above, being the literal element the first instrument of interpretation of the legal norm, in search of legislative intent, it is important to confront it with the other elements of interpretation, namely the rational or teleological element, the historical element and the systematic element.
With regard to the historical element, it should be noted that since the origin of the circulation tax, with the entry into force of Decree-Law no. 599/72, of 30 December, a presumption was explicitly enshrined, regarding the passive subjects of the tax as being those in whose name the vehicles were registered or recorded. That version of the law used the literal expression "being presumed as such."

However, taking into account the purposes of the tax in question, it must be recognized that the use of the expression "is considered," in the current version, contemplates an expression with a similar effect to that, embodying, equally, a presumption. This is also the case in the formulation contained in paragraph 1 of article 3, of the CIUC, in which a presumption is enshrined, revealed by the use of the expression "being considered," of similar meaning and equivalent value to the expression "being presumed," in use since the creation of the tax in question. The use of the expression "being considered" is justified by appearing, perhaps, more in keeping with the reinforcement given to vehicle ownership, which became the taxable event of the tax, in accordance with the provisions of article 6 of the CIUC.

Whereby, in light of the literal element of interpretation, nothing prevents the understanding that the provision of paragraph 1 of article 3 of the CIUC establishes a rebuttable presumption.

Thus, regarding the subjective incidence of the tax, it is to be concluded that there are no changes compared to the situation previously in force in the context of the Municipal Vehicle Tax, Circulation Tax and Haulage Tax, as is also widely recognized by the doctrine, continuing to be valid a rebuttable presumption in this matter.

This understanding is, furthermore, the only one that appears appropriate and in accordance with the principle of material truth and justice, underlying tax relationships, with the objective of taxing the real and effective owner and not one who, by circumstances of diverse nature, is, sometimes, nothing more than an apparent and false owner, by appearing in the vehicle register, as occurs in the concrete case with the Claimant, due to its activity as an importer and to compliance with the legally applicable rules for registration of new vehicles imported and introduced into Portuguese territory. To this effect, also the arbitral decisions issued in cases nos. 150/2014-T and 220/2014-T confirm the same understanding already reflected in earlier arbitral decisions, in the sense that: "(…) if the legislator had, as the Respondent claims, established in the law a non-presumptive qualification regarding who is the owner of the vehicles (a legal fiction), would thereby be establishing, through a different formulation, a rule entirely identical to the hypothetical rule referred. Would be making subjective incidence depend on a legal fiction, in total disconnection from any economic substance as the basis of subjective incidence. (…) And, if so, it must also be concluded that article 3, paragraph 1 can only establish a presumption of vehicle ownership, even with all the negative consequences that such conclusion will carry, certainly, in terms of tax administration efficiency."

This position was also the one that came to be, recently, recognized by the STA in the Judgment of 19-03-2015.

On the question under analysis, the understanding which has come to be defended in successive, diverse and numerous arbitral decisions is therefore unanimous. For this reason, it must be permitted to the holder registered in the vehicle register the possibility of presenting probative elements sufficient for demonstrating that the effective owner is, after all, a person different from the one appearing in the register, and which initially, and in principle, was supposed to be the true owner. Otherwise, one would accept the supremacy of the formal truth of the register over material truth, and would be admitting a gross violation of the fundamental tax principles stated and, furthermore, of the principle contained in article 73 of the GTL according to which there are no irrebuttable presumptions in the matter of tax incidence.
To all that is left stated above is added that any other understanding would result in the violation of the principles of legality, proportionality and justice, as well as that of the inquisitorial, enshrined, respectively, in articles 55 and 58 of the GTL. Moreover, it is possible to extract yet another argument from the provision of article 7 of the Code of Land Registry (which constitutes the fundamental legal basis in the matter of registration of property) which provides that "the definitive registration constitutes a presumption that the right exists and belongs to the registered holder, in the precise terms in which the registration defines it."

In light of the principle of uniformity and intrinsic coherence of the legal system, no justification appears acceptable for that the principle in force in property registration in general would suffer an inflection or even "unjustified trampling" in the matter of vehicle registration.

But, if some doubt persisted, it would always be said that, as regards the elements of interpretation of a rational or teleological bent, the statement of reasons of the Bill no. 118/X of 07/03/2007, underlying Law no. 22-A/2007, of 29/06, is quite expressive in clarifying that the reform of vehicle taxation is implemented through the shifting of part of the tax burden from the moment of acquisition of vehicles to the circulation phase and aims to "form a coherent whole" which, although intended for the raising of public revenue, intends that it be raised in the "measure of the environmental costs that each individual causes to the community," adding, concerning the tax in question and the different types and categories of vehicles, that "as a structuring and unifying element (…) the principle of equivalence is established, thus making clear that the tax, as a whole, is subordinated to the idea that taxpayers should be burdened in the measure of the cost they cause to the environment and the road network, this being the reason for being of this tax figure," further stating that it is "(…) this principle which dictates the burden of vehicles based on their respective ownership and until the moment of scrapping (…)".
Thus, the logic and rationality of the new system of vehicle taxation presupposes and aims for a passive subject coincident with the owner of the vehicle, on the assumption that it is that, and not another, the real and effective subject causing environmental damage, as results from the principle of equivalence inscribed in article 1 of the CIUC. This principle of equivalence, which informs the current unique circulation tax, has underlying it the polluter-pays principle, and concretizes the idea, inscribed in it, that whoever pollutes should, therefore, pay. It is, after all, about achieving the negative environmental externalities that arise from the use of motor vehicles, whether assumed by their owners and/or by the users, as costs that only they should bear. To this effect, the position reflected in Arbitral Decision no. 286/2013-T of 2 May 2014, supported by many others subsequently issued, is quite illuminating in stating that it is "this principle (of equivalence) that dictates the burden of vehicles based on their respective ownership and until the moment of scrapping, the common employment of a specific taxable base, the revision of the framework of current tax benefits and the allocation of a portion of the revenue to the municipalities of their respective use. Now, seeking to claim, as the Respondent does, that the legislator, in article 3, paragraph 1 of the CIUC, fixed, whatever the technical means underlying it, the subjective incidence of the tax in the persons in whose name the vehicles are registered, with complete independence of whether or not, in the relevant taxation period, they are holders of the right to use the vehicle, especially of its ownership, would imply disregarding that purpose which presides over the normativity of the tax, well manifested in the objective incidence and in the taxable base associated with the diverse categories of vehicles (cf. arts 2 and 7 of the CIUC). In that a registry entry, without correspondence with the underlying ownership, has no value to give satisfaction and compliance to such a purpose, because it is not the persons in whose name the vehicles are inscribed when they are not holders of rights over their use that cause environmental and road costs, but rather such environmental and road costs are caused by the actual users of the vehicles, in terms of the relevant substantive legal situations, even if they do not appear, as they should, in the vehicle register. The register, in fact, in no way testifies or serves regarding the principle of equivalence established in article 1 of the CIUC. Moreover, assuming that the determining element of subjective tax incidence is simple and exclusively the vehicle register also does not allow asserting a connection with any manifestation of relevant contributory capacity, which, as a rule, in taxes not strictly commutative, is essential, as there must exist, without prejudice to practicability requirements, some effective connection between the tax and an economically relevant substantive assumption capable of supporting the tax. The reason for being of the tax figure thus rules out the idea that the respective incidence is tied strictly and exclusively to the registry entry itself of vehicle ownership and not to the substantive situations attributing the right to use the vehicles (article 3, paragraphs 1 and 2 of the CIUC) to which the register is intended to give publicity (cf. article 1 and article 5 of Decree-Law no. 54/75, of 12 February, as subsequently amended, which regulates vehicle registration)."
It is added, furthermore, to note that DL no. 54/75, of 12/02, which disciplines vehicle registration, not providing any provision regarding the constitutive character of vehicle property registration, establishes, in paragraph 1 of its article 1, that vehicle registration aims only to give publicity to the legal situation of the assets. In accordance with article 7 of the Code of Land Registry, subsidiarily applicable to vehicle registration, by referral from article 29 of that enactment, 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." Pronouncing on this matter, the STJ, in a judgment of 19-02-2004, issued in case no. 3B4369, concludes that "(…) the registration has no constitutive effect, as 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 (arts. 1, para. 1, and 7, of the CRP84 and 350, para. 2, of the C. Civil) as well as of its ownership, in accordance with it (...)".
As regards the effects of the register, it is clear from the provisions of articles 1 and 7 of the Code of Land Registry (CRP) that the register has a dual purpose: to give publicity to the legal situation of the assets and to constitute a presumption that the right exists and belongs to the registered holder. These presumptions are, however, rebuttable by contrary evidence, as expressly results from article 350, paragraph 2, of the Civil Code (CC) and, in tax matters, reinforced by article 73 of the GTL. It is accepted by the doctrine and jurisprudence of our higher courts that registration is not a condition of validity of the transactions subject to it or underlying it, does not depend on it the transfer of ownership and does not belong to the transferor the burden of promoting the registration, so that no sanction can be imposed on it for non-compliance with that obligation by the acquirer (the latter being obliged to promote the registration) [4].
Thus, following the reiterated arbitral jurisprudence, mentioned above, relating to identical situations, one cannot but understand that the expression "being considered as such" contained in the said provision configures a legal presumption[5], and that this is rebuttable, under general terms, and in particular, by force of the provisions of article 73 of the GTL which determines that presumptions enshrined in norms of tax incidence always admit contrary evidence. This is also the position of the arbitral tribunal in the present proceedings, supporting the positions already previously reflected in the diverse arbitral decisions mentioned above, whereby it is understood that the rebuttable presumption inscribed in paragraph 1 of article 3 of the CIUC corresponds to the interpretation most adjusted to the pursuit of the objectives aimed at by the legislator.

On the Rebuttal of the Presumption

Presumptions of tax incidence can be rebutted through the proper contradictory procedure provided for in article 64 of the CPPT or, alternatively, through administrative review or judicial impugnation of tax acts based on them. In the case of these proceedings, the Claimant did not use that proper procedure, having instead opted for the present request for arbitral decision which thus constitutes a proper means to rebut the presumption of subjective incidence of the UCT on which the tax assessments whose annulment is the object of this are based, as this is a matter which falls within the material competence of this arbitral tribunal (arts. 2 and 4 of DL 10/2011).

To rebut the presumption derived from the entry in the vehicle register, the Claimant offered, as means of proof, copies of invoices, customs documents, certificates of shipment and export of the vehicles and others which are contained in the administrative review proceedings and from which the Tribunal's understanding resulted, having critically evaluated these means of proof, that the sale of all vehicles and tax assessments to the respective acquirers had occurred, such that at the time of the taxable events and the first property registrations made, the Claimant was no longer the owner of the vehicles in question. The argument of the unilateralism of the invoices does not stand, because these are means of proof of the occurrence of property transfers, at least if accompanied by other documents that leave no doubt regarding the realization of that particular transaction, as is the case herein.

One thus diverges from the understanding of the Respondent, which, if followed, would result in the requirement of proof impossible to achieve. Being certain that all the documents that the Claimant attaches to the record are commercial, accounting and tax documents, recognized for various legal purposes, with invoices and other customs or tax documents benefiting from the presumption of veracity contained in article 75 of the GTL. A presumption that the Respondent has not challenged.
In sum: none of the vehicles at issue herein were, on the date of registration, property of the Claimant, whereby it is considered that the presumption resulting from the first vehicle registration made is rebutted.

It is added, furthermore, that in the situation under analysis, one is faced with purchase and sale contracts relating to movable property, which, not being subject to any special formalities (C. Civil, article 219), operate the corresponding transfer of ownership by mere effect of the contract and delivery of the thing. (C. Civil, article 408, paragraph 1).

However, being at issue a contract of purchase and sale, which has as its object a motor vehicle, in which registration is mandatory, its timely performance presupposes the issuance of the sale declaration necessary for entry in the register of the corresponding acquisition in favor of the purchaser, in accordance with what has been understood by the jurisprudence of the higher courts[6].

Such a declaration, relevant for registration purposes, may constitute proof of the transaction, although it is not the only or exclusive means of proof of such fact. And, for registration purposes, no special formality is required either, it being sufficient to present to the competent entity a request signed by the purchaser and confirmed by the seller, which, through a declaration of sale confirms that ownership of the vehicle was acquired by the latter through a verbal contract of purchase and sale.

Now, based on the documents that make up the present proceeding, it is verified that, on the date of enforceability of the tax, the vehicles identified were no longer property of the Claimant by virtue of having been transferred by this to third parties. Whereby the presumption of ownership derived from vehicle registration accepted in paragraph 1 of article 3 of the CIUC is thus rebutted, as regards the vehicles and periods to which all disputed assessments refer, with reference to the vehicles identified therein, in accordance with the list attached to the present request for arbitral pronouncement. Thus, the understanding underlying the assessments disputed in the present proceedings, according to which the passive subjects of the UCT are, definitively and without admission of contrary evidence, the persons in whose name motor vehicles are registered, without considering the probative elements for identifying the actual and true users and current owners of the vehicles, resulted in the illegal assessment of the UCT, based on the incorrect interpretation and application of the norms of subjective incidence of the Unique Circulation Tax. Such assessments thus appear to be illegal which imposes the annulment of the corresponding tax acts.
In these terms, having regard to the provisions of article 3, paragraphs 1 and 2, of the CIUC, with the presumption rebutted in paragraph 1, it is concluded that the Claimant does not constitute a passive subject of the UCT assessed in relation to the year 2011, as regards the vehicles identified in the record. As a consequence of all that is stated above, it results that all disputed assessments are illegal, suffer from the defect of violation of law, due to error regarding the assumptions of fact and law, and therefore must be subject to annulment, proceeding consequently to the reimbursement to the Claimant of the amount improperly paid plus interest at the legal rate.

Compensatory Interest

The Claimant requests reimbursement of the improperly assessed tax, in the total amount of €98,304.76, plus compensatory interest, at the legal rate, in accordance with article 43 of the GTL and 61 of the CPPT.
In accordance with the provision of letter b) of article 24 of the LRTA, the arbitral decision on the merit of the claim of which no recourse or impugnation is available binds the tax administration from the end of the period provided for recourse or impugnation, and must this, in the exact terms of the success of the arbitral decision in favor of the passive subject and until the end of the period provided for the spontaneous execution of the sentences of tax judicial tribunals, "restore the situation which would exist if the tax act subject of the arbitral decision had not been practiced, adopting the acts and operations necessary for this purpose," which is in line with the provision of article 100 of the GTL [applicable by force of the provision of letter a) of paragraph 1 of article 29 of the LRTA] which establishes that "the tax administration is obliged, in case of total or partial success of an administrative review, judicial impugnation or appeal in favor of the passive subject, to immediately and fully restore the legality of the act or situation subject to the dispute, including the payment of compensatory interest, if applicable, from the end of the period of execution of the decision".
Although article 2, paragraph 1, letters a) and b), of the LRTA uses the expression "declaration of illegality" to define the competence of the arbitral tribunals functioning in the CAAD, making no reference to condemnatory decisions, it should be understood that it comprises in its competences the powers which in judicial impugnation proceedings are attributed to the tax tribunals, and that being the interpretation which is in tune with the sense of the legislative authorization on which the Government based itself to approve the LRTA and in which it proclaims, as a first directive, that "the tax arbitral process must constitute an alternative procedural means to the process of judicial impugnation and to the action for the recognition of a right or legitimate interest in tax matters."
The process of judicial impugnation, although being essentially a process of annulment of tax acts, admits the condemnation of the Tax Administration in the payment of compensatory interest, as is deduced from article 43, paragraph 1, of the GTL, in which it is established that "compensatory interest is due when it is determined, in administrative review or judicial impugnation, that there was error attributable to the services resulting in payment of the tax debt in an amount greater than legally due" and article 61, paragraph 4 of the CPPT (in the wording given by Law no. 55-A/2010, of 31 December, which corresponds to paragraph 2 in the original wording), which "if the decision that recognized the right to compensatory interest is a judicial decision, the payment period is counted from the beginning of the period of its spontaneous execution."
Thus, paragraph 5 of article 24 of the LRTA in stating that "the payment of interest, regardless of its nature, is due, in the terms provided for in the general tax law and in the Code of Procedure and Tax Process" should be understood as allowing the recognition of the right to compensatory interest in the arbitral process. In the case at issue, it is manifest that, as a result of the illegality of the disputed assessment acts, there is reimbursement of the tax, by force of the said articles 24, paragraph 1, letter b), of the LRTA and 100 of the GTL, as such is essential to "restore the situation which would exist if the tax act subject of the arbitral decision had not been practiced," in the part corresponding to the correction that was considered illegal.
Regarding compensatory interest, it is also clear that the illegality of the act is attributable to the Tax and Customs Administration, which, by its initiative, practiced it without legal support. One is faced with a defect of violation of substantive law, embodied in error regarding the assumptions of law, attributable to the Tax Administration. The more so that it had the opportunity to repair the illegal act, whether in the context of administrative review or after notification of the submission of the present arbitral application.

Consequently, the Claimant has the right to compensatory interest, in accordance with article 43, paragraph 1, of the GTL and article 61 of the CPPT, calculated on the amount that improperly paid.

Thus, the Tax and Customs Authority should give execution to the present arbitral decision, in accordance with article 24, paragraph 1, of the LRTA, determining the amount to be reimbursed to the Claimant and calculating the respective compensatory interest, at the supplementary legal rate of civil debts, in accordance with articles 35, paragraph 10, and 43, paragraphs 1 and 5, of the GTL, 61 of the CPPT, 559 of the Civil Code and Regulation no. 291/2003, of 8 April (or enactment or enactments that succeed it).

Compensatory interest is due from the dates of the payments made until the processing of the credit note, in which they are included (article 61, paragraph 5, of the CPPT).

V - Decision

In accordance with the foregoing, the Arbitral Tribunal agrees as follows:

I) To judge the exception invoked by the Respondent as without merit;

II) To judge the applications for declaration of illegality of the dismissal of the Administrative Review and of the self-assessments of UCT subject matter of the proceedings and identified above as well-founded;

III) To annul the said assessments;

IV) To judge the application for reimbursement of the sums paid corresponding to the said assessments, in the total of € 98,304.76 as well-founded and to condemn the Tax and Customs Authority to reimburse them;

V) To judge the application for payment of compensatory interest as well-founded and to condemn the Tax and Customs Authority to pay it to the Claimant, calculated on the amount to be reimbursed, from the dates of the payments until the processing of the credit note, in which it must be included (article 61, paragraph 5, of the CPPT), at the legal rates in effect until payment, in accordance with article 559 of the Civil Code and Regulation no. 291/2003, of 8 April (or enactment or enactments that succeed it).

VI) To condemn the Tax and Customs Authority in the costs of the present proceeding.

CASE VALUE

In accordance with the provisions of articles 305, paragraph 2 of the CPC, article 97-A, paragraph 1, letter a), of the CPPT and article 3, paragraph 2 of the Regulation on Costs in Tax Arbitration Proceedings, the case is assigned a value of €98,304.76.

Costs

Under article 22, paragraph 4, of the LRTA, and in accordance with Table I attached to the Regulation on Costs in Tax Arbitration Proceedings, the amount of costs is set at €2,754.00.

Notify, register and, in due course, file the proceeding.

Lisbon, 28 April 2016

The Collective Arbitral Tribunal,

Dr. Judge José Poças Falcão (President)

Dr. António Manuel Melo Gonçalves

Prof. Dr. Maria do Rosário Anjos

[1] See Sérgio Vasques, "The Special Taxes on Consumption," Almedina, 2000 and Explanatory Statement of Bill no. 118-X, which gave rise to Law no. 22-A/2007, of 29/05 (reform of vehicle taxation).

[2] In this sense, see: Arbitral Decisions of 19.7.2013, Case 26/1013-T, of 10.9.2013, Case 27/2013-T, of 15.10.2013, Case 14/2013-T, of 5.12.2013, Case 73/2013-T, of 14.2.2014, Case 170/2013-T, of 30.4.2014, Case 256/2013-T, of 2.5.2014, Case 286/2013, of 16.6.2014, Case 289/2013-T, of 14.7.2014, Case 43/2014-T, of 6.6.2014, Case 294/2013-T, of 15.9.2014, Cases 63/2014-T and 220/2014 and case 250/2014 – T of 7/11, and still, Judgment TCAS of 19-03-2015.

[3] See also Jorge de Sousa, CPPT, 6th Edition, Áreas Publisher. Lisbon, 2011, pages 586; still in this sense see Judgments STA, Judgments of 29.2.2012 and of 2.5.2012, Cases 441/11 and 381/12.

[4] In this sense, see, among others, the following Judgments of the STJ: Judgment STJ of 31.05.1966, in Case no. 060727 (Rapporteur: Counselor Lopes Cardoso), decision specifically regarding vehicle registration; Judgment STJ of 5.05.2005 (Rapporteur: Counselor Araújo Barros) and Judgment STJ of 14.11.2013, in Case no. 74/07.3TCGMR.G1.S1 (Rapporteur: Counselor Serra Batista) excellent in affirming the predominance of the principle of substance over form, the proof, by any suitable means, of who is substantively entitled to the right of property being valid, which rebutts the presumption of the register.

[5] Indeed, the Respondent itself affirms, more than once that "the taxable event of the tax is determined by registration or by the register," which necessarily implies the recognition of the presumptive character of the regime in question. Indeed, if "the taxable event of the tax is determined by registration or by the register," it is because, naturally, the "taxable event of the tax" is neither registration nor the register! These will be evidentiary facts, from which it is drawn, one being faced with, and in a way beyond question, a presumption.

[6] See STJ, Judgments of 23.3.2006 and of 12.10.2006, Cases 06B722 and 06B2620.

Frequently Asked Questions

Automatically Created

Who is liable for IUC payment in Portugal – the vehicle importer or the registered owner?

In Portugal, IUC liability generally falls on the person in whose name the vehicle is registered in the vehicle registration system. However, special situations arise for vehicle importers who temporarily register vehicles for commercial purposes before selling or exporting them. The subjective incidence rules determine that the registered owner at the time the tax becomes due is primarily liable, though importers may face assessments if vehicles remain registered in their name despite subsequent commercial transactions. This issue was central to CAAD Decision 624/2015-T, where an importing company challenged IUC assessments on vehicles it had registered but subsequently sold to concessionaires, rental companies, or exported to other countries.

Can multiple IUC tax assessments be challenged together through cumulation of claims at CAAD?

Yes, Portuguese tax arbitration law permits cumulation of claims (cumulação de pedidos), allowing taxpayers to challenge multiple related tax assessments in a single arbitration proceeding at CAAD. Decision 624/2015-T exemplifies this, where the claimant successfully consolidated 795 separate IUC assessments totaling €98,304.76 into one arbitration case. This procedural efficiency is particularly valuable when multiple assessments arise from the same factual and legal circumstances, as with systematic commercial operations. The LRTA (Legal Regime of Tax Arbitration) framework permits this approach, enabling comprehensive resolution of related disputes without requiring separate proceedings for each assessment, thereby reducing costs and avoiding potentially contradictory decisions.

What are the rules on subjective incidence of IUC for vehicle importers in Portugal?

The subjective incidence of IUC for vehicle importers in Portugal focuses on registration status and ownership at the relevant tax date. Importers who register vehicles in Portugal become subject to IUC as registered owners, even if registration is temporary for commercial purposes. The critical question addressed in cases like 624/2015-T is whether importers remain liable when vehicles are subsequently sold, exported to other EU Member States, or transferred to third countries. The law requires careful analysis of when ownership and registration transfer occurs, and whether the importer properly deregistered vehicles or transferred registration to purchasers. Importers engaged in systematic import-and-resale operations must ensure timely registration transfers to avoid ongoing IUC liability for vehicles no longer in their economic possession.

How can taxpayers challenge IUC self-assessments through tax arbitration at CAAD?

Taxpayers can challenge IUC self-assessments through CAAD arbitration by first filing an administrative review (reclamação graciosa) with the Tax Authority. If this review is rejected, as occurred in Decision 624/2015-T, taxpayers may submit a request for constitution of an arbitral tribunal within the legal deadline. The process involves filing a detailed petition identifying the contested assessments, appointing arbitrators (or allowing CAAD to appoint them), and presenting legal arguments. The LRTA (Legal Regime of Tax Arbitration) governs the procedure, which includes opportunity for both parties to submit written pleadings, evidence, and final arguments. The arbitral tribunal then issues a binding decision. This alternative dispute resolution mechanism offers faster resolution than traditional court litigation for tax disputes.

What was the outcome of CAAD decision 624/2015-T regarding IUC liquidations for 2011?

The excerpt from CAAD Decision 624/2015-T shows the procedural framework of the case but does not include the final outcome. The decision addressed 795 IUC assessments for 2011 totaling €98,304.76 against a vehicle importing company. The case involved vehicles that were imported, registered in Portugal, then sold to concessionaires (160 vehicles), exported (619 vehicles), sold to rental companies (11 vehicles), or were used vehicles (5 vehicles). The arbitral tribunal was constituted to decide whether the importer remained liable for IUC on these vehicles after their sale or export, addressing fundamental questions of subjective tax incidence. The decision would determine whether the Tax Authority's rejection of the administrative review was lawful and whether the IUC assessments should be annulled.

IUC 2011 Liability: Vehicle Importer Subjective Incidence and Cumulation of Claims (CAAD 624/2015-T)

Table of Contents

Summary

Full Decision

ARBITRAL DECISION

I REPORT

A) The Parties and Constitution of the Arbitral Tribunal

B) THE APPLICATION FILED BY THE CLAIMANT:

C – THE RESPONSE OF THE RESPONDENT

II - CASE MANAGEMENT

III. MATTER OF FACT

A) Proven Facts

B) JUSTIFICATION OF PROVEN FACTS

C) UNPROVEN FACTS

IV - Merit Decision: Legal Justification

On Subjective Incidence: The Taxable Event and the Effects of the Vehicle Register in the Context of UCT Incidence

On the Rebuttal of the Presumption

Compensatory Interest

V - Decision

CASE VALUE

Costs

Frequently Asked Questions

Tags

FRESH Legal Group

Table of Contents

IUC 2011 Liability: Vehicle Importer Subjective Incidence and Cumulation of Claims (CAAD 624/2015-T)

Table of Contents

Summary

Full Decision

ARBITRAL DECISION

I REPORT

A) The Parties and Constitution of the Arbitral Tribunal

B) THE APPLICATION FILED BY THE CLAIMANT:

C – THE RESPONSE OF THE RESPONDENT

II - CASE MANAGEMENT

III. MATTER OF FACT

A) Proven Facts

B) JUSTIFICATION OF PROVEN FACTS

C) UNPROVEN FACTS

IV - Merit Decision: Legal Justification

On Subjective Incidence: The Taxable Event and the Effects of the Vehicle Register in the Context of UCT Incidence

On the Rebuttal of the Presumption

Compensatory Interest

V - Decision

CASE VALUE

Costs

Frequently Asked Questions

Tags

FRESH Legal Group

Related Articles

Table of Contents