Process: 637/2014-T

Date: June 30, 2015

Tax Type: Valor do pedido:

Source: Original CAAD Decision

Summary

Process 637/2014-T concerns the subjective incidence of IUC (Imposto Único de Circulação) and whether vehicle registration creates a rebuttable presumption of ownership for tax purposes. The claimant, A... Lda, challenged 352 IUC assessment acts for tax years 2009-2012, arguing that although the vehicles were registered in its name, it had already sold them before the tax events occurred. The central legal issue involved interpreting Article 3(1) of the IUC Code, which states that the owner is the taxable person and considers as owner whoever is registered in the Vehicle Registration. The claimant argued this provision establishes a rebuttable presumption (presunção ilidível) that can be overcome by presenting invoices proving vehicle sales. The Tax Authority countered with three main arguments: first, that Article 3(1) is not a presumption but an express legal determination; second, that interpreting it as rebuttable would violate principles of legal certainty, efficiency, and proportionality; and third, that even if considered a presumption, the invoices presented lacked sufficient evidentiary force to rebut the registration presumption. The Tax Authority also raised procedural objections regarding illegal cumulation of claims, arguing the 352 assessments involved different vehicles, sales dates, purchasers, and amounts. The arbitral tribunal addressed the cumulation issue by clarifying that 'same factual circumstances' under RJAT Article 3(1) should not be restrictively interpreted as 'identical facts' but rather as similar factual profiles where the legal assessment is essentially identical across claims. The excerpt does not include the tribunal's final substantive ruling on whether the registration presumption was successfully rebutted.

Full Decision

Proc. 637/2014-T

Arbitral Decision

Claimant: A…, Lda.

Respondent: AT - Tax and Customs Authority

I - STATEMENT OF FACTS

1. Claim

A…, Lda, a legal entity no. …, with headquarters at …, Avenue …, lot…, 2nd floor, in Lisbon, hereinafter referred to as the Claimant, filed, on 28-08-2014, under the provisions of section a) of paragraph 1 of article 2 and article 10 of Decree-Law no. 10/2011, of 20 January, which approves the Legal Framework for Tax Arbitration (RJAT), a request for arbitral decision, against the AT - Tax and Customs Authority, with a view to

  • Annulment of 352 Single Vehicle Tax assessment acts relating to the years 2009, 2010, 2011 and 2012.

The Claimant alleges, in essence, the following:

  • The contested assessment acts are illegal due to errors in the assumptions relating to the tax event;

  • Such error is embodied in the contested assessment acts being based on the assumption that the Claimant was the owner of the vehicles in question on the date of the tax events when, in reality, the Claimant was not the owner of the vehicles in question on those dates. And was not the owner of said vehicles because it had previously proceeded to their alienation.

  • In accordance with article 3, paragraph 1 of the Single Vehicle Tax Code, the passive subject of the tax is the owner of the vehicle. And although the same provision states that the person registered as owner in the Vehicle Registration is considered as the owner of the vehicle, this rule should be interpreted as a presumption, regarding tax incidence, which is rebuttable.

  • By presenting documents (invoices) proving the sale of the vehicles, the Claimant rebuts the presumption of ownership that rests on it and, therefore, cannot be considered the passive subject of the tax assessed.

2. Response of the Respondent

In response to the request for arbitral decision presented by the Claimant, the Respondent AT - Tax and Customs Authority:

2.1. Alleges an irregularity of the claim, as the Claimant fails to identify the tax acts whose illegality it wishes to challenge;

2.2. Raises an exception regarding the illegality of the cumulation of claims, as there are disparate factual situations, embodied in different vehicles, with different sales dates, different procedures, sold to different entities and for wholly disparate amounts;

2.3. By way of contestation, alleges:

  • The tax legislator, when establishing in article 3, paragraph 1 who are the passive subjects of the Single Vehicle Tax, expressly and intentionally established that these are the owners (or, in the situations provided for in paragraph 2, the persons therein listed), being considered as such the persons in whose names the same [vehicles] are registered. This rule should not be interpreted, therefore, as a presumption.

  • The interpretation that the Claimant makes of article 3, to the effect that it contains a rebuttable presumption, violates the principle of trust and legal certainty, the principle of efficiency of the tax system and the principle of proportionality.

  • The tax legislator intentionally and expressly wished that persons in whose names (the vehicles) are registered be considered as owners, lessees, purchasers with reservation of title, or holders of the right of purchase option in long-term leasing.

  • But even if the provision in question is interpreted as containing a presumption, the Claimant fails to produce evidence that the facts resulting from the registration presumption are not true, because the documents presented as evidence - invoices relating to the sale of the vehicles - do not have sufficient evidentiary force to rebut the registration presumption.

3. Subsequent Procedure

By proposal and with the agreement of both parties, the Tribunal decided to dispense with the holding of the meeting provided for in article 18 of the RJAT.

4. Pleadings

The Claimant did not file written pleadings.

The Respondent filed written pleadings, in which it reiterated all the arguments raised in its response.

II – CASE MANAGEMENT

The singular Arbitral Tribunal was properly constituted on 30-10-2014, with the arbitrator being appointed by the Deontological Council of the Administrative Arbitration Center, having complied with the respective legal and regulatory formalities (articles 11, paragraph 1, sections a) and b) of the RJAT and 6 and 7 of the Code of Ethics of the Administrative Arbitration Center), and is competent ratione materiae, in accordance with article 2 of the RJAT.

The parties have legal personality and capacity, are legitimate and are properly represented.

No procedural defects were identified.

III – ISSUES TO BE DECIDED

The following are the issues to be decided by the Tribunal:

1. Preliminary Issue

  • Merits of the exception regarding the illegality of the cumulation of claims

2. Substantive Issues

2.1. The establishment, in article 3, paragraph 1 of the Single Vehicle Tax Code, of a presumption and its rebuttal

2.2. The rebuttal, in the present case, by the Claimant, of the presumption of ownership of the vehicles subject to tax

IV – FACTS ESTABLISHED

The following are the facts established as relevant for the decision:

1st: The Claimant was notified of the Single Vehicle Tax assessments identified in the document identified as "attached table", attached to the initial petition;

2nd The Single Vehicle Tax assessments referred to vehicles whose ownership was registered in the name of the Claimant on the date of the tax events;

4th The Claimant filed a gracious claim against said tax assessments;

There are no unproven facts with relevance to the decision in the case.

V - REASONING

1. Preliminary Issue - Merits of the Exception Regarding the Illegality of the Cumulation of Claims

The Respondent alleges that there is no identity of factual circumstances, as we are dealing with different vehicles, with different sales dates, different procedures, sold to different entities and for wholly disparate amounts.

Article 3, paragraph 1 of the RJAT states on this matter that "the cumulation of claims, even if relating to different acts, and the joinder of claimants are admissible when the merits of the claims depend essentially on the assessment of the same factual circumstances and on the interpretation and application of the same legal principles or rules."

Let us first examine what should not be understood by "same factual circumstances."

By "same factual circumstances" should not, in our view, be understood restrictively and precisely as "the same facts." According to this restrictive interpretation, there could be cumulation of claims when the same fact – the sale of vehicle X – was at issue in relation to several tax assessments relating to several years. We believe that this restrictive interpretation of the rule in question should not be applied because the expression "factual circumstances" is not equivalent to "facts." We believe that what the legislator intends to say by "same factual circumstances" is the "same factual profile that encompasses various different facts" (e.g., various sales).

Various sales of vehicles are various facts, in relation to which one could – or could not – consider there to be identity of the "factual circumstances."

On the other hand, what should be relevant to the issue of cumulation of claims are not any characteristics of the facts at issue in the claim, but the characteristics that have connection with the cause of action. Thus, we believe that there will be identity of factual circumstances when the factual circumstances are so similar that the factual basis is identical for all claims, such that the judgment that the judge must make on the matter of fact is identical in all claims.

We believe this to be the interpretation most consistent not only with the purpose of the provision – the economy of means and uniformity of decisions (Supreme Administrative Court, judgment of 16-11-2011, case no. 0608/11), a purpose that will only be realized when the judge is faced with different claims for which the same judgments apply both on the matter of fact and on the matter of law – but also with the wording of the rule – "the cumulation of claims, even if relating to different acts, and (…) are admissible when the merits of the claims depend essentially on the assessment of the same factual circumstances" – which excludes the need for a total and exact coincidence of the factual framework under examination.

In light of this interpretation, the fact that we are, in this case, dealing with different vehicles, with different sales dates, different procedures, sold to different entities and for wholly disparate amounts, does not mean that we are not dealing with the same factual circumstances, because the characteristics of the facts mentioned – vehicles, dates, purchasers, amounts – have no relevance to the factual basis, nor do they have any relevance to the "assessment" that falls to the judge to make.

We therefore consider that the cumulation of claims is lawful, under article 3, paragraph 1 of the RJAT.

2. On the Merits

2.1. The Establishment, in Article 3, Paragraph 1 of the Single Vehicle Tax Code, of a Presumption and Its Rebuttal

This issue has already been the subject of numerous arbitral decisions. To the effect that article 3, paragraph 1 of the Single Vehicle Tax Code establishes a presumption, the arbitral decisions rendered in cases no. 230/2014-T, no. 414/2014-T, no. 350/2014-T, 336/2014-T, no. 333/2014-T, no. 220/2014-T, no. 150/2014-T and 63/2014-T, among others, pronounced themselves. In the same sense, the Central Administrative Court of the South pronounced itself, in a judgment of 19-3-2015 (Case no. 08300/14).

In the last cited arbitral decision, whose reasoning we adopt, it is stated with regard to this issue:

"Article 11, paragraph 2 of the General Tax Law constitutes the starting point on this matter, stating that 'whenever terms specific to other branches of law are used in tax rules, they shall be interpreted in the same sense as they have there, unless otherwise provided directly by law.'

It is therefore necessary to ascertain whether it follows unequivocally from the provisions of article 3 of the Single Vehicle Tax Code that the legislator intended to establish there a concept of 'vehicle owner' specific to tax law, which encompasses persons who are not holders of such a right according to the rules of civil law.

Now, can the 'legislative freedom' that the legislator enjoys, which the Respondent refers to in paragraph 17 of its Response, go so far as to determine taxatively who is the owner of a vehicle, even if purely for tax purposes, radically dissociating this tax qualification from the qualification of civil law?

And, as a consequence of the previous question, another question arises: why would the legislator not simply have stipulated - as it would obtain exactly the same useful effect but eliminating any margin of legal insecurity or uncertainty - that 'the passive subjects of the tax are the persons in whose names the vehicles are registered, whether as owners, as financial lessees, as purchasers with reservation of title, or as other holders of purchase option rights by virtue of the leasing contract'? A question all the more pertinent, and a hypothesis all the more attractive, given that the legislator was aware of the negative experience, which keeps repeating itself, of the previous Vehicle Tax?

The answer seems evident: because, in this latter hypothesis, which the legislator did not follow, the subjective incidence of the tax could become completely disconnected from any economic substance and would depend exclusively on a legal appearance.

Now, if the legislator had, as the Respondent claims, established in law a non-presumptive qualification of who is the owner of vehicles (a legal fiction), it would thereby be establishing, through a different wording, a rule in all respects identical to the hypothetical rule mentioned. It would be making the subjective incidence of the tax rest on a legal fiction, in total disconnection from any economic substance as the basis of subjective incidence.

It is true that the efficiency of taxation determines the need for the Single Vehicle Tax to rest on vehicle registration and, therefore, requires that the tax administration be able to rely on the same vehicle registration.

But the principle of efficiency of taxation cannot absolutely override the principle of contributory capacity, to the point of eliminating it as a criterion for subjective incidence. And it is also true that the tax legislator would have at its disposal other means of holding the vehicle seller responsible, who fails in his duty to report the sale of the vehicle, for the payment of the tax, without being as a direct taxpayer (configuring, e.g., a case of tax liability for a third party's debt).

And, if such is the case, it must also be concluded that article 3, paragraph 1 can only establish a presumption of vehicle ownership, even with all the negative consequences that this conclusion will certainly entail in terms of the efficiency of tax administration."

We thus follow the cited decision, concluding that article 3, paragraph 1 of the Single Vehicle Tax Code contains a "juris tantum" presumption, which is rebuttable.

2.2. The Rebuttal, in the Present Case, by the Claimant, of the Presumption of Ownership of the Vehicles Subject to Tax

With regard to the question of the evidence necessary to rebut the presumption of ownership, it must first be noted that the presumption arising from vehicle registration must be brought into the equation.

The ownership of motor vehicles is subject to mandatory registration. And in accordance with article 7 of the Property Registration Code, applicable to Vehicle Registration by virtue of article 29 of the Vehicle Registration Code,[1] the registration of the ownership of a vehicle gives rise to a presumption that the holder of the right of ownership is the entity in whose favor the same right is registered.

If it is true that the presumption of article 3, paragraph 1 of the Single Vehicle Tax Code is established with a view to the purposes of taxation, the presumption established by the registration law is aimed at legal certainty in general, and there is no reason to believe that this presumption does not apply in the context of tax legal relations.

Therefore, given the existence of a registration presumption of ownership in favor of the Claimant, the latter, in order to set aside its qualification as owner, must set aside the presumption arising from vehicle registration.

As stated in the judgment of the Lisbon Court of Appeal of 24-3-2011 (case no. 195/09.8TBPTS.L1-2), "property registration pursues, at one and the same time, private law purposes and characteristically public law purposes. It pursues private law purposes, given that it guarantees security in the domain of private law rights, specifically in the area of rights with real efficacy – security of legal commerce (…), globally considered – facilitates the traffic and exchange of goods, and ensures the performance of the social function of real rights; it pursues purposes of public interest, as an instrument of legal certainty, the protection of third parties and the security of legal commerce, and as a guarantee of the updating of the register in relation to the fact publicized."

An identical question to this was decided by the Central Administrative Court in the recently cited judgment. It states there:

"In these terms, it should be noted that we are faced with mere private and unilateral documents, whose issuance does not suppose the intervention of the counterparty in the alleged agreement, thus having a reduced value for proving the existence of a synallagmatic contract, as is the purchase and sale."

And further on:

"And recall that none of the accounting documents in question proves, even, payment of the price by the buyer. Both the invoice and the debit note constitute accounting documents prepared within the company and intended for external use. The invoice should be viewed as the accounting document through which the seller sends to the buyer the general conditions of the transaction carried out. In turn, the debit note consists of the document in which the issuer communicates to the recipient that the latter owes it a certain monetary amount. Both documents appear in the phase of liquidation of the amount to be paid by the buyer, thus not providing evidence of payment of the price by the same buyer and, as a consequence, proof that the purchase and sale was concluded."

The Court concludes:

"Thus, it must be concluded that the respondent company did not even produce evidence relating to the alleged sale of the vehicles, and would have to prove that it was not the owner of the vehicles on the date to which the assessments refer, which would imply, in the present case, proving who was the current owner."

The following aspect of the doctrine expounded should be emphasized: what the Claimant must prove, in order to set aside its qualification as owner, is not that it alienated a vehicle, at a given moment, but rather that it was not the owner of the vehicle at the moment of the tax events, which are distinct juridical facts. We are in the domain of proof by full presumption, which cannot be set aside by mere judgments of probability.

To this argument, with which we fully agree and which we adopt, the following is merely added. Given that it is unanimously accepted and even matters of common sense that an invoice or any private and unilateral document is not sufficient to prove the conclusion of a purchase and sale contract, let alone ownership or non-ownership, it is further added that the rebuttal of the presumption of the truth of the register is particularly demanding.

On the subject, Mouteira Guerreiro says (Mouteira Guerreiro, J. A., Notions of Registration Law, 2nd ed. Coimbra, 1994, p. 70): "The protection afforded by registration is expressed in our system, in a rebuttable presumption. But, we cannot forget, it is a legal presumption. (…) What the register reveals cannot be disputed, even in court, without simultaneously requesting its cancellation."

The same author (Ibidem, p. 71) adds: "It follows from the principle of the presumption of truth or correctness the rule provided for in article 8 of the Constitution of the Portuguese Republic. If the definitive registration presumes that the right exists and belongs to the registered holder 'in the precise terms in which the register defines it,' it would make no sense to judicially challenge this publicized truth without simultaneously challenging the register itself. Therefore, whoever wishes to contest the veracity of the facts recorded in the register will also have to request its cancellation. If he does not do so, the action will not proceed after the pleadings, because there would be a risk of reaching an effective contradiction: on one hand, having a judgment declaring certain facts legally irrelevant or untruthful and, on the other, having a register presuming erga omnes the truthfulness and validity of those same facts."

The understanding expounded is sanctioned by the jurisprudence of the superior courts. See the judgments previously cited, in which it is affirmed that, in order to set aside the presumption of ownership resulting from Vehicle Registration, it is necessary to prove that the holder of the registered right belongs to another, but such is not sufficient, being still necessary to simultaneously request its cancellation (cf. judgment of the Coimbra Court of Appeal of 22-01-2013, case no. 3654/03.2TBLRA.C1; judgment of the Coimbra Court of Appeal of 3-06-2008, case no. 245-B/2002.C1).

VI. DECISION

For the reasons set out, this Tribunal decides to uphold a complete dismissal of the present arbitral claim.

Economic Utility Value of the Case: The economic utility value of the case is fixed at 15,838.33 euros.

Costs: Pursuant to article 22, paragraph 4, of the RJAT, the amount of costs is fixed at 918.00 euros, in accordance with Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, to be borne by the Claimant.

Let this arbitral decision be registered and notified to the parties.

Lisbon, Administrative Arbitration Center, 30 June 2015

The Arbitrator

(Nina Aguiar)

[1] DL no. 54/75, of 12 February.

Frequently Asked Questions

Automatically Created

What is the legal presumption of vehicle ownership for IUC (Imposto Único de Circulação) purposes under Article 3(1) of the IUC Code?
Under Article 3(1) of the IUC Code, the taxable person (passive subject) is the vehicle owner, and the law considers as owner the person in whose name the vehicle is registered in the Vehicle Registration (Registo Automóvel). The central dispute in Process 637/2014-T was whether this provision establishes merely a rebuttable presumption or a conclusive legal determination. The claimant argued it constitutes a presunção ilidível (rebuttable presumption), while the Tax Authority maintained it is an express legal rule that definitively identifies the taxpayer based on registration records, not a presumption subject to rebuttal.
Can a taxpayer rebut the presumption that the registered owner is the IUC taxable person by presenting proof of vehicle sale?
The claimant in Process 637/2014-T argued that a taxpayer can rebut the presumption of ownership by presenting documentary proof of vehicle sale, specifically invoices demonstrating alienation before the tax event date. However, the Tax Authority contested this position on two grounds: first, that Article 3(1) does not establish a presumption at all but rather an express legal determination; and second, that even if interpreted as a presumption, the invoices presented lack sufficient evidentiary force to overcome the registration presumption. The tribunal's final ruling on this rebuttal question is not included in the provided excerpt of the decision.
How did the CAAD rule on the annulment of 352 IUC tax assessments in Process 637/2014-T?
The provided excerpt of Process 637/2014-T does not include the CAAD's final substantive ruling on the annulment request. The document shows that the singular arbitral tribunal was properly constituted on October 30, 2014, addressed procedural issues including the Tax Authority's exception regarding illegal cumulation of claims, and identified the key substantive issues to be decided: whether Article 3(1) establishes a rebuttable presumption and whether the claimant successfully rebutted it. The tribunal began analyzing the cumulation issue, interpreting 'same factual circumstances' under RJAT Article 3(1) as referring to similar factual profiles rather than identical facts, but the excerpt cuts off before the final decision on the 352 IUC assessments.
What documents are required to prove vehicle alienation and challenge IUC subjective incidence before a tax arbitration tribunal?
In Process 637/2014-T, the claimant presented invoices (faturas) as documentary proof of vehicle sales to challenge the IUC subjective incidence. However, the Tax Authority argued these invoices lacked sufficient evidentiary force to rebut the registration presumption. The dispute highlights that mere commercial invoices may be insufficient to overcome the legal presumption tied to vehicle registration records. The case suggests that proving vehicle alienation for IUC purposes requires addressing the fundamental question of whether the registration-based ownership rule in Article 3(1) is rebuttable at all, and if so, what level and type of evidence is necessary. The tribunal's final determination on documentary requirements is not included in the provided excerpt.
Is the vehicle registration record conclusive for determining the IUC taxpayer or does it constitute a rebuttable presumption (presunção ilidível)?
This is the central legal question in Process 637/2014-T. The claimant argued that Article 3(1) of the IUC Code establishes a presunção ilidível (rebuttable presumption), meaning the registration record creates a presumption of ownership that can be overcome with contrary evidence. The Tax Authority argued the provision is not a presumption but an express legal determination that conclusively identifies the registered person as the owner for IUC purposes, regardless of actual ownership. The Tax Authority further contended that interpreting Article 3(1) as rebuttable would violate principles of legal certainty (segurança jurídica), tax system efficiency, and proportionality. The tribunal's final ruling on whether the registration creates a conclusive determination or rebuttable presumption is not included in the provided excerpt of the decision.