Process: 627/2015-T

Date: July 5, 2016

Tax Type: IUC

Source: Original CAAD Decision

Summary

This CAAD arbitration case (Process 627/2015-T) involves a financial institution challenging 72 IUC (Single Vehicle Circulation Tax) assessments totaling €11,826.75. The claimant, a leasing company supervised by Banco de Portugal, argues it was incorrectly assessed for IUC on vehicles in four distinct situations: (1) vehicles already sold before the taxable event occurred; (2) vehicles acquired from importers after the IUC assessment date; (3) vehicles subject to active financial leasing contracts; and (4) vehicles where leasing contracts were terminated due to lessee breach but not physically returned. The core legal dispute centers on Article 3 of the Vehicle Circulation Tax Code (VCTC), which establishes that vehicle owners are liable for IUC, defining owners as those in whose name vehicles are registered. However, Article 3(2) explicitly equates financial lessees with owners for tax purposes. The claimant contends the registration-based presumption in Article 3(1) is rebuttable and should not override actual ownership transfer or the lessee's exclusive enjoyment of the vehicle. For active leasing contracts, the financial institution argues the lessee bears exclusive liability under the equivalence principle, as they generate the environmental cost that IUC seeks to internalize. The claimant also invokes Article 18(1)(a) VCTC, which assigns IUC liability to importers when vehicles aren't registered within legal deadlines. Additionally, the company seeks recovery of €11,975.69 including €148.94 in compensatory interest, plus indemnity interest under Article 43 of the General Tax Law. This case raises fundamental questions about subjective tax incidence in financial leasing arrangements, the nature and rebuttal of legal presumptions in tax registration systems, and the allocation of IUC liability when physical possession and legal registration diverge.

Full Decision

ARBITRATION DECISION

The Arbitrator Raquel Franco, designated by the Deontological Council of the Centre of Administrative Arbitration (CAAD) to form the single arbitrator tribunal established on 9 December 2015, decides as follows:

I. REPORT

  1. On 01.10.2015, the company "A…, S.A.", Tax Identification Number …, filed a request for constitution of a single arbitrator tribunal, in accordance with the terms and for the purposes of Articles 2 and 10 of Decree-Law No. 10/2011, of 20 January (Legal Framework for Tax Arbitration, hereinafter "LFTA"), requesting the Tax and Customs Authority (TCA).

  2. The request for constitution of the Arbitration Tribunal was accepted by the Honourable President of CAAD and automatically notified to the TCA on 09.10.2015.

  3. Pursuant to paragraph (a) of Article 6, subsection 2 and paragraph (b) of Article 11, subsection 1 of Decree-Law No. 10/2011, of 20 January, as amended by Article 228 of Law No. 66-B/2012, of 31 December, the Deontological Council designated as arbitrator of the single arbitrator tribunal the undersigned hereto, who communicated acceptance of the corresponding appointment within the applicable period.

  4. On 23.11.2015 the parties were duly notified of this designation, and expressed no intention to refuse the appointment of the arbitrator in accordance with the combined provisions of Article 11, subsection 1, paragraphs (a) and (b) of the LFTA and Articles 6 and 7 of the Deontological Code.

  5. Thus, pursuant to paragraph (c) of Article 11, subsection 1 of Decree-Law No. 10/2011, of 20 January, as amended by Law No. 66-B/2012, of 31 December, the arbitration tribunal was constituted on 09.12.2015.

  6. In the present arbitration proceedings, the Claimant seeks to have the Arbitration Tribunal declare the illegality of 72 assessments for self-assessment of the single vehicle circulation tax (IUC) whose total amount amounts to € 11,826.75, and consequently determine the refund of the total amount of € 11,975.69, corresponding to tax and compensatory interest in the amount of € 148.94, as well as the payment of indemnification interest in accordance with Article 43 of the General Tax Law.

  7. The Claimant bases its request, in summary, on the following terms:

  • The Claimant is a financial institution subject to supervision by the Bank of Portugal which carries on its activity in the field of vehicle financing, namely under the modality of granting loans for the acquisition of vehicles or through financial leasing contracts.

  • The Claimant received 72 assessment notices for IUC on vehicles related to the activity mentioned above, having proceeded to pay all of them, although believing that these are illegal as they do not comply with the subjective prerequisites for the incidence of the tax.

  • In concrete terms, the Claimant understands that, in all cases covered by the arbitration request, the assessed tax concerns vehicles already sold by the Claimant on the date when the taxable event occurred, tax for which responsibility lies with the importer, vehicles whose leasing contract was still in force on the date when the taxable events occurred, and tax relating to vehicles whose leasing contract was in breach on the date of occurrence of the taxable event.

  • As to the first group of situations, the Claimant understands that the fact that the vehicle in question was sold by it at a moment prior to the occurrence of the IUC constitutes a ground for exclusion from the incidence of the tax that should have been taken into account by the TCA, insofar as, pursuant to Article 6, subsection 3 of the Vehicle Circulation Tax Code (VCTC), the tax is considered due to the owner (or to other holders of the vehicle who are equivalent) on the first day of the vehicle's taxation period, which, in accordance with Article 4, subsection 2 of the same Code, takes place on the date on which the registration is assigned. The fact that the ownership of the vehicles was not registered in the vehicle register in favor of the new owner cannot be imputed to the Claimant, which did not have legitimacy to request such registration. On the other hand, the Claimant understands that, although Article 3, subsection 1 of the VCTC provides that persons liable to the tax are the owners of vehicles, being considered as such the natural or legal persons, of public or private law, in whose name they are registered, the expression "being considered as" should be understood as a legal presumption that can be rebutted by evidence to the contrary by the transferor of the vehicle. Thus, in light of Article 3, subsection 1 of the VCTC, the tax must apply to the new owners of the vehicles.

  • As to the second reason invoked for the absence of subjective incidence, the Claimant understands that, having acquired the vehicle from the importer after the date of IUC assessment, this tax is also not its responsibility. Thus, the party responsible for IUC was the importer pursuant to Article 18, subsection 1, paragraph (a) of the VCTC which provides that, in the absence of registration of vehicle ownership effected within the legal period, the IUC due in the year of vehicle registration is assessed and demanded from the person liable to the tax on vehicles based on the vehicle customs declaration, or based on the supplementary declaration of vehicles on which the assessment of that tax is based, even if not due.

  • As to the third set of situations, the Claimant refers that financial leasing contracts had been concluded whose object was the vehicles in question, which were in force on the date when the taxable event arose and when the tax became due, so the person liable for IUC is, exclusively, the financial lessee. Thus, Article 3, subsection 2 of the VCTC provides that "financial lessees, acquirers with reservation of ownership, as well as other holders of purchase option rights by virtue of the leasing contract are deemed equivalent to owners. Moreover, it argues that the owner of the vehicle cannot be secondarily liable for payment of the tax in case of breach by the lessee since that solution would be contrary to the principle of equivalence pursuant to which IUC seeks to burden taxpayers in proportion to the environmental cost that they cause. Indeed, it is precisely because the lessee is the exclusive holder of the vehicle that the Road Code qualifies him as the "holder of the vehicle identification document" for the purposes of liability for breaches relating to the conditions of admission of the vehicle to traffic (e.g., lack of inspection), and he is also solely responsible for the payment of tolls, fines and expenses associated with this non-payment pursuant to Articles 118 and 135 of the Road Code and Article 10 of Law 25/2006, of 30 June.

  • As to the fourth group of situations (contracts in breach at the time of occurrence of the taxable event), the Claimant invokes the fact that, prior to the date of IUC expiration and as a result of breach of contractual obligations by the lessees, it terminated the financial leasing contractual relationships, which were resolved before the date set for termination of the contracts, but without the lessees having returned the vehicles in question. The Claimant resorted to the procedure provided for in Article 21 of Decree-Law No. 149/95, of 24 June, which provides for the precautionary measure of judicial delivery. Pursuant to subsection 1 of that legal provision, if, upon termination of the contract by resolution or by expiry of the period without exercise of the purchase right, the lessee does not proceed to return the asset to the lessor, the latter may, after requesting cancellation of the leasing registration, to be effected electronically whenever technical conditions permit, request the court a precautionary measure consisting of its immediate delivery to the applicant. The non-return of the vehicle by the respective lessee has as a consequence that the latter continues to enjoy the vehicle, without the respective owner being able to dispose of or in any way enjoy it. Thus, it considers that, despite having been given publicity to the cancellation of the leasing registration, this does not make the Claimant a person liable for the tax, which should continue to be the responsibility of the financial lessee, who maintains the possibility of enjoying the vehicle in question, which is in accordance with the principle of equivalence, provided in Article 1 of the VCTC.

  1. In its Response, the TCA invoked, in summary, the following:

8.1 Preliminary issues

  • First, the TCA argues that the Claimant did not provide all notifications with the indication of the payment deadline, namely with respect to vehicles …, …, …, …, …, …, …, …, …, …, …, …, and therefore fails to prove the timeliness of the request for constitution of the Arbitration Tribunal with respect to these assessed amounts challenged.

  • Second, the TCA states that the Claimant sent a list of vehicles for which it wishes to challenge IUC and that, from the individual verification of the documents attached to the proceedings, there results a total inconsistency between these and the list provided (by way of example, the duplication of assessment notices for vehicles …, …, …, …, …, … (for the third time), …, …. On page 1 the 2nd copies of invoices for vehicles …, …, followed by the assessment notice for vehicle …. On page 2 the 2nd copies of invoices for vehicles with registration numbers …, …, followed by a financial leasing contract for vehicle …. Does not attach the documents it invokes in Art. 23). It understands that, in light of the deadlines for submission of documents established by law, it is not possible to attach late all missing documents by the Claimant. It further understands that the Claimant did not contradict in any way the information contained in the vehicle register of being the owner of the vehicles on the dates of exigibility of the tax (Art. 3, subsection 1, of the VCTC).

8.2 As to the merits of the request, the TCA invokes the following arguments:

· The legislator expressly and intentionally established that such [as owners or in the situations provided for in subsection 2, the persons listed there] are considered to be the persons in whose name they [the vehicles] are registered, because this is the interpretation that preserves the unity of the tax-legal system.

· To understand that the legislator established here a presumption would unequivocally be to interpret against the law; it is, rather, a clear choice of legislative policy whose intention was that, for the purposes of IUC, those who appear as such in the vehicle register be considered owners.

· If the thesis defended by the Claimant were to be followed as to the fact that Article 3 of the VCTC enshrines a rebuttable presumption, then the rebuttal of the presumption depends on compliance with what is provided in Article 19 of the VCTC; the Claimant having not complied with the burden of proof imposed on it, and finding that the breach of the declarative obligation provided in that legal provision is found, two consequences should be drawn: (i) the responsibility of the Claimant for the arbitration costs relating to the present arbitration request given that such breach gave rise to the issuance of part of the assessments in question; (ii) the determination of its responsibility in terms of regulatory offences in light of Article 117, combined with Article 26, subsection 4, of the General Regulatory Offences Regime;

· The interpretation given by the Claimant results in an obstruction and increased cost of the competencies attributed to the Respondent, with obvious harm to the interests of the Portuguese State;

· The argument presented by the Claimant that the person liable for the tax is the actual owner, regardless of not appearing in the vehicle register in that capacity, is wrong in light of a teleological interpretation of the regime established in the VCTC insofar as the legislator intended to create a tax based on the taxation of the owner of the vehicle as it appears in the vehicle register.

· As to the documents provided by the Claimant to prove the first set of situations presented to the tribunal, the TCA understands that such, because they are invoices, are not suitable to prove the conclusion of a reciprocal contract such as a purchase and sale, as they do not reveal per se an essential and unequivocal declaration of will (i.e., acceptance) by the purported acquirer. It adds that the Claimant did not provide copies of the official form for registration of motor property when it could and should have done so in the application for the arbitration request, and neither did it provide proof of receipt of the prices. It also alleges that, with regard to the value or probative force of the invoices embodied in the documents attached to the proceedings, doubts arise, given the various mentions thereof contained (rescission, total loss by insurer, residual value, sale of unlleased vehicle). Finally, as to the invoices identified as 2nd copy, it invokes what was already decided in the arbitration decision of 30.07.2015, delivered in Case No. 79/2015-T CAAD, regarding the mention "valid upon good collection": "The Claimant alleges that, on the date when the taxable events occurred, it had already transferred the ownership of the vehicles to third party acquirers. To prove this it provides the second copies of invoices, in which the vehicle registration number, client number, identification of the recipient are mentioned. In the descriptive each document has a different mention, for example: in Doc. No. 1 the mention is "residual value", while in Docs. 3, 7 and 8 the mention is "sale of goods on credit", whose meaning leaves us with many doubts that it may have as underlying a transfer of ownership. But, already in doc. No. 5 in the descriptive appears "Total loss by insurer", whose meaning also raises many doubts for us about the type of underlying transaction." "It should be added that, in all the second copies of invoices attached to the files, the expression "valid upon good collection" appears. This mention appears in all documents attached to the files by the Claimant. Thus, it seems evident that the descriptive of the documents under analysis do not allow to conclude, without more, by the existence of underlying purchases and sales, given the diversity of situations described. But, such doubt could have been clarified and the proof of transfer of ownership would be demonstrated, if the Claimant had provided to the files copies of the sales declarations relating to each of the vehicles in question, which must have been issued and delivered to the respective buyers for the conclusion of the business and subsequent alteration of the ownership register. Certainly, if all these transfers of ownership took place, the sales declarations were duly completed and the documentary process conveniently concluded with the issuance of a receipt, because finance companies do not as a rule send the documents that conclude the process to the new owner without previously verifying payment of the value of the last invoice, residual value and associated charges. Indeed, that is why the documents attached to the files contain the indication of "valid upon good collection". Of course, the Claimant, given the dimension and business structure it has of all processes duly organized and copies of all documents formalizing the transactions. It is not credible that it only has second copies of invoices." In short, the Respondent understands that, if invoices are only valid after the demonstration of their good collection, and if such proof has not been made, then the invoices are invalid, or at least clearly insufficient, for the proof of the facts intended. Still on this point, it notes that, as for the vehicle with registration number …, in the "Customer Extract" there are returned cheques, so doubt remains as to whether the vehicle was disposed of or not. Still with regard to these "customer extracts", as for registration number …, it indicates in handwritten form that it actually refers to registration number …, remaining unclear to which of the registration numbers it refers. It adds, furthermore, that, notwithstanding the Claimant providing copies of the respective contracts, the truth is that no proof is made that the same were in force in the years of the IUC in question, which may, in particular, have had early termination, and the vehicle returned to the possession of the Claimant, in whose name it was registered. The indubitable proof that the Claimant should have made, but did not, was to provide documentary proof of payment of the financial lease rental in the month of exigibility of the tax.

· As to the third set of situations, the Respondent understands that the TCA has nothing to do with the contractual relationships between the Claimant and its clients and that, again, the Claimant provides no proof of what it alleges, namely the existence of a leasing contract; breach of that contract; cancellation of leasing registration; compliance with what is provided in Article 19 of the VCTC.

· With respect to the vehicle with registration number …, the TCA notes that the Claimant provided nothing that would allow attribution of responsibility for payment to the importer.

· Finally, the Respondent contends that, were the interpretation conveyed by the Claimant to be accepted, then the same would be contrary to the Constitution, insofar as it results in violation of the principle of confidence, the principle of legal certainty, the principle of efficiency of the tax system and the principle of proportionality.

  1. Subsequent procedural steps

Through an application filed on 20.01.2016, the Claimant attached to the files copies of the accounting entries in the SNC – Banks account, relating to the amounts received by reference to the sales of vehicles as to which it alleged that the IUC had a due date after the date of disposal. Through the same application, it also attached invoices relating to the month/year coinciding with the date of IUC assessment, with a view to demonstrating that the financial leasing contracts relating to such assessments were in force on the date when the IUC was assessed, and therefore the Claimant was not a person liable for the tax. It further clarified that only at that moment was it possible to gather all the documentation in question, as it is very detailed and difficult to obtain (being the Claimant a financial credit institution whose activity consists of granting loans for the acquisition of motor vehicles, the individualized identification of each of the situations is an exhaustive and time-consuming task).

Through an order of 20.01.2016, the Claimant was invited to make a statement on the preliminary issues raised by the Respondent in the Response filed.

On 02.02.2016, the Claimant presented the following statement on the preliminary issues raised by the Respondent:

  • on the matter of timeliness, it states that, on 05.10.2015, it filed an application with all the assessment notices that are the subject of the proceedings, from which the deadline for voluntary payment appears, from which the period for presenting the arbitration request begins to count, and from which the timeliness of the request can be concluded;

  • regarding the alleged failure to provide the documents referred to in Article 23 of the arbitration request, it denies such allegation, stating that it attached to the files the registrations in the vehicle register by which it can be proved the date on which it acquired the property in question and, therefore, the moment from which it became liable for IUC relating to that vehicle;

  • as to the allegation that the Claimant had not proved payment of the tax with respect to all assessed amounts challenged, it also contests, stating that all assessment notices were provided from which proof of payment appears;

  • as to what was referred to by the TCA regarding the failure to provide proof of receipt of the price as a way to prove the sale of vehicles, the Claimant clarifies that it provided invoices issued on the date of sale, accounting statements and copies of the entries relating to the amounts received from the sales of vehicles.

Through an order issued on 23.02.2016, the Tribunal determined that the TCA be notified of the applications and documents submitted by the Claimant on 20.01.2016 and 02.02.2016, as well as to make a statement on the same within 10 days, namely in light of the preliminary issues it had raised. Through the same order, notification was also determined of the Claimant to attach to the files the assessment notice relating to the vehicle with registration number … and the supporting documents to what is alleged as to the non-incidence of tax on vehicles with registration numbers … and ….

On 03.03.2016, the Respondent attached to the files an application in which it maintains, entirely, the tenor of the Response it had filed.

On 18.03.2016, the Claimant attached to the files the assessment notice relating to the vehicle with registration number …, requesting clarification on the remaining content of the order of 23.02.2016.

On 21.03.2016, the Tribunal issued an order clarifying that, as to vehicles with registration numbers … and …, with respect to which the Claimant alleges to have been sold before the date of expiration of the tax, no documents proving these facts had been attached to the files. It further determined that the same be attached within 10 days, under penalty of being considered definitively not attached to the files for purposes of proving the alleged facts.

On 23.03.2016, the Claimant attached to the files invoices issued on the date of sale, accounting statements and accounting entries of the SNC "Banks" account relating to the amounts received on the date of sale of vehicles … and ….

Through an order issued on 24.03.2016, the Tribunal determined that the Respondent be notified to make a statement on the documents attached by the Claimant on 23.03.2016.

On 19.04.2016, verifying that the Respondent had not exercised its right to reply, the period for doing so having already elapsed, the Tribunal decided to dispense the parties from the meeting provided for in Article 18 of the LFTA and granted a period for the presentation of written submissions. It also informed the parties that the arbitration decision would be issued by 17.06.2016.

On 03.05.2016, the Claimant presented its submissions, reiterating, in essence, the arguments already presented in the proceedings.

On 16.05.2016, the Respondent attached to the proceedings its submissions, in which it also reiterates the arguments already presented.

Through an order of 25.05.2016, the Tribunal notified the Claimant to attach to the files some documents proving facts alleged and which were not properly proved through documentary evidence, and at the same time notified the Respondent that it had 5 days, after submission of a response by the Claimant, to make a statement on the elements that the latter might attach.

The Claimant responded through an application dated 07.06.2016 and the Respondent made a statement on 09.06.2016, maintaining what it had already alleged previously.

III. CASE MANAGEMENT

  1. The Tribunal is competent and is regularly constituted, pursuant to Articles 2, subsection 1, paragraph (a), 5 and 6, all of the LFTA.

  2. The parties have legal personality and legal capacity, are legitimate and are legally represented, pursuant to Articles 4 and 10 of the LFTA and Article 1 of Regulation No. 112-A/2011, of 22 March.

  3. The proceedings do not suffer from defects that would invalidate it.

  4. It is sought to assess jointly the legality of 72 IUC assessments, for which the prerequisites provided for in subsection 1 of Article 3 of the LFTA and Article 104 of the Tax Procedure and Process Code are met, and cumulation is admissible by virtue of the identity of the tax and the fact that the analysis of the tax acts in question depends on the assessment of the same factual circumstances and the application of the same legal rules.

IV. FACTUAL MATTER

IV.1. Established Facts

Before proceeding to the assessment of the issues, it is necessary to present the factual matter relevant to its understanding and decision, which, having examined the documentary evidence and the administrative file (PA) attached to the files and also taking into account the alleged facts, is established as follows:

  1. The Claimant is a Financial Credit Institution subject to supervision by the Bank of Portugal, which is dedicated to vehicle financing, namely under the modality of granting loans for the acquisition of vehicles or the conclusion of financial leasing contracts;

  2. The Claimant received 72 assessment notices for IUC on vehicles related to the activity mentioned above, all identified in the Table Attached to the arbitration request, which is hereby fully reproduced;

  3. The Claimant made payment of all IUC assessment notices that are the subject of the arbitration request;

  4. The ownership of these vehicles was registered in the vehicle register in favor of the Claimant on the date of the taxable events;

  5. The Claimant issued the following documents called "2nd copies of invoices", relating to the vehicles and with the dates indicated below:

a. Vehicle with registration number …, invoice dated 24.02.2009;

b. Vehicle with registration number …, invoice dated 24.08.2013;

c. Vehicle with registration number …, invoice dated 22.07.2004;

d. Vehicle with registration number …, invoice dated 24.01.2009;

e. Vehicle with registration number …, invoice dated 30.03.2012;

f. Vehicle with registration number …, invoice dated 28.11.2013;

g. Vehicle with registration number …, invoice dated 24.04.2012;

h. Vehicle with registration number …, invoice dated 01.09.2013;

i. Vehicle with registration number …, invoice dated 24.04.2014;

j. Vehicle with registration number …, invoice dated 24.02.2015;

k. Vehicle with registration number …, invoice dated 24.01.2014;

l. Vehicle with registration number …, invoice dated 01.10.2011;

m. Vehicle with registration number …, invoice dated 01.04.2008;

n. Vehicle with registration number …, invoice dated 01.09.2014;

o. Vehicle with registration number …, invoice dated 24.02.2015;

p. Vehicle with registration number …, invoice dated 24.03.2012;

q. Vehicle with registration number …, invoice dated 01.05.2012;

r. Vehicle with registration number …, invoice dated 01.06.2009;

s. Vehicle with registration number …, invoice dated 01.04.2011;

t. Vehicle with registration number …, invoice dated 24.07.2012;

u. Vehicle with registration number …, invoice dated 24.07.2012;

v. Vehicle with registration number …, invoice dated 30.11.2006;

w. Vehicle with registration number …, invoice dated 24.03.2011;

x. Vehicle with registration number …, invoice dated 29.05.2005;

y. Vehicle with registration number …, invoice dated 24.03.2010;

z. Vehicle with registration number …, invoice dated 24.03.2009;

aa. Vehicle with registration number …, invoice dated 24.10.2012;

bb. Vehicle with registration number …, invoice dated 26.01.2005;

cc. Vehicle with registration number …, invoice dated 24.03.2012;

dd. Vehicle with registration number …, invoice dated 24.03.2011;

ee. Vehicle with registration number …, invoice dated 01.07.2014;

ff. Vehicle with registration number …, invoice dated 01.03.2010;

gg. Vehicle with registration number …, invoice dated 24.03.2015;

hh. Vehicle with registration number …, invoice dated 12.12.2014;

ii. Vehicle with registration number …, invoice dated 24.04.2011;

jj. Vehicle with registration number …, invoice dated 28.05.2005;

kk. Vehicle with registration number …, invoice dated 24.10.2014;

ll. Vehicle with registration number …, invoice dated 24.02.2013;

mm. Vehicle with registration number …, invoice dated 24.02.2013;

nn. Vehicle with registration number …, invoice dated 01.02.2004;

oo. Vehicle with registration number …, invoice dated 24.03.2010;

pp. Vehicle with registration number …, invoice dated 24.01.2011;

qq. Vehicle with registration number …, invoice dated 24.03.2011;

rr. Vehicle with registration number …, invoice dated 01.11.2006;

ss. Vehicle with registration number …, invoice dated 24.04.2011;

tt. Vehicle with registration number …, invoice dated 24.01.2012;

uu. Vehicle with registration number …, invoice dated 01.05.2012;

vv. Vehicle with registration number …, invoice dated 24.02.2009;

ww. Vehicle with registration number …, invoice dated 01.06.2010.

  1. With the exception of vehicles with registration numbers … and …, which concern the year 2014, all other assessed amounts challenged concern the year 2015.

  2. With respect to the vehicle with registration number …, the information contained in the Vehicle Registry Office confirms that the Claimant became its owner on 31.12.2014.

  3. The registration date of this vehicle is 05.11.2014, so the taxable event occurred before acquisition by the Claimant.

  4. With respect to the vehicle with registration number …, the information contained in the Vehicle Registry Office confirms that the Claimant became its owner on 14.01.2015.

  5. The assessment relating to the vehicle with registration number … is for 2014, so the respective taxable event occurred before the Claimant became its owner.

  6. The Claimant concluded the financial leasing contracts relating to the vehicles and for the periods identified below:

a. …, from 01.04.2009 to 01.04.2015.

b. …, from 01.03.2011 to 01.03.2015.

c. …, from 24.03.2014 to 24.03.2017.

  1. The vehicle with registration number … has a registration date of 31.03.2009, so the taxable event occurred during the term of the financial leasing contract.

  2. The vehicle with registration number … has a registration date of 24.02.2011, so the taxable event occurred during the term of the financial leasing contract.

  3. The vehicle with registration number … has a registration date of 26.02.2014, so the taxable event occurred during the term of the financial leasing contract.

  4. The Claimant concluded the financial leasing contracts relating to the vehicles and for the periods identified below:

d. …, from 05.02.2008 to 05.02.2013;

e. …, from 24.02.2009 to 24.03.2013;

f. …, from 24.03.2007 to 24.03.2012;

g. …, from 24.01.2009 to 24.01.2014;

h. …, from 01.03.2005 to 01.03.2011;

i. … from 24.03.2006 to 24.04.2011;

j. …, from 24.01.2007 to 24.02.2011;

k. …, from 24.10.2008, concluded for 60 months;

l. …, from 01.02.2009 to 01.03.2013;

m. …, from 24.03.2007 to 24.03.2012;

n. …, from 24.02.2008 to 24.02.2013;

o. …, from 24.03.2007 to 24.03.2012;

p. …, from 24.03.2007 to 24.03.2012;

q. …, from 24.07.2007 to 24.05.2014;

r. …, from 24.01.2007 to 24.02.2013;

s. …, from 01.05.2007 to 01.06.2012;

t. …, from 24.07.2006 to 24.07.2012;

u. …, from 01.04.2008 to 01.04.2013.

IV.2. Unproven Facts

a. That, with respect to vehicles with the registration numbers indicated below, the Claimant is not liable for the assessed IUC:

· … Justification: the IUC is after the term of the financial leasing contract and the Claimant informed the tribunal that the vehicle had been "retaken on 08.04.2015 and returned to the client on 29.04.2015 by reason of payment of the debt." To prove that fact it offered only a document with the indication "merely informative".

· … Justification: the IUC is after the term of the contract. The Claimant informed the tribunal that it had verified "Total loss. Indemnity liquidated by AXA Insurer in 09/2012", but offered no proof.

· ... Justification: the IUC is after the term of the contract and the Claimant acknowledges that the vehicle is its property.

· .... Justification: the IUC is after the term of the contract. The Claimant informed the tribunal that "Debt liquidated by client. Sales form sent on 05.08.2014." The only document provided for proof contains the indication: "Letter merely informative, does not require signature."

· ... Justification: the IUC is after the end of the contract and the Claimant acknowledges that the vehicle is its property.

· ... Justification: the IUC is after the end of the contract and the Claimant acknowledges that the vehicle is its property.

· ... Justification: the IUC is after the end of the contract and the Claimant acknowledges that the vehicle is its property.

· ... Justification: the IUC is after the end of the contract and the Claimant acknowledges that the vehicle is its property.

· ... Justification: the IUC is after the end of the contract and the Claimant acknowledges that the vehicle is its property.

· ... Justification: the IUC is after the end of the contract and the Claimant acknowledges that the vehicle is its property.

· ... Justification: the IUC is after the end of the contract. The Claimant only informed the tribunal that "Debt liquidated by client on 05/2016. Sales form sent on 03.05.2016."

· ... Justification: the IUC is after the end of the contract and the Claimant acknowledges that the vehicle is its property.

· ... Justification: the IUC is after the end of the contract and the Claimant acknowledges that the vehicle is its property.

· ... Justification: the IUC is after the end of the contract and the Claimant acknowledges that the vehicle is its property.

· ... Justification: the IUC is after the end of the contract and the Claimant acknowledges that the vehicle is its property.

· ... Justification: the IUC is after the end of the contract. The Claimant only informed the tribunal that "Debt liquidated by client. Sales form sent on 31.01.2013."

· ... Justification: the IUC is after the end of the contract and the Claimant acknowledges that the vehicle is its property.

· ... Justification: the IUC is after the end of the contract and the Claimant acknowledges that the vehicle is its property.

b. As to the vehicle with registration number …, whose registration date is 23.02.2011, that the sales invoice was issued before the taxable event (it was issued on 24.02.2015);

c. As to the vehicle with registration number …, whose registration date is 19.02.2009, that the sales invoice was issued before the taxable event (it was issued on 24.02.2015);

d. As to the vehicle with registration number …, whose registration date is 23.03.2011, that the sales invoice was issued before the taxable event (it was issued on 24.03.2015);

V. THE ISSUE TO BE DECIDED

The substantive issue in the present case consists of determining whether the facts alleged by the Claimant constitute grounds for exclusion from the subjective incidence of the tax and whether, as a consequence, it should be considered that the acts challenged suffer from error regarding the prerequisites of the taxable event, which would constitute a defect of violation of law resulting in their annulment, with the due legal consequences.

VI. LEGAL REASONING

The Claimant bases its request on four distinct types of arguments, in accordance with the factual situation it invokes:

  1. Vehicles whose ownership was transferred prior to the taxable event;

  2. Vehicles with a leasing contract in force on the date of the taxable event;

  3. Vehicles for which IUC responsibility lies with the respective importer;

  4. Vehicles in which the taxable event of IUC occurred after the contract entered into default.

  5. As to the first set of situations:

The Claimant invokes that, with reference to the acts of assessment whose ownership was transferred prior to the taxable event, the prerequisites for subjective incidence provided for in Article 3 of the Vehicle Circulation Tax Code are not met, and therefore it is not liable for IUC. It invokes that, on the date of the taxable events, it was no longer the owner of the said vehicles and, consequently, the assessments should be annulled by manifest lack of subjective liability for their payment.

It invokes the provisions of Article 3 of the VCTC, which, in its understanding, establishes an implicit presumption of ownership of vehicles in favor of those in whose name they are registered, a presumption which, by virtue of the application of the general rule provided for in Article 73 of the General Tax Law, is rebuttable by evidence to the contrary. For the Respondent, Article 3 of the VCTC does not establish any implicit presumption, but a true legal fiction, which is not rebuttable.

This issue has been abundantly dealt with by arbitral jurisprudence over recent years (cf. the decisions delivered in cases 286/2013-T, of 2 May 2014, 293/2013-T, of 9 June 2014, 46/2014-T of 5 September, 246 and 247/2014 T, of 10 October, among others), and has also been the subject of the judgment of the Southern Central Administrative Court delivered on 19-03-2015, case no. 08300/14. Following this court closely the lines of jurisprudence outlined in the cases indicated above, only the most significant features will be indicated here.

Thus, subsection 1 of Article 3 of the VCTC provides that:

"Persons liable for the tax are the owners of vehicles, being considered as such the natural or legal persons, of public or private law, in whose name they are registered."

The question being discussed with respect to this provision is as follows: should it be understood that the legislator used the word "considered" as he could have used the word "presumed" or, on the contrary, that the legislator intended to establish a legal fiction, precluding the possibility of presenting evidence to the contrary?

Pursuant to Article 349 of the Civil Code, "presumptions are inferences which the law or the judge draws from a known fact to establish an unknown fact." On the other hand, subsection 2 of Article 350 of the Civil Code clarifies that legal presumptions may be rebutted by evidence to the contrary, except in cases where the law prohibits it.

With respect to presumptions of tax incidence, Article 73 of the General Tax Law provides that these always admit evidence to the contrary.

"Legal fictions" consist, differently, "in a legal process that considers a situation or a fact as different from reality to assign it legal consequences"[1].

Now, contrary to what the Respondent argues and as has already been recognized in the arbitral and judicial decisions referred to, the analysis of the literal element, as well as the historical and teleological elements present in the provision in question lead to the conclusion that the legislator did not intend to establish any legal fiction but only and solely a presumption, rebuttable by evidence to the contrary in accordance with and for the purposes of Article 73 of the General Tax Law. Since the provision of incidence provided for in subsection 1 of Article 3 of the VCTC is a provision of tax incidence, any other understanding would clearly be contrary to the principles governing the tax legal relationship.

As to the historical element, it is important to note that the VCTC had its genesis in the creation, by Decree-Law 599/72, of 30 December, of the tax on vehicles, which already expressly established that the tax was due by the owners of vehicles, being presumed as such the persons in whose name they are registered or enrolled[2]. On the other hand, Article 2 of the Regulation of Taxes on Circulation and Road Transport (approved by Decree-Law No. 116/94) established that: "persons liable for the tax on circulation and the road transport tax are the owners of vehicles, being presumed as such, until proven to the contrary, the natural or legal persons in whose name they are registered".

It is true that, in the VCTC, the legislator replaced the expression "being presumed" with the expression "being considered", which, in the perspective of the Respondent, translated the establishment of a legal fiction, which is not rebuttable. We do not believe, however, that this is the case. The change of verb does not constitute a substantive change in the incidence provision, which, in our view, continues to establish a presumption rebuttable by evidence to the contrary – in conformity, moreover, with the provisions of Article 73 of the General Tax Law.

As Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa state, in the annotation to subsection 3 of Article 73 of the General Tax Law, "presumptions in matters of tax incidence may be explicit, revealed by the use of the expression 'it is presumed' or similar (…). However, presumptions may also be implicit in incidence provisions, in particular of objective incidence, when certain values of movable or immovable property are considered as constituting taxable matter, in situations in which it is not impractical to ascertain the actual value"[3].

In sum, in matters of tax incidence, presumptions may be revealed by the expression "it is presumed" or by a similar expression[4]. By way of example, Jorge Lopes de Sousa notes that in Article 40, subsection 1 of the Personal Income Tax Code, the expression "it is presumed" is used, whereas in Article 46, subsection 2 of the same Code the expression "it is considered" is used, with no difference between one and the other expression, both meaning, after all, the same: a legal presumption[5].

As to the teleological element, it is important to note that the structuring principle of the reform of motor vehicle taxation is precisely that of the incidence of taxation on the true user of the vehicle, which does not accord with the "blind" reading of the letter of the law, which could, after all, lead to taxing one who is not the owner and, in that way, one who is not the subject causing the "environmental and traffic cost" provoked by the vehicle, to which Article 1 of the VCTC refers.

Thus, with respect to the subjective incidence of the tax, it is to be concluded that there are no changes from the situation previously in force under the scope of the Municipal Tax on Vehicles, Tax on Circulation and Road Transport Tax, as is, moreover, widely recognized by legal doctrine, continuing to apply a rebuttable presumption on this matter. This understanding is, furthermore, the only one that appears adequate 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 various nature, is merely, at times, an apparent and false owner, by appearing in the vehicle register.

In this conformity, considering the elements of interpretation of the law referred to, we are led to the conclusion that the expression "being considered" has exactly the same meaning as the expression "being presumed", and should therefore be understood that Article 3, subsection 1 of the VCTC, establishes a true presumption of ownership and not any fiction, and that such presumption is therefore rebuttable. For this reason, the person registered in the vehicle register must be allowed the possibility of presenting probative elements sufficient to demonstrate that the actual owner is, in fact, a different person from the one appearing in the register.

Finally, it is necessary to consider, in the present analysis, the legal value of the vehicle register. Thus, pursuant to subsection 1 of Article 1 of Decree-Law 54/75, of 12 February, which established the Motor Vehicle Property Register, "the registration of vehicles has essentially the purpose of giving publicity to the legal situation of motor vehicles and their trailers, with a view to the security of legal transactions". Article 7 of the Land Register Code further adds that "final registration constitutes a presumption that the right exists and belongs to the person registered, in the precise terms in which the registration defines it". Motor vehicle property registration does not, therefore, have a constitutive nature, but merely a declarative one, allowing only the registration to presume the existence of the right and its ownership. Accordingly, the presumption resulting from the register may be rebutted by evidence to the contrary. And this is so precisely because, pursuant to Article 408 of the Civil Code, except for the exceptions provided for by law, the constitution or transfer of real rights over a determined thing is given by the mere effect of the contract, and its validity does not depend on registration in the register[6]. In sum, the vehicle register, in the economy of the VCTC, represents merely a rebuttable presumption of the persons liable for the tax. In the case of a contract for the purchase and sale of a motor vehicle, with the law not providing any exception for the same, the contract has real effect, the purchaser becoming its owner, independently of the register; likewise, the person registered in the register will cease to be the owner, even though he may appear, for some time or even a long time, in the register as such.

It should also be noted that the transfers effected are enforceable against the Respondent, despite the provisions of subsection 1 of Article 5 of the Land Register Code, which provides: "facts subject to registration only produce effects against third parties when registered." The notion of third parties for purposes of registration is established in subsection 4 of the same Article 5: third parties, for purposes of registration, are those who have acquired from a common author rights that are incompatible with each other, which is manifestly not the case of the TCA. Thus, the TCA is not a third party for purposes of registration.

As a consequence of the foregoing, the registered owner of a motor vehicle may provide evidence, for purposes of taxation under IUC, that he is no longer the actual owner of the vehicle in question, in particular by having proceeded to its sale. And proof of the existence of a purchase and sale contract may be made by any means, with an invoice being an accounting document suitable for this purpose, as well as for many others, in particular tax purposes. Invoices title sales, transactions or the provision of services which are presumed to be true by virtue of the presumption of truthfulness established in Article 75 of the General Tax Law. In this sense, it is not accepted that its probative force be questioned solely for the purpose of proving transfer of ownership of the vehicle, under penalty of falling into the legal absurdity of, from the same document, recognizing that the transaction existed for purposes of incidence of income tax, but did not exist for purposes of IUC. But, being a presumption, nothing prevents the demonstration of its falsity or inadequacy in face of the legal requirements established in Article 36 of the VAT Code. This is also, in this case, a rebuttable presumption, and the burden of proof lies with the TCA.

The Claimant alleges that, on the date when the taxable events occurred, it had already transferred the ownership of the vehicles to third party acquirers. To prove this it provides the second copies of invoices, in which are mentioned, among other elements, the vehicle registration number, client number, identification of the recipient, the value, a variable description – for example, "RESCISSION", "SALE OF UNLLEASED VEHICLE", "TOTAL LOSS BY INSURER", "RESIDUAL VALUE" – as well as the mention "Valid upon good collection."

The invoices provided by the Claimant benefit, as has been said, from the presumption of truthfulness contained in Article 75 of the General Tax Law, provided that they comply with the legal requirements and demonstrate the correspondence to the factual reality that the Claimant intends to demonstrate in the proceedings: the transfer of ownership of the vehicles.

However, the TCA questions the "very validity of all the alleged 2nd copies of vehicle disposal invoices, and for various reasons. In fact, with respect to all invoices identified as 2nd copies, it is absolutely relevant what was already decided in the arbitration decision of 30.07.2015, delivered in Case No. 79/2015-T CAAD, of the same Claimant, regarding the mention, contained in all invoices, of the mention "valid upon good collection" (…). That is, and in a preliminary and concise manner: if all invoices are only valid after the demonstration of their good collection, and if such proof has not been made, then all invoices are invalid for the purpose intended." (…) The invoices provided by the Claimant show in its descriptive distinct mentions. Thus, in some invoices provided, one can read in the description field the mention "SALE OF UNLLEASED VEHICLE", "TOTAL LOSS BY INSURER", "RESIDUAL VALUE", "RESCISSION", and "SALE OF GOODS ON CREDIT". That is, faced with a supposed single type of contract (i.e., purchase and sale contract of a motor vehicle), it would be expected to find the existence of a uniform descriptive, which is not the case in the instant case, given that various invoices attached to the arbitration request include different descriptives, and therefore one is necessarily led to conclude by the existence of several distinct realities."[7]

Indeed, the documents provided by the Claimant to prove the transfer of ownership raise some doubts as to the actual occurrence of the transfer that they purport to evidence. First, the descriptives do not permit concluding, without more, by the existence of underlying purchases and sales, given the diversity of situations described. Second, the indication of "valid upon good collection" deprives the invoice of the capacity to, by itself, demonstrate the actual conclusion of the sale. Of course, the scenario could be different if the Claimant had provided to the proceedings copies of the sales declarations relating to each of the vehicles in question, which certainly were issued and delivered to the respective buyers for the conclusion of the business and subsequent alteration of the ownership register. However, it did not. And, thus, this tribunal cannot consider proven the transfers of vehicles that the Claimant sought to prove by providing the invoices, but only the issuance of these. Therefore, as to the first set of situations contained in the table attached to the arbitration request, this tribunal does not consider proven the transfer of ownership that could lead to exclusion from subjective incidence by insufficiency of the documentary evidence presented.

Additionally, with respect to vehicles with registration numbers …, … and … that, in light of the dates of their respective registrations, the taxable event of the IUC in question would always have occurred before the supposed sale by the Claimant, and therefore would always have been its responsibility.

  1. As to the second set of situations:

As to the second group of assessed amounts challenged, the Claimant invokes the existence of leasing contracts in force on the dates when the taxable events of the VCTC occurred. The question that arises is therefore as follows: if, on the date of occurrence of the taxable event of IUC, a financial leasing contract whose object is the motor vehicle on which the taxation is levied is in force, for the purposes of the provisions of Article 3, subsections 1 and 2 of the VCTC, is the person liable for IUC the lessee or the leasing entity, the owner of the vehicle, in whose name the registration of the property right is made?

For these cases, the legislator instituted an explicit rule, in subsection 2 of Article 3 of the VCTC, according to which, during the term of the leasing contract, it is the lessees who are persons liable for the tax. This rule is, moreover, in line with the legal framework of financial leasing, established in Decree-Law No. 149/95, of 24 June, from which it follows that, during the term of a financial leasing contract, although the lessor continues to be the owner of the asset in question, only the lessee has exclusive enjoyment of the leased asset, using it as if he were the true owner.

Indeed, given that the lessor does not have, by legal and contractual obligation, the potential for use of the vehicle and the lessee has exclusive enjoyment of the motor vehicle, it is coherent that the lessee be responsible for payment of the tax, since he is the one who has the potential for use of the vehicle and who causes the traffic and environmental costs inherent to it.

However, it is necessary to pay attention to the provisions of Article 19 of the VCTC, which provides as follows:

"For the purposes of the provisions of Article 3 of this code, as well as Article 3, subsection 1 of the law of its approval, the entities that proceed to financial leasing, operational leasing or long-term rental of vehicles are obliged to provide to the General Direction of Taxes the data relating to the tax identification of the users of the leased vehicles."

Pursuant to the provisions of this article, the entities that proceed, in particular, to financial leasing of vehicles are obliged to provide to the TCA the tax identity of the users of the leased vehicles for the purposes of the provisions of Article 3 of the VCTC. Thus, for the lessor or finance company not to be considered liable for IUC, with reference to the vehicles covered by the respective contracts, the VCTC requires the communication provided for in Article 19. In fact, the burden of knowing whether or not a leasing contract is in force on the date of the taxable events, when it begins and when it ends, lies with the Claimant and not with the TCA. If the latter does not receive the information in a timely manner about the existence and conditions of the contract, it can only be guided by the information at its disposal, consulting the registration databases and/or the IMTT. In the present case, the Claimant did not proceed with the communication provided for in Article 19 of the VCTC – therefore, the TCA had no alternative but to issue the tax assessments in its name.

However, the Claimant presented, in the context of the present proceedings, the leasing contracts concluded with reference to several of the vehicles that are the subject of the assessed amounts challenged. Through these contracts it is possible (i) to verify that, in fact, financial leasing contracts were concluded with respect to the vehicles in question for the periods of time contained in the contracts and (ii) to know who the respective lessees are, who will be the persons liable for the VCTC. In these cases, with the existence of financial leasing contracts in force on the dates when the taxable events occurred, it will be the respective lessees, and not the lessor, who are responsible for payment of the tax.

The question will further arise: what about the communication provided for in Article 19 of the VCTC? Does its breach contend with the conclusion contained in the preceding paragraph as to the party responsible for payment of the tax? The answer is, in our view, negative. Indeed, the consequence that flows from the breach of that accessory obligation is the one we are witnessing: the TCA issues the assessment notices in the name of the owner of the vehicle, unaware that a financial leasing contract was concluded. However, this does not prevent that same owner/lessor from providing evidence of the conclusion of the contract and the period for which it was concluded and thus prevent payment of the tax. And the fact is that, in the present proceedings, the Claimant provided documentary evidence proving the existence of financial leasing contracts that were in force on the date when the taxable events relating to the vehicles in question occurred.

On this point, the Respondent comes to say that, as a result of the breach of Article 19 of the VCTC, "it was not the Respondent who gave rise to the filing of the arbitration request, but the Claimant itself" and that, "consequently, the Claimant should be condemned to pay the arbitration costs arising from the present arbitration request". This tribunal understands that the Respondent is not correct. On the one hand, the present arbitration request does not concern only the assessments in which the conclusion of financial leasing contracts whose term comprises the dates when the taxable events of the assessed tax occurred was at issue. Therefore, even if the Respondent were correct, that correctness would always be partial, and could not be applied to all cases to which the arbitration request refers. On the second hand, the logic of the Respondent does not take into account the fact that there was a prior administrative proceeding to the present arbitration proceedings within the scope of which the Respondent could have annulled the assessments in question. It is also important not to forget that the Claimant's failure is subject to regulatory offence liability in light of Article 117, combined with Article 26, subsection 4, both of the General Regulatory Offences Regime, punishable by a fine of € 300.00 to € 7,500.00 for each of the financial leasing contracts. That is the form found by the legislator to penalize those who fail to comply with the duty to inform the TCA.

Therefore, as to the IUC relating to vehicles with registration numbers …, … and …, this Tribunal considers proven the existence and validity of a financial leasing contract on the date when the taxable event of the tax occurred, and therefore responsibility for payment thereof lies with the lessee and not the lessor. A total of € 32.33 is involved in the case of the first vehicle; of € 143.19 in the second case, and of € 252.51 in the third case.

  1. As to the third set of situations raised by the Claimant, it encompasses the cases of two vehicles that are alleged to have been acquired from the importer before the date when the respective taxable event occurred.

It is verified, in fact, that, as to the vehicle with registration number …, the information contained in the Vehicle Registry Office confirms that the Claimant became its owner on 31.12.2014, with the taxable event occurring on 05.11.2014, that is, before acquisition by the Claimant. As to the vehicle with registration number …, the information contained in the Vehicle Registry Office confirms that the Claimant became its owner on 14.01.2015, with the assessment being for 2014, so the respective taxable event also occurred before the Claimant became its owner.

This means, therefore, that the Claimant is correct as to not being liable for the IUC in question and that, therefore the totals of € 670.37 in the case of the vehicle with registration number … and of 620.53 in the case of the vehicle with registration number … are not due.

  1. As to the last set of situations, the Claimant invokes that the vehicles were leased in financial leasing to clients of the Claimant, but that, prior to the date of expiration of IUC, and as a result of breach of contractual obligations by its clients, the Claimant was forced to terminate the financial leasing contracts in question, which were resolved early without, however, the clients having proceeded to return the assets as they were obliged. Consequently, the Claimant resorted to the mechanism provided for in Article 21 of Decree-Law No. 149/95, of 24 June, which presupposes prior cancellation of the leasing registration.

The Claimant understands, however, that despite having been given publicity to the cancellation of the leasing registration, this does not make the Claimant liable for the tax since, in practice, it continued unable to enjoy the vehicles in question after cancellation of the leasing registration.

As to this point, the Claimant is not correct. In fact, by proceeding with the registration of the cancellation of financial leasing, the Claimant cancels also the reason why the IUC was not its responsibility, once again becoming liable for the tax. The fact of not having the vehicle with itself is imputable to the respective client/former lessee, from whom the Claimant may demand, in particular, the charges it liquidated on account of a vehicle from which it could not enjoy during the period to which they relate. The vicissitudes of that relationship are not, however, imputable to the TCA.

On the other hand, it was found that, in all such cases, the financial leasing contracts would have, in accordance with their respective terms of validity, already terminated on the date of occurrence of the taxable event, so the tax would have again become responsibility of the Claimant. Invited to make a statement on these situations, the Claimant sent a table with information about what happened to the vehicles in question after the contract entered into default, but has not succeeded in proving any fact from which it follows that it is not liable for IUC with respect to those same vehicles. In fact, in most of the situations, it even ends up acknowledging that it is the owner thereof.

Thus, as to these situations, the Claimant is not correct.

VII. DECISION

In accordance with what is set out above, it is decided:

(i) To find the arbitration request partially upheld as to the following situations, which total the amount of € 1,718.93:

  • vehicle with registration number …, tax of € 660.45, interest in the amount of € 9.92, total of € 670.37;

  • vehicle with registration number …, tax of € 612.67, interest in the amount of € 7.86, total of € 620.53;

  • vehicle with registration number …, tax of € 32.00, interest in the amount of € 0.33, total of € 32.33;

  • vehicle with registration number …, tax of 141.47, interest in the amount of € 1.71, total of € 143.19;

  • vehicle with registration number …, tax of € 249.48, interest in the amount of € 3.03, total of € 252.51.

Value: in accordance with the provisions of Articles 97-A, subsection 1, paragraph (a), of the Tax Procedure and Process Code and Article 3, subsection 2 of the Regulation on Costs in Tax Arbitration Proceedings, the amount of € 11,975.69 is fixed as the value of the proceedings.

Costs: pursuant to the provisions of Article 22, subsection 4 of the LFTA and in accordance with Table I attached to the Regulation on Costs in Tax Arbitration Proceedings, the amount of costs is fixed at € 918.00, to be paid by the Claimant and by the Respondent in the proportion, respectively, of 85.65% and 14.35%, pursuant to Articles 12, subsection 2, and 22, subsection 4, both of the LFTA, and Article 4, subsection 4, of the cited Regulation.

It is recorded and notification is given.

Lisbon, 5 July 2016

The Arbitrator,

Raquel Franco

[1] Cfr. F. Rodrigues Pardal, "The use of presumptions in tax law", in Science and Tax Technique, No. 325-327, page 20 et seq..

[2] Cfr. Article 3 of the Regulation of Tax on Vehicles, attached to the aforementioned Decree-Law 599/72, of 30 December.

[3] Cfr. General Tax Law – Annotated and Commented, 4th ed., 2012, Written Meeting Publisher, p. 651.

[4] Cfr. Jorge Lopes de Sousa (2011), Tax Procedure and Process Code Annotated and Commented. Volume I. 6th Edition. Áreas Publisher: Lisbon, pp. 589 et seq..

[5] Cfr. Op. Cit., pp. 590 et seq..

[6] Cf. inter alia, the following Judgments of the Supreme Court of Justice: of 31.05.1966, Proc. No. 060727 (Reporter: Counsellor Lopes Cardoso); of 05.05.2005 (Reporter: Counsellor Araújo Barros) and of 14.11.2013, in Proc. No. 74/07.3TCGMR.G1.S1 (Reporter: Counsellor Serra Baptista).

[7] Cfr. the Response of the Respondent, arts. 128 et seq.

Frequently Asked Questions

Automatically Created

Who is liable for IUC tax on vehicles under a financial leasing agreement in Portugal?
Under Article 3(2) of the Vehicle Circulation Tax Code (VCTC), financial lessees are deemed equivalent to owners for IUC purposes. This means that during an active financial leasing contract, the lessee who has possession and use of the vehicle is considered the person liable for IUC tax. However, Portuguese tax authorities often assess the lessor (financial institution) based on vehicle registration records under Article 3(1) VCTC, which creates a rebuttable presumption that the registered owner is liable. The key dispute in arbitration cases involves whether this presumption can be overcome by proving the lessee has actual possession and exclusive use of the vehicle, particularly given the environmental equivalence principle underlying IUC taxation.
Can a financial institution challenge IUC tax assessments on vehicles already sold or transferred to lessees?
Yes, financial institutions can challenge IUC assessments through the CAAD (Centro de Arbitragem Administrativa) arbitration system. In this case, the claimant successfully initiated arbitration to contest 72 IUC assessments on vehicles already sold or under active leasing contracts. The challenge is based on Article 3 VCTC's subjective incidence rules, arguing that the registration-based presumption should yield to actual ownership transfers or lessee liability under financial leasing arrangements. Financial institutions typically argue they lack legitimacy to update vehicle registration records, and therefore shouldn't bear tax liability when vehicles have been transferred, sold, or are exclusively possessed by lessees who are deemed equivalent to owners under Article 3(2) VCTC.
What are the legal presumptions regarding vehicle ownership for IUC subjective incidence purposes?
Article 3(1) of the VCTC establishes a legal presumption that the owner liable for IUC is the person in whose name the vehicle is registered. However, the phrase 'being considered as' ('sendo como tal considerados') creates interpretive debate about whether this is an absolute or rebuttable presumption. Financial institutions argue this presumption can be rebutted through evidence of actual sale, transfer, or assignment of possession rights to lessees. Article 3(2) VCTC creates a specific statutory equivalence, deeming financial lessees, reservation-of-ownership buyers, and purchase option holders as equivalent to owners. Additionally, Article 18(1)(a) VCTC establishes that importers are liable for IUC when vehicles aren't registered within legal deadlines, creating another exception to the general registration-based presumption.
How does the CAAD arbitral tribunal process work for disputing IUC tax liquidations?
The CAAD arbitration process for IUC disputes begins with filing a request for constitution of an arbitral tribunal under Decree-Law 10/2011 (Legal Framework for Tax Arbitration). After acceptance by CAAD's President, the Tax and Customs Authority is automatically notified. The Deontological Council designates an arbitrator, and parties have an opportunity to refuse the appointment. Once constituted (typically within 2-3 months), the tribunal examines whether IUC assessments comply with subjective incidence requirements under the VCTC. The arbitrator analyzes arguments regarding vehicle ownership, registration presumptions, financial leasing equivalence, and actual possession. Taxpayers can seek declaration of illegality of assessments, refunds of taxes paid, plus compensatory interest already incurred and indemnity interest for amounts unduly paid.
Are compensatory and indemnity interest recoverable when IUC tax assessments are declared illegal?
Yes, both compensatory and indemnity interest are recoverable when IUC assessments are declared illegal. Compensatory interest refers to amounts already charged and paid by the taxpayer on the allegedly illegal assessment (in this case €148.94). Indemnity interest is awarded under Article 43 of the General Tax Law (LGT) to compensate taxpayers for financial loss resulting from unduly paid taxes. When an arbitral tribunal declares IUC assessments illegal, it typically orders refund of the principal tax amount plus any compensatory interest paid, and additionally determines that the Tax Authority must pay indemnity interest calculated from the date of undue payment until actual reimbursement, compensating the taxpayer for loss of use of those funds during the period the State retained them unlawfully.