Summary
Full Decision
Arbitral Award
The Arbitrator Dr. Filipa Barros (sole arbitrator), appointed by the Deontological Council of the Center for Administrative Arbitration ("CAAD") to form the Sole Arbitral Tribunal, constituted on 28 April 2017, decides as follows:
I. REPORT
The company A… corporate entity no.…, with registered office at Street …, …, Ground Floor …-… Lisbon, hereinafter "Claimant", hereby, pursuant to the provisions of article 2.º, no. 1, paragraph a), and articles 10.º and following of Decree-Law no. 10/2011, of 20 January, hereinafter referred to as "RJAT"[1], requests the constitution of an Arbitral Tribunal to pronounce on the illegality and consequent annulment of the VAT assessments and corresponding compensatory interest subsequently identified:
No.…, in the amount of € 1,102.16, relating to February 2011 and respective compensatory interest assessment no. … of € 200.62;
No. … in the amount of € 1,240.85, relating to March 2011 and respective compensatory interest assessment no. … of € 221.93;
No. … in the amount of € 62.10, relating to April 2011;
No. … in the amount of € 394.22, relating to May 2011 and respective compensatory interest assessment no. … of € 67.83;
No. … in the amount of € 1,009.24, relating to June 2011 and respective compensatory interest assessment no. … of € 170.33;
No. … in the amount of € 755.09, relating to July 2011 and respective compensatory interest assessment no. … of € 124.70;
No. … in the amount of € 708.86, relating to August 2011 and respective compensatory interest assessment no. … of € 114.89;
No. … in the amount of € 244.49, relating to September 2011 and respective compensatory interest assessment no. … of € 38.80;
No. … in the amount of € 298.31, relating to October 2011 and respective compensatory interest assessment no. … of € 46.29;
No. … in the amount of € 1,144.94, relating to November 2011;
No. … in the amount of € 1,343.89, relating to December 2011;
No. … in the amount of € 546.02, relating to January 2012;
No. … in the amount of € 393.30, relating to February 2012;
No. … in the amount of € 59.80, relating to March 2012;
No.… in the amount of € 931.73, relating to April 2012;
No. … in the amount of € 100.05, relating to May 2012;
No. … in the amount of € 747.96, relating to June 2012;
No. … in the amount of € 2,221.57, relating to July 2012;
No. … in the amount of € 290.26, relating to August 2012;
No. … in the amount of € 613.87, relating to September 2012;
No. … in the amount of € 226.78, relating to October 2012;
No. … in the amount of € 1,653.43, relating to November 2012;
No.…, in the amount of €87.63, relating to December 2012;
No.…, in the amount of €587.19, relating to January 2013;
No.…, in the amount of €305.47, relating to February 2013;
No.…, in the amount of €1,200.76, relating to March 2013 and respective compensatory interest assessment no. … € 118.45;
No.…, in the amount of €1,811.25, relating to May 2013;
No.…, in the amount of €118.45, relating to June 2013;
No.…, in the amount of €351.90, relating to July 2013;
No.…, in the amount of €3,286.93, relating to August 2013;
No.…, in the amount of €225.63, relating to September 2013;
No.…, in the amount of €1,370.34, relating to October 2013;
No.…, in the amount of € 737.84, relating to November 2013;
No.…, in the amount of € 236.90, relating to December 2013;
No.…, in the amount of €198.72, relating to January 2014;
No.…, in the amount of €488.75, relating to February 2014;
No.…, in the amount of €240.35, relating to March 2014;
No.…, in the amount of €54.97 relating to April 2014;
No.…, in the amount of €322.00, relating to May 2014;
No.…, in the amount of €644.46, relating to June 2014;
No.…, in the amount of €2.66087 relating to July 2014;
No.…, in the amount of €1,223.25, relating to July 2014;
No.…, in the amount of €34.50, relating to August 2014;
No.…, in the amount of €261.83, relating to September 2014;
No. … in the amount of € 127.02, relating to October 2014;
No.…, in the amount of €149.50, relating to November 2014;
No.…, in the amount of €50.53, relating to January 2015;
No.…, in the amount of €707.74, relating to February 2015;
No.…, in the amount of €100.01, relating to June 2015;
No.…, in the amount of €424.76, relating to July 2015;
No.…, in the amount of €196.37 relating to September 2015;
To substantiate its request, the Claimant argues, in summary, that the additional VAT assessments now being challenged are based on an alleged irregular situation in which certain customers of the Claimant, service recipients, found themselves, namely the fact that they were inactive as of a date prior to the issuance of the invoices or allegedly were not registered in VIES – System of Information on Intra-Community Transactions – for the purposes of carrying out intra-community operations, thereby violating the formalities provided in article 27.º no. 5 of RITI and article 36.º of the VAT Code.
The Claimant cannot accept the corrections proposed for the various periods of the years 2011, 2012, 2013 and 2014 based on formalistic findings.
It maintains that according to paragraph a) of number 6 of article 6.º of the VAT Code, VAT taxable services are those provided to taxable persons with seat, permanent establishment or domicile in national territory, whereby conversely, where the acquirer of services is not established in national territory, the service will not be subject to VAT taxation in Portugal, with the obligation to self-assess the VAT due resting on the service recipient. As such, no VAT is due in Portuguese territory by the service provider – in this case by the Claimant.
The Claimant argues that various forms of the reverse charge mechanism are provided for, motivated by combating tax fraud and evasion, and these have been mandatorily transposed into Portugal, being incorporated into the VAT Code and the RITI. In this context, the VIES system was created as an administrative cooperation mechanism, which through the registration of the economic operator with a valid identification number, allows the electronic exchange of information relating to VAT registration of economic operators located in the European Union.
However, the VIES system, created in 1993 with the objective of strengthening the fight against VAT fraud, has been subject to few technical improvements, having proven ineffective in providing information on intra-community transactions in the Member States. This insufficiency was observed in a 2014 report issued by the European Commission on the application of Regulation no. 904/2010CE, from which the importance of supporting VIES information with complementary elements obtained in national territory that demonstrate the existence of operations, or at least their plausibility, emerges.
Thus, and with regard to the irregular situations detected in the SIT report concerning the VAT numbers mentioned in the invoices issued by the Claimant, the latter could not but note surprise upon finding that such a significant number of customers had ceased operations between 2011 and 2014, while simultaneously maintaining a stable commercial relationship with it, through the same contacts. For this purpose, the Claimant conducted a series of proceedings with its customers in order to verify the reason for the irregularities pointed out by SIT, requesting support in confirming the status of taxable person in the respective Member States, and obtained the proper confirmation of the status of taxable person and also confirmation of the self-assessment of the tax.
According to the Claimant, it was duly demonstrated to the Tax Authority that the irregularities found in VIES relating to the VAT numbers of its customers were due to the following reasons:
The occurrence of restructuring operations involving mergers;
Changes in corporate type that required alteration of the VAT number;
Or subsequent entry into VAT groups that involve the alteration of the VAT number.
The Claimant attached to the proceedings the correspondence sent by the various customers, demonstrating that such alterations were not communicated to it at the time of invoice issuance; however, that such customers maintained their legal existence, constituted VAT taxable persons and carried out reverse charge of VAT following the acquisition of services from the Claimant. Additionally, in customers for whom written confirmation was not sent, it is possible to verify, via the internet, the corporate restructuring that motivated an update of the VAT number.
Therefore, once confirmation has been made that the acquirers of services provided by the Claimant are taxable persons validly registered in their countries, nothing more can be required by the Tax Authority. It acted in good faith, based on the existence of a long-standing and lasting commercial relationship, and it is wholly extraneous to the Claimant the existence of corporate alterations in the sphere of customers that were not communicated to it, as moreover results from the provisions of Recital 18 of the Implementing Regulation no. 282/2011 of the Council, of 15 March 2011. On the other hand, pursuant to paragraph b) of article 18.º of the aforementioned Regulation, a "reasonable verification of the accuracy of the information provided by the recipient, through normal commercial security measures, such as those relating to identity or payment controls" was carried out.
Finally, relying on the jurisprudence of the Portuguese superior courts and the rulings of the CJEU, the Claimant defends the sufficiency of the evidence presented, the fallibility of VIES registration and the fact that the VAT Directive does not provide, with regard to intra-community service provision, which means of proof to use before or after for purposes of validating non-subjection to VAT in Portuguese territory.
The Claimant concludes by recalling that the measures used by Member States must ensure the exact collection of the tax and prevent fraud, without jeopardizing the principle of neutrality, having no legal support in the present case the view espoused by the Tax Authority, imposing on the taxpayer the fulfillment of additional proof requirements, promoting a situation of double taxation in the field of VAT, when it was demonstrated that there is no missing tax.
On 22 February 2017, the request for constitution of the Arbitral Tribunal was accepted by His Excellency the President of CAAD and was immediately notified to the Respondent in accordance with the law.
The Claimant did not appoint an Arbitrator.
Thus, pursuant to and for the purposes of the provisions of no. 1 of article 6.º and paragraph b) of no. 1 of article 11.º of the RJAT, by decision of His Excellency the President of the Deontological Council, duly communicated to the parties within the legally provided periods, the signatory was appointed arbitrator of the Sole Arbitral Tribunal, who communicated to the Deontological Council and to the Center for Administrative Arbitration the acceptance of the appointment within the period stipulated in article 4.º of the Deontological Code of the Center for Administrative Arbitration.
In accordance with the provisions of paragraph c), of no. 1, of article 11.º of Decree-Law no. 10/2011, of 20 January, as amended by article 228.º of Law no. 66-B/2012, of 31 December, the Sole Arbitral Tribunal was constituted on 28 April 2017, followed by the relevant legal proceedings.
The Respondent, duly notified for this purpose, submitted its response in which it defends the inadmissibility of the request for arbitral pronouncement.
To this end, it alleges, in summary, that in the present proceedings the Claimant did not gather sufficient proof of the status of taxable persons of the service recipients it provided, which would allow it to apply paragraph a) of no. 6 of article 6.º of the VAT Code. Indeed, VIES is a mechanism that allows the electronic exchange of information relating to the registration of VAT of economic operators located in the European Union; through a simple and quick consultation, the Claimant could have verified the status of taxable persons of the recipients of its services at the time of invoicing. A simple print-out of this verification whenever the result was positive would be sufficient to prove such status of taxable person of the service recipients.
Now, if the Claimant did not make use of VIES, it cannot attribute deficiencies to the functioning of the system. On the other hand, if the irregularities concerning the VAT numbers of the Claimant's acquirers were received with surprise by it, this again proves that the Claimant did not verify the VAT numbers in question, because if it had done so it would have had the opportunity to correct the situation.
Additionally, the Respondent argues that the clarifications attached to the proceedings by the Claimant are emails of which it is unknown whether or not they are issued by persons with powers of representation of the corporate entities in question, and it will always be said that simple statements of taxable persons do not prove what the Claimant intends to prove, namely that the service recipient was on that date a taxable person and that the tax was self-assessed and paid.
Thus, the Respondent considers that there will never be duplication of collection when, in the absence of proof of the status of taxable person of the service recipients (from other Member States), tax is assessed (owed) in Portugal, even though it may also have been wrongly assessed in those other Member States, which it does not know if happened, due to lack of proof.
It further states that the Claimant's thesis finds no support either in Recital 19 of the Implementing Regulation (EU) no. 282/2011 of the Council of 15 March 2011 which establishes the implementation measures for Directive 2006/112/CE, nor in article 18.º of the aforementioned Regulation, from which it results that proof of the status of taxable person is made through the communication of the VAT number and its confirmation as well as the corresponding name and address. In the Tax Authority's view, the Claimant should have observed paragraph a) of no. 3 of the aforementioned article 18.º.
Therefore, and contrary to what the Claimant states, the jurisprudence of the CJEU is not applicable to the present case, as to this date the Claimant has not managed to provide proof of the status of taxable person of the service recipients, and facts proved by electronic mail where powers of representation of the persons sending them are not demonstrated cannot be accepted.
The Respondent concludes by requesting the dismissal of all the alleged defects in the administrative action.
On 12 June 2017, the Claimant was notified to attach to the proceedings the translation of documents in foreign languages, presented with the request for arbitral pronouncement, in accordance with article 134.º of the CPC, applicable ex vi article 29.º of the RJAT.
In compliance with the principle of contradictory proceedings, a viewing period of 10 days was granted to the Respondent, a facility which it exercised.
On 25 July 2017, given that, in this case, none of the purposes legally assigned to it were present, and with no objection from the parties, pursuant to the provisions of articles 16.º paragraph c), 19.º and 29.º no. 2 of the RJAT, as well as the principles of procedural economy and prohibition of useless acts, the holding of the meeting referred to in article 18.º of the RJAT was dispensed with.
Written arguments were submitted by the Claimant, followed by arguments from the Respondent.
In the arguments presented the parties reiterated essentially the positions defended in their respective pleadings.
II. PROCEDURAL SANITATION
The Arbitral Tribunal is materially competent and is regularly constituted, pursuant to articles 2.º no. 1, paragraph a), 5.º and 6º, no. 1, of the RJAT.
The parties have personality and judicial capacity, show themselves to be legitimately interested and are regularly represented, (cf. articles 4.º and 10.º, no. 2 of the RJAT and article 1.º of Ordinance no. 112-A/2011 of 22 March).
The proceedings do not suffer from nullities.
III. GROUNDS
1. Facts taken as proven
The facts were taken as proven on the basis of documents attached in the course of the administrative proceedings, in the request for arbitral pronouncement, and in the response presented by the Tax Authority, as follows indicated.
The Claimant is a commercial company by quota shares that is engaged in the provision of services in the area of industrial property consulting, namely protection of trademarks, patents and other Industrial Property rights;
The Claimant is classified, for VAT purposes, under the normal scheme with monthly periodicity;
The Claimant provides services to national and foreign customers who seek consulting for protection and legal compliance in Portugal or abroad of their industrial property rights;
Services provided by the Claimant to customers located outside Portuguese territory correspond to an approximate volume of 80% in relation to the whole of the activity;
The Claimant maintains a stable and long-standing commercial relationship with its customers, in particular those based in other EU Member States, to whom it provided services between 2011 and 2014;
The Claimant did not assess VAT in the invoices issued to its customers based in other Member States, for services provided between the years 2011 and 2014;
Having irregularities been pointed out by SIT regarding the VAT numbers indicated in the invoices issued to entities based in other Member States, the Claimant promoted proceedings with those same entities in order to verify the reason for the irregularities and to request proper support in confirming the status of taxable person;
The Claimant obtained clarifications from various customers established in other Member States as shown in the table below:
In the course of the development of its activity, in its periodic VAT declaration relating to the period of December 2014 (2014/12), the Claimant requested a VAT refund of € 28,000.00;
In this period of 2014/12, in which it requested the refund of € 28,000.00, a tax credit was determined to be carried forward to the following period in the amount of € 43,856.56;
In the year 2015, pursuant to service orders no. OI2015…/OI2015…/OI2015…/OI2015… a tax audit was initiated conducted by the Tax Inspection Services of the Finance Directorate of Lisbon (hereinafter "SIT"), which had as its object the verification of the tax situation of the Claimant, in the field of VAT, in the years 2011 to 2014;
In this sequence, in October 2015, SIT issued the respective draft audit report, in which they proposed the approval of the VAT refund in the amount of € 28,000.00 relating to the period 2014/12;
In the report, corrections were equally proposed to the VAT assessments of the years 2011, 2012, 2013 and 2014, in the total amount of € 38,404.24.
The RIT which is part of the Administrative Proceedings further refers to the following:
"Some documents relating to the transfer of goods and provision of services were requested, namely copies of the excerpts of the sub-accounts of accounts 2433 – VAT assessed, 2434 – VAT adjustments, 71 – Sales and/or 72 – Service Provision relating to the economic period of 2014, copies of the excerpts of current account relating to the economic periods of 2011 to 2014, as well as copies of the respective invoices, relating to customers with VAT numbers FR…, DE…, ESB…, SE…, GB…, GB…, FR5…, DE…, ESB…, SE…, GB…, GB…, FR…, DE…, ESB…, SE…, GB…, GB…, NL…, DE…, ESA…, SE…, GB…, GB…, DE…, ESA…, GB…, GB…, GB…, NL…, DE…, ESG…, GB…, GB… and GB…, copies of the highest-value invoices, for each tax period, relating to intra-community transfers of goods and service provision mentioned in the summary declarations, entered in field 7 of the periodic declarations for the periods 2014/01 to 2014/12, copies of the highest-value invoices, for each tax period, relating to transfers of goods and service provision that are exempt or not taxed (operations that give the right to deduction), entered in field 8 of the periodic declarations for the periods 2014/01 to 2014/12, as well as copies of the highest-value invoices, for each tax period, relating to transfers of goods and service provision that are exempt or not taxed (operations that do not give the right to deduction), entered in field 9 of the periodic declarations for the periods 2014/01 to 2014/12.
From the analysis carried out on the elements made available by the taxpayer we found the following:
i) Economic period of 2011
In the economic period of 2011 the company A…, Lda. provided services to various customers with seat in other member states, among which the following entities:
1) T… SA, with VAT number: FR …, to which it issued invoice no. 1816 in the amount of EUR 680.00 (Doc. no. 01);
2) B…, with VAT number: NL…, to which it issued invoice no. 1535 in the amount of EUR 280.00 (Doc. no. 02);
3) Q… BV, with VAT number: NL…, to which it issued invoice no. 2044 in the amount of EUR 664.00 (Doc. no. 03);
4) U…, with VAT number: DE…, to which it issued invoice no. 2170 in the amount of EUR 2,933.70 (Doc. no. 04);
5) M…, with VAT number: DE…, with invoices issued in the total amount of EUR 2,244.00 (Doc. no. 05);
6) Dr.H…, with VAT number: DE…, with invoices issued in the total amount of EUR 3,450.00 (Doc. no. 06);
7) V…, with VAT number: DE…, to which it issued invoice no. 460 in the amount of EUR 640.00 (Doc. no. 07);
8) C…, with VAT number: DE…, to which it issued invoice no. 720 in the amount of EUR 480.00 (Doc. no. 08);
9) W…, with VAT number: DE …, to which it issued invoice no. 1096 in the amount of EUR 500.00 (Doc. no. 09);
10) O… SA, with VAT number: ES…, with invoices issued in the total amount of EUR 5,929.00 (Doc. no. 10);
11) X…, with VAT number: ES…, with invoices issued in the total amount of EUR 780.00 (Doc. no. 11);
12) Y…, with VAT number: ES…, with invoices issued in the total amount of EUR 2,750.00 (Doc. no. 12);
13) P…, with VAT number: ES…, with invoices issued in the total amount of EUR 2,503.00 (Doc. no. 13);
14) Z…, SA, with VAT number: ES…, to which it issued invoice no. 2328 in the amount of EUR 251.00 (Doc. no. 14);
15) AA…, with VAT number: SE…, with invoices issued in the total amount of EUR 8,272.70 (Doc. no. 15);
16) L…, with VAT number: SE…, with invoices issued in the total amount of EUR 5,252.70 (Doc. no. 16);
17) D… AB, with VAT number: SE …, with invoices issued in the total amount of EUR 1,337.00 (Doc. no. 17);
18) R…–…, with VAT number: GB …, with invoices issued in the total amount of EUR 1,620.00 (Doc. no. 18);
19) N…, with VAT number: GB …, with invoices issued in the total amount of EUR 2,549.00 (Doc. no. 19);
20) "S…", with VAT number: GB…, with invoices issued in the total amount of EUR 1,101.00 (Doc. no. 20);
21) K…, with VAT number: GB…, to which it issued invoice no. 2087 in the amount of EUR 860.00 (Doc. no. 21);
22) G… Ltd., with VAT number: GB…, with invoices issued in the total amount of EUR 1,186.00 (Doc. no. 22);
ii) Economic period of 2012
In the economic period of 2012 the company A…, Lda. provided services to various customers with seat in other member states, among which the following entities:
1) BB… SA, with VAT number: FR …, with invoices issued in the total amount of EUR 607.00 (Doc. no. 23);
2) B…, with VAT number: NL…, to which it issued invoice no. 456 in the amount of EUR 260.00 (Doc. no. 24);
3) Q… BV, with VAT number: NL…, with invoices issued in the total amount of EUR 4,212.00 (Doc. no. 25);
4) U…, with VAT number: DE…, with invoices issued in the total amount of EUR 8,542.75 (Doc. no. 26);
5) O… SA, with VAT number: ES…, with invoices issued in the total amount of EUR 3,117.00 (Doc. no. 27);
6) X…, with VAT number: ES…, with invoices issued in the total amount of EUR 1,365.00 (Doc. no. 28);
7) Z…, SA, with VAT number: ES…, to which it issued invoice no. 1940 in the amount of EUR 251.00 (Doc. no. 29);
8) CC…, with VAT number: ES…, to which it issued invoice no. 829 in the amount of EUR 85.00 (Doc. no. 30);
9) AA…, with VAT number: SE…, with invoices issued in the total amount of EUR 6,629.00 (Doc. no. 31);
10) R… –…, with VAT number: GB…, with invoices issued in the total amount of EUR 2,186.00 (Doc. no. 32);
11) E… (…), with VAT number: GB…, with invoices issued in the total amount of EUR 717.00 (Doc. no. 33);
12) I…, with VAT number: GB…, with invoices issued in the total amount of EUR 1,746.70 (Doc. no. 34);
13) DD…, with VAT number: GB…, with invoices issued in the total amount of EUR 1,000.00 (Doc. no. 35);
14) J…, with VAT number: GB …, with invoices issued in the total amount of EUR 2,593.40 (Doc. no. 36);
15) N…, with VAT number: GB…, with invoices issued in the total amount of EUR 7,729.80 (Doc. no. 37);
16) G…., with VAT number:…, with invoices issued in the total amount of EUR 2,377.00 (Doc. no. 38);
iii) Economic period of 2013
In the economic period of 2013 the company A…, Lda. provided services to various customers with seat in other member states, among which the following entities:
1) EE…, with VAT number: FR…, with invoices issued from 20-03-2013 in the total amount of EUR 11,467.00 (Doc. no. 39);
2) BB… SA, with VAT number: FR…, with invoices issued in the total amount of EUR 701.00 (Doc. no. 40);
3) B…, with VAT number:…, to which it issued invoice no. 619 in the amount of EUR 190.00 (Doc. no. 41);
4) U…, with VAT number: DE…, with invoices issued in the total amount of EUR 9,054.12 (Doc. no. 42);
5) M…, with VAT number: DE…, to which it issued invoice no. 613 in the amount of EUR 2,395.70 (Doc. no. 43);
6) O…, with VAT number: ES…, with invoices issued in the total amount of EUR 5,498.00 (Doc. no. 44);
7) CC…, with VAT number: ES…, to which it issued invoice no. 435 in the amount of EUR 100.00 (Doc. no. 45);
8) AA…, with VAT number: SE…, with invoices issued in the total amount of EUR 6,614.00 (Doc. no. 46);
9) E… (…), with VAT number: GB…, with invoices issued in the total amount of EUR 770.00 (Doc. no. 47);
10) I…, with VAT number: GB…, to which it issued invoice no. 1342 in the amount of EUR 862.00 (Doc. no. 48);
11) F… (…), with VAT number: GB…, with invoices issued in the total amount of EUR 1,061.00 (Doc. no. 49);
12) J…, with VAT number: GB…, to which it issued invoice no. 1051 in the amount of EUR 1,293.12 (Doc. no. 50);
13) N…, with VAT number: GB…, to which it issued invoice no. 27 in the amount of EUR 560.00 (Doc. no. 51);
14) K…, with VAT number: GB…, to which it issued invoice no. 1055 in the amount of EUR 1,352.00 (Doc. no. 52);
15) G…., with VAT number: GB…, with invoices issued in the total amount of EUR 6,585.00 (Doc. no. 53);
iv) Economic period of 2014
In the economic period of 2014 the company A…, Lda. provided services to various customers with seat in other member states, among which the following entities:
1) EE…, with VAT number: FR…, with invoices issued in the total amount of EUR 14,861.00 (Doc. no. 54);
2) Q…, with VAT number: NL…, with invoices issued in the total amount of EUR 3,765.38 (Doc. no. 55);
3) O…, with VAT number: ES…, with invoices issued in the total amount of EUR 4,564.92 (Doc. no. 56);
4) Z…, SA, with VAT number: ES…, to which it issued invoice no. 164 in the amount of EUR 331.00 (Doc. no. 57);
5) CC…, with VAT number: ES…, to which it issued invoice no. 440 in the amount of EUR 100.00 (Doc. no. 58);
6) AA…, with VAT number: SE…, with invoices issued in the total amount of EUR 4,877.15 (Doc. no. 59);
7) E…(…), with VAT number: GB…, with invoices issued in the total amount of EUR 1,288.38 (Doc. no. 60);
8) I…, with VAT number: GB…, with invoices issued in the total amount of EUR 1,442.12 (Doc. no. 61);
9) F…(…), with VAT number: GB…, with invoices issued in the total amount of EUR 3,016.25 (Doc. no. 62);
10) G…, with VAT number: GB…, with invoices issued in the total amount of EUR 872.00 (Doc. no. 63);
11) E…, with VAT number: GB…, to which it issued invoice no. 699 in the amount of EUR 1,172.00 (Doc. no. 64);
v) The company EE…, with VAT number: FR … had tax domicile at Av. …, … Paris, France and was registered in the register for purposes of carrying out intra-community operations from 01-01-1999 to 19-03-2013 (Doc. no. 65);
vi) The company BB… SA, with VAT number: FR … had tax domicile at Av…, no.…, … Paris…, France and was registered in the register for purposes of carrying out intra-community operations from 01-01-1993 to 07-05-2008 (Doc. no. 66);
vii) The company T… SA, with VAT number: FR … had tax domicile at Av. …, no.…, … Paris…, France and was registered in the register for purposes of carrying out intra-community operations from 01-04-2000 to 01-11-2002 (Doc. no. 67);
viii) The company B…, with VAT number: NL … had tax domicile at…, no.…, … -…, Netherlands and was registered in the register for purposes of carrying out intra-community operations from 01-01-1980 to 10-05-2004 (Doc. no. 68);
ix) The company Q…, with VAT number: NL … had tax domicile at…, no.…, ……, Netherlands and was registered in the register for purposes of carrying out intra-community operations from 01-06-1992 to 03-11-2010 (Doc. no. 69);
x) The company U…, with VAT number: DE … had tax domicile at ... …, … …, Germany and was registered in the register for purposes of carrying out intra-community operations from 23-10-1992 to 05-09-2007 (Doc. no. 70);
xi) VAT number: DE … was not registered in the register for purposes of carrying out intra-community operations (Doc. no. 71);
xii) The company H…, with VAT number: DE … had tax domicile at ... ..., … …, Germany and was registered in the register for purposes of carrying out intra-community operations from 13-01-2004 to 02-01-2006 (Doc. no. 72);
xiii) V…, with VAT number: DE … had tax domicile at... …, … …, Germany and was registered in the register for purposes of carrying out intra-community operations from 29-12-1992 to 21-09-2002 (Doc. no. 73);
xiv) The company C…, with VAT number: DE … had tax domicile at… …, … Berlin, Germany and was registered in the register for purposes of carrying out intra-community operations from 01-12-1992 to 02-01-2010 (Doc. no. 74);
xv) The company W…, with VAT number: DE … had tax domicile at… ……, … Frankfurt, Germany and was registered in the register for purposes of carrying out intra-community operations from 23-10-1993 to 31-12-2006 (Doc. no. 75);
xvi) The company O…, with VAT number: ES … had tax domicile at… …, no.…, …, Barcelona, Spain and was registered in the register for purposes of carrying out intra-community operations from 15-05-2006 to 28-09-2010 (Doc. no. 76);
xvii) The company X…, with VAT number: ES … has tax domicile at…, no.…, …, …, … Barcelona, Spain and is registered in the register for purposes of carrying out intra-community operations only from 14-06-2012 (Doc. no. 77);
xviii) The company Y…, with VAT number: ES … has tax domicile at…, no.…, …, …, … Madrid, Spain and is registered in the register for purposes of carrying out intra-community operations only from 14-02-2012 (Doc. no. 78);
xix) The company P…, with VAT number: ES … had tax domicile at …, no.…, …, … Madrid, Spain and was registered in the register for purposes of carrying out intra-community operations from 01-01-1993 to 10-09-2008 (Doc. no. 79);
xx) VAT number: ES … is not registered in the register for purposes of carrying out intra-community operations (Doc. no. 80);
xxi) VAT number: ES … is not registered in the register for purposes of carrying out intra-community operations (Doc. no. 81);
xxii) VAT number: SE … is not registered in the register for purposes of carrying out intra-community operations (Doc. no. 82);
xxiii) VAT number: SE … is not registered in the register for purposes of carrying out intra-community operations (Doc. no. 83). However, the discrepancy was caused by the erroneous completion of the recapitulative declaration relating to the period of 2012/10 since the VAT number: SE … contained in the invoices issued to that customer is duly registered in VIES for purposes of carrying out intra-community operations (Doc. no. 84);
xxiv) L…, with VAT number: SE … had tax domicile at Box…, … …, Sweden and was registered in the register for purposes of carrying out intra-community operations from 01-01-1991 to 31-12-1997 (Doc. no. 85);
xxv) The company D…, with VAT number: SE … had tax domicile at …, ……, Sweden and was registered in the register for purposes of carrying out intra-community operations from 01-01-1991 to 01-03-2010 (Doc. no. 86);
xxvi) The company R…–…, with VAT number: GB … had tax domicile at…, ……, …, Great Britain and was registered in the register for purposes of carrying out intra-community operations from 01-04-1973 to 01-04-2011 (Doc. no. 87);
xxvii) The company FF…, with VAT number: GB … had tax domicile at…, …, …, Great Britain and was registered in the register for purposes of carrying out intra-community operations from 01-06-1978 to 01-07-2012 (Doc. no. 88). However, the company in question only issued invoices to this customer in 2011, so the discrepancy is not confirmed;
xxviii) The company E… (…), with VAT number: GB … had tax domicile at…, …, …, Great Britain and was registered in the register for purposes of carrying out intra-community operations from 01-04-1973 to 01-11-2011 (Doc. no. 89);
xxix) The company GG…, with VAT number: GB … had tax domicile at…, …, …, Great Britain and was registered in the register for purposes of carrying out intra-community operations from 01-04-1973 to 01-04-2011 (Doc. no. 90);
xxx) The company I…, with VAT number: GB … had tax domicile at…, …, Great Britain and was registered in the register for purposes of carrying out intra-community operations from 01-04-1973 to 01-04-2011 (Doc. no. 91);
xxxi) The company F… (…), with VAT number: GB … had tax domicile at …, …, …, …, Great Britain and was registered in the register for purposes of carrying out intra-community operations from 03-06-1980 to 01-07-2012 (Doc. no. 92);
xxxii) The company DD… Ltd., with VAT number: GB … had tax domicile at…, ……, …, Great Britain and was registered in the register for purposes of carrying out intra-community operations from 01-07-1982 to 01-11-2001 (Doc. no. 93);
xxxiii) The company J…, with VAT number: GB … had tax domicile at…, …, Great Britain and was registered in the register for purposes of carrying out intra-community operations from 01-07-1980 to 01-07-2010 (Doc. no. 94);
xxxiv) VAT number: GB … is not registered in the register for purposes of carrying out intra-community operations (Doc. no. 95);
xxxv) VAT number: GB … is not registered in the register for purposes of carrying out intra-community operations (Doc. no. 96);
xxxvi) K…, with VAT number: GB … had tax domicile at C/o …, …, …, …, …, Great Britain and was registered in the register for purposes of carrying out intra-community operations from 13-12-1993 to 14-07-2010 (Doc. no. 97);
xxxvii) The company G…, with VAT number: GB … had tax domicile at… ,…, …, …, Great Britain and was registered in the register for purposes of carrying out intra-community operations from 01-07-1996 to 31-03-2008 (Doc. no. 98);
xxxviii) The company HH…, with VAT number: GB … had tax domicile at…, …, …, …, Great Britain and was registered in the register for purposes of carrying out intra-community operations from 01-08-2007 to 30-11-2010 (Doc. no. 99). However, on 30-11-2010, this company was incorporated by the company HH…, with VAT number: GB …, which appears in the invoices issued by the company in question (Doc. no. 100), and the discrepancy is not confirmed;
xxxix) The situations in which these entities find themselves make it impossible for the transfers of goods and/or service provision made to them by the company A…, Lda. to have been carried out without tax assessment, under the provisions of paragraph a) of no. 6 of article 6.º of the VAT Code, conversely, since the acquirers of goods and/or services are inactive as of a date prior to the issuance of the respective invoices or are not even registered for purposes of carrying out intra-community operations;
xl) Therefore, in accordance with the provisions of paragraph b) of no. 6 of article 6.º of the VAT Code, the company A…, Lda. should have proceeded to assess tax concerning the operations carried out with these customers (Doc. no. 101), and thus corrections are necessary of which we shall give proper account in the following chapter of this report;
xli) The highest-value invoices relating to transfers of goods and service provision that are exempt or not taxed (operations that give the right to deduction), entered in field 8 of the periodic declarations for the periods 2014/01 to 2014/12 were issued to various customers with seat in countries outside the Community, namely Switzerland, United States of America and Japan;
xlii) These are operations not located in National Territory, so the company A…, Lda. properly did not assess tax concerning the operations carried out with these customers, given the provisions of paragraph a) of no. 6 and paragraph c) of no. 11, both of article 6.º of the VAT Code;
xliii) The highest-value invoices relating to transfers of goods and service provision that are exempt or not taxed (Operations that do not give the right to deduction), entered in field 9 of the periodic declarations for the periods 2014/01 to 2014/12 were issued to various customers and concern amounts paid on behalf and for account of the service recipients, registered by the taxable person in appropriate third-party accounts, amounts excluded from the taxable value, in accordance with the provisions of paragraph c) of no. 6 of article 16.º of the VAT Code;
Thus, given the situation in which the entities identified above find themselves, namely the finding that they were inactive as of a date prior to the issuance of the invoices or are not even registered in VIES – System of Information on Intra-Community Transactions for purposes of carrying out intra-community operations, the company A…, Lda. should have proceeded to assess tax concerning the operations carried out with them, in accordance with the provisions of paragraph b) of no. 6 of article 6.º of the VAT Code, and thus corrections are necessary of which we shall give proper account in the following chapter of this report."
On 19 October 2015, the Claimant exercised the competent right of hearing, against the said proposed VAT corrections having presented, in particular, the following clarifications:
Pursuant to the Final Tax Audit Report (hereinafter "RIT") corrections were made to the VAT assessments of the years 2011, 2012, 2013 and 2014 in the total amount of € 30,579.05, partially taking into account the considerations raised by the Claimant in the right of hearing, as follows indicated:
Economic Period - Amount
2011 - 8,304.15
2012 - 7,872.39
2013 - 9,274.52
2014 - 5,127.99
Total - 30,579.05
On 18 March 2016 the Claimant filed a Complaint of Grievance against the additional assessments issued by the Finance Directorate of Lisbon;
On 24 September 2016, the Claimant is notified to exercise the right of hearing, which chose not to exercise;
By dispatch of 23 November 2016, delivered by the Head of the Tax Justice Division of the Finance Directorate, in a substitution regime, the grievance complaint request was dismissed, in the exercise of subdelegated authority, which was notified to the Claimant on 30 November 2016;
The Claimant was notified of the respective VAT assessments and compensatory interest, in the global value of €30,579.05, having proceeded to its payment within the voluntary payment period;
On 22 February 2017, the Claimant deduced the request for constitution of the Arbitral Tribunal which gave rise to the present proceedings (cf. electronic request to CAAD).
2. Facts not proven
No facts were found with relevance to the appraisal of the matter that were not proven.
3. Motivation
Regarding the factual matter, the Tribunal need not pronounce on everything alleged by the parties, but rather has the duty to select the facts that matter for the decision and distinguish proven from unproven matters (cf. art.º 123.º, no. 2, of the CPPT and article 607.º, no. 3 of the CPC, applicable ex vi article 29.º, no. 1, paragraphs a) and e), of the RJAT).
Thus, the facts relevant to the judgment of the case are chosen and selected according to their legal relevance, which is established in view of the various plausible solutions of the question(s) of Law (cf. previous article 511.º, no. 1, of the CPC, corresponding to current article 596.º, applicable ex vi of article 29.º, no. 1, paragraph e), of the RJAT).
Thus, taking into account the positions taken by the parties, in light of article 110.º no. 7 of the CPPT, the documentary evidence, the statements of the Claimant that were not questioned by the Tax Authority and the Administrative Proceedings attached to the file, the facts listed above were considered proven, with relevance for the decision.
4. Matter of Law
The Tax Authority assessed additional VAT invoking in summary the following grounds:
The Claimant provided services to customers domiciled in various Community countries, which it considered not to be located in Portugal, by applying paragraph a) of no. 6 of article 6.º of the VAT Code, however, it did so in an irregular situation by including customers with activity ceased at a date prior to the services provided and the issuance of invoices as well as customers not registered for VAT purposes in the VIES system – System of Information on Intra-Community Transactions for purposes of carrying out intra-community operations.
Now, according to the Tax Authority, the Claimant should have proceeded to assess tax concerning the operations carried out with them, in accordance with the provisions of paragraph b) of no. 6 of article 6º of the VAT Code, as, without proof being made of the status of taxable persons of the customers in question, operations with them cannot be considered to be located in the respective Member States and, consequently, are considered to be located and subject to VAT in Portugal.
According to the Claimant, despite recognizing failings and irregularities at the moment of invoice issuance, sufficient proof was made of the status of taxable persons of the service recipients it provided, proof which in most cases came through documents issued by the tax authorities of the countries of residence and, in other cases through emails and clarifications that allow understanding the evolution of the tax numbers of the entities receiving services, due to formal alterations that occurred in these companies, and which demonstrated, in all situations, the reality of the operations as well as the substantive/substance requirements of the same. The Claimant adds that these are long-standing customers with which it maintains commercial relationships, although such customers never communicated any alterations to its VAT numbers. Finally, it points to the unreliability of the VIES system for proving the existence of VAT taxable persons.
Legal Framework
Since we are dealing with a tax subject to European Union regulation, the rules governing the Tax must be taken into account in accordance with European Union law, taking into account the respective transposition, and the CJEU jurisprudence on this matter must also be respected, which is a consequence of the obligation of preliminary rulings provided in § 3 of article 267.º of the Treaty on the Functioning of the European Union.
Thus, it is necessary to determine whether or not the presuppositions of incidence, namely spatial, of VAT in national territory are met concerning the service provision carried out by the Claimant, or, if not, whether the general rule of localization of service provision applies, as provided in article 6.º, no. 6, paragraph a), of the VAT Code, which determines taxation in the country of destination.
Regarding the localization of service provision, articles 44.º and 45.º of the VAT Directive[2] provide as follows:
Article 44.º
"The place of supply of services supplied to a taxable person acting as such is the place where that taxable person has established the seat of his economic activity. However, if such services are supplied to a fixed establishment, other than the seat of his economic activity, of the taxable person, the place of supply of such services is the place where the fixed establishment is located. In the absence of a seat of economic activity or a fixed establishment, the place of supply of such services is the place where the taxable person acting as the customer has his domicile or is habitually resident."
Article 45.º
"The place of supply of services supplied to a person who is not a taxable person is the place where the supplier has established the seat of his economic activity. However, if such services are supplied from a fixed establishment, other than the seat of his economic activity, of the supplier, the place of supply of such services is the place where the fixed establishment is located. In the absence of a seat of economic activity or a fixed establishment, the place of supply of such services is the place where the supplier has his domicile or is habitually resident."
With respect to the application of the reverse charge mechanism (VAT self-assessment by the acquirer) article 196.º of the VAT Directive provides as follows:
"VAT is due by the taxable persons who are the recipients of services referred to in article 56.o, or by the recipients of services referred to in articles 44.o, 47.o, 50.o, 53.o, 54.o and 55.o who are registered for VAT purposes in the territory of the Member State in which the tax is due, if the services are supplied by taxable persons not established in that Member State."
For its part, article 6.º, no. 6 of the VAT Code provides as follows:
"The following are taxable:
a) Services supplied to a taxable person referred to in no. 5 of article 2.º, whose seat, fixed establishment or, failing that, domicile, for which the services are supplied, is located in national territory, wherever the seat, fixed establishment or, failing that, domicile of the supplier is located;
b) Services supplied to a person who is not a taxable person, when the supplier has in national territory the seat of his activity, a fixed establishment or, failing that, domicile, from which the services are supplied."
Additionally, with relevance for the case in hand, Regulation (EC) no. 904/2010, of 07-10-2010[3] relating to cooperation and the fight against fraud in the field of VAT (applicable from 1 January 2012)[4] provides as follows:
Recital (18)
"The correct application of the rules on the place of supply of services depends mainly on the status of the customer as a taxable person or not, and the capacity in which it acts. In order to determine the status of the customer as a taxable person, it is useful to establish which supporting documents the supplier of services will have to obtain from the customer."
Recital (19)
"It should be clear that, where services are supplied to a taxable person for his own use or that of his staff, such taxable person should not be regarded as acting in that capacity. To determine whether the customer is acting in the capacity of a taxable person or not, the communication of his VAT identification number to the supplier is sufficient unless the supplier has information to the contrary. It is important to ensure that a service acquired for professional purposes but also used for private purposes is taxed in only one place."
From article 18.º of the aforementioned Regulation, the following arises:
"1. Unless the supplier has information to the contrary, the supplier may consider that a customer established in the Community has the status of a taxable person:
a) Where the customer has communicated his individual VAT identification number to him, and he obtains confirmation of the validity of that VAT identification number, as well as of the corresponding name and address, in accordance with article 31.º of Regulation (EC) no. 904/2010 of the Council, of 7 October 2010, relating to cooperation and the fight against fraud in the field of value added tax (5);
b) Where the customer has not yet received an individual VAT identification number but informs him that he has requested that number, and he obtains any other supporting document showing that the customer is a taxable person or a corporate entity which is not a taxable person but must be registered for VAT purposes, and carries out a reasonable verification of the accuracy of the information provided by the customer through normal commercial security measures, such as those relating to identity or payment controls."
Finally, in Implementing Regulation no. 282/2011 of the Council of 15 March 2011[5] (articles 17.º to 25.º) provisions of major relevance can be found in the implementation of the destination principle, concerning customers established in the European Union, namely, with interest for the case in the file, relating to the proof of the status of the customer – the question of how to know whether that customer is or is not a taxable person.
Thus, article 18.º of the said implementing regulation provides:
"1. Unless the supplier has information to the contrary, the supplier may consider that a customer established in the Community has the status of a taxable person:
a) Where the customer has communicated his individual VAT identification number to him, and he obtains confirmation of the validity of that VAT identification number, as well as of the corresponding name and address, in accordance with article 31.º of Regulation (EC) no. 904/2010 of the Council, of 7 October 2010, relating to cooperation and the fight against fraud in the field of value added tax;
b) Where the customer has not yet received an individual VAT identification number but informs him that he has requested that number, and he obtains any other supporting document showing that the customer is a taxable person or a corporate entity which is not a taxable person but must be registered for VAT purposes, and carries out a reasonable verification of the accuracy of the information provided by the customer through normal commercial security measures, such as those relating to identity or payment controls.
(...)".
Application to the Present Case
In accordance with the facts taken as proven, the Claimant is a commercial company engaged in the provision of services in the field of industrial property consulting, and services have been provided to various customers established in other Member States of the European Union.
In accordance with the provisions contained in the VAT Directive, supra referred to, two general rules of localization of service provision prevail: one (article 44.º of the VAT Directive) taking into account the domicile of the acquirer and enshrining the destination principle for business to business (B2B) operations, another (article 45.º of the VAT Directive) looking at the domicile of the supplier and enshrining the origin principle for business to consumer (B2C) operations.
In cross-border service provision between taxable persons, the acquirer is responsible for assessing the tax, through the reverse charge mechanism, provided in article 196.º of the VAT Directive.
As the Directive makes a distinction between business to business operations and business to consumer operations, it is important to know what should be considered business operations.
Article 44.º of the Directive refers to "taxable persons acting as such", so the localization rule provided in that provision should cover all taxable persons defined in Title III of the Directive, provided that the services are acquired in the course of their activity.
In the same sense, Recital (18) of Regulation (EC) no. 904/2010 refers that "The correct application of the rules on the place of supply of services depends mainly on the status of the customer as a taxable person or not, and the capacity in which it acts."
On the other hand, it is important to recall that in order to avoid double taxation it is necessary for Member States to make the same interpretation and application of articles 44.º and 196.º of the Directive.
In the present case it is discussed whether or not proof was made of the status of taxable person of the customers of other Member States, to whom the Claimant provided industrial property consulting services.
Indeed, the Tax Authority conducted inspections on the Claimant and concluded, in sum, that it is not possible to apply the rule of taxation at destination to the service provision contained in the SIT report carried out by the Claimant because, alongside irregularities detected in the transcription of the VAT number digits (situations which are nonetheless sporadic), in most situations the "VAT numbers are inactive as of a date prior to the issuance of invoices or are not even registered in VIES" being this system, the RIT continues, "that enables verification, at the time of consultation of the validity of a VAT number of a Member State".
Therefore, the sole basis for proceeding to the assessment of additional VAT, taxing in VAT in Portugal the service provision carried out by the Claimant is the fact that it did not previously consult VIES regarding the status of taxable persons of the recipients of its services at the time of invoicing them.
Thus, in other words, according to the Tax Authority, where a given VAT number is not validated in VIES, or an irregularity is found in the issuance of the invoice relating to the identification of the VAT number in question, no complementary proofs are to be accepted, relating to the status of a taxable person, and VAT must be assessed in Portugal, and the recipient of the operation considered a non-taxable person.
Now, with all due respect, we cannot agree with the position defended by the Tax Authority.
It is not denied that VIES constitutes an important means of access to information, in the context of intra-community operations, and it is possible to obtain confirmation by electronic means of the validity of the VAT identification number of a given person, as well as the corresponding name and address, provided that such information is duly updated.
However, VIES does not make it possible to prove that the material requirements of an intra-community operation are met. It has been understood by CJEU jurisprudence, in cases of exemptions in the context of intra-community transactions, that the absence of registration in VIES does not justify the refusal of VAT exemption in those operations, if there is no serious indication suggesting the existence of fraud and provided that it is proved that the material requirements of the operation are met.[6]
In the aforementioned CJEU ruling, the following is also stated:
"32. Accordingly, neither the obtaining by the customer of a valid VAT identification number for carrying out intra-community operations nor its registration in the VIES system constitute material requirements of the VAT exemption of an intra-community supply. They are only formal requirements that cannot jeopardize the right of the supplier to the VAT exemption, to the extent that the material requirements of an intra-community supply are met (see, by analogy, judgments of 6 September 2012, Mecsek‑Gabona, C‑273/11, EU:C:2012:547, paragraph 60; of 27 September 2012, VSTR, C‑587/10, EU:C:2012:592, paragraph 51; and of 20 October 2016, Plöckl, C‑24/15, EU:C:2016:791, paragraph 40).
33. In this regard, it should be recalled that, in the absence of a specific provision in the VAT Directive as to the evidence that taxable persons must provide in order to benefit from the VAT exemption, it is for the Member States to set, in accordance with article 131.° of that directive, the conditions for the exemption of intra-community supplies to ensure the correct and straightforward application of those exemptions and to prevent possible fraud, evasion and abuse. However, in exercising their powers, the Member States must respect the general principles of law which are part of the legal order of the Union (see judgments of 6 September 2012, Mecsek‑Gabona, C‑273/11, EU:C:2012:547, paragraph 36 and the case-law cited, and of 9 October 2014, Traum, C‑492/13, EU:C:2014:2267, paragraph 27).
34. According to the case-law of the Court of Justice, a national measure goes beyond what is necessary to ensure the correct collection of the tax if it makes the right to VAT exemption depend, in essence, on compliance with formal obligations, without taking into account substantive requirements and, in particular, without enquiring whether those requirements have been complied with. Indeed, operations must be taxed having regard to their objective characteristics (judgment of 20 October 2016, Plöckl, C‑24/15, EU:C:2016:791, paragraph 37 and case-law cited).
35. As regards the objective characteristics of an intra-community supply, it follows from paragraphs 23 to 25 of the present judgment that if a supply of goods meets the requirements laid down in article 138.°, paragraph 1, of the VAT Directive, that supply is exempt from VAT (see, to that effect, judgment of 20 October 2016, Plöckl, C‑24/15, EU:C:2016:791, paragraph 38 and case-law cited).
36. It follows that the principle of fiscal neutrality requires that the VAT exemption be granted if the substantive requirements are met, even if the taxable persons have neglected certain formal requirements (judgment of 20 October 2016, Plöckl, C‑24/15, EU:C:2016:791, paragraph 39)."
Although this jurisprudence was adopted regarding exemptions relating to intra-community transfers of goods, to the extent that it refers to the consequences of the use of VAT numbers (of recipients) that are inactive, non-existent or even unregistered, no specificity is seen that would justify different treatment for service provision. Being so it is to apply the interpretation adopted by the CJEU to the case in hand.
Now, the understanding of the Tax Authority is incompatible with the aforementioned CJEU jurisprudence, according to which the assignment of an identification number for VAT purposes is a means of proof of the tax status of the taxable person for the purposes of applying VAT that facilitates tax control of intra-community operations, "but this is a formal requirement that cannot jeopardize the right to exemption, to the extent that the material requirements of an intra-community supply are met". Also according to this jurisprudence, operations must be taxed according to their objective characteristics, since "neither the obtaining by the customer of a valid VAT identification number for carrying out intra-community operations nor its registration in the VIES system constitute material requirements of the VAT exemption of an intra-community supply".
It should further be noted that Implementing Regulation no. 282/2011, in its provisions for the implementation of the destination principle, conveys concern to safeguard the position of the service provider, establishing presumptions that exempt him from an unreasonable burden of proof, referring to a principle of good faith and caution measures normally required and expected in the commercial circuit.
Indeed, under article 18.º of the Implementing Regulation, beyond the VAT identification number is valued the possibility of "reasonable verification" of the accuracy of the information provided by the customer, through measures relating to "identity or payment control".
Now, as is proven, the Claimant maintains stable and lasting commercial relationships with the recipients of the services in question, and despite the changes in the VAT identification numbers of those customers not having been timely detected by the Claimant – resulting from changes in corporate type or mergers and incorporations of those companies – such acquirers cannot be considered as private individuals, and it is further a matter of common knowledge that these are companies operating as taxable persons, which acted in that capacity, carrying out operations in the course of their taxable activity, which, although acting under another VAT number, accepted the invoices issued by the Claimant, confirming the performance of tax self-assessment at destination.
Therefore, the information on cessation of activity accessed through VIES constitutes a presumption to that effect, but as all presumptions enshrined in the field of incidence admit counter-proof (cf. art. 73.º of the General Tax Law).[7]
In this sense, the complementary evidence presented by the Claimant makes it possible to reasonably prove that the recipients of the operations are taxable persons, and there is no reason to doubt the veracity of the emails sent by its customers where corporate transformations that occurred are evidenced, the rectifications of VAT numbers incorrectly entered by the Claimant, in addition to in some cases copies of certificates issued by the tax authorities of the countries where the service recipients are domiciled, attesting the status of taxable person, being presented.
On the other hand, the Tax Authority does not make counter-proof, reveals no serious indication that fraud existed, nor questions that services were provided as stated in the invoices, being in fact the fact that they were provided the presupposition of the additional VAT assessment.
In sum, the set of factors referred to above corroborates the conclusion that we are faced with formal irregularities resulting from the lack of confirmation in VIES whether the VAT identification number previously provided remained current, and not a situation of fraud or of service provision made to non-existent taxable persons.
Thus, in accordance with article 6.º no. 6 paragraph a) of the VAT Code, the challenged assessments suffer from a defect of violation of law, which justifies their annulment [article 163.º, no. 1, of the Administrative Procedure Code, subsidiarily applicable under article 2.º, paragraph c), of the General Tax Law].
The decision dismissing the grievance complaint is also illegal for having confirmed the VAT assessments.
6. Compensatory Interest
The Claimant also petitioned for the condemnation of the Respondent in compensatory interest, accrued and accruing until the date of return of the amounts of tax wrongly assessed, considering, in the present case, that wrongly assessed VAT occurred, due to error attributable to the administration.
In accordance with article 43.º of the General Tax Law and article 61.º of the Tax Procedure Code "Compensatory interest is due when it is determined, by means of grievance complaint or judicial challenge, that there was error attributable to the services from which results payment of the tax debt in an amount greater than legally due".
Error attributable to the administration is understood as error not attributable to the taxpayer and based on wrong presuppositions of fact and law that are not the responsibility of the taxpayer. Thus, "the right to compensatory interest covers only one of the causes of responsibility of the tax administration, acting as such: that originated by the wrongful payment of taxes, which is attributable to it (...) the right to compensatory interest in favor of the taxpayer comes, as a general rule, from a duty of indemnification of the tax administration resulting from the forced unproductivity of the amounts disbursed by the taxpayer."(cf. António Lima Guerreiro, Annotated General Tax Law, Rei dos Livros Publisher, p. 204 and 205).
Now, in the case in hand, it is demonstrated that the Claimant proceeded to the payment of tax and compensatory interest by force of the assessments which are the object of the present proceedings.
Consequently, the Claimant has the right to compensatory interest in accordance with article 43.º no. 1 of the General Tax Law and article 61.º of the Tax Procedure Code.
Compensatory interest shall be paid from the date on which the Claimant made the payment until full reimbursement, at the legal supplementary rate, in accordance with articles 43.º, no. 4, and 35.º, no. 10, of the General Tax Law, article 61.º of the Tax Procedure Code, article 559.º of the Civil Code and Ordinance no. 291/2003, of 8 April.
IV. DECISION
Therefore, it is decided in this Arbitral Tribunal to judge the arbitral request formulated by the Claimant as founded and, in consequence:
Annul the assessment acts which are the subject of the present proceedings, in the global value of €30,579.05;
In consequence, order the reimbursement of that amount whose assessment was wrongly made;
Condemn the Tax Authority and Customs Authority to pay to the Claimant compensatory interest, in accordance with articles 24.º, no. 5, of the RJAT, 43.º, no. 1, of the General Tax Law and 61.º of the Tax Procedure Code;
Condemn the Tax Authority and Customs Authority to pay the costs of the proceedings.
V. VALUE OF THE CASE
The value of the case is fixed at € 30,579.05, in accordance with article 97.º-A, no. 1, a), of the Tax Procedure and Process Code, applicable by virtue of paragraphs a) and b) of no. 1 of article 29.º of the RJAT and no. 2 of article 3.º of the Regulation of Costs in Tax Arbitration Proceedings.
VI. COSTS
The arbitration fee is fixed at €1,836.00, in accordance with Table I of the Regulation of Costs in Tax Arbitration Proceedings, to be paid by the Respondent, since the request was entirely founded, in accordance with articles 12.º, no. 2, and 22.º, no. 4, both of the RJAT, and article 4.º, no. 4, of the said Regulation.
Notify.
Lisbon, 10 October 2017
The Arbitrator
(Filipa Barros)
[1] Acronym for Legal Regime of Tax Arbitration.
[2] Directive 2008/8/CE of the Council, of 12 February 2008, amending Directive 2006/112/CE regarding the place of supply of services.
[3] Pursuant to Recital (4) "The objective of this regulation is to ensure the uniform application of the current VAT system, by establishing provisions implementing Directive 2006/112/CE, in particular regarding taxable persons, supplies of goods and provision of services and the place of taxable operations. In accordance with the principle of proportionality enshrined in no. 4 of article 5.o of the Treaty on European Union, this regulation does not exceed what is necessary to achieve that objective. The uniformity of application is best ensured by means of a regulation, as this instrument is binding and directly applicable in all Member States."
[4] Was amended by Regulation no. 517/2013, of the Council, of 13 May 2013.
[5] Amended by Implementing Regulation no. 1042/2013, of the Council, of 7 October 2013.
[6] Judgment of the CJEU of 09 February 2017, delivered in case no. C-21/16.
[7] In this sense, see CAAD jurisprudence, Case no. 709/2016-T of 20 June 2017 and Case no. 500/2016-T of 9 May 2017.
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