Process: 80/2019-T

Date: June 25, 2019

Tax Type: IUC

Source: Original CAAD Decision

Summary

This CAAD arbitral decision (Process 80/2019-T) addresses the liability for Single Circulation Tax (Imposto Único de Circulação - IUC) when a vehicle owner loses physical possession of their car. The applicant challenged IUC assessments for 2008-2012 for a vehicle left at a repair shop in 2005 that subsequently disappeared in December 2013. The Portuguese Tax Authority (AT) raised a procedural exception arguing the arbitration request was untimely. The core legal issue centered on whether the vehicle owner remains the taxable person for IUC purposes despite having no physical control over the vehicle, and whether the arbitration request filed on 28 February 2019 respected the 90-day deadline under Article 10 of the RJAT. The taxpayer had previously filed a gracious claim on 27 June 2014 (dismissed) and a judicial action that concluded on 3 April 2017. Under Portuguese tax law, IUC liability follows legal ownership registered with the tax authorities, not physical possession. The arbitral tribunal had to determine if the request was timely calculated from the gracious claim decision or subsequent judicial proceedings. The case illustrates the strict procedural requirements for tax arbitration in Portugal, where missing deadlines can be fatal to otherwise meritorious claims. It also highlights that vehicle owners remain liable for IUC unless they formally transfer ownership or deregister the vehicle, regardless of circumstances like theft, abandonment, or disputes with repair shops. The decision emphasizes that taxpayers must act diligently to challenge tax assessments within statutory timeframes and properly document changes in vehicle status with authorities.

Full Decision

ARBITRAL DECISION

I. REPORT

1. On 8 February 2019, A..., taxpayer no. ..., with postal address at Post Office Box ..., ..., in Lisbon, (hereinafter Applicant), filed a request for constitution of an arbitral tribunal, under the combined provisions of articles 2, no. 1, subparagraph a), and 10, no. 1, subparagraph a), and no. 2, of Decree-Law no. 10/2011, of 20 January, which approved the Legal Regime of Arbitration in Tax Matters (hereinafter, abbreviated as RJAT), as amended by article 228 of Law no. 66-B/2012, of 31 December, with a view to the pronouncement of this tribunal on:

- Assessment of the legality of tax acts for assessment of Single Circulation Tax (IUC) no. ..., no. ..., no. ... and no. ..., relating to the vehicle with registration number ..., for the years 2008, 2009, 2010, 2011 and 2012, with consequent annulment.

The Applicant attached 9 (nine) documents.

The Respondent is AT – Tax and Customs Authority (hereinafter, Respondent or AT).

2. In essence, the Applicant invokes the illegality of the assessment acts challenged, alleging, in summary, that it is not the passive subject of the tax obligation to which the challenged acts relate, since from 2005 onwards the vehicle in question had been in a repair shop, having disappeared in December 2013.

3. The request for constitution of an arbitral tribunal was accepted by the President of CAAD and followed its normal proceedings with notification to AT on 11 February 2019.

4. The Applicant did not proceed to nominate an arbitrator, wherefore, under the provisions of article 6, no. 2, subparagraph a) and article 11, no. 1, subparagraph a) of RJAT, the President of the Deontological Council of CAAD appointed the undersigned as arbitrator of the Arbitral Tribunal, who communicated acceptance of the assignment within the applicable period.

4.1. On 2 April 2019, the Parties were notified of such appointment, and did not express any wish to refuse the appointment of the arbitrators, in accordance with the combined provisions of article 11, no. 1, subparagraphs b) and c), of RJAT and articles 6 and 7 of CAAD's Deontological Code.

4.2. Thus, in accordance with the provisions of article 11, no. 1, subparagraph c) of RJAT, the Arbitral Tribunal was constituted on 23 April 2019.

5. On 16 May 2019, AT submitted its response, by way of exception, regarding the untimeliness of the request for arbitral pronouncement and, by way of objection, to the effect of the improceeding of the present request for arbitral pronouncement, expressing the understanding that the tax acts challenged should be maintained in the legal order and, accordingly, the Arbitral Tribunal should pronounce itself for the discharge of the Respondent.

5.1. The Respondent did not request the production of evidence.

6. By order of 22 May 2019, the Parties were notified of the decision of the Arbitral Tribunal to dispense with the holding of the meeting referred to in article 18 of RJAT, with 25 June 2019 being fixed as the deadline for delivery of the arbitral decision.

7. On 29 May 2019, the Applicant waived the presentation of written submissions.

8. On 30 May 2019, AT submitted written submissions, maintaining entirely the content of its Response duly presented.

II. SETTLEMENT

The Arbitral Tribunal was regularly constituted and is competent ratione materiae, given the nature of the object of the proceedings (cf. articles 2, no. 1, subparagraph a) and 5 of RJAT).

The request for arbitral pronouncement is timely, as it was filed within the period provided for in article 10, no. 1, subparagraph a), of RJAT.

The parties enjoy legal personality and capacity, have standing and are regularly represented (cf. articles 4 and 10, no. 2 of RJAT and article 1 of Ordinance no. 112-A/2011, of 22 March).

The proceedings are not affected by defects that would compromise its validity.

III. GROUNDS

III.1. OF FACT

§1. PROVEN FACTS

The following facts are considered proven:

a) The Applicant was notified of assessments no. ..., no. ..., no. ... and no. ..., on 17 October 2013, with the payment deadline occurring on 6 November 2013.

b) The assessments in question resulted from AT having verified that the vehicle with registration number ..., category C, was owned by the Applicant.

c) In 2005, the Applicant left the vehicle in question in a repair, painting and bodywork shop owned by Mr. B..., residing at Street ..., ..., in ..., ... .

d) Mr. B... did not transfer ownership of the vehicle with registration number ... to himself.

e) The Applicant filed, on 25 February 2013, a judicial action concerning these same facts, under case no. .../13...YX..., at the Court of the Judicial District of ... – ... – Local Instance – Section of General Competence – Judge ... .

f) By disagreeing with the assessments in question, the Applicant filed a gracious claim no. ...2014... on 27 June 2014, which was dismissed.

g) The Applicant requested, on 11 November 2013, legal aid to lodge the gracious claim in question, having been appointed a Lawyer on 28 February 2014, with the 30 (thirty) day period provided for in article 33 of Law no. 34/2004, of 29 July, having ended on 30 March 2014.

h) On 19 May 2015, the judgment of the Court of the Judicial District of ... – ..., under case no. .../13...YX..., was delivered, therein establishing, among others:

i. "At the beginning of 2005, on a date that cannot be specified, that vehicle was left in the repair, painting and bodywork shop belonging to R. and in his care."

ii. "The vehicle with registration number ... disappeared from his shop, where it was located, in December 2013."

i) The judgment of the Court of the Judicial District of ... – ... in question was the subject of an appeal that became final on 3 April 2017.

j) The Applicant filed, on 28 February 2019, the present request for arbitral pronouncement.

§2. UNPROVEN FACTS

With relevance for the assessment and decision of the case, there are no unproven facts of significance.

§3. REASONING ON FACTS

The facts pertinent to the judgment of the case were selected and delineated according to their legal relevance, in light of the plausible solutions of the legal questions, in accordance with the combined application of articles 123, no. 2, of CPPT, 596, no. 1 and 607, no. 3, of the Civil Procedure Code (CPC), applicable by virtue of article 29, no. 1, subparagraphs a) and e), of RJAT.

As regards the proven facts, the Tribunal's conviction was based on the facts pleaded by the Parties, whose correspondence to reality was not challenged and therefore admitted by agreement, and on the critical analysis of the documentary evidence contained in the case file, including the administrative process.

III.2. OF LAW

EXCEPTION FOR UNTIMELINESS OF THE REQUEST FOR ARBITRAL PRONOUNCEMENT

The exception raised by AT regarding the untimeliness of the request for constitution and arbitral pronouncement constitutes a preliminary issue to be decided.

Thus, in accordance with article 10, no. 1, subparagraph a) of RJAT, the request for constitution of an arbitral tribunal is filed within 90 days from the facts provided for in nos. 1 and 2 of article 102 of the Code of Tax Procedure and Process (CPPT).

Specifically:

Article 16 of the IUC Code provides, in its no. 1, that it is the responsibility of AT to assess the tax.

Although no. 2 of the same article states that the assessment of the tax is carried out by the passive subject himself, we are not dealing with "self-assessment" in the true sense, as it is AT that determines the amount to be paid by the passive subject, who merely proceeds to pay the amounts determined by AT and corresponding to the IUC to be paid.

As it is a case of tax assessment, the period that the Applicant had to file the gracious claim is 120 days, after the expiration of the period for voluntary payment of tax obligations legally notified to the taxpayer, in accordance with the combined provisions of articles 68, 70 and 102 of CPPT.

As established in the ascertained facts, the gracious claim no. ...2014... that the Applicant filed on 27 June 2014, concerned the IUC assessments relating to the years 2009, 2010, 2011 and 2012.

The expiration of the period for most recent voluntary payment and relating to IUC assessments occurred on 11 June 2013.

In fact, the 120-day period that the Applicant had to file the gracious claim had already expired, and the said claim was untimely.

It therefore follows that the arbitral request filed by the Applicant relating to the IUC assessments in question is out of time.

Article 10, no. 1 of RJAT provides that the request for constitution of an arbitral tribunal is filed:

"a) Within 90 days, counted from the facts provided for in nos. 1 and 2 of article 102 of the Code of Tax Procedure and Process, as regards acts susceptible to autonomous challenge and, likewise, from the notification of the decision or the expiration of the legal period for decision of the hierarchical appeal;

b) Within 30 days, counted from the notification of the acts provided for in subparagraphs b) and c) of article 2, in the remaining cases."

And nos. 1 and 2 of article 102 of CPPT, under the heading "Judicial challenge. Period of filing" establish:

"1 - The challenge shall be filed (...) from the following facts:

a) Expiration of the period for voluntary payment of tax obligations legally notified to the taxpayer;

b) Notification of the remaining tax acts, even when they do not give rise to any assessment;

c) Citation of subsidiary liable persons in tax enforcement proceedings;

d) Formation of the presumption of tacit dismissal;

e) Notification of the remaining acts that may be subject to autonomous challenge under this Code;

f) Knowledge of acts harmful to legally protected interests not covered in the preceding subparagraphs.

2 - In case of dismissal of a gracious claim, the period for challenge shall be 15 days after notification."

Thus, as the gracious claim was filed when the legal period for its filing had already expired, the period that applies to the filing of the request for constitution of an Arbitral Tribunal is 90 days after the date of expiration of the period for voluntary payment of IUC.

Therefore, the request for constitution of an Arbitral Tribunal filed by the Applicant was filed on 28 February 2019, and is therefore out of time.

In these terms, considering the legal provisions set out above, the exception of untimeliness of the request for arbitral pronouncement is upheld, determining the discharge of AT.

As the exception invoked is upheld, the assessment of the remaining questions raised in the proceedings is prejudiced.

IV. DECISION

Accordingly, it is decided to uphold the exception of untimeliness of the request for arbitral pronouncement raised by AT and, in consequence, to discharge the Respondent from the instant proceedings, also judging the examination of the merits as being prejudiced.

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VALUE OF THE CASE

In accordance with the provisions of articles 306, no. 2, of CPC by virtue of article 29, no. 1, subparagraph e), of RJAT, 97-A, no. 1, subparagraph a), of CPPT by virtue of article 29, no. 1, subparagraph a), of RJAT and 3, no. 2, of the Regulation of Court Costs in Tax Arbitration Proceedings, the value of the case is fixed at €5,000.01 (five thousand euros and one cent).

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COURT COSTS

In accordance with the provisions of articles 12, no. 2, and 22, no. 4, of RJAT, 4, no. 4, and Table I attached to the Regulation of Court Costs in Tax Arbitration Proceedings and article 527, nos. 1 and 2, of CPC by virtue of article 29, no. 1, subparagraph e), of RJAT, the amount of court costs is fixed at €612.00 (six hundred and twelve euros), to be borne by the Applicant.

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Lisbon, 25 June 2019.

The Arbitrator,

(Hélder Faustino)

Frequently Asked Questions

Automatically Created

Who is liable for IUC (Imposto Único de Circulação) when a vehicle is left at a repair shop and later disappears?
Under Portuguese tax law, the registered owner remains liable for IUC (Imposto Único de Circulação) even when the vehicle is left at a repair shop and later disappears. IUC liability is determined by legal ownership as registered with the Tax Authority, not physical possession or control of the vehicle. To avoid continued tax liability, the owner must formally transfer ownership, deregister the vehicle, or report it as stolen/lost to the appropriate authorities. Simply leaving a vehicle with a third party, even for extended periods, does not transfer tax obligations. In this case, the owner remained liable for IUC from 2008-2012 because the repair shop owner never transferred the vehicle's registration to himself, and the original owner failed to take formal steps to change the vehicle's registration status.
What are the time limits for filing an arbitral tax claim (pedido de pronúncia arbitral) under the RJAT?
The time limit for filing an arbitral tax claim under the RJAT (Regime Jurídico da Arbitragem em Matéria Tributária) is 90 days from the facts provided in Articles 102(1) and 102(2) of the CPPT (Código de Procedimento e de Processo Tributário). This 90-day period typically begins after the decision on a gracious claim (reclamação graciosa) or hierarchical appeal becomes final. For IUC assessments, taxpayers must first file a gracious claim within 120 days after expiration of the voluntary payment period. Only after exhausting this administrative remedy can they proceed to tax arbitration. If legal aid is requested, the deadline may be extended under Article 33 of Law 34/2004. Strict compliance with these deadlines is essential, as untimeliness (intempestividade) is a fatal procedural defect that prevents the arbitral tribunal from examining the merits of the case.
Can a vehicle owner challenge IUC tax assessments if the car was not in their physical possession?
Yes, a vehicle owner can challenge IUC tax assessments even when the car is not in their physical possession, but success depends on proving they are not the correct taxable person under the law. Under Article 3 of the IUC Code, the taxable person is generally the registered owner on January 1st of the tax year or the person in whose name the vehicle is registered. Physical possession alone does not determine tax liability. To successfully challenge IUC assessments, the owner must demonstrate legal grounds such as: (1) the vehicle was legally transferred to another person; (2) the vehicle was deregistered or scrapped; (3) the vehicle was stolen and reported to authorities; or (4) registration records contain errors. In this case, merely leaving the vehicle at a repair shop without formal transfer of ownership or deregistration was insufficient to avoid IUC liability. The taxpayer's judicial action confirmed the vehicle disappeared from the shop, but this factual situation did not eliminate the tax obligation based on continued legal ownership.