Draft State Budget Law for 2016 – Single Road Tax Code 

1. The Draft State Budget Law for 2016 contains a legislative authorization proposal to define, with interpretative nature, as taxable persons, for the Single Road Tax, the natural and legal persons, public or private, who have vehicles registered in their name.

2. Article 3 of the Single Road Tax Code establishes that:” the vehicle owners are taxable persons, being considered as taxable persons natural and legal persons, public or private, who have vehicles registered in their name.

3. In the several legal actions sponsored by CTSU, the Courts unanimously decided - against the claim of Tax Authority- that the Article 3/1 of the Single Road Tax Code with the expression “being considered as taxable persons” establishes a rebuttable legal presumption, in accordance with Article 73 of the General Taxation Law which establishes that the presumptions always admit evidence to the contrary.

In accordance with Article 64 of the Code of Tax Procedure and Proceedings, the tax incidence presumptions may be rebutted by an administrative complaint against acts grounded on the same.

To rebut the presumption, in relation to the vehicles subjected to taxation, invoices relating to the sale of the vehicles have been presented in Court, which demonstrated that the sale of the vehicles took place before the occurrence of the operative event and the consequent chargeability of the tax (Articles 4 and 6 of the Single Road Tax Code).

In conclusion, the person liable for payment of the single road tax is the owner of the vehicle, which is not necessarily the person in whose name the car is registered.

4. On the other hand, the leasing companies are the holders of the registration and the owners of the vehicles. However, in case of doubt, the Courts have held that tax due shall be paid by the lessees because the vehicles are used by them.

5. In accordance with the interpretive rule, there are two consequences that inflect the previous trend:

a) The actual rule can no longer be interpreted as a presumption which had been allowing the lessors and the holders of the registration, when they are not the owners of the vehicle, not to pay the tax. It means, that according to this new rule, the holder of the registration will always be treated as the taxable person.

b) Decree-Law 177/2014, of December 15th, amends the procedures for the vehicles registration in cases of unwritten purchase and sales agreement. This Decree enables the seller to require the officious modification of the registration if the buyer does not require it in a timely manner (60 days). In accordance with article 2/2 invoices, payment receipts or other discharge documents which indicate the vehicle registration number, the name and the address of the seller and the buyer indict the purchase and sale of the vehicle.

Bearing in mind the retrospective nature of this rule and the date of expiration (4 years), this rule will cover situations earlier than 2014 when the sellers could not amend the registration.

6. In conclusion, this proposal for amendment is highly questionable, because:

a) The payment of single road tax will be charged to the person in whose name the car is registered, even if the owner is another person;

b) It is intended that the amendment is applicable in previous years when the seller could not amend the vehicle registration.

On the other hand, taking into account our experience and knowledge in other cases, if the Government legislates under this legislative authorization, the Tax Authority may win the ongoing legal cases. In other words, the legislator wants to change the rules of the game half-way through by influencing decisions in favor of the Tax Authority, in cases that the Tax Authority would certainly loose.

In addition, problems concerning the retroactivity of tax law, which Article 103/3 of the Constitution of the Portuguese Republic expressly forbids, may arise.

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