IUC Tax Subjective Incidence: Financial Lessor Liability for Leased Vehicles Arbitration

APPLICANT: A... – financial credit institution S.A.

RESPONDENT: Tax and Customs Authority

Arbitral Decision[1]

I. REPORT

A) The Parties and Constitution of the Arbitral Tribunal

1. A... – financial credit institution S.A., formerly designated as A..., SA – Branch in Portugal, Legal Entity No. ..., with registered office at Place of ... - …, hereinafter referred to as "Applicant", requested the constitution of an Arbitral Tribunal, under the terms set forth in article 10º, and in subparagraph a), of no. 1, of article 2º, of the Legal Regime for Tax Arbitration, approved by Decree-Law no. 10/2011, of 20 January, hereinafter referred to as "LRTA" and of articles 1º and 2º of Ordinance no. 112 – A/2011, of 22 March, to consider the claim opposing it to the Tax and Customs Authority, hereinafter designated as "Respondent" or "TA", with a view to the annulment, on grounds of illegality, of the official assessments of the Unique Circulation Tax (UCT), relating to the years 2009, 2010, 2011 and 2012, in the total amount of €40.184,27, and to the motor vehicles identified by their respective registration number, as per the list contained in the request for arbitral pronouncement (see art. 11º of the PI), duly itemized in the tax assessment statements contained in document no. 1 attached to the PI, which are hereby given as fully reproduced herein.

2. The request for constitution of the Arbitral Tribunal, submitted on 4 February 2014, was accepted by the Most Excellent President of CAAD on 5 February 2014 and notified to the Tax and Customs Authority on 6 February 2014.

3. The Applicant chose not to designate an arbitrator, whereby, under the terms set forth in no. 1 of article 6º of the LRTA, the undersigned was designated by the Deontological Council of the Administrative Arbitration Centre as sole arbitrator. The appointment was accepted and the parties, notified of the acceptance, on 21 March 2014, did not refuse the designation, in accordance with the terms provided in subparagraphs a) and b), of no. 1, of article 11º, of the LRTA, combined with the provisions of articles 6º and 7º of the Deontological Code. Thus, in conformity with the precept contained in subparagraph c), of no. 1, of article 11º, of Decree-Law no. 10/2011, of 20 January, as amended by article 228º, of Law no. 66-B/2012, of 31 December, the Sole Arbitral Tribunal was constituted on 7 April 2014.

4. On 8 April 2014, the Respondent "TA" was notified to submit its response within the legal period, under the terms set forth in nos. 1 and 2, article 17º, of the LRTA. On 19 May 2014, the TA filed its Response and the attached documents designated as PA (administrative file). On 29 May 2014, at 11 hours and 15 minutes, the meeting provided for in article 18º of the LRTA was held, of which minutes were drawn up which are attached to the file and are hereby given as fully reproduced herein. At the meeting held, the parties chose to present their oral arguments immediately; at the close of the meeting, a date was also set for the pronouncement of the arbitral decision until 1 September 2014.

B) Procedural Prerequisites

1. The Arbitral Tribunal is regularly constituted and is materially competent, under the terms of article 2º, no. 1, subparagraph a) of Decree-Law no. 10/2011, of 20 January.

2. The Parties enjoy legal personality and capacity, are legitimate and are duly represented (Cf. Articles 4º and 10º, no. 2, of DL no. 10/2011 and article 1º, of Ordinance no. 112/2011, of 22 March).

3. The legitimacy of the Applicant to submit the present request for arbitral pronouncement is demonstrated by the contents of Permanent Certificate of Commercial Registration, with the code ..., indicated in the file, as well as by a copy of the deed concerning the transfer of the commercial establishment attached to A..., SA – Branch in Portugal (NIPC ...) to the then-named B... SA, currently designated as A... – FINANCIAL CREDIT INSTITUTION SA, as shown in document no. 72 attached to the PI.

4. As to the cumulation of claims, seeking the joint consideration of the legality of the UCT assessments for the years 2009, 2010, 2011 and 2012 and respective default interest, although they constitute autonomous acts, with the requirements set out in no. 1, of article 3º, of the LRTA and article 104º of the TCPC being met, the cumulation in the same arbitral request of claims for declaration of illegality of all tax assessment acts of UCT and respective default interest (consisting of one hundred and seventeen assessments) is admissible, given the identity of the tax and the consideration of the tax acts in question depending on the consideration of the same circumstances of fact and the application of the same rules of law.

5. The proceedings do not suffer from nullities that would invalidate them and no exceptions have been raised that would prevent judgment on the merits of the case, whereby the Tribunal is in a position to render the arbitral decision.

C) THE CLAIM FORMULATED BY THE APPLICANT:

1. The Applicant formulates the present request for arbitral pronouncement seeking the illegality and consequent annulment of the acts of assessment of Unique Circulation Tax and respective Default Interest, referring to the years 2009, 2010, 2011 and 2012, in the total amount of €40.184,27, with reference to sixty-nine vehicles identified by their respective registration number in the list contained in the request for arbitral pronouncement, which is hereby given as reproduced, as well as in the notes of tax assessment and respective default interest demonstrations, all attached to the PI as document no. 1, which is hereby given as fully reproduced.

2. It bases its claim on the illegality of the tax assessments and respective interest, alleging in summary the following:

a. the Applicant is a commercial company whose principal activity consists, among others, of the trade in motor vehicles;

b. within the scope of this activity, the Applicant offers its Clients various financing solutions, such as financial leasing ("Leasing") or Long-Term Rental ("LTR");

c. recently the Applicant was notified to proceed with payment of the UCT assessments for the years 2009, 2010, 2011 and 2012, this because, in the view of the TA, the said payments should be made by the present Applicant, given that it was registered as owner of the vehicles in question with the Motor Vehicle Registry;

d. on the date of the taxable event, the vehicles in question were no longer property of the Applicant, joining for the demonstration of this fact documents numbers 2 to 70 attached to the PI.

e. in the exercise of prior hearing rights, the Applicant had already alleged and proven that it was not the owner of the said vehicles; however such facts were not taken into account by the TA, which proceeded with the issuance of the said UCT assessments;

f. the response to the prior hearing right was notified to the Applicant after the issuance of the own UCT assessments in question, which entails a "restriction on the effective right of prior hearing."

g. the Applicant does not accept the understanding advocated by the TA, according to which "the taxable event is constituted by the ownership of the vehicle, as evidenced by the registration or registration in national territory and ceases only with the cancellation of the registration at the IMTT, or change of owner in the respective Registry", whereby, "once the situation is verified in the UCT database, and in accordance with no. 3, of art. 6º of the CIUC, it was, on the date [of the taxable event] subject to the tax (…) for this reason the tax is due";

h. the Applicant, given the high number of vehicles and UCT assessments in question, as well as taking into account the volume of documentation necessary to prove that, on the date of the taxable event it was no longer the owner of the vehicles in question, chose to, in the name of the principle of procedural economy, detail, through a summary table the vehicles on which the UCT was assessed, indicating the documentation proving the "non-ownership" of the vehicles, in accordance with article 11º of the arbitral request, which is hereby given as fully reproduced;

i. the Applicant paid the amount of Tax claimed in the assessments challenged, under the Special Debt Settlement Regime approved by Decree-Law no. 151-A/2013, of 31 October, as evidenced by document no. 1 which it attached to the arbitral request;

j. the legal foundation of the request for arbitral pronouncement is based, summarily, on the allegation of:

i. omission of essential formalities, by violation of the duty of reasoning; on the other hand the response to the prior hearing right was notified to the Applicant after the issuance of the own UCT assessments, and in relation to many of them it was not even notified of the rejection of the prior hearing right;

ii. the Applicant could not be considered subject to UCT given that article 3º, no. 1, of the CIUC establishes a presumption, which can be rebutted by proof of non-ownership of the vehicle on the date on which the taxable event occurred;

iii. the Applicant had already demonstrated that it was not the owner of the said vehicles in the exercise of prior hearing, whereby, immediately thereupon, it rebutted the presumption above referred to;

iv. the registration of the acquisition with the competent Motor Vehicle Registry is not a condition for the transfer of ownership, nor does it affect its validity;

v. pursuant to the terms set forth in article 1º, no. 1, of Decree-Law no. 54/75, of 12 February, it is established that the registration of vehicles has essentially as its purpose to give publicity to the legal situation of motor vehicles and their respective trailers with a view to the safety of legal commerce;

vi. pursuant to the terms of article 7º of the Real Property Registry Code, applicable by force of article 29º, of Decree-Law no. 54/75, of 12 February, the registration only "(…) constitutes a presumption that the right exists and belongs to the titled holder in the precise terms in which the registration defines it"; the same is also drawn from the provision of article 7º, of the Real Property Registry Code, applicable ex vi article 29º of Decree-Law no. 54/75 of 12 February;

vii. article 3º of the Vehicle Tax Code enshrines a rule of subjective scope that establishes, merely, a rebuttable legal presumption, in accordance with what results, moreover, from the provision of article 73º, of the General Tax Law (GTL);

viii. in reinforcement of its position, the Applicant invokes the jurisprudence contained in the Judgment of the Supreme Court of Justice, delivered in Case no. 03B4369 of 19/02/2004 and also the arbitral decisions nos. 26/2013-T and 27/2013 -T;

ix. finally, it also invokes the spirit of the law, from which results the enshrinement of the principle of equivalence as the underlying ratio of the unique circulation tax, highlighting the environmental concerns underlying the reform of vehicle taxation, "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" – cf. Article 1º, of the CIUC;

x. thus seeking a decision in the case sub judice that aims at a uniform interpretation and application of the law, it invokes that the factual and legal situation in question is identical to those which were at issue in the arbitral proceedings nos. 26/2013-T and 27/2013-T, in which the respective arbitral decisions concluded that article 3º, no. 1, of the CIUC enshrines a presumption, which can be rebutted; thus, according to the Applicant, it is incumbent to follow the legal reasoning adduced therein, for economy of means and with a view to a uniform interpretation and application of law, as imposed by article 8º, no. 3, of the Civil Code (C.C.);

xi. it alleges that the prerequisites set forth in article 43º of the GTL are fulfilled, whereby default interest is due, taking into account the value of the tax previously paid by the Applicant.

k. It concludes by requesting the annulment of the assessments challenged by the Applicant in the present proceedings and, in consequence, the reimbursement of the said amount, plus default interest, until full and complete payment.

D) THE RESPONSE OF THE RESPONDENT

1. The Respondent, duly notified for that purpose, submitted its Response in due time in which it alleged, in summary, the following:

a. the Applicant has no right on this matter, neither in light of the letter of the law; nor as to the nature of the registration and of the third party for that effect, nor, finally, as to the reading it presents of the spirit of the law and of the principle of equivalence;

b. the understanding advocated by the Applicant incurs, "not only a biased reading of the letter of the law [a)], but also the adoption of an interpretation that does not take into account the systematic element, violating the unity of the regime enshrined throughout the CIUC and, more broadly, throughout the entire legal-tax system [b)] and also results from an interpretation that ignores the ratio of the regime enshrined in the article in question, and likewise, throughout the CIUC [c)]";

c. it bases its allegation on the provisions of nos. 1 and 2, of article 3º of the CIUC, which determine, respectively, that "The subject persons 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 name they are registered" and that the persons subject to UCT are "the owners (or in the situations provided for in no. 2, the persons there referred to), being considered as such the persons in whose name they are registered";

d. the Respondent further alleges that the legislator did not use the expression "are presumed", as it could have done, indeed similarly to what occurs in other legal norms, exemplifying some situations provided for in law; it understands that in cases where the tax legislator uses the expression "is considered", it is not establishing a presumption;

e. it enumerates, merely by way of example, various norms contained in different tax codes that use the expression "is considered";

f. understanding that the legislator enshrined a presumption here, is based on an interpretation against the law, because "the clear option of the legislator was to consider that, for purposes of UCT, those who appear as such in the motor vehicle registration are to be considered owners;"

g. it invokes, in defense of this understanding, the decision delivered in the context of Case no. 210/13.0BEPNF, by the Administrative and Tax Court of Penafiel;

h. it concludes that this is the interpretation that takes into account the systematic element and preserves the unity of the legal-tax system, besides which, any other interpretation would be to ignore the teleological element of interpretation of law, the ratio of the regime enshrined in the article in question, and likewise, throughout the CIUC;

i. it adds that the non-updating of the registration, under the terms set forth in article 42º, of the Motor Vehicle Registry Regulation, will be imputable in the legal sphere of the subject person of the VEH and not in that of the State, as the active subject of this tax; any other understanding would put the TA in absolute uncertainty;

j. it reinforces this understanding by invoking the parliamentary debates around the approval of DL no. 20/2008, of 31 January, from which it transcribes excerpts, to conclude that the legislator intentionally wanted to enshrine a solution from which it results that UCT is due by the persons who appear in the registration as owners of the vehicles;

k. it also invokes, recommendation no. 6-B/2012 – Case No. R-3478/10, of 22/06/2012 of the Ombudsman, which it attached as document no. 2 to the response, addressed to the Secretary of State for Public Works, Transport and Communications;

l. being "the environmental concern one of the underlying ratios of the reform of vehicle taxation, this does not remove another of the fundamental ratios of the CIUC (…) based on the taxation of the vehicle owner as it appears in the motor vehicle registration";

m. adding to all this the Respondent further alleges that the interpretation conveyed by the Applicant is contrary to the Constitution, because the principle of taxpaying capacity is not the only nor the principal principle that informs the tax system; on the side of this, we find others with the same constitutional dignity, such as the principle of trust and legal security, the principle of efficiency of the tax system and the principle of proportionality;

n. in the view of the Respondent, "the interpretation proposed by the Applicant, which devalues the registral reality in detriment to an 'informal reality' and unsusceptible to minimal control by the Respondent, is offensive of the basilar principle of trust and legal security that should inform any legal relationship, here including the tax relationship;"

o. the interpretation given by the Applicant is offensive of the principle of efficiency of the tax system (…) with obvious prejudice to the interests of the Portuguese State; it would result in the absence of control of the tax and uselessness of the registral information systems, as well as representing a violation of the principle of proportionality;

p. it further alleges the lack of proof of the transfer of ownership of the vehicle, given that invoices are not, by themselves, documents apt to prove the conclusion of a synallagmatic contract such as purchase and sale;

q. the acts of UCT assessment do not suffer from the alleged defect of omission of essential formalities, due to lack of reasoning, since it is abundantly clear, both from all the Applicant's interventions at the level of the tax procedure and from its intervention in the present arbitral proceedings, that it is perfectly aware of the reasoning of the mass assessments it contests;

r. finally, it understands that the legal prerequisites for condemnation to default interest are not met;

s. also with regard to responsibility for arbitral costs, the Respondent understands that, not being within its control the transfer of ownership of motor vehicles, the UCT is assessed in accordance with the registral information duly transmitted by the Institute of Registries and Notaries; that is, the UCT is not assessed in accordance with information generated by the Respondent itself;

t. thus, it was not the Respondent that gave rise to the submission of the request for arbitral pronouncement, but rather the Applicant itself, which, moreover, has only now supplied documentary proof relating to the transfer of ownership, which did not occur in the prior administrative procedure, whereby it should be condemned to payment of the arbitral costs arising from the present request, under the terms of article 527º/1 of the New Code of Civil Procedure, ex vi article 29º/1 – e) of the LRTA, in line, moreover, with a similar question decided in the context of case no. 72/2013-T, which has been pending in this arbitration centre.

1. It concludes, by the lack of merit of the arbitral request, seeking the legality of the impugned tax acts and the dismissal of the Respondent in the claim.

II. QUESTIONS TO BE DECIDED

1. Given the positions of the Parties assumed in the arguments presented, it falls to the Tribunal to decide the following questions:

1st) On the omission of essential formality;

2nd) On the subjective scope of UCT, the effects of motor vehicle registration and the possible existence or not of a rebuttable presumption in this matter;

3rd) On the proof of transfer of ownership of vehicles and the rebuttal of the presumption;

4th) On the merit or lack of merit of the claim and the right to payment of default interest.

5th) On responsibility for payment of arbitral costs.

III. FACTUAL FOUNDATION

A) Established Facts

1. As factual matter relevant to the decision to be rendered, the Tribunal takes as established the following facts:

a. the Applicant is a general partnership whose principal activity consists, among others, of the trade in motor vehicles;

b. within the scope of its activity, the Applicant offers its clients various financing solutions intended for the purchase of motor vehicles, namely, the granting of financial leasing contracts ("leasing") or Long-Term Rental ("LTR");

c. the Applicant was notified to proceed with payment of one hundred and seventeen tax assessment payments of unique circulation tax, referring to sixty-nine vehicles, for the years 2009, 2010, 2011 and 2012, as per the UCT assessments attached to the file as document no. 1 attached to the arbitral request, and which are hereby given as fully reproduced;

d. the tax assessments were issued and notified to the Applicant in October 2013, with a payment deadline until 06.11.2013, with some of the assessments showing a payment deadline until 22.11.2013, as shown in the documents attached to the file by the Applicant;

e. the Applicant exercised its prior hearing right alleging that on the date of the taxable facts it was no longer the owner of the vehicles in question;

f. the Applicant was notified for payment of the UCT assessments and respective default interest, without having been previously notified of the decision of the TA regarding the issues raised in the context of prior hearing;

g. the Applicant was notified, on 20.12.2013, a date subsequent to the notification of the official UCT assessments for payment, of the decision to reject the claim raised in the context of prior hearing, made by the TA, only with respect to the vehicles with the registrations: ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-..; ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..-.., ..-..; as to the remaining vehicles that integrate the group of sixty-nine vehicles in question in the present proceedings, the Applicant was not notified of any decision;

h. in the present proceedings all tax assessments are in dispute, referring to the sixty-nine vehicles, object of the notifications contained in document no. 1 attached to the PI, which are hereby given as fully reproduced, which total the amount of €40.184,27;

i. the Applicant made payment of all the tax assessments challenged in the proceedings, which is evidenced by the documents attached to the file by the Applicant and which are part of document no. 1 attached to the PI;

j. on the date of the taxable facts, the motor vehicles referenced in the UCT assessments contained in document no. 1 attached to the PI, were still registered in the motor vehicle registry in the name of the present Applicant;

k. the vehicles identified in the impugned assessments and contained in document no. 1 attached to the PI, had already been subject to sale by the Applicant on a date prior to 2009, with the exception of the vehicles with the registrations hereinafter indicated, which were leased, by force of financial leasing contracts, and whose sale dates occurred subsequently, namely: a) vehicle with registration ..-..-.., with sales invoice issued on 20-09-2009; b) vehicle with registration ..-..-.., with sales invoice issued on 05-04-2010; c) vehicle with registration ..-..-.., with sales invoice issued on 20-08-2009; d) vehicle with registration ..-..-.., with sales invoice issued on 05-03-2010; e) vehicle with registration ..-..-.., with sales invoice issued on 03-11-2010;

l. for proof of the facts above described in k) the Applicant attached to the file Copies of the financial leasing contracts and invoices/receipts relating to the sales of the vehicles, contained in documents 2 to 70, attached to the PI;

m. the owners of the vehicles (former lessees) did not proceed with the appropriate registration, whereby in the databases of the Motor Vehicle Registry, the Applicant still appeared as the owner of the same;

n. on the date of the tax assessment acts, the TA had at its disposal all the elements of relevant information for the knowledge of the ownership of the vehicles, both by force of the relevant accounting elements contained in the file and in the accounting of the Applicant which the TA cannot be unaware of, but decisively, by the knowledge transmitted to it in the context of the exercise of prior hearing right, as alleged by the Applicant and results from the rejection responses made by the TA which are attached to the file as document no. 71 attached to the PI.

B) REASONING OF THE ESTABLISHED FACTS

1. The facts above described were given as established on the basis of the documents which the Parties attached to the present proceedings, notably the Applicant, attached to the claim submitted and the TA in the response and PA attached to the file. The Tribunal considered in particular, that the factual reality underlying the business situations regarding the various vehicles, proved by documents nos. 2 to 70 attached to the PI, which concern the vehicles subject to the impugned assessments is not questioned by the Respondent, but only its legal relevance for purposes of proof of the transfer of ownership, being that this is a matter of law to be decided by the Tribunal.

Thus, all facts that result from the analysis of all means of documentary proof attached to the file by the Applicant and by the Respondent, not contested by the parties, were considered as relevant.

C) UNPROVEN FACTS

1. There are no other facts given as unproven, since all facts relevant to the consideration of the claim were given as established.

IV – LEGAL FOUNDATION

1. Once the factual matter is established, it is important to know the questions of law above indicated, corresponding, in summary, to the questions of illegality raised by the Applicant in the present arbitral request. Let us therefore see the first question to be decided.

1st - On the Omission of Essential Formality and Defect of Lack of Reasoning

1. The Applicant alleges omission of essential formality, by violation of the duty of reasoning, given that the response to the prior hearing right was notified to the Applicant after the issuance of the own UCT assessments, and only in relation to some of the vehicles involved in the present proceedings. This response was one of rejection and contains the grounds contained in the documents attached to the file by the Applicant as document no. 71 attached to the PI, which is hereby given as fully reproduced. It happens that this rejection response was notified to the Applicant after the notification of the own final tax assessments, which were issued and sent for collection, without indication of the reasoning legally required. The Applicant thus understands that the fact of the response to the prior hearing right having been notified after the issuance of the own final UCT assessments involves a "restriction on the effective right of prior hearing" and that the final assessments notified and sent for collection to the present Applicant are not sufficiently reasoned. In relation to the remaining vehicles, no response was even issued to the prior hearing exercised by the Applicant.

2. There is no doubt that reasoning is a requirement of tax acts in general, being a constitutional imposition (268º of the CRP) and legal (art. 77º of the GTL). It can be said, in short, that it is a settled understanding among us, both in doctrine and in jurisprudence, that the legally required reasoning must meet a minimum set of characteristics. Reasoning is, moreover, the strict initiative and obligation of the administration (power/duty), being understood as official, with reasonings on request not being admissible. On the other hand, it must accompany the practice of the act, with subsequent reasonings making no sense. Finally, the reasoning must be clear, that is, comprehensible by an average recipient, avoiding polysemous or deeply technical concepts, and must contain all the essential elements that were determinative in the decision taken, indicating the legal norms and the motivation of the act.

3. Now, in the case sub judice it is obvious that the tax procedure did not proceed normally and that the TA did not act with the diligence that would be expected. However, it does not follow from this that the prior hearing right was "restricted", as the Applicant alleges. The exercise of that right was provided to the Applicant and it expressed itself, as set out above.

As for the response after the issuance of most of the assessments and the lack of response as to the remaining ones, it cannot be inferred without more that there results from this an absence of reasoning of the act. To assess the defect of lack of reasoning it is important, rather, to analyze the content of the assessment acts themselves. In fact, reasoning is, under the terms legally required, necessary and mandatory, but this cannot and should not be understood in an abstract and/or absolute manner, that is, "the reasoning required of a concrete tax act must be the reasoning necessary so that it does not present itself before the taxpayer as a pure demonstration of arbitrariness." (In this sense see Arbitral Decision no. 76/2013 T of 25.11.)

1. Article 77º/1 of the GTL states that: "The decision of a procedure is always reasoned by means of a succinct exposition of the reasons of fact and of law that motivated it, the reasoning being able to consist of mere declaration of agreement with the grounds of earlier opinions, information or proposals, including those that are part of the tax audit report." The reasoning may be, moreover, express or implicit, when it is deduced from facts that, with all probability, reveal it.

In the case of the file, the tax acts in dispute contain the identification of the tax (UCT), the year and the periods to which the tax relates, as well as the amount of tax owed, with all the elements appearing to coincide with the elements that had already been notified to the Applicant (the Applicant itself admits this in the PI), in the context of the exercise of prior hearing right. It further appears that the Applicant reveals a complete understanding of the grounds underlying the tax acts, with which it is in disagreement, but fully aware of their scope. From the confrontation of all the elements contained in the arbitral request itself, based on the content of the tax acts notified to the Applicant as recipient, it is possible to conclude that it properly understood the grounds thereof, as is moreover evidenced in the reasoning adduced.

Thus, understanding that the reasoning of the tax act is sufficiently perceptible to an average recipient, placed in the position of the actual recipient, the allegation in question should fail.

1. Given this, we come to the fundamental question at issue in the file, which is to know whether the Applicant should or should not be considered as subject person of UCT in light of the applicable legal framework. It is important, therefore, to decide whether the Applicant should be qualified as subject person of the Unique Circulation Tax, assessed in relation to the years 2009, 2010, 2011 and 2012, as to the vehicles identified in the request for arbitral pronouncement. The decision of this question requires an assessment of the terms of the configuration of the subjective scope of UCT in light of the provision of art. 3º, of the Code of the Unique Circulation Tax (CIUC), namely, the question of whether the subjective scope is based strictly on the registration of vehicle ownership in the Motor Vehicle Registry, or whether the registration operates only as a presumption of tax scope, rebuttable, in accordance with the provision of art. 73º, of the General Tax Law.

2nd - On the Subjective Scope of UCT, the Effects of Motor Vehicle Registration and the Possible Existence or Not of a Rebuttable Presumption in This Matter

1. The fundamental legal framework applicable in this matter is provided for in articles 1º to 6º, of the CIUC, approved by Law no. 22-A/2007, of 29 June.

Article 1º of the CIUC defines the objective scope of the tax, distinguishing vehicles by specified categories, a norm that appears clear and without difficulties of application. However, the same is not the case with the subjective scope norm contained in no. 1, of article 3º of the CIUC, which is at the origin of the present dispute and thus constitutes a question to be decided in the case under consideration.

What is certain is that the analysis of both provisions (articles 1º and 3º) allow us to conclude that in the operation of UCT, motor vehicle registration plays a fundamental role. What is important, therefore, is to determine the sense and scope of the subjective scope norm contained in article 3º, no. 1, of the CIUC and the possible existence or not of a rebuttable presumption, connected with the question of the legal effects of motor vehicle registration.

On this question, the positions of the parties can be summarized as follows: for the Applicant that norm enshrines a rebuttable legal presumption while for the Respondent the interpretation embraced by the Applicant is notoriously wrong and "results from a biased reading of the letter of the law", and from an interpretation that does not take into account the systematic element nor the ratio legis of the regime enshrined in the CIUC.

Article 3º of the CIUC provides that:

"ARTICLE 3º

SUBJECTIVE SCOPE

1 – The subject persons 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 name they are registered.

2 – Financial lessees, purchasers with retention of title, as well as other holders of purchase option rights by force of the lease contract are assimilated to owners".

Article no. 1, of the GTL establishes that:

"In the determination of the sense of tax norms and in the qualification of the facts to which they apply, the general rules and principles of interpretation and application of laws are observed".

The interpretation and application of the legal norm presupposes the accomplishment of an interpretive activity, which must be objective, balanced, and in accordance with the letter and spirit of the law. Any text, and the law is no exception, contains multiple meanings and frequently contains ambiguous or obscure expressions. For this reason, although the letter of the law is "the guiding thread" of the interpreter, it must be interpreted taking into account the underlying objectives, "the ratio" or the motivation of the legislator in establishing the norm in question. - (In this sense, see BAPTISTA MACHADO, Introduction to the Legitimizing Discourse, p. 175 et seq.)

To these elements is added another, of enormous importance, according to which the interpretation of the legal norm must respect the "unity of the legal system", its coherence and intrinsic logic.

1. Among us, article 9º, of the Civil Code (CC), provides the rules and fundamental elements for the interpretation of the legal norm. It is understood that the interpretation of tax law must comply with the provision of that norm, which begins by saying that interpretation must not be limited to the letter of the law, but must reconstruct from it the "legislative thought". Thus, it has come to be recognized by the Jurisprudence of the Supreme Administrative Court, among others, in the Judgments of 05/09/2012 and 06/02/2013, respectively, cases nos. 0314/12 and 01000/12, available at www.dgsi.pt. To these general principles are added the principles contained in the GTL, particularly in article 73º, which establishes that presumptions contained in norms of tax scope always admit proof to the contrary.

With regard to the question under analysis, it is important to highlight the contribution of arbitral decisions already rendered in cases nos. 14/2013-T, of 15 October, 26/2013-T of 19 July, 27/2013-T, of 10 September, 217/2013-T of 28 February and, more recently, in the decisions rendered in cases 286/2013-T, of 2 May 2014 and 293/2013-T, of 9 June 2014, among others, revealing a refined reflection on the fundamental question under consideration, establishing a uniform understanding of the same.

It is, therefore, within this background, using the fundamental hermeneutic principles just referred to, embraced by the Jurisprudence of our superior courts, that we must seek to find the adequate interpretation of the norms in presence.

1. Thus, as to the question of knowing, in light of the literal tenor of the provision in no. 1, of article 3º, of the CIUC, what the scope of the expression "being considered as such" is, given that in the current version the legislator did not use the term "are presumed" (which was contained in the defunct Vehicle Tax Regulation), the Tribunal understands that it can only be the following: the legislator presumes (considers) that the owners are the persons in whose name the vehicles are registered. This means that such presumption, implicit, is naturally rebuttable under the terms provided for in article 73º of the GTL.

Incidentally, the presumption established in article 3º, no. 1, of the current CIUC was already enshrined in the previous versions of the codes abolished with the entry into force of the CIUC. Already article 3º of the Vehicle Tax Regulation (approved by Decree-Law no. 143/78) established that: "the tax is due by the owners of the vehicles, being presumed as such, subject to proof to the contrary, the persons in whose name the same are registered or matriculated". Similarly, art. 2º, of the Regulation of Circulation and Haulage Taxes (approved by Decree-Law no. 116/94) established that: "the subject persons of the circulation tax and haulage tax are the owners of the vehicles, being presumed as such, subject to proof to the contrary, the natural or legal persons in whose name they are registered".

What truly changed with the entry into force of the new Code?

In fact, only the verb changed, the legislator now opting for the expression "being considered". What is certain is that between the previous legislative versions and the current one, the GTL came into force, which expressly enshrined the principle contained in article 73º, from which it results that any presumption in tax scope matters admits always proof to the contrary. Therefore, it becomes irrelevant the adoption of an express presumption or an implicit one, since one as much as the other are equally rebuttable.

Thus, it is understood that the fact that the legislator, in the current version of the CIUC, opted for an implicit presumption (using the expression "being considered") instead of an express presumption (with recourse to the expression "are presumed"), as happened previously, does not translate a substantial change with respect to the subjective scope of the tax.

1. Furthermore, we can easily point out various examples, drawn from the tax legal system, in which the legislator opted for the use of the verb "consider", with a presumptive sense. Besides which, as has already been said above, when it is a norm of tax scope, it would never be admissible the enshrinement of an irrebuttable presumption. As stated by Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, in the annotation to no. 3, of article 73º, of the GTL, "the presumptions in tax scope matters can be explicit, revealed by the use of the expression is presumed or similar (…). However, presumptions can also be implicit in scope norms, particularly objective scope, when certain values of movable or immovable property are considered as constituting taxable matter, in situations where it is not impracticable to ascertain the real value". And there are many examples of norms in which the verb "consider" is used to establish rebuttable presumptions, as happens with the provision no. 2 of article 21º of the CIRC, in article 89-A of the GTL or in article 40º, no. 1 of the CIRS, among others. The Respondent alleges, however, in its submitted response, that this same word "being considered" is also normally used by the tax legal system to define situations other than presumptions. However, such appears normal, namely in the case of other tax norms in which the legislator used the formula "is considered" or "are considered", but assigning it another sense, given that these are expressions that, depending on the context, can assume a plurality of meanings, without which one can draw the conclusion that the Respondent intends.

2. Taking into account that the legal system must form a coherent whole, the examples above referred to, as well as the doctrine and jurisprudence indicated, allow the conclusion that it is not only when the verb "presume" is used that we are faced with a presumption, but also the use of other terms or expressions, such as the term "is considered" can serve as the basis for presumptions.

And, as referred to above, being the literal element the first instrument of interpretation of the legal norm, in search of the legislative thought, it is important to confront it with the other elements of interpretation, namely the rational or teleological element, the historical element and the systematic element. And, also in this line of reasoning, the Tribunal cannot follow the reasoning adduced by the Tax Authority.

With regard to the historical element, it must be said that from the origin of the circulation tax, with the entry into force of Decree-Law no. 599/72 of 30 December, a presumption was explicitly enshrined, regarding the subject persons of the tax as being those in whose name the vehicles were registered or matriculated. This version of the law used the literal expression "being presumed as such". However, given the purposes of the tax in question, it must be recognized that the use of the expression "is considered", in the current version, contemplates an expression with a similar effect to that one, embodying, equally, a presumption. The same happens in the formulation contained in no. 1, of art. 3º, of the CIUC, in which a presumption is enshrined, revealed through the use of the expression "being considered", of similar meaning and equivalent value to the expression "are presumed", in use since the creation of the tax in question. The use of the expression "being considered" is justified, solely, by appearing more in keeping with the reinforcement given to vehicle ownership, which came to constitute the taxable event, under the terms contained in article 6º of the CIUC.

By which, in light of the literal element of interpretation, nothing prevents the understanding that the provision in no. 1, of art. 3º, of the CIUC, enshrines a rebuttable presumption.

This understanding is, moreover, the only one that appears adequate and in accordance with the principle of material truth and justice, underlying tax relationships, with the objective of taxing the real and effective owner and not one who, by circumstances of various nature, is sometimes nothing more than an apparent and false owner, by appearing in the motor vehicle registry.

For this reason, the person registered in the motor vehicle registry must be permitted the possibility of presenting sufficient proof elements for the demonstration that the effective owner is, after all, a person different from the one appearing in the registry, and which initially, and in principle, was supposed to be the true owner. Otherwise, the supremacy of the formal truth of the registry over the material truth would be accepted, and the gross violation of the fundamental fiscal principles enunciated would be admitted and, moreover, of the principle contained in article 73º, of the GTL according to which there are no irrebuttable presumptions in tax scope matters.

All of what is left above exposed would add a violation of the principles of legality, proportionality and justice, as well as the inquisitorial principle, enshrined, respectively, in articles 55º and 58º of the GTL.

1. Thus, as to the subjective scope of the tax, it is to be concluded that there are no changes in relation to the situation previously in force in the scope of the Municipal Tax on Vehicles, Circulation Tax and Haulage Tax, as is moreover widely recognized by doctrine, continuing to apply a rebuttable presumption in this matter. (In this sense, see Afonso, A. Brigas and Fernandes, M. (2009) Tax on Vehicles and Unique Circulation Tax, Coimbra Publishing House, p. 187)

Furthermore, it is possible to extract, still, another argument from the provision of article 7º of the Real Property Registry Code (which constitutes the fundamental legal basis in the matter of property registration), which provides that "the definitive registration constitutes a presumption that the right exists and belongs to the titled holder, in the precise terms in which the registration defines it."

In light of the principle of uniformity and intrinsic coherence of the legal system, no ground appears acceptable for the principle in effect in property registration in general to suffer an inflection or even unjustified "trampling" in the matter of motor vehicle registration.

These are the reasons why this Tribunal, with due respect, cannot agree with the understanding contained in the judgment delivered by the Administrative and Tax Court of Penafiel, in the context of case no. 210/13.0BEPNF, invoked by the Tax and Customs Authority in the present proceedings, namely, when it states that "the actual ownership and possession of the vehicle is irrelevant for the verification of the subjective and objective scope and the taxable event of the tax".

1. But, if any doubt persisted, it would always be said that, as to the elements of interpretation of rational or teleological bent, the statement of reasons for Proposal of Law no. 118/X of 07/03/2007, underlying Law no. 22-A/2007, of 29/06, is quite expressive in clarifying that the reform of vehicle taxation is realized by means of the displacement of part of the tax burden from the moment of vehicle acquisition to the phase of circulation and aims to "form a coherent whole" which, although destined for the raising of public revenue, intends the same to be raised "in the measure of the environmental costs that each individual causes to the community", adding, with respect to the tax in question and the different types and categories of vehicles, that "as a structuring and unifying element (…) the principle of equivalence is enshrined, thus making clear that the tax, in its entirety, is subordinated to the idea that taxpayers should be burdened in the measure of the cost they cause to the environment and the road network, being this the reason for existence of this tax figure", further stating, being "(…) this principle that dictates the burdening of vehicles according to their respective ownership and until the moment of scrapping (…)".

Thus, the logic and rationality of the new system of vehicle taxation presupposes and aims at a subject person coinciding with the owner of the vehicle, on the assumption that it is that one, and not another, the real and effective subject causing environmental damage, as results from the principle of equivalence inscribed in art. 1º, of the CIUC. This principle of equivalence, which informs the current unique circulation tax, has underlying the polluter-pays principle, and realizes the idea, inscribed in it, that whoever pollutes must, for that reason, pay. It is, after all, about achieving the negative environmental externalities that arise from the use of motor vehicles, whether assumed by their owners and/or users, as costs that only they should bear.

Let us recall, in this regard, the position expressed in the recent Arbitral Decision no. 286/2013-T of 2 May 2014:

"It is this principle (of equivalence) that dictates the burdening of vehicles according to their respective ownership and until the moment of scrapping, the common use of a specific taxable base, the revision of the framework of tax benefits in effect and the allocation of a portion of revenue to the municipalities of the respective use.

Now, to seek, as the Respondent does, that the legislator, in art. 3º, no. 1 of the CIUC, fixed, whatever the underlying technical means, the subjective scope of the tax in the persons in whose name the vehicles are registered, with total independence of whether or not they are, in the relevant tax period, holders of the right to use the vehicle, especially of its ownership, would imply disregarding that purpose which presides over the normativity of taxation, well manifested in the objective scope and in the taxable base associated with the various categories of vehicles (cf. arts 2º and 7º of the CIUC). It is that a registral entry, without correspondence with the underlying ownership, has no value whatsoever for the satisfaction and fulfillment of such purpose, since it is not the persons in whose name the vehicles are entered when they are not holders of rights to their use who cause environmental and road costs, but rather such environmental and road costs are caused by the effective users of the vehicles, in accordance with the relevant substantive legal situations, even if they do not appear, as they should, in the motor vehicle registry. The registry, in truth, in no way indicates or serves the principle of equivalence established in art. 1º of the CIUC. Indeed, to assume that the determinative element of the subjective tax scope is simple and exclusively the motor vehicle registry also does not allow for an assertion of a connection with any manifestation of relevant taxpaying capacity, which, as a rule, in taxes not strictly commutative, is essential, given that there must exist, without prejudice to practicability requirements, some effective connection between the tax and an economically material assumption capable of founding the tax. The reason for existence of the tax figure thus removes the idea that the respective scope is tied strictly and exclusively to the registral entry itself of the ownership of the taxable vehicles and not to the substantive situations attributing the right to use the vehicles (art. 3º, nos. 1 and 2 of the CIUC) to which the registry is intended to give publicity (cf. art. 1º and art. 5º of Decree-Law no. 54/75, of 12 February, with the subsequent amendments, which regulates motor vehicle registration)." – (In the same sense, see Arbitral Decisions nos. 14/2013-T, 26/2013-T of 19 July 2013, 27/2013 –T, 217-2013-T of 28 February and, more recently, and 293/2013-T of 9 June 2014, among others.)

Without need for further considerations, this is also the position of the arbitral tribunal in the present proceedings, upholding the positions already previously embodied in the various arbitral decisions above mentioned, whereby it is understood that the rebuttable presumption inscribed in no. 1, of art. 3º, of the CIUC, corresponds to the interpretation most adjusted to the pursuit of the objectives sought by the legislator. Any other understanding would imply accepting the possibility of taxing natural or legal persons without responsibility in the production of any environmental damage, while the real causers of such damage would not be subject to the tax, frustrating in absolute the purposes of regulation of the law itself, that is, its true ratio legis.

1. In summary, having traversed all relevant elements of interpretation, all point in the direction that the expression "being considered" has a meaning equivalent to the expression "are presumed". In consequence, it results from the provision in no. 1, of art. 3º, of the CIUC, the enshrinement of a legal presumption, which, in light of the provision of art. 73º, of the GTL, can only be understood as rebuttable. This presumption may be rebutted or set aside if, within the scope of the assessment procedure underway, it comes to be demonstrated that the person registered is not the true owner of the vehicle, subject person of the tax in question. It will be said that the legislator, in the new CIUC, did not feel the need to maintain in the new subjective scope norm an express and rebuttable presumption, given that after the entry into force of the General Tax Law (1999) "presumptions enshrined in scope norms always admit proof to the contrary". Therefore, in light of the tenor of article 73º, of the GTL, it would be technically incorrect to use the expression "being presumed as such, subject to proof to the contrary", contained in the previous version in force.

In light of the new scope norm the subject person of UCT is the owner or the financial lessee or, also, the purchaser with retention of title, even if they do not appear in the motor vehicle registry, provided sufficient proof is made to rebut the legal presumption arising from the registry, by force of the principle of equivalence legally enshrined.

Having arrived here it now remains to analyze the question of whether, in the present proceedings, the Applicant presented sufficient proof to rebut the presumption, demonstrating the transfer of ownership or the effects of the lease contracts in effect.

3rd) On the Proof of Transfer of Ownership of Vehicles and the Rebuttal of the Presumption

1. Considering the factual matter established in the present proceedings and given the provision in nos. 1 and 2, of the above explained article 3º, of the CIUC, it is to be concluded that the subject persons of the tax are, in some cases, the purchaser-lessees of the vehicles, as their true owners, and in the remaining cases, the lessees, and not the vendor-lessor, as the virtual owner of the vehicles in question. Let us therefore see:

a. of the sixty-nine vehicles identified in the impugned assessments and contained in document no. 1 attached to the PI, sixty-four had already been subject to sale by the Applicant on a date prior to 2009;

b. the remaining five vehicles, with the registrations hereinafter indicated, were in the possession and use of the respective lessees, by force of financial lease contracts, until the respective sale dates, namely: a) vehicle with registration ..-..-.., with sales invoice issued on 20-09-2009; b) vehicle with registration ..-..-.., with sales invoice issued on 05-04-2010; c) vehicle with registration ..-..-.., with sales invoice issued on 20-08-2009; d) vehicle with registration ..-..-.., with sales invoice issued on 05-03-2010; e) vehicle with registration ..-..-.., with sales invoice issued on 03-11-2010.

1. Thus, as to the vehicles referred to in the first group [a)], the Applicant is not subject person of UCT, by force of the provision in no. 1, of article 3º, of the CIUC, given that it proved that it was no longer its owner on the date of the taxable facts, having sold all the vehicles on dates prior to 2009. Therefore, it is necessary to conclude that it rebutted the presumption contained in the said legal norm.

As to the vehicles referred to in the second group [b)], the Applicant is not subject person of UCT, by force of the provision in no. 2, of article 3º, of the CIUC, given that the vehicles were in the possession and use of the lessees by effect of the respective lease contracts, by force of which and in accordance with the terms of their respective purchase option clauses, they came to acquire the ownership of the same, still during the years 2009 and 2010. From the financial lease contracts attached to the file by the Applicant there is a standard clause inserted in the general conditions, under the terms of which, with the payment of the residual value, the lessee can exercise the purchase option of the vehicle (See, merely as an example, see clause 9º, no. 3, part II – General Conditions, of Doc. no. 3 attached to the PI.)

1. The Respondent alleges "the lack of proof of the transfer of ownership of the vehicle, given that invoices are not, by themselves, documents apt to prove the conclusion of a synallagmatic contract such as purchase and sale. However, the Respondent is not right. The Applicant attached to the file copies of the financial lease contracts, accounting extracts identifying the entity and the contract, and also a copy of the respective invoice/receipt (cf. docs. nos. 2 to 70 attached to the PI). The Applicant also attached, as doc. no. 71 attached to the PI, a copy of the responses made by the TA, rejecting the claim for annulment of the alleged UCT assessments, in response to the Applicant's statement in the context of the exercise of prior hearing right, from which it can be inferred that the documentation now presented had already been presented previously to the TA. What is certain is that the latter came to present nothing to the present proceedings, in the context of the PA, which would allow inferring the contrary.

2. Motor vehicles are movable property, whose transfer of ownership does not obey special formalism. The transfer of ownership operates by mere effect of the contract, under the terms provided for in article 408º, no. 1, of the Civil Code.

In Portuguese law the fact that determines the transfer of ownership of a movable property (albeit subject to registration) is the contract expressed by the will of the parties. So much so that the buyer becomes the owner of the vehicle sold by means of the conclusion of the purchase and sale contract, independently of the registration, which is assumed as a condition of effectiveness and enforceability against third-party purchasers.

Thus, the proof of the existence of this purchase and sale contract can be effected by any means, with the invoice being an accounting document suitable for this purpose, as for many others, namely fiscal purposes, whereby it is not accepted that its probative force be questioned. But the Applicant also attached copies of the financial lease and long-term rental contracts underlying the transactions of the vehicles in question in the proceedings, whereby no doubt remains as to the demonstration of the true owners and/or lessors of the vehicles, subject to the scope of the tax, nor as to the moment in which the transfer of ownership operated.

Finally, as to the effects of motor vehicle registration, it is important to note that, in general, registration has only a publicity function. According to no. 1, of art. 1º, of Decree-Law no. 54/75, of 12 February (Motor Vehicle Registry Code in the last version introduced by Law no. 38/2008, of 11 August), the registration has as its purpose to give publicity to the legal situation of motor vehicles and their respective trailers, with a view to the safety of legal commerce. Thus, the registration is also a condition of enforceability in relation to third-party purchasers, which is to say that the purchaser who does not proceed with the registration remains subject to a condition of relative ineffectiveness against third parties. This is because in Portuguese law the legislator's option was not to adopt mandatory registration as a rule. For this very reason, article 7º of the Real Property Registry Code (CRP), applicable supplementarily to motor vehicle registration, by force of article 29º of the CRA, provides that: "The definitive registration constitutes a presumption that the right exists and belongs to the titled holder, in the precise terms in which the registration defines it."

1. Once more, it is necessary to conclude that definitive registration is nothing more than a presumption that the right exists and belongs to the titled holder, in the exact terms of the registration, which is rebuttable, admitting, for this reason, proof to the contrary.

And, on this point, given the function legally reserved to registration of publicizing the legal situation of property, it is necessary to conclude, in the case of motor vehicles, that it only allows us to presume that there is a right to those vehicles and that the same belongs to the person registered in the registry.

The registration does not, therefore, have a constitutive nature of the property right, but merely a declarative one, whereby the registration does not constitute a condition of validity of the transfer of the vehicle from the seller to the buyer. By which, the purchasers of the vehicles become, thus, owners of the same vehicles by way of the conclusion of the corresponding purchase and sale contracts, by mere effect of the contract, with or without registration. There is thus perfect harmony between this regime and what results from the provision in no. 1, of art. 408º, of the Civil Code, according to which the transfer of real rights over things is determined by mere effect of the contract, being one of such effects the transfer of the thing or the ownership of the right (cf. subparagraph a), of art. 879º of the said Civil Code).

1. Given this, in relation to sixty-five of the sixty-nine vehicles subject to UCT assessments the transfer of their ownership was demonstrated on a date prior to 2009. In relation to the remaining five vehicles subject to the other impugned assessments it was proved the existence of financial lease contracts in effect during the taxation period under analysis, having their ownership been transferred on dates comprised during the years 2009 and 2010. Now, in the first case by force of the provision in no. 1, and, in the second case, by force of the provision in no. 2, of article 3º, of the CIUC, notwithstanding the fact that the financial lessor is still in this case the owner of the vehicle in the years 2009 and 2010, it is the lessee who constitutes, exclusively, the subject person of UCT, given that it is "assimilated to the owner", whereby the Applicant does not then assume the quality of subject person of UCT with reference to any of the years or the vehicles under analysis.

2. The decision of the TA that led it to issue and collect the tax assessments now impugned was based, however, on a wrong assumption, according to which, under the terms of the provision in no. 1, of article 3º, of the CIUC, the tax is due by the person registered in the motor vehicle registry, independently of the subsequent demonstration that ownership belongs to a third party, and, furthermore, ignoring the principle contained in no. 2, of article 3º, of the CIUC as to lessees.

For all that is set out above, it is understood that the provision in no. 1, of art. 3º, enshrines a presumption, rebuttable upon the presentation of proof to the contrary, being this the interpretation that is most in harmony with the principle of material truth that the law undertakes to point out.

In the case of the proceedings, and contrary to what the Respondent alleges, the Tribunal understands that the documents presented by the Applicant are sufficient means of proof to demonstrate that the ownership of the vehicles in question, on the date of the taxable facts with reference to the years 2009 and 2010, no longer belonged to the Applicant, or if it belonged to them, were being used by third parties holding financial lease contracts and, with reference to the years 2011 and 2012, none of the vehicles was property of the present Applicant. The documents presented are, moreover, means of proof with sufficient force to rebut the presumption based on the registration, as enshrined in no. 1, of art. 3º, of the CIUC, given that they enjoy the presumption of truthfulness provided for in no. 1, of art. 75º, of the GTL.

In conformity, the presumption is rebutted.

1. It will thus be said that if the said lessees, purchasers of the vehicles, as their "new" owners, did not promote registration in their favor, it is presumed (rebuttable presumption), for purposes of no. 1 of art. 3º, of the CIUC, that the vehicle continues to be property of the person who sold it and who in the registry remains its owner, being certain that such presumption is rebuttable, whether by force of the established in no. 2, of art. 350º, of the Civil Code, whether in light of the provision of art. 73º, of the GTL. By which, from the moment in which the said presumption is set aside, by means of proof to the contrary, the TA will not be able to persist in considering as subject person of UCT the seller of the vehicle, who in the registry continues to appear as its owner.

Furthermore, the provision in art. 19º of the CIUC, precisely, for purposes of the provision in art. 3º of the said CIUC (that is, for purposes of the subjective scope), comes to impose, particularly on entities that engage in financial leasing, the obligation to supply to the TA the data relating to the identification of the users of the leased vehicles. By which, once again, the legislator was clear as to the legal value of the registration, requiring to know, beyond that, the actual users of the leased vehicles, which, moreover, is in perfect harmony with the understanding that no. 1, of art. 3º, of the CIUC intends, solely, to enshrine a legal presumption.

1. Thus, given what has already been said regarding the situation of the vehicles contained in the assessments now impugned, it is concluded that on the date on which the tax was exigible for each one of them, the Applicant does not configure as subject person of the tax, because:

a. in light of the interpretation that must be made of no. 1, of art. 3º, of the CIUC, the Applicant proved that it was no longer the owner of the vehicles whose ownership had already been transferred by mere effect of contract, to the lessees, on the date on which the UCT became exigible;

b. in light of the provision in no. 2, of article 3º, of the CIUC, the Applicant also cannot be considered subject person of the tax in relation to the remaining vehicles, whose ownership was transferred to the purchasers on dates subsequent to the date on which the UCT was exigible, and should be had as subject persons of the tax, in the years 2009 and 2010, the lessees, as assimilated, under the terms of that provision, to owners of the vehicles.

1. The understanding advocated by the TA in the response presented in the present proceedings, according to which the subject persons of UCT are, definitively and without admission of proof to the contrary, the persons in whose name the motor vehicles are registered, without considering the proof elements for identification of the effective and true owners of the vehicles, led to the illegal assessment of UCT, based on the erroneous interpretation and application of the norms of subjective scope of the Unique Circulation Tax. Such assessments thus appear illegal, which requires the annulment of the corresponding tax acts.

2. But the Respondent further alleges that the interpretation defended by the Applicant in this matter, beyond translating a biased reading of the law and being based on an interpretation against the law, is contrary to the Constitution, because the principle of taxpaying capacity is not the only nor the principal principle that informs the tax system; on the side of these, we find others with the same constitutional dignity, such as the principle of trust and legal security, the principle of efficiency of the tax system and the principle of proportionality. (cf. arts 61º and et seq. of the Response)

Now, for all that is set out above, it is obvious that the arbitral tribunal cannot agree with the Respondent in this allegation. But it will be important to leave one last reference to this regard, in defense of the position here stated and already sufficiently affirmed in previous arbitral decisions already mentioned. Thus, let it be said that, contrary to what the Respondent intends, the consideration that the provision of art. 3º, no. 1, of the CIUC enshrines a rebuttable presumption represents the best interpretation and the most in accordance with the Constitution, starting from the perspective of the Constitutional Court itself. It follows from the very jurisprudence of the Constitutional Court, established in judgment no. 348/97, of 29.4.1997 and reiterated in judgment no. 311/2003, of 28.4.2003, the unconstitutionality of "the establishment by the tax legislator of a presumption 'juris et de jure' since 'it completely prevents taxpayers from the possibility of contradicting the presumed fact, subjecting them to a taxation that can be founded on a taxable matter fixed despite of the principle of tax equality'".

In this conformity, the allegation of the Applicant does not appear to be without merit.

1. As to the Recommendation No. 6-B/2012 of the Ombudsman, invoked by the Respondent TA, it must be said, in a very succinct manner, that its content demonstrates only that the interpretation and application that the Tax Authority came to pursue regarding the legislative solution in question in the proceedings generated a chaotic, unjust and disproportionate situation, for which the Ombudsman's Office presents some recommendations. From this it results with evidence a failure of legislative foresight as to the insufficiencies of the registration system itself, as to the coordination of competencies between the different services involved (IMTT, Motor Vehicle Registry and Tax Authority), being certain that, with respect to the concrete solution of the case in question, that is, to the matters of law that they submitted to us for decision, nothing is inferred from the said recommendation that contradicts or puts into question the solution advocated by this arbitral tribunal and adopted in various preceding arbitral decisions, already above mentioned.

The Ombudsman recommends that measures be adopted in order to: "adapt the vehicle registration cancellation regime to the current vehicle taxation regime; consider legislative amendments in order to expedite the process of registration of transfer of ownership, so as to allow the individual seller the registration of the transfer of vehicle ownership and the adoption of a transitional regime that safeguards the interests of the large thousands of vehicle owners already scrapped without recourse to an authorized operator (…)"

It is not apparent, therefore, any other scope for this recommendation than the timely and necessary drawing of attention to the legislator to fill the numerous insufficiencies that practice, in the manner in which the current version of the law came to be applied by the different services involved, came to reveal.

With regard to the matters of law in question in the present proceedings, the recommendation is silent, given that these do not constitute the object of consideration. By which, from the recommendation nothing is extracted that could alter the understanding here held.

1. In these terms, given the provision of art. 3º, nos. 1 and 2, of the CIUC, it is concluded that the presumption contained in no. 1 is rebutted and that, for this reason, the Applicant does not constitute subject person of UCT, assessed in relation to the years 2009, 2010, 2011 and 2012, as to the vehicles identified in document no. 1 attached to the PI.

In consequence of all the above set out, it results that all the impugned assessments are illegal and should be subjected to annulment, proceeding, consequently, to the reimbursement to the Applicant of the amount unduly paid.

4th) On the Merit of the Claim and the Right to Payment of Default Interest.

1. Article b), of no. 1, of art. 24º, of the LRTA, provides that the arbitral decision on the merit of the claim for which no appeal or challenge is available binds the tax administration from the end of the term provided for appeal or challenge, and this must – in the exact terms of the merit of the arbitral decision in favor of the subject person and until the end of the term provided for the spontaneous execution of the sentences of the tax judicial courts – restore the situation that would have existed if the tax act subject to the arbitral decision had not been practiced, adopting the acts and operations necessary for that purpose.

2. This provision is in harmony with the provision of art. 100º, of the GTL, applicable to the case by force of the provision in subparagraph a), of no. 1, of art. 29º, of the LRTA, in which it is established that "The tax administration is obligated, in case of total or partial merit of complaints or administrative appeals, or of judicial proceedings in favor of the subject person, to the immediate and full restoration of the situation that would have existed if the illegality had not been committed, including the payment of default interest, under the terms and conditions provided for in law."

3. Article 43º, no. 1, of the General Tax Law provides that "default interest is due when it is determined, in a gracious complaint or judicial challenge, that there was error imputable to the services from which it results in payment of the tax debt in an amount greater than the legally due."

Now, as has already been said above, from the analysis of the proof elements contained in the present proceedings, it is possible to infer that, at least after the prior hearing conducted, the TA acquired knowledge of relevant factual and proof elements for the correct taking of the decision. Even if it were admitted that, from its point of view, it was necessary for the attachment of some documents for further clarification of the facts alleged by the Applicant, it should have notified it for that purpose and used all the prerogatives that the inquisitorial principle grants it and requires it to investigate all the facts it considered relevant. However, it did not do so, completely disregarding the allegation of the Applicant.

Thus, there is no doubt that the TA was in the availability of sufficient informational elements about the concrete situation of the vehicles contained in the file, so that it had the possibility to correct the error and avoid the practice of the harmful and illegal tax acts, which did not occur. And that is precisely what constitutes the error for which it is obligated to indemnify.

Therefore, the Tribunal cannot agree with the allegation of the Respondent according to which the latter merely applied the law, whereby, in the view of the TA, no error imputable to the services would result therefrom. If it were so, the administration would never be held responsible for the illegal application of the norms in force nor for the damages caused to individuals.

1. Thus being, given the provision of article 61º, of the TCPC, and considering that the prerequisites for the right to default interest are fulfilled, that is, verified the existence of error imputable to the services from which it results in payment of the tax debt in an amount greater than the legally due, as provided for in no. 1 of art. 43º of the GTL, the Applicant has the right to default interest at the legal rate, calculated on the amount of €40.184,27, which will be counted from the date on which payment was made until the full reimbursement of that same amount.

In the case of the present proceedings, the above-mentioned principles must be applied and, in the sequence of the illegality of the assessment acts referenced in this proceeding, there must, by force of those norms, be a place for the reimbursement of the amounts paid, whether as title of the tax paid, or of the corresponding default interest, as a means of achieving the restoration of the situation that would have existed if the illegality had not been committed.

5th) Responsibility for Payment of the Costs of the Proceedings

1. The Respondent, in articles 87º to 100º of the response comes to raise the question of responsibility for payment of the costs in the event the Tribunal comes to consider the arbitral request to have merit, seeking in that case that the provision of article 527º, no. 1 of the new Code of Civil Procedure be applied, ex vi article 29º, no. 1 subparagraph e) of the LRTA, in line with a similar question decided in the context of case no. 72/2013 – T.

Briefly, the Respondent alleges that: "it does not control the information contained in the registral databases; that UCT is not assessed in accordance with information generated by the respondent itself (…) and that in the absence of the Applicant's care in updating the motor vehicle registration, as it indeed should and was its responsibility [article 5º/1-a) of Decree-Law 54/75 of 12 February, and article 118º/4 of the Road Code.]"

It concludes that who gave rise to the present proceedings was the Applicant itself, by failing to proceed with the care that was required of it, led the TA to assess the UCT to the person who appeared in the information contained in the registry. It further invokes arbitral decision no. 26/2013 T.

For all that is set out above, particularly with regard to the question of condemnation to payment of default interest, it results that the Respondent is also without any ground in this matter. Let us see why.

In the matter of determination of costs due for the arbitral proceedings, the provisions of the LRTA and the respective Regulation of Costs in Tax Arbitration Proceedings (RCPAT) apply, being it may be necessary to resort to the application of the rules of subsidiary law, if and when there is some omission in the law that justifies it. It results from article 29º, no. 1, subparagraph e), of the LRTA, the possibility of subsidiary application of the CPC to the tax arbitral proceedings, in accordance with the nature of the omissions in the law.

Well, in the first place, there does not appear to be the existence of an omission in the law to resolve, in the present proceedings, as to the determination of the costs of the proceedings.

1. Article 527º, no. 1 of the CPC provides that "the decision that judges the action or any of its incidents or appeals condemns in costs the party that gave cause to them or, if there is no judgment on the merits of the action, the one who profited from the proceedings."

The Respondent seeks to demonstrate that who gave rise to the present arbitral request was the Applicant itself, with its negligent conduct. But it is not right.

In the first place, it was not the obligation of the Applicant to promote motor vehicle registration in favor of the new owners, but rather these who should have done it. See, moreover, on this point the Recommendation of the Ombudsman, attached to the file by the Respondent, which in its point III 6) refers, precisely, as one of the insufficiencies of the registral regime, the fact that "in cases where the transfer of ownership was not duly and timely registered, the sellers cannot now regularize the registration without the intervention of the buyer of the vehicle".

It does not hold, therefore, the invocation of article 5º, of the Motor Vehicle Registry Code in this context, when it is clear from the legal text itself that the obligation of registration falls to the owners. Thus, whenever a transfer of ownership occurs, it is to the new owner (buyer) that the obligation to register falls and not to the seller.

1. As to the fact that the TA does not have control over the registral databases, this appears irrelevant, since, if there is a failure in this matter, it is certain that only by legislative means can and should be resolved. Certainly this is not imputable to the Applicant. Once again the Recommendation of the Ombudsman may serve as good guidance for correcting the system in the failings it has revealed.

Secondly, and already incurring in repetition as to what has been said in the substantiation of the present decision as to default interest, it is certain that, in the context of prior hearing, the Applicant presented its defense, gave notice of the underlying factual reality and clarified the Respondent about the ownership and about the lease contracts in effect, its conclusion and the respective moments in which the transfer of ownership of all vehicles subject to the assessments in question occurred. The Applicant, furthermore, presented all the proof elements, documents, and factual elements permitting the TA to have complete knowledge of the situation and thus to correct the error and prevent the issuance of the illegal assessments. It is therefore undeniable that the Applicant acted with all the diligence required of it and that it is the Respondent who, by disregarding the Applicant's allegations despite having the necessary proof elements at its disposal, acted negligently and caused the need for the present arbitral proceedings to be filed.

This being so, it is the Respondent who should bear the costs of the present proceedings.

As to the question of who gave rise to the present proceedings, it is clear that it was not the Applicant's conduct, but rather the Respondent's failure to carry out its functions with the required diligence and its disregard for the proof elements presented by the Applicant during the prior hearing procedure. In this manner, the responsibility for the proceedings does not fall on the Applicant, but on the Respondent, the Respondent being therefore responsible for bearing the costs of the arbitral proceedings.

The Tribunal thus rejects the allegation of the Respondent, condemning it to bear all the costs of the present arbitral proceedings.

V. DECISION

In light of all the foregoing, the Tribunal decides:

1. To declare that all the tax assessment acts of Unique Circulation Tax and respective default interest, relating to the years 2009, 2010, 2011 and 2012, with reference to the sixty-nine vehicles identified in document no. 1 attached to the request for arbitral pronouncement, in the total amount of €40.184,27, are illegal;

2. To annul all the tax assessment acts above referred to;

3. To determine that the Tax and Customs Authority must proceed, immediately and fully, to the restoration of the situation that would have existed if the illegality had not been committed, which includes the reimbursement to the Applicant of the amount of €40.184,27, accrued with default interest at the legal rate from the date of payment until the date of full reimbursement;

4. To determine that the Applicant has the right to default interest, in accordance with article 43º, no. 1, of the General Tax Law;

5. To condemn the Tax and Customs Authority to bear all costs of the present arbitral proceedings.