IUC Tax Arbitration: Reform of Arbitral Decision on Vehicle Circulation Tax (CAAD 7/2015-T)

ENGLISH TRANSLATION

Arbitral Tax Case Law

Process No. 7/2015-T

Decision Date: 2025-11-12 IUC

Value of Claim: €188,274.36

Subject: Reform of Judgment - IUC – Reform of Arbitral Decision (attached to decision).

*Replaces the Arbitral Decision of October 23, 2015.

Process No. 7/2015-T

Arbitral Decision

I – Report

I.1. A..., Lda., with headquarters at ..., ...– ..., ...-... Porto Salvo (hereinafter referred to as the "Claimant"), having been notified of the decisions denying the administrative complaints identified in point 1 of its initial petition, filed, on 30/12/2014, a request for establishment of an arbitral tribunal, pursuant to the provisions of articles 5, no. 3, subparagraph a), and 6, no. 2, subparagraph a), both of Decree-Law No. 10/2011, of 20/1 (Legal Framework for Arbitration in Tax Matters, hereinafter referred to only as "RJAT"), in which the Tax and Customs Authority (AT) is the respondent, with a view to the "review of the legality of the decisions denying the administrative complaints [aforementioned and identified by the Claimant] and, as a result thereof, of the assessments of Single Vehicle Circulation Tax ("IUC") and compensatory interest".

I.2. On 16/3/2015, the present Collective Arbitral Tribunal was constituted.

I.3. Pursuant to article 17, no. 1, of the RJAT, the AT was cited as respondent party to present its response, pursuant to the said article, on 2/4/2015. The AT presented its response on 12/5/2015, arguing, in summary, that the Claimant's claim should be entirely dismissed.

I.4. On 13/5/2015, the respondent filed a motion requesting the attachment to the present case file of Document No. 2 referenced in its response.

I.5. On 26/5/2015, the Claimant filed a motion requesting "the transmission to the present case file of administrative proceedings relating to the tax acts sub judice, establishing the deadline for such purpose and determining the application of compulsory financial sanctions if such deadline is not met." The Claimant also responded to the exception raised by the respondent on 12/5/2015, defending the "admissibility of the joinder of claims, pursuant to article 3, no. 1, of the RJAT, and the consequent dismissal of the exception raised".

I.6. By order of 05/08/2015, the Tribunal considered, pursuant to article 16, subparagraphs c) and e), of the RJAT, that the meeting required by article 18 of the RJAT was dispensable and that the process was ready for decision. The date of 16/9/2015 was further set for the issuance of the arbitral decision, which was extended by an additional two months on 07/09/2015.

I.7. The Arbitral Tribunal was duly constituted, is materially competent, the process does not suffer from defects that invalidate it, and the Parties have legal personality and capacity, being properly constituted.

II – Parties' Arguments

II.1. The Claimant alleges in its initial petition that:

"[as to the joinder of claims] insofar as, in order to assess the legality of both tax acts, it is necessary to consider a single material reality transversal to the various tax facts in question, it may be concluded that the factual matter to be assessed in order to determine the illegality of such acts is essentially the same. [...]. It will thus be established that the objective connection required by article 3, no. 1, of the RJAT, for the joinder of claims relating to different tax acts, exists insofar as the legal-tax question within which the legality of the acts is assessed is essentially similar [...]. In these terms, it is concluded that the joinder of the claims for annulment of the tax acts subject of the present case is admissible";

"the IUC tax subjects are (i) users of vehicles who possess respective economic ownership, regardless of whether they are registered in the vehicle registry as their legal owners or not, and (ii) purchasers of vehicles from the moment that, pursuant to article 408 of the Civil Code, they become holders of the right of ownership over the vehicles";

"from an articulated reading of the provisions of articles 4, no. 2, 6, no. 2, and 17, no. 1, of the CIUC, it appears that tax is only generated after the assignment of registration to the vehicles in question. That is: before the assignment of registration, the vehicle owners are not IUC tax subjects, due to the absence of a tax event";

"As results from the evidence produced before the Tax Administration in the administrative complaint procedures that preceded the present case, in particular from the sales invoices presented in that context [...], the Claimant transferred the ownership of the vehicles in question to its dealers at a time prior to the assignment of their respective registrations. Thus, the Administration could not consider the Claimant to be the IUC tax subject for the vehicles identified in document No. 1, both in cases where the IUC assessments refer to a subsequent year, since in both cases the Claimant was not, on the date of the tax events, the owner of the vehicles";

"In summary, the grounds invoked by the Tax Administration for denying the administrative complaints that preceded the present case should be rejected, as they do not conform to the scheme contained in articles 1, 3, 4, no. 1 and 3, and 17, no. 1, of the CIUC";

"Given the documents made available by the Claimant, the Tax Administration was in possession of sufficient elements not only to consider the presumption contained in article 3, no. 1, of the CIUC to be rebutted, but also to properly identify the tax subjects responsible for payment of the tax in question. All things considered, it is concluded that the decisions denying the administrative complaints in reference are illegal, in violation of the scheme contained in articles 1, 3, 4, no. 1 and 2, 6, no. 1 and 3, and 17, no. 1, of the CIUC and, as a result, the illegality and consequent voidability of the IUC assessment acts identified therein and in document No. 1, pursuant to article 135 of the CPA";

"Once the IUC assessments in reference are annulled, the nullity of the corresponding compensatory interest assessments cannot fail to be recognized, pursuant to article 133, no. 2, subparagraph i), of the CPA";

"In the absence of the requirements for the assessment of compensatory interest provided for in article 35 of the LGT due to the lack of fault of the present Claimant, such tax act should be annulled, pursuant to article 135 of the CPA";

"Given that the tax acts subject of the present case suffer from the defect of violation of law, as extensively demonstrated, there can be no doubt that the present Claimant has the right to compensation for the loss resulting from the unavailability of the amounts of IUC and compensatory interest improperly paid, based on error attributable to the services of the Tax Administration, pursuant to article 43, no. 1 of the LGT".

II.2. The Claimant requests that the Arbitral Tribunal "declare the illegality of the denials of the administrative complaints nos. ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., as well as of the official IUC assessment acts identified therein and in document No. 1 attached to the present case, pursuant to article 135 of the CPA, in violation of articles 1, 3, 4, no. 1 and 2, 6, no. 1 and 3, and 17, no. 1, of the CIUC; with the granting of the claim set forth above, declare the nullity of the corresponding compensatory interest assessments, pursuant to article 133, no. 2, subparagraph i), of the CPA; subsidiarily, if [...] does not determine the annulment of the official IUC assessments in reference, [...] determine the original illegality of the corresponding compensatory interest assessments, due to failure to meet the requirements provided for in article 35 of the LGT; recognize the error attributable to the services of the Tax Administration, and, as a consequence, pursuant to article 43 of the LGT, condemn the Tax Administration to pay indemnificatory interest, computed on the total amount to be restituted, from the date of payment until the issuance of the respective credit note; finally, and to the extent of the granting of the previous claims, condemn the Tax Administration to pay the costs of the arbitral process".

II.3. For its part, the AT argues in its defense:

that "although it may be supposed that the factual procedures may be transversal to all assessments, the fact is that we are faced with disparate factual situations embodied in different vehicles, with different sales dates, different procedures if we are dealing with sales to dealers, on different dates and to completely different owners, with completely differentiated values";

that "from the articulation between the scope of the subjective incidence of IUC and the constitutive fact of the corresponding tax obligation, there clearly emerge from article 6 of the CIUC, the legal situations that generate the birth of the tax obligation, namely, the assignment of registration or registration in national territory";

that "the initial registration of ownership of admitted vehicles (as is the case in the present case), is based on the respective application and proof of compliance with tax obligations relating to the vehicle. That is, the issuance of a registration certificate implies the presentation of a DAV by the Claimant and the payment of the corresponding ISV and automatically results in the registration of vehicle ownership under article 24 of the RRA in the name of the entity that proceeded with its importation [...] and made the request for registration, that is, the Claimant";

that, pursuant to "article 24 of the RRA, the importer appears in the registry as the first owner of the vehicle and in that sense is, in accordance with what is provided in articles 3 and 6, both of the CIUC, the tax subject";

that "the assignment, to the Claimant, of a registration certificate embodies, pursuant to the provisions of article 6 of the CIUC, the taxable event, so that, having the Claimant requested the issuance of a registration certificate [and] such certificate being registered in the name of the Claimant, the requirements of the taxable event of IUC are met, as well as its enforceability, the Claimant being the tax subject";

that "the tax legislator did not provide that the tax would be owed by the owner of the vehicle who would be registered at the end of the 60 days referred to in no. 2 of article 42 of the RRA, which would be paid in the 30 days thereafter pursuant to article 17 of the CIUC. And certainly not did the legislator provide that importers, notwithstanding that they proceed with the sale of vehicles before the assignment of the registration certificate, could thus see the subjective incidence of IUC excluded. What the legislator established is that the taxable event of the tax is ascertained by registration or registration, expressly establishing article 24 of the RRA that, once ISV has been paid and registration has been requested, the vehicle is automatically registered in the name of the importer, that is, the Claimant";

that "the argument put forward in point no. 8 of the request for arbitral ruling is completely unfounded, and is therefore impugned";

that "the tax legislator in article 6 of the CIUC clearly established the premises as to the taxable event of the tax, as well as its enforceability, inequivocally establishing that such event is constituted by the ownership of the vehicle, as attested by the registration or registration in national territory. That is, the tax legislator did not provide that the tax would be owed by the owner of the vehicle who would be registered in the 60 days referred to in no. 2 of article 42 of the RRA, which would be paid in the 30 days thereafter pursuant to article 17 of the CIUC";

that, "regardless of whether the Claimant proceeds with the sale of the vehicle to its dealers up to the end of the legal deadline after the assignment of registration, such fact, in light of the taxable event established in article 6 of the CIUC, is manifestly inconsequential, insofar as the legislator expressly established that the taxable event is attested by the assignment of registration";

that "although the Claimant alleges that on the date of the assignment of registration it had already sold the vehicles to its dealers, such fact is irrelevant for the purposes of the application of the provisions of article 6 of the CIUC";

that "the position advocated by the Claimant [results] not only from a biased reading of the letter of the law, but also from the adoption of an interpretation that does not account for the systematic [nor teleological] element, violating the unity of the scheme established throughout the CIUC and, more broadly, throughout the entire tax-legal system and further results from an interpretation that ignores the ratio of the scheme established in the article in question, and indeed, throughout the CIUC;

that "article 3 of the CIUC does not contain any legal presumption";

that "invoices are not suitable to prove the conclusion of a synallagmatic contract such as a purchase and sale, as such invoices do not in themselves reveal an essential and unequivocal manifestation of will (i.e., acceptance) by the alleged purchasers"; that "the interpretation put forward by the Claimant appears to be contrary to the Constitution [given that] the position advocated by the Claimant [aims] to exclude the subjective incidence and taxation of IUC, has no legal basis and violates the constitutional principles of legality and tax justice, taxpaying capacity, equality, certainty and legal security";

that "the IUC is assessed in accordance with registry information duly transmitted by the Institute of Registries and Notariat [so that] the IUC is not assessed in accordance with information generated by the respondent itself. [...] the respondent limited itself to complying with the legal obligations to which it is bound and, in parallel, to following the registry information that was provided to it by the appropriate party";

that "no error attributable to the services [has occurred in this case, so] the legal requirements that confer the right to indemnificatory interest are not met".

II.4. The AT concludes, finally, that "the exception raised should be sustained, absolving the respondent from the action. If this is not accepted, the present request for arbitral ruling should be judged to be dismissed, maintaining in the legal order the tax assessment acts impugned and absolving, accordingly, the respondent entity from the claim."

III – Decision (First Decision on Case 23/10/2015)

An arbitral decision was issued on 23-10-2015, in which it was decided:

a) To dismiss the preliminary objections raised by the respondent;

b) To grant in full the request for arbitral ruling, with a declaration of the illegality of the denials of the administrative complaints nos. ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014... and the consequent annulment of the assessments of tax and compensatory interest, for suffering from the defect of violation of law, due to error regarding the factual and legal presuppositions, for all taxation periods and all vehicles identified in the present case;

c) To condemn the respondent to reimburse the Claimant for the entire amount paid, in the amount of €188,274.36, plus indemnificatory interest at the legal rate until full payment;

d) To condemn the respondent to payment of the costs of the present proceeding.

IV – Appeal to the Central Administrative Court-South (regarding the first decision of 23/10/2015)

THE TAX AND CUSTOMS AUTHORITY appealed the decision issued by the Arbitral Tribunal in the context of the proceeding bearing the number 7/2015-T in which A..., LDA is the claimant, and which annulled the IUC assessments relating to 2009 to 2012.

The appellant concludes its appeal by formulating the following conclusions:

"1st The present appeal aims to react against the arbitral decision issued on 2015-10-26 by the Collective Arbitral Tribunal constituted within the scope of case no. 7/2015-T that proceeded in the CAAD;

2nd The arbitral decision suffers from nullity, pursuant to article 28/1-d) of the RJAT" for violating the fundamental principle of equality of the parties;

3rd The principle of equality of the parties presupposes the recognition by the adjudicator of the same substantive status to the parties, such as the faculty of the latter to exercise the means of defense available to them;

4th The Collective Arbitral Tribunal did not grant the same substantive status to the parties in three dimensions: (i) it admitted, in an illegal manner, the joinder of documents and well beyond the deadline set for such purpose: (ii) it did not sanction the appellant for the late presentation of the documents in question" nor did it attempt to ascertain whether they were subsequently generated and/or whether there were difficulties in their joinder at an earlier time; (iii) it did not provide the appellant with conditions identical to those provided to the appellant regarding the documents presented;

5th With respect to the first dimension violating the principle of equality, it constitutes a transversal rule throughout the RJAT [article 10, no. 2, subparagraph d)], the CPTA [article 78, no. 2-I)] and the Code of Civil Procedure ("CPC" — article 423, no. 1) that evidence elements should be immediately attached to the initial petition;

6th In the present case what occurred was an inadmissible correction of the evidentiary deficiencies contained in the request for arbitral ruling, a correction made in a completely illegal manner through the untimely admission of documents well beyond the legal deadline and well beyond what would be reasonable to suppose;

7th Indeed, the appellant pointed out inconsistencies and evidentiary deficiencies at the defense stage through impugnation in its response and, in reaction, the appellant came to request the joinder of an amalgamation of documents under the principle of the right to be heard, well knowing that this principle does not permit such faculty when the only exception matter evident in the response presented concerned illegal joinder of claims;

8th The RJAT is very clear on this matter when it provides that all means of proof must be offered in the request for arbitral ruling in compliance, moreover, with the principle of expedition that informs it;

9th Article 10/2-d) of the RJAT, article 78/2-I) of the CPTA and article 423/1 of the CPC fall within a clear, public and notorious intent of the legislator to provide for obtaining a decision in the case within a reasonable timeframe, avoiding postponements and other delays, resulting from the modification of evidentiary requirements, at the procedurally appropriate moment for their production, interests that possess an even more reinforced value in the jurisdiction of arbitral taxation;

10th Both the Law, and Doctrine (e.g., Alberto dos Reis) as well as arbitral case law are clear in establishing that the proper moment for the presentation of documents is with the presentation of the request for arbitral ruling, since not only is the arbitral process composed of a smaller number of procedural acts, but the subsequent and successive presentation of documents constitutes an impediment of a process whose operation is desired and is desired to be expeditious;

11th Therefore, the Collective Arbitral Tribunal, by not issuing an order regarding the motion of 2015-09-03, by not issuing an order regarding the abnormal volume of documents attached to that pleading, by not issuing an order regarding the motion for joinder made at a time when the request for arbitral ruling had long been presented, clearly violated the principle of procedural parity, to the detriment of the appellant;

12th With respect to the second dimension violating the principle of equality, it is revealed by the fact that the Collective Arbitral Tribunal did not take care to ascertain (as was required to be ascertained by any tribunal) (i) the subsequent nature of the amalgamation of documents submitted through the motion presented by the appellant on 2015-09-03 and/or (ii) the difficulty of joinder at an earlier time, moreover, neither of them even invoked;

13th Especially when neither of those two reasons was even invoked by the appellant itself in its motion of 2015-09-03, in clear violation of the burden of proof established in article 423.72, at the end, of the CPC: "prove that it could not offer them with the pleading";

14th Thus, it was required of the Collective Arbitral Tribunal (i) to ascertain the reason (or reasons) why the documents were not presented when the request for arbitral ruling was presented by the appellant on 2014-12-30, (ii) to ascertain the reason (or reasons) why the appellant only presented the documents after the deduction of the response of the appellant and not before when it had the opportunity to do so, in particular during the extensive period of time that elapsed between 2014-12-30 (i.e., the date of presentation of the request for arbitral ruling) and 2015-04-02 (i.e., the date of the issuance of the order of the arbitrator president for the appellant to present its response) (iii) and equally to ascertain the reason (or reasons) why the appellant only attached on 2015-09-03 documents prepared on dates much earlier than such date;

15th The appellant had 90 days to instruct its request for arbitral ruling, a more than reasonable deadline to gather the 28 documents that it submitted on 2015-09-03, that is, the appellant had triple the time to properly instruct its request for arbitral ruling, compared to the period of time available to the appellant to exercise its right to be heard in its response;

16th The 28 documents were not intended to prove facts subsequent to the pleadings or whose presentation had become necessary by virtue of a subsequent occurrence, since the facts and documents were necessarily contemporaneous with the assessments placed in issue in the request for arbitral ruling;

17th The appellant was able and should have submitted the request for arbitral ruling after obtaining all the documents that it needed to justify the cause of action, since these are documents that are in its archives, were not in the possession of third parties and are relatively recent;

18th The Collective Arbitral Tribunal did not even bother to ascertain the reasons for such late joinder of the 28 documents (i) nor at the initial moment (i.e., with the presentation of the motion of 2015-09-03) (ii) nor in the final decision;

19th Equally, the Collective Arbitral Tribunal did not sanction the appellant (in particular in the apportionment of arbitral costs regarding the late and unjustified joinder of documents, on the contrary, since the decision of that tribunal opens a most serious precedent in the sense of stimulating future behaviors of this kind, thus opening, the possibility of any and all claimants being able to present an unusual reply (not admitted by the RJAT) to the response presented by the appellant under the guise of a "mere" motion that attaches documents;

20th Therefore, the Collective Arbitral Tribunal violated the principle of equality of the parties from the moment it, upon becoming aware of the content of the motion presented on 2015-09-03 by the appellant, did nothing and made no decision regarding it, thus allowing that procedural subject to attach to the process an amalgamation of documents in a manner completely untimely and probatively unfounded, whether in light of article 423/2 of the CPC or in light of article 423/3, both applicable ex vi of article 29/1-e) of the RJAT;

21st Given the laconic nature of the motion presented on 2015-09-03 by the appellant, it was required that the Collective Arbitral Tribunal ensure a true formal equality in the process, through ascertainment of the effective (or not) difficulty of joinder and/or subsequent generation of the 28 documents, under pain of, thus, providing the appellant the presentation of means of proof well beyond what is temporally permitted by law [article 10/2-d) of the RJAT];

22nd With respect to the third dimension violating the principle of equality, it results from the fact that the Collective Arbitral Tribunal did not provide, minimally, to the appellant conditions identical to those (generously) provided to the appellant regarding the presentation of documents well after the submission of the request for arbitral ruling;

23rd On 2015-09-03, that is, nine (9) MONTHS after the submission of the request for arbitral ruling and more than 3 (THREE) MONTHS after the presentation of the response of the appellant, the appellant requested the joinder to the file of _28 (twenty-eight) documents, however, the Collective Arbitral Tribunal did not issue, on that date or in the days and weeks that followed, any order admitting or refusing such joinder;

24th The day after the motion for joinder of the said 28 documents, on 2015-09-04 the appellant requested that the Collective Arbitral Tribunal proceed with the presentation of written pleadings, thus declaring, that it did not waive that formality, and three days later, on 2015-09-07, the Collective Arbitral Tribunal granted that latter motion, stipulating (unilaterally) that the pleadings would be presented in written form and in successive form within a period of 10 (ten) days;

25th However, the Collective Arbitral Tribunal (i) did not issue any order conferring on the appellant the faculty of pronouncing on the motion presented by the appellant regarding the production, or not, of final pleadings nor regarding the manner in which they would be produced, (ii) nor did it issue any order conferring on the appellant the faculty of pronouncing on the motion for joinder of the arbitral decision issued in case no. 777/2014-T and/or on the motion for joinder of the 28 documents submitted by the appellant;

26th The 28 documents submitted by the appellant were not just 28 pages of documents, but rather an amalgamation of documents, of abnormal dimension, composed of 1,448 pages that required analysis and "cross-referencing" with all the documents up to that moment presented in the process by both parties;

27th In the face of a motion for abnormal joinder of documents, what was thus requested of any tribunal was that the court pronounce promptly and expressly on such motion, which in the present case never occurred on the part of the Collective Arbitral Tribunal, whether on the date of joinder or in the days or weeks that followed;

28th In the opinion of the appellant, they are not on the same plane of equality: (i) an appellant that requests the joinder of a few simple 1,448 pages of 28 "new" documents nine (MONTHS after the submission of the request for arbitral ruling and more than 3 MONTHS after the presentation of the response of the appellant and (ii) an appellant that has little more than 20 DAYS to pronounce on a few simple 1,448 pages of 28 new documents that, note, arrived more than 9 MONTHS after the submission of the request for arbitral ruling and more than 3 MONTHS after the presentation of the response of the appellant;

29th In the opinion of the appellant, it is also not on the same plane of equality (i) the period of little more than 20 days (= 10 + 10) to, if so desired, present final pleadings and pronounce on 1,448 pages of 29 "new" documents and (ii) to have 30 days to present a response in the face of a request for arbitral ruling containing ab initio 1,448 pages of 28 "new" documents;

30th In the opinion of the appellant, there is a difference between (i) an analysis contained in the response to the request for arbitral ruling and (ii) an analysis contained in written final pleadings;

31st In the opinion of the appellant, it has the right (i) to pronounce in an intellectually honest manner on ALL the facts contained in the request for arbitral ruling, (ii) to pronounce on ALL the documents that should have been contained in that request and (iii) to the faculty of attempting to "cross-reference" the information contained in the documents provided by the opposing party with the information contained in its own documents,

32nd In the opinion of the appellant, its procedural attitude should not be reconditioned. (i) to construct its defense as the appellant submits "new" documents and "new" facts, (ii) to "impugn for the sake of impugning" and (iii) to impugn "just because" the facts contained in the documents;

33rd The facts demonstrate that the Collective Arbitral Tribunal (i) did not provide to the appellant conditions identical to those provided to the appellant, as the tribunal itself never came to grant (and to substantiate) expressly the motion for joinder of the 1,448 pages of the 28 "new" documents submitted on 2015-09-03, whether in an arbitral order or in the arbitral decision itself now placed in issue, (ii) but nonetheless did proceed to issue the arbitral decision sub judice supported (also) on the said 1,448 pages of the 28 "new" documents {cf. pages 25 and 28 of the arbitral decision);

On the other hand, the appellant did not fail to question the 1,448 pages of the 28 "new" documents submitted on 2015-09-03 when, in article 65 of its final pleadings, it pointed out that it did not know whether the tribunal had or had not admitted the illegal and untimely joinder of that amalgamation of documents;

35th In the opinion of the appellant, (i) before analyzing and deciding whether or not to impugn the documents and (ii) before analyzing and deciding whether to raise the untruthfulness of the documents, it has (or should have had) the right (which the trial court never gave it) to know, from the outset, whether the documents are or are not admitted to the file and on what legal and factual grounds they are admitted to the file;

36th In the opinion of the appellant, it does not have the duty to possess the gift of divination and, therefore, to conclude, in the face of the silence of the Collective Arbitral Tribunal regarding the motion presented by the appellant on 2015-09-03, that the latter was tacitly granted;

37th Contrary to what is stated in the decision, the Collective Arbitral Tribunal never decided on the matter of the joinder of the 1,448 pages of the 28 "new" documents; (i) whether on the date, in the days or in the weeks that followed the presentation of the motion for joinder by the appellant, (ii) whether in the arbitral order by which it granted the motion presented by the appellant regarding the presentation of written pleadings; (iii) or whether in the arbitral decision now placed in issue;

38th Although the trial court states in the decision that this matter was "already decided as a preliminary matter", the fact is that the only preliminary matter decided by the Collective Arbitral Tribunal was limited to the resolution of the matter regarding illegal joinder of claims, that is, the defense by exception raised by the appellant in its response (Cf. pages 8 and 9 of the arbitral decision), so, only implicitly and without substantiation (and, therefore, illegally) did the trial court decide the matter of subsequent document joinder;

39th In sum, the Collective Arbitral Tribunal (i) did not provide to the appellant conditions identical to those provided to the appellant regarding its defense in the arbitral process from the moment the latter presented its motion of 2015-09-03 and (ii) did not even bother to "mitigate the effects of the inequality" caused by the motion and amalgamation of documents presented on that date:

40th The arbitral decision further suffers from nullity, pursuant to article 28/1-d) of the RJAT, for violating the structural principle of the right to be heard as a direct result of the facts just described;

41st The principle of the right to be heard presupposes the hearing of the parties throughout the entire process, it not being permissible for the adjudicator to decide questions of fact or law raised in the dispute without the parties in confrontation having the opportunity to pronounce on them, under pain of not obtaining a just decision;

42nd This structural principle of the right to be heard was overlooked by the Collective Arbitral Tribunal, when the latter (i) by not issuing an order regarding the motion presented on 2015-09-03 and (ii) by doing nothing or taking no action in response to the alert contained in article 65 of the final pleadings of the appellant denied, in practice, that the latter procedural subject could attempt an intellectually honest right to be heard on the 1,448 pages of the 28 "new" documents submitted on 2015-09-03;

43rd The Collective Arbitral Tribunal not only (i) did not grant formally to the appellant the right to exercise the right to be heard that was available to it, but further (ii) materially limited the appellant's prerogative to exercise that right;

44th On the one hand, the Collective Arbitral Tribunal did not grant formally to the appellant the right to exercise the right to be heard that was available to it, inasmuch as it never came to grant (and to substantiate) expressly the motion for joinder of the 1,448 pages of the 28 new documents submitted on 2015-09-03, whether in an arbitral order or in the arbitral decision itself now placed in issue, in clear contrast to the mere 3 days it took to grant the motion of 2015-09-04 of the appellant by which the appellant requested the presentation of written pleadings:

45th On the other hand, the Collective Arbitral Tribunal materially limited the appellant's prerogative to exercise that right, to the extent that it did not give it the minimum conditions to effect the analysis that was required of the amalgamation represented by the 1,448 pages of the 28 "new" documents submitted on 2015-09-03;

46th In the opinion of the appellant, it did not materially have the right to be heard on those documents when it exercised the faculty of presenting its final pleadings, since it is not enough to give someone the possibility of presenting another pleading; it is further necessary to give that person the minimum conditions to present the new pleading;

47th In the opinion of the appellant, these minimum conditions were never given to it, since (i) not only did the Collective Arbitral Tribunal not formally give the appellant (without previously hearing it) the faculty of presenting its final pleadings, (ii) but it also materially limited that same faculty when it set it a period of little more than 20 DAYS (= 10 + 10) to pronounce on a few simple 1,448 pages of 28 "new" documents that, note, arrived more than 9 MONTHS after the submission of the request for arbitral ruling and more than 3 MONTHS after the presentation of the response of the appellant;

48th In the opinion of the appellant, the administration of tax justice in faster, less formal and recognized technical quality forms (as the RJAT intends) cannot, under any circumstance, translate into the diminution of the means of defense and proof available to the parties;

49th And let it not be alleged, in opposition to what has thus far been said, that the exercise of the right to be heard by the appellant would not affect minimally the direction of the arbitral decision now placed in issue, since the text of the decision clearly and expressly reveals that the Collective Arbitral Tribunal supported its decision on the simple 1,448 pages of 28 "new" documents that, note, arrived more than 9 MONTHS after the submission of the request for arbitral ruling and more than 3 MONTHS after the presentation of the response of the appellant (cf. pages 25 and 28 of the arbitral decision);

50th Consequently, the Collective Arbitral Tribunal acted improperly by materially limiting the appellant the right that was available to it to pronounce on the relevance and probative force of the simple 1,448 pages of 28 "new" documents, especially when such documentary evidence decisively influenced the course of the arbitral decision which, thus, resulted in a true "surprise decision" (cf., in this sense, the decision issued by the Central Administrative Court South on 2015-01-22 within the scope of case no. 06208/12);

51st The decision issued by the Collective Arbitral Tribunal constituted in the CAAD further suffers from nullity for the fact that it has not decided an essential matter on which it should have pronounced [article 28/1-c) of the RJAT];

52nd By means of the request for arbitral ruling, the appellant sought to place in issue the decisions denying the administrative complaint and the IUC assessments;

53rd The appellant issued a response to the request for arbitral ruling in which it sustained the legality of those tax acts; (i) clarifying the timeliness of its response (cf. articles 3 through 10 of the response; (ii) raising, as a defense by exception, illegal joinder of claims (cf. articles 11-16 of the response); (iii) defending (by impugnation) that article 3 of the IUC Code does not contain any rebuttable presumption (cf. articles 17-131 of the response); (iv) calling into question the probative value of documents joined by the appellant (cf. articles 132-149 of the response); (v) raising the unconstitutionality of the interpretation made by the appellant regarding article 3 of the IUC Code (cf. articles 150-161 of the response); and (vi) advocating for its non-condemnation to the payment of indemnificatory interest and arbitral costs (cf. articles 162-177 of the response);

54th Each of these matters (i) was duly developed by the appellant throughout its pleading, (ii) was unequivocally contained in separate chapters and, therefore, (iii) was perfectly identifiable by any reader;

55th The Collective Arbitral Tribunal understood (cf. page 9 of the decision) that the matter to be decided was limited to the following: "Once the factual matter is established, it is important to address the legal matter raised by the claimant, which consists of assessing the terms of the configuration of the subjective incidence of IUC in light of the provisions of article 3 of the IUC Code, namely, the question of whether the subjective incidence is based strictly on the registration of vehicle ownership in the vehicle registry, or whether the registration operates only as a presumption of tax incidence, rebuttable, in conformity with the provisions of article 73 of the General Tax Law. On this matter, there is already abundant and well-defined arbitral case law expressed in various arbitral decisions." : "The matter underlying the present request for arbitral ruling shall be that of the verification of the legality of the IUC assessments notified to the claimant";

56th However, not only did the list of matters established by the Collective Arbitral Tribunal omit the matter relating to the unconstitutionality of the interpretation made by the respondent regarding article 3 of the IUC Code (despite the tribunal itself recognizing in its point 2.3.M [cf. page 7 of the decision] the existence of such matter), but also - and more importantly - the very substantiation of the decision did not devote a single word to that relevant matter;

57th The issue surrounding the unconstitutionality of the interpretation made by the respondent regarding article 3 of the IUC Code constitutes a true matter and not a mere argument;

58th The Collective Arbitral Tribunal did not justify the reason or reasons that led it not to address the matters in question;

59th On the other hand, the issue surrounding the unconstitutionality of the interpretation made by the respondent regarding article 3 of the IUC Code is not a matter whose resolution would have been prejudiced by the resolution of the other matters, since, even if the Collective Arbitral Tribunal had adhered — as it did — to the thesis put forward by the appellant, it remains to be established whether such interpretation is still in conformity with the principles of legality, tax justice, taxpaying capacity, equality and legal certainty and confidence;

60th The arbitral decision does not suffer from a "mere" laconic or deficient substantiation, rather it constitutes a "surprise decision", as, moreover, the Central Administrative Court South concluded in the scope of case no. 08224/14, in a decision issued on 2015-04-23;

61st Moreover, by failing to comply with one of the essential requirements inherent to a decision - i.e., that of convincing its addressees — the Collective Arbitral Tribunal irremediably and incomprehensibly limited one of the few control mechanisms available to the appellant: the appeal to the Constitutional Court [article 70/1-b) of Law 28/82, of November 15];

62nd For reasons also for which the arbitral decision now placed in issue should not be maintained in the legal order, but should instead be declared null.

In such terms, for all the above set forth and always with the learned assistance of Your Excellencies, the present appeal should be judged well-founded and, consequently, the arbitral decision should be declared null, thus administering JUSTICE as is customary."

Notified to present pleadings, the respondent A..., LDA raised the exception of untimeliness of the appeal of the arbitral decision and presented its pleadings.

On February 20, 2025, the Central Administrative Court - South issued a judgment on the appeal, in which it declared the nullity of the arbitral decision and ordered the return of the case to the Arbitral Tribunal to reform it in accordance with the judgment rescinding the appellate court and to issue a new decision.

The TCAS judgment annulled the arbitral decision in the part in which the appellant invokes that the decision being appealed is null due to omission of pronouncement, regarding the matter on which it should have pronounced regarding the unconstitutionality of the interpretation made by the respondent regarding article 3 of the IUC Code that it raised in articles 150 through 161 of its response.

Thus, and in the understanding of the Tribunal, nullity due to omission of pronouncement constitutes a ground for appeal which, just as occurs with the judicial decision, only occurs when, subparagraph c) of the RJAT, there is an absolute lack of substantiation, when the judge does not take a position on a matter raised by the parties and does not issue a decision in the sense that it cannot take knowledge thereof, nor indicates reasons that justify the abstention from knowledge, nor does it result from the decision, expressly or implicitly, that such knowledge was prejudiced in view of the solution given to the dispute.

The appellant invoked in its response that the interpretation put forward by the claimant appears to be contrary to the fundamental law in light of the constitutional principles of legality and tax justice, taxpaying capacity, equality, certainty and legal security.

It further states that in no circumstance did the tax legislator provide for the exclusion of taxation in case of registration, overlooking the taxable event embodied in registration, and that the incidence is subject to the principle of tax legality, therefore, inasmuch as the tax legislator did not expressly establish in law the exclusion of subjective tax incidence in the case of IUC in the cases that the claimant points out and invokes, it is unequivocal that such understanding frontally violates the principle of tax legality established in article 8 of the LGT and 103 of the CRP.

It further invoked in its response the collision of the position put forward by the claimant with the principle of taxpaying capacity cf. articles 4 of the LGT and 104 of the CRP, in attempting to exclude the subjective incidence of IUC and its respective payment collides frontally with such principle as well as with the principle of tax equality established in article 13 of the CRP.

It is not incumbent upon this Tribunal to assess whether the matters were sufficiently developed or whether there was insufficient or incorrect pronouncement, only to verify whether there was pronouncement. Now, upon examination of the decision, it appears that no pronouncement was issued on such matters, therefore, the invoked nullity occurs, which determines the success of the appeal.

Thus, the present appeal is judged well-founded and, in consequence, the nullity of the arbitral decision appealed is declared, pursuant to articles 28, nos. 1, subparagraphs c) and d), of the RJAT, as will be provided in the operative part of this decision.

V - Reopening (of the arbitral proceeding – proceedings)

Reform of the Arbitral Decision

V.1. Scope and Limits of the Reform of the Decision

As is well known, when, on appeal, a judgment is issued that partially annuls the appealed ruling, the reform of the appealed decision is limited, in its scope, by the exact perimeter of the rescinding part of the annulling judgment, in obedience to the principle of formal res judicata.

In the present case, the annulling judgment of the TCAS-South judged the arbitral decision null in the part in which the appellant invokes that the decision being appealed is null due to omission of pronouncement, regarding the matter on which it should have pronounced regarding the unconstitutionality of the interpretation made by the respondent regarding article 3 of the IUC Code that it raised in articles 150 through 161 of its response.

Being thus, the reform that will now be made of the arbitral decision will be limited, because otherwise it could not be, to the matter on which it should have pronounced regarding the unconstitutionality of the interpretation made by the respondent regarding article 3 of the IUC Code that it raised in articles 150 through 161 of its response.

V.2. Curing of Defects

This Collective Arbitral Tribunal was duly constituted on 19.05.2025, with the arbitrators being designated by the Deontological Council of the CAAD, with the respective legal and regulatory formalities complied with (articles 11, no. 1, subparagraphs a) and b) of the RJAT and 6 and 7 of the Deontological Code of the CAAD), and is competent ratione materiae, in conformity with article 2 of the RJAT.

The Parties have legal personality and capacity, are proper and are duly represented.

No nullities have been identified in the proceeding, except for that which was found to exist by the appellate tribunal, and which will now be cured.

There are no exceptions or preliminary matters of which knowledge is required, so nothing prevents the determination of the merits of the case.

V.3. Matters to be Decided

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

• Unconstitutionality of the interpretation made by the respondent regarding article 3 of the IUC Code that it raised in articles 150 through 161 of its response.

V.4. Proven Facts

The following facts considered relevant to the determination of the case are deemed proven, the same facts invoked in the decision subject to reform, since the matter to be decided is merely one of law.

VI – Decision

With respect to the present reform, the respondent invokes the following:

a) In addition to everything set forth above, it should also be noted that the interpretation put forward by the claimant appears to be contrary to the fundamental law.

b) The position advocated by the claimant with a view to excluding the subjective incidence and taxation of IUC has no legal basis and violates the constitutional principles of legality and tax justice, taxpaying capacity, equality, certainty and legal security.

c) From the outset, the exclusion of subjective incidence in taxation regarding IUC proposed by the claimant, contradicts the principle of legality and typicality established in article 8 of the LGT and article 103 of the CRP, since such position is not based on the law.

d) In no circumstance did the tax legislator provide for the exclusion of taxation in case of registration, overlooking the taxable event embodied in registration.

e) That is, in no moment did the legislator conceive in law the position that the claimant advocates.

f) In accordance with the aforementioned norms, incidence is subject to the principle of tax legality.

g) Therefore, inasmuch as the tax legislator did not expressly establish in law the exclusion of subjective tax incidence regarding IUC in the cases that the claimant points out, it is unequivocal that such position frontally violates the principle of tax legality established in article 8 of the LGT and 103 of the CRP.

h) But furthermore: such understanding further collides with the principle of taxpaying capacity established in article 4 of the LGT and article 104 of the CRP.

i) Regarding taxpaying capacity, the Constitutional Court has come to consider that the principle of taxpaying capacity (taxable capacity, also frequently referred to as ability to pay — ability to pay — or economic capacity — wirtschaftliche Leistungsfähigkeit) as "the basic criterion of our 'fiscal Constitution' — concretizing the duty of all to pay taxes according to the same criterion, taxpaying capacity is the unitary criterion of taxation.

j) Thus, the principle of taxpaying capacity constitutes the presupposition and measure of taxes, constituting the economic suitability to bear the burden of the tax, that is, it requires that the legal type of tax contain reference only to economic-financial elements.

k) Now, the position supported by the claimant, in attempting to exclude the subjective incidence of IUC, concomitantly excluding the payment of IUC, frontally collides with the principle of taxpaying capacity.

l) By even greater reason and because intrinsically associated with the principle of taxpaying capacity, such position violates the principle of tax equality set forth in article 13 of the CRP.

m) Finally, it is indubitable that the position supported by the claimant collides with the principle of certainty and legal security.

Now, this Tribunal cannot agree with such understanding.

In truth, in the present case we are not faced with any type of interpretation non-conforming to the Constitution, to the extent that the norms of subjective incidence are not touched. Now, what presided over the formulation of the present decision were fully proven facts in the respective case file, namely:

• Now, in the present case it appears that the first registration was effected in the name of the present claimant (although it was not the owner of the vehicles), but immediately thereafter registration was effected in favor of the legitimate owners.

• Now, only in the absence of registration of vehicle ownership effected within the legal deadline, the tax owed in the year of vehicle registration is assessed and required from the tax subject on vehicles (ISV) based on the customs vehicle declaration, or based on the supplementary vehicle declaration on which the assessment of that tax is based, even though it is not owed (article 18, no. 1, subparagraph a), of the CIUC). From this latter provision it results that, in case there is registration of vehicle ownership effected within the legal deadline, the tax owed in the year of vehicle registration is assessed and required from the respective holder of that registration.

• Now, from the factuality proven in the case file it is concluded that in the case of the vehicles contained in the assessments now impugned and identified in document No. 1, that is precisely what occurred. That is, although the vehicles in question had a first registration in favor of the present claimant (as is understood from the legally established procedure to which the importer is subject), the vehicles were already, at that date, owned by others, in favor of whom they were registered at the Motor Vehicle Registry Office, the request for arbitration which condenses all the information relating to the date of sale/contractual transfer, date of registration and registration.

• Thus, if the claimant was not its effective owner on the date of the occurrence of the facts that determine the tax obligation, given that they had already been sold to their respective dealers, on a date prior to the very registration of the vehicles, as shown by the invoicing issued, which it attaches as probative element, it is neither understood nor justified the assessment of IUC against the importer and present claimant.

• This conclusion also flows from the interpretation of the norms of no. 1 of article 17 and article 18 of the CIUC, relating to the tax payment deadline and official assessment, respectively, which are based on the presupposition that "in the year of vehicle registration the IUC tax subject is the owner of the vehicle on the date that the said 60 days counted from the date of assignment of registration expire, who should assess and remit it to the State in the 60 days thereafter.

• And, being thus, in the case of the present case, it is demonstrated that the tax subject was not the present claimant.

In such terms, the arguments invoked by the respondent regarding the unconstitutionality due to violation of the principle of taxpaying capacity established in article 4 of the LGT and article 104 of the CRP are entirely without merit.

Therefore, the decision already made in the case file is maintained, namely, in such terms, and with the substantiation set forth, the Arbitral Tribunal decides:

a) To dismiss the preliminary objections raised by the respondent;

b) To grant in full the request for arbitral ruling, with a declaration of the illegality of the denials of the administrative complaints nos. ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014..., ...2014... and the consequent annulment of the tax assessments and compensatory interest, for suffering from the defect of violation of law, due to error regarding the factual and legal presuppositions, for all taxation periods and all vehicles identified in the present case;

c) To condemn the respondent to reimburse the claimant for the entire amount paid, in the amount of €188,274.36, plus indemnificatory interest at the legal rate until full payment;

d) To condemn the respondent to payment of the costs of the present proceeding.

The value of the proceeding is set at €188,274.36 (one hundred eighty-eight thousand two hundred seventy-four euros and thirty-six cents), pursuant to article 32 of the CPTA and article 97-A of the CPPT, made applicable by virtue of the provisions of article 29, no. 1, subparagraphs a) and b), of the RJAT, and article 3, no. 2, of the Regulation on Costs in Tax Arbitration Proceedings (RCPAT).

Costs to be borne by the respondent, in the amount of €3,672.00 (three thousand six hundred seventy-two euros), pursuant to Schedule I of the RCPAT, and in compliance with the provisions of articles 12, no. 2, and 22, no. 4, both of the RJAT, and the provisions of article 4, no. 4, of the said Regulation.

This arbitral decision shall be registered and notification thereof made to the parties.

Lisbon, November 12, 2025.

The Arbitrators

José Poças Falcão (President)

Miguel Patrício

Guilherme W. d'Oliveira Martins

CAAD: Tax Arbitration

Case No.: 7/2015-T

Subject: IUC

*Replaced by the arbitral decision of November 12, 2025

Process No. 7/2015-T

The arbitrators José Poças Falcão (Arbitrator President), Miguel Patrício and Guilherme Waldemar d'Oliveira Martins, designated by the Deontological Council of the Center for Administrative Arbitration to form an Arbitral Tribunal, hereby agree to the following:

Arbitral Decision

I – Report

1.1. A… Portugal, Lda., with headquarters at …, Building No. … – ….º Floor, …-… … (hereinafter referred to as the "Claimant"), having been notified of the decisions denying the administrative complaints identified in point 1 of its initial petition, filed, on 30/12/2014, a request for establishment of an arbitral tribunal, pursuant to the provisions of articles 5, no. 3, subparagraph a), and 6, no. 2, subparagraph a), both of Decree-Law No. 10/2011, of 20/1 (Legal Framework for Arbitration in Tax Matters, hereinafter referred to only as "RJAT"), in which the Tax and Customs Authority (AT) is the respondent, with a view to the "review of the legality of the decisions denying the administrative complaints [aforementioned and identified by the Claimant] and, as a result thereof, of the assessments of Single Vehicle Circulation Tax ("IUC") and compensatory interest".

1.2. On 16/3/2015, the present Collective Arbitral Tribunal was constituted.

1.3. Pursuant to article 17, no. 1, of the RJAT, the AT was cited as the respondent party to present its response, pursuant to the said article, on 2/4/2015. The AT presented its response on 12/5/2015, arguing, in summary, that the Claimant's claim should be entirely dismissed.

1.4. On 13/5/2015, the respondent filed a motion requesting the attachment to the present case file of Document No. 2 referenced in its response.

1.5. On 26/5/2015, the Claimant filed a motion requesting "the transmission to the present case file of administrative proceedings relating to the tax acts sub judice, establishing the deadline for such purpose and determining the application of compulsory financial sanctions if such deadline is not met." The Claimant also responded to the exception raised by the respondent on 12/5/2015, defending the "admissibility of the joinder of claims, pursuant to article 3, no. 1, of the RJAT, and the consequent dismissal of the exception raised".

1.6. By order of 05/08/2015, the Tribunal considered, pursuant to article 16, subparagraphs c) and e), of the RJAT, that the meeting required by article 18 of the RJAT was dispensable and that the process was ready for decision. The date of 16/9/2015 was further set for the issuance of the arbitral decision, which was extended by an additional two months on 07/09/2015.

1.7. The Arbitral Tribunal was duly constituted, is materially competent, the process does not suffer from defects that invalidate it, and the Parties have legal personality and capacity, being properly constituted.

II – Parties' Arguments

2.1. The Claimant alleges in its initial petition that:

"[as to the joinder of claims] insofar as, in order to assess the legality of both tax acts, it is necessary to consider a single material reality transversal to the various tax facts in question, it may be concluded that the factual matter to be assessed in order to determine the illegality of such acts is essentially the same. [...]. It will thus be established that the objective connection required by article 3, no. 1, of the RJAT, for the joinder of claims relating to different tax acts, exists insofar as the legal-tax question within which the legality of the acts is assessed is essentially similar [...]. In these terms, it is concluded that the joinder of the claims for annulment of the tax acts subject of the present case is admissible";

"the IUC tax subjects are (i) users of vehicles who possess respective economic ownership, regardless of whether they are registered in the vehicle registry as their legal owners or not, and (ii) purchasers of vehicles from the moment that, pursuant to article 408 of the Civil Code, they become holders of the right of ownership over the vehicles";

"from an articulated reading of the provisions of articles 4, no. 2, 6, no. 2, and 17, no. 1, of the CIUC, it appears that tax is only generated after the assignment of registration to the vehicles in question. That is: before the assignment of registration, the vehicle owners are not IUC tax subjects, due to the absence of a tax event";

"As results from the evidence produced before the Tax Administration in the administrative complaint procedures that preceded the present case, in particular from the sales invoices presented in that context [...], the Claimant transferred the ownership of the vehicles in question to its dealers at a time prior to the assignment of their respective registrations. Thus, the Administration could not consider the Claimant to be the IUC tax subject for the vehicles identified in document No. 1, both in cases where the IUC assessments refer to a subsequent year, since in both cases the Claimant was not, on the date of the tax events, the owner of the vehicles";

"In summary, the grounds invoked by the Tax Administration for denying the administrative complaints that preceded the present case should be rejected, as they do not conform to the scheme contained in articles 1, 3, 4, no. 1 and 3, and 17, no. 1, of the CIUC";

"Given the documents made available by the Claimant, the Tax Administration was in possession of sufficient elements not only to consider the presumption contained in article 3, no. 1, of the CIUC to be rebutted, but also to properly identify the tax subjects responsible for payment of the tax in question. All things considered, it is concluded that the decisions denying the administrative complaints in reference are illegal, in violation of the scheme contained in articles 1, 3, 4, no. 1 and 2, 6, no. 1 and 3, and 17, no. 1, of the CIUC and, as a result, the illegality and consequent voidability of the IUC assessment acts identified therein and in document No. 1, pursuant to article 135 of the CPA";

"Once the IUC assessments in reference are annulled, the nullity of the corresponding compensatory interest assessments cannot fail to be recognized, pursuant to article 133, no. 2, subparagraph i), of the CPA";

"In the absence of the requirements for the assessment of compensatory interest provided for in article 35 of the LGT due to the lack of fault of the present Claimant, such tax act should be annulled, pursuant to article 135 of the CPA";

"Given that the tax acts subject of the present case suffer from the defect of violation of law, as extensively demonstrated, there can be no doubt that the present Claimant has the right to compensation for the loss resulting from the unavailability of the amounts of IUC and compensatory interest improperly paid, based on error attributable to the services of the Tax Administration, pursuant to article 43, no. 1 of the LGT".

2.2. The Claimant requests that the Arbitral Tribunal "declare the illegality of the denials of the administrative complaints nos. … 2014 …, … 2014 …, … 2014 …, … 2014 …, … 2014 …, … 2014 …, … 2014 …, … 2014 …, … 2014 …, … 2014 …, … 2014 …, … 2014 …, … 2014 …, … 2014 …, … 2014 …, … 2014…, … 2014 …, … 2014 …, … 2014 …, … 2014 …, as well as of the official IUC assessment acts identified therein and in document No. 1 attached to the present case, pursuant to article 135 of the CPA, in violation of articles 1, 3, 4, no. 1 and 2, 6, no. 1 and 3, and 17, no. 1, of the CIUC; with the granting of the claim set forth above, declare the nullity of the corresponding compensatory interest assessments, pursuant to article 133, no. 2, subparagraph i), of the CPA; subsidiarily, if [...] does not determine the annulment of the official IUC assessments in reference, [...] determine the original illegality of the corresponding compensatory interest assessments, due to failure to meet the requirements provided for in article 35 of the LGT; recognize the error attributable to the services of the Tax Administration, and, as a consequence, pursuant to article 43 of the LGT, condemn the Tax Administration to pay indemnificatory interest, computed on the total amount to be restituted, from the date of payment until the issuance of the respective credit note; finally, and to the extent of the granting of the previous claims, condemn the Tax Administration to pay the costs of the arbitral process".

2.3. For its part, the AT argues in its defense:

that "although it may be supposed that the factual procedures may be transversal to all assessments, the fact is that we are faced with disparate factual situations embodied in different vehicles, with different sales dates, different procedures if we are dealing with sales to dealers, on different dates and to completely different owners, with completely differentiated values";

that "from the articulation between the scope of the subjective incidence of IUC and the constitutive fact of the corresponding tax obligation, there clearly emerge from article 6 of the CIUC, the legal situations that generate the birth of the tax obligation, namely, the assignment of registration or registration in national territory";

that "the initial registration of ownership of admitted vehicles (as is the case in the present case), is based on the respective application and proof of compliance with tax obligations relating to the vehicle. That is, the issuance of a registration certificate implies the presentation of a DAV by the Claimant and the payment of the corresponding ISV and automatically results in the registration of vehicle ownership under article 24 of the RRA in the name of the entity that proceeded with its importation [...] and made the request for registration, that is, the Claimant";

that, pursuant to "article 24 of the RRA, the importer appears in the registry as the first owner of the vehicle and in that sense is, in accordance with what is provided in articles 3 and 6, both of the CIUC, the tax subject";

that "the assignment, to the Claimant, of a registration certificate embodies, pursuant to the provisions of article 6 of the CIUC, the taxable event, so that, having the Claimant requested the issuance of a registration certificate [and] such certificate being registered in the name of the Claimant, the requirements of the taxable event of IUC are met, as well as its enforceability, the Claimant being the tax subject";

that "the tax legislator did not provide that the tax would be owed by the owner of the vehicle who would be registered at the end of the 60 days referred to in no. 2 of article 42 of the RRA, which would be paid in the 30 days thereafter pursuant to article 17 of the CIUC. And certainly not did the legislator provide that importers, notwithstanding that they proceed with the sale of vehicles before the assignment of the registration certificate, could thus see the subjective incidence of IUC excluded. What the legislator established is that the taxable event of the tax is ascertained by registration or registration, expressly establishing article 24 of the RRA that, once ISV has been paid and registration has been requested, the vehicle is automatically registered in the name of the importer, that is, the Claimant";

that "the argument put forward in point no. 8 of the request for arbitral ruling is completely unfounded, and is therefore impugned";

that "the tax legislator in article 6 of the CIUC clearly established the premises as to the taxable event of the tax, as well as its enforceability, inequivocally establishing that such event is constituted by the ownership of the vehicle, as attested by the registration or registration in national territory. That is, the tax legislator did not provide that the tax would be owed by the owner of the vehicle who would be registered in the 60 days referred to in no. 2 of article 42 of the RRA, which would be paid in the 30 days thereafter pursuant to article 17 of the CIUC";

that, "regardless of whether the Claimant proceeds with the sale of the vehicle to its dealers up to the end of the legal deadline after the assignment of registration, such fact, in light of the taxable event established in article 6 of the CIUC, is manifestly inconsequential, insofar as the legislator expressly established that the taxable event is attested by the assignment of registration";

that "although the Claimant alleges that on the date of the assignment of registration it had already sold the vehicles to its dealers, such fact is irrelevant for the purposes of the application of the provisions of article 6 of the CIUC";

that "the position advocated by the Claimant [results] not only from a biased reading of the letter of the law, but also from the adoption of an interpretation that does not account for the systematic [nor teleological] element, violating the unity of the scheme established throughout the CIUC and, more broadly, throughout the entire tax-legal system and further results from an interpretation that ignores the ratio of the scheme established in the article in question, and indeed, throughout the CIUC;

that "article 3 of the CIUC does not contain any legal presumption";

that "invoices are not suitable to prove the conclusion of a synallagmatic contract such as a purchase and sale, as such invoices do not in themselves reveal an essential and unequivocal manifestation of will (i.e., acceptance) by the alleged purchasers"; that "the interpretation put forward by the Claimant appears to be contrary to the Constitution [given that] the position advocated by the Claimant [aims] to exclude the subjective incidence and taxation of IUC, has no legal basis and violates the constitutional principles of legality and tax justice, taxpaying capacity, equality, certainty and legal security";

that "the IUC is assessed in accordance with registry information duly transmitted by the Institute of Registries and Notariat [so that] the IUC is not assessed in accordance with information generated by the respondent itself. [...] the respondent limited itself to complying with the legal obligations to which it is bound and, in parallel, to following the registry information that was provided to it by the appropriate party";

that "no error attributable to the services [has occurred in this case, so] the legal requirements that confer the right to indemnificatory interest are not met".

2.4. The AT concludes, finally, that "the exception raised should be sustained, absolving the respondent from the action. If this is not accepted, the present request for arbitral ruling should be judged to be dismissed, maintaining in the legal order the tax assessment acts impugned and absolving, accordingly, the respondent entity from the claim."

III – Proven and Not Proven Facts

3.1. The following facts are deemed proven:

i) The Claimant is a commercial company of Portuguese law, with registered office and actual management in national territory, classified under the general regime for corporate income tax and VAT purposes, which is engaged in the importation, admission and commercialization of motor vehicles of the brands "A1…" and "B…", mostly in new condition.

ii) To proceed with the commercialization of the said vehicles in Portugal, the Claimant uses a network of dealers to whom it grants the right to commercialize, at the retail stage, motor vehicles of the brands in question, and may further, in certain cases, proceed with the commercialization of vehicles with financial entities of the AA… Group in Portugal, which will be subject to financial lease contracts or long-term lease.

iii) Although disagreeing, the present Claimant proceeded, in November and December of 2013 and still within the voluntary payment period, to pay in full the IUC assessments and compensatory interest in reference. It further contested the legality thereof before the AT, requesting their annulment, in the administrative complaint proceedings nos. … …2014 …, … 2014 …, … 2014 …, … 2014 …, … 2014 …, … 2014 …, … 2014 …, … 2014 …, … 2014 …, … 2014 …, … 2014 …, … 2014 …, … 2014 …, … 2014 …, … 2014 …, … 2014 …, … 2014 …, … 2014 …, … 2014 … and … 2014 ….

iv) The Claimant was notified of the decisions denying the said administrative complaints on September 29 and 30 and October 22, 2014.

v) Not conforming to the said decisions, the Claimant filed the present arbitral request on 30/12/2014.

vi) The joinder of claims underlying the present arbitral request has legal basis, given that, in light of article 3, no. 1, of the RJAT, and article 104 of the CPPT, there is verified, for all of them, identity of tax, circumstances and grounds of fact and law invoked for their assessment and determination.

3.2. There are no material facts not proven relevant to the determination of the case.

IV – Preliminary Matter: Joinder of Claims

Given the identity of the tax facts (which is not equal to absolute identity of the factual situations, as correctly notes Jorge Lopes de Sousa in "Commentary to the legal framework for arbitration in tax matters", in Guide to Tax Arbitration, 2013, 147), of the tribunal competent for the determination and of the grounds of fact and law invoked, nothing prevents, in view of the provisions of article 104 of the CPPT and article 3 of the RJAT, the intended joinder (see point vi) of the proven factual matter).

V – Substantiation: The Legal Matter

Once the factual matter is established, it is important to address the legal matter raised by the Claimant, which consists of assessing the terms of the configuration of the subjective incidence of IUC in light of the provisions of article 3 of the IUC Code, namely, the question of whether the subjective incidence is based strictly on the registration of vehicle ownership in the vehicle registry, or whether the registration operates only as a presumption of tax incidence, rebuttable, in conformity with the provisions of article 73 of the General Tax Law. On this matter, there is already abundant and well-defined arbitral case law expressed in various arbitral decisions.

5.1. On Subjective Incidence: The Taxable Event and the Effects of Vehicle Registry Registration in the Context of IUC Incidence

The matter to be decided is strictly concerned with the requirements for IUC incidence, referring to the present case and, in that measure, it is required to address the alleged illegality due to violation of law due to error regarding the requirements that led the AT to issue the assessments impugned.

Thus, having analyzed the factual matter presented in the case file, the legal framework applicable resulting from the combined provisions of the CIUC, the ISV and the Motor Vehicle Code, it is necessary to assess its application to the present case in order to be able to conclude whether the IUC assessments impugned are or are not illegal.

First, it must be taken into account that the CIUC establishes, as a rule of incidence, that the tax subjects are the owners of the vehicles, being considered as such the persons in whose names they are registered. The fundamental legal framework applicable in this matter is that provided for in articles 1 through 6 of the CIUC, approved by Law No. 22-A/2007, of June 29.

Article 1 of the CIUC defines the objective incidence of the tax, distinguishing vehicles by specified categories, a norm that appears clear and without difficulties of application.

However, the same is not true with the rule of subjective incidence contained in no. 1 of article 3 of the CIUC, which is at the origin of the present dispute and constitutes, thus, the matter to be decided in the case under consideration. The analysis of both norms (articles 1 and 3) permits the conclusion that in the operation of IUC the vehicle registry has a fundamental role, but the correct application of the regime proposed by the legislator requires the use of other interpretative elements.

What matters, therefore, is to determine the meaning and scope of the rule of subjective incidence, contained in article 3, no. 1, of the CIUC and the possible existence or non-existence of a rebuttable presumption, connected with the question of the legal effects of vehicle registry registration, raised by the Claimant. On this matter, the positions of the parties set forth above are summarized as follows:

• for the Claimant, it cannot be considered a tax subject for IUC, since it was not the owner of the said vehicles at the moment the tax event occurred, having alienated the said vehicles on a date prior to the very registration thereof; moreover, all purchasers registered the acquisition of vehicle ownership; but, even if, in the years to which the IUC assessments in question refer (2009 to 2012), the transfer of the said vehicles was not duly registered with the Motor Vehicle Registry Office, the Claimant also could not be considered the taxpayer, since registry registration, or its absence, cannot be considered the determining element of the Claimant's tax responsibility;

• for the respondent, article 3, no. 1, of the CIUC establishes a rule of tax incidence and not a mere rebuttable presumption, so being it the first holder of vehicle registry registration, it is, without further consideration, the IUC taxpayer in the year in question.

Now, article 3 of the CIUC provides that:

"ARTICLE 3

SUBJECTIVE INCIDENCE

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

2 – Financially leasing tenants, purchasers with reservation of ownership, as well as other holders of purchase option rights by force of the leasing contract are deemed equivalent to owners".

Article 11, no. 1, of the LGT establishes that:

"In the determination of the meaning of tax norms and in the qualification of the facts to which they apply, the general rules and principles of interpretation and application of laws are observed".

The interpretation and application of the legal norm presupposes the performance of an interpretative activity, which should be objective, balanced, and in accordance with the letter and spirit of the law. Any text, and the law is no exception, bears multiple meanings and frequently contains ambiguous or obscure expressions. For that reason, although the letter of the law is "the guide thread" of the interpreter, it must be interpreted in light of the underlying objectives, "the ratio" or the motivation of the legislator in establishing the norm under analysis. To these elements there is added another according to which the interpretation of the legal norm must respect the "unity of the legal system," its coherence and intrinsic logic.

Article 9 of the Civil Code (CC) provides the rules and fundamental elements for the interpretation of the legal norm, to which the interpretation of the tax law must also obey the provisions of that norm, which begins by saying that interpretation should not be confined to the letter of the law, but should reconstruct from it the "legislative thought".

To these general principles there are further added the principles contained in the LGT, namely in article 73, which establishes that presumptions contained in tax incidence norms always admit contrary proof.

Furthermore, with respect to the matter under analysis, there should be noted the contribution of arbitral decisions already issued in cases nos. 14/2013-T, of October 15, 26/2013-T of July 19, 27/2013-T, of September 10, 217/2013-T of February 28 and, more recently, in the decisions issued in cases 286/2013-T, of May 2, 2014, 293/2013-T, of June 9, 2014, 46/2014-T of September 5, 250/2014-T, of November 17, 2014 and 43/2014-T, which, among others, reveal a refined reflection on the fundamental matter under consideration.

It is, therefore, in this framework of background, using the fundamental hermeneutical principles just mentioned, adopted by Case Law... [document continues but is truncated in the original Portuguese text]