Process: 836/2014-T

Date: June 24, 2015

Tax Type: IUC

Source: Original CAAD Decision

Summary

This CAAD arbitration case (Process 836/2014-T) addresses the critical question of subjective incidence of IUC (Imposto Único de Circulação - Single Road Tax) in the year of vehicle registration. A vehicle dealer challenged IUC assessments for 2009-2012, arguing they should not be liable for tax on vehicles sold to customers within 60 days of initial registration. The central legal debate concerns the interpretation of Articles 2, 3, 4, and 6 of the IUC Code (CIUC). The dealer contended that ownership for IUC purposes should be determined at the end of the 60-day period following registration assignment, not at the moment of registration. They argued that Article 3(1) of CIUC establishes a rebuttable presumption of ownership based on registration records, which can be refuted by proving actual ownership transfer through sales invoices and contracts. For 282 vehicles not re-registered within 60 days, the dealer maintained that registration has merely declarative, not constitutive, effect on ownership rights, citing Decree-Law 54/75 and the Property Registration Code. The Tax Authority defended that the tax obligation arises from registration or recording events under Article 6 CIUC, and that the person in whose name the vehicle is recorded is the taxable person. The case raises fundamental questions about the relationship between civil ownership, vehicle registration, and tax liability, the nature of legal presumptions in tax law, and whether commercial reality (actual sale) should prevail over formal registration for determining IUC liability in the registration year. This dispute is particularly significant for vehicle dealers and the automotive industry regarding IUC compliance obligations.

Full Decision

ARBITRATION AWARD

Case No. 836/2014-T

I – Report

1.1. A…, S.A. (hereinafter referred to as the "claimant"), with registered office at Rua …., No. …, …-… Lisbon, with the collective person number …, having been notified of the decision dismissing the gracious appeal No. … 2014 …, presented against the collections of IUC identified in Table 1 (contained in the proceedings record), relating to IUC for the years 2009, 2010, 2011 and 2012, plus the respective compensatory interest, filed, on 9/2/2015, a request for the constitution of an arbitral tribunal and for an arbitral decision, in accordance with the provisions of Articles 2, No. 1, sub-para. a), 5, No. 2, sub-paras. a) and b), 6, No. 1, and 10, No. 1, sub-para. a), and No. 2, all of Decree-Law No. 10/2011, of 20/1 (Legal Regime of Arbitration in Tax Matters, hereinafter referred to only as "LRAT"), whereby the Tax and Customs Authority (TA) is required, with a view to the "declaration of illegality of the said collections", as well as the reimbursement of "the amount paid, plus compensatory interest."

1.2. On 20/4/2015, the present Singular Arbitral Tribunal was constituted.

1.3. In accordance with Article 17, No. 1, of the LRAT, the TA was served, as the respondent party, to submit a response, in accordance with the said article. The TA submitted its response on 22/5/2015, arguing for the total rejection of the claimant's request.

1.4. By order of 17/6/2015, the Tribunal considered, in accordance with Article 16, sub-paras. c) and e), of the LRAT, that the meeting provided for in Article 18 of the LRAT was dispensable and that the case was ready for decision. The date of 24/6/2015 was further set for the rendering of the arbitral decision.

1.5. The Arbitral Tribunal was duly constituted, is materially competent, the case does not suffer from vices that would invalidate it, and the Parties have legal personality and capacity and are legitimately constituted.

II – Reasoning: Matters of Fact

2.1. The claimant alleges, in its initial petition, that: a) "the tax acts in question concern IUC due on vehicles registered in the years 2009 to 2012, whose sale by the Claimant to its customers occurred up to the end of the legal period of 60 days following the assignment of the registration"; b) "in some of these situations, the sale of the vehicles on behalf of the customers was also registered up to the end of the period of 60 days following the assignment of the registration"; c) "in others, for reasons generally beyond the Claimant's control, such registration only took place after the end of this period or did not take place at all"; d) "the interpretation that the tax administration services make [of Articles 2, 3, 4 and 6 of the CIUC] is defective and renders the tax acts in question illegal"; e) "in fact, being in question to determine who is the taxpayer of the IUC in the year of vehicle registration, those rules impose the opposite conclusion – that the taxpayer of the IUC is the owner of the vehicle at the end of the period of 60 days following the assignment of the registration"; f) "what results [from Articles 1, 3, No. 1, 4, No. 2, 6, No. 1 and 3, 17, No. 1, and 18, all of the CIUC, and Article 42, No. 1 and 2, of the RRA] is that ownership is the fact that triggers the tax obligation and that, in the year of registration, the IUC is due for an annual period that begins with the date of registration"; g) "the ownership of the vehicle for purposes of subjective scope is not legally subject to the same test as ownership for purposes of the birth of the tax obligation. In fact, instead of providing that such ownership be proven by registration or by recording, as occurs for purposes of the birth of the tax obligation (cf. Article 6 of the IUC Code), only a rebuttable presumption of ownership is established in favor of those in whose name the vehicles are recorded"; h) "a combined and systematic interpretation of Articles 3, No. 1, 4, No. 2 and 6, No. 1 and 3, all of the IUC Code, with No. 1 of Article 17 and No. 1 of Article 18, both of the same Code, immediately leads to the conclusion that the subjective scope of the IUC in the year of registration must be determined within the period of 60 days following registration and, therefore, at the beginning of the period of 30 days for the collection of the tax"; i) "if it had been the legislator's intention that the subjective scope not be determined at the end of that period [of 60 days following the assignment of registration], but rather, the legislator would have provided that the period of 30 days for tax payment begin as soon as the ownership of the vehicle was recorded"; j) "having demonstrated that in the case in question the vehicles [...] were sold to the Claimant's customers up to the end of that 60-day period (cf. documents No. 5, 6 and 7), it follows that this is not the taxpayer of the IUC due in the year of registration and, as such, the tax acts relating to the said vehicles are illegal and must be annulled"; l) "[as to the 282 vehicles that, although sold up to the end of the 60-day period following the assignment of registration, were not recorded in favor of the purchasers within that period, as] registration of ownership is not a constitutive fact of the right and merely presumes its existence, and can be refuted by proof to the contrary [and] once it is demonstrated that the Claimant was not the owner of the vehicles at the end of that 60-day period, the presumption resulting from the registration is refuted and, as such, the illegality of the tax acts in question is demonstrated"; m) "the ownership of the automobiles in question was transferred to the Claimant's customers by virtue of the respective purchase and sale contracts, of which the corresponding sales invoices constitute proof (cf. document No. 6), as well as the accounting extracts of the 'customers' account (cf. document No. 7 of the gracious appeal)"; n) "from the conjunction of [...] Articles 1 of Decree-Law No. 54/75 and 7 of the Property Registration Code, it follows that the function of registration is [...] to give publicity to the situation of the vehicles, not having registration a constitutive nature of the right of ownership, but merely declarative [...]. In this way, if the purchasers, new owners of the vehicles, do not proceed to register their right of ownership, it is presumed that this right continues to belong to the seller, being able, however, this presumption to be refuted by proof to the contrary, that is, proof, by any means, of the respective sale"; o) "in summary, it appears evident that the provision in No. 1 of Article 3 of the IUC Code establishes a rebuttable presumption or one that can be refuted"; p) "if this request for constitution of an arbitral tribunal is granted [...], the Claimant should be reimbursed the amount improperly paid. Furthermore, as the contested collections result from error attributable to the services which resulted in the payment of tax debt in an amount greater than legally due, the Claimant also has, in accordance with Article 43, No. 1, of the LGT, the right to compensatory interest."

2.2. The claimant concludes that "this request for constitution of an arbitral tribunal should be granted and, consequently, the annulment of the tax acts above better identified should be ordered, and the Claimant should be reimbursed the amount paid, plus compensatory interest."

2.3. For its part, the TA alleges, in its response: a) that "from the articulation between the scope of the subjective scope of the IUC and the constitutive fact of the corresponding tax obligation, there follows, unequivocally, from Article 6 of the CIUC, the legal situations that generate the birth of the tax obligation, that is, the assignment of registration or the recording in national territory"; b) that "the initial recording of property of vehicles admitted (as is the case herein), is based on the respective request and proof of compliance with the tax obligations relating to the vehicle. That is, the issuance of a registration certificate implies the presentation of a DAV by the Claimant and the payment of the corresponding ISV and automatically results in the recording of the property of the vehicle under Article 24 of the RRA in the name of the entity that proceeded to its importation [...] and to the formulation of the registration request, that is, the Claimant"; c) that "under Article 24 of the RRA, the importer appears in the register as the first owner of the vehicle and in that sense is, in accordance with what is provided in Article 3 and Article 6, both of the CIUC, the taxpayer of the tax"; d) that "the assignment, to the Claimant, of a registration certificate [constitutes], in accordance with the provision of Article 6 of the CIUC, [...] the taxable event of the tax, so that, having the Claimant requested the issuance of a registration certificate and being the same registered in the name of the Claimant, the prerequisites of the taxable event of the IUC and its enforceability are undoubtedly met, with the Claimant being the taxpayer of the tax"; e) that "the tax legislator did not provide that the tax would be due by the owner of the vehicle who was recorded at the end of the 60 days referred to in No. 2 of Article 42 of the RRA, which would be paid in the 30 days following in accordance with Article 17 of the CIUC. And much less did the legislator provide that importers, despite proceeding to sell the vehicles before the assignment of the registration certificate, can thus see the subjective scope of IUC excluded. What the legislator provided is that the taxable event of the tax is determined by registration or by recording, with Article 24 of the RRA expressly providing that once ISV has been paid and registration requested, the vehicle is automatically recorded in the name of the importer, that is, of the Claimant"; f) that, "regardless of whether the Claimant proceeds to sell the vehicle to its customers up to the end of the legal period following the assignment of the registration, such circumstance, in light of the taxable event set out in Article 6 of the CIUC, is manifestly irrelevant, insofar as the legislator expressly provided that the taxable event of the tax is proven by registration"; g) that "although the Claimant alleges that up to the end of the legal period of 60 days following the assignment of the registration it had already sold the vehicles to its customers, such fact is irrelevant for purposes of applying the provision of Article 6 of the CIUC"; h) that "with Article 6 of the CIUC establishing registration as the taxable event of the tax, this is enforceable upon its issuance regardless of recording occurring in the name of another owner"; i) that "the interpretation conveyed by the Claimant is contrary to the Constitution [since] the understanding advocated by the Claimant aims to exclude the subjective scope and taxation of the IUC, has no legal basis and violates the constitutional principles of legality and tax justice, of contributive capacity, of equality, of certainty and legal security"; j) that "the IUC is collected in accordance with the registration information timely transmitted by the Institute of Registers and Notary [so that] the IUC is not collected in accordance with information generated by the Respondent itself. [...] the Respondent merely complied with the legal obligations to which it is bound and, in parallel, followed the registration information that was provided to it by the proper party"; l) that "no error attributable to the services occurred, in casu, [so that] the legal prerequisites that confer the right to compensatory interest are not met."

2.4. The TA concludes, finally, that "this request for arbitral decision should be judged to be without merit, with the tax collection acts contested remaining in the legal order and the Respondent entity being absolved accordingly from the request."

2.5. The following facts are considered proven:

i) The claimant herein is the official distributor of the automobile brand "B…" in Portugal. In the context of its business, the claimant imports automobiles of the said brand and subsequently proceeds to sell them to its customers.

ii) The vehicles in question (413) are identified in "Table 1" contained in the proceedings record – a table that is considered reproduced here, as it was not contested and involves a very large number of vehicles.

iii) The collections in question amount to €39,643.66, of which €12,531.78 concern 131 vehicles registered between 2009 and 2012, which were sold and recorded in favor of the customer up to the end of the period of 60 days following the date of assignment of the registration, as can be verified by reading "Table 2", contained in point 27 of the proceedings record – a table that is considered reproduced here, as it was not contested and involves a large number of vehicles. The remaining amount (€27,111.88) concerns, on the other hand, 282 vehicles, also registered in 2009 to 2012 and sold up to the end of the period of 60 days following the date of assignment of the registration, but recorded in favor of the customer after that period (or still without any subsequent recording in its favor), which are listed in "Table 3", contained in point 29 of the proceedings record – a table that is also considered reproduced here, as it was not contested and involves a large number of vehicles.

iv) At a time prior to the year and month of taxation of the tax in question, the vehicles in question were sold to third parties and were not, therefore, the property of the claimant, as can be observed by reading the Tables referred to above. All sales mentioned in the lists of "Tables" 2 and 3 are supported by copies of the respective sales invoices and vehicle registration certificates (documents 5-7 of the gracious appeal attached to the instructing proceedings). The authenticity of these documents was not challenged by the TA, neither in the gracious appeal nor in the present case.

v) Although not conforming, the claimant herein proceeded to voluntarily pay the tax in question, under the exceptional regime for tax debts and social security, approved by Decree-Law No. 151-A/2013, of 31/10 – and thus benefited from the waiver of payment of the corresponding compensatory interest (document 1 of the gracious appeal attached).

vi) Not conforming to the said tax acts, the claimant herein filed a gracious appeal on 31/3/2014, which was dismissed by order of the Head of Division on 3/10/2014.

2.6. There are no unproven facts relevant to the decision of the case.

III – Reasoning: Matters of Law

In the present case, there are four controversial legal questions: 1) whether, as the TA alleges, the sales, even though proven by invoices and conducted within the period for recording, are "irrelevant for purposes of applying the provision of Article 6 of the CIUC"; 2) whether Article 3 of the CIUC contains a presumption and whether the same can be refuted; 3) whether – as the TA also alleges – there was, on the part of the claimant, an "interpretation [...] contrary to the Constitution"; 4) whether, in the present case, compensatory interest is due to the claimant.

Let us then see.

  1. Taking into account what Article 6, No. 1, of the CIUC provides, it is found that the constitutive fact of the tax obligation is the ownership of the vehicle, as proven by its respective registration in national territory.

However, as noted, in a similar case, in the Arbitral Decision relating to Case No. 43/2014-T, of 14/7/2014, which is reproduced here, as it is agreed with:

"[As] Article 3, No. 1, of the Single Circulation Tax Code establishes a rebuttable presumption, it is necessary to also analyze whether this presumption was actually refuted by the Claimant, as provided in Article 73 of the General Tax Law, which states that 'the presumptions established in the rules of tax scope always admit proof to the contrary, so they are rebuttable'. Thus, the person who is registered in the register as the owner of the vehicle and, in that sense, who was considered by the Respondent as the taxpayer of the tax, must demonstrate by means of available evidence that he is not the actual owner of the vehicle and, likewise, that ownership was transferred to another. Now, in the case in question, the Claimant produced documentary evidence [...] that demonstrates that on the date of the collections it did not consider itself the owner of the vehicles in question. [...]. [...] we consider that the sales invoices presented [...] enjoy presumption of truthfulness and, in this sense, of suitability and sufficient strength to refute the presumption resulting from the collections, in accordance with the provision of Article 75 of the General Tax Law. In this sense, it is considered that the Respondent, by not taking into account the documentary evidence submitted by the Claimant, is in error regarding the factual and legal prerequisites, which determines the annulment of the corresponding collection acts. On the other hand, regarding the collection and payment of the tax, Article 17, No. 1, of the IUC Code provides that, in the year of registration or recording of the vehicle in national territory, the tax is collected by the taxpayer within 30 days following the end of the period legally required for its registration. Being that, in accordance with Article 42, No. 2, of the Vehicle Registration Regulation, in the case of initial registration of ownership, the vehicle must be registered within 60 days counting from the date of assignment of the registration. That is, in the year of registration, it is only possible to determine the taxpayer of the Single Circulation Tax once the period for registration has ended, that is, the period of 60 days, counted from the registration, so only at that moment is the tax enforceable. Corroborating this same understanding, the IUC Code provides in its Article 18, No. 1, paragraph a), ('Official Collection') that, 'In the absence of recording of ownership of the vehicle carried out within the legal period, the tax due in the year of registration of the vehicle is collected and enforced: a) By the taxpayer of the tax on vehicles on the basis of the customs declaration of the vehicle, or on the basis of the supplementary declaration of vehicles on which the collection of this tax is based, even if not due'. That is, in accordance with this legal provision, only in situations where the ownership of the vehicle is not recorded within the legal period of 60 days (Article 42, No. 2, of the Vehicle Registration Regulation) is the tax enforced against the taxpayer of the Vehicle Tax. However, one cannot confuse the taxpayer of the Vehicle Tax (in this case the Registered Operator) with the taxpayer of the Single Circulation Tax. In fact, the Law is clear, the taxpayer of the Vehicle Tax only becomes responsible for the payment of the tax if it is not possible to determine the taxpayer of the Single Circulation Tax once the period legally established for registration has ended. Thus, in situations where the taxpayer of the Vehicle Tax succeeds in demonstrating that he transferred the vehicles in question to third parties before the end of the registration period, it should be concluded that he succeeded in refuting the presumption established in Article 3, No. 1, of the Single Circulation Tax Code. Having reached here, it is imperative to conclude that the Claimant [...] succeeded in demonstrating, through the submission of the evidence identified [...] that within the period of 60 days for registration he transferred the vehicles to third parties. That is, the Claimant succeeded in demonstrating that the vehicles in question were transferred within the period of 60 days for registration and, consequently, before the tax became enforceable. In view of the above, and as regards the enforceability of the tax, it is concluded that the ownership of the vehicles in question was transferred by means of purchase and sale contracts and, likewise, that on the date when the IUC became enforceable the Claimant was no longer the owner, as results from the documentary evidence submitted by the Claimant." (Emphasis ours.)

In these terms, with which it is agreed, it is concluded, in the same way, that:

A) In the case of the situations under analysis (see points iii) and iv) of the proven matters of fact), having the claimant presented, in particular, copies of the sales invoices – which constitute suitable means of evidence in light of Article 75 of the LGT, to demonstrate that, within the period of 60 days, it had transferred the said vehicles to third parties –, it is concluded that it succeeded in proving that it was no longer, on the date when the IUC in question became enforceable, the owner thereof, having, thereby, validly set aside the presumption that rested upon it.

This conclusion embraces all of the vehicles in question (413) given that, as noted, at the moment of enforceability of the tax – which is that of recording –, the claimant herein made sufficient proof that it was not the effective owner nor, for that reason, the responsible party for the payment of the tax.

  1. In reinforcement of the conclusion drawn in A), it is justified to ascertain the interpretation of Article 3 of the CIUC, for: i) to know whether the rule of subjective scope, contained in the said Article 3, establishes a presumption; ii) to know whether, in considering that this rule establishes a presumption, such violates the unity of the legal regime or disregards the systematic element and the teleological element; iii) to know – admitting that the presumption exists (and that it is rebuttable) – whether, in the case here under analysis, the refutation of the same was made.

i) Article 3, Nos. 1 and 2, of the CIUC, has the following wording, which is reproduced here:

"Article 3 – Subjective Scope

1 - The taxpayers 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 names the same are recorded.

2 - Financial lessees, purchasers with reservation of ownership, as well as other holders of purchase option rights under the lease contract are equated to owners."

The interpretation of the legal text cited is, naturally, essential to the resolution of the question under analysis. In that measure, it appears necessary to resort to Article 11, No. 1, of the LGT, and, by referral of this, to Article 9 of the Civil Code (CC).

Now, in accordance with the said Article 9 of the CC, interpretation starts from the letter of the law and aims, through it, to reconstruct the "legislative thought". This is to say (regardless of the objectivism-subjectivism debate) that literal analysis is the basis of the interpretive task and the systematic, historical or teleological elements are guides for the orientation of the said task.

The literal understanding of the legal text in question does not generate - even if the separation of this from the ascertainment, even if minimal, of the respective meaning is very debatable - the notion that the expression "considering-se as such" (considered as such) means something different from "presuming-se as such" (presumed as such). In fact, it would be very difficult to find authors who, in a task of pre-understanding of the said legal text, would instinctively reject the identity between the two expressions.

Confirming the indistinguishability (both literal and of meaning) of the words "considering" and "presuming" (presumption), see, for example, the following articles of the Civil Code: 314, 369, No. 2, 374, No. 1, 376, No. 2, and 1629. And, with particular interest, the case of the expression "considers-se" (is considered), contained in Article 21, No. 2, of the CIRC. As noted by Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, regarding this article of the CIRC: "moreover, this rule evidences that what is at issue in the taxation of capital gains is to ascertain the real value (the market value), the limitation to the ascertainment of real value derived from the rules for determining the taxable value provided for in the CIS cannot but be considered as a presumption in the matter of scope, whose refutation is allowed by Article 73 of the LGT" (see General Tax Law, Annotated and Commented, 4th ed., 2012, pp. 651-2).

ii) These are only some examples that allow us to conclude that it is precisely for reasons related to the "unity of the legal system" (the systematic element) that one cannot affirm that only when the verb "presume" is used is one faced with a presumption, given that the use of other terms or expressions (literally similar) can also serve as the basis for presumptions. And, among these, the expressions "considers-se as" or "considered as" assume, as seen, prominence.

If literal analysis is only the basis of the task, it appears, naturally, essential to evaluate the text in light of the other elements (or sub-elements of the so-called logical element).

It is justified, therefore, to ascertain whether the interpretation that considers the existence of a presumption in Article 3 of the CIUC collides with the teleological element, that is, with the purposes (or with the sociological relevance) of what was intended with the rule in question. Now, such purposes are clearly identified at the beginning of the CIUC: "The Single Circulation Tax follows the principle of equivalence, seeking to burden taxpayers in the measure of the environmental and road cost that they cause, in implementation of a general rule of tax equality" (see Article 1 of the CIUC).

What can be inferred from this Article 1? One can infer that the close connection of the 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 of economic owners). As was well noted in the Arbitral Decision handed down in Case No. 73/2013-T, of 5/12/2013: "in truth, the ratio legis of the tax [IUC] rather points in the direction that it is the users of the vehicles, the 'economic owner' in the words of Diogo Leite de Campos, the actual owners or financial lessees, who are to be taxed, since these are the ones who have the polluting potential causing environmental costs to the community."

iii) From the above, the conclusion is drawn that limiting the taxpayers of this tax only to the owners of the vehicles in whose names the same are recorded – ignoring situations where these no longer coincide with the actual owners or the actual users – constitutes a restriction that, in light of the purposes of the IUC, does not find a basis for support.

Registration thus generates only a rebuttable presumption, that is, a presumption that can be set aside by means of proof to the contrary (proof that the registration no longer reflects, at the moment of the tax obligation, the material truth that would have given it origin).

It would, moreover, be unjustified to impose a kind of irrebuttable presumption, since, without an apparent reason, one would be imposing a (admittedly debatable) formal truth to the detriment of what could really have been proven; and, on the other hand, be setting aside the duty of the TA to comply with the principle of official investigation established in Article 58 of the LGT, that is, the duty to carry out the necessary measures for a correct determination of the factual reality on which its decision should be based (which means the determination of the actual and effective owner of the vehicle).

On this matter, it is also worth noting that vehicle registration does not have constitutive effect, functioning, as said before, as a rebuttable presumption that the holder of the registration is, in fact, the owner of the vehicle. In this sense, see, for example, the Decision of the STJ of 19/2/2004, Case 03B4639: "Registration does not have constitutive effect, since it is intended to give publicity to the recorded act, functioning (only) as a mere rebuttable presumption (presumption 'juris tantum') of the existence of the right (Articles 1, No. 1 and 7, of the CRP84 and 350, No. 2, of the Civil Code) as well as of the respective ownership, all in accordance with what is contained therein."

In the same sense, the Arbitral Decision relating to Case No. 14/2013-T, of 15/10/2014, referred to on this matter, in terms that are agreed with here: "the essential function of vehicle registration is to give publicity to the legal situation of vehicles, registration not having constitutive effect, functioning (only) as a mere rebuttable presumption of the existence of the right, as well as of the respective ownership, all in accordance with what is contained therein. The presumption that the right recorded belongs to the person in whose name it is registered can be refuted by proof to the contrary. Not meeting the TA the requirements of the notion of third party for purposes of registration [a circumstance that could prevent the full effectiveness of the purchase and sale contracts executed], cannot prevail itself of the absence of updating the registration of the right of ownership to call into question the full effectiveness of the purchase and sale contract and to require from the seller (former owner) the payment of the IUC due by the purchaser (new owner) as long as the presumption of the respective ownership is refuted through sufficient proof of the sale."

Now, in the case here under analysis, it is found that the refutation of the presumption (by means of "sufficient proof" of the alleged transfers) was effected through the presentation, in particular, of copies of the sales invoices, whereby it is demonstrated that, as of the tax date, the claimant herein was no longer the owner of the vehicles.

On the other hand, the Tribunal also sees no reason to question such documents (nor were elements presented that would allow, in a well-founded manner, doubting their truthfulness), and therefore understands that the same constitute sufficient proof to demonstrate that the claimant was not, as said previously, as of the tax date, the owner of the vehicles in question. On this matter, see, for example, the Arbitral Decision handed down in the context of Case No. 27/2013-T, of 10/9/2013: "the documents presented, particularly the copies of the invoices that support, from the outset, the sales [of the vehicles referenced], [...] embody means of proof with sufficient strength and suitable to refute the presumption founded on the register, as established in No. 1 of Article 3 of the CIUC, documents which, moreover, enjoy the presumption of truthfulness provided for in No. 1 of Article 75 of the LGT."

  1. It is concluded, in view of what was set out above [in 1) and 2)], that there is no "interpretation [...] contrary to the Constitution", contrary to what is alleged by the respondent in points 70 to 82 of its response.

  2. A final note to consider, under Article 24, No. 5, of the LRAT, the request for payment of compensatory interest in favor of the claimant (Article 43 of the LGT and 61 of the CPPT).

On this matter, the Arbitral Decision handed down in Case No. 26/2013-T, of 19/7/2013 (which dealt with a situation similar to the one now under consideration) notes: "The right to compensatory interest referred to in the aforementioned LGT provision presupposes that tax has been paid in an amount greater than due and that such derives from error, of fact or law, attributable to the services of the TA. [...] even if it is recognized that the tax paid by the claimant is not due, as the claimant is not the taxpayer of the tax obligation, determining, consequently, the respective reimbursement, it is not evident that, at its origin, is found the error attributable to the services, which determines such right [to compensatory interest] in favor of the taxpayer. In fact, in proceeding to the official collection of the IUC considering the claimant as the taxpayer of this tax, the TA merely complied with the provision of No. 1 of Article 3 of the CIUC, which, as abundantly noted above, attributes such quality to the persons in whose names the vehicles are registered." In the same sense, see, for example, the Arbitral Decisions handed down in Cases: No. 170/2013-T, of 14/2/2014; No. 136/2014-T, of 14/7/2014; No. 230/2014-T, of 22/7/2014; and No. 140/2014-T, of 29/8/2014.

In view of the justification cited, and with which it is agreed, it is concluded, equally in the present case, that the said request for payment of compensatory interest is without merit.

IV – Decision

In view of the above, it is decided:

  • To judge the request for arbitral decision to be well-founded, with the consequent annulment, with all legal effects, of the collection acts relating to the 413 vehicles above identified, and the reimbursement of the respective amounts improperly paid.

  • To judge the request for arbitral decision to be without merit as to the recognition of the right to compensatory interest in favor of the claimant.

The value of the case is fixed at €39,643.66 (thirty-nine thousand six hundred forty-three euros and sixty-six cents), in accordance with Article 32 of the CPTA and Article 97-A of the CPPT, applicable by virtue of the provision of Article 29, No. 1, sub-paras. a) and b), of the LRAT, and of Article 3, No. 2, of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT).

Costs to be borne by the respondent, in the amount of €1,836.00 (one thousand eight hundred thirty-six euros), in accordance with Table I of the RCPAT, and in compliance with the provisions of Articles 12, No. 2, and 22, No. 4, both of the LRAT, and of the provision of Article 4, No. 4, of the cited Regulation.

Let notice be given.

Lisbon, 24 June 2015.

The Arbitrator

(Miguel Patrício)

Text prepared by computer, in accordance with the provision of Article 131, No. 5, of the CPC, applicable by referral of Article 29, No. 1, sub-para. e), of the LRAT.

The wording of the present decision is governed by the spelling prior to the Orthographic Agreement of 1990.

Frequently Asked Questions

Automatically Created

Who is the taxable person for IUC when a vehicle is sold within 60 days of registration?
According to the IUC Code (CIUC), the taxable person for IUC in the year of registration is presumed to be the person in whose name the vehicle is recorded, as established in Article 3(1). However, this case examines whether this presumption can be rebutted when a dealer sells the vehicle within the 60-day period following registration assignment. The dealer argued that ownership should be determined at the end of this 60-day period, and if the vehicle was sold before that deadline, the purchaser—not the dealer—should be liable for IUC. The legal framework establishes that the tax obligation arises with registration (Article 6 CIUC) and runs for an annual period beginning on the registration date. The controversial issue is whether actual ownership transfer through a sales contract, even without immediate re-registration, is sufficient to shift IUC liability from the dealer to the buyer within that 60-day window. This interpretation affects how Articles 3, 4, 6, 17, and 18 of CIUC interact to determine the taxable person.
Can a vehicle dealer be held liable for IUC after transferring ownership to a buyer?
Under Portuguese tax law, a vehicle dealer can potentially be held liable for IUC even after transferring actual ownership to a buyer, depending on registration status. Article 3(1) of the IUC Code creates a legal presumption that the person in whose name the vehicle is recorded is the owner for IUC purposes. If the dealer sells a vehicle but the buyer does not complete the re-registration process, the dealer remains the recorded owner and presumptively liable for IUC. However, dealers can challenge this liability by arguing that the Article 3(1) presumption is rebuttable. The dealer in this case presented evidence including sales invoices, purchase contracts, and accounting records to prove ownership had transferred to buyers, even when re-registration was delayed or incomplete. The key legal question is whether vehicle registration has merely declarative effect (publicizing ownership) or constitutive effect (creating ownership) for tax purposes. Dealers argue that since registration under Decree-Law 54/75 and the Property Registration Code is not constitutive of ownership rights, proof of actual sale should refute the registration-based presumption and relieve them of IUC liability.
What does Portuguese law say about subjective incidence of IUC on newly registered vehicles?
Portuguese law on subjective incidence of IUC for newly registered vehicles is governed primarily by Articles 3, 4, and 6 of the IUC Code (CIUC). Article 3(1) establishes that owners of vehicles are subject to IUC, with ownership presumed for those in whose name vehicles are recorded. Article 4(2) specifies that in the registration year, IUC is due for the annual period beginning on the registration date. Article 6 defines the constitutive facts that trigger the tax obligation: registration assignment or recording in national territory. The interaction of these provisions creates interpretive challenges. The law provides a 60-day period following registration assignment during which certain administrative obligations must be fulfilled, and IUC becomes payable within 30 days of this period's expiration (Articles 17 and 18 CIUC). The critical legal debate concerns whether subjective incidence (who is the taxpayer) should be determined at the moment of registration, at the end of the 60-day period, or at another point. Dealers contend that a systematic interpretation of these articles requires determining the taxpayer at the end of the 60-day period, meaning whoever owns the vehicle at that moment bears IUC liability for the registration year.
How does the CAAD arbitral tribunal resolve disputes over IUC liability between sellers and the Tax Authority?
The CAAD (Centro de Arbitragem Administrativa) arbitral tribunal resolves IUC liability disputes between sellers and the Tax Authority by analyzing the applicable legal framework under the IUC Code and determining the correct interpretation of subjective incidence rules. The tribunal examines whether the presumption established in Article 3(1) CIUC—that the recorded owner is the taxable person—is absolute or rebuttable. Arbitrators consider evidence presented by dealers, including sales contracts, invoices, and accounting records, to determine actual ownership at relevant moments. The tribunal applies principles of systematic and teleological legal interpretation, analyzing how Articles 3, 4, 6, 17, and 18 of CIUC interact to define the taxable person in the registration year. Key interpretive issues include: (1) whether registration has constitutive or merely declarative effect for tax purposes; (2) the significance of the 60-day period following registration assignment; (3) whether commercial reality should prevail over formal registration; and (4) what evidence is sufficient to rebut the registration-based ownership presumption. The tribunal's role is to determine whether the Tax Authority's assessment correctly identified the taxable person under law or whether the dealer successfully proved they were not the owner for IUC purposes.
What are the legal grounds to challenge IUC assessments through arbitration under the RJAT regime?
Legal grounds to challenge IUC assessments through arbitration under the RJAT (Regime Jurídico da Arbitragem em Matéria Tributária - Legal Regime of Arbitration in Tax Matters) regime, established by Decree-Law 10/2011, include illegality of tax acts based on incorrect application of substantive tax law. Taxpayers can request arbitration pursuant to Articles 2(1)(a), 5(2)(a) and (b), 6(1), and 10(1)(a) and (2) of RJAT after administrative remedies (such as hierarchical appeals) have been decided unfavorably. In IUC cases, common grounds include: (1) incorrect determination of subjective incidence (wrong identification of the taxable person); (2) misapplication of IUC Code provisions regarding ownership presumptions; (3) failure to consider evidence rebutting the Article 3(1) presumption; (4) incorrect calculation of tax due; and (5) improper charging of compensatory interest. Claimants must demonstrate that collections are illegal and seek annulment of tax acts plus reimbursement of amounts paid with compensatory interest. The arbitration request must be filed within the legal deadline after notification of the administrative decision. Material competence of the arbitral tribunal covers disputes about legality of tax acts, interpretation of tax law, and determination of tax obligations, making RJAT arbitration an effective alternative to judicial tax courts for resolving IUC liability disputes.