Intra-Community Transfer of Goods VAT Proof Requirements – CAAD Decision 149/2015-T

ARBITRAL DECISION

The Arbitrators José Pedro Carvalho (Presiding Arbitrator), Maria Forte Vaz and Manuel Vaz, appointed as arbitrators at the Administrative Arbitration Centre, agree to form an Arbitral Tribunal as follows:

RULING

In its written submissions[1], the Claimant requests the removal of the document filed by the Tax Authority (AT) at the meeting of 10-07-2015, which was admitted at that time.

It should be noted from the outset that, having been notified in the act of filing itself, the Claimant raised no objection to the filing, so it must be said that it has no grounds when it refers to the filing as "untimely" and "post hoc reasoning".

As regards the latter issue, it appears that the Claimant confuses evidence and reasoning, which are certainly distinct matters. In the present instance, we are in the first of the aforementioned categories, and that any eventual "post hoc reasoning" does not constitute grounds for the removal of documents, as is evident, among other things, from the lack of invocation of any legal provision supporting such a claim.

Furthermore, Article 423 of the Code of Civil Procedure (CPC) provides that:

"2- If documents are not filed together with the respective pleading, they may be presented up to 20 days before the date on which the final hearing takes place, but the party is ordered to pay a fine, unless it proves that it could not file them with the pleading.

3 - After the time limit provided in the preceding number, only documents whose presentation was not possible until that moment are admitted, as well as those whose presentation became necessary as a result of a subsequent occurrence."

Since the tax arbitration process does not require the mandatory holding of a final hearing, one must naturally equate to this the holding of the last meeting of the process, if it takes place, or the moment immediately prior to notification for the submission of written submissions, or the setting of a deadline for the final decision, without the holding thereof.

In this context, the filing of the document in question could never be considered "untimely".

Thus, at most, one could consider the possibility of ordering the AT to pay a fine, based on the aforementioned provision of Article 423/2 of the CPC.

However, the tax arbitration process - embodied in the RJAT - contains no provision regarding either the imposition of procedural fines or the imposition of incidental costs.

This omission may be viewed as a gap, to be filled by resorting to civil and tax procedural rules, or as an intentional omission aimed at the non-applicability of those rules.

In this case, it is understood that the latter legislative option is the correct one.

In fact, the RJAT only entrusts to the Regulation of Costs of the CAAD the setting of the arbitration fee, and not any other amount.

And, even if it were admitted that the arbitration fee under the RJAT could incorporate procedural fines and/or incidental costs awarded by the Courts established within it, the fact is that it has not done so.

Accordingly, it is understood that it is not legally permissible in the context of a tax arbitration process as it is currently configured to order the parties to pay procedural fines and/or incidental costs, which if it were to occur in the current context would, moreover, give rise to significant operational difficulties relating, among other things, to the entity beneficiary of the corresponding sum (the State? the CAAD? the Court?), as well as to the corresponding form of payment and possible enforcement collection.

Thus, and for the reasons stated, it would not be possible to order the AT to pay a fine, just as the Claimant is not ordered to pay costs for the present procedural incident, concerning the dismissal of its claim for removal of the document.

Given the foregoing, the arbitrators further agree to the following:

ARBITRAL DECISION

I – REPORT

On 2 March 2015, A… - …, S.A., with registered office at Avenue …, no. …, Lisbon, integrated in the Tax Service of Lisbon-…, registered at the Commercial Registry Office of … under the single registration number for a Legal Person no. …, filed a request for constitution of an arbitral tribunal, under the provisions of Articles 2 and 10 of Decree-Law no. 10/2011, of 20 January, which approved the Legal Regime for Arbitration in Tax Matters (hereinafter, abbreviated as RJAT), as amended by Article 228 of Law no. 66-B/2012, of 31 December, seeking the declaration of illegality of the VAT assessment acts with numbers …, …, 2012… and 2012…, for periods 09, 10, 11 and 12 of the year 2011, and respective compensatory interest assessments, with numbers … and …, and immediately on the dismissal of the hierarchical appeals that were filed against the dismissal decisions of the gracious complaints that preceded them.

To support its request the Claimant alleges, in summary, that the aforementioned assessments and, consequently, the second-level acts which, having them as their object, confirmed them, suffer from errors in their respective assumptions of law and fact.

On 04-03-2015, the request for constitution of the arbitral tribunal was accepted and automatically notified to the AT.

The Claimant did not proceed to appoint an arbitrator, so, under the provisions of subparagraph a) of paragraph 2 of Article 6 and subparagraph a) of paragraph 1 of Article 11 of the RJAT, the President of the Deontological Council of the CAAD appointed the signatories as arbitrators of the collective arbitral tribunal, who communicated acceptance of the appointment within the applicable time period.

On 23-04-2015, the parties were notified of these appointments, and neither manifested a wish to challenge any of them.

In accordance with the provision of subparagraph c) of paragraph 1 of Article 11 of the RJAT, the collective Arbitral Tribunal was constituted on 12-05-2015.

On 18-06-2015, the Respondent, duly notified for this purpose, filed its defence by way of objection.

On 10-07-2015, the meeting referred to in Article 18 of the RJAT took place.

The Claimant requested the use of testimonial evidence produced in case no. 753/2014T of the CAAD, which was granted, and the production of the testimonial evidence listed was dispensed with.

Having been granted a period for the submission of written submissions, these were submitted by the parties, commenting on the evidence produced and reiterating and developing their respective legal positions.

A period of 30 days was set for the pronouncement of the final decision, after submission of submissions by the AT.

The Arbitral Tribunal is substantively competent and is regularly constituted in accordance with Articles 2, paragraph 1, subparagraph a), 5 and 6, paragraph 1, of the RJAT.

The parties have legal standing and capacity, are legitimate and are legally represented, in accordance with Articles 4 and 10 of the RJAT and Article 1 of Ordinance no. 112-A/2011, of 22 March.

The process is not affected by nullities.

Having considered all the foregoing, it is necessary to render

II. DECISION

A. MATTERS OF FACT

A.1. Facts Deemed Proven

1. Pursuant to External Service Orders nos. OI2011…, OI2011…, OI2012… and OI2012…, four external inspection procedures were carried out on the Claimant, with declared registered office at Street …, … - Apartment …, in …, area of the Tax Service of …-….

2. The inspection procedures resulted from the analysis conducted by the AT of the VAT refund requests made by the Claimant, the origin of which is based on the carrying out of operations related to transactions in watches for Community and non-Community markets.

3. The reason for the inspections was related to:

i. the need for Information from the VAT Refund Request for period 2011/09 (DN 18-A/2010, of 30 June), the procedure having been of partial scope – VAT, temporally affecting the period 2011-09T (OI2011…);

ii. the need for Information from the VAT Refund Request for period 2011/10 (DN 18-A/2010, of 30 June), the procedure having been of partial scope – VAT, temporally affecting the period 2011-10T (OI2011…);

iii. the need for Information from the VAT Refund Request for period 2011/11 (DN 18-A/2010, of 30 June), the procedure having been of partial scope – VAT, temporally affecting the period 2011-11T (OI2012…);

iv. the need for Information from the VAT Refund Request for period 2011/12 (DN 18-A/2010, of 30 June), the procedure having been of partial scope – VAT, temporally affecting the period 2011-12T (OI2012…).

1. For the purposes of Corporate Income Tax (IRC), the Claimant was framed in the general system of taxation and, for the purposes of VAT, in the normal monthly frequency regime since 01.01.2011.

2. The Claimant was obliged and possessed accounting regularly organized in accordance with tax and commercial law, in compliance with Article 123 of the Corporate Income Tax Code and had fulfilled its declarative obligations in the context of VAT and Corporate Income Tax.

3. The Administrators of the Claimant are common to those of company B…, LDA, namely C…, TAX ID …, D…, TAX ID … and E…, TAX ID ….

4. Originally, the Claimant was registered for the exercise of the activity of Purchase and Sale of Real Estate, however, as of 01.07.2010, the company's activity consisted essentially of wholesale trading in watches of the brands ROLEX, PATEK PHILIPPE, CHOPARD, CARTIER, CHANEL, AUDEMARS PIGUET and VACHERON CONSTANTIN, intended for the Community and non-Community markets.

5. The Claimant came to complement company B… in the economic cycle of selling watches to abroad, since, until 30.06.2010, it was this company that formally proceeded to acquire (mostly imports) the aforementioned items and subsequent sale to the external market, and from that date on the Claimant, by virtue of the amendment to the articles of association, also began to carry out exports and intra-Community supplies having company B… as its sole supplier.

6. Taking into account that the transfers of goods carried out were intended for the external market, being operations exempt from VAT, the Claimant requested VAT refunds, as it did not collect tax on the supplies and benefited from the right to deduct VAT borne on acquisitions, in this case, made from company B….

7. The activity of company A… related to the commerce in watch articles in the year 2011, intended for the external market, was as follows:

[TABLE DATA]

1. The invoicing relating to extra-Community transfers of goods of A…, is distributed, in the year 2011, among the following customers:

[TABLE DATA]

1. The invoicing relating to intra-Community transfers of goods of A…, is distributed, in the year 2011, among the following customers:

[TABLE DATA]

1. The documents made available by the Claimant for purposes of evidencing the assumptions of the exemption claimed in the aforementioned operations, pursuant to subparagraph a) of Article 14 of the Regime for VAT in Intra-Community Transactions (RITI), documents proving the transport of the goods in question intended for another Member State, concern guides from transport companies FedEx, EMS and records from CTT.

2. By considering that, as a result of the analysis of the aforementioned documents, as well as the gathering of information regarding customers Q… (United Kingdom), S… (Italy), Z… (United Kingdom), U… (France), AA… (Spain), R… (Latvia), T… (Cyprus) and X… (Italy), situations arose susceptible to suggesting that the conditions required for the application of the exemption in question were not met, intra-Community administrative cooperation was requested from the tax authorities of the identified Member States, under Articles 5 and 19 of Regulation (EC) no. 904/2010, in order to confirm the intra-Community transactions in question.

3. From the responses received the Tax Authorities concluded that in relation to the supplies to customers S… (Italy), Z… (United Kingdom) and U… (France), no facts were reported susceptible of questioning the exemption applied by A… in the intra-Community supplies of goods respectively.

4. In relation to supplies to customer R… (Latvia), the Tax Authorities established that:

i. To demonstrate the assumption of the exemption of subparagraph a) of Article 14 of the RITI concerning the dispatch of goods to another Member State with destination to the purchaser, A… exhibited transport guides from the FedEx transport company, and it was verified, by consultation of the respective website (www.fedex.com), that the guides in question resulted in confirmed deliveries;

ii. In relation to all supplies made during the period, documented by the respective invoices, A… exhibited FedEx transport company guides, these guides stating that the contents of the shipment consisted of documents (Docs);

1. The tax authorities of Latvia informed that:

"B1-1) The taxpayer presented only invoices received from the Portuguese company for the total amount EUR 178772.00 (2011Q2 and 03) and payment documents (partial payment). No other documents confirming the collection of goods were presented.

(B1-7), (B1-11) R… did not declare the acquisition from your taxpayer, because transportation documents had not been received. R… was requested to declare acquisition from the Portuguese company.

(B1-8) It was not possible to establish the address of delivery, because transportation documents had not been presented."

1. The aforementioned text was translated by the AT as follows:

"B1-1 the taxpayer presented only invoices from the Portuguese company in the total amount of 178772€ (2011T2 and T3) and payment documents (partial payment). No other documents confirming the collection of goods were presented.

B1-7 B1-11

R… did not declare the acquisition from your taxpayer since transportation documents had not been received. R… was requested to declare the acquisition to the Portuguese company.

B1-8 It was not possible to identify the delivery address, since transportation documents were not presented."

1. The Latvian authorities further informed that:

"(B2-4), (B2-5) It was not possible to establish the transporter and vehicles used, because transportation documents had not been presented.

(B2-7) The following invoices presented for transactions in 2011Q2 and 2011Q3: 2011/09/12 invoice Nr. … for EUR 29672.00; 2011/09/10 invoice Nr. … for EUR 17600.00; 2011/08/26 invoice Nr. … for EUR 16111.00; 2011/07/21 invoice Nr. … for EUR 17600.00; 2011/07/15 invoice Nr. … for EUR 11025.00; 2011/07/12 invoice Nr…. for EUR 23408.00; 2011/06/30 invoice Nr. … for EUR 28697.00; 2011/06/28 invoice Nr …. for EUR 15181.00; 2011/06/28 invoice Nr. … for EUR 19478.00.

(B2-8) According to the document presented, transactions were the supply of goods.

(B2-11), (B2-12), (B2-13) The payment made for the amount of EUR 178772.00 from R… bank account Nt. ….

( 82-15) No information."

1. The aforementioned text was translated by the AT as follows:

"B2-4 B2-5 It was not possible to identify the transporter or the vehicles used, since transportation documents were not presented.

B2-7 The following invoices were presented for transactions in 2011 T2 and 2011T3:- ***

B2-8 In accordance with the document presented, the transactions were supplies of goods.

BN2-11, B2-12, B2-13 The payment made in the amount of 178772 from the bank account of R… no. … .

B2 -15 No information.".

1. Question B2-15, to which the preceding response refers, requested the indication of the name of the person who placed the order.

2. The same authorities further informed as follows:

"Copies of invoices and payment documents are enclosed. The further sale of goods was inspected at random. It was established that the goods were sold to the UK trader BB… (GB…). The company did not present the transport documentation and warehouse log-book. Therefore it was not possible to establish the address of delivery and storage, as well as the further movement of goods. Bookkeeping register, invoices issued by the Portuguese company, payment documents and documents for the random inspection of further sale are enclosed."

1. The aforementioned text was translated by the AT as follows:

"Copies of invoices and payment documents are attached. A random investigation was conducted regarding the resale of goods. It was found that the goods were sold to the UK operator BB… (GB…). The company did not present transport documents or warehouse records, so it was not possible to verify the delivery and storage address, nor other movements of goods. Accounting records, invoices issued by the Portuguese company, payment documents and documents for random investigation of resale of goods are attached."

1. From the documentation attached to the request for information, the Tax Authorities further found that:

i. the watches invoiced by R… to BB…, have as paying entity CC…, with address at suite …, Block …, …, Gibraltar, and it was verified through the bank statements of bank account …, R…, held at RIETUMU BANK with registered office in Riga, Latvia, the existence of bank transfers to this account from CC…;

ii. two of the four partial payments of invoices no. …, dated 12/09/11 in the amounts of €7.700,00 and €4.172,00 respectively, have as originating party of the bank transfers, through the credit institution LA BANQUE POSTALE – Paris, the Israeli citizen DD…, an individual who also appears as a customer of A… in 2010, whose operations were treated as exports with certification of exit of goods noted by the Customs of the Airport of … and whose transport was carried out in personal baggage of the same person on a flight destined for GENEVA;

iii. the same DD…, was a customer of A… in 2010 and in 2011, with part of the sales made at the shop counter;

iv. R… is ceased in the VIES register, as of 2012/05/24, and transactions between it and the claimant are likewise ceased.

1. In light of the foregoing, the Tax Authorities concluded that "the supplies to operator R… in the period under analysis, are subject to the collection of VAT, in accordance with Articles 1, 7 and 16 of the VAT Code and at the VAT rate in accordance with Article 18 of the aforementioned code, as of the date of the facts, with the collection and payment of tax being lacking" in the amounts subsequently calculated and indicated, resulting "from the application of VAT to the entirety of the sales of A… to the operator in question":

[TABLE DATA - R…]

[TABLE DATA - R…]

[TABLE DATA - R…]

[TABLE DATA - R…]

1. The correction made in the inspection procedure relating to OI2011… gave rise to the additional VAT assessment no. … and respective compensatory interest assessment no. …, relating to period 09 of the year 2011.

2. The correction made in the inspection procedure relating to OI2011… gave rise to the additional VAT assessment no. … and respective compensatory interest assessment no. …, relating to period 10 of the year 2011.

3. The correction made in the inspection procedure relating to OI2012… gave rise to the additional VAT assessment no. … underlying the account reconciliation statement no. 2012…, relating to period 11 of the year 2011.

4. The correction made in the inspection procedure relating to OI2012… gave rise to the additional VAT assessment no. … underlying the account reconciliation statement no. 2012…, relating to period 12 of the year 2011.

5. Since the assessments in question were not paid, tax enforcement proceedings nos. …2013…, …2013…, …2013… and …2013… were respectively instituted, which were processed by the Tax Service …-…, within which their suspension was requested by means of the submission of a guarantee.

6. Simultaneously, disagreeing with the corrections that gave rise to the aforementioned assessments, the Claimant filed Gracious Complaints:

i. no. …2013… on 30.04.2013, against the additional VAT assessment no. …, relating to period 2011-09 and respective compensatory interest (assessment no. …);

ii. no. …2013… on 30.04.2013, against the additional VAT assessment no. …, relating to period 2011-10 and respective compensatory interest (assessment no. …);

iii. no. …2013… on 16.04.2013, against the additional VAT assessment no. …, relating to period 2011-11, underlying the account reconciliation statement no. 2012…;

iv. no. …2013… on 16.04.2013, against the additional VAT assessment no. …, relating to period 2011-12, underlying the account reconciliation statement no. 2012….

1. The aforementioned Gracious Complaints were dismissed, which fact was notified to the Claimant on 03-10-2013.

2. Following this the Claimant filed, on 30-10-2013, Hierarchical Appeals:

i. no. …2013… (against the dismissal decision of gracious complaint no. …2013…);

ii. no. …2013… (against the dismissal decision of gracious complaint no. …2013…);

iii. no. …2013… (against the dismissal decision of gracious complaint no. …2013…);

iv. no. …2013… (against the dismissal decision of gracious complaint no. …2013…).

1. The dismissal of Hierarchical Appeal no. …2013… was notified to the Claimant by official letter no. … of 01.12.2014.

2. The dismissal of Hierarchical Appeal no. …2013… was notified to the Claimant by official letter no. … of 01.12.2014.

3. The dismissal of Hierarchical Appeal no. …2013… was notified to the Claimant by official letter no. … of 01.12.2014.

4. The dismissal of Hierarchical Appeal no. …2013… was notified to the Claimant by official letter no. … of 01.12.2014.

5. The Claimant proceeded to voluntary payment of the amounts being executed in the aforementioned enforcement proceedings, under Decree-Law 151-A/2013.

A.2. Facts Deemed Not Proven

1. The reference "Docs", mentioned in point 16/ii of the facts deemed proven, was made by the Claimant because it was prohibited by the insurance institution to mention the watches.

A.3. Reasoning of the Proven and Not Proven Facts

With respect to the facts, the Tribunal does not have to pronounce on everything that was alleged by the parties, it being incumbent upon it, rather, the duty to select the facts that are relevant to the decision and to distinguish the proven from the not proven facts (cf. Article 123, paragraph 2, of the Code of Tax and Administrative Procedure (CPPT) and Article 607, paragraph 3 of the CPC, applicable by virtue of Article 29, paragraph 1, subparagraphs a) and e), of the RJAT).

Thus, the facts pertinent to the judgment of the case are chosen and selected in accordance with their legal relevance, which is established in light of the various plausible solutions of the question(s) of Law (cf. previous Article 511, paragraph 1, of the CPC, corresponding to current Article 596, applicable by virtue of Article 29, paragraph 1, subparagraph e), of the RJAT).

Thus, taking into account the positions assumed by the parties, in light of Article 110/7 of the CPPT, the documentary evidence and the file attached to the record, the aforementioned facts were deemed proven, with relevance to the decision.

The facts listed in the written submissions of the Claimant are not included therein, but are not contained in its initial Claim, since they were not the subject of the evidence produced on a contradictory basis, which was delimited by the facts contained in the initial Claim and indicated in the Claim submitted by the Claimant on 15-06-2015.

The fact deemed not proven is due to insufficient evidence regarding it. In effect, the document from the Insurance broker (Minutes), filed by the Claimant as document 31, even when combined with the testimony of witness EE…, was not sufficient to convince the Tribunal of the motivation indicated, in the first place because that document is dated 2012 (and the corresponding policy (…), as far as can be determined, is from the same year), while the facts now in question relate to 2011. Moreover, the witness was not a representative of the insurance company, but merely a broker.

B. OF THE LAW

i. On the Request for Preliminary Ruling

In its Response, the AT requests "the submission to the CJEU, by way of a preliminary ruling (cf. Article 267 TFEU), before ruling on the merits and by means of suspension of proceedings, of the following questions:

1. Can a Member State consider that the requirement of the exemption of operations provided for in paragraph 1 of Article 138 of Council Directive 2006/112/CE of 28 November 2006 is not met when, through resort to the mechanism of administrative cooperation, it has obtained from the tax authorities of the Member State of destination of the goods, confirmation that, although the purchaser is validly registered as a taxable person for VAT purposes in that Member State and has made, in part or in whole, payment of the transaction, it has voluntarily not included the operation in the VAT return as an intra-Community acquisition of goods?

2. Can it be considered that an administrative practice respects the principle of legal certainty and proportionality when it places upon the seller the burden of proving the authenticity of dispatch and/or transport documents and receipt of goods when the transport documents presented do not identify the goods object of the transaction?"

Let us examine this.

As stated in point 7 of the Recommendations to National Courts regarding the submission of preliminary ruling requests (2012/C 338/01), of the CJEU[2]:

"the role of the Court in the context of a preliminary ruling proceeding is to interpret the law of the Union or to rule on its validity, and not to apply that law to the factual situation underlying the main proceedings. That role falls to the national judge and, therefore, it is not for the Court to rule on questions of fact raised in the context of the dispute in the main proceedings or on any disagreement as to the interpretation or application of national law rules".

It is further recalled, in point 12 of those same recommendations, that the preliminary ruling to the aforementioned Court should not be requested when:

i. there is already case law in the matter (and when the possibly new framework does not raise any real doubt as to the possibility of applying that case law to the specific case); or

ii. when the correct manner of interpreting the legal rule in question is unequivocal.

Consequently, it is stated in point 13: "a national court may, in particular where it considers itself sufficiently informed by the case law of the Court, itself decide on the correct interpretation of the law of the Union and its application to the factual situation of which it is seised".

Finally, as stated in point 18 of those same recommendations, "The national court may submit a request to the Court for a preliminary ruling from the moment it considers that a decision on the interpretation or validity is necessary to deliver its judgment.".

It is naturally agreed with the AT when, in its submissions, it asserts that "the decisions delivered by the arbitral tribunal are not susceptible of ordinary appeal", and therefore, given the respective assumptions, "the preliminary ruling proves to be mandatory", since "the binding to an arbitral jurisdiction cannot mean the loss of rights constitutionally guaranteed beyond those consented to with the binding to such type of jurisdiction", and the opposite understanding – that is, that the mandatory nature of the preliminary ruling does not apply to arbitral jurisdiction – would, moreover, as the AT affirms, "a violation of the constitutional principle of access to justice provided for in Article 20 of the Portuguese Constitution".

However, this is not so when the preliminary ruling is dismissed, on the basis, not of its admissibility, but of the lack of its assumptions and/or its unnecessary nature. In these cases, there would be no – it is believed – any violation of the aforementioned constitutional norms (or others), but merely a situation of the application of law to facts, contained in the judgment proper to the Tribunal, possibly tainted by error, and therefore, as the AT itself ends up recognizing, "such grounds relate to defects (…) inherent to the decision itself".

The first question formulated by the AT concerns, then, whether "Can a Member State consider that the requirement of the exemption of operations provided for in paragraph 1 of Article 138 of Council Directive 2006/112/CE of 28 November 2006 is not met when, through resort to the mechanism of administrative cooperation, it has obtained from the tax authorities of the Member State of destination of the goods, confirmation that the purchaser, although validly registered as a taxable person for VAT purposes in that Member State and has made, in part or in whole, payment of the transaction, has voluntarily not included the operation in the VAT return as an intra-Community acquisition of goods".

The first filtering criterion for the merit of the question formulated, from the perspective of its submission by way of preliminary ruling to the CJEU, concerns its usefulness for the decision of the case. That is, only if the answer to the question formulated is necessary to deliver a decision on the questions presented to the Tribunal for resolution, should it be submitted to the CJEU.

Now, with all due respect to other opinions, it is understood that this is not the case with the question in issue.

In effect, whether the answer to the question formulated is in the affirmative or in the negative, it will not be capable of determining the tenor of the decision to be delivered.

Thus, if the answer were in the affirmative sense, recognizing that a Member State can consider that the requirement of the exemption is not met, when it has confirmation that the purchaser, although validly registered as a taxable person for VAT purposes in the respective Member State and has made, in part or in whole, payment of the transaction, has voluntarily not included the operation in the VAT return as an intra-Community acquisition of goods, it would not follow from this, by virtue of the semantics of the question itself, conditioning the answer, that it would be prohibited in those cases, and in the present case specifically, to consider that the requirement of the exemption is met.

On the other hand, and symmetrically, also in the case of an answer in the opposite sense, recognizing to Member States the possibility of considering that the requirement of the exemption is met, in cases in which they have confirmation that the purchaser, although validly registered as a taxable person for VAT purposes in the respective Member State and has made, in part or in whole, payment of the transaction, has voluntarily not included the operation in the VAT return as an intra-Community acquisition of goods, it would not follow, in the same terms, that it would be prohibited, in those cases, and in the present case specifically, to consider that the requirement of the exemption is not met.

That is, and in summary: an answer saying that the Member State can, or cannot, consider that the requirements of the exemption are met, would not impose a particular tenor on the decision to be delivered in the present case, since it would always be necessary to ascertain, in light of national legislation, whether the Portuguese State was using the power that might be recognized in the answer to the question put.

For a question of scope analogous to that formulated by the AT to be useful, and which now concerns us, it should, from the outset, be invested with imperative content, the answer to which would represent an obligation, and not a mere possibility.

Not being the Tribunal bound, in this matter, by the request by the party, and having the duty to, sua sponte, submit for resolution to the CJEU those questions that prove necessary for the decision of the case, and which are within its competence, two questions could be formulated, namely:

• Is a Member State obliged to consider that the requirement of the exemption of operations provided for in paragraph 1 of Article 138 of Council Directive 2006/112/CE of 28 November 2006 is not met when, through resort to the mechanism of administrative cooperation, it has obtained from the tax authorities of the Member State of destination of the goods, confirmation that the purchaser, although validly registered as a taxable person for VAT purposes in that Member State, and has made, in part or in whole, payment of the transaction, has voluntarily not included the operation in the VAT return as an intra-Community acquisition of goods?

• Is it prohibited for a Member State to consider that the requirement of the exemption of operations provided for in paragraph 1 of Article 138 of Council Directive 2006/112/CE of 28 November 2006 is not met when, through resort to the mechanism of administrative cooperation, it has obtained from the tax authorities of the Member State of destination of the goods, confirmation that the purchaser, although validly registered as a taxable person for VAT purposes in that Member State, and has made, in part or in whole, payment of the transaction, has voluntarily not included the operation in the VAT return as an intra-Community acquisition of goods?

However, and from the outset, the answer to these questions would likewise not assume a decisive character regarding the case sub iudice.

In effect, in the present case, a series of additional circumstances speak both for and against the consideration of the fulfilment of the assumptions of the exemption discussed, whose assessment would always lie beyond the scope of the suggested questions and their possible answers, and therefore one could always consider that the assumptions of the exemption were fulfilled, taking into account other elements than the character of taxable person of the purchaser and the occurrence of payment, or that they were not fulfilled, taking into account other elements than the mere circumstance of non-inclusion in the VAT return of the operation as an intra-Community acquisition of goods.

On the other hand, and here we reach the crux of the question that is truly at issue in the present case, what is involved is, essentially, a judgment of fact – which amounts to determining whether there was or was not a dispatch of goods to the recipient of the intra-Community operation – and of the application of norms of internal law, most notably, relating to the burden of proof.

That is, we are, it is believed, in that domain to which the CJEU refers as "apply (…) law to the factual situation underlying the main proceedings". What is under discussion in the record is not ascertaining the meaning of a norm of European law, that meaning being clear and assumed by the parties, who understand what the meaning of the norm is and externalize that understanding, but verifying whether that norm is or is not applicable "to the factual situation underlying the main proceedings", and it is certain that in that judgment the norms of national law relating to the burden of proof intervene, and that the CJEU does not pronounce "on any disagreement as to the interpretation or application of national law rules".

As the CJEU itself stated in the Mecsek-Gabona judgment, "in the context of the proceeding established by Article 267 TFEU, the Court of Justice has no power to establish or assess the factual circumstances relating to the main proceeding"[3], and it is incumbent upon national courts to assess whether the Taxpayer of their State "has fulfilled the obligations incumbent upon it regarding proof and due diligence."[4], with respect to the assumptions of the exemption that it claims.

Finally, and in any event, it is always understood that the correct manner of interpreting the Community legal rule in question, in the perspective of the potential questions formulated, should be deemed unequivocal, in the sense that the answer should be negative to both. That is, a Member State will neither be obliged to, nor prohibited from, considering that the requirement of the exemption is not met, when, through resort to the mechanism of administrative cooperation, it has obtained from the tax authorities of the Member State of destination of the goods, confirmation that the purchaser, although validly registered as a taxable person for VAT purposes in that Member State, and has made, in part or in whole, payment of the transaction, has voluntarily not included the operation in the VAT return as an intra-Community acquisition of goods. Rather, in light of what has been the CJEU's case law, essentially oriented toward the correct and simple application of exemptions, regardless of those factors (non-declaration of intra-Community acquisition by the purchaser, registration thereof for VAT purposes in its State, and effective payment of the operation), the Member State may – without doubt – consider the assumptions of the exemption to be fulfilled or not, depending on the remaining factual elements gathered point in one or the other direction.

Moreover, in the Teleos Judgment, cited by the AT itself, it was stated ipsis verbis that "it must be held that, with the exception of the conditions relating to the status of taxable person, the transfer of the power of disposal of a good as owner and the physical movement of goods from one Member State to another, no other conditions can be required to qualify an operation as an intra-Community supply or acquisition of goods."[5], and that "even if the presentation by the purchaser of a tax declaration relating to the intra-Community acquisition can constitute evidence of the actual transfer of goods outside the Member State of supply, that declaration does, however, not assume a decisive meaning for the purposes of proving an intra-Community supply exempt from VAT."[6].

Furthermore, it can be read in the same judgment, that "the fact that the purchaser has submitted a declaration to the tax authorities of the Member State of destination relating to the intra-Community acquisition, such as that at issue in the main proceedings, can constitute supplementary evidence to demonstrate that the goods actually left the territory of the Member State of supply, but does not constitute decisive proof for the purposes of VAT exemption of an intra-Community supply.".

Also in the CJEU Judgment delivered in case C-587/10[7], it can be read that:

"55 With regard to the circumstance that the supplier submitted the tax declaration of the purchaser relating to its intra-Community acquisition, it must be recalled that, as was decided in paragraph 30 of this judgment, with the exception of the conditions relating to the status of taxable persons, the transfer of the power of disposal of a good as owner and the physical movement of goods from one Member State to another, no other condition can be imposed to qualify an operation as an intra-Community supply or acquisition of goods. Thus, to benefit from the exemption under Article 28-C, A, subparagraph a), first paragraph, of the Sixth Directive, it cannot be required of the supplier to provide evidence relating to the taxation of the intra-Community acquisition of the goods in question.

56 Furthermore, it cannot be considered that this declaration constitutes, in itself, decisive proof of the status of taxable person of the purchaser, and can only represent an indication (v., by analogy, Teleos and others, judgment already cited, paragraph 71, and of 27 September 2007, Twoh International, C-184/05, Reports, p. I-7897, paragraph 37).

57 Therefore, the circumstance that the supplier submitted or did not submit this declaration is also not capable of altering the answer to the questions submitted by the referring national court."

From this it is clear that, both in light of the Community legal provision in question and of the interpretation thereof made by the CJEU's case law, the intra-Community acquisition declaration, or lack thereof, by the purchaser, in an intra-Community supply of goods, may constitute supplementary evidence to demonstrate that the goods did or did not actually leave the territory of the Member State of supply, but does not constitute decisive proof for the purposes of VAT exemption of an intra-Community supply.

Accordingly, and for all the reasons stated, it is understood that the requested preliminary referral to the CJEU regarding the first of the questions formulated by the AT in its response, or any other related to it, is not justified.

The second question formulated by the AT consists in asking whether: "Can it be considered that an administrative practice respects the principle of legal certainty and proportionality when it places upon the seller the burden of proving the authenticity of dispatch and/or transport documents and receipt of goods when the transport documents presented do not identify the goods object of the transaction?", seeking its consideration, also within the framework of a preliminary ruling, by the CJEU.

This question, however, will likewise fail in the test of necessity of the answer for the decision to be delivered, the surpassing of which is indispensable to the viability of opting for a preliminary referral.

In effect, even if the CJEU can consider "that an administrative practice respects the principle of legal certainty and proportionality when it places upon the seller the burden of proving the authenticity of dispatch and/or transport documents and receipt of goods when the transport documents presented do not identify the goods object of the transaction", this would bring nothing to the decision of the case, if only because it would be in light of national law, the application of which is forbidden to the CJEU, that one would have to ascertain whether:

• the supposed administrative practice proportional in light of Community law is, or is not, binding upon the judicial body responsible for deciding the case; and

• that same administrative practice is, or is not, legal in light of national law.

Now, as was stated in the Judgment of the Administrative Court of Appeal (TCAN) of 12-03-2015, delivered in case 01560/05.5BEPRT[8], "Any suitable means of evidence is admissible, in the procedure and in the proceedings, in accordance with Articles 50 and 115, paragraph 1, of the Code of Tax and Administrative Procedure. Contrary understanding, in particular, the limitation through administrative circulars of the means of evidence admitted in the overturning of that presumption is unacceptable as it restricts the right to evidence that the constitutional principles of justice and effective judicial protection fully presuppose as secured to those interested – cf. Article 20 of the Fundamental Law.".

Accordingly, since the rules on distribution of the burden of proof are those that follow from the law, and not those that administrative practice determines, the answer to the second question formulated would not be useful for the decision to be delivered, in that, on the one hand, the administrative practice to which it refers, even if judged, in light of Community law, to be proportional, would not be binding upon this Tribunal, which is obliged to decide according to Portuguese law constituted, and on the other, in light of the latter, the limitation through administrative circulars of the means of evidence admitted for the demonstration of the fulfilment of the assumptions of the right to the exemption now being discussed will be unacceptable as it restricts the right to evidence that the constitutional principles of justice and effective judicial protection fully presuppose as secured to those interested, under the terms, moreover, of Article 20 of the Constitution.

Thus, and for the reasons stated, it is understood that the requested preliminary referral to the CJEU regarding the second of the questions formulated by the AT in its response, is not justified.

ii. On the Merits of the Case

The legal question that arises in the record is, essentially, whether, in light of the facts deemed proven, the assumptions of Article 14, subparagraph a) of the Regime for VAT in Intra-Community Transactions (RITI), which provides that:

"Are exempt from the tax:

a) The transfers of goods, made by a taxable person of those referred to in subparagraph a) of paragraph 1 of Article 2, dispatched or transported by the seller, by the purchaser or on their behalf, from the national territory to another Member State with destination to the purchaser, when the latter is a natural or legal person registered for the purposes of value added tax in another Member State, who has used the respective identification number to make the acquisition and is therein covered by a system of taxation of intra-Community acquisitions of goods;"

are fulfilled.

Since it is not controversial that the requirements for the application of the exemption in question are that:

• the supplier be a taxable person for VAT in its Member State of residence;

• that the purchaser be also a taxable person for VAT, resident in another Member State, and that use the respective identification number to make the acquisition;

• that the goods be effectively dispatched or transported to another Member State with destination to the purchaser;

what is alone in issue in the present proceeding is the verification of the last of those listed requirements, so that what needs to be ascertained is whether the goods in question were or were not effectively dispatched or transported to another Member State, with destination to the purchaser.

Article 74 of the General Tax Law (LGT) provides that "The burden of proof of the facts constitutive of the rights of the tax administration or of taxpayers falls upon whoever invokes them."

Applying this provision to the present case, and taking into account that what is at issue is a right of the taxpayer to a tax exemption[9], it will be clear, it is believed, that the burden of proof of the assumptions of the right that it intends to exercise will fall upon the taxpayer.

However, Article 350/1 of the Civil Code, applicable under the terms of Article 2/d) of the LGT, provides that "Whoever has the benefit of a legal presumption is excused from proving the fact to which it leads.".

In the case, and with relevance for the question, Article 75/1 of the LGT provides that "The declarations of taxpayers presented in accordance with the terms provided by law are presumed to be true and made in good faith, as well as the data and calculations entered in their accounting or records, when these are organized in accordance with commercial and tax legislation, without prejudice to the other requirements upon which the deductibility of expenses depends.".

The aforementioned presumption may be overcome by two routes, namely:

• overriding it – preventing it from operating – by the demonstration of any of the circumstances listed in paragraph 2 of the same Article 75 of the LGT;

• rebutting it, by proof to the contrary of what is presumed, under the terms of paragraph 2 of the also aforementioned Article 350 of the Civil Code.

In light of the aforementioned Article 75/1 of the LGT, it must be presumed to be true and made in good faith, both the periodic VAT declarations submitted, in accordance with the law, by the Claimant, where it calculated the refund indicated, and the data described in its accounting, in which no discrepancies were identified by the AT, as indeed could not be otherwise, since it would not be understood how, having the Claimant submitted its periodic declaration in accordance with the law, and having regularly organized accounting, it should be placed on the same footing as a negligent taxpayer[10].

The aforementioned presumption, moreover expressly invoked by the Claimant (cf. Article 87 of the initial claim), may be overcome by two routes, indicated respectively by Article 75/2 of the LGT and Article 350/2 of the Civil Code.

Let us examine whether this occurs[11].

The presumption in question will not operate if any of the (impeditive) circumstances listed in paragraph 2 of Article 75 of the LGT are verified, namely, and for what now matters:

• The declarations, accounting or records reveal omissions, errors, inaccuracies or founded indications that they do not reflect or prevent knowledge of the real taxable matter of the taxpayer;

• The taxpayer did not fulfil the duties incumbent on it to clarify its tax situation;

As explained by Elisabete Louro Martins[12]:

"The degree of proof required of the Tax Administration to overcome the presumption of truth provided by the LGT in favour of the taxpayer, will, in our view, depend on the nature of the defects ascertained. Formal defects (…) must be subject to actual proof based on the documents themselves presented by the Taxpayer (…). In truth, either the documents are formally correct or they are formally incorrect, and it is inadmissible that a decision be made based on mere indications of facts that can be grasped on the basis of available documents.

On the other hand, the same rule cannot be applied to material defects, since they are often based on elements external to the accounting, such as the fact that they do not titleize real operations that can confer upon the taxpayer the right to deduction, which do not allow obtaining a degree of reasonable certainty regarding the existence of the taxable fact. As it appears from the second part of subparagraph a) of paragraph 2 of Article 75 of the LGT, in the case of material defects, it will suffice for the Tax Administration to present objective concrete facts, based on concrete evidence, which according to the rules of common experience are strongly indicative of the existence of the taxable fact".

Examining the factual enumeration ascertained in the present proceeding, it is verified that there is no evidence whatsoever relating to the second of the impeditive circumstances of the operability of the presumption in question that have just been listed. On the contrary, and as is apparent from the facts deemed proven at point 13 of the facts, the Claimant responded, as far as it was able, to the requests for cooperation made by the AT, in order to clarify its tax situation. Thus, citing Jorge Manuel Santos Lopes de Sousa[13], "once the duty to clarify is fulfilled, the presumption of truthfulness and good faith of the declarations of taxpayers provided for in paragraph 1 of Article 75 of the LGT is maintained, incumbent upon the Tax Administration the role of challenging the truthfulness, through the demonstration of 'serious indications' of non-correspondence with the truth, thus 'falling upon [it] the burden of proof of the facts preventing the truth presumed to result from the declaration of taxpayers'".

Having then, into account the first of those same circumstances above mentioned, it will be incumbent, with respect to each group of situations in question in the present proceeding, to ascertain whether omissions, errors, inaccuracies of the declarations or accounting were detected, and/or whether founded indications were gathered that those did not reflect the real taxable matter of the taxpayer.

If such is verified, then one must ascertain whether, the presumption of truthfulness arising from Article 75/1 of the LGT failing, the Claimant achieves, by another means of proof, to fulfill the probative burden that, under the terms previously outlined, falls upon it.

If that does not occur, it will be incumbent to verify whether the AT has succeeded in proving to the contrary the facts that, under the aforementioned terms, must be presumed, relating to the occurrence of the intra-Community transfer in question in the present proceeding, in the exercise of the faculty that, under the terms of Article 350/2 of the Civil Code, falls to it[14].

Let us examine, then.

Regarding the operations in question in the present proceeding, the AT ascertained, with relevance and in summary, that:

i. In relation to all supplies made during the period, documented by the respective invoices, FedEx transport company guides were exhibited, these guides stating that the contents of the shipment consisted of documents (Docs);

ii. the watches invoiced by R… to BB…, have as paying entity CC…, with address at suite …, Block …, …, Gibraltar;

iii. two of the four partial payments of invoices no. …, dated 12/09/11 in the amounts of €7.700,00 and €4.172,00 respectively, have as originating party of the bank transfers, through the credit institution LA BANQUE POSTALE – Paris, the Israeli citizen DD…;

iv. R… is ceased in the VIES register, as of 2012/05/24, with transactions between it and the claimant likewise ceased.

As appears from both the Inspection Report and the decision on the gracious complaint, the AT deemed as decisive the information provided by its Latvian counterpart, from which it follows, in summary, that:

i. the purchaser did not declare, to its tax authority, the operations with the Claimant, in question in the present proceeding, as an intra-Community acquisition intra-Community;

ii. The purchaser had in its accounting files the invoices issued by the now Claimant, as well as documents relating to the respective payment, but did not submit documents relating to transport or storage;

iii. The goods transacted were resold to a United Kingdom operator.

Before proceeding, it is appropriate to properly situate the probative value of the information provided by the Latvian counterpart of the national AT, taking into account what is alleged by the latter, according to which, "such a mechanism for the exchange of information between the tax authorities of the Member States, being necessary and indispensable in situations of doubt, is also a unique means of proof and the most appropriate for the purposes of control of what are so declared by taxable persons, intra-Community supplies of goods.".

If this phrase has underlying it the understanding that information provided within the scope of that mechanism, has full probative force, that will, from the outset, be lacking in legal basis, since the fundamental provision for any judgment regarding the probative value of the information in question lies in paragraphs 1 and 4 of Article 76 of the LGT, which provide that:

"1 - Information provided by tax inspection makes fact when substantiated and based on objective criteria, under the terms of the law.(...)

4 - The information provided by foreign tax administrations under international conventions on mutual assistance to which the Portuguese State is bound are covered by paragraph 1, without prejudice to proof to the contrary by the taxpayer or interested party.".

Regarding the provision in question, note, from the outset, that it does not establish any conclusive proof, that is, one not susceptible of proof to the contrary.

On the other hand, one cannot but consider that the probative value conferred by the LGT to the information provided by the Tax Inspection, or by foreign tax administrations, is limited to what constitutes a matter practiced or directly perceived by the author of the information, thus excluding mere personal judgments of the informant[15].

Now, the matter that concerns us should be considered as directly perceived by the Latvian tax authority as the non-declaration of acquisitions to the Claimant, as well as the non-submission, by the purchaser, of transport and warehouse documents and the submission, by the same of the invoices and payment documents.

This will be, barring a better opinion, the probative scope to which the weight of the information obtained by the AT, by its Latvian counterpart, under the terms of Article 76 of the LGT, is restricted to, being facts directly perceived by the tax authority of that country.

Moreover, and in light of the documentation attached to the response to the information request, it is verified that:

i. the watches invoiced by the Claimant to R…, were subsequently invoiced by the latter to BB…, this operation having as paying entity CC…;

ii. two of the four partial payments of invoices no. …, dated 12/09/11 in the amounts of €7.700,00 and €4.172,00 respectively, have as originating party of the bank transfers, through the credit institution LA BANQUE POSTALE – Paris, the Israeli citizen DD…;

iii. R… is ceased in the VIES register, as of 2012/05/24, with transactions between it and the claimant likewise ceased.

It is in this framework, therefore, that the probative judgment must operate, in order to ascertain whether the aforementioned presumption of truthfulness of Article 75/1 of the LGT is maintained, or, in a first moment, is prevented, under the terms of subparagraph a) of paragraph 2 of the same article, or, in a second moment, is rebutted, under the terms of Article 350 of the Civil Code.

In effect, as was stated above, it was incumbent on the Claimant to demonstrate that:

• the supplier was a taxable person for VAT in its Member State of residence;

• that the purchaser was also a taxable person for VAT, resident in another Member State, and that used the respective identification number to make the acquisition;

• that the goods were effectively dispatched or transported to another Member State with destination to the purchaser.

There being no doubt, in the case and as has been seen, regarding the first two requirements, and the third being, in the first place, presumptively proved, it would then be incumbent on the AT to demonstrate some fact impeditive of that presumption or, simply, to rebut it.

It is therefore incumbent to ascertain whether the factual framework outlined above can be qualified as "founding indications" that the accounting and declaration presented by the taxpayer did not reflect its actual taxable matter, or whether, on the other hand, it demonstrates, beyond any reasonable doubt, that, in the case, there was no dispatch of goods to abroad, which, if not demonstrated by any of the assumptions of paragraph 2 of Article 75 of the LGT, shall be presumed.

With respect due to other opinions, it is understood that, in the specific case, the answer to both questions should be negative.

In effect, while it is undeniable that one or another indication is detected that some situation outside the regular processing of commercial relations might be under way – namely the circumstance that the intra-Community acquisition was not declared, that documentary records of the path of the goods transacted are particularly scarce, that the path that it is possible to perceive (Portugal-Latvia-United Kingdom) is not particularly "normal", that there is the involvement in that circuit, at the level of payments, of entities that are, in some way, suspicious (CC…; DD…) and, indeed, in this context, the very closing of activity, subsequently, of the purchaser – one cannot but note, on the one hand, that all this set of situations lies totally downstream of the operations sub iudice and, therefore, outside the intervention of the Claimant, and, on the other hand, that they are contradicted by other indications of equal or superior intensity, such as the circumstances that the Claimant has always properly declared its operations, the fact that all financial movements are congruent, and, moreover, the circumstance that is admittedly indicated that the goods in question have, all indications are, been subsequently transacted, by the purchaser, to the United Kingdom.

With respect to this latter situation, and as Clotilde Celorico Palma notes[16], "Note that if the seller has the obligation to ascertain that the purchaser of the goods is a taxable person duly identified for VAT purposes in another MS and that the goods are dispatched or transported outside the national territory. It is not, however, incumbent upon it to control whether the goods were dispatched or transported to the MS to which the identification number communicated to it by the purchaser corresponds. It will only be possible for the seller to ascertain such fact if the dispatch or transport of goods is effected by it or on its account, being indicated to it as the MS of destination an MS different from the one to which the identification number under which the acquisition was made corresponds. However, even in this situation, the application of the exemption of the intra-Community transfer of goods in question is not called into question. What is called into question, rather, is the information provided by the taxable person to the respective tax administration, through the completion of the summary declaration of the respective intra-Community supplies of goods. It should be noted in this regard that it was precisely in light of this type of situation that the Community legislator provided for a safety mechanism within the scope of the new location rules. In accordance with these rules, notwithstanding the fact that the dispatch or transport of goods arrives in another MS (general rule of location of intra-Community acquisitions of goods), the intra-Community acquisition of goods will be taxable in the MS that issued the identification number under which the purchaser carried out the operation".

Accordingly, the important emphasis for being faced with an intra-Community transfer (TIB) from the point of view of the supplier is, in addition to ensuring that the purchaser is a taxable person for VAT carrying out intra-Community operations, to ensure that the goods physically left the Member State of the supplier taxpayer.

This has been, moreover, the understanding of the CJEU, which, in the Judgment delivered in case C-430/09[17], considered that "the application of the exemption to an intra-Community supply is subject to the condition that the transport must be completed in a Member State different from that of the supply, being irrelevant, for this purpose, the address where the transport ends.".

Thus, to rebut the presumption of truthfulness of the intra-Community supply regularly declared, it would be necessary to demonstrate that the goods did not leave the national territory, and not, merely, that they did not follow to the Member State where the purchaser is situated, and there is no reasonable doubt, in the case, that the goods will, in fact, have actually left the national territory.

Also worthy of special mention is the circumstance that, in the transport documents presented by the Claimant, the contents are described as "Documents".

In this regard, note that, as appears from point 13 of the facts deemed proven, the Claimant had, for all exports by it declared, guides from the FedEx and EMS transport companies and CTT records, it not being demonstrated that among the situations that were accepted by the AT, there do not exist others in which the description contained in those documents was precisely the same ("Documents").

Furthermore, demonstrative of the non-decisiveness of this circumstance is the fact that, given that it follows, from the outset, from the documentation presented by the Claimant to the AT, the latter – and correctly so – concluded that it was not sufficient, from the outset, to proceed to the collection of additional tax.

On the other hand, and no concrete cause having been proved for the notation in question, that fact is not given, unaccompanied as it is by any others that point to the fact that the dispatch in question did not, in fact, occur, decisive relevance in that sense, all the more so since, as the Claimant suggests[18], if the sense of its action were directed toward creating a staging of dispatch, it would, surely, have made clear in the documentation in question the mention "watches", and not "documents".

Now, in so far as, in the wake of the preceding reasoning, it was the AT which, in order to prevent the triggering of the presumption enshrined in Article 75/1 of the LGT, was burdened with the task of gathering "founded indications" that the accounting and declaration presented by the Claimant, in question in the present proceeding, did not reflect its real taxable matter, the doubt in question would necessarily have to be resolved in a manner unfavorable to the position of that authority.

Accordingly, and for all the reasons stated, it is concluded that the presumption enshrined in Article 75/1 of the LGT is in force in the case, relating to the periodic declaration and accounting entries presented by the Claimant, with respect to the intra-Community supplies of goods in question in the tax acts subject to the present proceeding, and therefore, under the terms of Article 350/1 of the Civil Code, the Claimant is excused from proving the factual assumptions thereof, which are presumed.

Yet another mention, finally, for the circumstance, also – as has been seen – ascertained, and relating to which the information of the Latvian tax authorities will make fact, according to which the purchaser will not have declared the operations declared by the Claimant, and now in question and which is understood, either alone or combined with the others ascertained, under the terms already discriminated above, to be insufficient to rebut the conclusions drawn.

In effect, and from the outset, the decision to declare or not the intra-Community acquisition is exclusively determined by the purchaser, with the Claimant being wholly unrelated thereto, in terms of not being able to determine or control it.

On the other hand, even if it were not thus understood, one would nonetheless have to conclude that, at most, such a circumstance would only be capable of generating a situation of doubt.

In effect, and applying here the ratio of the CJEU's answer to the fourth question posed in the Teleos Judgment[19], cited by both parties, one must understand that the fact that the purchaser has not submitted a declaration to the tax authorities of the Member State of destination relating to the intra-Community acquisition, such as the one now in issue, can constitute supplementary evidence to demonstrate that the goods did not actually leave the territory of the Member State of dispatch, but does not constitute decisive proof for the purposes of non-exemption of VAT of an intra-Community supply.

Also, the aforementioned CJEU Judgment, delivered in case C-587/10, it was affirmed, as has been seen, that "with the exception of the conditions relating to the status of taxable persons, the transfer of the power of disposal of a good as owner and the physical movement of goods from one Member State to another, no other condition can be imposed to qualify an operation as an intra-Community supply or acquisition of goods.".

It is not, thus and in summary, possible to validate the judgment that we are faced with objective concrete facts, based on concrete evidence, which according to the rules of common experience are strongly indicative of the existence of the taxable fact.

Accordingly, for all the reasons stated, it is to be considered that the AT has not fulfilled the burden of demonstrating facts impeditive of the presumption of truthfulness of the Claimant's declaration, enshrined in Article 75/1 of the LGT.

In the same manner, it is to be concluded that the elements brought by the AT are insufficient to rebut the presumption of truthfulness formed under the terms of the aforementioned provision, and therefore, in this part, the arbitral claim shall be deemed well-founded.

The Claimant further formulates a claim for compensation for undue guarantee.

This matter has already been the subject of various decisions within the context of arbitral jurisdiction, and can be seen, among others, in the arbitral case of the CAAD, no. 1/2013T[20], in terms that are now transcribed:

"In accordance with the provision of subparagraph b) of Article 24 of the RJAT, the arbitral decision on the merits of the claim to which no appeal or challenge falls is binding on the tax administration as of the end of the time period for appeal or challenge, and it must, in the exact terms of the well-foundedness of the arbitral decision in favor of the taxpayer and until the end of the time period provided for the voluntary execution of the decisions of tax courts, 'restore the situation that would have existed if the tax act subject to the arbitral decision had not been made, by adopting the acts and operations necessary for that purpose.'

In the legislative authorization on which the Government based itself to approve the RJAT, granted by Article 124 of Law no. 3-B/2010, of 28 April, is proclaimed, as a primary guideline of the institution of arbitration as an alternative form of jurisdictional resolution of conflicts in tax matters, that 'the tax arbitration proceeding must constitute an alternative procedural means to the judicial challenge proceeding and to the action for the recognition of a right or legitimate interest in tax matters.'

Although Article 2, paragraph 1, subparagraphs a) and b), of the RJAT uses the expression 'declaration of illegality' to define the competence of the arbitral tribunals operating in the CAAD and does not refer to constitutive (annulment) and condemnatory decisions, it should be understood, in harmony with the aforementioned legislative authorization, that the competences include those powers which in judicial challenge proceedings are attributed to tax courts in relation to acts whose assessment of legality falls within their competencies.

Although judicial challenge proceedings are essentially proceedings for mere annulment (Articles 99 and 124 of the CPPT), a condemnation of the tax administration in the payment of compensatory interest and compensation for undue guarantee may be delivered therein.

In truth, despite the fact that there is no express provision to that effect, it has been pacifically understood in tax courts, since the entry into force of the codes of the fiscal reform of 1958-1965, that a claim for condemnation in the payment of compensatory interest may be combined in judicial challenge proceedings with the claim for annulment or declaration of nullity or non-existence of the act, for in those codes it is stated that the right to compensatory interest arises when, in a gracious complaint or judicial proceedings, the administration is convinced that there was an error of fact imputable to the services. This regime was, subsequently, generalized in the Code of Tax and Administrative Procedure, which established in paragraph 1 of its Article 24 that 'there will be a right to compensatory interest in favor of the taxpayer when, in a gracious complaint or judicial proceedings, it is determined that there was an error imputable to the services', then, in the LGT, in whose Article 43, paragraph 1, is established that 'compensatory interest is due when it is determined, in a gracious complaint or judicial challenge, that there was an error imputable to the services, resulting in payment of the tax debt in an amount higher than legally due' and, finally, in the CPPT in which it is established, in paragraph 2 of Article 61 (corresponding to paragraph 4 in the version given by Law no. 55-A/2010, of 31 December), that 'if the decision recognizing the right to compensatory interest is judicial, the period for payment is counted from the beginning of the period for voluntary execution.'

With respect to the claim for condemnation to payment of compensation for provision of undue guarantee, Article 171 of the CPPT establishes that 'compensation in the case of a bank guarantee or equivalent wrongfully provided will be requested in the proceeding in which the legality of the debt being executed is contested' and that 'compensation must be requested in the complaint, challenge or appeal or, if its grounds are subsequent, within 30 days after its occurrence.'

Thus, it is unequivocal that judicial challenge proceedings encompass the possibility of condemnation to payment of compensation for undue guarantee and is, in principle, the appropriate procedural means to formulate such a claim, which is justified by evident reasons of procedural economy, since the right to compensation for undue guarantee depends on what is decided regarding the legality or illegality of the assessment act.

The request for constitution of the arbitral tribunal has as a corollary the proceeding in which the 'legality of the debt being executed' will be discussed being the arbitral proceeding, and therefore, as results from the express tenor of that paragraph 1 of the aforementioned Article 171 of the CPPT, it is also the arbitral proceeding that is appropriate to consider the claim for compensation for undue guarantee.

Moreover, the cumulation of claims relating to the same tax act is implicitly presupposed in Article 3 of the RJAT, when it refers to 'cumulation of claims even if relating to different acts', which allows it to be understood that the cumulation of claims is also possible relating to the same tax act and the claims for compensation from compensatory interest and condemnation for undue guarantee are capable of being encompassed by that formula, and therefore an interpretation in this sense has, at least, the minimum verbal correspondence required by paragraph 2 of Article 9 of the Civil Code.

The regime for the right to compensation for undue guarantee is contained in Article 52 of the LGT, which establishes the following:

Article 53

Guarantee in Case of Undue Provision

1. The debtor who, to suspend execution, offers a bank guarantee or equivalent, will be indemnified in whole or in part for the losses resulting from its provision, if it has been maintained for a period exceeding three years in proportion to the completion in administrative appeal, challenge or opposition to execution that have as their object the debt guaranteed.

2. The period referred to in the preceding number does not apply when it is verified, in a gracious complaint or judicial challenge, that there was an error imputable to the services in the assessment of the tax.

3. The compensation referred to in number 1 has as its maximum limit the amount resulting from the application to the guaranteed amount of the rate of compensatory interest provided for in the present law and may be requested in the gracious complaint or judicial challenge proceeding itself, or autonomously.

4. Compensation for provision of an undue guarantee will be paid by abatement from the tax revenue of the year in which payment was made."

In the case at hand, it is manifest that the error of the assessment act embodied in the assessments made without support in a fact that is a prerequisite of the tax is imputable to the Tax and Customs Authority, since the tax inspection and the assessments were of its initiative and the Claimant in no way contributed to that error being made.

For this reason, the Claimant is entitled to compensation for the guarantee provided.

However, the charges that the Claimant incurred to provide the guarantee were not alleged and proved, so it is not viable to fix here the compensation to which the Claimant is entitled, which can only be done in the execution of this judgment.

C. DECISION

In these terms this Arbitral Tribunal decides to deem the arbitral claim totally well-founded and, in consequence,

a) Annul the VAT assessment acts with numbers …, …, 2012… and 2012…, for periods 09, 10, 11 and 12 of the year 2011, and respective compensatory interest assessments, with numbers … and …, as well as the dismissal of the hierarchical appeals that were filed against the dismissal decisions of the gracious complaints that preceded them;

b) Condemn the Tax and Customs Authority to pay the Claimant compensation for undue guarantee, in the amount to be calculated in the execution of judgment;

c) Condemn the Respondent in the costs of the proceeding.

D. Value of the Proceeding

The value of the proceeding is fixed at € 169,242.62, under the terms of Article 97-A, paragraph 1, subparagraph a), of the Code of Tax and Administrative Procedure, applicable by virtue of subparagraphs a) and b) of paragraph 1 of Article 29 of the RJAT and paragraph 2 of Article 3 of the Regulation of Costs in Tax Arbitration Proceedings.

E. Costs

The arbitration fee is fixed at € 3,672.00, under the terms of Table I of the Regulation of Costs in Tax Arbitration Proceedings, to be paid by the Respondent, since the claim was entirely well-founded, under the terms of Articles 12, paragraph 2, and 22, paragraph 4, both of the RJAT, and Article 4, paragraph 4, of the aforementioned Regulation.

Let it be notified.

Lisbon

2 November 2015

The Presiding Arbitrator

(José Pedro Carvalho - Rapporteur)

The Arbitrator Vogal

(Maria Forte Vaz)

The Arbitrator Vogal

(Manuel Vaz)