IUC Subjective Incidence and Legal Presumptions: Leasing Company Tax Liability Arbitration Decision 725/2016-T

ARBITRAL TAX DECISION

1 REPORT

1.1 –A..., with NIP: … (doc 1), Claimant in the tax procedure, above and marginally referenced, hereinafter referred to as the "Claimant", came, invoking the provisions of paragraphs 1 and 2 of article 10 of Decree-Law no. 10/2011, of 20 January (hereinafter RJAT), of article 99 of the Code of Tax Procedure and Process (CPPT) and of paragraph 1 of article 95 of the General Tax Law (LGT), to request the establishment of a Single Arbitral Tribunal, seeking a claim for review of the tax acts set out in the self-assessments made by the Claimant, in the following terms:

• The annulment of the acts of assessment of the Unique Circulation Tax (hereinafter referred to as IUC), effected by the Tax and Customs Authority (hereinafter AT), relating to the years: 2013 and 2014 as per documents nos. 4 and 5, which form an integral part of the Request for Tax Arbitral Pronouncement.

• The claim for reimbursement of the total amount of € 12,606.78, which includes the corresponding compensatory interest, wrongfully paid by the Claimant.

• The Claimant considers that it also has the right to indemnification interest provided for in articles 43 of the LGT and in article 61 of the CPPT, both, ex vi, article 29 of the RJAT.

1.2 Pursuant to the provisions of subparagraph a) of paragraph 2 of article 6 and of subparagraph b) of paragraph 1 of article 11 of Decree-Law no. 10/2011, of 20 January, in the wording introduced by article 228 of Law no. 66-B/2012, of 31 December, the Deontological Council appointed as sole arbitrator, Maria de Fátima Alves, who communicated acceptance of the assignment, within the applicable timeframe:

• On 2017-01-31, the parties were duly notified of this appointment, having manifested no intention to challenge the appointment of the arbitrator, pursuant to the combined provisions of article 11 paragraph 1 subparagraphs a) and b) of the RJAT and of articles 6 and 7 of the Deontological Code,

• Whereby the arbitral tribunal was established on 2017-02-15, as provided for in subparagraph c) of paragraph 1 of article 11 of Decree-Law no. 10/2011, of 20 January, in the wording introduced by article 228 of Law 66-B/2012, of 31 December.

1.3 The Claimant, in the grounds of its request for arbitral pronouncement, alleges, in summary, the following:

• The self-assessments challenged in the proceedings were effected by the Claimant and paid in full, despite disagreeing with them, through documents extracted from the Tax Portal (cf., docs no. 4 and no. 5), attached to the proceedings.

• Now, the Claimant is a Financial Institution, specialized in the automobile sector, whereby it enters into Long-Term Lease Contracts (ALD), Short-Term Lease Contracts (renting) and Financial Leasing Contracts (leasing), of motor vehicles.

• Resulting from this context, that within the scope of its commercial activity, it enters into contracts of diverse nature with its clients, of which the vehicle rental contracts without driver "with or without promise of sale and purchase, lease contracts and financing contracts" stand out.

• The Claimant further alleges that when acquiring new vehicles from national importers: … and …, it does financial leasing (leasing), long-term lease (ALD), renting (AOV) or operational leasing, of those same vehicles in favor of third parties.

• Additionally, "after the term of the contracts, as a rule," it proceeds with the transfer of property of the vehicles to the corresponding lessees or to third parties, by a residual value".

• Being that, concerning the vehicles in question, the Claimant either had leased those vehicles in favor of third parties or was not the owner of the controversial vehicles, as it had already sold them to the respective lessees or to third parties, as it alleged and demonstrated in the Administrative Complaint, attached to the proceedings, as doc no. 5".

• It emphasizes the fact that it was not the taxpayer at the date of the tax liability, as can be seen "from the copies of the contracts and invoices of sale that evidence the sale of the respective vehicles, contained in document no. 6, dossier concerning each one of the controversial vehicles and, which forms an integral part of the proceedings.

• Those invoices, which are sent, automatically, after their issuance, to the respective clients, thus transferring the property of the vehicles to their rightful owners.

• A situation that also occurs within the scope of lease contracts, as it removes the Claimant's responsibility for payment of the respective IUC, pursuant to paragraphs 1 and 2 of article 3 of the CIUC, as these are the owners of the vehicles by force of the lease contract.

• The Claimant puts in relief the fact that it is "merely a lessor of motor vehicles" and, therefore, never drove any of the leased vehicles on its own account or in its own interest, any of the vehicles leased in the table that it annexes, as doc 7, whereby the imputation of IUC should only be applied to those that cause damage to the road network and to the environment, as provided for in the principle of equivalence, article 1 of the CIUC, which enshrines the polluter/payer principle, cf., Sérgio Vasques, in "The principle of equivalence as a criterion of tax equality", Almedina, 2008, p. 312 et seq.

• From which it results that: the damage that accrues to the environment, arising from the use of motor vehicles, must be assumed by the actual polluters, as these are the user agents of the same, who drive them in their own interest (cf., Sérgio Vasques, "Reform of Automobile Taxation: problems and perspectives, Taxation, no. 10, 2002, p. 60, 79 et seq.

• Whereby the Claimant "was never the actual polluter and causer of environmental damage", as it only limited itself to leasing the controversial automobiles and, selling them, "in cases where the contracts had already terminated", cf., docs no. 5, 6 and 7, attached to the proceedings.

• Attending to the context described, as of the date of the tax facts, the Claimant could not be considered a taxpayer of the tax, a fact that prevents any subjective responsibility for its payment.

1.4 The Respondent, Tax and Customs Authority (hereinafter referred to as AT), submitted a Response, from which it appears that the tax acts in controversy do not suffer from any defect of legal violation, pronouncing itself in favor of the rejection of the claim and the maintenance of the assessment acts questioned, defending, summarily, the following:

• The Respondent alerts to the fact that the amount of the Claim does not conform to the amount of the Administrative Complaint no. …2015…, "which was partially rejected" and whose amount corresponds, at fls. 62 of PA, to the sum of €11,654.58, whereas the amount of the Claim (PI) corresponds to the sum of € 12,606.78.

• In response to an arbitral order, sent to the Claimant, by this Tribunal, the Claimant came to the proceedings, to clarify the divergence of amounts, alleging that the amount of €11,654.58, corresponds to the initially claimed amount in the preceding AC that focused on 214 IUC assessments, whereas,

• the exact amount (€12,606.78), is what corresponds to the sum of 204 specifically challenged assessments, and the economic utility of the Claim, cf., art. 10 paragraph 2 subparagraph e) of the RJAT and art. 97-A, paragraph 1, subparagraph a) of the CPPT, ex vi, art. 29, paragraph 1 subparagraph a) of the RJAT.

• By way of challenge:

• It challenges, within the scope of "error in the assumptions and in the consequent violation of articles 19 and article 3, both of the Code of the Unique Circulation Tax":

• Alleging that the Claimant makes an erroneous interpretation and application of the legal norms, capable of being subsumed to the case sub judice;

• It grounds that, within the scope of the "avoidance" of article 3 of the CIUC, financial lessors must necessarily consider article 19 of the CIUC.

• Whereby the Claimant, in failing to comply with the specific obligation of article 19 of the CIUC, cannot be exempted from the tax under article 3 of the CIUC, whereby the Claimant should be considered as a taxpayer of the IUC.

• Because, notwithstanding the fact that the Claimant "alleges to have entered into financial lease contracts, is responsible for IUC, because it did not communicate the existence of financial leasing to which article 19 of the CIUC refers;

• However, although article 19 of the CIUC refers to article 3 of the same statute, it must be considered that in the case sub judice, there is a specific analysis of the circulation of vehicles, in public space that constitutes the road and environmental damage caused, by the respective users/polluters, who must be responsible, according to the principle of equivalence provided for in article 1 of the CIUC (which will be developed, in the appropriate chapter);

• The Respondent also challenges the facts made by the Claimant, both within the scope of registration and within the scope of registration, in national territory;

• Facts that question the tax liability of the unique circulation tax on vehicles;

• Questions the veracity of the probative means, lease contracts and sale invoices, corresponding to the respective vehicles;

• As it does not consider them "suitable to prove the conclusion of a bilateral contract";

• Now, perhaps by oversight, the Respondent does not consider, that in this specific case, the purchase and sale of a vehicle, has freedom of form, pursuant to art. 219 of the CC., enabling that the contract of purchase and sale can be by verbal contract, but which is not the case in concreto;

• And, as is known, the change of the ownership of the right of property, acquired by way of verbal form, of purchase and sale of vehicles "is relevant for purposes of IUC, from the date of transmission of the respective vehicles, as provided for in article 17-A of the CIUC;

• It grounds, the Respondent that "the tax legislator, in articles 3 and 6 of the CIUC, clearly established the premises as to the tax event, as well as its tax liability, establishing unequivocally that such event is constituted by the ownership of the vehicle, as attested by the registration or registration in national territory";

• Being, therefore, irrelevant that the Claimant transferred, with the sale, the ownership of motor vehicles, to "third parties";

• The Respondent, faced with the facts, summarily exposed:

• Makes a general and objective interpretation of the provisions, expressly invoked, not considering the presumption of article 3 of the CIUC, thus disregarding article 73 of the LGT;

• Does not take into account the principle of "equivalence", provided for in paragraph 1 of the CIUC, corollary of the polluter/payer principle, with basis in paragraph 2 of article 66 of the CRP and in the Doctrine, supra referred to in point 1.3 and which will be better clarified (further ahead) in this Arbitral Decision;

• Does not deem relevant the probative means, set out in the contracts and in the purchase and sale invoices, when it has them available, within the scope of IRC, as the Claimant necessarily has organized accounts.

1.5 The meeting provided for in article 18 of the RJAT was dispensed with, as it concerns matters already sufficiently debated, both in the proceedings and in jurisprudence, this Arbitral Tax Tribunal understanding, unnecessary the final arguments, dispensing with the hearing of witnesses.

1.6 This Tribunal having set 2017-06-08, for the Final Decision.

2 ISSUES TO BE DECIDED

2.1 Given the above in the previous numbers, relative to the exposition of the parties and to the arguments presented, the main issues to be decided are the following:

• The allegation made by the Claimant relating to the material illegality of the assessment acts and the illegality of the ancillary interest acts, faced with the years 2013 and 2014, relating to IUC on the vehicles supra referenced in the PI;

• The erroneous interpretation and application of the norms of subjective incidence of the unique circulation tax assessed and collected, which constitutes the central issue to be decided in the present proceedings.

• The legal value of the registration of motor vehicles.

3 FACTS FINDINGS

3.1 In matters of fact, relevant to the decision to be rendered, this Tribunal takes as established, faced with the elements existing in the proceedings, the following facts:

• The Claimant presented probative elements contained in documents nos. 1, 2, 3, 4, 5, 6 and 7, attached to the PI, which are taken as fully reproduced for all legal purposes;

3.1.1 GROUNDS OF PROVEN FACTS

• The facts taken as proven are based on the documents attached to the request for arbitral pronouncement of the supra mentioned PI, which are taken as fully reproduced for all legal purposes.

3.1.2 UNPROVEN FACTS

• There are no facts taken as unproven, given that all facts deemed relevant for the assessment of the merits of the case have been proven.

4 LEGAL GROUNDS

4.1 The Tribunal is materially competent and is regularly constituted, pursuant to articles 2 paragraph 1, subparagraph a), 5 paragraph 2, subparagraph a), 6 paragraph 1, 10 paragraph 1, subparagraph a) and paragraph 2 of the RJAT:

• The parties enjoy legal personality and capacity and are legitimate, ex vi, articles 4 and 10, paragraph 2, of the RJAT and article no. 1 of Ordinance no. 112-A/2011, of 22 March;

• The proceedings do not suffer from nullities.

4.2 The claim, object of the present proceedings, consists in the declaration of annulment of the IUC assessment acts, corresponding to the motor vehicles better identified in the proceedings;

4.2.1 Condemnation of the AT to refund the amount of the tax relating to such assessments in the amount of € 12,606.78;

4.2.2 Condemnation of the AT to payment of indemnification interest on the same amount.

4.3 According to the understanding of the AT, it is sufficient that in the registration, the vehicle appears as property of a certain person, for that person to be the taxpayer of the tax obligation.

4.4 The matter of fact is fixed, as appears in no. 3.1 supra, being important now to determine the Law applicable to the underlying facts, in accordance with the issues to be decided, identified in no. 2.1 supra, it being certain, that the central issue, at stake, in the present proceedings, relative to which there are absolutely opposite understandings between the Claimant and the AT, consists in knowing whether paragraph 1 of article 3 of the CIUC relating to the subjective incidence of the unique circulation tax enshrines or not a rebuttable presumption.

4.5 Everything analyzed and, taking into account, on the one hand, the positions of the parties in confrontation, mentioned in points 1.3 and 1.4 supra and, considering, on the other hand that the central issue to be decided is whether paragraph 1 of article 3 of the CIUC enshrines or not a legal presumption of tax incidence, it behooves, in this context, to assess and render a decision.

5 ISSUE OF ERRONEOUS INTERPRETATION AND APPLICATION OF THE NORM OF SUBJECTIVE INCIDENCE OF THE IUC

5.1 It is deemed pacifically understood in doctrine, that in the interpretation of tax laws the general principles of interpretation apply in full which will be, merely and naturally, limited by the exceptions and particularities dictated by the law itself which is the object of interpretation. This is an understanding that has received acceptance in the General Tax Laws of other countries and which also came to be enshrined in article 11 of our General Tax Law, which has, moreover, been frequently underlined by jurisprudence.

It is consensually accepted that with a view to grasping the meaning of the law, interpretation resorts, a priori, to reconstructing legislative intent through the words of the law, which means, seeking its literal meaning, weighing it and assessing it in light of other criteria, intervening, the so-called elements of a logical, rational or teleological nature and of a systematic order:

• With regard to the interpretation of tax law, jurisprudence must be considered, namely, the Judgments of the STA of 05-09-2012, case no. 0314/12, of 06-02-2013, case 01000/12, available at www.dgsi.pt, the importance of the provision of article 9 of the Civil Code (CC), as a fundamental element of legal hermeneutics;

• Paragraph 1 of article 3 of the CIUC provides that "The taxpayers of the tax are the owners of the vehicles, considered as such the natural or legal persons, of public or private law, in whose name the same are registered";

• The formulation used in the aforesaid article, resorts to the expression "considered as" which raises the question of whether to such expression can be attributed a presumptive meaning, equating to the expression "presumed", these are expressions frequently used, with equivalent meanings;

• As teaches Jorge Lopes de Sousa, in Code of Tax Procedure and Process, Annotated and Commented, volume I, 6th Edition, Área Editora, SA, Lisbon 2011, p. 589, that in matters of tax incidence, presumptions may be revealed by the expression "presumed" or by similar expression, there mentioning various examples of such presumptions, referring to that contained in article 40, paragraph 1 of the CIRS, in which the expression "presumed" is used and that contained in article 46 paragraph 2, of the same Code, in which use is made of the expression "considered as", as an expression with a similar effect to that and, equally embodying, a presumption;

• In the legal formulation set out in paragraph 1 of article 3 of the CIUC, in which a presumption has been enshrined, revealed by the expression "considered as", of similar meaning and of equivalent value to the expression "presumed", in use since the creation of the tax in question;

• The use of the expression "considered as" aimed at nothing more than the establishment of a closer and clearer approximation between the taxpayer of the IUC and the actual owner of the vehicle, which is in harmony with the emphasis conferred on the ownership of the vehicle, which came to constitute the tax event, pursuant to article 6 of the CIUC;

• The relevance and the interest of the presumption, in question, which historically was revealed by means of the expression "presumed" and which now, makes use of the expression "considered as", resides in the truth and justice that, by that means, is conferred to tax relations and, which embody fundamental tax values, permitting to tax the real and effective owner and not the one who, by circumstances of diverse nature, is sometimes merely an apparent and false owner. If the case were not thus considered, not admitting and deeming relevant the presentation of probative elements intended to demonstrate that the actual owner is, after all, a person different from the one appearing in the registration and, which initially, and in principle, one would suppose to be the true owner, those values would be objectively disregarded.

5.2 Account must also be taken of the principle of equivalence, inscribed in article 1 of the CIUC, which has underlying the polluter-payer principle and, concretizes the idea inscribed in it that whoever pollutes must, therefore, pay (v. Fernanda Alves and Nuno Vitorino, "The Balance of the Reform of Automobile Taxation" p. 42 et seq; Sérgio Vasques, in "The principle of equivalence as a criterion of Tax equality", Almedina, 2008, p. 312 et seq, and, also, by the same author "Reform of Automobile Taxation: problems and perspectives", Taxation, no. 10, 2002, p. 79 et seq). The aforementioned principle has constitutional basis, in that it represents a corollary of the provision in subparagraph h) of paragraph 2 of article 66 of the Constitution, having, also, basis in Community law, whether at the level of original law, article 130-R, of the Treaty of Maastricht (Treaty on European Union, of 07-02-1992), where the aforementioned principle came to be contained as support of Community Policy, in the environmental domain and which aims to hold responsible those who contribute with the damage that accrues to the community, arising from the use of motor vehicles, must be assumed by its owner-users, as costs that only they should bear.

5.3 Attending to the facts supra described, it is important to note that the already referred elements of interpretation, be those related to literal interpretation, supported on the words legally used, be those relating to logical elements of interpretation, of a historical nature or of a rational order, point, all of them, in the direction that the expression "considered as" has a meaning equivalent to the expression "presumed", and should thus be understood that the provision of paragraph 1 of article 3 of the CIUC enshrines a legal presumption that, faced with article 73 of the LGT, where it is established that "Presumptions enshrined in tax incidence norms always admit proof to the contrary", will necessarily be rebuttable, which means that the taxpayers are, in principle, the persons in whose name such vehicles are registered. These persons, identified in these conditions, are those to whom the AT must necessarily direct itself;

• But it will be, in principle, given that in the framework of prior hearing, of mandatory character, faced with the provision of subparagraph a) of paragraph 1 of article 60 of the LGT, the tax relation may be reconfigured, validating the taxpayer initially identified or redirecting the procedure in the direction of the one who is, after all, the true and effective, taxpayer of the tax in question.

• The taxpayer has the right to be heard, by means of prior hearing (José Manuel Santos Botelho, Américo Pires Esteves and José Cândido de Pinho, in Code of Administrative Procedure, Annotated and Commented, 4th edition, Almedina, 2000, annotation 8 of article 100).

• The prior hearing which, naturally, must be made concrete in the moment immediately prior to the assessment procedure, corresponds to the seat and proper time to, with certainty and security, identify the taxpayer of the IUC.

6 REGARDING THE LEGAL VALUE OF REGISTRATION

6.1 Regarding the legal value of registration, it is important to note what is established in paragraph 1 of article 1 of Decree-Law no. 54/75, of 12 February (altered several times, the last being by Law no. 39/2008, of 11 August), when it provides that "the registration of motor vehicles has essentially as its purpose to give publicity to the legal situation of motor vehicles and their respective trailers, with a view to the safety of legal commerce":

• Article 7 of the Code of Land Registration (CRA), applicable, supplementarily, to the registration of automobiles, by force of article 29 of the CRA, provides that "The definitive registration constitutes a presumption that the right exists and belongs to the titled holder, in the precise terms in which the registration defines it";

• Definitive registration constitutes nothing more than a rebuttable presumption, admitting, therefore, proof to the contrary, as follows from the law and jurisprudence has been pointing out, which can be seen, among others the Judgments of the STJ no. 03B4369 of 19-02-2004 and no. 07B4528, of 2008-01-29, available at: www.dgsi.pt;

• Therefore, the function legally reserved to registration is on the one hand to publicize the legal situation of the assets, in the case at hand, of the vehicles and, on the other hand, allows us to presume that there exists the right over those vehicles and that the same belongs to the titled holder, as such inscribed in the registration, does not have a constitutive nature of the right of property, but only declarative, hence registration does not constitute a condition of validity of the transmission of the vehicle from the seller to the buyer;

• The acquirers of the vehicles become owners of those same vehicles by way of the conclusion of the corresponding contracts of purchase and sale, with registration or without it;

• In this context it is worth recalling that, faced with the provision of paragraph 1 of article 408 of the CC, the transfer of real rights over things, in the case sub judice, motor vehicles, is determined by mere effect of the contract, being that pursuant to the provision of subparagraph a) of article 879 of the CC, among the essential effects of the contract of purchase and sale, the transmission of the thing stands out;

• Faced with the above, it becomes clear that legislative intent points in the direction that the provision of paragraph 1 of article 3 of the CIUC, enshrines a presumption "juris tantum, consequently rebuttable, permitting, thus, that the person, which, in the registration, is inscribed as owner of the vehicle, may present probative elements intended to demonstrate that such ownership is inserted in the legal sphere of another person, to whom the ownership was transferred;

• Which regarding the controversial facts, there exist, attached to the proceedings documents, that were proven by the Claimant, both at the hearing prior hearing, as in the request for arbitral pronouncement, configuring, therefore the certainty that it belongs to the respective owners/users, of the vehicles, the subjective responsibility of the IUCs, pursuant to paragraphs 1 and 2 of article 3 of the CIUC.

7 THE PRESUMPTION OF ARTICLE 3 OF THE CIUC AND THE DATE ON WHICH THE IUC IS TAX LIABLE

7.1 DATE ON WHICH THE IUC IS TAX LIABLE

• The IUC is a tax of periodic taxation, whose periodicity corresponds to the year which begins on the date of registration or on each of its anniversaries, as provided for in paragraphs 1 and 2 of article 4 of the CIUC;

• It is tax liable pursuant to paragraph 3 of article 6 of the aforementioned Code;

• It being worth noting that, as to the assessment of IUC taxed to the Claimant on the vehicles supra referenced, in the years 2013 and 2014, it must be considered, that at the moment of the tax facts, the vehicles in question were in the legal sphere of the owners/users of the said automobiles, because they hold the use and enjoyment of the said vehicles, whereby pursuant to paragraphs 1 and 2 of art. 3 of the CIUC, they must be held responsible, for payment of the obligation of the said tax, cf. docs nos. 6 and 7, attached to the proceedings.

7.1.1 Regarding the burden of proof, article 342 paragraph 1 of the CC provides "to the one who invokes a right falls the burden of proving the constitutive facts of the right alleged";

7.1.2 Also article 346 of the CC (counter-proof) determines, that "to the proof that will be produced by the party on whom the burden of proof falls can the contrary party oppose counter-proof with respect to the same facts, intended to render them doubtful; if it succeeds, the question is decided against the party burdened with the proof." (As affirms Anselmo de Castro, A., 1982, ED. Almedina Coimbra, "Civil Procedural Law Declaratory", III, p. 163, "falling upon one of the parties the burden of proof, to the contrary party it suffices to oppose counter-proof, being this a proof intended to render doubtful the facts alleged by the first".

Thus, in the case of the proceedings, what the Claimant has to prove, in order to rebut the presumption that follows both from article 3 of the CIUC as well as from the Vehicle Registration itself, is that it, the Claimant, was not the owner of the vehicles in question in the period to which the assessments challenged relate. It proposes to prove, as follows from the proceedings, is that the ownership of the vehicles, did not belong to it in the periods to which the assessments relate. Presenting, thus, the sales invoices and the vehicle lease contracts contained in the documents, attached to the Administrative Complaint and attached to the proceedings as documents no. 4, 5, 6 and 7, which are taken as fully reproduced, for all legal purposes.

7.2 REBUTTAL OF THE PRESUMPTION

• The Claimant, as referred to in 3.1., regarding the proven facts, alleged, with the purpose of rebutting the presumption, of not being a taxpayer of the tax, at the time of the occurrence of the tax facts, offering for that purpose the following documents;

• Sales invoices to the respective lessees and lease contracts (cf., documents attached to the proceedings with nos. 4, 5, 6 and 7);

• Now, these documents, enjoy, the presumption of veracity provided for in paragraph 1 of article 75 of the LGT. Resulting from here, that at the date on which IUC was tax liable those who held the ownership of motor vehicles were the legitimate owners and users and not the Claimant.

8 OTHER ISSUES RELATING TO THE LEGALITY OF THE ASSESSMENT ACTS

• Regarding the existence of other issues relating to the legality of the assessment acts, taking into account that it is inherent in the establishment of an order of knowledge of the defects, as provided for in article 124 of the CPPT, that proceeding the request for arbitral pronouncement based on defects that prevent the renewal of the assessments challenged, is prejudiced, because useless, the knowledge of other defects, it does not seem necessary to know of the other issues raised.

9 REIMBURSEMENT OF THE TOTAL AMOUNT PAID

• Pursuant to the provision of subparagraph b) of paragraph 1 of article 24 of the RJAT and, in accordance with what is there established, the arbitral decision on the merits of the claim, to which no appeal or challenge shall apply, binds the tax administration from the end of the term provided for appeal or challenge, and this must, in the exact terms of the success of the arbitral decision in favor of the taxpayer and until the end of the term provided for the voluntary execution of the judgments of the tax courts "Restore the situation that would exist if the tax act object of the arbitral decision had not been made, adopting the acts and operations necessary for that effect"

• These are legal commands that are found in total harmony with the provision of article 100 of the LGT, applicable to the case, ex vi, of the provision of subparagraph a) of paragraph 1 of article 29 of the RJAT, in which it is established that "The tax administration is obliged, in case of total or partial success of claims or administrative appeals or of a court proceeding in favor of the taxpayer, to the immediate and full restoration of the situation that would exist if the illegality had not been committed, corresponding the payment of indemnification interest, in the terms and conditions provided for in the law";

• The case contained in the present proceedings, raises the manifest application of the mentioned norms, given that following the illegality of the assessment acts, referenced, in this proceeding, there must, by force of these norms, be a reimbursement of the amounts paid, be it as title of the tax paid, be it of the corresponding compensatory interest, as a way to achieve the restoration of the situation that would exist if the illegality had not been committed.

10 REGARDING THE RIGHT TO INDEMNIFICATION INTEREST

• The declaration of illegality and consequent annulment of an administrative act confers on the addressee of the act the right to reinstatement of the situation in which it found itself before the execution of the annulled act.

• Within the scope of the assessment of the tax, its annulment confers on the taxpayer the right to restitution of the tax paid, increased by the corresponding compensatory interest and, as a rule, the right to indemnification interest, pursuant to paragraph 1 of article 43 of the LGT and, article 61 of the CPPT.

• Whereby the Claimant has the right to indemnification interest on the amount of tax paid relating to the annulled assessments.

11 DECISION

Faced with the above, this Arbitral Tribunal decides:

• To find the claim for declaration of the illegality of the IUC assessment, relating to the years: 2013 and 2014, regarding the motor vehicles identified in the present proceedings, well-founded, and consequently, annulling the corresponding tax acts;

• To find well-founded the claim for condemnation of the Tax Administration to refund the wrongfully paid amount, in the amount of 12,606.78 euros, condemning the Tax and Customs Authority to effect these payments;

• The AT must, also, effect the payment corresponding to the amount due for indemnification interest, on the tax paid relating to the annulled assessments, pursuant to paragraph 1 of article 43 of the LGT, ex vi, of paragraph 2 of article 61, of the CPPT (Wording of Law no. 55-A/2010, of 31-12, entered into force, on 2011-01-01.

CASE VALUE: In accordance with the provision of articles 306 paragraph 2 of the CPC and 97-A, paragraph 1 of the CPPT and in article 3, paragraph 2 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the case is set at € 12,606.78.

COSTS: In accordance with paragraph 4 of article 22 of the RJAT, the amount of costs is set at € 918.00, pursuant to Table I, attached to the Regulation of Costs in Tax Arbitration Proceedings, to be borne by the Tax and Customs Authority.

Notify the parties.

Lisbon, 2017-06-08

The Arbitrator

Maria de Fátima Alves

(the text of this decision was prepared by computer, pursuant to article 131, paragraph 5 of the Code of Civil Procedure, applicable by referral of article 29, paragraph 1 subparagraph e) of Decree-Law 10/2011, of 20 January (RJAT), governed by current spelling rules)