VAT Exemption on Intra-Community Supply of Goods: Proof Requirements Under RITI Article 14(1)(b)

ARBITRAL DECISION

CAAD: Tax Arbitration

Case no. 164/2015-T

Subject Matter: VAT, intra-Community supply of goods, evidence, VAT exemption (article 14(1)(b) of the ISGR)

The Arbitrators José Poças Falcão (Presiding Arbitrator), João Ricardo Catarino and Luís Menezes Leitão, appointed by the Ethics Committee of the Administrative Arbitration Center to form an Arbitral Tribunal, hereby decide as follows:

I – REPORT

On 11 March 2015, A… – …, LDA, hereinafter A… or Claimant, a legal entity, taxpayer number …, with registered office at Avenue …, no. … Lisbon, filed a request for constitution of an arbitral tribunal, under the combined 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, as amended by article 228 of Law no. 66-B/2012, of 31 December (hereinafter, abbreviated as LRAT), seeking the declaration of illegality of the VAT assessments no. 2013…, 2013…, 2013… and 2013…, and respective compensatory interest assessment no. 2013…, relating to the 4 quarters of the year 2012 (see Inspection Reports, docs. 22 to 25, attached to the case file), corresponding to an amount of tax which the Claimant contends is not due, relating to intra-Community supply operations of goods, in the amount of € 104,615.38 (one hundred and four thousand six hundred and fifteen euros and thirty-eight cents) and, immediately thereafter, the dismissal of the hierarchical appeal it filed in relation to the same, expressly dismissed by a decision which appears in the annexes.

The Tax and Customs Authority is hereby Respondent, hereinafter TA.

The Claimant did not appoint an arbitrator, therefore, under the provisions of article 6(2)(a) and article 11(1)(b) of the LRAT, the President of the Ethics Committee of CAAD appointed the undersigned as arbitrators of the collective arbitral tribunal, who accepted the appointment within the applicable time limit.

The parties were notified of this appointment and expressed no intention to refuse the appointment of the arbitrators, in accordance with article 11(1)(a) and (b) of the LRAT and articles 6 and 7 of the Code of Ethics.

Accordingly, in compliance with article 11(1)(c) of the LRAT, as amended by article 228 of Law no. 66-B/2012, of 31 December, the collective arbitral tribunal was constituted on 25 May 2015.

To substantiate its claim, the Claimant alleges, in summary, that the amount of VAT which was officially assessed against it, in the amount of € 104,615.38, is not effectively due, insofar as it relates to intra-Community transactions of goods, which are exempt from VAT, in light of the provisions of article 14(1)(b) of the ISGR – Intra-Community Supply of Goods Regime.

On 22 June 2015, the Tax Authority (hereinafter TA), Respondent, duly notified for such purpose, presented its Response, arguing that the VAT in question was outstanding, due to the lack of proof of the prerequisites upon which the exemption depends, established in article 14(a) of the Intra-Community Supply of Goods VAT Regime (ISGR), namely in transactions of watches to other Member States of the European Union.

Indeed, in the sales that the Claimant invoiced in the aforementioned periods to B… (LV…) and/or to C… (LV…), the TA would have detected a set of facts indicating that the goods in question were not "dispatched or transported by the seller, by the buyer or on behalf of either, from national territory to another Member State intended for the buyer".

Furthermore, the TA considers that the resolution of the case submitted to this Tribunal requires a combined interpretation of articles 131 and 138(1) of Council Directive 2006/112/EC, of 28 November 2006, concerning the common system of value added tax (OJ L 347, p.1), requesting submission to the CJEU, as a matter of preliminary ruling (pursuant to article 267 TFEU), before substantive ruling and through suspension of proceedings, of the following questions:

1. Can it be considered that an administrative practice respects the principle of proportionality when it places upon the seller the burden of proving the authenticity of transport documents and the receipt of goods when the transport documents do not identify the goods that are the subject of the supply?

2. Can it be considered that an administrative practice respects the principle of proportionality when it places upon the seller the burden of proving the effectiveness of intra-Community supplies when there is a contradiction between the documentation presented by different operators (seller and buyer)?

The Claimant, duly notified for such purpose, presented a Motion on 6 July 2015, through which it pronounced itself (negatively) in writing on the necessity of a preliminary ruling referral to the CJEU, requested by the TA in article 80 of its Response, for the examination of certain questions of law and consequent ruling on the merits of the case, as it considered it unnecessary.

For this purpose, the Claimant invoked the fact that all questions of application of law that arise in the case "are crystal clear in light of European law and jurisprudence", and should not, consequently, lead to a preliminary ruling referral to the CJEU, due to its being unnecessary, and contended for its dismissal.

Considering that there was no need for the production of additional evidence, beyond the documentary evidence already incorporated in the case file, that the parties had pronounced themselves, to the extent necessary, on the matter of exception and that the principles of procedural economy and the prohibition of useless acts apply in arbitral proceedings, under the provisions of article 16(c) and (e) of the LRAT, the holding of the meeting referred to in article 18 of the LRAT was dispensed with and the parties were afforded the opportunity to present written submissions, which both did, reiterating the positions they had assumed in their pleadings.

The Arbitral Tribunal is materially competent and is regularly constituted, under articles 2(1)(a), 5 and 6(1) of the LRAT.

The parties have standing and legal capacity, are legitimate and are legally represented, under articles 4 and 10 of the LRAT and article 1 of Order no. 112-A/2011, of 22 March.

The case is not affected by any nullities.

Having considered all the foregoing, it is necessary to rule as follows:

II. DECISION

A. MATTER OF EXCEPTION

The TA, Respondent, invokes the exception of preliminary ruling referral to the CJEU of the matter at issue, citing the fact that the resolution of the case requires a combined interpretation of articles 131 and 138(1) of Directive 2006/112/EC of the Council, of 28.11.2006, with regard to the questions it specifically raises in article 80 of its Response.

To the contrary, the Claimant submits that such referral is unnecessary due to the clarity of the meaning, content and scope of the above-mentioned provisions, taking into account the abundant Community jurisprudence on the matter, to such extent that it can no longer be considered that European Law is not already clear.

In accordance with Article 267 TFEU (former article 234 TEC), whenever a question of preliminary ruling is raised before any court or tribunal of a Member State, that court or tribunal may, if it considers that a decision on that question is necessary to enable it to give judgment, request the Court of Justice to give a ruling thereon. Whenever a question of this kind is raised in proceedings pending before a court or tribunal of a Member State whose decisions are not subject to a remedy of judicial review provided by the law of that Member State, that court or tribunal must submit the question to the Court of Justice.

Within the matter of law, it shall be examined whether the requirements for a preliminary ruling referral are satisfied, to which the examination is deferred.

B. MATTER OF FACT

B.1. Facts established as proven

The facts that must be proven are the following:

a) The Claimant is a taxable person registered for VAT purposes in Portugal, under the normal monthly regime.

b) The Claimant dispatched to its customers (the companies C…; and B…), likewise taxable persons registered for VAT in the destination Member State of the goods, Latvia, which is proven through the transport documents provided by the carrier X..., whose website declares the shipments as confirmed deliveries, as established as proven by the TA in the inspection report (at p. 9);

c) It is further proven in the case file that the Claimant issued, in relation to the operations with C… two invoices (2012…; 2012…), and in relation to B…, another 22 invoices, between January and May 2012, identified in the External Examination Report of the accounting records prepared by the TA (hereinafter Report), in which watches are listed as the goods sold, although the Claimant had the transport guides of carrier X... include the statement that the object of transport was "documents";

d) It is also proven, as a result of data matching and with regard to the supplies made to B…, that this company identified only the purchase of three watches from the Claimant (p. 13 of the report).

B.2. Facts not proven

It is not proven that the goods dispatched, both in the operations with the company C… and with the company B…, were actually "watches", since in the transport guides of X... the indication of "documents" appears, and there is no other evidence, whether direct or indirect, that the goods actually dispatched under these operations are "watches" (pp. 9, 12, 13 and 14 of the report).

B.3. Reasoning of the matters of fact proven and not proven

Regarding the matters of fact, the Tribunal does not need to rule on everything alleged by the parties; rather, it is incumbent upon it to select the facts that matter for the decision and distinguish between proven and unproven matters (see article 123(2) of the CCPTAX and article 607(3) of the CPC, applicable ex vide article 29(1)(a) and (e) of the LRAT).

In this way, the facts relevant to the judgment of the case are selected and circumscribed according to their legal relevance, which is established in light of the various plausible solutions to the question(s) of Law (see the previous article 511(1) of the CPC, corresponding to the current article 596, applicable ex vi of article 29(1)(e) of the LRAT).

Accordingly, taking into account the positions assumed by the parties, in light of article 110/7 of the CCPTAX, the documentary evidence and the case file attached to the case, the facts listed above were considered proven, as relevant to the decision.

C. ON THE LAW

C.1. MATTER OF EXCEPTION

The TA invokes the question of the necessity of preliminary ruling referral, considering that it is necessary to conclude that the jurisprudence of the CJEU that has addressed the application of the exemption provided in article 138(1) of Directive 2006/112/EC and in the corresponding provisions – article 28 C, part A, subparagraph a), 1st paragraph – of the Sixth Directive, namely, Judgments of 27/09/2007, case C-409/04, Teleos et al., of 27/09/2007, case C-146/05, Albert Collé; of 27/09/2007, case C-184/05, Twoh International; of 07/12/2010, case C-285/09, R., of 06/09/2012, case C-273/11, Mecsek-Gabona; of 27/09/2012, case C-587/10, VSTR; of 09/10/2014, case C-492/13, Traum, "do not yield clear guidance that would allow the elucidation of the situation at hand." For this reason, accordingly, the TA expressly invokes the need to clarify, prior to the substantive decision, the following questions:

1. Can it be considered that an administrative practice respects the principle of proportionality when it places upon the seller the burden of proving the authenticity of transport documents and the receipt of goods when the transport documents do not identify the goods that are the subject of the supply?

2. Can it be considered that an administrative practice respects the principle of proportionality when it places upon the seller the burden of proving the effectiveness of intra-Community supplies when there is a contradiction between the documentation presented by different operators (seller and buyer)?

The Claimant maintains that such referral is not necessary, considering, firstly, that "the preliminary ruling referral should occur to resolve questions relating to the assessment of the validity or the interpretation of European law, and there is no discernible, in this case, any relevant interpretive dispute between the official and binding position of the TA and that advocated by the Claimant, or problem of validity of any internal norm in the face of European law."

The Claimant is right. Indeed, having weighed the facts and the exact meaning, content and scope of the Community provisions and the Jurisprudence already rendered by the CJEU, it appears clear that they are sufficiently clear to resolve with perfect clarity the questions at issue. Indeed, such Jurisprudence is so clear that it enabled the TA to issue equally clear Administrative Guidance – Circular Letter 30009 of 10.12.2009 – where it expresses an understanding that reflects very appropriately the established Jurisprudence, which, moreover, is confirmed in the Opinion attached.

Indeed, the Teleos Judgment of the CJEU, among others, establishes that the term "dispatched" should be interpreted "(…) to mean that an intra-Community acquisition of a good is made and the exemption of an intra-Community supply is applicable only when the right to dispose of the good as owner has been transferred to the buyer and the supplier proves that that good was dispatched or transported to another Member State and that, following that dispatch or transport, the same physically left the territory of the Member State of supply."

The TA has disseminated Guidance according to which, for the purposes of article 14(a) of the ISGR, it shall be admissible that proof of the departure of the goods from national territory may be made by recourse to the general means of proof, namely through the following alternative possibilities:

• the transport documents, which, depending on whether the transport is by road, air or sea, may be, respectively, the shipping declaration (CMR), the air waybill ("Airwaybill" - AWB) or the bill of lading ("Bill of lading"- B/L), as the Claimant correctly notes at p. 11 of its initial pleading.

It is, moreover, established that, although it is within the competence of the Member States to set the conditions for the application of the exemption of an intra-Community supply (CJEU, see Judgment Albert Collé), such States are bound by the obligation to respect the general principles of law that inform the Community legal order, including, inter alia, the principles of legal certainty and proportionality. And even if these conditions are set and have been observed by the dispatcher, the constitution of the obligation upon such dispatcher to pay the VAT relating to that supply violates legal certainty, "when it is demonstrated that, due to fraud committed by the buyer of which the supplier had no and could not have knowledge, the goods in question did not actually leave the territory of the Member State of supply."

And further, without being exhaustive, it is clear that the entitlement to exemption of an intra-Community supply cannot depend on compliance with formal obligations, without taking into account substantive requirements and, namely, without questioning whether these have been observed, going beyond what is necessary to ensure accurate collection of the tax (Judgment Albert Collé and Xavier B. Proof of Dispatch and the Right to Exemption of Intra-Community Transactions (I), OTOC Journal, no. 176, 10.2014).

The ease with which Xavier de Basto stated these rules (op. cit., loc. cit.), in addition to what has been stated above, leads the Tribunal to establish the conviction that there is no objective basis for granting, in this respect, the TA's request. Accordingly, in the terms and with the grounds set out above, the Tribunal decides that the exception invoked by the TA does not proceed, and, therefore, the substantive question submitted to this Arbitral Tribunal should be examined, which is the object of the present dispute, namely to determine whether or not the Claimant's position is correct, that is, whether or not proof has been made of compliance with the requirements imposed by article 14(a) of the ISGR so that the operation can be qualified as an intra-Community supply of goods.

Accordingly, given that we are dealing with a question on which the Court of Justice of the European Union has already rendered a decision, there is no reason to ask the Court to pronounce itself again, and therefore the request for a preliminary ruling referral made by the Respondent is dismissed.

Thus, we proceed to the analysis of the merits of the case.

C.2. MERITS OF THE CASE

From the perspective of this Arbitral Tribunal, the determination of whether the Claimant's position is correct depends, accordingly, on the prior elucidation of the exact meaning, content and scope of the requirements demanded by the ISGR and, once this is done, on the verification, in concreto, of such compliance, in light of the facts established as proven in the case file. The cumulative requirements set out in article 14(a) of the ISGR, as they result from the text of the law, are the following:

a) That the supplies of goods have been made by a taxable person referred to in article 2(1)(a) of the ISGR;

b) That the goods have actually been dispatched or transported by the seller, by the buyer or on behalf of either, from national territory;

c) That such dispatch or transport has been made to another Member State intended for the buyer;

d) That the buyer is also, at the time of the operation, a natural or legal person registered for value added tax purposes in another Member State;

e) That it has used its respective identification number to effect the acquisition; and

f) That it is covered in that Member State by a taxation regime for intra-Community acquisitions of goods.

Now, in the case at hand, regardless of other equally relevant questions, which we will address below, on a subsidiary basis, the Claimant does not comply with one of the basic requirements for the qualification of the operation as an intra-Community supply, since, although it provides proof that it issued sales invoices with the reference to "watches", it does not provide proof that the goods actually dispatched by it were actually and unequivocally "watches", since the transport documents of X... show in the description of each of those guides the transport of "DOCUMENTS" and not such "watches" (see docs. 26, 27 and 29 to 31, annexed to the initial pleading as evidence).

Accordingly, from the outset, the taxpayer fails to prove the actual dispatch or transport of the watches in question to the Member State. It thus directly violates the provision in article 14(a) of the ISGR, namely, that "the goods [declared, in this case, watches] have actually been dispatched or transported by the seller, by the buyer or on behalf of either, from national territory."

If it be true that the declaration of something different from what was actually transported may be attributable to rules imposed by the insurer, as the Claimant provides evidence through the attachment to the case file of a copy of the HDI insurance policy 2012…, in which one can read that "Claims for losses of shipments are excluded when the transport guide shows any word related to jewelry (gold, silver, pearls, watches, etc.) as well as the mention of the values transported, both in Portuguese as in any other language, except when the legislation of the destination country so requires," it is also true that such rules do not override the legal obligation that equally fell upon it to prove, for tax purposes, and specifically for the purpose of substantiating the nature of the economic operation conducted, that the goods actually transported were "watches." (In this sense, see Judgment Teleos, which established that it is required (1) proof of the status of taxable person, (2) the transfer of the right to dispose of a good as owner and (3) the physical movement of goods from one Member State to another.

That is to say, compliance with contractual rules relating to protection in transport, contracted with the insurer, did not preclude the obligation to prove, before the competent tax authorities, that the goods actually transported were "watches". Since the Claimant has not done so, and there is no evidence in the case file of the physical departure of the watches from national territory, it remains to be demonstrated that the buyers, taxable persons registered in Latvia, have acquired the right to dispose of the goods as owners.

Accordingly, it is clear that the Claimant, by not demonstrating the actual dispatch or transport of the goods specifically at issue, fails to fulfill one of the basic requirements established in article 14(a) of the ISGR to enable the unequivocal qualification of the operation as an intra-Community supply. And, with this, it can only be established as proven the direct and frontal breach of this structural requirement established in article 14(a) of the ISGR, to resolve the question of whether the Claimant is correct or not. A response that in these terms and having as the strict limit the scope and content of the evidence specifically produced in the case file, since no other was adduced, can only be negative, since there is no proof that those goods have been "dispatched or transported by the seller, by the buyer or on behalf of either, from national territory to another Member State intended for the buyer".

Moreover, as results from the Teleos Judgment, among others, which the Claimant itself cites, both in its initial pleading and in its final submissions, when it refers to the statement in the aforementioned Judgment that the term "dispatched" should be interpreted "(…) to mean that an intra-Community acquisition of a good is made and the exemption of an intra-Community supply is applicable only when the right to dispose of the good as owner has been transferred to the buyer and the supplier proves that that good was dispatched or transported to another Member State and that, following that dispatch or transport, the same physically left the territory of the Member State of supply." (emphasis added).

Consequently, this Arbitral Tribunal considers that the Claimant is not correct when it invokes having carried out an intra-Community supply, exempt from VAT, since it cannot, in the terms and with the grounds invoked and proven, be established as proven the actual realization of such an intra-Community supply of watches, nor, consequently, can it be conferred upon it the status of exemption that results from such qualification. Now, it does not appear that the requirement of proof of dispatch or transport constitutes a requirement that goes beyond what is necessary to ensure accurate collection of the tax or that exceeds the limits of legal certainty, proportionality and VAT neutrality, as was equally noted by the Judgment Albert Collé, abundantly referred to by the parties.

The Claimant does, indeed, make abundant and near exhaustive argumentation in this sense, particularly in its Final Submissions, but the truth is that, on the one hand, the Tribunal can only judge based on the evidence actually produced by the parties and not based on facts that are reasonably believed to have occurred by reason of the arguments spent by the parties in the distinguished procedural documents and, on the other hand, the Claimant merely attaches an insurance contract, but this, once again, does not prove the actual shipment of the invoiced goods.

For this reason, in the absence of such unequivocal demonstration, the VAT assessed by the TA cannot but be considered as effectively due, under the general rules.

The substantive question having been elucidated, relating to the fulfillment of the substantive requirements for the qualification (or non-qualification) of the operation as an intra-Community supply, the examination and decision on the remaining arguments presented by the parties is rendered moot, by being unnecessary, particularly the grounds based on the extensive Jurisprudence of the CJEU brought to the case file by the parties.

Be that as it may, on a merely subsidiary basis and with respect to the more complex question of what should be the extent of the duty to prove of the VAT taxable person (article 2(1)(a)) and in a more general thesis, it may be further elaborated that the ISGR is silent on the requirements for proof of the realization of an intra-Community supply, a fact which the Claimant invokes.

The TA is well aware of the problem, which moreover is of general application to the VAT Directive itself, in that it lacks a norm that specifically specifies what the means of proof should be for full demonstration of the ISGR requirements so as to qualify an operation as intra-Community.

The administrative guidance through Circular Letter 30009, of 10/12/1999 (and, for example, the TA guidance sheet T909 2007296, of 31.3.2009) clarifies that proof of the actual realization of the intra-Community supply can be made by any means, including, if necessary, the declaration, in the Member States of destination of the goods, by the respective buyers, that they have carried out the corresponding intra-Community acquisitions of goods.

Now, in a transaction, by definition there are two parties. In this case, the status of both parties is relevant (both must be taxable persons properly registered in Member States, who have acted in that capacity) and, furthermore, the actual dispatch of the goods, as referred to above.

However, it appears clear that, in light of the special concerns about fraud that intra-Community transactions can raise and effectively do raise, and of the control systems created to control them, under penalty of the failure of the functioning and the very credibility of the intra-Community VAT regime, the meaning of the concept of "dispatch or transport" referred to in article 14(a) of the ISGR should not be contained in the simple fulfillment of the unilateral formality of the mere dispatch or transport, but should extend to the need and to the consequent burden, which cannot but fall upon the taxable person who dispatches the goods, of proving the arrival at the destination of the goods dispatched or transported intended for the buyer, when the latter is a natural or legal person registered for value added tax purposes in another Member State, who has used its respective identification number to effect the acquisition and is covered in that Member State by a taxation regime for intra-Community acquisitions of goods.

In fact, in our view, only with such proof is the circuit of the legal-material operation closed and can one then state that we are dealing with a true intra-Community supply of goods. Otherwise we will have merely a supply of goods but without the possibility of substantiating its "intra-Community" nature. It is, therefore, necessary to prove the intra-Community character of the operation, which must be done not only by recourse to formal proof of "dispatch or transport" but also by substantive, that is, material, demonstration of the actual transmission of goods from one point to another point of the Community territory, which also includes the actual receipt of the good dispatched by its recipient.

Now, in this case, the requirements set out in subparagraphs a) and c) above are established – the nature of the taxable person and the actual dispatch through the issuance of transport guides and sales invoices of the goods, as well as confirmed deliveries by the carrier, from which proof of the actual receipt of "goods" by the buyer results. What was missing to prove is that those goods were or were the same goods appearing in the respective invoices, above identified (see also Examination Reports on the accounting records), due to the references that appear of something different, as noted above.

Now, this substantiation of "receipt" of the good dispatched constitutes a structural element of the concept of intra-Community supply of goods, since the law does not content itself with the legal transmission but requires the actual or material dispatch and delivery of the good dispatched or transported from national territory to another Member State intended for the buyer (see in this sense, the Judgment of the Southern Administrative Court, case 04434/10, Section: CT - 2nd Court, of 06/07/2011, which decided that:

1. The requirements provided for in article 14 of the ISGR are to be cumulatively verified for the Portuguese taxable person to benefit from the right to exemption of the tax, in the scope of intra-Community transactions;

2. If the taxpayer does not prove, by any means of proof allowed by law, the actual dispatch and delivery of the goods sold to another taxable person of VAT located in another Member State, they cannot benefit from the tax exemption regime as intra-Community transactions.

And in this, the requirements cannot but include substantiation of the departure but also extend to the actual arrival of the goods "to the other Member State" intended for the "buyer". The expressions used in the provision at issue – article 14(a) of the ISGR – "dispatch," "transport," "intended for the buyer," cannot but be considered as constituting the concrete materialization of the duty to have goods follow, to actually dispatch, that is, "to cause to depart with a certain purpose; to send; to remit; to dispatch" certain goods to a specific taxable person (in this sense, Dictionary of the Portuguese Language with Orthographic Agreement [online]. Porto: Porto Editora, 2003-2015. [consulted 2015-10-07 15:37:13]. Available on the Internet: http://www.infopedia.pt/dicionarios/lingua-portuguesa/expedir), with the purpose of ensuring they actually reach.

Indeed, and in the same vein, article 20 of the VAT Directive establishes that "intra-Community acquisition of goods" is the operation by which "the acquisition of the right to dispose, as owner, of a movable tangible good dispatched or transported intended for the buyer, by the seller, by the buyer or on behalf of either, to a Member State other than the Member State from which the dispatch or transport of the good commenced;" article 138 of the same Directive provides that "Member States shall exempt the supply of goods dispatched or transported…" which gives to the actual, effective delivery of the good dispatched a position of prominence, in line with internal and Community jurisprudence.

Note, moreover, that in another parallel place in the common VAT system and since the entry into force of the CVAT, the duty was established to substantiate the realization of the supplies of goods and services exempt under subparagraphs a) to j), p) and q) of article 14(1) and subparagraphs b), c), d) and e) of article 15(1) through the appropriate customs documents, as provided in article 29(9) of the CVAT, whenever, in the operation, the competent customs authorities are involved, in the terms provided for by the respective laws and regulations.

Now, aware that, in accordance with those same laws, not always in the operations provided for in articles 14 and 15 of the CVAT is the intervention of those customs authorities required, whether for reasons of internal law, or on the basis of Community law or regulation, the VAT Code has always established that, absent a legal obligation for the intervention of customs services, the substantiation of the operations should be done through declarations issued by the buyer of the goods or user of the services, indicating the destination that will be given to them. Now, in this case, this regime has never been considered disproportionate or violative of the values of legal certainty or proportionality, correctly invoked by the Claimant, based on numerous Judgments of the CJEU.

Accordingly, there is no reason to see that, for a parallel regime, that is, where identical needs for substantiation manifest themselves, in order to ensure certainty and legal security aimed at preventing VAT fraud, other, lighter, obligations of substantiation of the VAT taxable persons in intra-Community supplies should be, since the identical and manifested with equal intensity social values to protect, which is nothing more than certainty regarding the regular functioning of a general regime of taxation of transactions in the EU and the propriety of the exemption invoked, according to those same rules. Under penalty of, otherwise, leaving in shadow the unequivocal demonstration of a structuring reality in the model of Community VAT, opening the doors to fraud and the injustice resulting from the existence in commerce, of goods burdened and not burdened with the tax, with the natural economic consequences, not only for the tax economy but for the economy in general.

This obligation of issuance and possession by the exporter of a declaration, for operations exempt from VAT (with recovery of VAT borne upstream), provided for in article 29(8) of the CVAT, thus fulfills a purpose that is in all respects identical to that for which, in intra-Community supplies of goods, it is required of the taxable person to demonstrate that the goods supplied were actually dispatched or transported intended for the buyer, and were properly received by it.

It has further been understood that article 29(8) of the CVAT is a condition for the functioning of the exemptions referred to in articles 14 and 15 of the CVAT, so that the failure to observe this condition makes the VAT required that would be due as if it were a merely internal operation. This regime aims to prevent tax fraud, given that one is in the presence of a situation of non-collection of tax, which has an exceptional character in the field of VAT. It is because of the seriousness of the possible failure to have the substantiating documents required by article 29(8) that article 29(9) of the same provision determines the legal obligation, for the supplier of the goods or the provider of the services, to assess the corresponding tax. (see guidance sheet of the TA - Exports - Substantiation of exemption in operations – Process no. …, order of the SDG of Taxes, legal substitute of the Director General, on 2012-05-24).

Now, it appears clear to this Tribunal that the grounds of a general and specific nature on which rest the special care required in these cases of export of goods or services (articles 14 and 15 of the CVAT), linked to the certainty and legal security that the legal requirements on which the non-collection of tax depends are unequivocally proven, are also the same for which it cannot but be required of the taxable person who dispatches the goods, who failed to collect VAT in economic operations which he himself qualified as intra-Community supplies of goods, proof of the actual dispatch and arrival of those goods to another Member State intended for the buyer, identified as such in the documents that support the operation.

Naturally, for this purpose, the underlying concerns are relevant of ensuring that intra-Community supplies do not constitute a means of escape from the rules of the tax and a way for VAT fraud, feeding the parallel economy. Even though there is no reason to objectively believe that this was the purpose of the A… Claimant, and it can be admitted that the operation is regular, it cannot but be required that it fulfill the burden of proving all the requirements of the intra-Community nature of the operation. Activity that proved to be here very important because of the special sensitivity of these operations in face of the phenomenon of VAT fraud, which it did not do, neither in the context of those operations nor subsequently, when it could do so, whether in an inspection or in the context of the present arbitral proceedings.

Indeed, in light of the above, it fell to the now Appealing party the burden of proof of the verification of these requirements to confer on the operation the quality of "intra-Community" and to achieve the right to such tax exemption, under the terms provided in article 74(1) of the LGT. Accordingly, it fell to it, with respect to the relevant facts, the burden of producing the pertinent evidence in order to demonstrate the well-founded nature of the application of the legal framework it applied and the non-collection of VAT – see article 341 of the Civil Code – which is based on criteria of availability and ease of proof, "since no one better than the now appealing party could be placed to come prove these invoked requirements of the right to exemption, such as having made the delivery of those goods in those other Member States, to another taxable person of the tax and as such registered there for such purpose and who has used its respective identification number to effect those acquisitions." (in this sense, see Judgment of the Southern Administrative Court, case 04434/10, Section: CT - 2nd Court, of 06/07/2011). Now, when asked to present proof of compliance with all the requirements qualifying the operation as an intra-Community supply, the Claimant did not do so.

Moreover, as is well known, before the advent of the Community internal market the classical borders contained fewer risks, which is why new tax obligations were established and a system (VIES) was instituted entirely dedicated to the control of the operations and which constitute the current pillar of the control of those intra-Community supplies.

As well as, moreover, is well noted in the Opinion attached to the case file, at p. 6, it is necessary to substantiate the physical circuit of the good, that is, proof that the goods departed, that they were dispatched or transported. It is clear that such proof must be adequate for the purposes, and cannot be excessively burdensome under penalty of violation of the principles of justice and proportionality, but it cannot be said that it takes on the character of excessive the burden of proof of the actual dispatch of the invoiced goods, rather than any others, which here it was required that the Claimant should have done, which it did not do.

On the other hand, article 131 of the VAT Directive grants to the States the power to adopt appropriate control measures, avoiding, naturally, excessively burdening taxable persons. In that sense, the administrative guidance - Circular Letter no. 30009 of the TA – establishes that the general means of proof are admissible, including, in the limit, a declaration in the Member State of destination of the goods, by the respective buyer, that it has carried out the corresponding intra-Community acquisition, in line with the jurisprudence of the CJEU. As can be seen, there is no rigid position regarding the general means of proof of the realization of an intra-Community supply since any suitable means of proving that departure and acquisition of the effective right to dispose of the good serves.

Consequently, it cannot be conceded that the Claimant is correct in its position, and therefore the assessments in question must be upheld.

D. DECISION

Accordingly, in this Arbitral Tribunal, it is decided:

a) To dismiss the exception raised by the Respondent;

b) To dismiss in its entirety the claim for declaration of voidability of the acts on which arbitral ruling is requested, and therefore not declaring the illegality of the dismissal of the hierarchical appeal and of the VAT assessments relating to the 4 quarters of the year 2012 and compensatory interest (see Inspection Reports, docs. 22 to 25, attached to the case file), corresponding to VAT in the amount of € 104,615.38 (one hundred and four thousand six hundred and fifteen euros and thirty-eight cents);

c) To render moot the examination and decision relating to the other questions raised by the claimant.

E. CASE VALUE

The case value is fixed at €104,615.38 (one hundred and four thousand six hundred and fifteen euros and thirty-eight cents), under article 97-A(1)(a) of the Code of Tax Procedure and Process, applicable pursuant to article 29(1)(a) and (b) of the LRAT and article 3(2) of the Regulation of Costs in Tax Arbitration Proceedings.

F. COSTS

The tax arbitration fee is set at € 3,060, under Table I of the Regulation of Costs in Tax Arbitration Proceedings, to be paid by the Claimant, due to its total failure, under articles 12(2) and 22(4), both of the LRAT, and article 4(4) of the said Regulation.

Notification is ordered.

Lisbon, 16 November 2015

The Presiding Arbitrator

(José Poças Falcão)

The Arbitrating Member

(João Ricardo Catarino)

The Arbitrating Member

(Luís Menezes Leitão)