Process: 624/2016-T

Date: April 15, 2020

Tax Type: IUC

Source: Original CAAD Decision

Summary

CAAD Case 624/2016-T addresses the critical issue of IUC subjective incidence when vehicle ownership is disputed between a commercial intermediary and tax authorities. The claimant, a vehicle trading company representing automobile manufacturers, challenged 400 IUC assessment acts totaling €36,396.49 for 200 vehicles registered in 2011-2012. The company argued it was not the legitimate taxpayer as vehicles were sold to dealers and rental companies before the tax liability arose, despite being the registered owner. The case required reform following TCA Sul's identification of procedural nullity in the original 2017 arbitral decision, specifically regarding two unaddressed issues: the probative efficacy of invoices and the legal effects of reservation of ownership clauses in sale contracts. The claimant presented evidence including concession contracts, supply agreements, and sales invoices issued prior to or concurrent with registration, arguing these documents proved ownership had transferred before the IUC tax fact occurred. Portuguese IUC Code Articles 3, 6, and 17 establish legal presumptions that the registered owner is the taxpayer, but this presumption is rebuttable. The central legal question involves whether documentary evidence of prior sale can overcome the legal presumption arising from vehicle registration. The Tax Authority contested the claim, alleging erroneous interpretation of CIUC provisions and arguing that registration procedures followed by the claimant support tax liability. This decision clarifies important principles regarding the temporal determination of IUC taxpayer status, the evidentiary threshold required to rebut registration presumptions, and the interplay between civil law ownership concepts and tax law liability rules in Portuguese vehicle taxation.

Full Decision

TAX ARBITRATION JURISPRUDENCE

Case No. 624/2016-T

Decision Date: 2020-04-15

IUC

Claim Amount: € 36,396.49

Subject Matter: IUC - Subjective Scope - Legal Presumptions – Reform of Arbitral Decision (attached to decision)

  • Replaces the Arbitral Decision of 3 April 2017

ARBITRAL-TAX DECISION

1 – REPORT

Pursuant to the judgment of the Southern Tax Court (TCA Sul), hereinabove better identified, there are two issues that the Arbitral Court did not address:

  • "The arbitral decision incurred a procedural nullity, pursuant to Article 515, paragraph 1, letter d) of the Code of Civil Procedure, due to failure to rule on the issues raised in the response to the request for arbitral ruling, relating to the probative efficacy of invoices and,

  • The legal effects of the property reservation clause of the purchase and sale contracts."

In this sequence, it is incumbent upon this Sole Arbitral Tax Court to decide:

1.1

A..., S.A., with Tax Identification Number: ..., Claimant in the tax procedure, above and marginally referenced, hereinafter denominated "Claimant," came, invoking the provisions of paragraphs 1 and 2 of Article 10 of Decree-Law No. 10/2011, of 20 January (hereinafter RJAT), of Article 99 of the Code of Tax Procedure and Process (CPPT), and of paragraph 1 of Article 95 of the General Tax Law (LGT), to request the constitution of a Sole Arbitral Court, with a view to:

  • The annulment of 400 acts of assessment of the Single Vehicle Circulation Tax (hereinafter designated as IUC), effected by the Tax and Customs Authority (hereinafter AT), concerning the years: 2011 and 2012, relating to the 200 vehicles listed in the notifications, attached hereto as documents Nos. 1 and 2, which form an integral part of the Request for Tax Arbitral Ruling;

  • The request for reimbursement of the total amount of € 31,823.67, corresponding to the 200 tax acts of assessments of single vehicle circulation tax, increased by a further 200 assessment acts, corresponding to the respective compensatory interest, in the total amount of €4,572.82 (doc. No. 2) which constitute a total amount of €36,396.49, unduly paid by the Claimant (cf., doc. 11), whereby it requests the joinder of claims, pursuant to paragraph 1 of Article 3 of the RJAT and Article 104 of the CPPT, pursuant to Article 29 of the RJAT, and requests the right to indemnificatory interest provided for in Articles 43 of the LGT and in Article 61 of the CPPT, both pursuant to Article 29 of the RJAT.

1.2

Pursuant to the provisions of letter a) of paragraph 2 of Article 6 and letter b) of paragraph 1 of Article 11 of Decree-Law No. 10/2011, of 20 January, in the wording introduced by Article 228 of Law No. 66-B/2012, of 31 December, the Ethics Council appointed as sole arbitrator, Maria de Fátima Alves, who communicated acceptance of the assignment within the applicable period:

  • On 21-12-2016 the parties were duly notified of such appointment, having manifested no intention to refuse the appointment of the arbitrator, pursuant to the combined provisions of Article 11, paragraph 1, letters a) and b) of the RJAT and Articles 6 and 7 of the Ethics Code;

  • Whereby, the arbitral tribunal was constituted on 05-01-2017, as stipulated in letter c) of paragraph 1 of Article 11 of Decree-Law No. 10/2011, of 20 January, in the wording introduced by Article 228 of Law 66-B/2012, of 31 December.

1.3

The Claimant, in the substantiation of its request for arbitral ruling, asserts, in summary, the following:

  • The assessment acts, to which the single vehicle circulation taxes relate, assessed and identified in documents No. 1 and 2, attached to the request for ruling, were directed directly to the Claimant;

  • Now, the Claimant, as a commercial company, dedicates itself to the commercialization of vehicles, representing various automobile brands, whereby the "vehicles that are the object of the challenged assessments, fall within its activity of selling new vehicles to the network of its dealers and, in other cases, to car rental companies";

  • With respect to the vehicles in question, the Claimant acted as an intermediary between the manufacturers of the brands it represents and the dealers, within the scope of concession contracts (inserted in doc. No. 3) and, with car rental companies, acted within the scope of supply agreements (inserted in doc. No. 15), both documents are attached to the record;

  • However, the 200 vehicles in dispute were commercialized by the Claimant within the scope of the aforementioned concession contracts and supply agreements;

  • Being relevant to consider that the Claimant only commercializes new vehicles;

  • Whereby, necessarily, it only proceeds to the registration of vehicles that it orders for the execution of the aforementioned contracts with the respective dealers and execution of supply agreements, in order to proceed with the delivery of vehicles already registered (cf., doc. No. 3, aforementioned clause 3, and doc. No. 6, attached to the record);

  • Furthermore, the Claimant proceeded to issue sales invoices up to the date of assignment of registration to the vehicle in Portugal;

  • In the case of sales by the Claimant to dealers, the invoice is issued prior to the date of registration, being identified by chassis numbers and subject to subsequent debit note of the Vehicle Registration Tax (ISV), already with registration (cf. doc. No. 10, attached to the record);

  • In the case of car rental companies, the date of the invoice coincides with the date of registration (cf. invoices issued by the Claimant, attached to the record, doc. No. 10);

  • Whereby, in accordance with document No. 10 (attached to the record), all the procedures that the Claimant follows with respect to the registration of vehicles are verified, both within the scope of dealers and within the scope of agreements with car rental companies;

  • Being that, from the invoices, in document No. 10, aforementioned, it appears that the initial registration of ownership in favor of the Claimant was effected "at a moment when it did not hold the ownership of the referred vehicles, since it had already transmitted them to the dealers or car rental companies";

  • Which, in the case sub judice, eliminates any responsibility of the Claimant regarding the payment of the IUC, since it was never the owner of any of the 200 vehicles in question, as has been demonstrated and proven in the facts, documented, presented and attached to the record, because, at the moment of the year of registration, the assessment of the tax on the vehicles in question no longer belonged to the Claimant;

  • Whereby, from what precedes, "the vehicles in question were all sold to dealers and car rental companies, prior to the date of the tax facts and the exigibility of the tax," resulting that, the Claimant "proceeded to invoice the vehicles in question, still prior to the assignment of registration;

  • Given the context described, on the date of the tax facts, the Claimant could not be considered a taxpayer of the tax, a fact which precludes any subjective responsibility for its payment.

1.4

The Respondent, Tax and Customs Authority (hereinafter designated as AT), submitted a response, from which it appears that the tax acts in dispute do not suffer from any legal defect, pronouncing in favor of the inadmissibility of the claim and the maintenance of the questioned assessment acts, defending, summarily, the following:

  • It contests, within the scope of "error regarding the premises and the consequent violation of Article No. 3 of the IUC Code";

  • Alleging that the Claimant makes an erroneous interpretation and application of the legal norms, subsumable to the case sub judice;

  • It argues that, "from the combination of Articles 3, 6 and 17, all of the CIUC, the procedures alleged by the Claimant both within the scope of importation and subsequent sale to dealers, not being responsible for the IUC, since it is not a taxpayer of the vehicle circulation tax and, also when it alleges that the procedure of the Respondent, both with respect to the request for registration and the initial registration, violates paragraph 1 of Article 3 of the CIUC";

  • The Respondent also contests the facts effected by the Claimant, both within the scope of registration and within the scope of registration in national territory;

  • Facts that call into question the exigibility of the single vehicle circulation tax;

  • Alleging that "the tax legislator, in Article 6 of the CIUC, clearly establishes the taxable event of the tax, as well as its exigibility, since such event is constituted by the ownership of the vehicle, as attested by the registration or registration in national territory";

  • It substantiates such situation, pursuant to Article 24 of the RRA, "since the Claimant, upon completing the DAV, paying the ISV and requesting the registration certificate, it fills in the taxable event (objective/subjective scope), being required to pay it pursuant to Article 3 of the CIUC";

  • Therefore, the taxable event of the tax is attested by the assignment of registration;

  • And that "the initial registration of each motor vehicle is effectuated in the name of the importing entity, in this case the Claimant";

  • It argues, the Respondent, that "the tax legislator, in Articles 3 and 6 of the CIUC, clearly established the premises regarding the taxable event of the tax, as well as its exigibility, clearly stipulating that such event is constituted by the ownership of the vehicle, as attested by the registration or registration in national territory";

  • Being, therefore, irrelevant that the Claimant transmitted, with the sale, the ownership of the motor vehicles to "third parties";

  • It makes a general and objective interpretation of what is expressly provided in the articles it invokes, not considering the presumption of Article 3 of the CIUC, thereby disregarding Article 73 of the LGT;

  • It does not take into account the principle of "equivalence," provided for in paragraph 1 of the CIUC, a corollary of the polluter/payer principle, with a basis in paragraph 2 of Article 66 of the Constitution;

  • It does not consider the procedures legally effected by the Claimant when making its first registration or entry in national territory, complying with the permitted deadlines, given the combination of paragraph 2 of Article 24 of the RRA with paragraph 1 of Article 17 of the CIUC.

1.5

The meeting provided for in Article 18 of the RJAT was waived, as these are matters already sufficiently debated, both in the record and in jurisprudence, this Tax Arbitral Court understanding it unnecessary to have final arguments, dispensing with the examination of witnesses;

  • The Court, in compliance with the provisions of Article 18, paragraph 2 of the RJAT, designated, foreseeably, until 03-04-2017, the Pronouncement of the Arbitral Decision.

NOW,

In accordance with what is established by the Judgment of the TCA Sul, aforementioned better identified, there are two issues that the arbitral court did not address:

  • "The probative efficacy of invoices" and,

  • "The legal effects of the property reservation clause of the purchase and sale contracts"

  • However, this matter of -property reservation- is expressly declared in the heading "Rebuttal of the Presumption,"

  • When it states that: "those documents enjoy the presumption of truthfulness provided for in Article 75 of the LGT, from which it follows that on the date when the IUC was exigible, those who held the ownership of the motor vehicles were the legitimate owners and not the Claimant."

  • Being that, pursuant to paragraph 2 of Article 3 of the CIUC, those acquiring with property reservation are equated to taxpayers, thus giving as proven the transmission of the ownership of the vehicles, in this case, at a moment prior to the exigibility of the tax. The facts are substantiated by documents attached to the record, namely, the purchase and sale invoices.

  • As to the alleged property reservation, this Arbitral Court understands it to be irrelevant to the object of the record, since the object concerns the subjective scope of the Tax – IUC.

However, this Sole Arbitral Court understands it appropriate to pronounce,

  • Within the scope of Article 9 of the petition of the Challenge to the alleged issue of constitutionality of the interpretation made by the Respondent, regarding the body of Article 3 of the CIUC.

  • Based on the principles set forth in letters c) and e) of Article 16 of the RJAT, this Arbitral Court expresses that the entire subject matter of the alleged constitutionality issue is properly substantiated and clearly expressed in the entire body of the heading, point 5 (of this decision), denominated:

  • "Issue of erroneous interpretation and application of the norm of subjective scope of the IUC," thereby eliminating all manner of doubts as to the controversial issue.

2 ISSUES FOR DECISION

2.1

Given the foregoing in the preceding paragraphs, relative to the exposition of the parties and the arguments presented, the main issues to be decided are as follows:

  • The allegation made by the Claimant relating to the material illegality of the assessment acts and the illegality of the accessory interest acts, regarding the years 2011 and 2012, relating to the IUC on the 200 vehicles aforementioned in the request for ruling;

  • The erroneous interpretation and application of the norms of subjective scope of the single vehicle circulation tax assessed and collected, which constitutes the central issue to be decided in this proceeding;

  • The legal value of the registration of motor vehicles.

3 FACTUAL GROUNDS

3.1

In matters of fact relevant to the decision to be rendered, this Court finds to be established, given the elements existing in the record, the following facts:

  • The Claimant presented probative elements contained in documents Nos.; 1, 2, 3, 4, 6, 10, 11 and 15, attached to the request for ruling, which are given as fully reproduced for all legal purposes;
3.1.1 SUBSTANTIATION OF PROVEN FACTS
  • The facts deemed as proven are based on documents attached to the request for arbitral ruling of the aforementioned request for ruling, which are given as fully reproduced for all legal purposes.
3.1.2 UNPROVEN FACTS
  • There are no facts deemed as unproven, given that all facts considered relevant to the assessment of the claim have been proven.

4 LEGAL GROUNDS

4.1

The Court is materially competent and is regularly constituted, pursuant to Articles 2, paragraph 1, letter a), 5, paragraph 2, letter a), 6, paragraph 1, 10, paragraph 1, letter a) and paragraph 2 of the RJAT:

  • The parties enjoy legal personality and capacity and are legitimate, pursuant to Articles 4 and 10, paragraph 2, of the RJAT and Article No. 1 of Ordinance No. 112-A/2011, of 22 March;

  • The proceeding does not suffer from nullities;

  • There is no preliminary issue upon which the Court must pronounce.

4.2

The claim, object of this proceeding, is the declaration of annulment of the IUC assessment acts corresponding to the motor vehicles better identified in the record;

4.2.1

Condemnation of the AT to reimburse the amount of the tax relating to such assessments in the amount of € 36,396.49;

4.2.2

Condemnation of the AT to payment of indemnificatory interest on the same amount.

4.3

According to the understanding of the AT, it is sufficient that in the registration the vehicle appears as property of a determined person, for that person to be the taxpayer of the tax obligation.

4.4

The factual matter is fixed, as provided in paragraph 3.1 above, it being important now to determine the applicable law to the underlying facts, in accordance with the issues for decision identified in paragraph 2.1 above, being certain that the central issue at stake in this record, with respect to which there are absolutely opposed understandings between the Claimant and the AT, consists in determining whether paragraph 1 of Article 3 of the CIUC establishes or not a rebuttable presumption.

4.5

All analyzed and, taking into account, on one hand, the positions of the parties in confrontation, mentioned in points 1.3 and 1.4 above and, considering, on the other hand, that the central issue to be decided is whether paragraph 1 of Article 3 of the CIUC establishes or not a legal presumption of tax scope, it is incumbent, in this context, to assess and render decision.

5 ISSUE OF ERRONEOUS INTERPRETATION AND APPLICATION OF THE NORM OF SUBJECTIVE SCOPE OF THE IUC

5.1

Considering it to be uncontested understanding in doctrine that in the interpretation of tax laws the general principles of interpretation apply fully, which will be, only and naturally, limited by the exceptions and particularities dictated by the law itself being interpreted. This is an understanding that has been receiving acceptance in the General Tax Laws of other countries and which has also come to be embodied in Article 11 of our General Tax Law, which has, moreover, been frequently underscored by jurisprudence.

It is consensually accepted that, with a view to grasping the meaning of the law, interpretation resorts, a priori, to reconstructing the legislative thought through the words of the law, which means seeking its literal meaning, evaluating it and assessing it in light of other criteria, with the involvement of so-called elements of a logical, rational or teleological nature and of a systematic order:

  • With regard to the interpretation of tax law, account must be taken of jurisprudence, namely, the Judgments of the Supreme Administrative Court of 05-09-2012, case No. 0314/12, of 06-02-2013, case 01000/12, available at www.dgsi.pt, the importance of the provisions of Article 9 of the Civil Code (CC), as a fundamental element of legal hermeneutics;

  • Paragraph 1 of Article 3 of the CIUC provides that "The taxpayers of the tax are the owners of the vehicles, being considered as such the natural or legal persons, of public or private law, in whose name they are registered";

  • The formulation used in the said article resorts to the expression "being considered as" which raises the question of whether such expression can be attributed a presumptive meaning, equating it to the expression "being presumed," these are expressions frequently used with equivalent meanings;

  • As teaches Jorge Lopes de Sousa, in Code of Tax Procedure and Process, Annotated and Commented, volume I, 6th Edition, Área Editora, SA, Lisbon 2011, p. 589, that in matters of tax scope, presumptions can be revealed by the expression "it is presumed" or similar expression, there being mentioned various examples of such presumptions, referring to that contained in Article 40, paragraph 1 of the Corporate Income Tax Code, in which the expression "it is presumed" is used and that contained in Article 46, paragraph 2, of the same Code, in which use is made of the expression "is considered," as an expression with an effect similar to that and, equally embodying a presumption;

  • In the legal formulation set forth in paragraph 1 of Article 3 of the CIUC, in which a presumption was established, revealed by 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" was intended only to establish a more marked and clear approach between the taxpayer of the IUC and the actual owner of the vehicle, which is in harmony with the emphasis given to vehicle ownership, which came to constitute the taxable event of the tax, pursuant to Article 6 of the CIUC;

  • The relevance and interest of the presumption in question, which historically was revealed through the expression "being presumed" and which now uses the expression "being considered," resides in the truth and justice that, by that means, is conferred to tax relationships and, which embody fundamental tax values, allowing taxation of the real and actual owner and not that which, by circumstances of a diverse nature, does not pass, at times, from being an apparent and false owner. If the case were not thus considered, not admitting and recognizing the presentation of probative elements designed to demonstrate that the actual owner is, after all, a person different from that which appears in the registration and, which initially, and in principle, was supposed to be the true owner, those values would be objectively set aside.

5.2

Account must also be taken of the principle of equivalence, inscribed in Article 1 of the CIUC, which has as its basis the polluter-payer principle and concretizes the idea contained therein that he who pollutes must, therefore, pay. The said principle has constitutional grounding, inasmuch as it represents a corollary of the provisions in letter h) of paragraph 2 of Article 66 of the Constitution, having also grounding in Community law, whether at the level of original law, Article 130-R, of the Treaty of Maastricht (Treaty on European Union, of 07-02-1992), where the said principle came to be set forth as the basis of Community Policy in the environmental domain and which aims to hold responsible those who contribute to the losses that accrue to the community, deriving from the use of motor vehicles, to be assumed by their owner-users, as costs that only they must bear.

5.3

Given the facts described above, it is important to emphasize that the aforementioned elements of interpretation, whether those related to literal interpretation, supported by the words legally used, whether those relating to elements of logical interpretation, of a historical nature or of a rational order, all point in the direction that the expression "being considered" has a meaning equivalent to the expression "being presumed," and thus should be understood that the provisions of paragraph 1 of Article 3 of the CIUC establish a legal presumption which, in light of Article 73 of the LGT, where it is established that "Presumptions established in tax scope norms always admit contrary proof," will necessarily be rebuttable, which means that the taxpayers are, in principle, the persons in whose name such vehicles are registered. Such persons, identified in those conditions, are therefore those to whom the AT must necessarily direct itself;

  • But it will be, in principle, given that within the framework of prior hearing, mandatory in character, given the provisions of letter a) of paragraph 1 of Article 60 of the LGT, the tax relationship may be reconfigured, validating the initially identified taxpayer or redirecting the procedure toward the one that is, after all, the true and actual taxpayer of the tax in question.

  • The taxpayer has the right to be heard, through prior hearing (José Manuel Santos Botelho, Américo Pires Esteves and José Cândido de Pinho, in Code of Administrative Procedure, Annotated and Commented, 4th edition, Almedina, 2000, annotation 8 of Article 100).

  • The prior hearing which, naturally, is to be realized at a moment immediately prior to the assessment procedure, corresponds to the proper place and time to identify with certainty and safety the taxpayer of the IUC.

  • That in the record at hand, the Claimant demonstrated to the AT, at the stage of prior hearing, that the facts fell within the scope of contracts with dealers and agreements with car rental companies, whereby, through documents attached to the record, the Claimant could never be responsible for the payment of the IUC.

6 ON THE LEGAL VALUE OF REGISTRATION

6.1

Regarding the legal value of registration, it is important to note what is established in paragraph 1 of Article 1 of Decree-Law No. 54/75, of 12 February (altered several times, most recently via Law No. 39/2008, of 11 August), when it establishes that "the registration of vehicles has essentially for its purpose the publicizing of the legal situation of motor vehicles and their respective trailers, with a view to the security of legal commerce":

  • Article 7 of the Real Property Registration Code (CRP), applicable supplementarily to the registration of automobiles, by force of Article 29 of the CRA, provides that "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";

  • Definitive registration constitutes nothing more than a rebuttable presumption, admitting therefore contrary proof, as follows from the law and jurisprudence has been indicating, being able to see, among others the Judgments of the Supreme Court of Justice No. 03B4369 of 19-02-2004 and No. 07B4528, of 29-01-2008, available at: www.dgsi.pt;

  • Therefore, the function legally reserved to registration is on one hand to publicize the legal situation of the assets, in the case at hand, of vehicles and, on the other hand, it allows us to presume that the right to those vehicles exists and that it belongs to the holder, as such registered in the registration, does not have a constitutive nature of the right of ownership, but only a declarative one, hence the registration does not constitute a condition of validity of the transmission of the vehicle from seller to purchaser;

  • The acquirers of vehicles become owners of those same vehicles by means of the conclusion of the corresponding purchase and sale contracts, with registration or without it;

  • In this context it is worth recalling that, given the provisions of paragraph 1 of Article 408 of the CC, the transfer of real rights over things, in the case sub judice, motor vehicles, is determined by mere effect of the contract, being that pursuant to the provisions of letter a) of Article 879 of the CC, among the essential effects of the purchase and sale contract, stands out the transmission of the thing;

  • Given the foregoing, it becomes clear that the legislative thought points in the direction that the provisions of paragraph 1 of Article 3 of the CIUC establishes a presumption "juris tantum," consequently rebuttable, thus permitting that the person who, in the registration, is inscribed as owner of the vehicle, may present probative elements designed to demonstrate that such ownership is inserted in the legal sphere of another person, to whom the ownership was transferred;

  • Which with respect to the facts in dispute, there exist, attached to the record, documents that were proven by the Claimant, both at the stage of prior hearing and in the request for arbitral ruling, thereby establishing the certainty that to the respective owners/users of the vehicles belongs the subjective responsibility for the IUCs, pursuant to paragraphs 1 and 2 of Article 3 of the CIUC.

7 THE PRESUMPTION OF ARTICLE 3 OF THE CIUC AND THE DATE ON WHICH THE IUC IS EXIGIBLE

7.1 DATE ON WHICH THE IUC IS EXIGIBLE

  • The IUC is a tax of periodic taxation, whose periodicity corresponds to the year which begins on the act of registration or on each of its anniversaries, as provided in paragraphs 1 and 2 of Article 4 of the CIUC;

  • It is exigible pursuant to paragraph 3 of Article 6 of the said Code;

  • Being important to note that, regarding the assessment of IUC charged to the Claimant on the vehicles aforementioned, in the years 2011 and 2012, account must be taken that at the moment of the tax facts, the vehicles in question were in the legal sphere of the owners/users of the said automobiles, because these hold the use and enjoyment of the said vehicles, whereby pursuant to paragraphs 1 and 2 of Art. 3 of the CIUC, they must be held responsible for the payment of the obligation of the said tax.

7.1.1

Regarding the burden of proof, Article 342, paragraph 1 of the CC stipulates "the burden of proving the constitutive facts of the alleged right falls to the one who invokes a right";

7.1.2

Also Article 346 of the CC (contrary proof) determines that "against the proof produced by the party upon whom the burden of proof falls, the opposing party may set contrary proof regarding the same facts, designed to render them doubtful; if it succeeds, the matter is decided against the party burdened with the proof." (As states Anselmo de Castro, A., 1982, ED. Almedina Coimbra, "Civil Declaratory Procedural Law," III, p. 163, "when one of the parties is burdened with the burden of proof, the opposing party need only set contrary proof, this being a proof designed to render doubtful the facts alleged by the first").

Thus, in the case of the record, what the Claimant must prove, in order to rebut the presumption that flows from both Article 3 of the CIUC and the automobile registration itself, is that it, the Claimant, was not the owner of the vehicles in question during the period to which the challenged assessments relate. It proposes to prove, as results from the record, that the ownership of the vehicles did not belong to it during the periods to which the assessments relate. Thus presenting the sales invoices of 200 vehicles contained in the documents attached to the Gracious Claim and attached to the record as document No. 10 and Nos. 3, 4, 6, which are given as fully reproduced for all legal purposes.

7.2 REBUTTAL OF THE PRESUMPTION

  • The Claimant, as referred to in 3.1, regarding the proven facts, alleged, with the purpose of dismissing the presumption, not being a taxpayer of the tax at the occurrence of the tax facts, offering for such purpose the following documents;

  • Sales invoices to dealers and agreements with car rental companies, documents attached to the record with Nos. 1, 2, 3, 4, 6, 10 and 11;

  • Now, those documents enjoy the presumption of truthfulness provided for in paragraph 1 of Article 75 of the LGT. From this it follows that on the date when the IUC was exigible those who held the ownership of the motor vehicles were the legitimate owners and not the Claimant.

8 OTHER ISSUES RELATING TO THE LEGALITY OF THE ASSESSMENT ACTS

  • Regarding the existence of other issues relating to the legality of the assessment acts, taking into account that it is inherent in the establishment of an order of knowledge of defects, as provided in Article 124 of the CPPT, that when the request for arbitral ruling is based on defects that prevent the renewal of the challenged assessments, the knowledge of other defects becomes prejudiced, because useless, it does not seem necessary to know of the other issues raised.

9 REIMBURSEMENT OF THE TOTAL AMOUNT PAID

  • Pursuant to the provisions of letter b) of paragraph 1 of Article 24 of the RJAT and in accordance with what is established therein, the arbitral decision on the merits of the claim for which no appeal or challenge is available, binds the tax administration from the end of the period provided for appeal or challenge, such administration being required, in the exact terms of the procedural success of the arbitral decision in favor of the taxpayer and until the end of the period provided for spontaneous execution of the sentences of tax courts "To restore the situation that would exist if the tax act that is the object of the arbitral decision had not been performed, adopting the acts and operations necessary for such purpose"

  • These are legal commands that are in complete harmony with the provisions of Article 100 of the LGT, applicable to the case, pursuant to the provisions of letter a) of paragraph 1 of Article 29 of the RJAT, in which it is established that "The tax administration is obligated, in case of total or partial success of claims or administrative appeals or judicial proceedings in favor of the taxpayer, to the immediate and complete reconstitution of the situation that would exist if the illegality had not been committed, corresponding to the payment of indemnificatory interest, pursuant to the terms and conditions provided for in the law";

  • The case contained in this record raises the manifest application of the mentioned norms, since as a consequence of the illegality of the assessment acts referenced in this proceeding, there must, by force of those norms, be reimbursement of the amounts paid, whether as title of the tax paid or the corresponding compensatory interest, as a way of achieving the reconstitution of the situation that would exist if the illegality had not been committed.

10 RIGHT TO INDEMNIFICATORY INTEREST

  • The declaration of illegality and consequent annulment of an administrative act confers upon the recipient of the act the right to restoration of the situation in which it would find itself before the execution of the annulled act.

  • Within the scope of tax assessment, its annulment confers upon the taxpayer the right to restitution of the tax paid and, as a rule, the right to indemnificatory interest, pursuant to paragraph 1 of Article 43 of the LGT and Article 61 of the CPPT.

  • Whereby the Claimant has the right to indemnificatory interest on the amount of tax paid relating to the annulled assessments.

11 DECISION

Given the foregoing, this Sole Arbitral Court decides:

  • To affirm the total success of the request for arbitral ruling.

  • To judge well-founded the claim for declaration of illegality of the IUC assessment relating to the years: 2011 and 2012, regarding the 200 motor vehicles identified in this proceeding, thereby annulling the corresponding tax acts;

  • To judge well-founded the claim for condemnation of the Tax Administration to reimburse the amount unduly paid, in the amount of 36,396.49 euros, condemning the Tax and Customs Authority to effect these payments, with all legal consequences;

  • The AT must also effect payment corresponding to the amount due for indemnificatory interest on the tax paid relating to the annulled assessments, pursuant to paragraph 1 of Article 43 of the LGT, pursuant to paragraph 2 of Article 61 of the CPPT (Wording of Law No. 55-A/2010, of 31-12, entering into force on 2011-01-01.

VALUE OF THE PROCEEDING: In accordance with the provisions of Articles 306, paragraph 2 of the CPC and 97-A, paragraph 1 of the CPPT and Article 3, paragraph 2 of the Regulation of Costs in Tax Arbitration Proceedings, the proceeding is valued at € 36,396.49.

COSTS: In accordance with paragraph 4 of Article 22 of the RJAT, the amount of costs is fixed at € 1,836.00 pursuant to Table I, attached to the Regulation of Costs in Tax Arbitration Proceedings, charged to the Tax and Customs Authority.

Notify the parties.

Lisbon, 20-04-15

The Arbitrator

Maria de Fátima Alves

(The text of this decision was prepared by computer, pursuant to Article 131, paragraph 5 of the Code of Civil Procedure, applicable by referral from Article 29, paragraph 1, letter e) of Decree-Law 10/2011, of 20 January (RJAT), governed in its drafting by current orthography)

ARBITRAL-TAX DECISION

1 REPORT

1.1

A..., S.A., with Tax Identification Number: ..., Claimant in the tax procedure, aforementioned and marginally referenced, hereinafter denominated "Claimant," came, invoking the provisions of paragraphs 1 and 2 of Article 10 of Decree-Law No. 10/2011, of 20 January (hereinafter RJAT), of Article 99 of the Code of Tax Procedure and Process (CPPT), and of paragraph 1 of Article 95 of the General Tax Law (LGT), to request the constitution of a Sole Arbitral Court, with a view to:

  • The annulment of 400 acts of assessment of the Single Vehicle Circulation Tax (hereinafter designated as IUC), effected by the Tax and Customs Authority (hereinafter AT), concerning the years: 2011 and 2012, relating to the 200 vehicles listed in the notifications, attached hereto as documents Nos. 1 and 2, which form an integral part of the Request for Tax Arbitral Ruling;

  • The request for reimbursement of the total amount of € 31,823.67, corresponding to the 200 tax acts of assessments of single vehicle circulation tax, increased by a further 200 assessment acts, corresponding to the respective compensatory interest, in the total amount of €4,572.82 (doc. No. 2) which constitute a total amount of €36,396.49, unduly paid by the Claimant (cf., doc. 11), whereby it requests the joinder of claims, pursuant to paragraph 1 of Article 3 of the RJAT and Article 104 of the CPPT, pursuant to Article 29 of the RJAT, and requests the right to indemnificatory interest provided for in Articles 43 of the LGT and in Article 61 of the CPPT, both pursuant to Article 29 of the RJAT.

1.2

Pursuant to the provisions of letter a) of paragraph 2 of Article 6 and letter b) of paragraph 1 of Article 11 of Decree-Law No. 10/2011, of 20 January, in the wording introduced by Article 228 of Law No. 66-B/2012, of 31 December, the Ethics Council appointed as sole arbitrator, Maria de Fátima Alves, who communicated acceptance of the assignment within the applicable period:

  • On 21-12-2016 the parties were duly notified of such appointment, having manifested no intention to refuse the appointment of the arbitrator, pursuant to the combined provisions of Article 11, paragraph 1, letters a) and b) of the RJAT and Articles 6 and 7 of the Ethics Code;

  • Whereby, the arbitral tribunal was constituted on 05-01-2017, as stipulated in letter c) of paragraph 1 of Article 11 of Decree-Law No. 10/2011, of 20 January, in the wording introduced by Article 228 of Law 66-B/2012, of 31 December.

1.3

The Claimant, in the substantiation of its request for arbitral ruling, asserts, in summary, the following:

  • The assessment acts, to which the single vehicle circulation taxes relate, assessed and identified in documents No. 1 and 2, attached to the request for ruling, were directed directly to the Claimant;

  • Now, the Claimant, as a commercial company, dedicates itself to the commercialization of vehicles, representing various automobile brands, whereby the "vehicles that are the object of the challenged assessments, fall within its activity of selling new vehicles to the network of its dealers and, in other cases, to car rental companies";

  • With respect to the vehicles in question, the Claimant acted as an intermediary between the manufacturers of the brands it represents and the dealers, within the scope of concession contracts (inserted in doc. No. 3) and, with car rental companies, acted within the scope of supply agreements (inserted in doc. No. 15), both documents are attached to the record;

  • However, the 200 vehicles in dispute were commercialized by the Claimant within the scope of the aforementioned concession contracts and supply agreements;

  • Being relevant to consider that the Claimant only commercializes new vehicles;

  • Whereby, necessarily, it only proceeds to the registration of vehicles that it orders for the execution of the aforementioned contracts with the respective dealers and execution of supply agreements, in order to proceed with the delivery of vehicles already registered (cf., doc. No. 3, aforementioned clause 3, and doc. No. 6 and 15, attached to the record);

  • Furthermore, the Claimant proceeded to issue sales invoices up to the date of assignment of registration to the vehicle in Portugal;

  • In the case of sales by the Claimant to dealers, the invoice is issued prior to the date of registration, being identified by chassis numbers and subject to subsequent debit note of the Vehicle Registration Tax (ISV), already with registration (cf. doc. No. 10 and 15, attached to the record);

  • In the case of car rental companies, the date of the invoice coincides with the date of registration (cf. invoices issued by the Claimant, attached to the record, doc. No. 10 and 15);

  • Whereby, in accordance with documents No. 10 and 15 (attached to the record), all the procedures that the Claimant follows with respect to the registration of vehicles are verified, both within the scope of dealers and within the scope of agreements with car rental companies;

  • Being that, from the invoices, in documents No. 10 and 15, aforementioned, it appears that the initial registration of ownership in favor of the Claimant was effected "at a moment when it did not hold the ownership of the referred vehicles, since it had already transmitted them to the dealers or car rental companies";

  • Which, in the case sub judice, eliminates any responsibility of the Claimant regarding the payment of the IUC, since it was never the owner of any of the 200 vehicles in question, as has been demonstrated and proven in the facts, documented, presented and attached to the record, because, at the moment of the year of registration, the assessment of the tax on the vehicles in question no longer belonged to the Claimant;

  • Whereby, from what precedes, "the vehicles in question were all sold to dealers and car rental companies, prior to the date of the tax facts and the exigibility of the tax," resulting that, the Claimant "proceeded to invoice the vehicles in question, still prior to the assignment of registration;

  • Given the context described, on the date of the tax facts, the Claimant could not be considered a taxpayer of the tax, a fact which precludes any subjective responsibility for its payment.

1.4

The Respondent, Tax and Customs Authority (hereinafter designated as AT), submitted a response, from which it appears that the tax acts in dispute do not suffer from any legal defect, pronouncing in favor of the inadmissibility of the claim and the maintenance of the questioned assessment acts, defending, summarily, the following:

  • It contests, within the scope of "error regarding the premises and the consequent violation of Article No. 3 of the IUC Code";

  • Alleging that the Claimant makes an erroneous interpretation and application of the legal norms, subsumable to the case sub judice;

  • It argues that, "from the combination of Articles 3, 6 and 17, all of the CIUC, the procedures alleged by the Claimant both (within the scope of importation and subsequent sale to dealers, not being responsible for the IUC, since it is not a taxpayer of the vehicle circulation tax and, also when it alleges that the procedure of the Respondent, both with respect to the request for registration and the initial registration, violates paragraph 1 of Article 3 of the CIUC";

  • The Respondent also contests the facts effected by the Claimant, both within the scope of registration and within the scope of registration in national territory;

  • Facts that call into question the exigibility of the single vehicle circulation tax;

  • Alleging that "the tax legislator, in Article 6 of the CIUC, clearly establishes the taxable event of the tax, as well as its exigibility, since such event is constituted by the ownership of the vehicle, as attested by the registration or registration in national territory";

  • It substantiates such situation, pursuant to Article 24 of the RRA, "since the Claimant, upon completing the DAV, paying the ISV and requesting the registration certificate, it fills in the taxable event (objective/subjective scope), being required to pay it pursuant to Article 3 of the CIUC";

  • Therefore, the taxable event of the tax is attested by the assignment of registration;

  • And that "the initial registration of each motor vehicle is effectuated in the name of the importing entity, in this case the Claimant";

  • It argues, the Respondent, that "the tax legislator, in Articles 3 and 6 of the CIUC, clearly established the premises regarding the taxable event of the tax, as well as its exigibility, clearly stipulating that such event is constituted by the ownership of the vehicle, as attested by the registration or registration in national territory";

  • Being, therefore, irrelevant that the Claimant transmitted, with the sale, the ownership of the motor vehicles to "third parties";

  • The Respondent, given the facts summarily set out:

  • It makes a general and objective interpretation of what is expressly provided in the articles it invokes, not considering the presumption of Article 3 of the CIUC, thereby disregarding Article 73 of the LGT;

  • It does not take into account the principle of "equivalence," provided for in paragraph 1 of the CIUC, a corollary of the polluter/payer principle, with a basis in paragraph 2 of Article 66 of the Constitution;

  • It does not consider the procedures legally effected by the Claimant when making its first registration or entry in national territory, complying with the permitted deadlines, given the combination of paragraph 2 of Article 24 of the RRA with paragraph 1 of Article 17 of the CIUC.

1.5

The meeting provided for in Article 18 of the RJAT was waived, as these are matters already sufficiently debated, both in the record and in jurisprudence, this Tax Arbitral Court understanding it unnecessary to have final arguments, dispensing with the examination of witnesses;

  • The Court, in compliance with the provisions of Article 18, paragraph 2 of the RJAT, designated, foreseeably, until 03-04-2017, the Pronouncement of the Arbitral Decision.

2 ISSUES FOR DECISION

2.1

Given the foregoing in the preceding paragraphs, relative to the exposition of the parties and the arguments presented, the main issues to be decided are as follows:

  • The allegation made by the Claimant relating to the material illegality of the assessment acts and the illegality of the accessory interest acts, regarding the years 2011 and 2012, relating to the IUC on the 200 vehicles aforementioned in the request for ruling;

  • The erroneous interpretation and application of the norms of subjective scope of the single vehicle circulation tax assessed and collected, which constitutes the central issue to be decided in this proceeding;

  • The legal value of the registration of motor vehicles.

3 FACTUAL GROUNDS

3.1

In matters of fact relevant to the decision to be rendered, this Court finds to be established, given the elements existing in the record, the following facts:

  • The Claimant presented probative elements contained in documents Nos.; 1, 2, 3, 4, 6, 10, 11 and 15, attached to the request for ruling, which are given as fully reproduced for all legal purposes;
3.1.1 SUBSTANTIATION OF PROVEN FACTS
  • The facts deemed as proven are based on documents attached to the request for arbitral ruling of the aforementioned request for ruling, which are given as fully reproduced for all legal purposes.
3.1.2 UNPROVEN FACTS
  • There are no facts deemed as unproven, given that all facts considered relevant to the assessment of the claim have been proven.

4 LEGAL GROUNDS

4.1

The Court is materially competent and is regularly constituted, pursuant to Articles 2, paragraph 1, letter a), 5, paragraph 2, letter a), 6, paragraph 1, 10, paragraph 1, letter a) and paragraph 2 of the RJAT:

  • The parties enjoy legal personality and capacity and are legitimate, pursuant to Articles 4 and 10, paragraph 2, of the RJAT and Article No. 1 of Ordinance No. 112-A/2011, of 22 March;

  • The proceeding does not suffer from nullities;

  • There is no preliminary issue upon which the Court must pronounce.

4.2

The claim, object of this proceeding, is the declaration of annulment of the IUC assessment acts corresponding to the motor vehicles better identified in the record;

4.2.1

Condemnation of the AT to reimburse the amount of the tax relating to such assessments in the amount of € 36,396.49;

4.2.2

Condemnation of the AT to payment of indemnificatory interest on the same amount.

4.3

According to the understanding of the AT, it is sufficient that in the registration the vehicle appears as property of a determined person, for that person to be the taxpayer of the tax obligation.

4.4

The factual matter is fixed, as provided in paragraph 3.1 above, it being important now to determine the applicable law to the underlying facts, in accordance with the issues for decision identified in paragraph 2.1 above, being certain that the central issue at stake in this record, with respect to which there are absolutely opposed understandings between the Claimant and the AT, consists in determining whether paragraph 1 of Article 3 of the CIUC establishes or not a rebuttable presumption.

4.5

All analyzed and, taking into account, on one hand, the positions of the parties in confrontation, mentioned in points 1.3 and 1.4 above and, considering, on the other hand, that the central issue to be decided is whether paragraph 1 of Article 3 of the CIUC establishes or not a legal presumption of tax scope, it is incumbent, in this context, to assess and render decision.

5 ISSUE OF ERRONEOUS INTERPRETATION AND APPLICATION OF THE NORM OF SUBJECTIVE SCOPE OF THE IUC

5.1

Considering it to be uncontested understanding in doctrine that in the interpretation of tax laws the general principles of interpretation apply fully, which will be, only and naturally, limited by the exceptions and particularities dictated by the law itself being interpreted. This is an understanding that has been receiving acceptance in the General Tax Laws of other countries and which has also come to be embodied in Article 11 of our General Tax Law, which has, moreover, been frequently underscored by jurisprudence.

It is consensually accepted that, with a view to grasping the meaning of the law, interpretation resorts, a priori, to reconstructing the legislative thought through the words of the law, which means seeking its literal meaning, evaluating it and assessing it in light of other criteria, with the involvement of so-called elements of a logical, rational or teleological nature and of a systematic order:

  • With regard to the interpretation of tax law, account must be taken of jurisprudence, namely, the Judgments of the Supreme Administrative Court of 05-09-2012, case No. 0314/12, of 06-02-2013, case 01000/12, available at www.dgsi.pt, the importance of the provisions of Article 9 of the Civil Code (CC), as a fundamental element of legal hermeneutics;

  • Paragraph 1 of Article 3 of the CIUC provides that "The taxpayers of the tax are the owners of the vehicles, being considered as such the natural or legal persons, of public or private law, in whose name they are registered";

  • The formulation used in the said article resorts to the expression "being considered as" which raises the question of whether such expression can be attributed a presumptive meaning, equating it to the expression "being presumed," these are expressions frequently used with equivalent meanings;

  • As teaches Jorge Lopes de Sousa, in Code of Tax Procedure and Process, Annotated and Commented, volume I, 6th Edition, Área Editora, SA, Lisbon 2011, p. 589, that in matters of tax scope, presumptions can be revealed by the expression "it is presumed" or similar expression, there being mentioned various examples of such presumptions, referring to that contained in Article 40, paragraph 1 of the Corporate Income Tax Code, in which the expression "it is presumed" is used and that contained in Article 46, paragraph 2, of the same Code, in which use is made of the expression "is considered," as an expression with an effect similar to that and, equally embodying a presumption;

  • In the legal formulation set forth in paragraph 1 of Article 3 of the CIUC, in which a presumption was established, revealed by 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" was intended only to establish a more marked and clear approach between the taxpayer of the IUC and the actual owner of the vehicle, which is in harmony with the emphasis given to vehicle ownership, which came to constitute the taxable event of the tax, pursuant to Article 6 of the CIUC;

  • The relevance and interest of the presumption in question, which historically was revealed through the expression "being presumed" and which now uses the expression "being considered," resides in the truth and justice that, by that means, is conferred to tax relationships and, which embody fundamental tax values, allowing taxation of the real and actual owner and not that which, by circumstances of a diverse nature, does not pass, at times, from being an apparent and false owner. If the case were not thus considered, not admitting and recognizing the presentation of probative elements designed to demonstrate that the actual owner is, after all, a person different from that which appears in the registration and, which initially, and in principle, was supposed to be the true owner, those values would be objectively set aside.

5.2

Account must also be taken of the principle of equivalence, inscribed in Article 1 of the CIUC, which has as its basis the polluter-payer principle and concretizes the idea contained therein that he who pollutes must, therefore, pay. The said principle has constitutional grounding, inasmuch as it represents a corollary of the provisions in letter h) of paragraph 2 of Article 66 of the Constitution, having also grounding in Community law, whether at the level of original law, Article 130-R, of the Treaty of Maastricht (Treaty on European Union, of 07-02-1992), where the said principle came to be set forth as the basis of Community Policy in the environmental domain and which aims to hold responsible those who contribute to the losses that accrue to the community, deriving from the use of motor vehicles, to be assumed by their owner-users, as costs that only they must bear.

5.3

Given the facts described above, it is important to emphasize that the aforementioned elements of interpretation, whether those related to literal interpretation, supported by the words legally used, whether those relating to elements of logical interpretation, of a historical nature or of a rational order, all point in the direction that the expression "being considered" has a meaning equivalent to the expression "being presumed," and thus should be understood that the provisions of paragraph 1 of Article 3 of the CIUC establish a legal presumption which, in light of Article 73 of the LGT, where it is established that "Presumptions established in tax scope norms always admit contrary proof," will necessarily be rebuttable, which means that the taxpayers are, in principle, the persons in whose name such vehicles are registered. Such persons, identified in those conditions, are therefore those to whom the AT must necessarily direct itself;

  • But it will be, in principle, given that within the framework of prior hearing, mandatory in character, given the provisions of letter a) of paragraph 1 of Article 60 of the LGT, the tax relationship may be reconfigured, validating the initially identified taxpayer or redirecting the procedure toward the one that is, after all, the true and actual taxpayer of the tax in question.

  • The taxpayer has the right to be heard, through prior hearing (José Manuel Santos Botelho, Américo Pires Esteves and José Cândido de Pinho, in Code of Administrative Procedure, Annotated and Commented, 4th edition, Almedina, 2000, annotation 8 of Article 100).

  • The prior hearing which, naturally, is to be realized at a moment immediately prior to the assessment procedure, corresponds to the proper place and time to identify with certainty and safety the taxpayer of the IUC.

  • That in the record at hand, the Claimant demonstrated to the AT, at the stage of prior hearing, that the facts fell within the scope of contracts with dealers and agreements with car rental companies, whereby, through documents attached to the record, the Claimant could never be responsible for the payment of the IUC.

6 ON THE LEGAL VALUE OF REGISTRATION

6.1

Regarding the legal value of registration, it is important to note what is established in paragraph 1 of Article 1 of Decree-Law No. 54/75, of 12 February (altered several times, most recently via Law No. 39/2008, of 11 August), when it establishes that "the registration of vehicles has essentially for its purpose the publicizing of the legal situation of motor vehicles and their respective trailers, with a view to the security of legal commerce":

  • Article 7 of the Real Property Registration Code (CRP), applicable supplementarily to the registration of automobiles, by force of Article 29 of the CRA, provides that "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";

  • Definitive registration constitutes nothing more than a rebuttable presumption, admitting therefore contrary proof, as follows from the law and jurisprudence has been indicating, being able to see, among others the Judgments of the Supreme Court of Justice No. 03B4369 of 19-02-2004 and No. 07B4528, of 29-01-2008, available at: www.dgsi.pt;

  • Therefore, the function legally reserved to registration is on one hand to publicize the legal situation of the assets, in the case at hand, of vehicles and, on the other hand, it allows us to presume that the right to those vehicles exists and that it belongs to the holder, as such registered in the registration, does not have a constitutive nature of the right of ownership, but only a declarative one, hence the registration does not constitute a condition of validity of the transmission of the vehicle from seller to purchaser;

  • The acquirers of vehicles become owners of those same vehicles by means of the conclusion of the corresponding purchase and sale contracts, with registration or without it;

  • In this context it is worth recalling that, given the provisions of paragraph 1 of Article 408 of the CC, the transfer of real rights over things, in the case sub judice, motor vehicles, is determined by mere effect of the contract, being that pursuant to the provisions of letter a) of Article 879 of the CC, among the essential effects of the purchase and sale contract, stands out the transmission of the thing;

  • Given the foregoing, it becomes clear that the legislative thought points in the direction that the provisions of paragraph 1 of Article 3 of the CIUC establishes a presumption "juris tantum," consequently rebuttable, thus permitting that the person who, in the registration, is inscribed as owner of the vehicle, may present probative elements designed to demonstrate that such ownership is inserted in the legal sphere of another person, to whom the ownership was transferred;

  • Which with respect to the facts in dispute, there exist, attached to the record, documents that were proven by the Claimant, both at the stage of prior hearing and in the request for arbitral ruling, thereby establishing the certainty that to the respective owners/users of the vehicles belongs the subjective responsibility for the IUCs, pursuant to paragraphs 1 and 2 of Article 3 of the CIUC.

7 THE PRESUMPTION OF ARTICLE 3 OF THE CIUC AND THE DATE ON WHICH THE IUC IS EXIGIBLE

7.1 DATE ON WHICH THE IUC IS EXIGIBLE

  • The IUC is a tax of periodic taxation, whose periodicity corresponds to the year which begins on the act of registration or on each of its anniversaries, as provided in paragraphs 1 and 2 of Article 4 of the CIUC;

  • It is exigible pursuant to paragraph 3 of Article 6 of the said Code;

  • Being important to note that, regarding the assessment of IUC charged to the Claimant on the vehicles aforementioned, in the years 2011 and 2012, account must be taken that at the moment of the tax facts, the vehicles in question were in the legal sphere of the owners/users of the said automobiles, because these hold the use and enjoyment of the said vehicles, whereby pursuant to paragraphs 1 and 2 of Art. 3 of the CIUC, they must be held responsible for the payment of the obligation of the said tax.

7.1.1

Regarding the burden of proof, Article 342, paragraph 1 of the CC stipulates "the burden of proving the constitutive facts of the alleged right falls to the one who invokes a right";

7.1.2

Also Article 346 of the CC (contrary proof) determines that "against the proof produced by the party upon whom the burden of proof falls, the opposing party may set contrary proof regarding the same facts, designed to render them doubtful; if it succeeds, the matter is decided against the party burdened with the proof." (As states Anselmo de Castro, A., 1982, ED. Almedina Coimbra, "Civil Declaratory Procedural Law," III, p. 163, "when one of the parties is burdened with the burden of proof, the opposing party need only set contrary proof, this being a proof designed to render doubtful the facts alleged by the first").

Thus, in the case of the record, what the Claimant must prove, in order to rebut the presumption that flows from both Article 3 of the CIUC and the automobile registration itself, is that it, the Claimant, was not the owner of the vehicles in question during the period to which the challenged assessments relate. It proposes to prove, as results from the record, that the ownership of the vehicles did not belong to it during the periods to which the assessments relate. Thus presenting the sales invoices of 200 vehicles contained in the documents attached to the Gracious Claim and attached to the record as document No. 10, 15 and Nos. 3, 4, 6, which are given as fully reproduced for all legal purposes.

7.2 REBUTTAL OF THE PRESUMPTION

  • The Claimant, as referred to in 3.1, regarding the proven facts, alleged, with the purpose of dismissing the presumption, not being a taxpayer of the tax at the occurrence of the tax facts, offering for such purpose the following documents;

  • Sales invoices to dealers and agreements with car rental companies, documents attached to the record with Nos. 1, 2, 3, 4, 6, 10, 15 and 11;

  • Now, those documents enjoy the presumption of truthfulness provided for in paragraph 1 of Article 75 of the LGT. From this it follows that on the date when the IUC was exigible those who held the ownership of the motor vehicles were the legitimate owners and not the Claimant.

8 OTHER ISSUES RELATING TO THE LEGALITY OF THE ASSESSMENT ACTS

  • Regarding the existence of other issues relating to the legality of the assessment acts, taking into account that it is inherent in the establishment of an order of knowledge of defects, as provided in Article 124 of the CPPT, that when the request for arbitral ruling is based on defects that prevent the renewal of the challenged assessments, the knowledge of other defects becomes prejudiced, because useless, it does not seem necessary to know of the other issues raised.

9 REIMBURSEMENT OF THE TOTAL AMOUNT PAID

  • Pursuant to the provisions of letter b) of paragraph 1 of Article 24 of the RJAT and in accordance with what is established therein, the arbitral decision on the merits of the claim for which no appeal or challenge is available, binds the tax administration from the end of the period provided for appeal or challenge, such administration being required, in the exact terms of the procedural success of the arbitral decision in favor of the taxpayer and until the end of the period provided for spontaneous execution of the sentences of tax courts "To restore the situation that would exist if the tax act that is the object of the arbitral decision had not been performed, adopting the acts and operations necessary for such purpose"

  • These are legal commands that are in complete harmony with the provisions of Article 100 of the LGT, applicable to the case, pursuant to the provisions of letter a) of paragraph 1 of Article 29 of the RJAT, in which it is established that "The tax administration is obligated, in case of total or partial success of claims or administrative appeals or judicial proceedings in favor of the taxpayer, to the immediate and complete reconstitution of the situation that would exist if the illegality had not been committed, corresponding to the payment of indemnificatory interest, pursuant to the terms and conditions provided for in the law";

  • The case contained in this record raises the manifest application of the mentioned norms, since as a consequence of the illegality of the assessment acts referenced in this proceeding, there must, by force of those norms, be reimbursement of the amounts paid, whether as title of the tax paid or the corresponding compensatory interest, as a way of achieving the reconstitution of the situation that would exist if the illegality had not been committed.

10 RIGHT TO INDEMNIFICATORY INTEREST

  • The declaration of illegality and consequent annulment of an administrative act confers upon the recipient of the act the right to restoration of the situation in which it would find itself before the execution of the annulled act.

  • Within the scope of tax assessment, its annulment confers upon the taxpayer the right to restitution of the tax paid, together with the corresponding compensatory interest, and, as a rule, the right to indemnificatory interest, pursuant to paragraph 1 of Article 43 of the LGT and Article 61 of the CPPT.

  • Whereby the Claimant has the right to indemnificatory interest on the amount of tax paid relating to the annulled assessments.

11 DECISION

Given the foregoing, this Arbitral Court decides:

  • To judge well-founded the claim for declaration of illegality of the IUC assessment relating to the years: 2011 and 2012, regarding the 200 motor vehicles identified in this proceeding, thereby annulling the corresponding tax acts;

  • To judge well-founded the claim for condemnation of the Tax Administration to reimburse the amount unduly paid, in the amount of 36,396.49 euros, condemning the Tax and Customs Authority to effect these payments;

  • The AT must also effect payment corresponding to the amount due for indemnificatory interest on the tax paid relating to the annulled assessments, pursuant to paragraph 1 of Article 43 of the LGT, pursuant to paragraph 2 of Article 61 of the CPPT (Wording of Law No. 55-A/2010, of 31-12, entering into force on 2011-01-01.

VALUE OF THE PROCEEDING: In accordance with the provisions of Articles 306, paragraph 2 of the CPC and 97-A, paragraph 1 of the CPPT and Article 3, paragraph 2 of the Regulation of Costs in Tax Arbitration Proceedings, the proceeding is valued at € 36,396.49.

COSTS: In accordance with paragraph 4 of Article 22 of the RJAT, the amount of costs is fixed at € 1,836.00 pursuant to Table I, attached to the Regulation of Costs in Tax Arbitration Proceedings, charged to the Tax and Customs Authority.

Notify the parties.

Lisbon, 03-04-2017

The Arbitrator

Maria de Fátima Alves

(The text of this decision was prepared by computer, pursuant to Article 131, paragraph 5 of the Code of Civil Procedure, applicable by referral from Article 29, paragraph 1, letter e) of Decree-Law 10/2011, of 20 January (RJAT), governed in its drafting by current orthography)

Frequently Asked Questions

Automatically Created

Who is liable for IUC payment when vehicle ownership is disputed under Portuguese tax law?
Under Portuguese tax law, IUC liability is primarily determined by vehicle registration status. Article 3 of the CIUC establishes that the registered owner on the tax fact date (January 1st) is presumed to be the taxpayer. However, this legal presumption is rebuttable. When ownership is disputed, the party challenging the assessment must provide sufficient documentary evidence proving they were not the actual owner when the tax liability arose. Relevant evidence includes sale contracts, invoices with dates preceding registration, and proof of delivery. The case law establishes that mere registration does not definitively establish ownership for tax purposes if the taxpayer can demonstrate the vehicle was sold before the tax fact occurred.
How do legal presumptions of vehicle registration affect IUC subjective incidence?
Legal presumptions based on vehicle registration create a prima facie case that the registered owner is the IUC taxpayer. Article 6 CIUC ties tax liability to registration records maintained by IMT (Institute of Mobility and Transport). This presumption operates to facilitate tax administration by providing clear identification of liable parties. However, Article 73 LGT allows taxpayers to rebut legal presumptions through contrary proof. The burden shifts to the taxpayer to demonstrate that despite registration, they lack the relevant legal relationship (ownership or use) that justifies IUC liability. Courts have held that this rebuttal requires credible, contemporaneous documentation such as dated invoices, delivery records, and contracts showing transfer of ownership before the tax assessment period.
What are the grounds for reforming an arbitral tax decision under RJAT?
Under RJAT (Regime Jurídico da Arbitragem em Matéria Tributária), grounds for reforming arbitral tax decisions include procedural nullities under Article 615 CPC as referenced in Article 28 RJAT. Specifically, Article 615(1)(d) CPC establishes nullity when the arbitral tribunal fails to rule on issues properly raised by parties. In this case, TCA Sul identified that the original arbitral decision failed to address two critical issues raised in the response: the probative efficacy of invoices and legal effects of reservation of ownership clauses. Such omissions constitute failure to decide (omissão de pronúncia), requiring the arbitral tribunal to issue a reformed decision addressing the previously omitted issues. The reform maintains the original case structure but supplements the decision with analysis of all properly raised legal questions.
Can a reservation of ownership clause in a sale contract exempt the registered owner from IUC liability?
A reservation of ownership clause (reserva de propriedade) in Portuguese civil law retains legal title with the seller until full payment, but its effect on IUC liability is limited. For tax purposes, IUC liability follows the criteria in Article 3 CIUC: ownership, use, or possession of the vehicle. Even when a reservation clause exists, if the buyer has possession, use, and is registered as owner, they may still be considered the IUC taxpayer. The clause affects civil law ownership rights but does not automatically exempt the registered party from tax obligations. Tax authorities typically maintain that registration creates the tax liability regardless of underlying civil arrangements. However, if the reservation clause is combined with evidence that the seller retained actual possession and control, it may support challenging IUC assessment. The key is demonstrating that the registered party lacks the substantive relationship to the vehicle that justifies taxation.
What is the evidentiary value of invoices in challenging IUC tax assessments before CAAD?
Invoices possess significant evidentiary value in CAAD proceedings for challenging IUC assessments, but their weight depends on corroborating circumstances. Under Article 75 LGT, invoices are documentary evidence that can help establish facts material to tax liability. When invoices are dated prior to vehicle registration and show sale to third parties, they support arguments that the issuer was not the owner on the tax fact date. However, Portuguese tax courts apply careful scrutiny to invoice evidence, particularly when challenging registration-based presumptions. Invoices gain maximum probative force when: (1) dated contemporaneously with the alleged transaction, (2) accompanied by proof of payment and delivery, (3) consistent with other documentation like contracts and transport records, and (4) reflected in proper accounting records. The AT may challenge invoice reliability by examining whether registration occurred while the seller still held title, suggesting the sale was not complete when invoiced. Ultimately, invoices form part of the overall factual matrix rather than conclusive proof.