IUC Subjective Incidence: Financial Institution Challenges Vehicle Tax Liability and Legal Presumptions (CAAD 712/2015-T)

ARBITRAL DECISION

I. REPORT

1. A… - FINANCIAL CREDIT INSTITUTION, S.A., Tax ID…, with headquarters at Rua…, …-…, …, …-… …, requested the constitution of an arbitral tribunal in tax matters raising a request for arbitral pronouncement against the acts of assessment of Single Circulation Tax (IUC) relating to the periods 2011, 2012 and 2015, in the aggregate amount of € 10,706.47, whose illegality it invokes as the basis for the annulment petition it formulates. Petitioning, therefore, the annulment of the said acts, with the consequent reimbursement of sums improperly paid, the Claimant further requests the recognition of the right to the corresponding compensatory interest, calculated in accordance with legal terms.

2. The Claimant bases the petition, presented on 30-11-2015, on the circumstance that, at the date on which the taxability of the tax occurred, the Claimant was not the passive subject of the tax obligation.

3. In response to the requested, the Tax and Customs Authority (AT) pronounced itself in the sense of the dismissal of the present request for arbitral pronouncement, maintaining in the legal order the impugned tax acts and, in accordance, for the acquittal of the Respondent entity, raising, however, the dilatory exception of illegal cumulation of claims.

4. The request for constitution of the arbitral tribunal was accepted by the President of CAAD and automatically notified to the Tax and Customs Authority on 10-12-2015.

5. Pursuant to the provisions of article 6, section 2, paragraph a) and article 11, section 1, paragraph b) of Decree-Law No. 10/2011, of 20/01, as amended by article 228 of Law No. 66-B/2012, of 31/12, the Ethics Council appointed the undersigned as arbitrator of the singular arbitral tribunal, who communicated acceptance of the assignment within the applicable period, and notified the parties of this appointment on 26-01-2016.

6. Duly notified of this appointment, the parties did not manifest the will to refuse the appointment of the arbitrator, in accordance with the combined provisions of article 11, section 1, paragraphs a) and b) of the RJAT and articles 6 and 7 of the Ethics Code.

7. Thus, in accordance with the provisions of article 11, section 1, paragraph c) of the RJAT, as amended by article 228 of Law No. 66-B/2012, of 31/12, the singular arbitral tribunal was constituted on 10-02-2016.

8. The regularly constituted arbitral tribunal is materially competent, in light of the provisions of articles 2, section 1, paragraph a), of the RJAT.

9. The parties have legal personality and capacity and have standing (articles 4 and 10, section 2, of the RJAT, and article 1 of Administrative Order No. 112-A/2011, of 22/03).

II. ON THE REQUEST FOR ARBITRAL PRONOUNCEMENT

1. Basing the petition for annulment of the IUC assessment acts relating to various motor vehicles, which it identifies through their respective license plate numbers, and to the periods 2011, 2012 and 2015, the Claimant alleges, in summary:

10.1. The corporate purpose of the Claimant is expressed in the financing of credit acquisitions of consumer goods and equipment (financial leasing and credit), as well as in the activity of Long-Term Rental (LTR) of motor vehicles without driver, motorcycles and boats;

10.2. In the scope of the activity it develops, the Claimant enters into contracts with its clients for long-term rental and financial leasing contracts, at the end of which the vehicle is transferred to the lessee, whose object are motor vehicles and, also, mutual loan contracts for the acquisition of motor vehicles in which a clause of retention of ownership is established in its favor;

10.3. At the end of financial leasing contracts, as a general rule, the lessee acquires the vehicle for a residual value;

10.4. The entering into of such contracts constitutes, pursuant to article 5 of the Motor Vehicle Property Registry Code, a fact subject to mandatory registration;

10.5. Regarding the vehicles subject to the IUC assessments at issue herein, the beneficiaries of the respective contracts did not register their condition as lessees, purchasers with retention of ownership or even as owners;

10.6. This omission determined that the Claimant, in all cases at issue herein, is registered in the motor vehicle property registry as owner or beneficiary of a clause of retention of ownership, reason for which the respective Single Circulation Taxes were assessed to it;

10.7. The said assessments concern tax whose taxable fact occurred:

(i) At a moment when the now Claimant was merely beneficiary of a clause of retention of ownership stipulated in the loan contract (Vehicles identified in Table No. 1 of the petition and Docs. 1 to 6);

(ii) At a moment when the Claimant had already proceeded to the sale of the vehicle, as a general rule at the end of a financial leasing contract (Vehicles identified in Table No. 2 of the petition and Docs. 7 to 93); or

(iii) At a moment that had occurred the total loss of the vehicles in question by accident covered by insurance contract (Vehicles identified in Table No. 3 of the petition and Docs. 94 to 108); or

(iv) Regarding vehicles that were subject to financial leasing and long-term rental that fell into default, with the proceedings in litigation and not being, to date, recovered the said vehicles (Vehicles identified in Table No. 4 of the petition and Docs. 109 to 171); or

(v) Regarding a vehicle that was returned by the Claimant to the respective supplier for presenting a defect (Vehicle identified in Table No. 5 of the petition and Doc. 172);

10.8. From the foregoing, the Claimant concludes that it was not the passive subject of the tax at the date of the occurrence of the respective taxable events, in accordance with the legal basis which, below, is transcribed in its essential lines.

10.9. In accordance with the provisions of article 3, section 1 of the IUC Code, "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."

10.10. Article 3, section 2 of the same rule further establishes that "Financial lessees, purchasers with retention of ownership, as well as other holders of purchase option rights by virtue of leasing contracts, are equated to owners."

10.11. In the interpretation of the rule of incidence of IUC and following the canons that govern the interpretation of legal norms, namely article 9 of the Civil Code, one must have in consideration that "The interpretation should not limit itself to the letter of the law but reconstruct from the texts the legislative thought, taking especially into account the unity of the legal system, the circumstances in which the law was drafted and the specific conditions of the time in which it is applied";

10.12. And that, in the interpretation "However, the legislative thought cannot be considered by the interpreter unless it has in the letter of the law the minimum of verbal correspondence, even if imperfectly expressed."

10.13. From what precedes it follows, therefore, that the first task to be undertaken with a view to the interpretation of the rule of incidence in question, will be that of seeking to reconstruct the legislative thought underlying the legal text.

10.14. In article 1 of the IUC Code the legislator established what it denominated the principle of equivalence,

10.16. According to this principle the tax in question here seeks to burden the taxpayers in the measure of the environmental and road cost that they cause, in concretization of a general rule of tax equality.

10.17. It is, therefore, a principle that imposes, in the scope of the taxation of motor circulation, the logic of the user-payer;

10.18. It is, therefore, within this rationale that the rule of subjective incidence of IUC should, from the outset, be interpreted.

10.19. It should therefore be understood that the passive subject of IUC is the owner of the vehicle only in those cases in which the purchaser is not burdened with a clause of retention of ownership or there do not exist other holders of the right of purchase option by virtue of a leasing contract, cases in which the tax is owed by he who holds the right of exclusive use of the vehicle, by reason of the principle of the user-payer that guides the taxation of motor road circulation;

1. Developing in more detail the basis exposed, the Claimant states:

11.1. As to the IUC assessments on vehicles with retention of ownership in favor of the Claimant (Table 1 - Docs. 1 to 6). In cases where the acquisition of vehicles is made using financing granted by the Claimant to the respective purchasers, a clause of retention of ownership in favor of this is established. Thus, the purchaser contracts the purchase of the vehicle with the supplier, with the price paid by the Claimant, and the ownership of the vehicle does not transfer until the end of the loan contract;

Since one is not in the presence of a retention of ownership constituted in favor of the seller, nothing prevents that, by virtue of the institute of subrogation, the same be constituted in favor of the Claimant-financier. It is, therefore, in this context, that the retention of ownership is constituted in favor of the Claimant.

Thus, the existence of a retention of ownership over a determined asset in favor of a third party (in this case the Claimant) allows it to reserve for itself the domain of the thing (vehicle) until the fulfillment of the obligations that fall on the debtor (the borrower) in the scope of the contract in question (loan). However, the possession of the thing passes immediately, and by virtue of the contract, to the sphere of the purchaser, being he the exclusive user thereof;

Recognizing this effect, the legislator provided for the equation to owners, for purposes of determining the passive subject status for IUC, of purchasers with retention of ownership, without, however, providing for the need for such retention to operate in favor of the seller. That is sufficient to conclude that, in the cases provided for in section 2 of article 3 of the IUC Code, the assumptions of subjective incidence are verified only in the sphere of the purchasing users and only in relation to these. For which the tax acts identified in Table 1 are affected by illegality.

11.2. Of the IUC assessments on vehicles already alienated on the date of the occurrence of the respective taxable event (Table 2 - Docs. 7 to 93). Since the ownership of the automobiles identified in Table 2 was transferred on the date on which the tax obligation became due, it is important to clarify the scope of the final part of section 1 of article 3 and whether there is established a true legal presumption in the matter of tax incidence.

Referring to the established case law on this matter, the Claimant concludes that the rule contained in section 1 of article 3 of the IUC Code establishes a true legal presumption in the scope of the subjective incidence of the tax, whose refutation, in accordance with and for the purposes of article 73 of the LGT, it effects, demonstrating that it is not the owner of the vehicles on the date of the occurrence of the taxable event, a fact which it demonstrates through the presentation of a copy of the respective sales invoices.

11.3. Of the IUC assessments on vehicles total-loss or definitively lost (Table 3, Docs. 94 to 108). The vehicles identified in this Table suffered, before the occurrence of the taxable event of the respective tax, accidents that caused their total loss.

Regarding these, the Claimant, as owner of the vehicle, provided its insurer with the documents necessary to prove the occurrence of the accident, and the respective effects, occasion in which it received, under the respective contract, the indemnity owed;

It further provided the insurer with the documents necessary so that it would request, as is incumbent on it by virtue of law (cf. section 8 of article 119 of the Highway Code), the cancellation of the corresponding license plate;

For this reason, on the date on which the tax in question became due, the respective assumption of the objective incidence was no longer verified (cf. articles 2 and section 3 of article 4 of the IUC Code).

11.4. Of the IUC assessments on vehicles that were subject to financial leasing and long-term rental that fell into default, with the proceedings in litigation and not being, to date, recovered the said vehicles (Table No. 4 - Docs. 109 to 171). Regarding these vehicles, identified in Table 4, the respective lessees fell into default, with the proceedings in litigation. In addition, to date, and notwithstanding the efforts of the Claimant in that direction, the vehicles in question have not yet been recovered. For that reason, on the date on which the tax became due, the passive subject of the tax is the lessee.

11.5. Of the IUC assessments on vehicle that was subject to immediate return by the Claimant to the respective supplier for presenting a defect and was promptly exchanged for another vehicle, for which it did not even become subject to a contract or to circulate (Table 5 - Doc. 172). For the said reasons, the vehicle in question never became subject to any contract on the part of the Claimant or to be used by it for any purpose.

III. ON THE EXCEPTION OF ILLEGAL CUMULATION OF CLAIMS

1. The Claimant, invoking the provisions of article 3, section 1, of the RJAT, considers the cumulation of claims relating to the different tax acts to be admissible, sustaining that the success of the claims depends essentially on the appreciation of the same factual circumstances and the interpretation and application of the same principles or rules of law.

2. According to the Claimant's understanding, this will be the situation that occurs in the case of the petition that originated the present proceeding in which it is sought that the Arbitral Tribunal pronounce itself on the legality of the tax assessments identified therein, "being that in all of them there are facts that prevent the now Claimant from being the passive subject of the tax in question and in all of them there is an issue of the interpretation and application of the same principles or rules of law."

3. However, the Respondent, in its response, in addition to sustaining the legality of the questioned assessments, raises the exception of illegal cumulation of claims.

4. According to the Respondent, in the present case, the requirement of coincidence regarding the factual circumstances is not met. Thus, "Although one could speculate that the factual procedures may be transversal to all assessments, what is certain is that we are faced with disparate factual situations embodied in: (i) different vehicles; (ii) with different transmission dates; (iii) different grounds for transmission; (iv) different grounds for taxation and (v) different owners."

5. Consequently, "the cumulation made by the Claimant is illegal, and should not be admitted by the Singular Arbitral Tribunal, which should notify the Claimant, in accordance with and for the purposes of article 47, sections 5 and 5 of the CPTA."

6. Following a ruling of 9-04-2016 the Claimant was notified to pronounce itself regarding the exception raised by the Respondent.

7. Pronouncing itself on the said exception, the Claimant says that "contrary to the understanding professed by the Respondent, the factual circumstances referred to in article 3 of the RJAT do not refer to the existence of different vehicles, different transmission dates, different grounds for transmission and taxation or different owners.

If so were the case, never could a cumulation of claims be possible, since there would never be cumulative circumstances."

1. Differently, the Claimant understands that "the coincidence regarding factual circumstances refers to the illegitimacy of the Claimant, through the transmission of the ownership or enjoyment and possession of the vehicles to third parties.

It is indeed the entering into of those contracts and the transfer of enjoyment and possession to third parties that is the principal and transversal basis to all the impugned assessments, since it is that issue that prevents the Claimant from being the passive subject of the tax in question.

See, in this regard, article 104 of the CPPT (applicable subsidiarily to the tax arbitral process by virtue of article 29 of the RJAT), according to which claims may be "cumulated and authors joined in case of identity of the nature of the taxes, the grounds of fact and law invoked and the court competent for the decision".

1. The Claimant concludes that "it can, from now on, be concluded that the identity of the nature of the taxes is verified, since it is the impugning of taxes, only. In the same way, and as we have seen, the identity of the grounds of fact is also fulfilled. It remains to analyze the grounds of law.

In this regard, it is important to note that the identity of the grounds of law is related to the lack of the assumptions of subjective incidence, provided for in section 2 of article 3 of the CIUC, which are equally transversal to all the impugned assessments, since, for purposes of that provision, the Claimant was not the owner of the vehicles, in any of the cases presented."

IV. INTERLOCUTORY DECISION

1. Considering that the possible success of the exception raised by the Respondent would necessarily lead to the non-judgment of the merits of the case and to the acquittal of the defendant (Cf. CPTA, article 89, and C.P. Civil, article 576, section 2), the Tribunal considered that, before any other issue, it should pronounce itself on the alleged illegal cumulation of claims.

2. As referred to above, the Respondent raised the illegality of the cumulation of claims made by the Claimant, by considering that the existence of the same factual circumstances is not met, inasmuch as one is faced with different vehicles, with different transmission dates, totally different owners, different grounds for taxation, in addition to different grounds for transmission.

3. On this matter, article 3, section 1 of the RJAT provides that "the cumulation of claims even though relating to different acts and the joining of authors are admissible when the success of the claims depends essentially on the appreciation of the same factual circumstances and the interpretation and application of the same principles or rules of law".

4. According to the transcribed rule, the cumulation of claims requires that the following cumulative requirements be met: that the success of the claims depends essentially on the appreciation of the same factual circumstances and the interpretation and application of the same principles or rules of law.

5. It is settled, in case law and in doctrine, that the viability of cumulation of claims does not require an absolute identity of the factual situations, it being sufficient that these situations are similar in the aspects relevant to the decision, as is extracted from the term "essentially" used in that rule.

6. With no doubts being raised as to the application of the same rules of law, it appears that, in the present case, the requirement of identity of the factual situations is not met.

7. In effect, it is verified that there are nothing less than five completely distinct factual situations, as, moreover, they come clearly differentiated in various tables organized in accordance with the basis of the factual and legal issues that constitute the object of the request for arbitral pronouncement:

• Table 1 - Situations in which the questioned assessments concern vehicles on which, by way of subrogation, retention of ownership in favor of the Claimant was constituted - Legal basis: paragraphs 29 to 42);

• Table 2 - Situations in which the assessments concern vehicles that had already been alienated on the date of the taxability of the tax - Legal basis: paragraphs 43 to 68);

• Table 3 - Situations relating to vehicles total-loss on the date of the occurrence of the taxable event - Legal basis: paragraphs 69 to 72);

• Table 4 - Situations relating to vehicles subject to financial leasing and LTR in default of the respective lessees - Legal basis: paragraphs 73 to 80);

• Table 5 - Situation relating to vehicle subject to return to the respective supplier - Legal basis: paragraphs 81 to 86).

1. The factual frameworks are, therefore, very diversified upon which the success of the claim depends, thus not showing itself, the requirement of identity of factual circumstances required for the cumulation of claims, as determined by article 3 of the RJAT.

2. In these terms, and with the grounds expressed above, the Tribunal decided, through an Interlocutory Decision, to judge as successful the exception raised by the Respondent regarding the illegal cumulation of claims and, pursuant to the provisions of article 4, section 3, of the CPTA, applicable by referral of article 29 of the RJAT, to determine the notification of the Claimant to, within a period of 10 days, indicate the claim it wishes to see appreciated in the proceeding, under the threat of, not doing so, there being acquittal of the defendant on all claims.

3. It was further decided to determine the continuation of the proceeding once the period granted to the Claimant to indicate the claim it wishes to see appreciated in the present proceeding had elapsed.

4. Following notification of the said Interlocutory Decision, the Claimant came to declare that it considers it "absolutely illegal and susceptible of tainting with nullity the decision that will be rendered finally."

5. Thus understands the Claimant that "Contrary to what the said ruling defends, it is evident that the factual and legal circumstances on which all the claims rest resides in the daily activity of the Respondent, which, as is known, is dedicated to the rental of motor vehicles, in the most diverse modalities."

6. After making some considerations on the applicable legal norms, the Claimant considers that "The strict identity of grounds of fact and law is not necessary in tax arbitration, only requiring that the success of the claims depends essentially on the appreciation of the same circumstances and the application of the same legal principles, which, precisely, is what is at issue in the present proceeding,"

In which, as reiterated and repeatedly already explicated, it is sought that the tribunal conclude that the Claimant, as a financial institution that finances the use and acquisition of motor vehicles, is not the passive subject of the IUC that applies to such vehicles.

1. For which it concludes that "Any different approach to this issue can only rest on a regrettable confusion about the applicable principles and inevitably results, in an enormous prejudice to the taxpayers to whom, notwithstanding the insistence of the legislator in simplifying procedures and guaranteeing the speed and effectiveness of the proceedings for dispute resolution, justice continues to be denied for reasons of a formalistic, adjectival and even vaguely ridiculous nature."

2. And, with the grounds expressed, "the Claimant understands that it cannot conform itself with the decision of the tribunal."

3. However, "Without prejudice, and for mere caution of counsel", the Claimant decided to inform the tribunal "that the claim it wishes to see appreciated in the present proceedings is the claim for declaration of illegality of the IUC assessments in the amount of EUR 4,279.64, which concern tax whose taxable event occurred at a moment when the Claimant had already proceeded to the sale of the respective vehicles, and which were attached to the Initial Petition through Documents 7 to 93, in accordance with Table No. 2 of the said Petition."

4. Notwithstanding the indication of the claim it wishes to see appreciated, the Claimant requests the tribunal that, "under the principle of free conduct of the proceeding and the autonomy of the judge, reviews its decision, rendering another, capable of assuring the effective jurisdictional protection of the claimant and which, finally, appreciates the merits question raised, the only relevant one in this present context."

5. Although one accompanies, in general terms, the considerations that the Claimant makes around the admissibility of cumulation of claims, in accordance with article 3 of the RJAT, the Tribunal considers it is not possible to accede to the petition formulated in the sense of reviewing the position assumed in the Interlocutory Decision in reference, for the reasons and with the grounds expressly listed in the same.

6. Moreover, it is noted that the situation to which the present proceeding refers is in all identical to that which was the subject of decision in Proceeding 691/2014-T, of CAAD, whose conclusions cannot fail to be followed and which, with due consideration, are transcribed below:

"Article 3, section 1 of the RJAT states on this matter that "the cumulation of claims even though relating to different acts and the joining of authors are admissible when the success of the claims depends essentially on the appreciation of the same factual circumstances and the interpretation and application of the same principles or rules of law."

The rule requires, therefore, two cumulative requirements: the first, that the success of the claims depends essentially on the appreciation of the same factual circumstances; and the second, that the success of the claims depends essentially on the interpretation and application of the same principles or rules of law.

Let us first see what should not be understood by "same factual circumstances".

By "same factual circumstances" should not, save better opinion, be understood restrictively and exactly as "the same facts". According to this restrictive interpretation, there could be cumulation of claims only when the same fact – the sale of vehicle X – was at issue in relation to various tax assessments relating to various years. We believe that the rule in question should not be interpreted this way, in this restrictive manner, because the expression "factual circumstances" is not equivalent to "facts".

To find the precise scope of the rule, it is useful to take into account the interpretation that doctrine has made of the provision referring to the cumulation of claims in the tax proceeding. Article 104 of the CPPT addresses this matter, pursuant to which, "in judicial impugnation may, in accordance with the law, be cumulated claims and authors joined in case of identity of the nature of the taxes, the grounds of fact and law invoked and the court competent for the decision".

As to the identity of the grounds of fact, Jorge Lopes de Sousa says, in Code of Tax Procedure and Process Annotated and Commented, 6th ed., Vol. II, Áreas, Lisbon, 2011, p. 183, that "it is not necessary for the cumulation and joining to be viable that there be an absolute identity of the factual situations, it being sufficient that the legal-tax issue to be appreciated is identical.

On the same issue, but in commentary to article 71 (cumulation of claims in gracious claim), the same Author reaffirms that "it is not necessary for the cumulation of claims an absolute identity of the factual situations, it being sufficient that the legal-tax issue to be appreciated is identical", adding: "For that identity, what will be necessary is that the legal issue to be appreciated is fundamentally the same and that the factual situation is similar in the points that are relevant to the decision. The facts will be essentially the same when they are common to the claims of all the authors, in such a way that it can be concluded that, if the alleged facts by one of the authors are proved, there will be the factual basis wholly or partially necessary for the success of the claims of all of them. Thus, for example, a case in which there is assessment of municipal contribution relating to a year in which one considers as passive subject of this tax a holder of the right of use and occupation of a property will be identical, for purposes of gracious claim, to another in which it is a matter of appreciating the same issue in relation to the same interested party as to another property of which they are holder of an identical right, or as to another year in relation to the same property."

Can this interpretation be applied to article 3, section 1 of the RJAT? In this provision one speaks of "same factual circumstances", while the provision of the CPPT speaks of "grounds of fact". But one cannot fail to consider that the factual circumstances to which article 3 of the RJAT refers are the factual circumstances relevant to the cause of action, and only these. In that measure, since the factual circumstances relevant to the cause of action are those on which the basis of the factual grounds rests, the expressions are equivalent.

Therefore, what should be relevant to the issue of the admissibility of cumulation of claims within the scope of the RJAT are not any characteristics of the facts alleged in the claim, but only the characteristics that have connection with the cause of action. There will exist, thus, identity of factual circumstances when the factual circumstances are so similar that the basis of the factual grounds is identical for all the claims, in such a way that the appreciation which the judge has to make on the matter of fact is identical in all of them.

The examples given by Lopes de Sousa in the transcribed passage adjust themselves to this criterion, while at the same time they translate a relatively restrictive interpretation of the concept of "identity of the grounds of fact". In the two cases suggested as example, the legal-tax issue to be appreciated is identical, as the Author states: the question of whether the holding of the right of use and occupation determines subjection to tax.

The cited Author goes even further, asserting that it is necessary that, when the facts that serve as the basis for one of the claims are proved, the "factual basis wholly or partially necessary for the success of all of them" is proved.

The interpretation that the Author makes of the provision, through these examples, is, as stated above, a relatively restrictive interpretation, which is justified by the very ratio of the rule, which resides in the economy of means and uniformity of decisions (STA, judgment of 16-11-2011, proc. no. 0608/11). Now, such economy of means and uniformity of decisions will only be realized when the judge is faced with different claims for which the same judgments hold both on the matter of fact and on the matter of law. In other words, although placed before a multiplicity of facts, the judge has to make the same judgments for all the facts.

Let us now examine the situation in the present proceedings.

The Claimant alleges that the possibility of cumulation of claims in the domain of tax arbitration is broader than in the domain of the CPPT, but offers no legal argument to base this allegation. It states that:

"The strict identity of grounds of fact and law is not necessary in tax arbitration, only requiring that the success of the claims depends essentially on the appreciation of the same circumstances and the application of the same legal principles, which, precisely, is what is at issue in the present proceeding, in which, as reiterated and repeatedly already explicated, it is sought that the tribunal conclude that the Claimant, as a financial institution that finances the use and acquisition of motor vehicles, is not the passive subject of the IUC that applies to such vehicles."

Let us analyze the argument.

"The appreciation of the claims must depend essentially on the same circumstances (of fact)", says the Claimant, and correctly so, inasmuch as this is the import of article 3, section 1 of the RJAT. But what are the factual circumstances on whose appreciation the success of all the claims depends, in accordance with the Claimant?

In the words of the Claimant, these circumstances would be that "the Claimant, as a financial institution that finances the use and acquisition of motor vehicles, is not the passive subject of the IUC that applies to such vehicles". Therefore, the Claimant intends for the Tribunal to conclude the following: "the Claimant is a financial institution that finances the use and acquisition of motor vehicles, therefore, it is not the passive subject of the IUC that applies to such vehicles, irrespective of the legal situation of those vehicles"!

It is not necessary for elaborated lucubrations to conclude that the argumentation does not have the minimum of consistency, since the fact that the Claimant is a financial institution that finances the use and acquisition of motor vehicles has no relevance whatsoever to the determination of its quality as passive subject of the tax, and much less could the success of the claim depend on such a circumstance.

Therefore, the Claimant, although it asserts that the requirement of the appreciation of the cumulated claims depending essentially on the same factual circumstances is met, does not identify the factual circumstances on which the success of the claims depends and which are common to all of them.

The Claimant alleges, in its first pronouncement on the matter of exception, sent to the proceeding on 4-6-2015, that the "entering into of long-term contracts and the transfer of enjoyment and possession to third parties is the principal and transversal basis to all the impugned assessments, since it is that issue that prevents the Claimant from being the passive subject of the tax in question".

As is abundantly evident, the assertion is inaccurate, that is, the entering into of long-term contracts and the transfer of enjoyment and possession to third parties are not the principal and transversal basis to all the impugned assessments. The principal and transversal basis to all the impugned assessments is the existence of a registration of the ownership of the vehicles subject to tax in the name of the Claimant.

The initial petition itself structures the basis of factual and legal grounds in five distinct factual frameworks (legal facts) which are the following:

• In paragraphs 28 to 41, the Claimant articulates the basis of factual grounds referring to the situations in which it is beneficiary of a clause of retention stipulated in a loan contract;

• In paragraphs 42 to 67, the Claimant exposes the basis of factual grounds referring to the situations in which the vehicles were alienated;

• In paragraphs 68 to 77, the Claimant exposes the basis of factual grounds referring to the situations in which a financial leasing contract is in effect on the vehicles;

• In paragraphs 78 to 81, the Claimant exposes the basis of factual grounds relating to the situations of total loss of vehicles.

• And finally, in paragraphs 82 to 89, the Claimant exposes the basis of factual grounds relating to the situations of financial leasing contracts that are in default.

In the five factual frameworks described, the success of the claim does not depend, essentially, on the same factual circumstances.

Let us see.

In relation to the situations in which the Claimant alleges being a beneficiary of a retention of ownership, the success of the claim depends on:

• proving the existence of an acquisition with retention of ownership for each of the vehicles in question (which, it may be noted in passing, is not proven in any of the cases);

• proving that the situation of acquisition with retention of ownership was maintained, despite not being registered, on the date of the taxable events, for each vehicle;

• discussing and clarifying the relevance that the failure to communicate the acquisition of property to the Respondent has for purposes of applying article 3, section 1 of the CIUC, an issue that has not yet been clarified by case law or doctrine;

• Eventually, clarifying whether such communication was or was not made;

In relation to the situations in which the Claimant alleges having proceeded to the alienation of vehicles, the success of the claim depends on:

• proving that the Claimant is not the owner of the vehicles, on the date of the taxable events, contrary to what results from the vehicle registration;

• discussing how such proof can and should be made, in light of the probative value of the presumption of registry inscription;

In relation to the situations in which the Claimant alleges that financial leasing contracts are in effect, the success of the claim depends on:

• proving that financial leasing contracts are in effect on the vehicles in question (which is proven only, it may be said in passing, in relation to one vehicle);

• Discussing the relevance that the non-compliance with the obligation imposed on the lessees by article 19 of the CIUC has on the incidence of the tax;

• Eventually proving that the Claimant complied with the ancillary obligation imposed by article 19 of the CIUC.

In relation to the situations in which the Claimant alleges that total loss of vehicles has occurred, the success of the claim depends on:

• Proving the total loss of vehicles

• Clarifying how that fact affects the incidence of the tax:

a) by way of a change in the subjective incidence, by transfer to the insurance company, which would imply proving the transfer of ownership to it;

b) by way of the disappearance of the object of the objective incidence of the tax, which would imply discussing the relevance of the failure to regularize that situation in terms of registration;

In relation to the situations in which the Claimant alleges the existence of financial leasing contracts that are in default:

• Proving the existence of such contracts;

• Proving the pendency of such proceedings;

• Determining the legal situation of vehicles in the pendency of such proceedings;

• Determining the relevance of the legal situation of the vehicles to the incidence of the tax.

From what is stated above, it is necessary to conclude that the success of the 391 cumulated claims does not depend, essentially, on the appreciation of the same factual circumstances, nor are the same the legal-tax issues to be appreciated. There exists no central legal-tax issue common to all the claims.

We consider, therefore, that in the case, the conditions required by article 3, section 1 of the RJAT for the cumulation of claims are not met, with the consequence that the cumulation of all the claims formulated by the Claimant is not admissible, fact which constitutes a dilatory exception provided for in article 89, paragraph g) of the Code of Procedure in the Administrative Courts (CPTA), applicable ex vi of article 29, section 1, paragraph c) of the RJAT, of official knowledge, which prevents the judgment of the merits of the case (article 576, section 2 of the Civil Code of Procedure, applicable ex vi of article 29, section 1, paragraph e) of the RJAT) and leads to the acquittal of the Respondent of the suit."

1. Thus maintaining the decision rendered regarding the exception raised by the Respondent regarding the illegality of cumulation of claims, the Tribunal will limit its appreciation to the merits of the claim that the Claimant declared it wishes to see appreciated in the present proceedings, that is, "the claim for declaration of illegality of the IUC assessments in the amount of EUR 4,279.64, which concern tax whose taxable event occurred at a moment when the Claimant had already proceeded to the sale of the respective vehicles, and which were attached to the Initial Petition through Documents 7 to 93, in accordance with Table No. 2 of the said Petition."

2. Raising doubts, however, regarding the analysis of the documentation presented by the Claimant concerning the claim it wishes to see appreciated, namely in that it is verified that the same relates as documents 7 to 93 a documentary collection much greater, on the order of hundreds of documents, being that, by the sampling to which was proceeded, some will be impertinent and others absolutely unnecessary, was, by ruling of 24-06-2016, determined the reorganization of the evidence attached to the claim in such a way that to each assessment only the pertinent documents were attached, beginning with the sales invoice, and all duly numbered.

3. Notified of the said decision, the Claimant, manifesting however disagreement regarding the same, insisting on the good organization of the documentation opportunely sent, chose to attach in paper support the documents which, in its understanding, provide sufficient proof of what it alleges regarding the illegality of the questioned assessments.

4. In these terms, and based on the documentation presented by the Claimant (Docs. 7 to 93), the Tribunal will appreciate the legality of the IUC assessments relating to vehicles which the same alleges to have been already alienated on the date of the occurrence of the respective taxable event, identified in Table 2 of the petition.

V. OF THE IUC ASSESSMENTS ON VEHICLES ALREADY ALIENATED ON THE DATE OF THE OCCURRENCE OF THE RESPECTIVE TAXABLE EVENT (Table 2 - Docs. 7 to 93)

1. Regarding the assessments which it lists in Table 2 of the petition, the Claimant bases the petition for annulment, with the consequent reimbursement of the sums improperly paid plus the corresponding compensatory interest, on the ground that the ownership of the vehicles identified therein by their respective license plate numbers had already been transferred to third parties on the date on which the taxability of the tax occurred to which the same relate.

2. Referring to the established case law on this matter, the Claimant sustains that the rule contained in section 1 of article 3 of the IUC Code establishes a true legal presumption in the scope of the subjective incidence of the tax, whose refutation, in accordance with and for the purposes of article 73 of the LGT, it effects, demonstrating that it is not the owner of the vehicles on the date of the occurrence of the taxable event, a circumstance of which it intends to provide proof through the presentation of a copy of the respective sales invoices, documents which it includes in the documentary collection which it identifies as documents 7 to 93.

3. Analyzing, however, the documentation offered by the Claimant, it is immediately apparent that only the assessments which refer to documents no. 81 to 89 relating to the corresponding vehicles identified in Table 2 have as recipient – passive subject of the tax obligation – the Claimant.

4. In effect, all the remaining assessments identified in the said Table, as well as the documentation relating thereto, identify as passive subject the company B…, S.A.

5. It is, therefore, this company that is identified in the documentation presented by the Claimant, being the same that appears as lessor in leasing contracts and seller in the sales invoices issued by it with reference to the vehicles to which the assessments identified in Table 2 relate and to which refer documents no. 7 to 80 and 90 to 93.

6. There arises, thus, and from the start, the question of the standing of the Claimant regarding the impugning of the IUC assessments in which it does not assume the quality of passive subject.

7. On this matter article 9, section 4 of the CPPT provides that have standing in the tax judicial proceeding, in addition to the tax administration, taxpayers, including substitutes and responsible parties, other tax obligors, parties to tax contracts, any other persons who prove legally protected interest, the Public Prosecutor and the Representative of the Public Treasury.

8. Not being the passive subject of the tax obligation nor being attributed to it any tax liability regarding the assessments made to B…, S.A., nor, furthermore, providing proof of legitimate interest that may assist it - which, moreover, it does not invoke - the Claimant, as regards them, lacks standing to file a request for arbitral pronouncement.

9. In these terms, the Tribunal will be cognizant only of the assessments relating to the periods and vehicles identified in the table below elaborated from the documents presented by the Claimant.

1. From the extensive list contained in Table 2 of the petition, only the tax acts referred to above have as passive subject the Claimant, fact which, as follows from the simple verification of the documents that integrate the present proceeding, is given as entirely proven.

There are no other facts relevant to the merits decision that have not been proven.

1. It is, therefore, at issue to determine whether the Claimant should or should not be considered passive subject of IUC for the vehicles and period to which the tax relates, as identified in the table above, considering that the same, although they continued then registered in its name, had already been subject to transmission to third parties by bill of sale.

2. Regarding the subjective incidence of IUC, article 3, section 1 of the respective Code provides that: "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."

3. According to the understanding of the Respondent, the said rule does not entail any legal presumption, considering that "the tax legislator wished intentionally and expressly that those considered as owners, lessees, purchasers with retention of ownership or holders of the right of purchase option or long-term rental be the persons in whose names (the vehicles) are registered"

4. For its part, the Claimant sustains that that rule establishes a legal presumption, refutable by contrary proof on the part of the transferor, considering that, for such, the present request appears suitable.

5. This matter has been the subject of numerous decisions within the scope of the arbitral tribunals operating in CAAD, generally in the sense of the success of the respective claims, on the basis that the rule in question contains a legal presumption that admits contrary proof.

6. Adhering without reservations to the position referred to above, the reproduction thereof is dispensed with, as unnecessary and tedious, inasmuch as in the present proceeding nothing new is put forward on that matter.

ON THE MERITS OF THE CLAIM

1. Concluding, in line with the guidance that has invariably been followed by arbitral case law, that the rule of subjective incidence of IUC establishes a refutable presumption, it is important to analyze the documentation offered by the Claimant in order to know whether the same does or does not constitute sufficient proof for its refutation.

2. As referred to above, in the matter of fact, in the situation to which the present claim refers, at issue is the taxation, in IUC, of motor vehicles which, on the date of the taxability of the tax, would already be the property of third parties, following and because of contracts of purchase and sale celebrated with the Claimant.

3. Regarding the situation referred to are presented, as element of proof, certified copies of the invoices which evidenced the transmissions, accompanied by copies of the rental contracts that preceded the respective sale.

ON THE REFUTATION OF THE PRESUMPTION

1. The presumptions of tax incidence always admit contrary proof, as expressly provided in article 73 of the general tax law, and can be refuted by the specific contradictory procedure provided for in article 64 of the CPPT or, alternatively, by the way of gracious claim or judicial impugning of the tax acts based thereon.

2. In the present case, the Claimant did not use that specific procedure, for which the present request for arbitral decision is the appropriate means to refute the presumption of subjective incidence of IUC that supports the tax assessments whose annulment constitutes the object of the request, since it is a matter that falls within the scope of the material competence of this arbitral tribunal (articles 2 and 4 of the RJAT).

3. Appearing the Claimant in the Motor Vehicle Registry as owner of the vehicles identified in the documents attached to the request in the period of taxation to which the questioned assessments relate and having the vehicles in question, on the date of the taxability of the tax, already passed to the property of third parties, by bill of sale, it remains to evaluate the proof presented, in order to determine whether the same is sufficient to refute the presumption established in section 1 of article 3 of the same Code.

4. For refutation of the said presumption, derived from the inscription of the motor vehicle registry, the Claimant offers certified copies of the sales invoices issued on a date prior to the taxability of the tax relating to the period of taxation to which the assessments relate.

ON THE REFUTATION OF THE PRESUMPTION BASED ON COMMERCIAL INVOICES

1. Pronouncing itself on the documentary evidence presented, the Respondent alleges that the invoices, in general, do not constitute suitable documents to effect the proof sought in the sense that the Claimant is not the owner of the vehicles in the periods of taxation to which the assessments at issue relate.

2. In that sense, the Respondent sustains that the invoices do not constitute documents with probative force "sufficient to undermine the (supposed) legal presumption established in article 3 of the CIUC."

3. Moreover, according to the Respondent, "...the rules of motor vehicle registration have (still) not reached the point where mere invoices unilaterally issued by the Claimant can substitute the request for motor vehicle registration, moreover, approved by official form..."... "The unequivocal declaration of intent of the supposed purchasers could be evidenced by means of the attachment of a copy of the said official form for motor vehicle property registration, since it is a document signed by the intervening parties."

4. It is, therefore, at issue, whether the invoices that evidence commercial transactions constitute element of proof for refutation of the presumption contained in article 3 of the CIUC and, if so admitted, whether the certified copies of the invoices presented by the Claimant constitute sufficient proof for that purpose.

5. For that purpose, it is important to bear in mind that, in the situation under analysis, one is faced with contracts of purchase and sale which, relating to movable property and not being subject to any special formalism (C. Civil, article 219), effect the corresponding transfer of real rights (C. Civil, article 408, section 1).

6. Being contracts involving the transmission of ownership of movable goods, through the payment of a price, they have, as essential effects, among others, that of delivery of the thing (C. Civil, articles 874 and 879).

7. However, being at issue contracts of purchase and sale that have as object motor vehicles, in which registration is mandatory, the punctual fulfillment thereof presupposes the issuance of the declaration of sale necessary for the inscription in the registry of the corresponding acquisition in favor of the purchaser, as has been understood by the case law of the superior courts. Such declaration, relevant for purposes of registration, may constitute proof of the transaction, but is not the sole or exclusive means of proof of the transaction.

8. For purposes of registration, neither is any special formalism required, the presentation to the competent entity of a request subscribed by the purchaser and confirmed by the seller, which, through a declaration of sale confirms that the ownership of the vehicle was by the purchaser acquired by verbal contract of purchase and sale (see Vehicle Registration Regulation, article 25, section 1, paragraph a)).

9. Notwithstanding these being the rules derived from the provisions of civil law, relating to the informality of the transmission of movable things and, as the case may be, of the respective registration, one cannot fail to also bear in mind that, in the situation under analysis, we are faced with commercial transactions, effected by a company in the scope of its business activity.

10. In that scope, the selling company is bound by the fulfillment of specific accounting and tax norms, in which invoicing assumes special relevance.

11. From the outset, by virtue of tax norms, the entity effecting the transmission of goods is obliged to issue an invoice with respect to each transmission of goods, whatever the quality of the respective purchaser, be it a company, passive subject of VAT, or a final consumer (CIVA, article 29, section 1, paragraph b).

12. Also in accordance with the provisions of tax norms, the invoice must comply with a determined form, detailed regulated in articles 36 of the VAT Code and 5 of Decree-Law no. 198/90, of 19/06.

13. It is on the basis of this document issued by the supplier of goods that the purchaser, when an economic operator, will deduct the VAT to which they are entitled (CIVA, article 19, section 2) - unless the tax borne in the acquisition of the vehicle, by the characteristics thereof, is not deductible - and account for the expense of the transaction (CIRC, articles 23, section 6 and 123, section 2).

14. For its part, it is also on the basis of the invoicing issued that the supplier of goods should account for the respective revenues, as follows from the provisions of paragraph b) of section 2 of article 123 of the CIRC.

15. Since issued in the legal form and constitute elements supporting the accounting entries in accounts organized in accordance with commercial and tax legislation, the data contained therein are covered by the presumption of veracity referred to in article 75, section 1, of the LGT.

16. Considered, therefore, the relevance attributed by tax legislation to invoices issued, in accordance with the law, by commercial companies in the scope of their business activity and the presumption of veracity of the transactions they evidence, one cannot fail to consider that the same can constitute, by themselves alone, sufficient proof of the transmissions invoked by the Claimant.

17. In the present case, it is verified that the invoices that evidence the transactions in question identify the selling company, the purchaser and, by their respective license plate, the vehicle transacted and the price of the sale, as well as the date on which they were issued.

18. In these terms, it is considered that the invoices presented by the Claimant constitute sufficient proof of the facts alleged for purposes of refutation of the presumption in question, it being thus unnecessary the examination of the witnesses enlisted by the Claimant.

19. Thus, considering the presumption of ownership derived from the motor vehicle registry refuted, as contained in section 1 of article 3 of the CIUC, the annulment of the assessments identified in the Table contained in Point 52 of the present decision should be proceeded to, on the ground of illegality and error in the assumptions on which they are based.

REQUEST FOR COMPENSATORY INTEREST

1. In addition to the annulment of the assessments, and consequent reimbursement of the sums improperly paid, the Claimant further requests that the right to compensatory interest be recognized, under article 43 of the LGT.

2. In effect, pursuant to the provision of section 1 of the said article, compensatory interest is owed "when it is determined, in gracious claim or judicial impugning, that there was error attributable to the services from which resulted payment of the tax debt in an amount greater than legally owed." Beyond the means referred to in the provision that is transcribed, we understand that, as follows from section 5 of article 24 of the RJAT, the right to the mentioned interest can be recognized in the arbitral proceeding and, thus, the petition is cognizable.

3. The right to compensatory interest referred to in the provision of the LGT above stated presupposes that tax has been paid in an amount greater than owed and that such derives from error, of fact or law, attributable to the services of the AT.

4. In the present case, even if one acknowledges that the tax paid by the Claimant is not owed, due to the fact that it is not the passive subject of the tax obligation, determining, in consequence, the respective reimbursement, it is not apparent that, at its source, there exists error attributable to the services, which determines such right in favor of the taxpayer.

5. In this manner, in promoting the official assessment of IUC considering the Claimant as passive subject of this tax, the AT limited itself to giving effect to the provision of section 1 of article 3 of the CIUC, which, as above has been abundantly stated, imputes such quality to the persons in whose name the vehicles are registered.

6. As also has been concluded, the said rule has the nature of a legal presumption, from which follows, for the AT, the right to assess the tax and exact it from those persons, without necessity to prove the facts which lead to it, as expressly provided in section 1 of article 350 of the C. Civil.

7. The Claimant did not raise, with the Tax Administration, any proceeding tending to refute that presumption, namely by activating the special procedure provided for in article 64 of the CPPT or by filing gracious claim.

VI. DECISION

In these terms, and with the grounds exposed, the Arbitral Tribunal decides:

a) Judge as successful the exception raised by the Respondent regarding the illegality of the cumulation of claims formulated by the Claimant, maintaining the interlocutory decision rendered in the present proceeding;

b) Admit the claim that the Claimant, under article 4, section 3, of the CPTA, declared it wishes to see appreciated in the present proceeding.

c) Judge as unsuccessful the request for arbitral pronouncement regarding the assessments identified in Table 2 of the petition and documents no. 7 to 80 and 90 to 93, due to lack of standing of the Claimant;

d) Judge as successful the request for arbitral pronouncement, in what concerns the refutation of the presumption of subjective incidence of IUC, regarding the assessments identified in Table 2 of the petition and documents no. 81 to 89 - reproduced in the Table contained in Point 52 of the present decision - determining their annulment and consequent reimbursement of the sums improperly paid.

e) Judge as unsuccessful the request regarding the recognition of the right to compensatory interest in favor of the Claimant.

f) Condemn the Claimant and the Respondent for the payment of costs.

Value of the proceeding: € 10,706.47.

Costs: Under article 22, section 4, of the RJAT, and in accordance with Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, I fix the amount of costs at € 918.00, charged to the Claimant and the Respondent (AT), in the proportion of their success, being € 884.74 and € 33.26, respectively.

Lisbon, 1 August 2016,

The Arbitrator,

Álvaro Caneira.

[i] See, among others, STA, Judgment of 16.11.2011, Proc. 608/11

[ii] See Jorge Lopes de Sousa, Code of Tax Procedure and Process Annotated and Commented, 6th ed., Vol. II, Áreas, Lisbon, 2011, p. 183: "it is not necessary for cumulation and joining to be viable that there be an absolute identity of the factual situations, it being sufficient that the legal-tax issue to be appreciated is identical."

[iii] By way of merely exemplary reference, see Procs. 14/2013-T, 26/2013-T, 27/2013-T, 73/2013-T, 170/2013-T, 217/2013-T, 256/2013-T, 289/2013-T, 294/2013-T, 21/2014-T, 42/2014-T, 43/2014-T, 50/2014-T, 52/2014-T, 67/2014-T6, 68/2014-T, 77/2014-T, 108/2014-T, 115/2014-T, 117/2014-T, 118/2014-T, 120/2014-T, 121/2014-T, 128/2014-T, 140/2014-T, 141/2014-T, 152/2014-T, 154/2014-T, 173/2014-T, 174/2014-T, 175/2014-T, 182/2014-T, 191/2014-T, 214/2014-T, 219/2014-T, 221/2014-T, 222/2014-T, 227/2014-T, 228/2014-T, 229/2014-T, 230/2014-T, 233/2014-T, 246/2014-T, 247/2014-T, 250/2014-T, 262/2014-T, 302/2014-T, 333/2014-T, 414/2014-T, 646/2014-T, all available at www.caad.org.pt.

[iv] See STJ, Judgments of 23.3.2006 and 12.10.2006, Procs. 06B722 and 06B2620.

[v] It is noted that, in the scope of the special procedure for the registration of motor vehicle ownership acquired by verbal contract of purchase and sale, approved by Decree-Law no. 177/2014, of 15 December, the invoice constitutes, among others, a document that indicates the effective purchase and sale of the vehicle, provided that it contains the vehicle license plate as well as the name of the seller and purchaser.