IUC Subjective Incidence and Legal Presumptions: Annulment of 135 Vehicle Tax Assessments (CAAD 69/2015-T)

ARBITRAL DECISION

I REPORT

A… SA, a legal entity … (Tax Office of ... – …) with registered office at Place of …, …, …, 4405 - 849 …,

under the provisions of article 2(1)(a) and articles 10 et seq. of Decree-Law 10/2011 of 20 January, submitted a request for arbitral pronouncement "(…)" with a view to resolving the dispute it has been maintaining with the Tax Authority and with the objective of having declared the illegality and consequent annulment of 135 tax assessment acts relating to the Single Circulation Tax for the years 2009, 2010, 2011 and 2012, concerning the 135 vehicles/registration numbers better identified in the map constituting DOC. No.1 which follows in annex, as well as the assessment acts for compensatory interest associated therewith, all totaling the sum of €117,179.42, the breakdown of which is as follows:

Single Circulation Tax ---------- €105,473.64
Compensatory Interest ---------- €11,705.78 (…)"

The Applicant considers that the tax assessment acts for the Single Circulation Tax in question suffer from error regarding the factual assumptions, which constitutes a vice of violation of law, by virtue of art. 99(a) of the Code of Tax Procedure (CPPT), capable of justifying the annulment of such tax acts, and requests that this Court declare the illegality and consequent annulment, both of the assessment acts relating to the Single Circulation Tax for the years 2009, 2010, 2011 and 2012, concerning the 135 vehicles/registration numbers identified in Doc. No.1, and of the assessment acts for compensatory interest associated therewith, totaling the sum of €117,179.42 corresponding to:

Single Circulation Tax ---------- €105,473.64
Compensatory Interest ---------- €11,705.78

It bases its claim alleging, essentially and in summary:

a) The lack of use of the vehicles, whether resulting from the decrease in activity, the seizure of documents by virtue of garnishments or simply from the fact of not using the vehicles, led the Applicant to cease to settle the IUC concerning the years in question;

b) Although there are still hierarchical appeals pending decision, there is a set of proceedings in which the dismissal of the Hierarchical Appeal has already been notified to the Applicant;

c) On 10.11.2014 it was notified of the dismissal concerning proceedings Nos:
[reference numbers …2014…]

d) On 20.11.2014 the dismissal of proceedings No. …2014….

e) On 24.11.2014 the dismissal of proceedings Nos:
[reference numbers …2014…]

f) On 25.11.2014 the dismissal of proceedings Nos …2014… and …2014….

g) On 26.11.2014 the dismissal of proceedings No …2014….

h) On 27.11.2014 the dismissal of proceedings Nos:
[reference numbers …2014…]

i) There still remain 54 Hierarchical Appeals to be decided on the same matter, all as can be better verified by analysis of the summary map attached under Doc. No.2.

j) As a consequence of non-payment of the IUC, during the month of August 2013, the Tax Authority sent to the Applicant 398 assessment acts for IUC beginning in the year 2009 and ending in the year 2012, distributed among the 139 vehicles registered in the name of the Applicant, according to the summary map which it attaches under DOC. No.2.

k) The situation of the motor vehicles listed in Doc. No.1 can be analyzed in the following groups:

• Vehicles that are located in ... (Applicant's registered office)
• Vehicles that are located in the Autonomous Region of the Azores
• Vehicles that are located in Angola
• Vehicles that are located in Morocco

VEHICLES LOCATED IN ... (DOC. No.5)

l) The 37 vehicles in question ceased to circulate on a date prior to the first IUC being claimed, and one of them, the motorcycle with registration number …-…-…, was stolen;

m) 6 vehicles were sold before the first IUC being claimed (…-…-…, …-…-…, …-…-…, …-…-…, …-…-… and …-…-…);

n) 13 vehicles were sold either in the same year of the tax being demanded or in the first of them (…-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-… AND …-…-…);

o) Of the 37 vehicles listed, 33 have their registration number cancelled.

VEHICLES LOCATED IN THE AUTONOMOUS REGION OF THE AZORES (DOC. No.6)

p) IUC for the years 2009 to 2012 is being demanded;

q) All vehicles ceased to circulate on a date prior, a significant part due to the age of the vehicles and the lack of conditions to be able to circulate;

r) The great majority of the vehicles was sold for scrap and destroyed after sale;

s) Of the 33 vehicles listed, 25 have their registration number cancelled;

t) Of the 33 vehicles listed, 2 were sold before the first IUC being claimed (…-…-… and …-…-…)

u) Of the 33 vehicles listed, 8 were sold in the final month of the first year of IUC being claimed (…-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-… and …-…-…)

VEHICLES LOCATED IN THE AUTONOMOUS REGION OF MADEIRA (DOC. No.7)

v) IUC for the years 2009 and 2010 is being demanded

x) All vehicles ceased to circulate on a date prior;

z) The 4 registration numbers are cancelled;

aa) The 4 vehicles were sold.

VEHICLES LOCATED IN MOROCCO (DOC. No.8)

bb) Of the 30 registration numbers listed, IUC for the years 2009 to 2012 is being demanded for 25, while for the 5 remaining, IUC for the years 2010 to 2012 is being demanded;

cc) 15 registration numbers are already cancelled;

dd) All vehicles ceased to circulate prior to the first year claimed;

ee) 17 were sold to the branches in Morocco long before the first year of IUC being claimed (…-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…);

ff) The remaining ones, light vehicles, unlike the heavy vehicles, entered the country by the hand of employees through a simple authorization.

VEHICLES LOCATED IN ANGOLA (DOC. No.9)

gg) IUC for the years 2009 to 2012 is being demanded;

hh) The vehicles all ceased to circulate between the years 2005 to 2007;

ii) They were all sold to the branches in Angola on a date prior to the first year being claimed, more specifically between 2006 and 2007;

jj) Of the 8 registration numbers listed, 6 are cancelled.

kk) From the combination of article 1 of Decree-Law No. 54/75 with article 7 of the Constitution of the Portuguese Republic (CRP), it results that the essential function, the object of the registration is, as is stated in that article 1, to give publicity to the situation of the vehicles, that is, to the registered act, the registration not having, in the words contained in the Supreme Court of Justice Judgment of 19.2.2004, "constitutive effect functioning (only) as mere presumption, rebuttable (presumption juris tantum) of the existence of the right (arts 1(1) and 7 of the Constitution and 350(2) of the Civil Code) as well as of the respective ownership, all in accordance with its terms".

ll) There being no provision in the Constitution that goes in the sense of considering registration as a condition of validity of the contracts subject thereto, and the understanding being unanimous in doctrine and jurisprudence as stated above, it is concluded that to acquire the quality of owner it is sufficient that the owner appear in the purchase and sale contract as buyer, independent of registration, since this has only declarative value and not constitutive value, the absence of registration not affecting the quality of owner. [As can also be read in the Supreme Court of Justice Judgment of 15.12.1977 (proc. 0066582) "land registration has merely declarative function"; "the presumption that the registered right belongs to the person in whose name it is inscribed, can be rebutted by contrary proof"].

mm) The concept of third party for purposes of land registration and concomitantly of motor vehicle property registration, was interpreted in the judgment standardizing jurisprudence of 18 May 1999 in a restrictive manner, which form subsequently received legal consecration in article 5(4) of the Constitution, according to which "third parties, for purposes of registration, are those who have acquired from a common author incompatible rights with each other", wording which has remained until today. (Supreme Court Judgment 25.1.2001 – Proc. 299/00, 7th Section).

nn) In light of the legal and jurisprudential notion of "third party", the understanding prevails that the Tax Authority does not meet the requirements of that notion of "third party" and cannot, in this way, invoke the absence of registration to justify the ineffectiveness of motor vehicle purchase and sale contracts.

oo) Article 3(1) of the Single Circulation Tax Code (CIUC) establishes a presumption that the natural or legal person in whose name the vehicle is registered is in fact its owner.

pp) Thus, if the buyer and new owner of the vehicle does not proceed to register their right of ownership, it is presumed that this right continues to belong to the seller, being able, however, this presumption to be rebutted by means of contrary proof, that is, proof by any means of the respective sale (See Arts. 1 of Decree-Law No. 54/75, 7 of the Constitution and 350(2) of the Civil Code).

qq) The Tax Authority cannot take advantage of the absence of updating the registration of the right of ownership to demand payment of the tax from the previous owner in whose name the vehicle is registered if, by any means, it is presented with sufficient proof of the respective sale.

rr) This interpretation of article 3(1) of the CIUC being the one that best identifies with the principles to which the Tax Authority must subordinate itself, in particular, the inquisitorial principle with a view to discovering material truth.

The applicant did not proceed to appoint arbitrators, whereby, under the provisions of article 6(2)(a) of the Rules of Tax Arbitration (RJAT), the undersigned were appointed by the president of the Deontological Council of CAAD to form part of this Collective Arbitral Tribunal, having accepted in accordance with the legally foreseen terms.

The parties were duly notified of this appointment and did not manifest the will to refuse it according to the combined terms of article 11(1)(a) and (b) of the RJAT and articles 6 and 7 of the Deontological Code.

The Tribunal was constituted on 15-4-2015 [article 11(1)(c) of the RJAT, in the wording introduced by article 228 of Law No. 66-B/2012, of 31-12]

The Tax and Customs Authority submitted its response and attached the administrative proceedings, defending, essentially, that the request for arbitral pronouncement should be ruled unfounded and that the impugned tax acts should be maintained in the legal order.

On 22-6-2015 the meeting of the Tribunal with the parties took place (article 18 of the RJAT), which was followed by the production of witness testimony, after which both parties produced their respective oral submissions.

Preliminary Ruling/Procedural Assumptions

The arbitral tribunal was regularly constituted and is substantively competent, in light of the provisions of articles 2(1)(a) and 30(1) of the RJAT.

Being the same tax (IUC) and given the identity of the factual and legal grounds in all challenges to the assessments, the assumptions provided for in articles 104 of the Code of Tax Procedure and 3 of the RJAT are met for the consolidation of the claims.

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

The proceedings do not suffer from nullities and no questions have been raised that may prevent the appreciation of the merits of the case.

II GROUNDS

Proven Facts

The following is the essential factual framework established to frame legally and in accordance with law the issues raised[1]:

a) The Applicant is a civil construction and public works company that exercises its activity throughout the national territory (including the Autonomous Regions of the Azores and Madeira where it maintained branches) as well as in the Kingdom of Morocco and in Angola;

b) As a consequence of non-payment of the IUC, during the month of August 2013, the Tax Authority sent to the Applicant 398 assessment acts for IUC beginning in the year 2009 and ending in the year 2012, distributed among the 139 vehicles registered in the name of the Applicant, according to the summary map which is attached under DOC. No.2;

c) The Applicant was the owner on the date of the aforementioned IUC assessments, of the vehicles identified in documents No. 1 and 2, attached with the arbitral petition, specifically the following:

[TABLE: Detailed vehicle registration data showing license plates, manufacture years, months, last IUC paid, assessment amounts, and compensatory interest for approximately 60 vehicles, totaling €38,363.65 in IUC and €3,947.31 in interest]

d) With respect to the vehicles identified in document No. 5 – vehicles that are located in ..., [for which the Applicant attached documents with a view to rebutting the presumption of ownership established in article 3 of the IUC Code], such rebuttal was not achieved regarding the following vehicles:

1. …-…-… – year 2009/2010: the Applicant attached a debit note with the description of transfer of equipment. Such document appears to be insufficient to demonstrate that there was in fact a transfer of the ownership of the vehicle.

In consequence, it is considered due the IUC assessed by the Tax Authority (€103 + €14.03).

1. …-…-… – from 2009-2012: the Applicant attached a debit note with the description of transfer of equipment. Such document appears to be insufficient to demonstrate that there was in fact a transfer of the ownership of the vehicle.

In consequence, it is considered due the IUC assessed by the Tax Authority (€195 + €21.90).

1. …-…-… – from 2009 to 2012: the Applicant attached a sales declaration which is not fully completed, lacking the identification of the buyer. Such document appears to be insufficient to demonstrate that there was in fact a transfer of the ownership of the vehicle.

In consequence, it is considered due the IUC assessed by the Tax Authority (€75.46 + €8.97).

1. …-…-…, …-…-…, …-…-…, …-…-…, …-…-…, …-…-…: the Applicant attached only the invoices for the sale of the vehicles, the Tribunal being unable to consider that with such documents the transfer of ownership of the vehicles has been demonstrated, since no evidence of payment, sales declarations or other documents demonstrating the transfer of ownership were attached. The IUC and compensatory interest assessment acts are maintained with respect to the following vehicles:

[In summary: based on the documents attached, the Tribunal is convinced that with respect to the IUC assessment acts identified in document No. 5, responsibility for their payment is attributable to the Applicant].

e) With respect to the vehicles identified in document No. 6 – vehicles that are located in the Autonomous Region of the Azores, for which the Applicant attached documents with a view to rebutting the presumption of ownership established in article 3 of the IUC Code, the Tribunal considers that, in no situation, can the presumption of ownership of the Applicant be considered rebutted.

f) In fact, with respect to the vehicles allegedly without conditions for circulation and/or garnished, the Tribunal understands that the Applicant did not prove that the transfer of ownership of the automobiles occurred, being, therefore, applicable, in these situations, the presumption of ownership provided for in article 3(1) of the IUC Code.

[In consequence, it is considered that, according to the terms provided for in article 4(3) of the IUC Code, the tax is due by the owner "until the cancellation of the registration or record by virtue of scrapping carried out in accordance with the law."]

g) With respect to the vehicles allegedly sold, the Applicant only attaches the invoices for the sale of the vehicles, the Tribunal being unable to consider that with such documents the transfer of ownership of the vehicles has been demonstrated, since no evidence of payment, sales declarations or other documents revealing that the transfer of ownership occurred were attached.

[Based on the documents attached, the Tribunal understands that the Applicant did not prove that the transfer of ownership of the automobiles occurred, being, therefore, applicable, in these situations, the presumption of ownership provided for in article 3(1) of the IUC Code. In consequence, it is considered that, according to the terms provided for in article 4(3) of the IUC Code, the tax is due by the owner "until the cancellation of the registration or record by virtue of scrapping carried out in accordance with the law."]

h) The vehicles identified in DOC.7 ["vehicles that are located in Madeira"], in light of the documents attached to the record, were, three of them, namely those with registration numbers …-…-…, …-…-… and …-…-…, invoiced to a company in Oliveira de Azeméis, and the remaining one, that is, the one with registration number …-…-…, invoiced to a company in Lourosa, and in either case, the Applicant attached, without more, the invoices relating to their sale, which appears to be insufficient to demonstrate the actual transfer of ownership of the vehicles in question. (See Doc. 98 and 100);

With respect to the vehicles referenced as "Sales/Exports to Angola":

i) The combination both of the invoice presented with the document of the respective Shipping Agency, which indicates the shipment of the vehicle with registration number …-…-… on 11-08-2007, and with the document issued by the National Council of Shippers of Angola, where the arrival of the said vehicle at the Port of Angola is estimated for the date of 24-08-2007, and also with the customs export document processed on 09-08-2007, allows it to be considered certain that the vehicle in question was in fact exported in August 2007, transferring the ownership of the vehicle in question from the Applicant to its buyer, whereby, either in light of the principle of territoriality, as established in article 13(1) of the General Tax Law (LGT), or because the presumption established in article 3(1) of the CIUC was rebutted, the Applicant, on the date of the IUC assessment for 2009, was not the passive subject of that tax. (See Doc. 99);

j) The combination of the invoice presented, both with the document of the respective Shipping Agency attesting the actual shipment of the vehicle with registration number …-…-…. on 03-06-2006, and with the document issued by the National Council of Shippers of Angola, where reference is made to the shipment of the vehicle in question on the said date, appears to demonstrate its actual export, whereby, in light of the principle of territoriality, as established in article 13(1) of the LGT, the norms of the CIUC are not to be applied to the taxable facts underlying the assessment acts at issue in the present proceedings, relating to the years 2009/2010/2011/2012. (See Doc. 59)

k) The combination of the invoice presented with the document issued by the National Council of Shippers of Angola, where the arrival of the vehicle with registration number …-…-… at the port is estimated for 28-09-2007, appears to demonstrate its actual export, whereby, in light of the principle of territoriality, as established in article 13(1) of the LGT, the norms of the CIUC are not to be applied to the taxable fact underlying the assessment act at issue in the present proceedings, relating to the year 2009. (Doc. 60)

l) The combination of the invoice presented, both with the document of the respective Shipping Agency indicating the shipment, at the Port of Leixões, on 25-10-2007, of the vehicle with registration number …-…-…, and with the document issued by the National Council of Shippers of Angola, where the arrival of the said vehicle at the Port of Angola is estimated for 07-11-2007, allows it to be considered its actual export, whereby, in light of the principle of territoriality, as established in article 13(1) of the LGT, the norms of the CIUC are not to be applied to the taxable facts underlying the assessment acts at issue in the present proceedings, relating to the years 2009/2010/2011/2012. (See Doc. 66)

m) The combination of the invoice presented, both with the document of the respective Shipping Agency, which indicates the shipment of the vehicle with registration number …-…-… on 11-08-2007, and with the document issued by the National Council of Shippers of Angola, where the arrival of the said vehicle at the Port of Angola is estimated for the date of 24-08-2007, and also with the customs export document processed on 09-08-2007, allows it to be considered certain that the vehicle in question was in fact exported in August 2007, transferring the ownership of the vehicle in question from the Applicant to its buyer, whereby, either in light of the principle of territoriality, as established in article 13(1) of the LGT, or because the presumption established in article 3(1) of the CIUC was rebutted, the Applicant, on the date of the IUC assessment for 2009, was not the passive subject of that tax. (See Doc. 99)

n) The combination of the invoice presented with the export of the vehicle with registration number …-…-…, supported by the customs export document No. …, of 07-05-2006, of the Customs House of …, allows it to be concluded that, in light of the principle of territoriality, as established in article 13(1) of the LGT, the norms of the CIUC are not to be applied to the taxable fact underlying the assessment act at issue in the present proceedings, relating to the mentioned vehicle, for the year 2009. (See Doc. 63)

o) The combination of the invoice presented, both with the Bill of Lading, the shipping document where the actual shipment of the vehicle with registration number …-…-… on 20-05-2006 is attested, and with the corresponding customs export document, allows it to be considered certain its actual export, whereby, in light of the principle of territoriality, as established in article 13(1) of the LGT, the norms of the CIUC are not to be applied to the taxable fact underlying the assessment act at issue in the present proceedings, relating to the year 2009. (See Doc. 61)

p) The combination of the invoice presented, both with the document of the respective Shipping Agency indicating the shipment, at the Port of Leixões, on 25-10-2007, of the vehicle with registration number …-…-…, and with the document issued by the National Council of Shippers of Angola, where the arrival of the said vehicle at the Port of Angola is estimated for 07-11-2007, allows it to be considered that the vehicle in question was in fact exported in November 2007, transferring the ownership of the vehicle in question from the Applicant to its buyer, whereby, either in light of the principle of territoriality, as established in article 13(1) of the LGT, or because the presumption established in article 3(1) of the CIUC was rebutted, the Applicant, on the date of the IUC assessments, for the years 2009/2010/2011, was not the passive subject of that tax. (See Doc. 62)

[Concluding: the mentioned vehicles, identified in DOC. 9, were the object of definitive export to Angola, with their ownership being transferred to the respective acquirers. The Applicant, in these terms, as stated above, either by virtue of what is established in article 13(1) of the LGT, or because the presumption established in article 3(1) of the CIUC was rebutted, does not appear to us to be responsible for payment of the amounts contained in the IUC and Compensatory Interest assessments which, in this particular, total the sum of €4,873.62].

q) With respect to the vehicles referenced as "Sales/exports to Morocco":

(1) - The customs export document presented and the invoice therein duly transcribed relate to the temporary export of the vehicle with registration number …-…-…, thus not appearing to be sufficient documents to prove the actual transfer of the ownership of the said vehicle. (See Doc. 69)

(2) - The only document presented, as proof that, on the date of the due date of the IUC, the ownership of the vehicle with registration number …-…-… had already been transferred, refers to a copy of the Garnishment Act, dated 15-12-2010, which does not appear to be sufficient to demonstrate the said transfer of ownership, whereby on the date of the assessments in question in the case, relating to the said vehicle, the Applicant was the passive subject of the tax. (See Doc. 96)

• (3) - No documents whatsoever were presented tending to demonstrate the transfer of the ownership of the vehicle with registration number …-…-….

• (4) - The only document presented, as proof that on the date of the due date of the IUC the ownership of the vehicle with registration number …-…-… had already been transferred, refers to a copy of the Garnishment Act, dated 13-05-2013, which does not appear to be sufficient to demonstrate the said transfer of ownership, whereby on the date of the assessments in question in the case, relating to the said vehicle, the Applicant was the passive subject of the tax. (See Doc. 89)

• (5) - The only document presented, as proof that on the date of the due date of the IUC the ownership of the vehicle with registration number …-…-… had already been transferred, is embodied in a document on "letterhead of the Motor Vehicle Registry (IMTT)", relating to the cancellation of the said registration number, referenced to the year 2013, which does not appear to be sufficient to demonstrate that on the date of the IUC assessments, relating to the said vehicle, the Applicant was not the passive subject of that tax. (See Doc. 72)

• (6) - The only document presented, as proof that on the date of the due date of the IUC the ownership of the vehicle with registration number …-…-… had already been transferred, is embodied in a document on "letterhead of the Motor Vehicle Registry (IMTT)", relating to the cancellation of the said registration number, referenced to the year 2013, which does not appear to be sufficient to demonstrate that on the date of the IUC assessments, relating to the said vehicle, the Applicant was not the passive subject of that tax. (See Doc. 73)

• (7) - There is a lack of customs export document, to which is added the circumstance that the invoice presented relates to the temporary export of the vehicle with registration number …-…-…, which does not appear to be sufficient to demonstrate that on the date of the IUC assessments, relating to the said vehicle, the Applicant was not the passive subject of that tax. (See Doc. 74)

• (8) - The only document presented, as proof that on the date of the due date of the IUC the ownership of the vehicle with registration number …-…-… had already been transferred, is embodied in a document on "letterhead of the Motor Vehicle Registry (IMTT)", relating to the cancellation of the said registration number, referenced to the year 2015, which does not appear to be sufficient to demonstrate that on the date of the IUC assessments, relating to the said vehicle, the Applicant was not the passive subject of that tax. (See Doc. 87)

• (9) - The only document presented, as proof that on the date of the due date of the IUC the ownership of the vehicle with registration number …-…-… had already been transferred, is embodied in a document on "Letterhead of the Motor Vehicle Registry (IMTT)" relating to the cancellation of the said registration number, which entered the said Institute on 09-10-2013, which does not appear to be sufficient to demonstrate that on the date of the IUC assessments, relating to the said vehicle, the Applicant was not the passive subject of that tax. (See Doc. 75)

• (10) - The only document presented, as proof that on the date of the due date of the IUC the ownership of the vehicle with registration number …-…-… had already been transferred, refers to a copy of the Garnishment Act, dated 15-10-2010, which does not appear to be sufficient to demonstrate the said transfer of ownership, whereby on the date of the assessments in question in the case, relating to the said vehicle, the Applicant was the passive subject of the tax. (See Doc. 92)

• (11) - The only document presented, as proof that on the date of the due date of the IUC the ownership of the vehicle with registration number …-…-… had already been transferred, is embodied in a document on "letterhead of the Motor Vehicle Registry (IMTT)", relating to the cancellation of the said registration number, in the year 2013, which does not appear to be sufficient to demonstrate that on the date of the IUC assessments, relating to the said vehicle, the Applicant was not the passive subject of that tax. (See Doc. 76)

• (12) - The only document presented, as proof that on the date of the due date of the IUC the ownership of the vehicle with registration number …-…-… had already been transferred, refers to a copy of the Garnishment Act, dated 28-02-2012, which does not appear to be sufficient to demonstrate the said transfer of ownership, whereby on the date of the assessments in question in the case, relating to the said vehicle, the Applicant was the passive subject of the tax. (See Doc. 94)

• (13) - The only document presented, as proof that on the date of the due date of the IUC the ownership of the vehicle with registration number …-…-… had already been transferred, refers to a copy of the Garnishment Act, dated 16-03-2011, which does not appear to be sufficient to demonstrate the said transfer of ownership, whereby on the date of the assessments in question in the case, relating to the said vehicle, the Applicant was the passive subject of the tax. (See Doc. 65)

• (14) - The only document presented, as proof that on the date of the due date of the IUC the ownership of the vehicle with registration number …-…-… had already been transferred, is embodied in a document on "letterhead of the Motor Vehicle Registry (IMTT)", relating to the cancellation of the said registration number, in the year 2013, which does not appear to be sufficient to demonstrate that on the date of the IUC assessments, relating to the said vehicle, the Applicant was not the passive subject of that tax. (See Doc. 79)

• (15) - The only document presented, as proof that on the date of the due date of the IUC the ownership of the vehicle with registration number …-…-… had already been transferred, is embodied in a document on "letterhead of the Motor Vehicle Registry (IMTT)", relating to the cancellation of the said registration number, in the year 2013, which does not appear to be sufficient to demonstrate that on the date of the IUC assessments, relating to the said vehicle, the Applicant was not the passive subject of that tax. (See Doc. 82)

• (16) - The documents presented, embodied in the report submitted by the Applicant to the Insurance Company B… - …, SA, relating to an accident that occurred on 26-01-2006 with the vehicle with registration number …-…-…, and the response of the aforementioned insurance company, referring to the need for the Applicant to satisfy various conditions relating to the transmission of ownership, so that the accident would be settled as Total Loss, namely the sending to the Insurer of the vehicle logbook and the property registration certificate, conditions whose performance is not demonstrated in the record, which was taken as essential for purposes of the transfer of ownership of the vehicle, whereby it was not proved that before the due date of the IUC in 2010/2011/2012, there was actual transfer of the ownership of the vehicle in reference, as Salvage, to the insurance company. (See Doc. 84)

• (17) - The documents presented by the Applicant, with respect to the vehicle with registration number …-…-…, translated into a declaration by the Police Authorities of Morocco to the effect that the said vehicle was damaged on 07-10-2009 in that country, becoming completely unusable, as well as the report to the Insurance Company B… made by the Applicant, both from 2009, do not appear to be sufficient to prove that, before the due date of the IUC in 2010/2011/2012, there was actual transfer of the ownership of the vehicle in reference, either to the alleged buyer or to the insurance company, as Salvage. (See Doc. 86)

[Concluding: with respect to the seventeen vehicles mentioned above, identified in DOC.8, the Applicant failed to demonstrate that the actual transfer of the ownership of such vehicles occurred on dates prior to those of the due date of the corresponding IUC and, consequently, it appears to be responsible for payment of the amounts contained in the IUC and Compensatory Interest assessments which, with respect to the mentioned vehicles, total the sum of €13,717.37].

r) With respect to the vehicles referenced as "Sales/Exports to Morocco" to which the following table alludes:

[TABLE: Vehicle details for Morocco exports showing registration numbers, years, months, last IUC, assessment amounts, and interest for 10 vehicles, totaling €18,291.00 in assessments and €2,088.29 in interest]

(1) - With respect to the vehicle with registration number …-…-… no documents were presented, nor are any amounts mentioned resulting from assessments that have been made.

(2) - The documents presented, namely: the invoice relating to the sale of the vehicle; the customs export document processed at the Customs House of ..., as well as the proof of the export of the vehicle by the Customs House of Almería-Spain and also the document of origin of the vehicle and the document of the respective Shipping Agent, allow it to be considered that the vehicle with registration number …-…-… was definitively exported in July 2007, transferring the ownership of the vehicle in question from the Applicant to its buyer, whereby, either in light of the principle of territoriality, as established in article 13(1) of the LGT, or because the presumption established in article 3(1) of the CIUC was rebutted, the Applicant, on the date of the IUC assessments, for the years 2009/2010/2011/2012, was not the passive subject of that tax. (See Doc. 71)

• (3) - The combination of the invoice presented, relating to the sale of the vehicle with registration number …-…-…, with the document of origin and with the customs export document processed at the Customs House of ..., allow it to be considered that the said vehicle was definitively exported in the year 2007, transferring the ownership of the vehicle in question from the Applicant to its buyer, whereby, either in light of the principle of territoriality, as established in article 13(1) of the LGT, or because the presumption established in article 3(1) of the CIUC was rebutted, the Applicant, on the date of the IUC assessments, for the years 2009/2010/2011/2012, was not the passive subject of that tax. (See Doc. 68)

• (4) - No documents whatsoever were identified relating to the vehicle with registration number …-…-….

• (5) - The combination of the invoice presented, relating to the sale of the vehicle with registration number …-…-…, with the customs export document processed at the Customs House of ..., on 15-03-2007 and with the document of the respective Shipping Agent, allow it to be considered that the said vehicle was definitively exported in the year 2007, transferring the ownership of the vehicle in question from the Applicant to its buyer, whereby, either in light of the principle of territoriality, as established in article 13(1) of the LGT, or because the presumption established in article 3(1) of the CIUC was rebutted, the Applicant, on the date of the IUC assessments, for the years 2009/2010/2011/2012, was not the passive subject of that tax. (See Doc. 78)

• (6) - The documents presented, namely: the invoice relating to the sale of the vehicle; the customs export document processed at the Customs House of ..., as well as the document of origin of the vehicle and the document of the respective Shipping Agent, allow it to be considered that the vehicle with registration number …-…-… was definitively exported in April 2007, transferring the ownership of the vehicle in question from the Applicant to its buyer, whereby, either in light of the principle of territoriality, as established in article 13(1) of the LGT, or because the presumption established in article 3(1) of the CIUC was rebutted, the Applicant, on the date of the IUC assessments, for the years 2009/2010/2011/2012, was not the passive subject of that tax. (See Doc. 67)

• (7) - The documents presented, that is, the invoice relating to the sale of the vehicle; the customs export document; the document of origin of the vehicle and the document of the respective shipping agent, allow it to be considered that the vehicle with registration number …-…-… was definitively exported in the year 2007, transferring the ownership of the vehicle in question from the Applicant to its buyer, whereby, either in light of the principle of territoriality, as established in article 13(1) of the LGT, or because the presumption established in article 3(1) of the CIUC was rebutted, the Applicant, on the date of the IUC assessments, for the years 2009/2010/2011/2012, was not the passive subject of that tax. (See Doc. 80)

• (8) - The documents presented, namely: the invoice relating to the sale of the vehicle; the customs export document processed at the Customs House of ..., as well as the proof of the export of the vehicle by the Customs House of Almería-Spain and also those referring, both to the Shipping Agent and to the Official Customs Broker, allow it to be considered that the vehicle with registration number …-…-… was definitively exported in November 2006, transferring the ownership of the vehicle in question from the Applicant to its buyer, whereby, either in light of the principle of territoriality, as established in article 13(1) of the LGT, or because the presumption established in article 3(1) of the CIUC was rebutted, the Applicant, on the date of the IUC assessments, for the years 2009/2010/2011/2012, was not the passive subject of that tax. (See Doc. 81)

• (9) - The documents presented, that is, the invoice relating to the sale of the vehicle with registration number …-…-…; the document of origin of the vehicle and the customs export document, as well as the document of the Shipping Agent, allow it to be considered that the said vehicle was definitively exported in March 2007, transferring the ownership of the vehicle in question from the Applicant to its buyer, whereby, either in light of the principle of territoriality, as established in article 13(1) of the LGT, or because the presumption established in article 3(1) of the CIUC was rebutted, the Applicant, on the date of the IUC assessments, for the years 2009/2010/2011/2012, was not the passive subject of that tax. (See Doc. 83)

• (10) - The invoice presented, relating to the sale of the vehicle with registration number …-…-…, as well as the customs export document processed at the Customs House of ... and the proof of the export of the vehicle by the Customs House of Almería-Spain, allow it to be considered that the said vehicle was definitively exported in October 2006, transferring the ownership of the vehicle from the Applicant to its buyer, whereby, either in light of the principle of territoriality, as established in article 13(1) of the LGT, or because the presumption established in article 3(1) of the CIUC was rebutted, the Applicant, on the date of the IUC assessments, for the years 2010/2011/2012, was not the passive subject of that tax. (See Doc. 85)

[Concluding: In these circumstances, the Tribunal understood that the vehicles aforementioned, identified in DOC. 8, were the object of definitive export to Morocco, with their ownership being transferred to the respective recipients. The Applicant, in these terms, as stated above, either by virtue of what is established in article 13(1) of the LGT, or because the presumption established in article 3(1) of the CIUC was rebutted, does not appear to be responsible for payment of the amounts contained in the IUC and Compensatory Interest assessments, which total the sum of €20,379.29. In summary, given all of the foregoing, with respect to the vehicles inscribed in the Tables/Charts mentioned above, relating to the vehicles in Madeira, Angola and Morocco, it appears that the Applicant:

• Is not responsible for payment of IUC and Compensatory Interest, with respect to the vehicles destined for Angola, and ten of the vehicles exported to Morocco, which totals the sum of €25,252.91;

• Is responsible for payment of IUC and Compensatory Interest, with respect to seventeen of the vehicles exported to Morocco, and the four vehicles allegedly sold in the Autonomous Region of Madeira, which totals the sum of €14,732.66].

Motivation

The facts mentioned are documentarily proven or were not specifically disputed.

Specifically, the dates of registration of the vehicles mentioned are documented in the administrative proceedings attached by the Tax Authority.

The respondent did not contest the documents, invoking, in particular, their falsity.

Also, the witness testimony produced was taken into account by the Tribunal in the formation of its respective conviction.

II GROUNDS (continued)

The Law

Given the positions of the Parties assumed in the arguments presented, a central decisive question is whether, on the date of the occurrence of the facts generating the tax [article 3(1) of the CIUC[2]], the owners of the vehicles are not those who appear in the register, will it be, notwithstanding, these (those who appear in the register) that will always be considered the passive subjects of the IUC, with the result that the presumption of ownership revealed by the register is not rebuttable or, said otherwise, whether the norm of subjective incidence contained in article 3(1) of the CIUC establishes or does not establish a presumption.

This and other issues relating to the incidence and passive subjects in taxation of the IUC have already, essentially, been addressed in diverse decisions of CAAD, some of which have already been published at www.caad.org.pt and others are in the process of being published [See, for example, decisions rendered in proceedings Nos 14/2013, 26/2013, 27/2013, 73/2013, 170/2013, 294/2013 and 154/2014].

No reasons are apparent to invert or alter the essential sense of this Jurisprudence.

Let us see then:

Article 3 of the CIUC (Single Circulation Tax Code) provides:

"Article 3

Subjective Incidence

1 – The passive subjects of the tax are the owners of the vehicles, being considered as such the natural or legal persons, of public or private law, in whose name the same are registered.

2 – Equivalent to owners are financial lessees, buyers with reservation of ownership, as well as other holders of purchase option rights by virtue of the leasing contract".

By its turn, article 11(1) of the General Tax Law (LGT) establishes that "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".

Resolving the doubts that arise in the application of legal norms presupposes the carrying out of an interpretative activity.

Thus, it is necessary to consider what is the best interpretation[3] of article 3(1) of the CIUC, in light, first of all, of the literal element, that is, that which aims to detect the legislative thought that is objectified in the norm, to verify whether the same contemplates a presumption, or whether it determines, definitively, that the passive subject of the tax is the owner who appears in the register.

The question that arises then is, in the case sub judicio, whether the expression "considered to be" used by the legislator in the CIUC, instead of the expression "presumed to be", which was the one that appeared in the diplomas that preceded the CIUC, will have removed the nature of presumption from the legal provision in question.

In our view, and contrary to what the Tax Authority learned argues, the answer necessarily has to be negative, since from the analysis of our legal order it is clear that the two expressions have been used by the legislator with equivalent meaning, either at the level of rebuttable presumptions, or in the framework of irrebuttable presumptions, whereby nothing enables us to draw the conclusion sought by the Tax Authority on a mere semantic reason.

In fact, this occurs in varied legal norms that consecrate presumptions using the verb "to consider", of which the following are indicated, merely by way of example:

~ in the field of civil law - article 243(3) of the Civil Code, when it establishes that "the third party who acquired the right after the registration of the action of simulation is always considered to be acting in bad faith, when such registration took place";

~ also in the field of industrial property law, the same occurs when article 59(1) of the Code of Industrial Property provides that "(…) inventions whose patent has been requested during the year following the date on which the inventor leaves the company, are considered to have been made during the execution of the employment contract (…)";

~ and, finally, in the field of tax law, when article 89-A(3) and (4) of the LGT provide that it is the burden of the taxpayer to prove that the income declared corresponds to reality and that, if this proof is not made, it is presumed ("is considered" in the wording of the Law) that the income is that which results from the table contained in article 89-A(4) of the said article.

This conclusion in the sense that there is total equivalence of meanings between the two expressions, which the legislator uses indifferently, satisfies the condition established in article 9(2) of the Civil Code, since the minimum correspondence of wording is ensured for purposes of determining legislative thought.

It is important, next, to subject the norm in question to the other elements of logical interpretation, in particular, the historical element, the rational or teleological element and the systematic element.

Disserting on the interpretative activity says FRANCESCO FERRARA that this "is the most difficult and delicate operation that the jurist can dedicate himself to, and demands fine touch, sharp sense, happy intuition, much experience and perfect command not only of the positive material, but also of the spirit of a certain legislation. (…) Interpretation must be objective, balanced, without passion, bold at times, but not revolutionary, acute, but always respectful of the law" (See Essay on the Theory of Interpretation of Laws, translation by MANUEL DE ANDRADE, (2nd ed.), Arménio Amado, Editor, Coimbra, 1963, p. 129).

As BAPTISTA MACHADO refers, "the legal provision presents itself to the jurist as a linguistic statement, as a set of words that constitute a text. To interpret obviously consists in drawing from that text a certain meaning or content of thought.

The text allows multiple meanings (polysemy of the text) and frequently contains ambiguous or obscure expressions. Even when apparently clear at first reading, its application to concrete cases of life frequently gives rise to unforeseen and unpredictable difficulties of interpretation. Besides, although apparently clear in its verbal expression and bearing only one meaning, there is still the possibility that the verbal expression betrayed the legislative thought – a phenomenon more frequent than may appear at first sight " (See Introduction to Law and to Legitimating Discourse, pp.175/176).

"The purpose of interpretation is to determine the objective meaning of the law, avis potestas legis. (…) The law is not what the legislator wanted or wanted to express, but solely that which it expressed in the form of law. (…) On the other hand, the legal command has an autonomous value that may not coincide with the will of the makers and drafters of the law, and may lead to unforeseen and unexpected consequences for the legislators. (…) The interpreter must seek not that which the legislator wanted, but that which in the law appears objectively wanted: the mens legis and not the mens legislatoris (See FRANCESCO FERRARA, Essay, pp. 134/135).

Understanding a law "is not merely mechanically grasping the apparent and immediate meaning that results from verbal connection; it is to inquire with depth the legislative thought, to descend from the verbal surface to the intimate concept that the text contains and to develop it in all its possible directions" (loc. cit., p.128).

With the objective of unveiling the true sense and scope of legal texts, the interpreter draws on the interpretative factors which are essentially the grammatical element (the text, or the "letter of the law") and the logical element, which in turn is subdivided into the rational element (or teleological), systematic element and historical element. (See BAPTISTA MACHADO, loc. Cit., p. 181; J.OLIVEIRA ASCENSÃO, The Law – Introduction and General Theory 2nd Ed., Calouste Gulbenkian Foundation, Lisbon, p.361).

Among us, it is article 9 of the Civil Code (CC) that provides the rules and fundamental elements for correct and adequate interpretation of norms.

The text of article 9(1) of the CC begins by saying that interpretation must not be confined to the letter of the law, but must reconstruct from it the "legislative thought".

On the expression "legislative thought", BAPTISTA MACHADO tells us that article 9 of the CC "did not take a position in the controversy between subjectivist doctrine and objectivist doctrine. It is proven by the fact that it does not refer, neither to the "will of the legislator" nor to the "will of the law", but instead points as the purpose of interpretative activity the discovery of "legislative thought" (art. 9, 1st). This expression, purposefully colorless, means exactly that the legislator did not want to commit" (loc. cit., p. 188).

In the same sense, PIRES DE LIMA and ANTUNES VARELA pronounce themselves in annotation to article 9 of the CC (See Civil Code Annotated – vol. I, Coimbra ed., 1967, p. 16).

And on article 9(3) of the CC, the author refers: "(…) this (3) proposes to us, therefore, a model of ideal legislator that consecrated the most correct solutions (most correct, just or reasonable) and knows how to express itself in a correct form. This model clearly wears objectivist characteristics, since it does not take for point of reference the concrete legislator (so often incorrect, precipitated, unhappy) but an abstract legislator: wise, prudent, rational and just" (loc. cit. p. 189/190).

Right after, this distinguished Professor draws attention to the fact that article 9(1) mentions three more elements of interpretation "the unity of the legal system", the "circumstances in which the law was elaborated" and the "specific conditions of the time in which it is applied" (loc. cit, p. 190).

As to the "circumstances of the time in which the law was elaborated", explains BAPTISTA MACHADO that this expression "represents that which was traditionally called the occasio legis: the conjunctural factors of a political, social and economic nature that determined or motivated the legislative measure in question" (loc. cit., p.190).

Relative to the "specific conditions of the time in which it is applied", this author says that this element of interpretation "has decidedly an actualist connotation (loc. cit., p. 190) in which it coincides with the opinion expressed by PIRES DE LIMA and ANTUNES VARELA in annotations to article 9 of the CC.

With respect to the "unity of the legal system", BAPTISTA MACHADO considers this the most important interpretative factor: "(…) its consideration as a decisive factor would always be imposed on us by the principle of coherent valorization or axiological of the legal order" (loc. cit., p. 191).

It is also this author who tells us, with respect to the literal or grammatical element (text or "letter of the law") that this "is the point of departure of interpretation. As such, it has from the beginning a negative function: that of eliminating those meanings that do not have any support, or at least any correspondence or resonance in the words of the law.

But it equally has a positive function, in the following terms: if the text allows only one meaning, it is that the meaning of the norm – with the proviso, however, that it is possible to conclude based on other norms that the wording of the text betrayed the thought of the legislator" (loc. cit., p. 182).

Referring to the rational or teleological element, this author says that it consists "in the reason for the law (ratio legis), in the end sought by the legislator in drafting the norm. Knowledge of this end, especially when accompanied by knowledge of the circumstances (political, social, economic, moral, etc.,) in which the norm was elaborated or of the political-economic-social conjuncture that motivated the legislative decision (occasio legis) constitutes a subsidy of the greatest importance for determining the meaning of the norm. It is enough to recall that the clarification of the ratio legis reveals to us the valuation or weighing of the diverse interests that the norm regulates and, therefore, the relative weight of those interests, the choice between them translated by the solution that the norm expresses" (loc. cit., pp. 182/183).

It is still BAPTISTA MACHADO who tells us, now with respect to the systematic element (context of the law and parallel provisions) that "this element comprises the consideration of the other provisions that form the complex of norms of the institute in which the norm being interpreted is integrated, that is, that regulate the same matter (context of the law), as well as the consideration of legal provisions that regulate parallel normative problems or related institutes (parallel provisions). It also comprises the systematic place that belongs to the norm being interpreted in the overall order, as well as its consonance with the spirit or intrinsic unity of the entire legal order.

This interpretative subsidy is based on the postulate of intrinsic coherence of the order, namely on the fact that the norms contained in a codification obey in principle a unitary thought" (loc.cit., p. 183).

As teaches JOSEF KOHLER, cited by MANUEL DE ANDRADE "(…) In particular we must take into account the interlinking of the diverse laws of the country, because a fundamental requirement of all sound legislation is that the laws adjust themselves to each other and do not result in a congeries of disconnected provisions (Essay, p. 27).

Through the analysis of the historical element, the conclusion is extracted that, since the entry into force of Decree-Law 59/72, of 30 December, the first to regulate this matter, until Decree-Law No. 116/94, of 3 May, the last to precede the CIUC [see Law No. 22-A/2007, with amendments from Law 67-A/2007 and 3-B/2010], the presumption [emphasized] was consecrated that the passive subjects of the IUC are the persons in whose name the vehicles are registered on the date of their assessment.

It is verified, therefore, that the tax law had, from the beginning, the objective of taxing the true and actual owner (or lessee, in case of financial leasing and ALD) and user of the vehicle, it being indifferent the use of one or another expression which, as we have seen, have in our legal order an equivalent meaning.

The same is to be said when we resort to the elements of interpretation of a rational or teleological nature.

With effect, the current and new framework of motor vehicle taxation consecrates principles that aim to subject the owners of the vehicles to bearing the costs of damage to roads and the environment caused by these, as is apparent from the content of article 1 of the CIUC.

Now the consideration of these principles, in particular, the principle of equivalence, which deserve constitutional protection and consecration in community law, and are also recognized in other branches of the legal order, determines that the aforementioned costs be borne by the actual owners, the causers of the aforementioned damage, which sets aside, altogether, an interpretation that aimed to prevent the presumed owners from proving that they no longer are by the property being in the legal sphere of another[4].

Thus, also, from the interpretation carried out in light of the elements of a rational and teleological nature, given that which the rationality of the system guarantees and the purposes sought by the new CIUC, it is clear that article 3(1) of the CIUC consecrates a rebuttable legal presumption.

Given the foregoing, it is important to conclude that the ratio legis of the tax points in the direction of the actual owner-users of the vehicles being taxed, whereby the expression "to be considered" is used in the normative in question in a meaning similar to "to be presumed", reason whereby there is no doubt that a legal presumption is consecrated.

On the other hand, article 73 of the LGT establishes that "(…) the presumptions consecrated in tax incidence norms always admit contrary proof, whereby they are rebuttable (…)".

Thus being, consecrating article 3(1) of the CIUC a presumption juris tantum [and, therefore, rebuttable], the person who is inscribed in the register as owner of the vehicle and who, for that reason was considered by the Tax Authority as the passive subject of the tax, can present elements of proof aiming to demonstrate that the holder of the property, on the date of the taxable event, is another person, to whom the property was transferred.

Subsuming:

Applying the principles and rules that have just been set out to the situation sub judicio – and which, moreover, have been somewhat referenced with respect to the appreciation and decision of the matter of fact - one easily concludes that the following are illegal due to lack or violation of their respective assumptions:

a) With respect to the vehicles inscribed in the table referred to in c) of the list of proven facts, the assessments mentioned therein in the overall amount of €42,310.96;

b) With respect to the IUC assessments to which documents No. 9 attached with the petition and items i) to p) of the proven facts list refer, in the overall amount of €4,873.62;

c) With respect to the IUC assessments to which documents No. 8 attached with the petition and item r) of the proven facts list refer, in the overall amount of €20,379.29.

III – DECISION

In accordance with the foregoing, this Arbitral Tribunal decides:

a) To rule, partially favorably, the request for annulment of the IUC assessments and compensatory interest under challenge and, in consequence, decides to annul those tax acts in the terms mentioned above [a) With respect to the vehicles inscribed in the table referred to in c) of the list of proven facts, the assessments mentioned therein in the overall amount of €42,310.96;

b) With respect to the IUC assessments to which documents No. 9 attached with the petition and items i) to p) of the proven facts list refer, in the overall amount of €4,873.62;

c) With respect to the IUC assessments to which documents No. 8 attached with the petition and item r) of the proven facts list refer, in the overall amount of €20,379.29] and

b) To rule unfounded the remaining part of the request and maintain, in consequence, the respective tax acts.

c) To condemn the Applicant and the Respondent in costs, which are fixed, for each one, in the proportion of 42% for the Applicant and 58% for the Respondent.

Value of the Proceedings

In accordance with the provisions of article 306(2) of the Code of Civil Procedure and 97-A(1)(a) of the Code of Tax Procedure and 3(2) of the Regulation of Costs in Tax Arbitration Proceedings, the value of €117,179.42 is fixed for the proceedings.

Costs

In accordance with article 22(4) of the Rules of Tax Arbitration, the amount of costs is fixed at €3,060 (three thousand and sixty euros), in accordance with Table I annexed to the Regulation of Costs in Tax Arbitration Proceedings, to be paid by the Tax and Customs Authority.

Lisbon, 2 October 2015

The Arbitral Tribunal,

José Poças Falcão
President

António Correia Valente
Member

Magda Feliciano
Member

[1] For greater ease of exposition (although perhaps less correct) with the factual framework, the reasons, not only factual but also legal (e.g., rebuttal of the presumption of ownership which appears in the register, etc.), on which the Tribunal based its conviction, are being indicated.

[2] Acronym of Single Circulation Tax Code.

[3] The genesis of the legal relationship of tax presupposes the cumulative verification of the three necessary assumptions for its emergence, namely: the real element, the personal element and the temporal element. (In this sense see, among many other authors, Freitas Pereira, M. H., Taxation, 3rd Edition, Almedina, Coimbra, 2009).

[4] Under the heading "principle of equivalence" article 1 of the CIUC establishes: "The single circulation tax obeys the principle of equivalence, seeking to burden the taxpayers in the measure of the environmental and road cost that they cause, in the implementation of a general rule of tax equality".

On the notion of the principle of equivalence, SÉRGIO VASQUES tells us: "In obedience to the principle of equivalence, the tax must be shaped in attention to the benefit that the taxpayer derives from public activity, or in attention to the cost that the taxpayer's own activity imputes to the community" (See Special Consumption Taxes, Almedina, 2000, p. 110).

And, further on, this Professor explains, with respect to automobiles: "a tax on automobiles based on a rule of equivalence will be equal only if those who cause the same road wear and the same environmental cost pay the same tax; and those who cause different wear and environmental cost pay different tax also.