Process: 97/2013-T

Date: March 28, 2014

Tax Type: IUC

Source: Original CAAD Decision

Summary

This CAAD arbitral decision (Process 97/2013-T) addresses whether a taxpayer can obtain a refund of IUC (Single Circulation Tax) paid for 2009 when vehicle registration cancellation was delayed by administrative procedures. The claimant requested vehicle seizure on September 30, 2008, under Decreto-Lei 78/2008, but the registration was only cancelled on April 28, 2009—29 days after the statutory deadline. The claimant paid €30.80 in IUC plus €4.89 in compensatory interest, totaling €35.69, and argued the delay was not attributable to him. The Tax Authority raised procedural exceptions, arguing passive illegitimacy and claiming the IMTT (Institute for Mobility and Land Transport) should be involved as the entity responsible for registration procedures. On the merits, the TA contended that under Articles 3, 4, and 6 of the IUC Code, tax liability attaches to the registered owner at the start of each taxation period (the registration anniversary date). Since the vehicle remained registered in the claimant's name on April 1, 2009—the first day of the 2009 taxation period—all elements of subjective, objective, and temporal incidence were satisfied, making the IUC charge legally valid. This case highlights the intersection between legal presumptions of vehicle ownership based on registration records and the taxpayer's ability to challenge tax assessments when administrative delays occur outside their control, raising important questions about responsibility attribution in Portuguese vehicle taxation.

Full Decision

ARBITRAL DECISION

CLAIMANT: A

RESPONDENT: TAX AND CUSTOMS AUTHORITY

I – REPORT

A – PARTIES

A, resident at …, TIN …, hereinafter referred to as "Claimant", requested the constitution of an Arbitral Tribunal, in accordance with the combined provisions of articles 2 and 10 of Decree-Law No. 10/2011, of 20 January (Legal Framework for Tax Arbitration, hereinafter referred to as "LFTA"), with a view to the appraisal of the following claim that opposes him to the Tax and Customs Authority (which succeeded, among others, the Directorate-General for Taxes), hereinafter referred to as "Respondent" or "TA".

B – CLAIM

  1. The request for the constitution of an arbitral tribunal was accepted by the Honourable President of CAAD and notified to the TA on 30 April 2013.

  2. The Claimant did not proceed to appoint an arbitrator, whereupon, in accordance with the provisions of No. 1 of article 6 of the LFTA, the undersigned was appointed by the Deontological Board of CAAD as arbitrator of the Singular Arbitral Tribunal, having accepted in accordance with the legal provisions.

  3. The parties were duly notified of such appointment on 17 June 2013 and did not express their intention to refuse it, in accordance with the combined provisions of subparagraphs a) and b) of No. 1 of article 11 and articles 6 and 7 of the Deontological Code.

  4. Thus, in compliance with the provision in subparagraph c) of No. 1 of article 11 of Decree-Law No. 10/2011, of 20 January, with the wording introduced by article 228 of Law No. 66-B/2012, of 31 December, the Singular Arbitral Tribunal was constituted on 5 July 2013.

  5. On 12 December 2013, the Tribunal extended, in accordance with No. 2 of article 21 of the LFTA, the initial period of 6 months which ended on 5 January 2014, for a period of 2 months from this date.

  6. On 19 February 2014, the meeting referred to in article 18 of the LFTA was held with the Parties, from which minutes were drawn up and are attached to the file.

  7. The herein Claimant requests that this present Arbitral Tribunal pronounce itself on his right to reimbursement of the amount he paid for Single Circulation Tax (IUC), concerning the vehicle of category "E", with registration …, for the year 2009, in the amount of € 30.80 to which are added compensatory interest in the amount of € 4.89, for a total of € 35.69, which implies the appraisal of the connected question of the legality of the respective liquidation act.

C – CAUSE OF ACTION

To support the request for arbitral pronouncement, the Claimant alleged the following:

  1. That he requested on 30.9.2008 the seizure of the vehicle in question in accordance with No. 1 of article 5 of Decree-Law No. 78/2008 of 6 May, a norm which he reproduced in his request for arbitral pronouncement.

  2. He also refers that, according to information from the TA, the cancellation of the registration "occurred on 28.04.2009, that is, 29 days after the deadline stipulated by law".

  3. He considers, in summary, that there was a delay in the cancellation of the registration which cannot be attributed to him.

D – RESPONSE OF THE RESPONDENT

  1. The Respondent, duly notified to this effect, timely submitted its response (R) in which, in synthesis, alleged the following:

BY WAY OF EXCEPTION

  1. Faced with the content of the claim and the cause of action, the TA defends "the existence of a pressing interest to sue – objection of the IMTT" (See article 8 of the (R)).

  2. Referring to the procedures contained in Decree-Law No. 78/2008 of 6 May, it sustains its thesis on the circumstance that "only the IMTT will be able to have knowledge of the facts relating to that same procedure which permits determining eventual causes of the alleged delay in the cancellation of the registration, and the consequent imputability thereof, in the present specific case. It being certain that the TA, as an entity foreign to this procedure, cannot certainly be imputable such delay: which will always be imputable to the owner or to the IMTT" (See articles 9 and 10 of the (R)).

  3. Subsequently, it develops a set of arguments namely that the present tribunal cannot "be considered endowed with legitimacy to render an arbitral decision on the merits" which lead it to conclude:

a) By the "passive illegitimacy of the Tax and Customs Authority (herein represented by its highest representative) to be party to the action".

b) By the "interest to sue (object) of the IMTT, in this dispute, inasmuch as it has a personal and direct interest in its outcome".

c) By the "impossibility of remedying the invoked passive illegitimacy through an incident of compulsory intervention, given the non-binding of the IMTT to the jurisdiction of CAAD" (See articles 11 to 25 of the (R)).

  1. It ends this part of its Response relating to the exceptions invoked by saying "that the exception invoked should be considered and the public entity sued should be absolved from the action, in accordance with articles 89, No. 1, para. d) of the Code of Administrative Court Procedure and article 576, No. 2, of the Code of Civil Procedure" (See article 26 of the (R)).

BY WAY OF CHALLENGE ON THE MERITS

  1. Invoking Nos. 1 and 3 of article 3, Nos. 1 and 3 of article 4 and Nos. 1 and 3 of article 6, all of the IUCT, the TA emphasizes that the passive subjects of the tax are the owners of the vehicles, being considered as such the persons in whose name they are registered; that the taxable event is constituted by the ownership and registration of the vehicle, as attested by the registration number or registration in national territory, being due until the cancellation of the registration by virtue of registration removal carried out in accordance with the law, and only ceases from that same date of cancellation of registration; that the taxability of the tax is considered verified on the first day of the taxation period referred to in No. 2 of article 4 of the IUCT, that is, corresponding to the year which begins on the date of registration or on each of its anniversaries, being the tax due by the owner in whose name the vehicles are registered, whether at the IMTT or at the Motor Vehicle Registration Office at the time of fulfillment of the tax obligation, determined in No. 2 of article 4 of the IUCT.

  2. Faced with the rules it has stated, the TA affirms that the ownership of the vehicle in question "was registered in favour of the Claimant, in active situation, not existing cancellation of the registration on the date of 01/04/2009 (1st day of the month of registration, which corresponds to the 1st day of the taxation period, cf. article 4, No. 2 of the IUCT" (See No. 35 of the (R)).

  3. In the opinion of the TA, "in accordance with articles 1 to 6 of the IUCT, all elements of objective, subjective and temporal incidence are met, the taxable event and taxability for the liquidation of the IUC for 2009 of the said vehicle in the legal sphere of the Claimant" (See article 36 of the (R)).

  4. After transcribing part of the judgment of the Administrative and Tax Court of Penafiel rendered in process No. 210/13. OBEPNF, the TA concludes that "the exception of passive illegitimacy invoked should be judged to have merit and, accordingly, the entity sued should be absolved from the action, or if this is not so understood, the present request for arbitral pronouncement should be judged to lack merit as not proven, maintaining in the legal order the impugned tax liquidation act and absolving, accordingly, the entity sued from the claim" (See articles 39 and 40 of the (R)).

  5. This present Tribunal was regularly constituted in CAAD to appraise and decide the object of the present process.

E – QUESTIONS TO BE DECIDED

  1. It behoves us, therefore, to appraise and decide.

  2. In light of the positions of the Parties assumed in the arguments presented, the following constitute central decisive questions:

a) Those raised by the Respondent which alleged the following procedural dilatory exceptions:

I. Dilatory exception of incompetence of this present Arbitral Tribunal.

II. Dilatory exception of (passive) illegitimacy, procedural of the TA and the personal and direct interest to object of the IMTT.

III. The essentiality of compulsory intervention by the IMTT in the present arbitral process in light of articles 316 et seq. of the CPC.

b) Those raised by the Respondent as to the maintenance in the legal order of the tax liquidation act.

c) That raised by the Claimant relating to his right to reimbursement of the amount of IUC he paid, which implies the appraisal of the connected question of the legality of the respective liquidation act.

F – OF THE DEDUCED DILATORY EXCEPTIONS

F. 1. OF THE DEDUCED EXCEPTION OF INCOMPETENCE OF THE ARBITRAL TRIBUNAL

  1. Taking into account the provision in article 13 of the Code of Procedure in Administrative Courts (CPAC), here applicable by force of article 29, No. 1, subparagraph c), of the LFTA, the question of competence shall be addressed in the first place, since according to that norm of the CPAC its examination precedes that of any other matter.

  2. In the case at hand, the questions of incompetence of the Tribunal, of passive illegitimacy and of compulsory intervention possess a very close connection.

  3. Thus, the TA contends that the causes of the alleged delay in the cancellation of the registration can only be clarified by the IMTT, the TA being an entity foreign to this fact, wherefore there exists an interest to sue which determines the necessary passive legitimacy of the IMTT to intervene in the present claim and the passive illegitimacy of the TA, compulsory intervention by the IMTT being essential.

  4. Developing this reasoning, the TA refers that the IMTT is not represented by the highest representative of the TA and that the latter cannot assume representation of another entity other than the TA, but also that there does not exist an act binding the IMTT to the jurisdiction of CAAD, concluding that the object of the present action affects personal and direct interests of entities which are not bound to this jurisdiction, nor represented in court, wherefore this Tribunal constituted under the aegis of CAAD is not "endowed with legitimacy to render an arbitral decision on the merits".

  5. These are the arguments which lead the TA to contend for the incompetence of this present Arbitral Tribunal.

Let us see if this is so.

  1. In accordance with the provision in subparagraph a) of No. 1, of article 2, of the LFTA, arbitral tribunals are competent to appraise the claims of "declaration of illegality of acts of tax liquidation, of self-liquidation, of withholding at source and of payment on account".

  2. For its part, No. 1 of article 4 of the LFTA stipulates that the binding of the tax administration to the jurisdiction of arbitral tribunals depends on an order of the members of the Government responsible for the areas of finance and justice.

  3. The binding referred to in article 4, No. 1, of the LFTA was established by Order No. 112-A/2011, of 22 March, whose article 1 establishes the binding to the jurisdiction of arbitral tribunals of the services of DGCI and DGAIEC today merged in the current TA – Tax and Customs Authority.

  4. And article 2 of the said Order postulates that the aforementioned services bind themselves to the jurisdiction of arbitral tribunals which function in CAAD which have as their object the appraisal of the claims relating to taxes the administration of which is entrusted to them, referred to in No. 1 of article 2 of Decree-Law No. 10/2011, of 20 January, providing, however, for some exceptions, which do not apply to the case at hand.

  5. It is thus clear that to appraise and decide the exception of incompetence of this Tribunal, it is decisive to make a judgment regarding the problem of the administration of IUC, that is, whose responsibility it is to administer it.

  6. And, to administer a tax, in particular an imposed tax is, namely, to be holder of the competence to liquidate and collect the tax in question (See No. 3, of article 1 of the LGT). And the TA is a service of the direct administration of the State which has as its mission to administer taxes, being one of its attributions to ensure the liquidation and collection of taxes on income, on patrimony and on consumption (See articles 1 and 2 of DL No. 118/2011, of 15 December).

  7. Specifically regarding IUC, No. 1 of article 2 of Law No. 22-A/2007, of 29 June, expressly stipulates that competence relating to the administration of IUC falls to the Directorate-General for Taxes, today integrated in the TA.

  8. And being the administration of IUC defined as being of exclusive competence of the TA, in light of the aforementioned article 2, No. 1, subparagraph a) of the LFTA and the body of article 2 of Order No. 112-A/2011, of 22 March, this present Tribunal is materially competent to know of the Claimant's claim, wherefore the exception of incompetence deduced by the Respondent lacks merit.

F 2 – AS TO THE PASSIVE ILLEGITIMACY OF THE TA AND THE INTEREST TO SUE OF THE IMTT.

  1. On this matter it is appropriate to bear in mind the provision in article 9, Nos. 1 and 4, of the Code of Tax and Customs Procedure applicable subsidiarily to the arbitral process provided for in the LFTA, by force of the provision in subparagraph a) of No. 1 of its article 29, since there is no norm of this statute which defines passive legitimacy.

  2. The Respondent invokes the passive illegitimacy of the TA to be party to the action as sole defendant in matters concerning IUC due to the personal and direct interest of the IMTT to object, this interest to sue determining the necessary passive legitimacy of the IMTT to intervene in the present claim.

  3. But this invocation cannot have merit by the reasons pointed out above, because the important thing, what is relevant for this purpose, is who has competence to liquidate and collect IUC, deriving therefrom, as was demonstrated, the administration of this tax is exclusively the competence of the TA, having therefore passive legitimacy and the IMTT lacking it.

F 3 – AS TO THE ESSENTIALITY OF COMPULSORY INTERVENTION BY THE IMTT.

  1. Side by side with the question of (i)legitimacy dealt with above, is found the requested compulsory intervention.

  2. The Respondent raises the incident of compulsory intervention provided for in articles 316 et seq. of the CPC, alleging personal and direct interest of the IMTT to sue in the present case.

  3. Within the scope of the impugn process articles 127 and following of the Code of Tax and Customs Procedure regulate procedural incidents and therein the incident of compulsory intervention is not provided for, wherefore it appears that this is not admissible.

  4. Furthermore, what is in question in this process is whether should be declared the right to reimbursement of the amount paid, which embodies a claim of the taxpayer connected with the liquidation act, being thus implicitly a prior judgment on the legality of this act. And, for this, it is important to bear in mind the conclusions to which we arrived above regarding the exclusive competence of the TA to, namely, liquidate and collect IUC, that is, exercise the administration of this tax exclusively.

  5. Thus, it is clear that the TA holds the decisive competence, as well as the direct interest to object as to the dispute of the legality of the liquidation act in question in the present case, as well as to the eventual right to reimbursement of the amount paid by the Claimant, there being, in consequence, no place for compulsory intervention which the TA requested.

G – PROCEDURAL REQUIREMENTS

  1. The Arbitral Tribunal is regularly constituted. It is materially competent, in accordance with article 2, No. 1, subparagraph a), of Decree-Law No. 10/2011, of 20 January.

  2. The Parties enjoy legal personality and capacity, are legitimate, the TA being legally represented, with the Claimant intervening on his own behalf (See articles 4 and 10, No. 2, of the same statute and article 1 of Order No. 112-A/2011, of 22 March).

  3. The process does not suffer from vices that would invalidate it.

  4. Having regard to the tax administrative process transmitted by electronic means, the documentary evidence attached to the case and the allegations produced, it now behoves us to present the factual matter relevant for the understanding of the decision which is fixed as follows.

II – REASONING

H – FACTUAL REASONING

  1. Regarding material fact, this present Tribunal accepts as established the following facts:

  2. On 30 September 2008 the Claimant requested from the IMTT, based on No. 1 of article 5 of Decree-Law No. 78/2008, of 6 May, the seizure of the vehicle to which this process refers (See Document No. 10, p. 7).

  3. On 8 April 2013, at 22H38 the TA sent to the Claimant herein an e-mail saying, in synthesis, that from its database it appears that the latter is/was owner of the vehicle with registration … subject to IUC, with such tax, for the year 2009 being "unliquidated" (See Document 2).

  4. The said e-mail further states that the TA would shortly liquidate officiously the IUC due and that if payment were made before the lifting of the notice of inquiry it could benefit from a reduction in fine. It further informed that to obtain the liquidation slip there was available a tutorial for liquidation of IUC at an address which it also indicated.

  5. Reacting to the content of the e-mail referred to in the preceding point, the Claimant by e-mail of 9 April 2013, at 9H36, referred to sending in attached file a copy of the request for seizure of the vehicle in question which he presented to the IMTT on 30 September 2008 and requested the annulment of what he called the notice of inquiry and the respective regularization in the TA's computer system, further requesting that he be confirmed that the situation was regularized.

  6. In response to this communication he received also by e-mail from the Tax Office … (SF-…), sent on 9 April 2013 at 17H53 the information that "in accordance with No. 3 of article 6 of the IUC Code, the tax is due on the first day of the month of payment. This registration was cancelled on 2009-04-28, being April the month of payment the tax for this year is due".

  7. On the same day at 18H17, the Claimant herein also by e-mail addressed to SF-… transcribed No. 1 of article 5 of Decree-Law No. 78/2008, of 6 May and invoking his request for seizure of the vehicle dated 30.9.2008 contended that "the six months provided for were completed on 31.3.2009 date on which the tax was not yet due". He ended by requesting the review of the decision and confirmation thereof.

  8. On 14 April 2013, the Claimant insisted that SF-… inform him whether the TA had heeded the fact that the failure to meet the deadline for the non-cancellation of the registration was not attributable to him.

  9. Again by e-mail, SF-… informed Mr. A that "the registration … was cancelled by the IMTT on 2009-04-23, being in accordance with No. 3 of article 6 of the IUC Code, responsible for the payment of the year 2009".

  10. On 18 April 2013 the Claimant herein made the payment of the amounts of IUC and compensatory interest, in the amount of € 30.80 and € 4.89, respectively, for a total of € 35.69.

  11. As results from the document entitled "consultation of historical record by registration (land vehicle)", the present process concerns a vehicle of category E (motorcycle) with registration …, whose date of first registration is 22.4.1993 cancelled on 23.4.2009 (See Document No. 10, p. 8).

REASONING OF FACTS PROVEN

  1. The facts listed in the preceding numbers 49 to 58 were accepted as proven on the basis of the documents in the database of this process and indicated relative to each of the points of the factual matter, insofar as their adherence to reality was not questioned.

FACTS NOT PROVEN

  1. There do not exist facts accepted as not proven, since all facts relevant to the appraisal of the claim were accepted as proven.

I - LEGAL REASONING

  1. The factual matter is fixed, it now behoves us to proceed to legal subsumption and determine the Law applicable to the underlying facts in accordance with the remaining questions to be decided.

  2. The positions of the Parties are known: for the Claimant on 31.3.2009 the tax was not yet due; for the Respondent, "the vehicle in question was registered in Portugal and its ownership was registered in favour of the Claimant, not existing cancellation of the registration on the date of 1.4.2009, that is, on the 1st day of the month of anniversary of the registration (which constitutes the 1st day of the taxation period, cf. Article 4, No. 2, of the IUCT. Consequently it is in the Claimant that are verified the taxable event, the taxability and the elements of objective, subjective and temporal incidence of IUC (See articles 2, 3, 4 and 6 of the IUCT)" (See articles 37 and 38 of the R).

THE ACTIVITY OF THE TAX ADMINISTRATION AND THE PRINCIPLES OF TAX PROCEDURE

  1. The activity of the tax administration, having regard to the provision in article 266 of the Constitution of the Portuguese Republic (CRP) and article 55 of the General Tax Law (LGT), must be subordinated to the Constitution and the Law, and must respect the rights and legitimate interests of citizens (principle of legality) and the principles of equality, proportionality, justice, impartiality and good faith (See Diogo Leite de Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, General Tax Law, annotated and commented, 4th ed., 2012, Encontro da Escrita, pp. 445 et seq.).

  2. As to the principle of legality, article 3 of the Code of Administrative Procedure (CAP) provides that "the bodies of the Public Administration must act in obedience to the law and to the law, within the limits of the powers attributed to them and in conformity with the purposes for which such powers were conferred upon them".

These principles, like the other general principles of administrative activity contained in the CAP, are applicable to any and all action of the Public Administration even if merely technical or of private management (See No. 5 of article 2 of the CAP).

  1. In commenting on article 3 of the CAP, DIOGO LEITE DE CAMPOS, BENJAMIM SILVA RODRIGUES AND JORGE LOPES DE SOUSA say that "the principle of legality, embodied in obedience to the law and to the law, is not limited to the duty of compliance with the law in the strict sense, also encompassing subordination to all legal values, normative or not, such as international law and community law norms, regulatory norms, situations defined judicially or administratively and obligations contractually assumed" (General Tax Law, Annotated and Commented, 4th ed. 2012, Encontro da Escrita, p. 446).

  2. And as to what is stipulated in No. 2 of article 266 of the CRP, those authors say: "the action of the administration, to be legal, will have to be in harmony with the principles of equality, proportionality, justice, impartiality and good faith which, having their own content, are nevertheless part of the block of legality which such action must respect".

  3. Concerning the principle of legality inherent in article 3 of the CAP, MÁRIO ESTEVES DE OLIVEIRA, PEDRO COSTA GONÇALVES AND JOÃO PACHECO DE AMORIM say "in the subordination of the Administration to the law, imposed in article 3, No. 1, the latter is manifestly understood in an objective sense, reported to the sources of Law (all of them, from the most solemn to the least graduated, such as regulations for the use of public services) including general principles, even if these are not contained in a written norm" (CAP Annotated, 2nd ed. Almedina, 1997, p. 91).

  4. These authors further say: "the reference to the law as a parameter of administrative activity, leads implicit moreover another most important implication: that of the binding of the administration to a just (or legal) idea of the law, not to look at it in a purely mechanistic and formalist manner, but as a legal sieve for its interpretation and application, in consonance with the values of justice inherent to the legal order, especially to the constitutional" (Ibidem).

  5. For those illustrious administrative law scholars the principle of justice constitutes "an ultimate ratio of the subordination of the Administration to the Law, permitting the invalidation of those acts which, not fitting within any of the expressed legal conditions of administrative activity, constitute, however, an intolerable affront to the elementary values of the Legal Order, especially those embodied in norms respecting the integrity and dignity of persons, their good faith and confidence in the Law" (loc. cit. p. 106 and Dec. STA of 13.11.2008, proc. 073/08).

  6. The STA pronouncing itself on the principle of good faith, in its aspect of protection of confidence, says the following: "the principle of good faith, in its aspect of protection of confidence, aims to safeguard legal subjects against unjustifiably unpredictable actions of those with whom they are dealing" (See Dec. of 21.9.2011, proc. 753/11).

  7. On the principles of legal certainty and protection of the confidence of citizens, JOSÉ JOAQUIM GOMES CANOTILHO teaches that the principles of legal certainty and protection of confidence, as constitutive elements of the Rule of Law, "are so closely associated that some authors consider the principle of protection of confidence as a sub-principle or as a specific dimension of legal certainty. In general, it is considered that legal certainty is connected with objective elements of the legal order – guarantee of legal stability, security of orientation and realization of the law – whereas the protection of confidence is more connected with the subjective components of confidence, namely the calculability and predictability of individuals in relation to the legal effects of the acts of public powers" (In Constitutional Law and Theory of the Constitution, Almedina, 1998, p. 250).

  8. And, on this matter, this distinguished constitutional scholar also says: "the general principle of legal certainty in a broad sense (thus encompassing the idea of protection of confidence) can be formulated as follows: the individual has the right to be able to trust that to his acts or to the public decisions affecting his rights, positions or legal relations based on existing and valid legal norms are attached the legal effects foreseen and prescribed by those norms" (Ibidem).

  9. For its part, the principle of equality as one of the structuring principles of the general regime of fundamental rights deserves from this author the following comment: "the affirmation – all citizens are equal before the law - meant, traditionally, the requirement of equality in the application of the law. (…) equality in the application of the law continues to be one of the basic dimensions of the principle of equality constitutionally guaranteed and, (…) it assumes particular relevance within the scope of the equal application of the law (of the law) by the bodies of the administration and by the courts (see Dec. TC 142/85)" (loc. cit. pp. 388/389).

DECREE-LAW NO. 78/2008, OF 6 MAY, AND ITS EFFECTS ON THE ECONOMY OF IUCT

  1. No. 3 of article 6 of the IUCT provides that "the tax is considered due on the first day of the taxation period referred to in No. 2 of article 4".

  2. For its part No. 2 of article 4 establishes, in the wording in effect at the time of the facts, the following: "the taxation period corresponds to the year which begins on the date of registration or on each of its anniversaries, for vehicles of categories A, B, C, D and E, and to the calendar year, for vehicles of categories F and G".

  3. Of interest for the analysis of the case at hand, also relevant is No. 3 of this article 4 which has the following wording: "the tax applicable to vehicles of categories A, B, C, D and E is due until the cancellation of the registration by virtue of removal carried out in accordance with the law".

  4. The norms transcribed above are integrated in the IUCT published as Annex II to Law No. 22-A/2007, of 29 June, entering into force on 1 July 2007.

  5. However, on 11 May 2008, Decree-Law No. 78/2008, of 6 May entered into force with the objective of establishing a transitional regime, with an exceptional character, to permit the regularization of the database of vehicles of the Institute of Mobility and Land Transport, IP (IMTT) and of the Institute of Registration and Notariat, IP (IRN) providing, in particular, conditions for the officio cancellation of vehicle registrations (See preamble).

  6. MÁRIO ESTEVES DE OLIVEIRA teaches: "the primary public interest falls exclusively to the legislator who realizes it, weighing which are, of all the interests or needs felt in a social body, those whose dignification or protection by Law is justified because they contribute to that just distribution of goods or composition of conflicts which he, legislator, wishes to see achieved.

That weighing will lead him to elect in the law certain individual ends and certain collective interests or needs, as the most compatible or most convenient to the realization of the primary public interest" (See Administrative Law, Vol. 1, Almedina, 1980, p. 288).

  1. The legislator, when he felt the need to approve Decree-Law No. 78/2008, did nothing more than realize a fundamental principle, namely that of the pursuit of the public interest, in this case the primary public interest.

  2. And, for the pursuit of this interest, the legislator felt the need to provide in the said statute, other causes for the cancellation of the registration, beyond "removal carried out in accordance with the law", in particular the officio cancellation of vehicle registrations.

  3. In effect, and as far as the case at hand is concerned, No. 1 of article 5 of Decree-Law No. 78/2008 establishes the following: "1 - Vehicles are considered disappeared and their respective registrations are cancelled officio, six months having elapsed on the request for seizure of the vehicle made by the owner for purposes of regularization of ownership, without there having been seizure or regularization of ownership by eventual possessors".

  4. In accordance with No. 1 of article 9 of Law No. 3/2004, of 15 January which approves the framework law of public institutes and which requires that these be created by legislative act, the IMTT was created by Decree-Law No. 147/2007, of 27 April, according to which this Institute is a legal person of public law integrated into the indirect administration of the State, endowed with administrative, financial and patrimonial autonomy, which functions under the tutelage and superintendence of the Minister of Transport, Public Works and Communications, being one of its attributions "to ensure the management of the national registers of the transport sector, namely of vehicles (…)" (See Preamble, article 1 and subparagraph r) of No. 2 of article 3, all of DL No. 147/2007).

  5. As indirect administration of the State that it is, the IMTT exercises a form of administrative activity which is destined to the realization of the purposes of the State.

On this activity FREITAS DO AMARAL says: "this is an activity which is destined to the realization of the purposes of the State, which, precisely for that reason, is an activity of a state nature. It translates into the realization of tasks which are tasks of the State.

It is not, however, an activity exercised by the State itself. It is an activity which the State transfers, by its decision, to other entities distinct from it. (…) Those powers which the State entrusts to other entities are in charge of these, although they continue to be, at root, powers of the State itself" (In, Course of Administrative Law, Vol 1, Almedina, 1988, p. 109).

  1. On this matter this illustrious Professor further points out: "state indirect administration is an activity exercised in the interest of the State. (…) It is an activity destined to realize the purposes of the State, therefore in its interest" (Ibidem, p. 310).

  2. In the same sense VITAL MOREIRA pronounces himself when he affirms "indirect administration is, as the very name says, that which is realized on behalf of the State by other entities other than the State by its own administration. It is the pursuit of administrative attributions of a certain administrative entity, by means of another administrative entity" (In, Autonomous Administration and Public Associations, Coimbra ed., 1997, p. 105).

  3. VITAL MOREIRA further refers: "the essential thing is the creation of new public entities, to whom the territorial administration interested (namely the State) confers certain of its attributions to be carried out in the interest of the parent administration. The entities entrusted to realize that parcel of administration of another entity do not pursue their own interests, but rather the interests of the parent entity; they do not define their own orientation, rather they receive it from the parent entity, just as their respective attributions and powers (devolution of powers)" (Ibidem).

  4. Having regard to the provision in subparagraph d) of article 199 of the CRP, Law No. 3/2004, of 15 January (Framework Law of Public Institutes), the content of Decree-Law No. 147/2007, of 27 April and this authoritative doctrine, we can conclude, in summary, that the IMTT exercises an activity of a state nature, which realizes tasks which are tasks of the State, for the realization of its purposes and in its interest, functioning, at the time of the facts, under the tutelage and superintendence of the Minister of Transport, Public Works and Communications.

  5. Having arrived here, it is important to draw the necessary consequences which the acts practiced by the IMTT provoke, or may provoke in other services of the State, including those integrated in direct administration.

  6. The TA says that the ownership of the vehicle in question in the present process "was registered in favour of the Claimant, in active situation, not existing cancellation of the registration on the date of 01/04/2009 (1st day of the month of registration, which corresponds to the 1st day of the taxation period, cf. article 4, No. 2 of the IUCT)." (See article 35 of the R).

  7. With due respect, it results from the provision in No. 2 of article 4 combined with the provision in No. 3 of article 6, both of the IUCT that the taxation period begins on the day of the anniversary of the registration and not on the 1st day of the month of registration.

  8. However, it is apparent from that statement that the TA accepts the cancellation of the registration as a fact which prevents the liquidation of the tax.

  9. In the case at hand, the vehicle which is the object of the present process, had its first registration on 22 April 1993, wherefore, in 2009, its anniversary occurred on 22 April and not on 1 April.

  10. It is true that in accordance with the "consultation of historical record by registration", the registration was cancelled on 23 April 2009.

According to the Claimant, the registration was cancelled with delay having regard to the date on which he made the request for seizure and the date on which the registration was actually cancelled.

  1. It is said that there is delay when something happens after the proper, convenient or marked moment.

Delay is the "act or effect of delaying; lack of punctuality in the fulfillment of an obligation or commitment" (See Houaiss Dictionary of the Portuguese Language, Temas e Debates, Lisbon, 2005, Tome III, p. 974).

  1. In the case of officio cancellation of registrations in accordance with No. 1 of article 5 of Decree-Law No. 78/2008, it cannot be said that there legally exists a marked moment for the IMTT to cancel the registrations, wherefore neither can it be said, in relation to each case, that there exists a delay in cancellation.

It is natural that the procedures which lead to the officio cancellation of a registration based on No. 1 of article 5 of Decree-Law No. 78/2008 are not concluded the day following the expiration of the six-month period to which this legal provision refers. But when the IMTT cancels officio a registration in accordance with this norm, it means that all the requirements contained therein are fulfilled.

  1. What is inconceivable is that after the registration has been officio cancelled, the effects of the cancellation not be reported to the day following the expiration of that six-month period.

  2. In effect, only this interpretation of No. 1 of article 5 of Decree-Law No. 78/2008 is in accord with the principles set forth in No. 2 of article 266 of the CRP and 55 of the LGT.

  3. To consider the date on which the IMTT proceeds to cancel the registration as the relevant one for purposes of determination of the moment of birth of the tax obligation for IUC, is to carry out an arbitrary, unfounded and unreasonably justified differentiation.

  4. In truth, only by considering the effects of the cancellation of registrations made on the basis of No. 1 of article 5 of Decree-Law No. 78/2008, reported to the day following the expiration of the six-month period referred to in this norm, is the principle of equality in the application of the Law respected, the protection of confidence which permits individuals to foresee the legal effects of the acts of public powers, without forgetting that only this interpretation gives effect to the principle of legality in its dimension of obedience to the law and to the law which binds the Administration to act according to a just (or legal) idea of the law. And the principle of justice constitutes, as the STA points out, "an ultimate ratio of subordination of the Administration to the Law" (See of 13.11.2008, proc. 073/08).

The same reasoning applies to the presumption of disappearance of vehicles which should be considered disappeared, in accordance with the said norm, on the day following the expiration of the six-month period counting equally from the request for seizure of the respective vehicle.

THE BIRTH OF THE TAX OBLIGATION FOR IUC

  1. In accordance with the provision in No. 1 of article 36 of the LGT "the tax legal relationship is constituted with the taxable event".

  2. From this legal provision it follows that the tax obligation arises at the moment of the occurrence of the taxable event. The tax obligation as a legal obligation has as the presupposition of its birth the concrete occurrence of the fact defined abstractly by the law as the presupposition of the obligation.

  3. Referring to the structure of the taxable event ALBERTO XAVIER says that it decomposes into two essential elements: an objective one and a subjective one. "The objective element is the taxable event itself considered in itself, independent of its connection to a subject: it is what the doctrine designates sometimes as objective presupposition and other times, with less propriety, as real incidence". The subjective element, for its part, is that which connects or binds the fact to a given category of subjects, so as to determine as to them the birth of the obligation of tax" (In, Manual, p. 249).

  4. This author further tells us that "the objective element of the taxable event is capable of being considered, from the structural prism, under various distinct angles, which represent true sub-elements of that fact: we refer to the material, temporal and quantitative prism, there being also those who refer to a spatial prism" (Ibidem, p. 250).

  5. Important for the analysis of the case at hand, are the material and temporal sub-elements. This illustrious Professor says that "the material element is given to us by the fact itself in its objective materiality". Referring to the temporal sub-element, this author considers the tax period as an essential element of the taxable event. It can be said that the temporal element reveals itself to be important for the determination of the moment of birth of the obligation, that is, the moment in which the Administration can demand the tax performance.

  6. As to the subjective element of the taxable event, ALBERTO XAVIER tells us that it "is constituted by the legal criteria of attribution of the fact to a determined category of subjects. It is what some designate as 'objective presupposition' and others as 'personal incidence'".

  7. Another notion which is important to bear in mind is that of incidence which for ALBERTO XAVIER "is the normative meaning of the taxable event, the reality foreseen by the tax norm and on which this incides: it is the legal description of the taxable event, corresponding thus more closely to the concepts of tatbestand and fattispecie".

  8. For PEDRO SOARES MARTINEZ "the norms of incidence define the plane of incidence, that is, the complex of presuppositions of whose combination results the birth of the obligation of tax, as well as the elements of the same obligation. The norms of incidence determine who is the active subject of the obligation of tax (…) the passive subjects of the same obligation, what is the taxable matter (…)" (See Manual, Almedina, 1983, p. 122).

  9. Possessed of these doctrinal notions and in the light of the principles above enumerated, we reiterate the understanding previously expressed that it cannot be accepted that, in particular in the cases encompassed by No. 1 of article 5 of Decree-Law No. 78/2008, the determination by a service of the direct administration of the State, of the moment of the birth of the tax obligation for IUC and consequently of its taxability, remain dependent on the moment in which another service of the State, in this case the IMTT, proceeds to cancel the registration.

CONCLUSION

  1. In accordance with the norms above referred to, the doctrinal teachings exposed and the understandings previously formulated, it is concluded that:

a) The Claimant having requested the seizure of the vehicle in question in accordance with No. 1 of article 5 of Decree-Law No. 78/2008, of 6 May, on 30.9.2008, the six-month period from this date expired on 30.3.2009 (See subparagraph c) of article 279 of the CC).

b) Therefore, the vehicle to which this process refers, is considered disappeared on 31.3.2009 and its registration cancelled on this date.

c) Having in mind that the date of first registration is 22.4.1993, in 2009 its anniversary occurred on 22.4.2009, being this the first day of the taxation period, that is, that on which IUC becomes due (See articles 4, No. 2 and 6, No. 3, of the IUCT).

d) Being considered disappeared on 31.3.2009, the vehicle in question does not integrate the presuppositions of the objective incidence provided for in article 2 of the IUCT.

e) For its part, the Claimant herein, does not integrate the presuppositions of the subjective incidence contained in article 3 of the IUCT, not being, therefore, a passive subject of this tax concerning the vehicle …, for the year 2009, in particular, because on 22.4.2009, the registration of his right of ownership was no longer found, in the words of the Respondent, "in active situation", since the registration is considered cancelled on 31.3.2009.

f) As the STA points out "passive subject of a tax is the one whom the law indicates and in relation to whom the taxable event was verified" (See Dec. of 9.5.1993 – rec. 12168).

g) Prof. PEDRO SOARES MARTINEZ teaches that "the presupposition of fact, in the global sense of the complex of presuppositions, is always indispensable so that any tax obligation be constituted" (loc. cit., p. 175).

h) Now, the presuppositions of fact which integrate the provisions of law referred to in the preceding subparagraphs d) and e) not being verified by the reasons there referred to, there is not born in 2009, concerning the vehicle in question any obligation of IUC in the legal sphere of the Claimant herein.

In truth, in the present case, none of the presuppositions (objective, subjective, temporal) indispensable to the birth of the tax obligation are found to be verified.

  1. In declaring 01/04/2009 as the 1st day of the month of registration which corresponds to the 1st day of the taxation period, instead of indicating as 1st day of the taxation period 22.4.2009, the day of the anniversary of the registration and in not considering that the vehicle in question is presumed disappeared on the day following the expiration of the six-month period, that is, on 31.3.2009, and the respective registration is considered cancelled equally on this day, the TA makes an erroneous interpretation and application of No. 1 of article 5 of Decree-Law No. 78/2008, of 6 May, as well as of subparagraph e) of No. 1 of article 2, of No. 1 of article 3, of No. 2 of article 4 combined with No. 3 of article 6, all of the IUCT, thus committing errors regarding the presuppositions of law, which constitutes violation of law.

  2. As a result of these errors regarding the presuppositions of law on which are based the acts of liquidation to which the present request for declaration of illegality of the Claimant refers, implicit in his request for reimbursement of the amounts he paid, this request must be judged to have merit, justifying the annulment of the acts of liquidation in question with all the legal consequences, in particular as to the reimbursement of the amounts paid.

  3. Although article 2 of the LFTA explicitly attributes only to arbitral tribunals which function in CAAD competencies to declare the illegality of tax liquidation acts, the fact that the legislator attributes to the tax arbitral process the nature of "alternative procedural means to judicial impugn process and to the action for the recognition of a right or legitimate interest in tax matters", permits concluding that the object of arbitral processes is identical to that which has the judicial impugn process (See article 124, No. 2 of Law No. 3-B/2010, of 28 April).

  4. Being the judicial impugn process essentially a contentious means of mere annulment as results from articles 99 and 124 of the Code of Tax and Customs Procedure, what is intended with it is to eliminate the effects produced by illegal acts.

  5. In the case at hand, the reimbursement which the Claimant intends, is encompassed in the elimination of the effects produced by the impugned acts, as it is a sum which the Claimant paid by force of the impugned liquidation acts.

III – DECISION

Therefore, having regard to all the above, this present Tribunal decides:

a) To judge unfounded the exceptions of incompetence of this present Tribunal and of passive illegitimacy of the TA;

b) Not to know, consequently, of the incident of compulsory intervention deduced by the Respondent;

c) To judge to have merit as proven, on the basis of violation of law, the implicit request for declaration of illegality of the acts of liquidation of IUC and compensatory interest, formulated by the Claimant;

d) To annul the acts of liquidation of IUC and compensatory interest to which document 2009 587628003 of 18.4.2013, of the TA, refers;

e) To judge to have merit the request for reimbursement of the sum unjustly liquidated and paid in the amount of € 35.69;

f) To condemn the TA to pay the costs of the present process.

VALUE OF THE PROCESS

In accordance with the provision in article 97-A, No. 1, subparagraph a) of the Code of Tax and Customs Procedure and article 3, No. 2, of the Regulation of Costs in Tax Arbitration Processes, the value of the process is fixed at € 35.69.

COSTS

In accordance with the provision in article 22, No. 4, of the LFTA, the amount of costs is fixed at € 306.00, in conformity with that established in Table I attached to the Regulation of Costs in Tax Arbitration Processes, charged to the TA.

Let it be registered and notified.

Lisbon, 28 March 2014.

THE ARBITRATOR

José António de Jesus dos Anjos

(The writing of the present decision is governed by the old spelling)

Frequently Asked Questions

Automatically Created

Who is liable for IUC payment when a vehicle registration cancellation is delayed by the tax authority?
Under Portuguese tax law, the liable party for IUC payment is the person in whose name the vehicle is registered at the start of the taxation period (the registration anniversary date), as established in Articles 3 and 4 of the IUC Code. Even when registration cancellation is delayed by administrative procedures, the legal presumption is that the registered owner remains the taxpayer until the actual cancellation date. The tax authority's position is that the taxable event is verified on the first day of the taxation period, regardless of pending administrative procedures. However, taxpayers may challenge this through arbitration if they can demonstrate the delay was not attributable to them and resulted from administrative failings.
Can a taxpayer claim a refund of IUC paid on a vehicle pending registration cancellation under Decreto-Lei 78/2008?
Yes, a taxpayer can claim a refund of IUC paid on a vehicle pending registration cancellation under Decreto-Lei 78/2008 by initiating arbitral proceedings at CAAD (Centro de Arbitragem Administrativa). The claimant must demonstrate that they complied with the legal requirements for vehicle seizure and that any delay in registration cancellation was not attributable to them. However, success depends on proving that the administrative delay by the tax authority or IMTT violated the statutory deadlines and that this delay directly caused the IUC charge. The tax authority typically argues that as long as the vehicle was registered in the taxpayer's name on the first day of the taxation period, the IUC charge is legally valid regardless of pending cancellation procedures.
How do legal presumptions of vehicle ownership affect IUC subjective incidence in Portuguese tax law?
Legal presumptions of vehicle ownership critically affect IUC subjective incidence by establishing that the registered owner is presumed to be the taxpayer liable for the tax. Article 3 of the IUC Code creates a legal presumption that whoever appears in the vehicle registration records is the owner for tax purposes. This presumption operates automatically—the tax is assessed based on registration status on the first day of each taxation period (typically the registration anniversary). The presumption can only be rebutted by formal cancellation of registration, which must be completed according to legal procedures. Even if a taxpayer has initiated cancellation procedures, they remain liable until the registration is formally cancelled in the official records maintained by IMTT or vehicle registration offices.
What is the CAAD arbitral tribunal procedure for disputing IUC tax assessments in Portugal?
The CAAD arbitral tribunal procedure for disputing IUC assessments begins with the taxpayer submitting a request for constitution of an arbitral tribunal under Articles 2 and 10 of Decreto-Lei 10/2011 (RJAT). If the taxpayer does not appoint an arbitrator, one is appointed by CAAD's Deontological Board. Parties are notified and have the right to refuse the appointment. Once constituted, the tribunal has 6 months (extendable by 2 months) to issue a decision. The tax authority must file a response addressing both procedural exceptions and merits. A mandatory meeting under Article 18 of RJAT is held with both parties. The tribunal examines whether all elements of tax incidence are satisfied and decides on the legality of the assessment and any refund claims.
Does a delay in vehicle registration cancellation by the Autoridade Tributária exempt the owner from IUC liability?
No, a delay in vehicle registration cancellation by the Autoridade Tributária or IMTT does not automatically exempt the owner from IUC liability under current Portuguese tax law. The tax authority's position is that IUC liability depends solely on registration status at the critical date—the first day of the taxation period. Articles 4 and 6 of the IUC Code establish that tax is due until formal cancellation of registration, and taxability is verified on the registration anniversary regardless of pending administrative procedures. However, taxpayers can challenge this through arbitration by arguing that administrative delays beyond statutory deadlines should not result in additional tax burdens. The outcome depends on whether the tribunal accepts that the delay was attributable to the administration and whether this constitutes grounds for annulling the assessment or granting a refund.