IUC Subjective Incidence and Legal Presumptions: Vehicle Importer Challenges Tax Assessments for 161 Cars

ARBITRAL DECISION

A – REPORT

1. A..., SA, legal person no. ..., with registered office at Street ..., lot ..., ..., came to request the constitution of an arbitral tribunal, under the terms of articles 2, no. 1, a) and 10, nos. 1 and 2 of the Legal Framework for Tax Arbitration, provided for in Decree-Law no. 10/2011, of 20 January, hereinafter designated "RJAT" and of articles 1 and 2 of Order no. 112-A/2011, of 22 March, with a view to the declaration of illegality of the official assessments of Unique Circulation Tax (IUC) and respective compensatory interest, relating to the years 2013 and 2014, in the total amount of €16,695.27, concerning 161 vehicles, as well as the recognition of the right to indemnificatory interest, with the Tax and Customs Authority (hereinafter designated "AT") being the respondent.

2. Having admitted the request for constitution of a single arbitral tribunal, and the claimant not having opted for the designation of an arbitrator, in accordance with the terms of article 6, no. 2, a) and article 11, no. 1, b) of the RJAT, as amended by article 228 of Law no. 66-B/2012, of 31 December, the Deontological Council designated the undersigned as arbitrator.

The parties were notified of this designation, having not manifested any willingness to refuse the arbitrator's designation, in accordance with the combined terms of article 11, no. 1, a) and b) of the RJAT and articles 6 and 7 of the Deontological Code, having, in accordance with the provision of article 11, no. 1, c) of the RJAT, as amended by article 228 of Law no. 66-B/2012, of 31 December, the arbitral tribunal been constituted on 24-11-2014.

1. Notified, the AT came to present a response in which it did not raise any objection.

2. The meeting referred to in article 18 of the RJAT was held, at which occasion the witnesses listed by the claimant were questioned, having subsequently been granted to the parties, as they requested, a period for presentation of written submissions.

3. The parties presented submissions.

4. An arbitral decision having been rendered, the respondent challenged the decision before the Central Administrative Court South which, granting the challenge, annulled it, on the grounds that there was an omission of pronouncement.

1. The claimant seeks that the illegality and inherent annulment of the acts assessing the Unique Circulation Tax of the official assessments of IUC and respective compensatory interest, relating to the years 2013 and 2014, concerning 161 vehicles, be declared, with the consequent restitution of the tax paid, compensatory interest, plus indemnificatory interest, alleging in summary:

a) It has as its business purpose the trade in automobiles, respective parts and accessories, within which it imports, exclusively, all motor vehicles of the B... brand for the national market.

b) Once imported, all vehicles are immediately sold to the brand's concessionaries, some of which are part of the same economic group, who in turn sell them to final customers - who will be the users of the vehicles and in whose interest they enter road circulation.

c) All imported vehicles are so imported by means of a prior request from the concessionaries, submitted via electronic means directly to the factory.

d) The vehicles, once imported, are immediately sold and invoiced to the concessionaries.

e) Although from a strictly formal point of view the registration of the vehicles is done initially in the name of the importer (the Claimant), it is the concessionary who requests the vehicle registrations.

f) The sales by the claimant to the concessionaries occur precisely on the date of issuance of the invoices by the Claimant to the concessionaries.

g) It is the polluting taxpayer who should bear the tax (IUC) to the extent of the costs it causes to road infrastructure and the environment, which is not the case with the claimant in that, as a mere importer, it does not produce any "environmental and road cost" or "wear of public goods".

h) The vehicles in question were not owned by the claimant on the dates of their respective registrations, as it had already sold them to third parties.

i) Although the IUC is owed by the owners of the vehicles – in this case, on the date of registration, as it is the IUC relating to the year of registration - the persons in whose names the vehicles are registered may rebut the (mere) legal presumption of ownership arising from such registration or vehicle record.

j) The registration has merely declaratory effects, of opposability of the right as to third parties, but never constitutive effects of the right - from which it follows that registration does not constitute a condition of validity of the transmission of the vehicle from seller to buyer.

k) Unlike civil law and procedure, which are based on the principle of disposition, tax law and procedure are based on the principle of inquiry and discovery of material truth, which was violated by the AT.

l) The challenged assessments are not sufficiently reasoned, as they do not specify the IUC values concretely demanded concerning each vehicle.

m) The demand for compensatory interest, even before the voluntary payment period has elapsed, in the specific case of IUC, suffers from a defect of violation of law, and moreover, for the assessment of such compensatory interest there would always be required an adequate causal nexus between the conduct of the taxpayer and the delay in the assessment of the tax.

1. For its part, the respondent came in reply to allege, in summary:

a) The claimant does not demonstrate the existence of a commercial concession relationship between itself and the entities that appear in the invoices, nor the "immediate sales" to the concessionaries.

b) Nor does it demonstrate when and by what means the deliveries to the concessionaries occurred.

c) Within the scope of article 17 of the Vehicle Tax Code, the introduction into consumption and assessment of tax on vehicles that do not possess a national registration is titled by the issuance of a Customs Vehicle Declaration, such issuance constituting the taxable event, in accordance with and for the purposes of the provisions of article 5 of the IVC.

d) In accordance with the terms of article 117 of the Traffic Code, the registration is requested from the IMTT by the entity that proceeds to admission or introduction into consumption.

e) The moment from which the tax obligation is constituted has a direct relationship with the issuance of the registration certificate, in which the facts subject to registration must appear (compare the provisions of no. 2 of article 4 and no. 3 of article 6, both of the IUC Code, in no. 1 of article 10 of Decree-Law no. 54/75, of 12 February and in article 24 of the Motor Vehicle Registration Regulation).

f) From which it results that the initial registration of property of vehicles admitted (as is the case here), is based on the respective request and proof of compliance with fiscal obligations relating to the vehicle.

g) The issuance of a registration certificate implies the presentation of a Customs Vehicle Declaration by the claimant and payment of the corresponding Vehicle Tax and automatically generates the registration of the property of the vehicle under article 24 of the MVR in the name of the entity that proceeded to its importation and request for registration, namely the claimant.

h) The first registration of each vehicle is accomplished in the name of the importing entity, in this case the claimant.

i) Having the claimant requested the issuance of a registration certificate being the same registered in its name, the requirements of the taxable event of IUC are met, as well as of its exigibility, the claimant being the passive subject of the tax.

j) In light of the legal norms it is clearly irrelevant the sale to its concessionaries before the assignment of the registration.

k) Should the understanding advocated by the claimant be adopted, the formula would be found to avoid taxation under IUC in the case where the registration certificate were assigned in a given year – with the taxable event and tax exigibility emerging in that year – and only the subject of registration in the name of another owner in the following year.

l) The understanding propounded by the claimant with a view to removing the subjective scope and taxation of IUC, in case of selling the vehicle before the assignment of the registration, in addition to having no legal support, violates constitutional principles of legality and tax justice, of contributive capacity, equality, certainty and legal security.

m) Invoices are not apt to prove the conclusion of a synallagmatic contract such as purchase and sale, as such documents do not reveal by themselves an indispensable and unequivocal declaration of will (i.e., acceptance) by the purported acquirers.

n) The reasoning contained in the assessments is sufficiently clear and unequivocal, especially since the claimant through the present request for arbitral pronouncement and in light of the arguments explained by it throughout its submissions, demonstrates having fully understood the factual and legal framework on which the respondent's decision rested, as it attempts to rebut, point by point, all of its action.

o) It is not because article 18 of the IUC Code limits itself to establishing special rules on assessment that one can automatically conclude, in the face of express mention, the absence of obligation to pay compensatory interest under IUC, which shall be exigible whenever, by fact attributable to the taxpayer, the assessment of tax is delayed.

p) It further argues that the legal requirements granting the claimed right to indemnificatory interest are not met.

1. The Arbitral Tribunal was regularly constituted and is materially competent.

The parties possess legal personality and capacity and are legitimate (articles 4 and 10, no. 2, of the same legal instrument and article 1 of Order no. 112-A/2011, of 22 March).

The proceedings do not suffer from nullities.

B. DECISION

1. MATTER OF FACT

1.1. PROVEN FACTS

The following facts are considered proven:

a) The claimant is a commercial company that has as its business purpose the trade in automobiles, respective parts and accessories, within which it imports, exclusively, all motor vehicles of the Renault brand for the national market.

b) Once imported, all vehicles are immediately sold to the brand's concessionaries, some of which are part of the same economic group, who in turn sell them to final customers.

c) The vehicles are imported by means of a prior request from the concessionaries, submitted via electronic means directly to the factory.

d) Having arrived in Portugal, the vehicles are immediately invoiced by the claimant to the concessionaries and immediately delivered to their premises.

e) The sales invoices do not contain the registrations, as these had not yet been requested, but only the chassis numbers of the vehicles sold to the concessionaries.

f) After the sale to the concessionaries the claimant pays the due Vehicle Tax, requests the issuance of the registration and invoices them the tax borne, including the registrations of the vehicles in the respective invoices.

g) The registrations of all vehicles subject to the request for arbitral pronouncement were obtained after the claimant had issued the sales invoices to the concessionaries.

h) The claimant exercised, within the framework of the official assessment procedure, right of hearing, having there presented copies of the invoices also attached to the present proceedings.

i) The claimant paid the tax that is the subject of the challenged assessments.

j) The claimant presented, on 20-09-2014, the request for arbitral pronouncement that gave rise to the present case.

1.2 The facts were given as proven on the basis of documents attached to the proceedings by the claimant, whose authenticity was not challenged by the respondent, as well as on the statements of the witnesses called, whose testimonies proved to be impartial and enlightening.

1.3 FACTS NOT PROVEN

There are no facts given as not proven with relevance for the appreciation of the request.

1.4 THE LAW

The fundamental question raised by the claimant lies in the understanding, which it sustains, of its improper qualification, by the AT, as a passive subject of IUC.

For the respondent it is decisive, for this qualification, the fact that the claimant appears in the register as owner of the vehicles which, moreover, results from article 117 of the Traffic Code, when it stipulates that it is the entity that proceeds to admission or introduction into consumption – the claimant – that requests from the IMPT the issuance of registration.

Article 3, no. 1 of the IUC Code provides: "the passive subjects of the tax are the owners of the vehicles, being considered as such the natural and legal persons, of public or private law, in whose names they are registered."

From this it follows that the taxable event of the tax is constituted by ownership as attested by registration or record in national territory (article 6, no. 1 of the same legal instrument).

The question to be decided thus reduces itself to the interpretation to be given to article 3, no. 1 of the IUC Code in order to ascertain whether the provision on subjective scope contained therein establishes a legal presumption juris tantum – and, as such, capable of being rebutted (as the claimant sustains) or, on the contrary, an express and intentional definition of personal scope, in the sense that necessarily the passive subject of the tax is the one in whose name the motor vehicle is registered as owner.

On the basis of the wording of that provision, the respondent - AT - sustains that the basis of personal scope which it defines does not today contain any legal presumption, since that provision conveys in express and intentional manner the thought of the tax legislator, in the sense of considering, in an irrefutable manner, as passive subjects of IUC the persons in whose names the motor vehicles are registered.

It adds, in support of its thesis, that the legislator expressly provided that the taxable event of the tax set out in article 6 of the IUC Code is attested by the issuance of the registration. From which it would follow that "although the claimant alleges that on the date of the assignment of registration it had already sold the vehicles to its concessionaries, such fact is irrelevant for purposes of application of the provisions of article 6 of the IUC Code."

Now, in accordance with the provisions of article 11 of the General Tax Law, "in determining the meaning of tax norms and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed." Indeed, as stated by Diogo Leite Campos, Benjamim Rodrigues, J. Lopes de Sousa – General Tax Law 4th ed., in annotation to such article, "…without departing from the letter of the law, which must be the principal reference and starting point for the interpreter, its automatic application is excluded, assuming that in laws there is an operative rationality which the interpreter must strive to reconstruct."

It is, then, within this framework of interpretation of tax law, in this case article 3, no. 1 of the IUC Code, that we must find the answer to the antagonism of positions between the claimant and the AT.

For the AT it is decisive for the determination of the passive subject of IUC the registration of property of the motor vehicle, so that will be considered as such, in an irreversible manner, the one in whose name it is registered, which, in the case at hand, would be reinforced by the fact that the claimant appears as first owner while requester of the registration certificate.

Regarding this point it must be kept in mind that article 3, no. 1 of the IUC Code, as a provision on subjective scope, makes no distinction between different registrations of motor vehicle property (namely between initial registration and subsequent registrations).

The registration of property of vehicles is, in view of the provisions of article 5, no. 1, a) and no. 2 of Decree-Law 54/75, of 12 February, mandatory, so that any right of property that affects the vehicle is subject to registration, with which is intended the security of legal commerce, as well as the publicity of the legal situation thereof.

Such registration enjoys, in accordance with the provisions of article 7 of the Real Property Registration Code (applicable to motor vehicle registration by virtue of article 29 of the aforesaid Decree-Law no. 54/75), the "…presumption that the right exists and belongs to the registered holder, in the precise terms in which the registration defines it."

We have, therefore, that the inscription in the vehicle property registration is, also itself, a presumption that the right of property over it exists in accordance with what is stated in the registration.

That is to say, motor vehicle property registration does not constitute any condition of validity of the contracts subject to it, similarly to what occurs with real property registration (whose regime, as we have already noted, is extensive to motor vehicle registration); the registration has a merely declaratory function.

However, article 5, no. 1 of the Real Property Registration Code provides that "facts subject to registration only produce effect against third parties after the date of their respective registration." From which it seems to result that this would be sufficient for the AT to invoke the absence of registration to immediately bring into operation article 3, no. 1 of the IUC Code, demanding payment of the tax from the one in whose name the vehicle is registered, as the passive subject of the tax.

It happens, however, that article 5, no. 4 of the Real Property Registration Code restricts such understanding, by determining that "third parties, for purposes of registration, are those who have acquired from a common author rights that are incompatible with one another." From which it follows that, by that route, never would the AT be enabled to invoke the lack of registration, insofar as it does not meet the concept of third party.

Having set this out in general terms, it must be ascertained whether, despite what has just been stated, article 3, no. 1 of the IUC Code contains, or does not contain, a legal presumption.

Everything is, in sum, a matter of determining whether the expression "considering-se," used there, has the nature of a legal presumption.

Let it be said that it seems offensive to the unity of the legal system – and even, with appropriate adaptations, in opposition to nos. 2 and 3 of article 11 of the General Tax Law - that an individual come to be considered as not owner of a property for civil purposes and have to necessarily be for tax purposes.

To which is added the fact that the AT must guide its activity by observance of the principles of legality, inquiry and discovery of material truth, inherent to the constitutional diktat of contributive capacity. Not meaning by this that this latter has the scope sought by the claimant when it advocates the existence of official knowledge by the AT of the sales it carries out, by virtue of the communication thereof via SAF-T.

In any case, it seems evident that, whether from the systematic or teleological point of view, the expression "considering-se," adopted in article 3, no. 1 of the IUC Code contemplates a true presumption, to which is not opposed the apparent literality of the expression, nor the tax legal order.

In this regard, Diogo Leite Campos, Benjamim Rodrigues, J. Lopes de Sousa state – General Tax Law 4th ed., in annotation to article 73, p. 651: "presumptions in matters of tax scope may be explicit, revealed by the use of the expression 'presumed' or similar, as occurs, for example, in nos. 1 to 5 of article 6, in article 3, no. a) of article 10, in articles 19 and 40, no. 1, of the Corporation Income Tax Code. However, presumptions may also be implicit in scope provisions, namely objective scope, when certain values of moveable or immoveable property are considered as constituting taxable matter, in situations where it is not impossible to ascertain the real value...", enumerating thereafter a set of examples.

We understand that it is precisely that case which article 3, no. 1 of the IUC Code contemplates: an implicit presumption. Presumption, moreover, which has always existed in the field of motor vehicle circulation tax, although previously defined in express form.

On the other hand, in fulfillment of the principles - with consecration in our community legal order - of polluter-pays and equivalence, the IUC imports concerns of an environmental and energetic order, seeking that costs resulting from environmental damage caused by the use of motor vehicles be borne by the actual owners (and not by presumed owners).

It is, therefore, necessary to conclude that article 3, no. 1 of the IUC Code consecrates a presumption of subjective scope.

Now, article 350, no. 2 of the Civil Code establishes that legal presumptions may be rebutted by contrary proof, except in cases expressly provided for in law.

And, regarding the rebuttal of presumptions, we consider good the doctrine to which the Supreme Court of Justice resorted in the reasoning of Pronouncement no. 1/91 of 03-04-1991 (Official Gazette no. 114, of 18 May) - to classify as juris tantum a presumption established in a labor statute - defended by Vaz Serra [Proof (substantive probatory law), Monthly Journal of Law 110-112, p. 35], as well as by Mário de Brito (Annotated Civil Code, p. 466) and Mota Pinto (General Theory of Civil Law, p. 429): "…juris tantum presumptions constitute the rule, with juris et de jure presumptions being the exception. In doubt, the legal presumption is juris tantum, as it should not be considered, absent reference in the law, that it was intended to prevent the production of contrary proof, imposing a formal truth to the detriment of real proof proven."

For its part, within the sphere of tax law, article 73 of the General Tax Law provides that "presumptions consecrated in tax scope provisions always admit contrary proof." Which means that all presumptions in matters of tax scope, such as that which article 3, no. 1 of the IUC Code consecrates, are juris tantum and, as such, rebuttable.

Regarding alleged unconstitutionality

The respondent contends that such interpretation would violate constitutional principles of legality and tax justice, of contributive capacity, equality, certainty and legal security.

We advance, from the outset, that we do not perceive in the submissions of the respondent minimally consistent support to base such invocation.

As an expression of the principle of the democratic rule of law, "the principle of tax legality has at its base the idea of self-taxation or of self-consent of taxes, according to which taxes must be consented to by the taxpayers themselves" (Casalta Nabais, Tax Law – 5th ed., p. 136) and which, among us, is divided into the reserve of formal law and the reserve of substantive law, which, in sum, is concretized in the principle of typicality, imposing the regulation by substantive law of the essential elements of the tax.

The respondent holds that "having the tax legislator not expressly consecrated in law, the removal of the subjective scope of taxation under IUC in the cases which the Claimant points out, it is unequivocal that such understanding violates frontally the principle of tax legality set out in articles 8 of the General Tax Law and 103 of the Constitution."

We are unable to perceive in what manner the interpretation given to that norm – in the sense that it contains a presumption – could violate those constitutional principles. Indeed, such interpretation does not impair the principle of typicality, which, as an emanation of the principle of legality, requires that the interpretation of the norm and the classification of the taxable facts constituting the tax legal relationship be delimited within those parameters.

The interpretation of the norm in the sense of considering that it contains a legal presumption results only from the coherent application of article 11 of the General Tax Law, in imposing that must be observed in the interpretation and application of tax laws, the general rules and principles applicable to other laws.

The same applies regarding the also invoked violation of the principle of contributive capacity. It is true that, as the AT well states, the "principle of contributive capacity constitutes the presupposition and measure of taxes constituting the economic fitness to bear the burden of the tax."

A conclusion that is clearly present in the consecration of the presumption of the aforesaid article 3, no. 1 of the IUC Code. Indeed, as stated above, this tax imports concerns of an environmental and energetic order, seeking that costs resulting from environmental damage caused by the use of motor vehicles be borne by the actual owners (and not by presumed owners). That is, that provision seeks to tax those who are effective owners of motor vehicles and, to that extent, polluters of the environment and not those who are only presumedly so.

In the same manner, thereby is given expression to the principle of tax equality, insofar as equally is taxed what is equal: the uniform taxation of actual owners – and, in that capacity, polluters of the environment – of motor vehicles.

The interpretation which we adopt and is sustained by the claimant does not, thus, contend with any constitutional principle.

Nothing therefore opposes, quite the contrary, that it be considered that article 3, no. 1 of the IUC Code consecrates a legal presumption of subjective scope.

Regarding the rebuttal of the presumption

From the evidence brought before the proceedings by the claimant, it results that this was not the owner of the vehicles to which the assessments that are the subject of the present arbitral request pertain, on the date limits of their respective payments.

On this point, the respondent challenges that invoices titling purchase and sale contracts are apt to prove the effective transmission of property of the vehicles.

It does not, however, question the truthfulness of the documents attached. Being certain that in tax matters the presumption of truth of the elements contained in the taxpayer's accounts applies, as is the case with invoices, to which is added that the witnesses called by the claimant, in enlightening testimonies, confirmed the existence of the transactions embodied in the invoices attached to the proceedings.

Regarding the payment of the aforesaid invoices, these same witnesses clarified that payment thereof is effected on the day following its sending to the concessionaries by a financial entity, the C… Branch Portugal.

It is, for the case, irrelevant that payment be effected by a third entity, such circumstance not colliding with the transmission of the right of property.

We have therefore as settled, that it was not placed in question that the transactions, reflected in the invoices attached by the claimant, were carried out, being certain that the purchase and sale contract is consensual, not requiring any special form thereof.

In such manner, the transmission of property is proven to have occurred, being certain that the AT has no legitimacy to oppose the absence of registration, as it is not, for such purposes, regarded as a third party.

It happens, however, as the respondent well sustains, that, in view of the provisions of articles 24 and 42 of the Motor Vehicle Registration Regulation, it is the importer that must proceed to the registration of the motor vehicle, in this case, within a maximum period of sixty days from the assignment of the registration.

In its understanding, it is decisive, for this question, the requirement resulting from the aforesaid article 24 that the "importer appears in the register as first owner of vehicle," from which would result, in view of the provisions of articles 3 and 6 of the IUC Code, in an ineluctable manner, its quality as passive subject of the tax.

From which it follows that the first registration of a new vehicle must necessarily be accomplished in the name of the importer.

And, concomitantly, in the case of vehicles subject to first registration it is on the date on which this is obtained that the moment of the exigibility of the tax is defined.

It happens that all vehicles that are the subject of the assessments under consideration in the present request for arbitral pronouncement were, as has already been concluded, the subject of transmission by the claimant.

That is to say, on the date on which the registrations were issued, the vehicles were no longer property of the claimant.

Having proven the transmission of property, it is concluded that the assessments that are the subject of the present arbitral request suffer from illegality, and therefore their annulment is required.

It thus results, prejudiced the appreciation of the other questions raised.

Indemnificatory interest

In addition to the restitution of the tax improperly paid, the claimant seeks that the right to payment of indemnificatory interest be declared.

Such right comes consecrated in article 43 of the General Tax Law which has as its presupposition that it be ascertained, in amicable reclamation or judicial challenge - or in tax arbitration – that there was error imputable to the services from which results payment of the debt in an amount superior to that legally due.

The recognition of the right to indemnificatory interest in the arbitral proceedings results from the provisions of article 24, no. 5 of the RJAT.

In the case at hand, it seems to us that there is, in fact, error imputable to the AT in the assessments in question.

Indeed, the claimant had already presented, in the context of prior hearing in the official assessment procedures, sufficient documentation for the rebuttal of the presumption which lay upon it.

Despite this being so and the AT being required to guide itself, as stated above, by the principle of inquiry, it ignored all the elements it had at its disposal and which should have prevented the carrying out of the challenged assessments.

By which the claimant is entitled to the sought payment of indemnificatory interest.

3. DECISION

In view of the foregoing, it is decided:

a) To judge as well-founded, by defect of violation of law, the request for annulment of the tax acts that are the subject of the arbitral request corresponding to the IUC assessments relating to the years 2013 and 2014 and subsequent compensatory interest, as well as the request for payment of indemnificatory interest,

b) To condemn the Tax and Customs Authority to refund to the claimant the amount of tax paid, plus the respective indemnificatory interest;

c) To condemn the Tax and Customs Authority to pay the costs of the proceedings.

VALUE OF THE CASE: In accordance with the provisions of article 306, no. 2 of the Civil Procedure Code, article 97-A, no. 1, a) of the Code of Tax Process and Procedure and article 3, no. 2 of the Regulation of Costs in Tax Arbitration Proceedings, the case is assigned a value of €16,695.27 (sixteen thousand six hundred and ninety-five euros and twenty-seven cents).

COSTS: In accordance with the provisions of article 22, no. 4, of the Regulation of Costs in Tax Arbitration Proceedings, the amount of costs is fixed at €1,224.00 (one thousand two hundred and twenty-four euros), in accordance with Table I attached to the Regulation of Costs in Tax Arbitration Proceedings.

Let notification be made.

Lisbon, 02-05-2016

The Arbitrator

António Alberto Franco

ARBITRAL DECISION

A – REPORT

1. A..., SA, legal person no. ..., with registered office at Street ..., lot ..., ..., came to request the constitution of an arbitral tribunal, under the terms of articles 2, no. 1, a) and 10, nos. 1 and 2 of the Legal Framework for Tax Arbitration, provided for in Decree-Law no. 10/2011, of 20 January, hereinafter designated "RJAT" and of articles 1 and 2 of Order no. 112-A/2011, of 22 March, with a view to the declaration of illegality of the official assessments of Unique Circulation Tax (IUC) and respective compensatory interest, relating to the years 2013 and 2014, in the total amount of €16,695.27, concerning 161 vehicles, as well as the recognition of the right to indemnificatory interest, with the Tax and Customs Authority (hereinafter designated "AT") being the respondent.

2. Having admitted the request for constitution of a single arbitral tribunal, and the claimant not having opted for the designation of an arbitrator, in accordance with the terms of article 6, no. 2, a) and article 11, no. 1, b) of the RJAT, as amended by article 228 of Law no. 66-B/2012, of 31 December, the Deontological Council designated the undersigned as arbitrator.

The parties were notified of this designation, having not manifested any willingness to refuse the arbitrator's designation, in accordance with the combined terms of article 11, no. 1, a) and b) of the RJAT and articles 6 and 7 of the Deontological Code, having, in accordance with the provision of article 11, no. 1, c) of the RJAT, as amended by article 228 of Law no. 66-B/2012, of 31 December, the arbitral tribunal been constituted on 24-11-2014.

1. Notified, the AT came to present a response in which it did not raise any objection.

2. The meeting referred to in article 18 of the RJAT was held, at which occasion the witnesses listed by the claimant were questioned, having subsequently been granted to the parties, as they requested, a period for presentation of written submissions.

3. The parties presented submissions.

1. The claimant seeks that the illegality and inherent annulment of the acts assessing the Unique Circulation Tax of the official assessments of IUC and respective compensatory interest, relating to the years 2013 and 2014, concerning 161 vehicles, be declared, with the consequent restitution of the tax paid, compensatory interest, plus indemnificatory interest, alleging in summary:

a) It has as its business purpose the trade in automobiles, respective parts and accessories, within which it imports, exclusively, all motor vehicles of the ... brand for the national market.

b) Once imported, all vehicles are immediately sold to the brand's concessionaries, some of which are part of the same economic group, who in turn sell them to final customers - who will be the users of the vehicles and in whose interest they enter road circulation.

c) All imported vehicles are so imported by means of a prior request from the concessionaries, submitted via electronic means directly to the factory.

d) The vehicles, once imported, are immediately sold and invoiced to the concessionaries.

e) Although from a strictly formal point of view the registration of the vehicles is done initially in the name of the importer (the Claimant), it is the concessionary who requests the vehicle registrations.

f) The sales by the claimant to the concessionaries occur precisely on the date of issuance of the invoices by the Claimant to the concessionaries.

g) It is the polluting taxpayer who should bear the tax (IUC) to the extent of the costs it causes to road infrastructure and the environment, which is not the case with the claimant in that, as a mere importer, it does not produce any "environmental and road cost" or "wear of public goods".

h) The vehicles in question were not owned by the claimant on the dates of their respective registrations, as it had already sold them to third parties.

i) Although the IUC is owed by the owners of the vehicles – in this case, on the date of registration, as it is the IUC relating to the year of registration - the persons in whose names the vehicles are registered may rebut the (mere) legal presumption of ownership arising from such registration or vehicle record.

j) The registration has merely declaratory effects, of opposability of the right as to third parties, but never constitutive effects of the right - from which it follows that registration does not constitute a condition of validity of the transmission of the vehicle from seller to buyer.

k) Unlike civil law and procedure, which are based on the principle of disposition, tax law and procedure are based on the principle of inquiry and discovery of material truth, which was violated by the AT.

l) The challenged assessments are not sufficiently reasoned, as they do not specify the IUC values concretely demanded concerning each vehicle.

m) The demand for compensatory interest, even before the voluntary payment period has elapsed, in the specific case of IUC, suffers from a defect of violation of law, and moreover, for the assessment of such compensatory interest there would always be required an adequate causal nexus between the conduct of the taxpayer and the delay in the assessment of the tax.

1. For its part, the respondent came in reply to allege, in summary:

a) The claimant does not demonstrate the existence of a commercial concession relationship between itself and the entities that appear in the invoices, nor the "immediate sales" to the concessionaries.

b) Nor does it demonstrate when and by what means the deliveries to the concessionaries occurred.

c) Within the scope of article 17 of the Vehicle Tax Code, the introduction into consumption and assessment of tax on vehicles that do not possess a national registration is titled by the issuance of a Customs Vehicle Declaration, such issuance constituting the taxable event, in accordance with and for the purposes of the provisions of article 5 of the IVC.

d) In accordance with the terms of article 117 of the Traffic Code, the registration is requested from the IMPT by the entity that proceeds to admission or introduction into consumption.

e) The moment from which the tax obligation is constituted has a direct relationship with the issuance of the registration certificate, in which the facts subject to registration must appear (compare the provisions of no. 2 of article 4 and no. 3 of article 6, both of the IUC Code, in no. 1 of article 10 of Decree-Law no. 54/75, of 12 February and in article 24 of the Motor Vehicle Registration Regulation).

f) From which it results that the initial registration of property of vehicles admitted (as is the case here), is based on the respective request and proof of compliance with fiscal obligations relating to the vehicle.

g) The issuance of a registration certificate implies the presentation of a Customs Vehicle Declaration by the claimant and payment of the corresponding Vehicle Tax and automatically generates the registration of the property of the vehicle under article 24 of the MVR in the name of the entity that proceeded to its importation and request for registration, namely the claimant.

h) The first registration of each vehicle is accomplished in the name of the importing entity, in this case the claimant.

i) Having the claimant requested the issuance of a registration certificate being the same registered in its name, the requirements of the taxable event of IUC are met, as well as of its exigibility, the claimant being the passive subject of the tax.

j) In light of the legal norms it is clearly irrelevant the sale to its concessionaries before the assignment of the registration.

k) Should the understanding advocated by the claimant be adopted, the formula would be found to avoid taxation under IUC in the case where the registration certificate were assigned in a given year – with the taxable event and tax exigibility emerging in that year – and only the subject of registration in the name of another owner in the following year.

l) The understanding propounded by the claimant with a view to removing the subjective scope and taxation of IUC, in case of selling the vehicle before the assignment of the registration, in addition to having no legal support, violates constitutional principles of legality and tax justice, of contributive capacity, equality, certainty and legal security.

m) Invoices are not apt to prove the conclusion of a synallagmatic contract such as purchase and sale, as such documents do not reveal by themselves an indispensable and unequivocal declaration of will (i.e., acceptance) by the purported acquirers.

n) The reasoning contained in the assessments is sufficiently clear and unequivocal, especially since the claimant through the present request for arbitral pronouncement and in light of the arguments explained by it throughout its submissions, demonstrates having fully understood the factual and legal framework on which the respondent's decision rested, as it attempts to rebut, point by point, all of its action.

o) It is not because article 18 of the IUC Code limits itself to establishing special rules on assessment that one can automatically conclude, in the face of express mention, the absence of obligation to pay compensatory interest under IUC, which shall be exigible whenever, by fact attributable to the taxpayer, the assessment of tax is delayed.

p) It further argues that the legal requirements granting the claimed right to indemnificatory interest are not met.

1. The Arbitral Tribunal was regularly constituted and is materially competent.

The parties possess legal personality and capacity and are legitimate (articles 4 and 10, no. 2, of the same legal instrument and article 1 of Order no. 112-A/2011, of 22 March).

The proceedings do not suffer from nullities.

B. DECISION

1. MATTER OF FACT

1.1. PROVEN FACTS

The following facts are considered proven:

a) The claimant is a commercial company that has as its business purpose the trade in automobiles, respective parts and accessories, within which it imports, exclusively, all motor vehicles of the ... brand for the national market.

b) Once imported, all vehicles are immediately sold to the brand's concessionaries, some of which are part of the same economic group, who in turn sell them to final customers.

c) The vehicles are imported by means of a prior request from the concessionaries, submitted via electronic means directly to the factory.

d) Having arrived in Portugal, the vehicles are immediately invoiced by the claimant to the concessionaries and immediately delivered to their premises.

e) The sales invoices do not contain the registrations, as these had not yet been requested, but only the chassis numbers of the vehicles sold to the concessionaries.

f) After the sale to the concessionaries the claimant pays the due Vehicle Tax, requests the issuance of the registration and invoices them the tax borne, including the registrations of the vehicles in the respective invoices.

g) The registrations of all vehicles subject to the request for arbitral pronouncement were obtained after the claimant had issued the sales invoices to the concessionaries.

h) The claimant exercised, within the framework of the official assessment procedure, right of hearing, having there presented copies of the invoices also attached to the present proceedings.

i) The claimant paid the tax that is the subject of the challenged assessments.

j) The claimant presented, on 20-09-2014, the request for arbitral pronouncement that gave rise to the present case.

1.2 The facts were given as proven on the basis of documents attached to the proceedings by the claimant, whose authenticity was not challenged by the respondent, as well as on the statements of the witnesses called, whose testimonies proved to be impartial and enlightening.

1.3 FACTS NOT PROVEN

There are no facts given as not proven with relevance for the appreciation of the request.

1.4 THE LAW

The fundamental question raised by the claimant lies in the understanding, which it sustains, of its improper qualification, by the AT, as a passive subject of IUC.

For the respondent it is decisive, for this qualification, the fact that the claimant appears in the register as owner of the vehicles which, moreover, results from article 117 of the Traffic Code, when it stipulates that it is the entity that proceeds to admission or introduction into consumption – the claimant – that requests from the IMPT the issuance of registration.

Article 3, no. 1 of the IUC Code provides: "the passive subjects of the tax are the owners of the vehicles, being considered as such the natural and legal persons, of public or private law, in whose names they are registered."

From this it follows that the taxable event of the tax is constituted by ownership as attested by registration or record in national territory (article 6, no. 1 of the same legal instrument).

The question to be decided thus reduces itself to the interpretation to be given to article 3, no. 1 of the IUC Code in order to ascertain whether the provision on subjective scope contained therein establishes a legal presumption juris tantum – and, as such, capable of being rebutted (as the claimant sustains) or, on the contrary, an express and intentional definition of personal scope, in the sense that necessarily the passive subject of the tax is the one in whose name the motor vehicle is registered as owner.

On the basis of the wording of that provision, the respondent - AT - sustains that the basis of personal scope which it defines does not today contain any legal presumption, since that provision conveys in express and intentional manner the thought of the tax legislator, in the sense of considering, in an irrefutable manner, as passive subjects of IUC the persons in whose names the motor vehicles are registered.

It adds, in support of its thesis, that the legislator expressly provided that the taxable event of the tax set out in article 6 of the IUC Code is attested by the issuance of the registration. From which it would follow that "although the claimant alleges that on the date of the assignment of registration it had already sold the vehicles to its concessionaries, such fact is irrelevant for purposes of application of the provisions of article 6 of the IUC Code."

Now, in accordance with the provisions of article 11 of the General Tax Law, "in determining the meaning of tax norms and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed." Indeed, as stated by Diogo Leite Campos, Benjamim Rodrigues, J. Lopes de Sousa – General Tax Law 4th ed., in annotation to such article, "…without departing from the letter of the law, which must be the principal reference and starting point for the interpreter, its automatic application is excluded, assuming that in laws there is an operative rationality which the interpreter must strive to reconstruct."

It is, then, within this framework of interpretation of tax law, in this case article 3, no. 1 of the IUC Code, that we must find the answer to the antagonism of positions between the claimant and the AT.

For the AT it is decisive for the determination of the passive subject of IUC the registration of property of the motor vehicle, so that will be considered as such, in an irreversible manner, the one in whose name it is registered, which, in the case at hand, would be reinforced by the fact that the claimant appears as first owner while requester of the registration certificate.

Regarding this point it must be kept in mind that article 3, no. 1 of the IUC Code, as a provision on subjective scope, makes no distinction between different registrations of motor vehicle property (namely between initial registration and subsequent registrations).

The registration of property of vehicles is, in view of the provisions of article 5, no. 1, a) and no. 2 of Decree-Law 54/75, of 12 February, mandatory, so that any right of property that affects the vehicle is subject to registration, with which is intended the security of legal commerce, as well as the publicity of the legal situation thereof.

Such registration enjoys, in accordance with the provisions of article 7 of the Real Property Registration Code (applicable to motor vehicle registration by virtue of article 29 of the aforesaid Decree-Law no. 54/75), the "…presumption that the right exists and belongs to the registered holder, in the precise terms in which the registration defines it."

We have, therefore, that the inscription in the vehicle property registration is, also itself, a presumption that the right of property over it exists in accordance with what is stated in the registration.

That is to say, motor vehicle property registration does not constitute any condition of validity of the contracts subject to it, similarly to what occurs with real property registration (whose regime, as we have already noted, is extensive to motor vehicle registration); the registration has a merely declaratory function.

However, article 5, no. 1 of the Real Property Registration Code provides that "facts subject to registration only produce effect against third parties after the date of their respective registration." From which it seems to result that this would be sufficient for the AT to invoke the absence of registration to immediately bring into operation article 3, no. 1 of the IUC Code, demanding payment of the tax from the one in whose name the vehicle is registered, as the passive subject of the tax.

It happens, however, that article 5, no. 4 of the Real Property Registration Code restricts such understanding, by determining that "third parties, for purposes of registration, are those who have acquired from a common author rights that are incompatible with one another." From which it follows that, by that route, never would the AT be enabled to invoke the lack of registration, insofar as it does not meet the concept of third party.

Having set this out in general terms, it must be ascertained whether, despite what has just been stated, article 3, no. 1 of the IUC Code contains, or does not contain, a legal presumption.

Everything is, in sum, a matter of determining whether the expression "considering-se," used there, has the nature of a legal presumption.

As a starting point, the answer seems to us to be negative.

It seems offensive to the unity of the legal system – and even, with appropriate adaptations, in opposition to nos. 2 and 3 of article 11 of the General Tax Law - that an individual come to be considered as not owner of a property for civil purposes and have to necessarily be for tax purposes.

To which is added the fact that the AT must guide its activity by observance of the principles of legality, inquiry and discovery of material truth, inherent to the constitutional diktat of contributive capacity. Not meaning by this that this latter has the scope sought by the claimant when it advocates the existence of official knowledge by the AT of the sales it carries out, by virtue of the communication thereof via SAF-T.

In any case, it seems evident that, whether from the systematic or teleological point of view, the expression "considering-se," adopted in article 3, no. 1 of the IUC Code contemplates a true presumption, to which is not opposed the apparent literality of the expression, nor the tax legal order.

In this regard, Diogo Leite Campos, Benjamim Rodrigues, J. Lopes de Sousa state – General Tax Law 4th ed., in annotation to article 73, p. 651: "presumptions in matters of tax scope may be explicit, revealed by the use of the expression 'presumed' or similar, as occurs, for example, in nos. 1 to 5 of article 6, in article 3, no. a) of article 10, in articles 19 and 40, no. 1, of the Corporation Income Tax Code. However, presumptions may also be implicit in scope provisions, namely objective scope, when certain values of moveable or immoveable property are considered as constituting taxable matter, in situations where it is not impossible to ascertain the real value...", enumerating thereafter a set of examples.

We understand that it is precisely that case which article 3, no. 1 of the IUC Code contemplates: an implicit presumption. Presumption, moreover, which has always existed in the field of motor vehicle circulation tax, although previously defined in express form.

On the other hand, in fulfillment of the principles - with consecration in our community legal order - of polluter-pays and equivalence, the IUC imports concerns of an environmental and energetic order, seeking that costs resulting from environmental damage caused by the use of motor vehicles be borne by the actual owners (and not by presumed owners).

It is, therefore, necessary to conclude that article 3, no. 1 of the IUC Code consecrates a presumption of subjective scope.

Now, article 350, no. 2 of the Civil Code establishes that legal presumptions may be rebutted by contrary proof, except in cases expressly provided for in law.

And, regarding the rebuttal of presumptions, we consider good the doctrine to which the Supreme Court of Justice resorted in the reasoning of Pronouncement no. 1/91 of 03-04-1991 (Official Gazette no. 114, of 18 May) - to classify as juris tantum a presumption established in a labor statute - defended by Vaz Serra [Proof (substantive probatory law), Monthly Journal of Law 110-112, p. 35], as well as by Mário de Brito (Annotated Civil Code, p. 466) and Mota Pinto (General Theory of Civil Law, p. 429): "…juris tantum presumptions constitute the rule, with juris et de jure presumptions being the exception. In doubt, the legal presumption is juris tantum, as it should not be considered, absent reference in the law, that it was intended to prevent the production of contrary proof, imposing a formal truth to the detriment of real proof proven."

For its part, within the sphere of tax law, article 73 of the General Tax Law provides that "presumptions consecrated in tax scope provisions always admit contrary proof." Which means that all presumptions in matters of tax scope, such as that which article 3, no. 1 of the IUC Code consecrates, are juris tantum and, as such, rebuttable.

From the evidence brought before the proceedings by the claimant, it results that it was not the owner of the vehicles to which the assessments that are the subject of the present arbitral request pertain, on the date limits of their respective payments.

On this point, the respondent challenges that invoices titling purchase and sale contracts are apt to prove the effective transmission of property of the vehicles.

It does not, however, question the truthfulness of the documents attached. Being certain that in tax matters the presumption of truth of the elements contained in the taxpayer's accounts applies, as is the case with invoices, to which is added that the witnesses called by the claimant, in enlightening testimonies, confirmed the existence of the transactions embodied in the invoices attached to the proceedings.

Regarding the payment of the aforesaid invoices, these same witnesses clarified that payment thereof is effected on the day following its sending to the concessionaries by a financial entity, the B....

It is, for the case, irrelevant that payment be effected by a third entity, such circumstance not colliding with the transmission of the right of property.

We have therefore as settled, that it was not placed in question that the transactions, reflected in the invoices attached by the claimant, were carried out, being certain that the purchase and sale contract is consensual, not requiring any special form thereof.

In such manner, the transmission of property is proven to have occurred, being certain that the AT has no legitimacy to oppose the absence of registration, as it is not, for such purposes, regarded as a third party.

It happens, however, as the respondent well sustains, that, in view of the provisions of articles 24 and 42 of the Motor Vehicle Registration Regulation, it is the importer that must proceed to the registration of the motor vehicle, in this case, within a maximum period of sixty days from the assignment of the registration.

In its understanding, it is decisive, for this question, the requirement resulting from the aforesaid article 24 that the "importer appears in the register as first owner of vehicle," from which would result, in view of the provisions of articles 3 and 6 of the IUC Code, in an ineluctable manner, its quality as passive subject of the tax.

From which it follows that the first registration of a new vehicle must necessarily be accomplished in the name of the importer.

And, concomitantly, in the case of vehicles subject to first registration it is on the date on which this is obtained that the moment of the exigibility of the tax is defined.

It happens that all vehicles that are the subject of the assessments under consideration in the present request for arbitral pronouncement were, as has already been concluded, the subject of transmission by the claimant.

That is to say, on the date on which the registrations were issued, the vehicles were no longer property of the claimant.

Having proven the transmission of property, it is concluded that the assessments that are the subject of the present arbitral request suffer from illegality, and therefore their annulment is required.

It thus results, prejudiced the appreciation of the other questions raised.

Indemnificatory interest

In addition to the restitution of the tax improperly paid, the claimant seeks that the right to payment of indemnificatory interest be declared.

Such right comes consecrated in article 43 of the General Tax Law which has as its presupposition that it be ascertained, in amicable reclamation or judicial challenge - or in tax arbitration – that there was error imputable to the services from which results payment of the debt in an amount superior to that legally due.

The recognition of the right to indemnificatory interest in the arbitral proceedings results from the provisions of article 24, no. 5 of the RJAT.

In the case at hand, it seems to us that there is, in fact, error imputable to the AT in the assessments in question.

Indeed, the claimant had already presented, in the context of prior hearing in the official assessment procedures, sufficient documentation for the rebuttal of the presumption which lay upon it.

Despite this being so and the AT being required to guide itself, as stated above, by the principle of inquiry, it ignored all the elements it had at its disposal and which should have prevented the carrying out of the challenged assessments.

By which the claimant is entitled to the sought payment of indemnificatory interest.

3. DECISION

In view of the foregoing, it is decided:

a) To judge as well-founded, by defect of violation of law, the request for annulment of the tax acts that are the subject of the arbitral request corresponding to the IUC assessments relating to the years 2013 and 2014, as well as the request for payment of indemnificatory interest,

b) To condemn the Tax and Customs Authority to refund to the claimant the amount of tax paid, plus the respective indemnificatory interest;

c) To condemn the Tax and Customs Authority to pay the costs of the proceedings.

VALUE OF THE CASE: In accordance with the provisions of article 306, no. 2 of the Civil Procedure Code, article 97-A, no. 1, a) of the Code of Tax Process and Procedure and article 3, no. 2 of the Regulation of Costs in Tax Arbitration Proceedings, the case is assigned a value of €16,695.27 (sixteen thousand six hundred and ninety-five euros and twenty-seven cents).

COSTS: In accordance with the provisions of article 22, no. 4, of the Regulation of Costs in Tax Arbitration Proceedings, the amount of costs is fixed at €1,224.00 (one thousand two hundred and twenty-four euros), in accordance with Table I attached to the Regulation of Costs in Tax Arbitration Proceedings.

Let notification be made.

Lisbon, 20-05-2015

The Arbitrator

António Alberto Franco

[1] Arbitral Decision annulled by the judgment of the Central Administrative Court South rendered within the scope of Case no. 08799/15, of 19-11-2015.