Summary
Full Decision
ARBITRAL DECISION
The request for constitution of the arbitral tribunal was accepted by His Excellency the President of CAAD and automatically notified to the Tax and Customs Authority on 22-12-2016. Pursuant to the provisions of paragraph a) of number 2 of article 6 and paragraph b) of number 1 of article 11 of Decree-Law no. 10/2011, of 20 January, as amended by article 228 of Law no. 66-B/2012, of 31 December, the Deontological Board designated the undersigned as arbitrator of the sole arbitral tribunal and notified the parties of this designation on 03-02-2017.
Thus, in accordance with the provisions of paragraph c) of number 1 of article 11 of Decree-Law no. 10/2011, of 20 January, as amended by article 228 of Law no. 66-B/2012, of 31 December, the sole arbitral tribunal was constituted on 20-02-2017, following the relevant legal proceedings.
I – REPORT
1- On 10-12-2016, the company "A..., S.A.", Tax ID..., filed a request for constitution of a sole arbitral tribunal, pursuant to the combined provisions of articles 2 and 10 of Decree-Law no. 10/2011, of 20 January (Legal Regime of Arbitration in Tax Matters, hereinafter referred to only as LRATM), in which the Tax and Customs Authority is the Respondent.
2- Requesting the declaration of illegality and annulment of the acts of dismissal of Hierarchical Appeals no.s... 2015..., ... 2015..., ... 2015..., ... 2015... and ... 2015..., filed against the acts that dismissed the administrative complaints presented by it regarding each of the IUC assessment acts in question (see Documents attached to the case file with the Initial Pleading) and of five (5) assessment acts for Single Vehicle Tax (IUC) for the period of 2013, relating to 5 vehicles, in the total amount of €452.91, plus the respective compensatory interest, provided for in art. 43 of the TGL.
3- The Claimant requests the aforementioned annulment, as it considers that the AT makes an incorrect interpretation of the law, namely regarding the provisions of no. 1 and no. 2 of art. 3 of the IUC Code (as worded at the date of the facts) by understanding that, given that a financial lease contract was in effect at the time when the IUC became due, it is the lessee, and not the lessor (although the latter holds title to the vehicle), who is required to pay it.
4- It invokes substantial arbitral jurisprudence in its favor.
5- For its part, the AT...
Alleges that the assessments in question constitute a correct interpretation and application of law to the facts, are duly reasoned, do not suffer from the defect of violation of law, and should, consequently, be judged as lacking merit, and the AT should be absolved from the claim.
6- In its view, in summary, the AT submits...
The tax legislator, in establishing in no. 1 of art. 3 who are the taxpayers subject to IUC, established expressly and intentionally that these are the owners (or in the situations provided for in no. 2, the persons therein named), being considered as such the persons in whose name the same are registered, because this is the interpretation that preserves the unity of the tax legal system.
7- This is a clear option of legislative policy adopted by the legislator, whose intention, within its freedom of legislative form, was that, for the purposes of IUC, those who appear as such in the vehicle registry should be considered owners.
8- The present request for arbitral pronouncement concerns various acts of assessment of Single Vehicle Tax (IUC). However, given the identity of the tax facts, the tribunal competent to decide, and the grounds of fact and law invoked, the tribunal considers that nothing prevents, in light of the provisions of arts. 3 of LRATM and 104 of CPPT, the cumulation of claims.
9- The case does not suffer from any defects of nullity.
10- There is no obstacle to the examination of the merits of the case.
II - FACTUAL MATTER
1- The Claimant is a credit institution whose activity includes financing the automobile sector, entering into financial lease contracts intended for the acquisition, by companies and individuals, of motor vehicles.
2- In these contracts, the customer, lessee, during the stipulated time, maintains the temporary enjoyment of the vehicle – which remains the property of the Claimant – through compensation in the form of rental payments.
The lessee may come to acquire the vehicle, at the end of the contract, by payment of a residual value.
3- The motor vehicles identified in the list attached to the case file were given in financial lease, by the Claimant, to the customers also identified therein, (Docs. 6 to 10).
4- Such lease was in effect in the year (or, more specifically, in the relevant month of the year) when the obligation to pay the IUC associated with the respective vehicle became due.
5- The ownership belonged to the Claimant, as the leasing entity, having not, however, enjoyed the use of the vehicles, which by force of the contract were delivered to the lessees.
6- The Claimant was notified to proceed with the payment of the IUCs to which the assessment acts in question relate, which it did in a timely manner.
Facts Proven
All of the aforementioned.
Facts Not Proven
Although without decisive relevance to the sense of the decision, the following is referred to as an unproven fact:
- Compliance with the duty incumbent on leasing entities, pursuant to article 19 of the IUC Code, to "provide to the General Tax Directorate the data relating to the tax identification of the users of the leased vehicles" (art. 19 of the IUC Code).
Reasoning of the Proven and Unproven Factual Matter
Regarding the factual matter, the Tribunal does not need to pronounce on everything that was alleged by the parties; rather, it has the duty to select the facts that matter for the decision and to distinguish proven from unproven matter (cf. art. 123, no. 2, of CPPT and article 607, no. 3 of CPC, applicable ex vi article 29, no. 1, paragraphs a) and e), of LRATM).
In this way, the facts relevant to the judgment of the case are chosen and selected according to their legal relevance, which is established in view of the various plausible solutions of the question(s) of Law (cf. previous article 511, no. 1, of CPC, corresponding to the current article 596, applicable ex vi of article 29, no. 1, paragraph e), of LRATM).
Thus, taking into account the positions assumed by the parties, in light of article 110/7 of CPPT, and the documentary evidence attached to the case file, the facts listed above were considered proven, with relevance for the decision.
III - ON THE LAW
1- The disputed issue in the present arbitral action centers on the determination of the status of taxpayer subject to IUC due during the validity of a financial lease contract: whether the lessee or the leasing entity (although the owner).
Let us examine this.
2- This issue has been dealt with persistently in this CAAD, as evidenced, among others, by the Initial Pleading:
Proc.s 170/2013-T, 256/2013-T, 286/2013-T, 45/2014-T, 60/2014-T, 129/2014-T, 136/2014-T, 221/2014-T, 222/2014-T, 225/2014-T, 228/2014-T, 229/2014-T, 230/2014-T, 232/2014-T, 235/2014-T, 645/2014-T, 655/2015-T, 371/2015-T, 654/2015-T.
Or mentioned in the decision of Proc. 173/2016-T:
Proc.s 14/2013-T, 26/2013-T, 27/2013-T, 73/2013-T, 217/2013-T, 289/2013-T, 294/2013-T, 21/2014-T, 42/2014-T, 43/2014-T, 50/2014-T, 52/2014-T, 67/2014-T, 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, 227/2014-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.
3- See in the same sense the proceedings 580/2016-T, 586-2016T, 598/2016-T.
By agreeing with it, we follow, very closely, transcribing, with due deference, the understanding advocated in the decisions rendered in these proceedings, in the part in which they affirm:
Proc. 580/2016-T
(...) It is therefore at issue to determine whether the Claimant should or should not be considered a taxpayer subject to IUC as regards the vehicles and periods to which the tax relates, duly identified in the appendix to the claim..., because, as of the date the tax became due, ... financial lease contracts, or other lease contracts with purchase option, were in effect, even though such contracts have not been subject to registration with the Vehicle Registration Authority, with the lessor remaining identified as the owner therein.
17. Regarding this matter, article 3 of the IUC Code provides, in its numbers 1 and 2, as worded at the date of the facts under analysis:
"1 - The taxpayers subject to the tax are the owners of vehicles, being considered as such the natural or legal persons, of public or private law, in whose name the same are registered.
2. Financial lessees, purchasers with reservation of title, as well as other holders of purchase option rights by virtue of lease contracts are equated to owners."
18. According to the understanding of the Respondent, the aforementioned provision does not contain any legal presumption, considering that "The tax legislator, in establishing in article 3, no. 1, who are the taxpayers subject to IUC, established expressly and intentionally that these are the owners (or in the situations provided in no. 2 the persons therein named), being considered as such the persons in whose name the same are registered."
19. On the other hand, the Claimant argues that the aforementioned provision establishes a legal presumption, refutable in the general terms and, in particular, by force of the provisions of article 73 of the General Tax Law (TGL), according to which the presumptions of tax incidence always admit evidence to the contrary.
20. This matter has been the subject of numerous decisions within the framework of arbitral tribunals operating in CAAD, generally in the sense of the merits of the respective claims, on the grounds that the provision in question, as worded at the date of the facts to which the present claim relates, contains a legal presumption that admits evidence to the contrary.
21. Adhering, therefore, to the position referred to above, it is dispensed with, as unnecessary and tedious, the reproduction of the respective reasoning, since in the present case nothing new is put forward on this matter.
22. However, the conclusion that the provision of subjective incidence of IUC establishes a refutable presumption does not preclude another issue which, for the present case, is important to clarify, which is whether the verification of the circumstance provided for in no. 2 of article 3 of the IUC Code precludes or not the rule of incidence established in no. 1 of the same article, in the event that compliance with the provisions of article 19 of the IUC Code has not been effected.
23. This provision, in force at the date of the facts to which the present claim relates, established that "For the purposes of the provisions of article 3 of this code, as well as no. 1 of article 3 of the law of its approval, entities that carry out financial lease, operational lease, or long-term rental of vehicles are obliged to provide to the General Tax Directorate the data relating to the tax identification of the users of the leased vehicles."
23. From the provision of no. 2 of article 3 of the IUC Code, combined with the cited article 19 of the same Code, there are, therefore, no doubts that, where vehicles are transferred to third parties under a financial lease regime or other lease contracts with purchase option, the taxpayer of this tax will be the lessee and not the respective owner, thus precluding the rule of subjective incidence of no. 1 of that article, provided that sufficient evidence is provided to refute the presumption that the same contains.
24. This, however, will not be the understanding of the Respondent, which, moreover, points out that "Despite the Claimant alleging to have entered into financial lease contracts, it is certain that it is responsible for the payment of the respective IUC, since it did not communicate the existence of financial lease to which article 19 of the IUC Code refers."
25. It is noted that the relevance of non-compliance with such an obligation regarding the incidence of the tax in question has been the subject of several arbitral decisions, recalling, in this regard, the Arbitral Decision of 14-07-2014, in Proc. 136/2014-T:
"Indeed, the provisions of article 3, no. 2, of the IUC Code are quite clear regarding the subjective incidence of IUC, in the validity of financial lease contracts, subjecting the lessee to this obligation, as it equates him to the owner for this purpose.
Thus, since the law does not assign this obligation to the owner-lessor, there will be no place for any relief on the part of the latter, with the communication provided for in the aforementioned article 19 of the IUC Code, for the simple reason that it was never subject to the payment of the tax.
The subjective incidence of IUC is established, in all its elements, in article 3 of the IUC Code and will be through the application of this provision that the taxpayer will be determined, being irrelevant for the purposes of the incidence of the tax the non-compliance with the aforementioned ancillary obligation."
26. It is, therefore, to this jurisprudential orientation, which, without reservations, is adhered to, not following, thus, the understanding of the Respondent expressed above(...).
Proc. 586-2016T
(...)61 - The decisive issue in the present case, regarding which there are absolutely opposite understandings between the Claimant and the AT, is to determine whether the provision of subjective incidence contained in no. 1 of art. 3 of the IUC Code establishes or not a refutable presumption.
62 - The positions of the parties are known. In fact, for the Claimant, the provisions of no. 1 of art. 3 of the IUC Code establish a refutable legal presumption, understanding that, in light of the provisions of no. 2 of the aforementioned article, financial lessees and holders of long-term vehicle rental contracts without driver, with promise of sale and purchase, are the taxpayers of the tax;
63 - The Respondent, for its part, considers that the tax legislator, in establishing in art. 3, no. 1 of the IUC Code who are the taxpayers of IUC, determined, expressly and intentionally, that these are the owners (or in the situations provided in no. 2, the persons therein named), being considered, as such, the persons in whose name the same are registered.
...
I - INTERPRETATION OF THE PROVISION OF SUBJECTIVE INCIDENCE CONTAINED IN NO. 1 OF ARTICLE 3 OF THE IUC CODE
64 - On this issue, that is, whether the provision of subjective incidence contained in no. 1 of art. 3 of the IUC Code establishes a presumption, it should be noted that the jurisprudence established in CAAD points in the direction that the said provision establishes a legal presumption. Indeed, from the first Decisions issued on this matter, in the year 2013, among which may be, namely, referred to those rendered within the framework of Proceedings no.s 14/2013-T, 26/2013-T and 27/2013-T, up to the most recent ones which may be indicated as Decisions rendered in the context of Proceedings no. 69/2015-T and no. 79/2015-T, passing through numerous Decisions rendered in the year 2014, of which are mentioned, by way of mere example, the Decisions rendered in Proceedings no.s 34/2014-T, 120/2014-T and 456/2014-T, all point to the understanding that no. 1 of art. 3 of the IUC Code establishes a refutable legal presumption.
In this regard, reference should also be made to the recent Decision of the Lisbon Tax Court, rendered on 23-01-2017, in Proc. No. 463/13.4BELRS, where it is considered that the "[...] applicant succeeded in refuting the presumption established in art. 3, no. 1 of the IUC Code."
The understanding set forth in the Judgment of the Central Administrative Court of the South, rendered on 19-03-2015, Proceeding 08300/14, ... should also be considered, which seconds the referred jurisprudence, when it expressly states therein that art. 3, no. 1 of the IUC Code "[...] establishes a legal presumption that the holder of the vehicle registry is its owner, and such presumption is refutable by virtue of art. 73 of the TGL".
This is an understanding which we fully rely upon and which is given, without further ado, as valid and applicable in the present case, it not being considered, therefore, necessary other developments, given the abundant reasoning contained in the aforementioned Decisions and in the aforementioned Judgment(...).
Proc. 598/2016-T
(...) It can be inferred that the close connection of IUC to the principle of equivalence (or principle of benefit) does not allow the exclusive association of the "taxpayers" referred to therein with the figure of owners but rather with the figure of users (or economic owners). As was well noted in the AD rendered in proc. no. 73/2013-T: "in truth, the ratio legis of the tax [IUC] rather points in the direction that the users of vehicles are taxed, the «economic owner» in the words of Diogo Leite de Campos, the actual owners or the financial lessees, because these are the ones that have the polluting potential that causes environmental costs to the community."
From the foregoing, it follows that limiting the taxpayers of this tax solely to the owners of vehicles in whose name the same are registered - ignoring situations in which these no longer coincide with the actual owners or actual users of the same - constitutes a restriction that, in light of the purposes of IUC, finds no basis for support. And, even if it is alleged that the legislator's intention was for the purposes of IUC, to consider as owners those who, as such, appear in the vehicle registry, it is necessary to bear in mind that such registry, in light of what has been said previously, generates only a refutable presumption, i.e., a presumption that can be set aside by the presentation of evidence to the contrary. In this sense, see, e.g., the Judgment of the TCAS of 19/3/2015, proceeding 8300/14: "The [...] art. 3, no. 1, of the IUC Code, establishes a legal presumption that the holder of the vehicle registry is its owner, and such presumption is refutable".
It would, moreover, be unjustified to impose a kind of non-refutable presumption, since, without an apparent reason, one would be imposing a (admittedly debatable) formal truth to the detriment of what could actually be proven; and, on the other hand, to thwart the duty of the AT to comply with the inquisitorial principle established in art. 58 of the TGL, i.e., the duty to carry out the necessary steps for a correct determination of the factual reality on which its decision should be based (which means, in the present case, the determination of the current and effective owner of the vehicle).
Moreover, if the seller were not permitted to refute the presumption contained in art. 3 of the IUC Code, one would be benefiting, without a plausible reason, acquirers who, in possession of correctly completed and signed contract forms for acquisitions, and enjoying the advantages associated with their condition as owners, would attempt to escape, through a "registral formalism", payment of tolls or fines.
In this regard, it is also worth noting that vehicle registration does not have constitutive effect, functioning, as mentioned before, as a refutable presumption that the holder of the registration is, in fact, the owner of the vehicle. In this sense, see, e.g., the Judgment of the Supreme Court of Justice of 19/2/2004, proc. 03B4639: "Registration does not produce constitutive effect, since it is intended to give publicity to the registered act, functioning (only) as a mere presumption, refutable (presumption «juris tantum») of the existence of the right (arts. 1, no. 1 and 7, of the CRP and 350, no. 2, of the Civil Code) as well as of the respective title, all in accordance with its terms."
…
Also note the AD rendered in proc. no. 27/2013-T, of 10/9/2013, where it is emphasized that "the documents presented, particularly the copies of invoices that support, from the outset, the sales [of the] vehicles [...] referenced, [...] embody means of proof with sufficient force and adequate to refute the presumption founded on the registration, as enshrined in no. 1 of art. 3 of the IUC Code, documents which, moreover, enjoy the presumption of truthfulness provided for in no. 1 of art. 75 of the TGL."
…
see, e.g., Agostinho Cardoso Guedes (in "The subjective incidence of the single vehicle tax in the context of financial lease contracts or other lease contracts with purchase option", in: Magazine of Business Sciences and Law, 23, 2013, pp. 17-18): "The financial lessee is treated by law as a quasi-owner. [...]. It is thus understood that the obligation to pay IUC falls on the financial lessee and not on the lessor given the characteristics of his legal position. The same applies to the purchaser with reservation of title. [...]. Also similar to the position of the financial lessee is that of the lessee with purchase option. Here too the lessee has the exclusive enjoyment of the leased property and has the right to acquire its ownership (without the lessor being able to oppose such acquisition). That is, in the three situations referred to by the legislator in art. 3, no. 2, of the IUC Code, we have two common aspects: the lessee/purchaser has exclusive enjoyment of the property and has the right (or expectation) to become owner in the short or medium term."
...
It also alleges, the Respondent ... that, for the purposes of refuting the presumption of art. 3 of the IUC Code, it is necessary that the financial lessors (such as the herein Claimant) comply with the obligation inherent in article 19 of the IUC Code to exonerate themselves from the obligation to pay the tax.
This understanding of the AT does not, however, hold, given that, as well noted, for example, in the AD rendered in proc. no. 14/2013-T, of 15/10/2013, "the financial lessee is equated to owner for the purposes of no. 1 of article 3 of the IUC Code, which is the same as saying to be a taxpayer of IUC (See no. 2 of art. 3). [...] the lessor not having, by legal and contractual imposition, the potential for use of the vehicle and the lessee having exclusive enjoyment of the automobile, [and reaffirming] the conclusion to which we had already come that [...] the ratio legis of the IUC Code commands that, pursuant to the aforementioned no. 2 of article 3 of this Code, it is the lessee who is responsible for the payment of the tax, since it is he who has the potential for use of the vehicle and causes the road and environmental costs inherent to it. The same conclusion is reached when the importance given to users of leased vehicles in article 19 of the IUC Code is verified. Indeed, pursuant to the provisions of this article, entities that proceed, namely, to the financial lease of vehicles are obliged to provide to the AT (ex-DGCI), the tax identity of the users of the leased vehicles for the purposes of the provisions of article 3 of the IUC Code (subjective incidence), as well as of no. 1 of article 3 of the Law of its approval, since pursuant to this norm of Law no. 22-A/2007, if the revenue generated by the IUC is incident on vehicles subject to long-term rental or operational lease, it should be allocated to the municipality of residence of the respective user [...] [But, despite that obligation, such does not prevent that,] on the date of the occurrence of the tax event, a financial lease contract [is in effect] which has a motor vehicle as its object, for the purposes of the provisions of article 3, nos. 1 and 2, of the IUC Code, [being that the] taxpayer of IUC is the lessee even if the registration of the right of property of the vehicle is made in the name of the leasing entity, provided that it provides proof of the existence of the referred contract."
By the foregoing, the allegation of the AT relating to art. 19 of the IUC Code does not hold, since the same aims to superimpose a formal obligation on a substantial reality clearly demonstrative of the Claimant's condition as a leasing entity in the underlying contracts(...).
4. Thus, the request for arbitral pronouncement proceeds in this respect, regarding the illegality of the assessments.
5- It is important to note, because invoked in the response of the AT, that we cannot see, (without prejudice to the strained, but misplaced, justification), in what way the understanding advocated herein may be at issue with the violation of the constitutional principles of confidence and legal certainty, the principle of efficiency of the tax system and the principle of proportionality.
We note, in fact, no violation of constitutional provisions and principles.
Concluding...
Before the sense of the consolidated jurisprudence, above transcribed, to which full adherence is given, since it is important to contribute to a uniform interpretation and application of Law (article 8, no. 3 of the Civil Code), it is necessary to conclude that there is no legal basis for the acts of assessment of IUC and compensatory interest relating to the vehicles and periods identified in the request for arbitral pronouncement, which, as of the date when the tax became due, were transferred to the respective lessees under the terms of lease contracts.
For this reason, the contested assessments are affected by the defect of error regarding the legal grounds, requiring their annulment.
As for the request for compensatory interest formulated by the Claimant, article 43, no. 1, of the TGL establishes that compensatory interest is due when it is determined that there was an error attributable to the services that results in payment of the tax debt in an amount greater than legally due.
In the case, the error that affects the assessment is attributable to the Tax and Customs Authority, which carried out the assessment act on its own initiative.
Indeed, the Tax Administration is generally required to act in accordance with the Law (arts. 266, no. 1, of the C.R.P. and 55 of the T.G.L.), so that, regardless of proof of fault by any of the persons or entities that compose it, any illegality not resulting from an action of the taxpayer will be attributable to fault of the services themselves.
It has, therefore, the right to be reimbursed by the Respondent for the amount it paid, (pursuant to the provisions of articles 100 of the TGL and 24, no. 1, of the LRATM) and, furthermore, to be indemnified for the unduly paid amount through the payment of compensatory interest, by the Respondent, from the date of payment of the amount, until reimbursement, at the legal subsidiary rate, pursuant to articles 43, nos. 1 and 4, and 35, no. 10, of the TGL, article 559 of the Civil Code and Ordinance no. 291/2003, of 8 April.
DECISION
Under these terms, it is decided in this Arbitral Tribunal to judge the request for arbitration filed as meritorious and, in consequence:
a- Not to grant the request for declaration of unconstitutionality;
b- To declare the annulment of the dispatch dismissals of the Hierarchical Appeals and tax assessment acts, in the total amount of €452.91, impugned;
c- To determine the reimbursement of the tax unduly paid;
d- To condemn the AT in the payment of compensatory interest due from the date of payment of the tax until full reimbursement of the amount paid;
e- To condemn the Respondent in the costs of the proceedings, fixed below.
Value of the Proceedings
The value of the proceedings is fixed at €452.91, pursuant to article 97-A, no. 1, a), of the Code of Tax Procedure and Process, applicable by virtue of paragraphs a) and b) of no. 1 of article 29 of the LRATM and of no. 2 of article 3 of the Regulation of Costs in Tax Arbitration Proceedings.
Costs
The value of the arbitration fee is fixed at €306.00, pursuant to Table I of the Regulation of Costs in Tax Arbitration Proceedings, to be paid by the Respondent, since the claim was considered entirely meritorious, pursuant to articles 12, no. 2, and 22, no. 4, both of the LRATM, and article 4, no. 4, of the cited Regulation.
Lisbon, 11 May 2017
The Arbitrator,
(Fernando Miranda Ferreira)
Frequently Asked Questions
Automatically Created