Process: 773/2014-T

Date: November 6, 2015

Tax Type: IUC

Source: Original CAAD Decision

Summary

This CAAD arbitration case (Process 773/2014-T) involved A... Portugal, SA challenging four IUC (Imposto Único de Circulação - Single Circulation Tax) assessments totaling €140.41 relating to three motor vehicles. The claimant petitioned for a declaration of illegality of the assessments and payment of compensatory interest on amounts paid. The arbitral tribunal was constituted on January 30, 2015, following appointment of a sole arbitrator by the Ethics Council. However, before substantive adjudication could occur, significant procedural developments emerged during the hearing held on September 4, 2015. The claimant formally withdrew the proceedings concerning two assessments (2013... and 2014...), while the Portuguese Tax and Customs Authority simultaneously revoked the remaining two contested assessments (2014... and 2014...). Consequently, no assessments remained in dispute. The arbitrator ratified the withdrawal as valid and effective pursuant to Articles 287, 285(2), and 300 of the Code of Civil Procedure, applicable through Article 2(e) of the Code of Tax Procedure and Process and Article 29 of the Legal Regime of Tax Arbitration (RJAT - Decree-Law 10/2011). The tribunal declared the proceedings terminated without substantive decision on the merits, including the subjective incidence of IUC taxation. The proceeding value was fixed at €140.41 under Article 97-A(1)(a) of the Code of Tax Procedure and Process. Arbitration costs totaling €306.00 were allocated between the parties according to Table I of the Regulation of Costs in Tax Arbitration Proceedings, with the claimant bearing €143.44 (approximately 47%) and the Tax Authority €162.56 (approximately 53%), demonstrating a relatively balanced cost distribution despite case termination.

Full Decision

ARBITRAL AWARD

I – REPORT

A… Portugal, SA, taxpayer number …, with registered office at …, hereinafter referred to as the Claimant, filed a request for constitution of an arbitral tribunal in tax matters and a request for arbitral award, pursuant to the provisions of articles 2, no. 1 a) and 10, no. 1 a), both of Decree-Law no. 10/2011, of 20 January (Legal Regime of Arbitration in Tax Matters, abbreviated as LRAT), petitioning for a declaration of illegality of the Single Circulation Tax (IUC) assessments no. 2014…, 2014…, 2013… and 2014…, relating to motor vehicles with registration plates …-…-…, …-…-… and …-…-…, in the total amount of € 140.41, as well as payment of compensatory interest on the amounts paid.

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 20-11-2014.

Pursuant to the provisions of articles 5, no. 2, a), 6, no. 1 and 11, no. 1, a) of the LRAT, the Ethics Council appointed the undersigned as arbitrator of the sole arbitral tribunal, who communicated acceptance of the appointment within the applicable period.

On 15-01-2015, the parties were duly notified of such appointment, having not expressed any intention to challenge the appointment of the arbitrator, pursuant to the combined provisions of article 11, no. 1, paragraphs a) and b) of the LRAT and articles 6 and 7 of the Code of Ethics.

Thus, in compliance with the provision of paragraph c) of no. 1 of article 11 of the LRAT, the sole arbitral tribunal was constituted on 30-01-2015.

On 04-09-2015, the tribunal held the meeting provided for in article 18 of the LRAT.

At this meeting, the Claimant presented withdrawal of the proceedings concerning assessment acts no. 2013… and 2014….

The Respondent also informed that it proceeded with the revocation of assessment acts no. 2014… and 2014….

II – Ratification of Withdrawal

Having considered the provisions of articles 287; 285, no. 2 and 300 of the Code of Civil Procedure, by virtue of article 2, paragraph e) of the Code of Tax Procedure and Process and article 29 of the Legal Regime of Tax Arbitration (Decree-Law no. 10/2011, of 20 January), this Arbitral Tribunal finds the withdrawal presented by the parties to be valid and effective, which it ratifies by this award, and declares the proceedings terminated.

Value of the Proceeding

The value of the proceeding is fixed at € 140.41, 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 LRAT and no. 2 of article 3 of the Regulation of Costs in Tax Arbitration Proceedings.

Costs

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 Claimant and Respondent, in the proportion of € 143.44 and € 162.56, respectively.

Let it be notified.

Lisbon, 6 November 2015

The Arbitrator

(Amândio Silva)

Frequently Asked Questions

Automatically Created

What is the subjective incidence of IUC (Imposto Único de Circulação) and who is liable for this vehicle tax in Portugal?
The subjective incidence of IUC (Imposto Único de Circulação) in Portugal determines who is liable to pay this annual vehicle circulation tax. Under Portuguese tax law, IUC liability falls on the registered owner of the vehicle as of the assessment date. The tax obligation arises from vehicle ownership rather than usage, making it a property-based tax. The liable person is the individual or legal entity registered as the vehicle's owner in the vehicle registration system maintained by the Instituto dos Registos e Notariado (IRN). While this specific case referenced subjective incidence as a theme, the substantive issue was not decided due to withdrawal and revocation of assessments, preventing judicial clarification on this particular aspect.
Can a taxpayer withdraw from CAAD tax arbitration proceedings after filing a request for arbitral decision?
Yes, a taxpayer can withdraw from CAAD (Centro de Arbitragem Administrativa) tax arbitration proceedings after filing a request for arbitral decision. This case demonstrates that withdrawal is permitted under Portuguese tax arbitration law. The legal framework allows parties to withdraw their claims, even after the arbitral tribunal has been constituted and proceedings are underway. The withdrawal must be ratified by the arbitral tribunal to become effective. In this case, the arbitrator ratified the claimant's withdrawal pursuant to Articles 287, 285(2), and 300 of the Code of Civil Procedure, applicable through Article 2(e) of the Code of Tax Procedure and Process and Article 29 of the RJAT (Legal Regime of Tax Arbitration, Decree-Law 10/2011). Upon ratification, the tribunal declares the proceedings terminated regarding the withdrawn claims.
What happens when the Portuguese Tax Authority revokes IUC tax assessments during arbitration proceedings?
When the Portuguese Tax and Customs Authority revokes IUC tax assessments during arbitration proceedings, those specific assessments are removed from dispute, eliminating the object of the litigation concerning the revoked acts. In this case, the Tax Authority revoked two of the four contested assessments (2014... and 2014...) during the arbitration hearing. Combined with the claimant's simultaneous withdrawal of the other two assessments, no contested acts remained for adjudication. The revocation by the Tax Authority represents an administrative recognition that the assessments should not stand, effectively conceding those specific claims. This led to termination of the entire proceeding, as there were no remaining substantive issues requiring arbitral decision. The revocation does not necessarily constitute an admission of illegality but resolves the dispute administratively.
How are arbitration costs allocated between the taxpayer and the Tax Authority when an instance is extinguished in CAAD?
When an arbitration instance is extinguished in CAAD through withdrawal and revocation, arbitration costs are allocated between the taxpayer and the Tax Authority according to the Regulation of Costs in Tax Arbitration Proceedings. In this case, despite termination without substantive decision, the total arbitration fee of €306.00 (determined per Table I of the Regulation) was apportioned between the parties. The claimant paid €143.44 (approximately 47%) while the Tax Authority (Respondent) paid €162.56 (approximately 53%). This relatively balanced distribution, with the Tax Authority bearing a slightly higher proportion, reflects that both parties contributed to case resolution through withdrawal and revocation respectively. The cost allocation in extinction scenarios differs from cases decided on merits, where the losing party typically bears the full burden. The proportional sharing recognizes mutual responsibility for proceedings initiation and resolution.
What is the legal basis for homologation of withdrawal in Portuguese tax arbitration under the RJAT?
The legal basis for homologation (ratification) of withdrawal in Portuguese tax arbitration under RJAT is found in Article 29 of Decree-Law 10/2011 (RJAT - Legal Regime of Tax Arbitration), which incorporates provisions from the Code of Civil Procedure and the Code of Tax Procedure and Process. Specifically, the arbitrator applies Articles 287, 285(2), and 300 of the Code of Civil Procedure (Código de Processo Civil) through the reference in Article 2(e) of the CPPT (Code of Tax Procedure and Process) and Article 29 of RJAT. Article 287 CPC governs the effects of withdrawal, Article 285(2) addresses party withdrawal rights, and Article 300 regulates termination of proceedings. The tribunal must verify that withdrawal is valid and effective before ratification. Once ratified by arbitral award, the withdrawal produces definitive effects, terminating the proceedings with res judicata consequences regarding the withdrawn claims.