Process: 67/2014-T

Date: July 15, 2014

Tax Type: IUC

Source: Original CAAD Decision

Summary

CAAD arbitration process 67/2014-T addresses a critical question in Portuguese tax law: who is liable for IUC (Imposto Único de Circulação - Single Circulation Tax) when vehicles under financial leasing (locação financeira) are transferred to lessees but the ownership transfer is not registered. The claimant, a leasing company, challenged 13 IUC assessments totaling €1,602.15 for tax years 2010-2012, arguing it should not be liable for tax on vehicles it no longer owned. The core legal dispute centered on Article 3(1) of the IUC Code, which establishes tax liability based on registered ownership. The claimant contended that after leasing contracts terminated and lessees exercised their right to acquire vehicles at residual value, the economic and legal ownership transferred, even without formal registration. The company argued that registration is neither a validity requirement for sale contracts nor necessary for transfer effects to occur, and that the Tax Authority cannot rely on lack of registration since it does not qualify as a 'third party' under registration law. Furthermore, the claimant asserted that the presumption of ownership based on registration can be rebutted through evidence. The Tax and Customs Authority countered that the IUC legislation intentionally establishes liability based on registered ownership, not as a rebuttable presumption but as a definitive legal criterion. The Authority argued that accepting the claimant's position would undermine legal certainty, create administrative inefficiency, and violate the principle that taxpayers must use available legal mechanisms (vehicle registration) to protect their interests. This case highlights fundamental tensions between formal registration requirements and economic reality in tax law, particularly regarding IUC liability in financial leasing arrangements.

Full Decision

ARBITRAL DECISION

Claimant: A..., Sa
Respondent: Tax and Customs Authority

Subject Matter: Single Circulation Tax – financial leasing

I. REPORT

  1. On 27 January 2014, the company A..., Sa, corporate number ..., hereinafter identified as Claimant, filed a request for arbitral opinion, in accordance with the provisions of articles 2, no. 1, subparagraph a) and 10 of Decree-Law no. 10/2011, of 20 January (Legal Framework for Arbitration in Tax Matters, hereinafter referred to as LFATM).

  2. In the said request for arbitral opinion, the Claimant seeks for the Arbitral Tribunal to declare the illegality of 13 additional assessment acts for Single Circulation Tax (SCT), in the total amount of € 1,602.15, relating to the years 2010 to 2012, hereinafter better identified (cf. Annex A, accompanying the request for constitution of the Arbitral Tribunal):

i. SCT and Interest Assessment Statement no. 2011 ..., relating to the year 2011 and the vehicle with license plate ..-..-.., resulting in the amount of € 134.78 payable, which amount was paid on 29 October 2013, at the payment deadline;

ii. SCT and Interest Assessment Statement no. 2011 ..., relating to the year 2011 and the vehicle with license plate ..-..-.., resulting in the amount of € 134.78 payable, which amount was paid on 29 October 2013, at the payment deadline;

iii. SCT and Interest Assessment Statement no. 2012 ..., relating to the year 2012 and the vehicle with license plate ..-..-.., resulting in the amount of € 162.82 payable, which amount was paid on 29 October 2013, at the payment deadline;

iv. SCT and Interest Assessment Statement no. 2011 ..., relating to the year 2011 and the vehicle with license plate ..-..-.., resulting in the amount of € 168.35 payable, which amount was paid on 29 October 2013, at the payment deadline;

v. SCT and Interest Assessment Statement no. 2011 ..., relating to the year 2011 and the vehicle with license plate ..-..-.., resulting in the amount of € 168.35 payable, which amount was paid on 29 October 2013, at the payment deadline;

vi. SCT and Interest Assessment Statement no. 2012 ..., relating to the year 2012 and the vehicle with license plate ..-..-.., resulting in the amount of € 214.01 payable, which amount was paid on 29 October 2013, at the payment deadline;

vii. SCT and Interest Assessment Statement no. 2010 ..., relating to the year 2010 and the vehicle with license plate ..-..-.., resulting in the amount of € 18.78 payable, which amount was paid on 29 October 2013, at the payment deadline;

viii. SCT and Interest Assessment Statement no. 2010 ..., relating to the year 2010 and the vehicle with license plate ..-..-.., resulting in the amount of € 37.57 payable, which amount was paid on 29 October 2013, at the payment deadline;

ix. SCT and Interest Assessment Statement no. 2010 ..., relating to the year 2010 and the vehicle with license plate ..-..-.., resulting in the amount of € 58.43 payable, which amount was paid on 29 October 2013, at the payment deadline;

x. SCT and Interest Assessment Statement no. 2011 ..., relating to the year 2011 and the vehicle with license plate ..-..-.., resulting in the amount of € 186.17 payable, which amount was paid on 29 October 2013, at the payment deadline;

xi. SCT and Interest Assessment Statement no. 2012 ..., relating to the year 2012 and the vehicle with license plate ..-..-.., resulting in the amount of € 101.28 payable, which amount was paid on 29 October 2013, at the payment deadline;

xii. SCT and Interest Assessment Statement no. 2012 ..., relating to the year 2012 and the vehicle with license plate ..-..-.., resulting in the amount of € 101.28 payable, which amount was paid on 29 October 2013, at the payment deadline;

xiii. SCT and Interest Assessment Statement no. 2011 ..., relating to the year 2011 and the vehicle with license plate ..-..-.., resulting in the amount of € 115.55 payable, which amount was paid on 29 October 2013, at the payment deadline.

  1. The Claimant further petitions for reimbursement of the amount paid - € 1,602.15 – as well as payment of compensatory interest, in accordance with article 43 of the General Tax Law.

  2. The request for constitution of the arbitral tribunal was accepted on 28 January 2014, by His Excellency the President of the CAAD and was notified to the Tax and Customs Authority (hereinafter identified as Respondent), on the same date.

  3. The Claimant did not appoint an arbitrator, therefore, pursuant to article 6, no. 1, of the LFATM, the undersigned was designated by the President of the Deontological Council of the CAAD as arbitrator of the present Singular Arbitral Tribunal, the appointment having been accepted as legally provided for.

  4. On 30 May 2014, and in accordance with the terms and for the purposes provided for in article 18 of the LFATM, the first meeting of the Arbitral Tribunal took place, with minutes being drawn up, which are attached to the case file, from which it results, inter alia, that the Claimant waived the testimonial evidence listed.

  5. The Claimant sustains its claim, in summary, on the understanding that if during the validity of a financial leasing contract the lessor should not be considered subject to SCT, then by greater reason it will not be subject to such tax after the termination of the leasing contract and the exercise, by the lessee, of its right to acquire the asset at residual value.

  6. The Claimant further argues that the failure to register the transfer effected between the Claimant and the lessees does not render it unenforceable against the Tax Authority, since registration is neither a condition for the validity of the purchase and sale contract nor a condition for the transfer effect to occur, adding further that as the Tax Authority does not fall within the concept of third parties for registration purposes, since it does not acquire from the same transferor rights wholly or partially incompatible with the rights of the purchaser, it cannot rely on the absence of registration of the transfer to demand payment of the tax owed by the former owner, whether this be a lessor or any other entity.

  7. The Claimant further argues that if the owner does not promote the registration of the property of the vehicle in its name, it is presumed that the ownership continues to belong to the debtor, but that this presumption may be rebutted through evidence to the contrary, which may be made by any means (e.g. by testimonial evidence or documents).

  8. The Claimant concludes that, since in the present case the anniversaries of the license plates occurred in months subsequent to the alienation of the corresponding vehicles, it was no longer the owner thereof, and therefore the contested assessments are consequently illegal.

  9. In its Reply, the Respondent invoked, in summary, that the tax legislator, when establishing in article 3, no. 1, who are the subjects liable to SCT, expressly and intentionally established that these are the owners, considered to be such the persons in whose name they are registered, meaning that the Respondent understands that it is not a matter of a presumption, because the SCT became owed by the persons appearing in the register as owners of the vehicles.

  10. The Respondent further understands that the position put forward by the Claimant violates the principle of confidence and legal certainty, insofar as it devalues the registry reality to the detriment of an informal reality, incapable of minimal control by the Tax Authority, and also violates the principle of efficiency of the tax system insofar as by ignoring the registry reality, it generates additional administrative costs for the Tax Authority and the Portuguese State and obstruction of its services, and finally violates the principle of proportionality insofar as the Claimant has the necessary and adequate legal mechanisms to safeguard its taxpaying capacity (e.g. vehicle registration) without having exercised them in due time.

  11. The Respondent further argues that, even if this were not the case, the Claimant, by presenting only the sales invoices for each of the vehicles, has not proven the transfer of ownership of those same vehicles.

  12. Finally, the Respondent understands that to rebut the presumption of article 3 of the SCT Code, the Claimant as lessor was obliged to communicate to the Tax Authority the data relating to the identification of the users of the leased vehicles, the Claimant having failed to prove compliance with this obligation.

II. PRELIMINARY RULING

  1. The Tribunal is materially competent and is regularly constituted, in accordance with articles 2, no. 1, subparagraph a), 5 and 6, all of the LFATM.

  2. The parties have legal capacity and standing, are legitimate and are represented, in accordance with articles 4 and 10 of the LFATM and article 1 of Order no. 112-A/2011, of 22 March.

  3. There are no irregularities and preliminary issues affecting the entire case, therefore it is now necessary to examine the merits of the claim.

III. SUBJECT MATTER OF THE ARBITRAL OPINION

  1. The following issues are submitted to the Tribunal for examination and decision:

i. to determine whether the norm of no. 1 of article 3 of the SCT Code admits that the person in whose name the vehicle is registered at the Property Registry can demonstrate, through the means of evidence admitted in law, that notwithstanding this fact, it is not the owner of the vehicle in the period to which the tax relates and thus rebut the tax obligation that falls upon it;

ii. whether the sales invoice for the vehicle is a sufficient document to prove the transfer.

FACTUAL MATTER

Proven Facts

  1. The Claimant is a credit institution whose activity includes the conclusion of financial leasing contracts intended for the acquisition, by companies and individuals, of motor vehicles (cf. motor vehicle rental contracts without driver attached to the request for constitution of the Arbitral Tribunal);

  2. The Claimant concluded the following motor vehicle rental contracts without driver:

i. no. 2010.050346.10, with company B..., SA, with reference to the vehicle with license plate ..-..-.., on 7 July 2010 (cf. motor vehicle rental contract without driver attached to the request for constitution of the Arbitral Tribunal);

ii. no. 2010.050346.07, with company B..., SA, with reference to the vehicle with license plate ..-..-.., on 7 July 2010 (cf. motor vehicle rental contract without driver attached to the request for constitution of the Arbitral Tribunal);

iii. no. 2009.477439.01, with C..., with reference to the vehicle with license plate ..-..-.., on 6 April 2009 (cf. motor vehicle rental contract without driver attached to the request for constitution of the Arbitral Tribunal);

iv. no. 2010.050356.16, with company B..., SA, with reference to the vehicle with license plate ..-..-.., on 7 July 2010 (cf. motor vehicle rental contract without driver attached to the request for constitution of the Arbitral Tribunal);

v. no. 2010.050356.04, with company B..., SA, with reference to the vehicle with license plate ..-..-.., on 7 July 2010 (cf. motor vehicle rental contract without driver attached to the request for constitution of the Tribunal);

vi. no. 2008.030698.01, with company D..., with reference to the vehicle with license plate ..-..-.., on 18 July 2008 (cf. motor vehicle rental contract without driver attached to the request for constitution of the Tribunal);

vii. no. 2006.009472.01, with E..., with reference to the vehicle with license plate ..-..-.., on 12 April 2006 (cf. motor vehicle rental contract without driver attached to the request for constitution of the Arbitral Tribunal);

viii. no. 2006.035507.01, with F..., with reference to the vehicle with license plate ..-..-.., on 3 January 2007 (cf. motor vehicle rental contract without driver attached to the request for constitution of the Arbitral Tribunal);

ix. no. 2006.006435.01, with company G..., Lda, with reference to the vehicle with license plate ..-..-.., on 9 March 2006 (cf. motor vehicle rental contract without driver attached to the request for constitution of the Arbitral Tribunal);

x. no. 2008.009202.01, with H..., with reference to the vehicle with license plate ..-..-.. (cf. motor vehicle rental contract without driver attached to the request for constitution of the Arbitral Tribunal);

xi. no. 2011.044591.18, with company B..., SA, with reference to the vehicle with license plate ..-..-.., on 18 July 2011 (cf. motor vehicle rental contract without driver attached to the request for constitution of the Arbitral Tribunal);

xii. no. 2011.044591.13, with company B..., SA, with reference to the vehicle with license plate ..-..-.., on 18 July 2011 (cf. motor vehicle rental contract without driver attached to the request for constitution of the Arbitral Tribunal);

xiii. no. 2007.046868.01, with I..., with reference to the vehicle with license plate ..-..-.., on 4 December 2007 (cf. motor vehicle rental contract without driver attached to the request for constitution of the Arbitral Tribunal).

  1. The Claimant issued the following Invoice/Receipts with reference to the following contracts:

i. no. 2010…..10 - Invoice/Receipt no. 2011/… H, issued on 2 May 2011, in the name of J..., SA with reference to the vehicle with license plate ..-..-.. (License plate month: July - cf. invoice attached to the request for constitution of the Arbitral Tribunal);

ii. no. 2010…..07 – Invoice/Receipt no. 2011/05/… H, issued on 2 May 2011, in the name of J..., SA with reference to the vehicle with license plate ..-..-.. (License plate month: July - cf. invoice attached to the request for constitution of the Arbitral Tribunal);

iii. no. 2009…..01 - Invoice/Receipt no. 2012.01…., issued on 20 January 2012, in the name of K..., Lda with reference to the vehicle with license plate ..-..-.. (License plate month: March - cf. invoice attached to the request for constitution of the Arbitral Tribunal);

iv. no. 2010…..16 - Invoice/Receipt no. 2011/05/… H, issued on 2 May 2011, in the name of J..., SA with reference to the vehicle with license plate ..-..-.. (License plate month: July - cf. invoice attached to the request for constitution of the Arbitral Tribunal);

v. no. 2010.050356.04 - Invoice/Receipt no. 2011/05/… H, issued on 2 May 2011, in the name of J..., SA with reference to the vehicle with license plate ..-..-..(License plate month: July - cf. invoice attached to the request for constitution of the Arbitral Tribunal);

vi. no. 2008…..01 - Invoice/Receipt no. 2012.04…., issued on 17 April 2012, in the name of company D..., with reference to the vehicle with license plate ..-..-..(License plate month: July - cf. invoice attached to the request for constitution of the Arbitral Tribunal);

vii. no. 2006…..01 - Invoice/Receipt no. 2009.12…., issued on 3 December 2009, in the name of E..., with reference to the vehicle with license plate ..-..-.. (License plate month: January - cf. invoice attached to the request for constitution of the Arbitral Tribunal);

viii. no. 2006…..01 - Invoice/Receipt no. 2009.11…, issued on 26 November 2009, in the name of F..., with reference to the vehicle with license plate ..-..-.. (License plate month: January - cf. invoice attached to the request for constitution of the Arbitral Tribunal);

ix. no. 2006…..01 - Invoice/Receipt no. 2009/04/… H, issued on 1 April 2009, in the name of company L..., LDA, with reference to the vehicle with license plate ..-..-.. (License plate month: March - cf. invoice attached to the request for constitution of the Arbitral Tribunal);

x. no. 2008…..01 - Invoice/Receipt no. 2010.08…., issued on 26 August 2010, in the name of H..., with reference to the vehicle with license plate ..-..-.. (License plate month: April - cf. invoice attached to the request for constitution of the Arbitral Tribunal);

xi. no. 2011…. 1.18 - Invoice/Receipt no. 2012/05/… H, issued on 2 May 2012, in the name of M..., Lda, with reference to the vehicle with license plate ..-..-.. (License plate month: June - cf. invoice attached to the request for constitution of the Arbitral Tribunal);

xii. no. 2011…..13 - Invoice/Receipt no. 2012/05/… H, issued on 2 May 2012, in the name of M..., Lda, with reference to the vehicle with license plate ..-..-.. (License plate month: June - cf. invoice attached to the request for constitution of the Arbitral Tribunal);

xiii. no. 2007…..01 - Invoice/Receipt no. 2011.06…., issued on 6 June 2011, in the name of I..., with reference to the vehicle with license plate ..-..-.. (License plate month: November - cf. invoice attached to the request for constitution of the Arbitral Tribunal);

  1. The Claimant was notified of 13 additional assessment acts for Single Circulation Tax (SCT), in the total amount of € 1,602.15, relating to the years 2010 to 2012, hereinafter better identified (cf. Annex A, accompanying the request for constitution of the Arbitral Tribunal):

i. SCT and Interest Assessment Statement no. 2011 ..., relating to the year 2011 and the vehicle with license plate ..-..-.., resulting in the amount of € 134.78 payable, which amount was paid on 29 October 2013, at the payment deadline;

ii. SCT and Interest Assessment Statement no. 2011 ..., relating to the year 2011 and the vehicle with license plate ..-..-.., resulting in the amount of € 134.78 payable, which amount was paid on 29 October 2013, at the payment deadline;

iii. SCT and Interest Assessment Statement no. 2012 ..., relating to the year 2012 and the vehicle with license plate ..-..-.., resulting in the amount of € 162.82 payable, which amount was paid on 29 October 2013, at the payment deadline;

iv. SCT and Interest Assessment Statement no. 2011 ..., relating to the year 2011 and the vehicle with license plate ..-..-.., resulting in the amount of € 168.35 payable, which amount was paid on 29 October 2013, at the payment deadline;

v. SCT and Interest Assessment Statement no. 2011 ..., relating to the year 2011 and the vehicle with license plate ..-..-.., resulting in the amount of € 168.35 payable, which amount was paid on 29 October 2013, at the payment deadline;

vi. SCT and Interest Assessment Statement no. 2012 ..., relating to the year 2012 and the vehicle with license plate ..-..-.., resulting in the amount of € 214.01 payable, which amount was paid on 29 October 2013, at the payment deadline;

vii. SCT and Interest Assessment Statement no. 2010 ..., relating to the year 2010 and the vehicle with license plate ..-..-.., resulting in the amount of € 18.78 payable, which amount was paid on 29 October 2013, at the payment deadline;

viii. SCT and Interest Assessment Statement no. 2010 ..., relating to the year 2010 and the vehicle with license plate ..-..-.., resulting in the amount of € 37.57 payable, which amount was paid on 29 October 2013, at the payment deadline;

ix. SCT and Interest Assessment Statement no. 2010 ..., relating to the year 2010 and the vehicle with license plate ..-..-.., resulting in the amount of € 58.43 payable, which amount was paid on 29 October 2013, at the payment deadline;

x. SCT and Interest Assessment Statement no. 2011 ..., relating to the year 2011 and the vehicle with license plate ..-..-.., resulting in the amount of € 186.17 payable, which amount was paid on 29 October 2013, at the payment deadline;

xi. SCT and Interest Assessment Statement no. 2012 ..., relating to the year 2012 and the vehicle with license plate ..-..-.., resulting in the amount of € 101.28 payable, which amount was paid on 29 October 2013, at the payment deadline;

xii. SCT and Interest Assessment Statement no. 2012 ..., relating to the year 2012 and the vehicle with license plate ..-..-.., resulting in the amount of € 101.28 payable, which amount was paid on 29 October 2013, at the payment deadline;

xiii. SCT and Interest Assessment Statement no. 2011 ..., relating to the year 2011 and the vehicle with license plate ..-..-.., resulting in the amount of € 115.55 payable, which amount was paid on 29 October 2013, at the payment deadline.

  1. The factual matter established as proven rests on the documentary evidence presented.

Unproven Facts

  1. No essential facts, with relevance for the examination of the merits of the case, were found to be unproven.

IV. LAW

  1. As noted at the outset, the first question to be clarified in the present case concerns the determination whether the norm of no. 1 of article 3 of the SCT Code admits that the person in whose name the vehicle is registered at the Property Registry can demonstrate, through the means of evidence admitted in law, that notwithstanding this fact, it is not the owner of the vehicle in the period to which the tax relates and thus rebut the tax obligation that falls upon it.

  2. Article 3, no. 1, of the SCT Code provides that "the subjects liable to the tax are the owners of the vehicles, considered to be such the natural or legal persons, of public or private law, in whose name they are registered."

  3. In accordance with this legal provision, the subjects liable to the tax are therefore the owners of the vehicles.

  4. Indeed, in accordance with the SCT Code, the tax is owed by the owner of the vehicle until the cancellation of the license plate or registration due to scrapping carried out in accordance with the law (cf. article 4, no. 3 of the SCT Code), with the ownership of vehicles being taxed, regardless of their respective use or enjoyment.

  5. For purposes of implementing subjective tax incidence, those considered as owners are the natural or legal persons in whose name the vehicles are registered.

  6. In this context, the Tax Authority assesses the tax in accordance with the elements constituting the SCT database, the updating of which is carried out on the basis of elements provided by the IRN – I.P. and by the IMTT.

  7. Article 3, no. 1, of the SCT Code thus establishes a legal presumption in accordance with which the person inscribed in the register as owner of the vehicle is considered as subject liable to the tax.

  8. The use of the expression "considered to be" instead of the expression "presumed" does not exclude this conclusion.

  9. As better developed in the Arbitral Decision rendered in Case no. 14/2013-T "Examining the Portuguese legal system, we find countless norms that establish presumptions using the verb consider, many of which are used in the gerund form ("considering" or even "considered to be"). Examples of these are the norms listed below: In the Civil Code, inter alia, articles 314, 369 no. 2, 374 no. 1, 376 no. 2, 1629. In the Industrial Property Code, we refer as an example to article 98 where the term "considering" is also used in a presumptive context. Also in the tax legal system one can find the verb "consider," namely the term "is considered" with a presumptive meaning. As explained by Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, in annotation no. 3 to article 73 of the GTL "presumptions in tax incidence matters can be explicit, revealed by the use of the expression presumes or similar (…). However, presumptions can also be implicit in incidence norms, namely of objective incidence, when certain values of movable or immovable property are considered as constituting taxable matter, in situations where it is not impossible to determine the actual value" (emphasis ours), then giving some examples of norms in which the verb "consider" is used as in no. 2 of article 21 of the CIRT occurs, by establishing that "for purposes of determining taxable profit, the value of acquisition of capital increments obtained free of charge is considered to be its market value, which cannot be less than that resulting from the application of the rules for determining the taxable value provided for in the Tax Stamp Code". (emphasis ours). (…). Taking into account that the legal system must form a coherent whole, the examples referred to above, accompanied by the doctrine and case law indicated, by appeal to the systematic element (context of the law and parallel provisions), authorize the conclusion that it is not only when the verb "presume" is used that we are faced with a presumption, but also the use of other terms or expressions can serve as a basis for presumptions, namely the term "is considered," thereby showing that the condition established in no. 2 of article 9 of the CC is met, which requires that legislative intent have at least a minimum of verbal correspondence in the letter of the law, even if imperfectly expressed." (at www.caad.pt).

  10. As also noted in the cited arbitral decision, the ratio legis of the SCT points in the direction of taxing the effective owners or the users of the vehicles, such as financial lessees, since it is they who have the polluting potential causing environmental costs to the community (cf. article 3, no. 1 and 2, of the SCT Code).

  11. Indeed, the SCT seeks to burden taxpayers in proportion to the environmental and road cost they cause, in implementation of a general rule of tax equality, as expressed in its article 1.

  12. It is not apparent that the taxation of former owners could contribute to this objective, which will only be achieved if the taxation targets the actual owner or user.

  13. Furthermore, registration does not have constitutive effect in our legal system, having instead a merely declarative function (cf. Decision of the Supreme Court of Justice rendered in Case no. 00A217, of 20-06-2000 and Decision of the Supreme Court of Justice rendered in Case no. 087725, of 13-02-1996, at www.dgsi.pt).

  14. The "definitive registration constitutes a presumption that the right exists and belongs to the registered holder, in the exact terms in which the registration defines it. But, as the appellant correctly states, this registration presumption is rebuttable – although not through counterproof, but rather through proof to the contrary – since registration, even if definitive, constitutes a mere rebuttable presumption." (cf. Decision of the Supreme Court of Justice, in Case no. 07B4528, of 29-01-2008, at www.dgsi.pt), which means that the nature of registration in our legal system also does not exclude the conclusion reached that we are faced with a presumption in the present case.

  15. Finally, since the Tax Authority does not fall within the concept of third party for registration purposes, "since it does not acquire from the same transferor rights wholly or partially incompatible with the rights of the purchaser, it is easily concluded that it cannot rely on the absence of registration of the transfer to demand payment of the tax owed by the former owner, whether this be a lessor or any other entity" (cf. Opinion of Professor Dr. Agostinho Cardoso Guedes, attached to the case file).

  16. Now, since article 3, no. 1, of the SCT Code establishes a presumption, this presumption is a rebuttable presumption since it concerns a norm of (subjective) tax incidence.

  17. Indeed, presumptions established in tax incidence norms always admit proof to the contrary, since the provision of article 73 of the General Tax Law expressly excludes, in the domain of tax incidence norms, the possibility of the existence of irrebuttable presumptions.

  18. The "prohibition of irrebuttable presumptions arising from art. 73 of the GTL is limited to tax incidence norms, but covering both subjective incidence and objective or real incidence norms. Incidence norms, in the broad sense, are those that "define the plane of incidence or that is, the complex of assumptions whose conjunction results in the birth of the tax obligation, as well as the elements of that obligation. In this sense, incidence norms are those that determine the active and passive subjects of the tax obligation, those that indicate what the taxable matter is, the rate and tax benefits" (cf. SOUSA, Jorge Lopes de - Tax Procedure and Process Code – Annotated and Commented, Áreas Publishers, 6th edition, 2011, vol. I, p. 586).

  19. Thus, since article 3, no. 1 of the SCT Code establishes a rebuttable presumption, the entity inscribed in the register as owner of the vehicle and which, for that reason was considered by the Tax Authority as subject liable to the tax, may present evidence elements aiming to demonstrate that the holder of ownership is another person, to whom the ownership was transferred.

  20. And contrary to what alleged by the Respondent Entity, compliance or non-compliance with the provision of article 19 of the SCT Code, which obliges entities engaging in financial leasing, operational leasing or long-term rental of vehicles to provide the Internal Revenue Service with data relating to the tax identification of the users of the leased vehicles, does not exclude the rebuttable character of the presumption under examination, in accordance with the invocation of art. 73 of the GTL.

  21. The SCT is of annual periodicity, being owed in full in each year to which it relates, with the taxation period corresponding to the year beginning on the date of registration or on each of its anniversaries, with respect to vehicles of categories A, B, C, D and E (cf. article 4, no. 1 and 2 of the SCT Code).

  22. In the present case, the Claimant alienated the vehicles in question on dates prior to those of the months of the license plates, in the years to which the assessments in question relate, in accordance with the Invoices/Receipts attached to the request for constitution of the arbitral tribunal.

  23. Article 29, no. 1, subparagraph b), of the IVA Code, in its current wording, determines the obligation to issue an invoice for each transfer of goods or provision of services, regardless of the quality of the acquirer of the goods or recipient of the services, even if they do not request it, as well as for payments made to them before the date of transfer of goods or provision of services.

  24. The expression "invoice or equivalent document" previously used in the IVA Code has been replaced by the term "invoice."

  25. As results from the Preamble of Decree-Law no. 197/2012, of 24 August, which introduced amendments to the IVA invoicing rules "It is further evident that taxpayers cannot issue and deliver documents of a nature different from an invoice to evidence the transfer of goods or provision of services to their respective acquirers or recipients, under penalty of application of the legally provided penalties".

  26. After these amendments, only the "Invoice" or "Invoice-receipt" and the "Simplified invoice" satisfy the invoicing obligation, insofar as they contain the requirements of no. 5 of article 36 or no. 2 of article 40, respectively, both of the IVA Code, as acknowledged by the Tax Authority in Circular Notice no. 30141/2013, of 4 January 2013, whereas previously the figure of the "Invoice-receipt" was peacefully accepted.

  27. For its part, in accordance with subparagraph f), of no. 5 of article 36 of the IVA Code, the invoice must necessarily contain the date on which the goods were placed at the disposal of the acquirer, if that date does not coincide with the date of issuance of the invoice, that is, if such notice does not appear on the invoice, it is presumed that the goods were placed at the disposal of the acquirer on the date of issuance of the invoice.

  28. In the present case, where the issuance of Invoice/Receipt is at issue, this proves the transfer of the asset and the respective payment (cf. articles 476 of the Commercial Code and 123, no. 2, subparagraph a) of the IRC Code).

  29. Furthermore, the Claimant benefits from the presumption of veracity of the operations recorded in its accounts and in the respective supporting documents.

  30. Indeed, it expressly results from no. 1 of article 75 of the General Tax Law that "The declarations of the taxpayers presented in accordance with the terms provided for in law are presumed to be true and made in good faith, as well as the data and determinations recorded in their accounts or books, when these are organized in accordance with commercial and tax legislation, without prejudice to the other requirements on which the deductibility of expenses depends".

  31. In this context, it was then the responsibility of the Tax Authority to bring evidence to the proceedings that would allow this presumption to be rebutted, and having failed to do so (insofar as it merely asserts that the invoice is not an adequate document to prove the sale of the vehicles), the documents submitted by the Claimant, more specifically the Invoices/Receipts constitute proof of the transfer of the vehicles in question.

  32. And, having those transfers occurred on dates prior to those of the months of the license plates, in the years to which the assessments in question relate, the Claimant was no longer subject liable to the tax with reference to the assessments in question, whose annulment, consequently, is ordered.

V. DECISION

In view of the foregoing, it is decided to judge the request for arbitral opinion well-founded, with the consequent annulment, with all legal effects, of the SCT assessment acts contested, condemning the Respondent Entity to reimburse the amount paid - € 1,602.15 – and also to the payment of compensatory interest, in accordance with article 43 of the General Tax Law.

The value of the case is fixed at € 1,602.15 (one thousand six hundred and two euros and fifteen cents), in accordance with art. 32 of the CAPT and art. 97-A of the CPPT, applicable by virtue of the provision of art. 29, no. 1, subparagraphs a) and b), of the LFATM, and of art. 3, no. 2, of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT).

Costs borne by the Respondent Entity, in the amount of € 306 (three hundred and six euros), in accordance with Table I of the RCPAT, since the present claim was judged well-founded, and in compliance with articles 12, no. 2, and 22, no. 4, both of the LFATM, and the provision of art. 4, no. 4, of the cited Regulation.

Notify.

Lisbon, 15 July 2014

[Text prepared by computer, in accordance with article 131, no. 5 of the Code of Civil Procedure (CCP), applicable by remission of article 29, no. 1, subparagraph e) of the LFATM, with blank spaces and reviewed by the undersigned arbitrator].

The Arbitrator

(Ana Moutinho Nascimento)

Frequently Asked Questions

Automatically Created

Who is liable for IUC (Imposto Único de Circulação) on vehicles under a financial leasing agreement in Portugal?
Under Portuguese tax law, IUC liability for vehicles under financial leasing (locação financeira) is determined by Article 3(1) of the IUC Code, which establishes that the tax is owed by the registered owner of the vehicle. During the leasing contract, this is typically the leasing company (lessor) listed in the vehicle registration. When a leasing contract terminates and the lessee exercises the option to purchase the vehicle at residual value, tax liability should transfer to the new owner. However, if the ownership transfer is not registered with the vehicle registration authorities, the Tax Authority considers the party appearing in the register as liable for IUC, even if economic ownership has transferred. The legal question is whether this constitutes a rebuttable presumption or an absolute criterion for tax liability.
Can the registered owner challenge IUC assessments when the vehicle is used by a lessee under locação financeira?
Yes, a registered owner can challenge IUC assessments when the vehicle is used by a lessee under locação financeira, particularly after the leasing contract terminates and ownership transfers to the lessee. In CAAD process 67/2014-T, the leasing company challenged assessments arguing it was no longer the owner when the tax became due, as the lessees had acquired the vehicles at residual value. The challenge can be based on arguments that: (1) registration is not required for the validity or transfer effect of the sale; (2) the Tax Authority is not a 'third party' that can invoke lack of registration; (3) the presumption of ownership from registration can be rebutted by evidence; and (4) the actual owner at the tax anniversary date (not the registered owner) should be liable. However, success depends on whether the tribunal accepts that IUC liability is based on a rebuttable presumption or an absolute registration-based criterion.
What does Portuguese tax law say about the subjective incidence of IUC in financial leasing contracts?
Portuguese tax law regarding subjective incidence of IUC in financial leasing contracts is governed primarily by Article 3(1) of the IUC Code, which states that persons liable for the tax are the owners of vehicles, defined as those in whose name the vehicles are registered. This creates a central legal tension: the Tax Authority interprets this as an absolute criterion linking liability to registered ownership, not a rebuttable presumption. During active financial leasing contracts, the lessor (leasing company) typically remains the registered owner and is considered liable for IUC. However, legal uncertainty arises when leasing contracts terminate and lessees acquire vehicles at residual value without promptly updating the vehicle registration. Taxpayers argue this registration requirement is merely procedural and that economic ownership determines tax liability, while the Tax Authority maintains that registration provides legal certainty and administrative efficiency, and that taxpayers have a responsibility to update registrations to reflect ownership changes.
How can taxpayers dispute additional IUC tax assessments through CAAD tax arbitration in Portugal?
Taxpayers can dispute IUC assessments through CAAD (Centro de Arbitragem Administrativa) tax arbitration under the Legal Framework for Arbitration in Tax Matters (RJAT - Decree-Law 10/2011). The process begins by filing a request for arbitral opinion within the legal deadline after receiving the assessment. In case 67/2014-T, the claimant filed on January 27, 2014, challenging 13 IUC assessments. The request must specify the contested acts, amounts, and legal grounds. After acceptance, the case is assigned to an arbitrator (or arbitral panel), and the Tax Authority submits a reply. A preliminary hearing is scheduled where procedural matters are addressed and evidence can be presented. Taxpayers must pay the contested amounts before filing (as occurred here, with all amounts paid on October 29, 2013) to gain standing. The arbitration offers advantages over administrative appeals, including faster resolution, specialized tax law expertise, and enforceability of decisions. If successful, taxpayers can obtain reimbursement of amounts paid plus compensatory interest under Article 43 of the General Tax Law.
What was the outcome of CAAD arbitration process 67/2014-T regarding IUC liability in vehicle leasing?
The text excerpt provided does not include the final decision or outcome of CAAD arbitration process 67/2014-T. The document presented contains only the Report section (sections I through 12), detailing the parties' arguments: the claimant leasing company argued it should not be liable for IUC on vehicles sold to lessees after leasing contract termination, even without registration of the transfer, while the Tax and Customs Authority argued that IUC liability is determined by registered ownership according to Article 3(1) of the IUC Code. To determine the actual outcome—whether the tribunal declared the assessments illegal and ordered reimbursement of €1,602.15 plus compensatory interest, or upheld the Tax Authority's position—the complete arbitration decision including the Legal Grounds and Decision sections would be required. The outcome would establish important precedent regarding whether IUC liability in financial leasing scenarios is based on formal registration or can be determined by proof of economic ownership.