Summary
Full Decision
ARBITRAL DECISION
I – REPORT
A…, SA, taxpayer no. …, with headquarters at … Street, LISBON, hereinafter referred to as the Claimant, filed a request for the establishment of an arbitral tribunal in tax matters and a request for an arbitral pronouncement, pursuant to the provisions of articles 2 no. 1 a) and 10 no. 1 a), both of Decree-Law no. 10/2011, of 20 January (Legal Regime for Arbitration in Tax Matters, abbreviated as RJAT), requesting the declaration of illegality of the assessments of four assessment acts of the Single Circulation Tax (IUC), relating to the years 2013 and 2014, identified in the Table annexed to this decision, which is given as fully reproduced and of which it forms part, made by the Tax and Customs Authority, in the total amount of € 176.77, as well as the payment of compensatory interest on the amounts paid.
The request for establishment of the arbitral tribunal was accepted by the President of CAAD and automatically notified to the Tax and Customs Authority on 01-09-2014.
Pursuant to the provisions of articles 5 no. 2 al. a), 6 no. 1 and 11 no. 1 al. a) of the RJAT, the Deontological Council appointed the undersigned as arbitrator of the sole arbitral tribunal, who communicated acceptance of the assignment within the applicable deadline.
On 15-10-2014, the parties were duly notified of this appointment and did not express any intention to refuse the arbitrator's appointment, pursuant to the combined provisions of article 11 no. 1 paragraphs a) and b) of the RJAT and articles 6 and 7 of the Code of Ethics.
Thus, in accordance with the provision in paragraph c) of article 11 no. 1 of the RJAT, the sole arbitral tribunal was established on 30-10-2014.
On 25-03-2015, the meeting provided for in article 18 of the RJAT was held and the witnesses indicated by the Claimant were examined.
The parties submitted written arguments.
The arbitral tribunal was regularly established and is materially competent, in light of the provisions of articles 2 no. 1 paragraph a) and 30 no. 1 of Decree-Law no. 10/2011, of 20 January.
The parties possess legal personality and capacity, are legitimate parties and are represented (arts. 4 and 10 no. 2 of the same statute and art. 1 of Ordinance no. 112-A/2011, of 22 March).
The proceedings are not affected by nullities and no exceptions were raised.
The arguments supporting the Claimant's request for an arbitral pronouncement are, in summary, as follows:
Arguments of the Claimant
11.1 All of these acts of additional tax assessment are based on the same facts and likewise on the same legal grounds.
11.2 All presuppose the same legal-tax understanding: that, pending the respective financial leasing contracts, the Claimant, as lessor of the vehicles in question, is responsible for payment of the IUC, rather than the corresponding lessee.
11.3 Considering this identity of tax facts, factual and legal grounds and also of the tribunal competent to decide, and further taking into account the high number of vehicles and the volume of documentation necessary to prove the facts alleged below, the Claimant chose to, pursuant to articles 3 of the RJAT and 104 of the Code of Procedural and Tax Procedure, aggregate the additional assessments whose legality is contested in a single request for an arbitral pronouncement.
11.4 Requesting the Arbitral Tribunal that, pursuant to the cited provisions and taking into account the principle of procedural economy, it issue, within the scope of the present arbitral proceedings, a judgment on the legality of the 4 assessment acts under consideration here, similarly to what has already occurred in arbitral proceedings nos. 26/2013-T, 27/2013-T, 170/2013-T, 286/2013-T, 55/2014-T, 45/2014-T, 67/2014-T, 129/2014-T, 136/2014-T, among many others.
11.5 As a preliminary matter, the Claimant alleges its procedural legitimacy to file the request for an arbitral pronouncement relating to the tax assessment of the motor vehicle with license plate …, notified to the company B…, SA, branch in Portugal, whose set of assets was incorporated by the Claimant, as evidenced by the supporting documents it attaches.
11.6 A substantial part of the Claimant's activity involves the conclusion – among others – of financial leasing contracts intended for the acquisition, by companies and private individuals, of motor vehicles.
11.7 These contracts follow, in general, a common outline, typical of this type of financing: the Claimant, after being contacted by the customer – who at this stage has already chosen the type of vehicle they wish to acquire, its characteristics (make, model, accessories, etc.) and even its price – acquires the vehicle from the supplier indicated by the customer, and proceeds next to deliver it to the customer who assumes the quality of lessee.
11.8 During the period stipulated in the contract, this lessee maintains temporary enjoyment of the vehicle – which remains the property of the Claimant – through remuneration to be paid to the Claimant in the form of rents; being able to acquire the vehicle at the end of the contract through the payment of a residual value.
11.9 A key point of this type of contracts lies in the fact that, under no circumstance, the enjoyment of the acquired automobile belongs to the Claimant: the vehicle subject to the contract remains, at all times, during the validity of the contract, in the exclusive enjoyment of the customer/lessee.
11.10 The motor vehicles identified in the list attached as Annex A were given on financial lease, by the Claimant, to the customers also identified in column M) who subsequently exercised the purchase option.
11.11 During the contract period, the legal ownership belonged to the Claimant but the respective usufruct and use were exclusively of the lessee.
11.12 The Claimant was notified to proceed with payment of the IUC to which the additional assessment acts identified in the attached table as Annex A relate.
11.13 That is, the Tax and Customs Authority came to require payment of the IUC relating to the motor vehicles in question that were no longer the property of the Claimant at the time the tax should have been paid.
11.14 That is, on the dates to which the tax facts that originated the IUC assessments refer, the Claimant was no longer the owner of the vehicles.
11.15 Nevertheless, the Claimant paid, which is why it requests the respective refund.
11.16 As a subsidiary argument, even if in the year or month to which the IUC in question relates, the transmission was not yet duly registered with the Motor Vehicle Registry Office – which is not admitted except for purposes of discussion – the Claimant could not be considered a passive subject of the IUC because such vehicles are subject to financial leasing contracts.
11.17 Indeed, as the arbitral case law has highlighted, during the term of a financial leasing contract, the passive subject of the IUC is, pursuant to article 3 of the IUC Code, the lessee; all the more so, the responsibility for payment of the tax shall fall to the new owner.
In its written arguments, the Claimant contests the alleged lack of proof by insufficiency of the invoices attached, invoking the presumption of truthfulness from which they benefit, pursuant to article 75 of the General Tax Law. It further clarifies that the testimonial evidence produced made it possible to demonstrate that there is no incongruity given that the different references result from different realities (only the residual value is collected or, in the second case, anticipated rents and residual value). As for the fact that one of the invoices is presented without a header, this is due to it being a second copy of an invoice originally issued by C….
Response of the Defendant
12.1 In its Response, by way of exception, the Defendant alleges that, with respect to the assessment notified to the commercial company B…, SA, Branch in Portugal, the Claimant failed to minimally demonstrate the said incorporation by the Claimant of the assets and liabilities.
12.2 Having failed to do so, we are faced with a partial lack of legitimacy, which constitutes a dilatory exception that gives rise to the dismissal of the action.
12.3 As to the lack of reasoning of the additional assessment acts now impugned, according to settled doctrine and case law, it is not possible to allege the lack of reasoning of the act when, in the specific case, the contextual motivation allowed its recipient to know the factual and legal reasons that led the Defendant to make the decision in question, and has, with full clarity and extent, impugned the grounds of the decision.
12.4 As to the value of the motor vehicle registry in determining the passive subject of IUC, the Tax Authority understands that the arguments of the Claimant: a) constitute a distorted reading of the letter of the law; b) do not take into account the systematic element, violating the unity of the regime established throughout the IUC and, more broadly throughout the entire legal-fiscal system; and, finally, c) also derive from an interpretation that ignores the ratio of the regime established in no. 1 of article 3 of the IUC Code.
12.5 The tax legislator in establishing in art. 3 no. 1 who are the passive subjects of the IUC established expressly and intentionally that these are the owners (or in the situations provided for in no. 2 the persons mentioned there), being considered as such the persons in whose name the same are registered.
12.6 The legislator did not use the expression "is presumed" as it could have done, for example, in the following terms: "the passive subjects of the tax are the owners of the vehicles, being presumed as such the natural or legal persons, of public or private law, in whose name the same are registered".
12.7 Thus, it is imperative to conclude that the legislator established expressly and intentionally that they are to be considered as such (as owners or in the situations provided for in no. 2 the persons enumerated there) the persons in whose name the same (vehicles) are registered, inasmuch as it is this interpretation that preserves the unity of the legal system.
12.8 In accordance, this understanding has already been adopted by the jurisprudence of our courts, transcribing for this purpose part of the judgment of the Administrative and Tax Court of Penafiel, handed down in Case no. 210/13.0BEPNF. (See art. 64 of the Response).
12.9 On the systematic element of interpretation, the Claimant alleges that the solution upheld by the Claimant is intolerable, and the understanding endorsed by it finding no legal support, as results not only from no. 1 of article 3 but from the provision in article 6 no. 1 when it refers to "as evidenced by the registration or registry".
12.10 Thus, the failure to update the registry will be attributable to the legal sphere of the passive subject of the IUC and not of the Portuguese State.
12.11 Even if admitting that from the point of view of the rules of civil law and land registry, the absence of registration does not affect the acquisition of the quality of owner, according to the terms established in the IUC Code, the legislator intentionally and expressly wanted that they be considered as owners, lessees, acquirers with reservation of ownership or holders of the right of purchase option in long-term rental, the persons in whose name (the vehicles) are registered.
12.12 In point III.3 of the response, the Defendant further adds that, without prejudice to the above, if accepted as valid the rebuttal of the presumption – which is only admitted for purposes of reasoning – it will always be said that the copy of the financial leasing contracts and the 3 invoices of the sale are not sufficient proof to shake the legal presumption established in article 3 of the IUC Code, according to recent case law of CAAD (proceedings nos. 63/2014-T, 150/2014-T and 220/2014-T).
12.13 As to the invoices presented, serious doubts are raised, given the discrepancies they present: "the invoice attached as Document 7 to the Initial Petition can be read in the description field the mention 'sale of the asset', (...) In the invoices attached as Documents 8 and 9 to the I.P.: appears in the description the mention 'residual value' (...) That is, faced with a supposed single contractual type (i.e., purchase and sale contract of a motor vehicle) one would expect the existence of a uniform description...(...) On the other hand, the invoice attached as Document 9 to the i.p. does not even possess an identifying element of the alleged seller. (...) There is not even a reference to the corporate name of the Claimant and its tax identification number!" (articles 133 to 140 of the Response).
12.14 Showing that the invoices do not comply with their legal standards for issuance (article 36 no. 5 of the IVA Code), it is necessary to conclude that such documents can never benefit from the presumption of truthfulness referred to in article 75 of the General Tax Law.
12.16 As to the subsidiary allegation of the Claimant that, if proof of the transfer of ownership is not made, the financial leasing contracts would remain in force, it does not proceed because at the end of the financial leasing contract period, without the lessee acquiring ownership, this does not mean that the contract remains in force.
12.17 It further adds that the argumentation put forward by the Claimant represents a violation of the principles of trust and legal certainty, the principle of efficiency of the tax system and the principle of proportionality.
12.18 Lastly, as to the payment of compensatory interest and arbitration costs, having not the Defendant taken care of updating the motor vehicle registry, the procedural costs of the present proceedings will be its responsibility since its omission gave rise to the issuance of assessments to the holder of the ownership right.
12.19 In the same sense, compensatory interest shall not be due, because, even if it is understood that the tax is not due, there is no error attributable to the service because the Tax Authority merely complied with the norm of no. 1 of article 3 of the IUC Code.
12.20 Consequently, the Claimant should be condemned to payment of the arbitration costs, in line with what was decided in a similar matter within the scope of Case no. 72/2013-T of this Arbitration Centre.
12.21 In its written arguments, the Defendant insists that non-compliance with the rules for invoice issuance removes the presumption of truthfulness thereof and that, having the Claimant not presented other evidence, proof of the transfer of the vehicles in question was not made.
All considered, it is necessary to render a final decision.
A. FACTUAL MATTERS
A.1. Facts found to be proven
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The Claimant was notified, in the years 2013 and 2014, of additional assessment acts nos. 2013…, 2014… and 2013… relating to two vehicles;
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The fourth assessment act (no. 2013…) subject to the present arbitral request was directed to the company A…, SA, with no. …, which, through transfer of the business unit of B… SA – Branch in Portugal (previously designated D…, SA – Branch in Portugal), Tax ID …, assumed ownership of the contracts previously concluded by this branch (cf. Document attached to the Proceedings in the meeting relating to article 18).
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The motor vehicles identified in the list attached as Annex A were given on financial lease, by the Claimant, to the customers also identified in column L), cf. the financial leasing contracts attached to the arbitral request as documents nos. 4 to 6.
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The Claimant proceeded with full payment of the said tax assessments.
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The Claimant issued receipt invoices relating to the sale of the vehicles....
There are no facts not proven that are relevant to the consideration of the merits of the case.
B. LAW
B1 On the exception of lack of legitimacy
In its Response, the Defendant alleges that, with respect to the assessment notified to the commercial company B…, SA, Branch in Portugal, the Claimant failed to minimally demonstrate the said incorporation by the Claimant of the assets and liabilities.
Having failed to do so, we are faced with a partial lack of legitimacy, which constitutes a dilatory exception that gives rise to the dismissal of the action.
In the meeting for the purposes of the provision of article 18, the Claimant presented a copy of the public deed – not contested by the Defendant – of capital increase of the Claimant (at the time with the name E…, SA) which proves that the portfolio of "B… SA, Branch in Portugal, was incorporated into its legal sphere.
From the evidence adduced, the manifest legitimacy of the Claimant results, which is why the exception raised does not proceed.
B2 On the merits
In view of the positions of the Parties assumed in the arguments presented, the central question is whether, on the date of occurrence of the facts generating the tax (article 3 no. 1 of the IUC Code) the owners of the vehicles are not those appearing in the registry, will they nonetheless be those who will always be considered the passive subjects of the IUC, it being therefore not considered a rebuttable presumption the ownership revealed by the registry or, stated differently, whether the norm of subjective incidence contained in article 3 no. 1 of the IUC Code establishes or does not establish a presumption.
If the presumption is admitted, it will then be necessary to assess whether the Claimant proved the transfer of ownership of the vehicles at a date prior to the one to which the assessment relates.
1. On the interpretation of article 3 no. 1 of the IUC Code, in order to determine whether it establishes or does not establish a presumption of ownership of the vehicle
As to the first question, the matter has already been extensively dealt with in Tax Arbitral Jurisprudence. See, by way of example, the various decisions of CAAD published at www.caad.org.pt, namely those handed down in proceedings nos. 14/2013, 26/2013, 27/2013, 73/2013, 170/2013, 294/2013 and 216/2014. In the present award we shall follow the understanding and conclusions of those decisions.
For the sake of synthesis and clarity of reasoning, we adhere, without reservation, to the framework set out in the arbitral decision in Case no. 216/2014-T, which we cite and to which we refer:
"The general and unanimous sense of such jurisprudence is to consider that article 3-1 of the IUC Code enshrines a rebuttable presumption of ownership based on the entries or registrations appearing in the Motor Vehicle Registry Office and/or the IMTT database on the date of the tax event.
That is: with the IUC assessed based on the registry entries or in accordance with the information in the IMTT databases, the passive subject may exonerate itself from payment by proving the non-correspondence between the reality and those entries and elements which the Tax Authority relied upon to carry out the assessments.
No reasons are apparent for reversing or altering the essential sense of this jurisprudence.
Let us then examine the question again, more closely:
Article 3 of the IUC Code (Single Circulation Tax Code) provides:
Article 3
Subjective Incidence
1 – The passive subjects of the tax are the owners of the vehicles, being considered as such the natural or legal persons, of public or private law, in whose name the same are registered.
2 – Financial lessees, acquirers with reservation of ownership, as well as other holders of purchase option rights by virtue of the leasing contract are equated to owners."
For its part, article 11 no. 1 of the General Tax Law provides that "in the determination of the sense of tax norms and in the qualification of the facts to which they apply, the general rules and principles of interpretation and application of laws are observed".
Resolving the doubts that may arise in the application of legal norms presupposes the performance of an interpretative activity.
It is therefore necessary to consider which is the best interpretation of art. 3 no. 1 of the IUC Code, in light, first of all, of the literal element, that is, that in which one seeks to detect the legislative thought that is objectified in the norm, in order to verify if it contemplates a presumption, or if it determines, definitively, that the passive subject of the tax is the owner appearing in the registry.
The question that arises is, in the case sub judice, whether the expression "considering as" used by the legislator in the IUC Code, instead of the expression "presuming", which was what appeared in the diplomas that preceded the IUC Code, will have removed the nature of presumption from the legal provision in question.
In our view and contrary to what the Tax Authority rightly argues, the answer must necessarily be in the negative, since from the analysis of our legal system it is clear that the two expressions have been used by the legislator with equivalent meaning, whether at the level of rebuttable presumptions or within the framework of irrebuttable presumptions, which is why nothing enables the conclusion sought by the Tax Authority to be drawn on a mere semantic reason.
In fact, this is the case with various legal norms that enshrine presumptions using the verb "consider", of which the following are indicated, merely by way of example:
~ in the field of civil law - no. 3 of art. 243 of the Civil Code, when it establishes that "the third party who acquires the right after the registration of the action of simulation is always considered in bad faith, when such registration has taken place";
~ also in the field of industrial property law the same applies, when art. 59 no. 1 of the Industrial Property Code provides that "(…) inventions whose patent has been applied for during the year following the date on which the inventor leaves the company are considered made during the execution of the employment contract (…)";
~ and, finally, in the field of tax law, when nos. 3 and 4 of art. 89-A of the General Tax Law provide that it is the responsibility of the taxpayer to prove that the declared income corresponds to reality and that, in the absence of such proof, it is presumed ("considered" in the letter of the Law) that the income is that which results from the table in no. 4 of the said article.
This conclusion of there being complete equivalence of meanings between the two expressions, which the legislator uses indifferently, satisfies the condition established in art. 9 no. 2 of the Civil Code, since the minimum correspondence of wording is assured for the purposes of determining legislative thought.
It is important, next, to submit the norm in question to the other elements of logical interpretation, namely, the historical element, the rational or teleological element and the systematic element.
Discussing the interpretative activity, Francesco Ferrara says that this "is the most difficult and delicate operation to which the jurist can dedicate himself, and it demands fine judgment, refined sense, fortunate intuition, much experience and perfect mastery not only of positive material, but also of the spirit of a certain legislation. (…) Interpretation must be objective, balanced, without passion, bold at times, but not revolutionary, keen, but always respectful of the law" (See Essay on the Theory of Interpretation of Laws, translation by Manuel de Andrade, (2nd ed.), Arménio Amado, Editor, Coimbra, 1963, p. 129).
As Batista Machado states "the legal provision presents itself to the jurist as a linguistic statement, as a set of words that constitute a text. To interpret evidently consists in drawing from that text a certain sense or content of thought.
The text admits multiple senses (polysemy of the text) and frequently contains ambiguous or obscure expressions. Even when apparently clear on first reading, its application to concrete cases in life often brings to light unsuspected and unforeseeable interpretation difficulties. Moreover, although apparently clear in its verbal expression and bearing only one sense, one must still account for the possibility that the verbal expression may have betrayed legislative thought – a phenomenon more frequent than it may appear at first sight" (See Introduction to Law and the Discourse of Legitimation, pp. 175/176).
"The purpose of interpretation is to determine the objective sense of the law, the vis potestas legis. (…) The law is not what the legislator wished or wished to express, but only that which he expressed in the form of law. (…) On the other hand, the legal command has an autonomous value that may not coincide with the will of the makers and drafters of the law, and may lead to unexpected and unforeseen consequences for the legislators. (…) The interpreter must seek not what the legislator wished, but what objectively appears to be wished in the law: the mens legis and not the mens legislatoris" (See Francesco Ferrara, Essay, pp. 134/135).
To understand a law "is not merely to grasp mechanically the apparent and immediate sense that results from verbal connection; it is to inquire deeply into legislative thought, descend from the verbal surface to the intimate concept that the text contains and develop it in all its possible directions" (loc. cit., p. 128).
With the aim of uncovering the true sense and scope of legal texts, the interpreter employs interpretative factors which are essentially the grammatical element (the text, or the "letter of the law") and the logical element, which, in turn, subdivides into the rational (or teleological) element, the systematic element and the historical element. (See Batista Machado, Loc. Cit., p. 181; Oliveira Ascensão, Law – Introduction and General Theory 2nd Ed., Calouste Gulbenkian Foundation, Lisbon, p. 361).
Among us, it is article 9 of the Civil Code (CC) that provides the rules and fundamental elements for the correct and adequate interpretation of norms.
The text of article 9 no. 1 of the CC begins by saying that interpretation should not be confined to the letter of the law, but should reconstruct from it the "legislative thought".
On the expression "legislative thought" Batista Machado tells us that article 9 of the CC "did not take a position in the controversy between the subjectivist doctrine and the objectivist doctrine. It is evidenced by the fact that it refers neither to the 'will of the legislator' nor to the 'will of the law', but instead points to the discovery of 'legislative thought' as the purpose of the interpretative activity (art. 9, 1st). This expression, purposefully colorless, means precisely that the legislator did not wish to commit itself" (loc. cit., p. 188).
In the same sense P. de Lima and A. Varela pronounce themselves, in annotation to article 9 of the CC (See Civil Code Annotated – vol. I, Coimbra ed., 1967, p. 16).
And on no. 3 of article 9 of the CC, Batista Machado further states: "(…) this no. 3 thus proposes to us a model of ideal legislator that established the most correct solutions (most correct, just or reasonable) and knows how to express itself in correct form. This model is clearly marked by objectivist characteristics, as it does not take the concrete legislator as its reference point (so often incorrect, hasty, unfortunate) but an abstract legislator: wise, far-seeing, rational and just" (Work and loc. cit. p. 189/190).
Right after, this distinguished Master draws attention to the fact that no. 1 of article 9 refers to three other elements of interpretation to "the unity of the legal system", the "circumstances in which the law was enacted" and the "specific conditions of the time in which it is applied" (loc. cit, p. 190).
As to the "circumstances of the time in which the law was enacted", Batista Machado further explains that this expression "represents what has traditionally been called the occasio legis: the conjunctural factors of a political, social and economic nature that determined or motivated the legislative measure in question" (loc. cit., p. 190).
With respect to the "specific conditions of the time in which it is applied". this element of interpretation "has decidedly an actualistic connotation (loc. cit., p. 190) which coincides with the opinion expressed by P. de Lima and A. Varela in annotations to article 9 of the CC.
As to the "unity of the legal system", Batista Machado considers this the most important interpretative factor: "(…) its consideration as a decisive factor would always be imposed upon us by the principle of axiological or evaluative coherence of the legal order" (loc. cit., p. 191).
It is also this author who tells us, with respect to the literal or grammatical element (text or "letter of the law") that this "is the starting point of interpretation. As such, it has from the outset a negative function: to eliminate those senses that have no support, or at least some correspondence or resonance in the words of the law.
But it also has a positive function, in the following terms: if the text admits only one sense, that is the sense of the norm – with the caveat, however, that it may be concluded on the basis of other norms that the wording of the text betrayed the thought of the legislator" (loc. cit., p. 182).
Referring to the rational or teleological element, this author says that it consists "in the reason for being of the law (ratio legis), in the end sought by the legislator in enacting the norm. The knowledge of this end, especially when accompanied by knowledge of the circumstances (political, social, economic, moral, etc.,) in which the norm was enacted or of the political-economic-social conjuncture that motivated the legislative decision (occasio legis) constitutes a subsidy of the greatest importance for determining the sense of the norm. It suffices to recall that the clarification of the ratio legis reveals to us the valuation or weighing of the various interests regulated by the norm and, therefore, the relative weight of those interests, the choice between them expressed by the solution that the norm expresses" (loc. cit., pp. 182/183).
With respect to the systematic element (context of the law and parallel provisions) which "this element comprises the consideration of the other provisions that form the complex of norms of the institute in which the norm being interpreted is integrated, that is, that regulate the same matter (context of the law), as well as the consideration of legal provisions that regulate parallel normative problems or related institutes (parallel provisions). It also comprises the systematic place that belongs to the norm being interpreted in the overall system, as well as its harmony with the spirit or intrinsic unity of the entire legal system.
This interpretative aid is based on the postulate of the intrinsic coherence of the system, namely on the fact that the norms contained in a codification follow in principle a unitary thought" (Batista Machado, loc. cit., p. 183).
"(…) In particular we must take into consideration the interconnection of the various laws of the country, because a fundamental requirement of all sound legislation is that the laws adjust to one another and do not result in a jumble of disconnected provisions" (Joseph Kohler, cited by Manuel de Andrade, in Essay, p. 27).
Descending to the case at hand and the legal and judicial framework underlying it:
Through analysis of the historical element, it is concluded that, from the entry into force of Decree-Law 59/72, of 30 December, the first to regulate this matter, until Decree-Law no. 116/94, of 3 May, the last to precede the IUC Code [cf. Law no. 22-A/2007, as amended by Law 67-A/2007 and 3-B/2010], the presumption [italics ours] was established that the passive subjects of the IUC were the persons in whose name the vehicles were registered on the date of their assessment.
It is verified, therefore, that tax law has, from the outset, had the objective of taxing the true and effective owner and user of the vehicle, the use of one or another expression being irrelevant, since, as we have seen, they have a coincident sense in our legal order.
The same applies when we resort to elements of rational or teleological interpretation.
In fact, the current and new framework of vehicle taxation establishes principles aimed at subjecting vehicle owners to bearing the costs of damage caused by vehicle-related road and environmental damage, as can be seen from the content of art. 1 of the IUC Code.
Now the consideration of these principles, in particular the principle of equivalence, which merit constitutional protection and are enshrined in European law, and are also recognized in other branches of the legal system, determines that the aforementioned costs be borne by the actual owners, the causers of the said damage, which entirely rules out an interpretation aimed at preventing the presumptive owners from making proof that they are no longer owners because ownership is in the legal sphere of another.[5]
Thus, also, from the interpretation made in light of rational and teleological elements, considering what the rationality of the system ensures and the ends sought by the new IUC Code, it is clear that no. 1 of art. 3 of the IUC Code establishes a rebuttable legal presumption.
In light of the foregoing, it is important to conclude that the ratio legis of the tax points in the direction of taxing the actual owner-users of vehicles, which is why the expression "considering as" is used in the normative in question in a sense similar to "presuming", which is why there is no doubt that a legal presumption is established.
Furthermore, article 73 of the General Tax Law establishes that "(…) the presumptions established in tax incidence norms always admit proof to the contrary, which is why they are rebuttable (…)".
Thus, inasmuch as article 3 no. 1 of the IUC Code establishes a rebuttable presumption juris tantum [and therefore rebuttable], the person who is registered in the registry as owner of the vehicle and who, for that reason, was considered by the Tax Authority as the passive subject of the tax, may present evidence aimed at demonstrating that the holder of ownership, on the date of the tax event, is another person, to whom ownership was transferred.
(…)
These operations of transfer of ownership are opposable to the Tax and Customs Authority, inasmuch as, although the facts subject to registration only produce effects in relation to third parties when registered, in light of the provision of art. 5 no. 1 of the Property Registration Code [applicable by referral of the Motor Vehicle Registration Code], the Tax Authority is not a third party for purposes of registration, since it is not in the situation provided for in no. 2 of the said art. 5 of the Property Registration Code, applicable by virtue of the Motor Vehicle Registration Code, that is: it did not acquire from a common author rights incompatible with each other.
In conclusive summary:
For IUC assessment, the Tax and Customs Authority may only rely upon the registered reality or information contained in the IMTT database if the outdatedness of the legal situation, in particular as to vehicle ownership, is not proven.
The motor vehicle registry, in the economy of the IUC Code, thus represents a mere rebuttable presumption of the passive subjects of the tax."
It is now necessary to assess whether the Claimant proved the transfer of ownership of the vehicles.
2. On the proof of transfer of the motor vehicles
In light of the foregoing, we conclude that no. 1 of art. 3 of the IUC Code establishes a rebuttable presumption, pursuant to article 73 of the General Tax Law, that the holder of the motor vehicle registry is its owner. In casu, the Claimant must prove, in order to rebut the presumption of article 3 no. 1 of the IUC Code (and even of the Motor Vehicle Registry) that it was not the owner of the vehicles in question during the period to which the impugned assessments relate.
To prove that such transfers of ownership occurred through purchase and sale contracts, the Claimant presents, with respect to the additional assessments nos. 2013…, 2014… and 2013… copies of receipt invoices.
In its arguments, citing arbitral case law in proceedings nos. 63/2014-T, 150/2014-T and 220/2014-T, the Defendant alleges that the invoices, as unilateral and private documents, do not constitute sufficient proof to rebut the presumption.
We disagree with this understanding.
It must be noted from the outset that the contract for the purchase and sale of a motor vehicle is a verbal contract, not subject, therefore, to any specific form. From this framework, inevitably results a special importance of the fiscal document not only for tax purposes but also for civil or other purposes.
In the case, the Claimant presented receipt invoices, issued in accordance with the law, evidencing not only the sales transaction but also the receipt,[2] although, as alleged by the Claimant, the transfer of ownership does not depend on the fulfillment of the payment obligation.
The invoices constitute, for tax purposes, the documents legally required to evidence the sales transactions and provision of services, as expressly results from the various tax codes (see the provision in no. 6 of article 23 of the Corporation Income Tax Code, paragraph b) of no. 1 of article 29 and article 36 of the VAT Code and article 115 of the Personal Income Tax Code).
It would be strange, therefore, that an invoice constitutes, from the point of view of the transferor, sufficient proof to determine income from the sale of a vehicle, taxable under Personal Income Tax (in the organized accounting system) or Corporation Income Tax, but, on the contrary, would not constitute sufficient proof to evidence the same transfer, now for IUC purposes.
This statement does not prevent the Tax Authority from proving that it is a false document because there was no actual transfer (with all the fiscal and criminal consequences).
In casu, there is no proof or even any indication that calls into question the presumption of good faith of the taxpayer and of the documents presented, as expressly results from article 75 of the General Tax Law. The supposed incongruity of the invoices alleged by the Defendant was justified and fully understood by the tribunal, which is why no indication was presented that would call into question the presumption of truthfulness of those documents.
However, this presumption is not applicable to the document identified as a second copy of the invoice. First, because the failure to identify the supplier/service provider does not allow the document to be considered as a second copy of the original document. It is a document without any fiscal validity and which, per se, does not allow proof of the execution of an operation (due to the obvious lack of one of the parties).
Faced with the technical impossibility of issuing a second copy of the invoice and, we note, alleged non-existence in the file of the duplicate issued pursuant to no. 4 of the VAT Code which must be in the taxpayer's accounting files, it was incumbent upon the Claimant to present other means of proof, namely evidence of payment by bank transfer, deposit, check, etc.
In conclusion, the prerequisites necessary for the approval of the request for annulment of assessments nos. 2013…, 2014… and 2013… are met, on the grounds of illegality and error in the assumptions, and the request for annulment of assessment no. 2013… is disapproved.
C. Compensatory Interest
The Claimant proceeded with full payment of the said IUC assessments, which is why it requests the refund of these undue amounts, plus compensatory interest, at the legal rate, pursuant to article 43 of the General Tax Law and 61 of the Code of Procedural and Tax Procedure.
In the case at hand, it is manifest that, following the illegality of the tax assessment acts, a refund of the tax is warranted, by virtue of the said arts. 24 no. 1 paragraph b) of the RJAT and 100 of the General Tax Law, since such is essential to "re-establish the situation that would exist if the tax assessment act subject to the arbitral decision had not been carried out".
With regard to compensatory interest, the Claimant failed to prove, despite having alleged it, that it made the communication referred to in article 19 of the IUC Code, which is why the Tax Authority, with the elements and information it had, proceeded with the tax assessment, pursuant to the legal provisions, that is, taxing the Claimant on the basis of the elements it was aware of, namely the ownership of the property as it appears in the Motor Vehicle Registry.
Consequently, the Claimant is not entitled to compensatory interest, pursuant to article 43 no. 1 of the General Tax Law and article 61 of the Code of Procedural and Tax Procedure.
D. DECISION
For these reasons, this Arbitral Tribunal decides as follows:
a) To uphold the request for declaration of illegality of the IUC assessments nos. 2013…, 2014… and 2013…, on the grounds of illegality and error in the assumptions;
b) To dismiss the request for declaration of illegality of IUC assessment 2013….
c) To condemn the Tax and Customs Authority to refund to the Claimant the amounts paid unduly;
d) To condemn the Claimant and Defendant to payment of the costs of the proceedings, in the proportion of € 58.23 and € 247.77, respectively.
E. Value of the proceedings
The value of the proceedings is fixed at € 176.77, pursuant to article 97-A no. 1 a) of the Code of Procedural and Tax Procedure, applicable by virtue of paragraphs a) and b) of no. 1 of article 29 of the RJAT and no. 2 of article 3 of the Regulation of Costs in Tax Arbitration Proceedings.
F. Costs
The arbitration fee is fixed at € 306.00, pursuant to Table I of the Regulation of Costs in Tax Arbitration Proceedings, to be paid by the Defendant, since the request was entirely dismissed, pursuant to articles 12 no. 2 and 22 no. 4, both of the RJAT, and article 4 no. 4 of the said Regulation.
The responsibility for costs is that of the losing party because, contrary to what was alleged, the Tax Authority could, within 30 days following knowledge of the request for establishment of the Arbitral Tribunal, have proceeded with the revocation of the assessment acts identified (article 13 no. 1 of the RJAT), all the more so as the Claimant attached, with presentation of the request, a copy of the invoices evidencing the transfer of ownership of the vehicles.
Notify the parties.
Lisbon,
1 June 2015
The Arbitrator
(Amândio Silva)
[1] The genesis of the legal relationship of tax presupposes the cumulative verification of the three prerequisites necessary to its creation, namely: the real element, the personal element and the temporal element. (In this sense, see, among many other authors, Freitas Pereira, M.H., Tax Law, 3rd Edition, Almedina, Coimbra, 2009.
[2] In the decision of CAAD relating to Proc. no. 785/2014-T cited by the Defendant in its arguments, it is argued that the presentation of the receipt invoice or receipt has sufficient force to rebut the presumption of article 3 no. 2 of the IUC Code.
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