André Kosters / Lusa
The Constitutional Court declares that charging those who have the vehicle registered, regardless of who actually drives it, violates the principle of tax equality.
The Constitutional Court (TC) considered unconstitutional the rule of the Single Circulation Tax Code (IUC) which determines that the tax must be charged to the person in whose name the vehicle is registered, regardless of who its effective owner is. The decision, released last Friday, only applies to the specific case analyzed, but sets a precedent for future court decisions on similar matters.
The ruling concludes that the current rule violates the principle of tax equalitynamely the principle of equivalence, by assuming an “indisputable” presumption, that is, one that does not admit proof to the contrary. In practice, this means that the registered taxpayer is obliged to pay the tax even when he no longer uses the vehicle, and cannot demonstrate that ownership has been transferred. According to the TC, this impossibility of contesting compromises tax justiceespecially when the IUC is justified by environmental costs associated with the effective use of the car.
The case that gave rise to the decision began at the Administrative and Fiscal Court of Penafiel and concerned just 32.17 euros of IUC. The first instance ruled in favor of the taxpayer and refused to apply the rule due to unconstitutionality, leading the Public Prosecutor’s Office to appeal to the TC, says the .
This is not a new topic in the courts. For years, the Tax Authority (AT) argued that the tax should be charged to the registration holderignoring evidence of alienation of the vehicle. Importing or leasing companies were frequently asked to pay IUC for cars already sold or returned. After several legal defeats, the Government changed the law in 2016, reinforcing the tax interpretation and giving it an interpretative character. It is precisely this change that the TC now rejects and declares unconstitutional.
The decision has a practical impact in several situations. In sales between individuals, for example, it is the buyer who must update the registration, but many do not do so within the legal period of 60 daysleaving the seller exposed to paying IUC. Although the law allows the seller to update the registration through documentary proof, the TC emphasizes that this procedure involves costs and can only be carried out after the buyer has failed to comply.
