CAAD Case 307/2017-T: VAT Deductibility and False Invoices in Subcontracting – Arbitral Decision

ARBITRAL DECISION

The Arbitrator Dr. Filipa Barros (sole arbitrator), designated by the Ethics Council of the Administrative Arbitration Centre ("CAAD") to form the Sole Arbitral Tribunal, constituted on 14 July 2017, hereby decides as follows:

I. REPORT

The company A..., LDA. NIPC ... with registered office at Rua ... – shop – ...-... ..., hereinafter "Claimant", hereby requests, pursuant to article 2, no. 1, paragraph a), and articles 10 et seq. of Decree-Law no. 10/2011, of 20 January, hereinafter referred to as "RJAT"[1], the constitution of an Arbitral Tribunal to rule on the illegality and consequent annulment of tax acts relating to additional assessments of Value Added Tax (VAT) nos. ... and ..., concerning the periods 2013.12T and 2014.03T, issued in 2016, in the amounts of €4,064.27 and €14,061.15, respectively.

To support its request, the Claimant develops two lines of argumentation:

• On the one hand, it contends that there was no mandatory prior administrative procedure and competent substantiation of the tax corrections, beyond that which accompanied the assessment notice for the period 2014.03T;

• On the other hand, it claims the legitimacy in exercising the right to deduct the tax it bore, as all legal requirements for this purpose are met.

Regarding point a), the Claimant alleges that no administrative procedure relating to VAT for the fiscal year 2014.03T took place, which constitutes, unequivocally, the omission of legal procedure, classifiable under paragraphs d) and l) of article 161 of the Administrative Procedure Code (CPA), and accordingly, the tax act should be declared null.

In this regard, it states that it was notified of only a single inspection report concerning the fiscal year 2013.12T, and that the substantiation contained therein cannot be used thereafter as justification for the correction made by the Tax Authority (TA) to the VAT for 2014.03T, as these are not contemporary tax acts as would be required.

Regarding point b), the Claimant contends, in summary, that there are no grounds for the Tax and Customs Authority (hereinafter TA) to disregard the deduction of VAT incurred with the provision of services by company B... Lda., relating to a subcontract for the execution of a work awarded to the Claimant in....

In this context, the Claimant was contacted by its client, the firm C..., CRL, for the execution of a work at Doca Peixe de ..., although it did not have sufficient human and technical resources for the complete execution thereof. For this purpose, it opted to contact the company B..., through Mr. D..., who presented himself as a worker/service provider of B... Lda., as well as Mr. E..., managing partner, who represented the commercial company.

The Claimant researched information about B... Lda., having confirmed the registration of the commercial company and the absence of tax debts or any others, notwithstanding the fact that the company had not filed accounts since its establishment in 2010.

Thus, part of the subcontract was awarded to B... Lda., which always fulfilled its execution, enabling the Claimant to also comply with its clients, in this case C.... The subcontract was duly invoiced by B... Lda. to the Claimant, which paid it and, in turn, invoiced the Works Owner.

Consequently, the execution of the works is indisputable, and the TA did not provide proof, as incumbent upon it, that the services listed in the invoices did not have real and effective implementation.

Furthermore, invoices questioned by the TA are invoices issued through Certified Software (no. 19/DGCI) in accordance with compliance with legal requirements, both substantive and formal in nature, and there were never doubts for the Claimant about the existence of "business structure" for the execution of the work listed therein. Nor is it understood what type of structure should exist from the TA's perspective, beyond labour and material/equipment to execute the contracted construction services. Indeed, it would even be possible for the contracted entity – B..., Lda. – to have opted to proceed with the contracting of third parties to provide the construction services.

Thus, the Claimant reiterates that the services were provided and the invoices issued in legal form, in accordance with the subcontract, and nothing more can be required to be controlled. It further notes that it is not true that the work is not mentioned in the invoices in question, as all mention the issuer and the work carried out at....

On the other hand, the Claimant has no possibility of controlling whether the invoices issued by B... Lda. differ from client to client, either at the layout level or at the printing level, as the invoices it received are all identical and derive from a certified invoicing programme. Moreover, all invoices mention the issuer and work carried out at the work of..., substantially and formally complying with the requirements established by article 36 of the VAT Code.

It concludes by noting that the burden of proof of simulation falls on the TA, under article 74, no. 1 of the General Tax Law (LGT), which has not pursued its attributions in terms of inspection and monitoring, thus violating the principle of legality of administrative action, the principle of justice and good faith. Furthermore, it considers that the TA violated the principle of presumption of veracity of taxpayers' declarations contained in article 75 of the LGT, imputing to the Claimant the responsibility for producing diabolical proof, which cannot proceed, as it constitutes a violation of fundamental rights, and the questioned invoices should be admitted and the VAT levied against the Claimant should be considered deductible.

On 16 May 2017, the request for constitution of the Arbitral Tribunal was accepted by the Honourable President of CAAD and immediately notified to the Respondent under the legal terms.

The Claimant did not proceed with the nomination of an Arbitrator.

Thus, under the terms and for the purposes of no. 1 of article 6 and paragraph b) of no. 1 of article 11 of the RJAT, by decision of the Honourable President of the Ethics Council, duly communicated to the parties within the legally prescribed timeframes, the undersigned was designated as arbitrator of the Sole Arbitral Tribunal, and communicated to the Ethics Council and the Administrative Arbitration Centre the acceptance of the assignment within the timeframe stipulated in article 4 of the Code of Ethics of the Administrative Arbitration Centre.

In accordance with the provision of paragraph c), of no. 1, of article 11 of Decree-Law no. 10/2011, of 20 January, as amended by article 228 of Law no. 66-B/2012, of 31 December, the Sole Arbitral Tribunal was constituted on 14 July 2017, followed by the relevant legal procedures.

The Respondent, duly notified for this purpose, submitted its response in which it defends the unfoundedness of the request for arbitral ruling.

To this end, it invokes the existence of strong indications that the invoices identified in the Tax Inspection Report (hereinafter TIR), issued by company B... Lda., relating to civil construction services provided to the Claimant, are false.

The indications that raise suspicions about the actual provision of services are, namely, the following:

• The company B... Lda. is a taxable person issuing false invoices;

• Through the use of elements obtained in cross-checking inspection, the TA found that B... Lda. lacks adequate business, technical, human and logistical structure for the execution of the work described in the invoices, a lack of structure that would prevent it from executing work amounting to the invoiced values;

• The invoices made available by B... Lda.'s clients differ from client to client, both at the "layout" level and at the printing level;

• The invoices did not contain a description of the services provided, unit cost or hourly cost thereof, nor identification of the works where the services had been provided;

• The invoices did not contain the mandatory mention "VAT liquidated by the purchaser", legally required in the provision of services and transfers of goods related to civil construction;

• The Claimant did not attach to the process any evidence of the existence of a permit on the part of B... Lda.

• The Claimant did not proceed with the identification of any of the workers who had worked on the site, not indicating any name or address, having referred that those responsible for that company were present at the site, making it impossible to identify other workers since those representatives are currently emigrated to Germany;

• As the contractor has the right to measure the work, no measurement maps were brought to the record;

• The Claimant was unable to demonstrate payment of goods and services to B... Lda., having only presented a copy certified by Bank F... S.A. of a cheque in the amount of €22,078.50 (which was indeed accepted by the TA as proof of payment), not proving the remaining amount of €67,521.00, nor evidencing any financial movement of the bank accounts that would prove payment of said amount;

• It was not possible to prove that B... Lda. participated as a subcontractor of the Claimant in the work carried out by the Claimant at Doca Pesca de....

In light of the foregoing, it is the understanding of the Respondent that the TA was only obliged to question the veracity of the operations described in the invoices, by collecting factual evidence of their lack of credibility, and it fell to the Claimant to prove the existence of the tax facts that it claimed as the basis for its right, that is, the actual performance of the subcontract by B... in the work of ... in which the Claimant participated as a contractor.

In this regard, the Respondent emphasizes the guidance issued by the extensive jurisprudence of the superior courts that reinforces the interpretation made in the context of the inspection procedure.

It further argues that the Claimant failed to prove the materiality of the operations in question, and since the burden of proving the constitutive facts of the right to deduct VAT falls upon it, any probatory indefinition should be resolved against its claim.

Without waiving this, the TA adds that the Claimant would never be entitled to deduct the tax described in invoices that do not comply with the legal form, which is not observed when the invoices do not comply with the requirements enshrined in no. 5 of article 36 of the VAT Code.

Finally, the Claimant failed to comply with the provision of Decree-Law no. 21/2007, of 29.01, which determines, in the case of civil construction services, the obligation for the invoice to contain the expression "VAT due by the purchaser", with the latter to proceed with a self-assessment, and insofar as such service is also deductible, this fact would be evidenced by the deduction of the corresponding VAT.

Now, only in those cases where VAT is self-assessed by the purchaser by virtue of the provision of a civil construction service may the tax be deducted, and it has been proven in the record that the Claimant did not assess the corresponding tax, thus being prevented from proceeding with its deduction.

The Respondent concludes for the unfoundedness of all the vices attributed to the administrative action.

On 14 November 2017, the meeting provided for in article 18 of the RJAT took place, in which, among other things, the examination of the witnesses listed by the Claimant, Mr. D... and G... (cf. Minutes of the Sole Arbitral Tribunal Meeting) took place.

Written submissions were presented by the Claimant, followed by submissions by the Respondent.

In the submissions presented the parties reiterated essentially the positions defended in their respective pleadings.

II. PROCESS SANITATION

The Arbitral Tribunal is materially competent and is regularly constituted under articles 2, no. 1, paragraph a), 5 and 6, no. 1, of the RJAT.

The parties have legal personality and capacity, are legitimate and are regularly represented (cf. articles 4 and 10, no. 2 of the RJAT and article 1 of Ordinance no. 112-A/2011 of 22 March).

The process has no nullities.

III. SUBSTANTIATION

1. Facts Deemed Proven

The facts were deemed proven based on documents attached in the context of the administrative procedure, the request for arbitral ruling, witness evidence and the response presented by the TA, on the terms indicated hereinafter.

• The Claimant is a limited company registered at the Commercial Registry of …, with share capital of €66,400.00;

• The Claimant is held 100% by H..., its managing partner;

• The Claimant has had, since 17-04-2001, as its corporate purpose "the provision of services in the field of civil construction, contracts and subcontracts of public and private works, namely construction, reconstruction and remodeling of residential buildings, as well as specialized construction activities such as installation and coating of floors or walls, sale, rental and installation and disassembly of scaffolding. Purchase and sale of properties, real estate, tourist and urban land, as well as leasing of its real property assets, resale of acquired properties.";

• Since 17-04-2001, the Claimant has been taxed for the main activity "Other installations in constructions", which corresponded to CAE 43290 and for the secondary activities of "Coating of floors and walls", "Painting and installation of glass" and "Purchase and sale of real estate" which correspond to CAE 43330, 43340 and 68100;

• For VAT purposes, the Claimant has been classified, since 01-01-2013, in the normal regime with quarterly periodicity and, for IRC purposes, since 01-01-2009, in the general taxation regime;

• On 02 June 2016, Service Order no. OI2016... was issued, initiating an internal inspection action on behalf of the Claimant, following the inspection action on the taxable person B... Lda, holder of NIF..., and conducted under Service Orders OI2015..., OI2015... and OI2015..., concerning the years 2011, 2012 and 2013;

• In the year 2013, it was determined that the Claimant declared, through Annex P of annual declarations, the acquisition of services/goods from suppliers holding NIF..., ..., ..., ..., ... and ...;

• B... Lda., NIF... was identified by the Tax Information Systems (SIT) as a taxable person issuing false invoices;

• Through an inspection action carried out on B... Lda., the SIT gathered evidence that the company lacked business, technical, human and logistical structure for the performance of the subcontract;

• On 30 April 2013, the Claimant entered into a contract for works with C..., CRL;

• The said contract had as its object a works contract for "replacement of roof, located in..." more specifically at Docapeixe;

• The value of the works amounted to a total sum of €275,105.00;

• The Claimant did not have sufficient human and technical resources for the complete execution of the work and contacted subcontractors for its execution;

• The Claimant contacted Mr. D..., who, not having availability of resources, indicated a company he knew, B..., Lda., for the performance of subcontract work; (testimony of witness Mr. D...);

• On 1 September 2013, the Claimant entered into a works contract with B... Lda.;

• Under Clause 1st of the works contract concluded with B... Lda., under the heading "Object": "The first party awards to the second party the contract for

a) formwork, concreting, iron reinforcement, concrete finishing located in ..., obligating itself to execute the corresponding part of the work in question, for which it is duly qualified;"

and, then, written by hand:

• "Replacement of roof: installation of roof structure and related work";

• Under Clause 4th of the works contract concluded with B... Lda., under the heading "Execution Deadlines" "The contractual period for the execution of the work is as follows:

• Start of work: 15 September 2013

• End of work: in accordance with availability for work execution respecting production periods.

All as provided for in the approved work schedule".

• Mr. D... never visited the work site of ... nor was aware whether it was carried out (testimony of witness Mr. D...);

• Mr. D... asked his fellow countryman Mr. E... if everything was going well, to which he replied "Everything is fine" (testimony of witness Mr. D...);

• Mr. D... never knew the offices of B... Lda., usually finding himself in the street with Mr. E... or in a café, where they conversed (testimony of witness Mr. D...);

• By letter no. ..., of 16.03.2016, the SIT notified the Claimant to present, with respect to supplier B... Lda, holder of NIF ... and with address at Rua ..., no.... – ..., elements relating to copies of invoices/receipts, accounting, account extracts, photocopies of means of payment, namely cheques (front and back) issued by the bank or proof of bank transfers as well as budgets, budget proposals and contracts for the years 2012 and 2013;

• The Claimant was further requested to identify workers related to the execution of work and works mentioned in the invoices issued by taxable person B... Lda, with the attachment of attendance sheets, work sheets and other elements that allow identifying workers, as well as the identification of subcontractors and/or own collaborators and employees who had worked on said works;

• With regard to the clarifications requested of the Claimant, it results from the SIT report issued by the Lisbon Tax Directorate, in particular the following: "In the context of the notification made to this entity, in the person of D. I... sent by mail a copy of the works contract, concluded on 01 September 2013 – between A... and B... company Lda., a copy of account statements 22.1.1 864 –B... Lda., account 31.2.1.3 – Purchases with VAT – Rate 23%, account 62.2.1.1 – Specialist work Rate 23, account 24.3.2.1.3 – Inventories Normal Rate, account 24.3.2.3.3 – VAT Other Services – Normal Rate, account 12.1.1 – Banks, copies of invoices and receipts from 2013 and copies of cheques (front only). In the meantime, it sent copies of proposals P-....11 and ...-F/13 of 23/11/2011 and 15/03/2013, respectively, and a copy of the works contract concluded on 30 April 2013 (without the signature of the first party) between A... and C... company CRL, with NIPC –... and various copies of invoices and receipts from 2013 and copies of cheques (front only). Finally, to what was requested in our notification, it sent – documents also by mail, from 13-04-2016, and provided the following clarifications: "we now understand with your email that you may not have yet received all the elements requested by Your Excellencies, which is why we are sending the rest.

Thus we enclose:

Documents relating to the general works contract in question;

Documents relating to taxable person B..., Lda.;

We further inform that at the work site, Messrs. E... and J... were present as responsible for the commercial company B.... Mr. D... also worked at the site providing services for that company. Other workers were present at the site for this company, whose identity we tried to obtain from the representatives of the taxable person, however we learned that they are emigrated, allegedly to Germany";

• The Claimant did not present the building permit of B... Lda.;

• Under the terms of the copy of the works contract attached to the record concluded between the Claimant and C..., Mr. G... was responsible for supervising the work at...;

• When questioned by the Arbitral Tribunal on aspects relating to the execution of the work at..., Mr. G... stated, with relevance to the record, the following:

"At the time A... did not have its own resources to carry out the work because it had 12/13 workers and resorted to subcontractors, like B..." (...)"The work had various subcontractors"(...);

"Mr. E... only appeared at the work at the beginning, then there was a brother there who commanded the workers" (...);

And further on "E... went to the work and came when necessary and I spoke with him".

"I don't have to know if the workers showed up or not, if they didn't show up I would come down on them (...)";

"Mr. D... never worked on the site" (...);

"To my knowledge we did not do more work with B..." (...);

"The work was a good work, it took some time, almost a year" further on "B... were the ones who spent the most time there".

(see testimony of witness G...);

• When questioned by the Arbitral Tribunal on aspects relating to the documentation of the works contract for the work at..., Mr. G... stated, among other things, the following:

"I don't know what the final value of the work was" (...), and further on "I was the one who made the budgets for the work but I don't know what the final value was" (...);

"We had a work folder, which is with A..." (...) "There were measurement reports, a copy was for us and another was for the client, they exist or existed, I remember having signed them";

"I made attendance sheets for the workers on the work, then I send them to A..., A... makes the document and pays the contractors";

"Payments to subcontractors were made at the office, what I did was provide vouchers for their expenses, I note the vouchers and give the expenses to the office and they do the accounts";

"I don't know about the paperwork, I'm just an employee". (see testimony of witness G...);

• The commercial company B... Lda. issued to the Claimant the following invoices:

• Invoice no. 119, issued on 04.10.2013, in the amount of €17,950.00, plus VAT at the rate of 23%, of €4,128.50, totalling €22,078.50, with the description "installation of roof structure with Sandwich panels, including all complementary fittings. Cleaning, repair and insulation of gutters. Provision of lifting equipment at your work site at ... on 03-09-2013";

• Invoice no. 120, issued on 04.10.2013, in the amount of €12,700.00, plus VAT at the rate of 23%, of €2,921.00, totalling €15,621.00, with the description "installation of roof structure with Sandwich panels, including all complementary fittings. Cleaning, repair and insulation of gutters. Provision of lifting equipment at your work site at ... on 26-09-2013"

• Invoice no. 131 issued on 11.11.2013, in the amount of €19,500.00 plus VAT at the rate of 23%, of €4,485.00, totalling €23,985.00, with the description "Work marking, installation of concrete panels (illegible). Formwork in all surrounding areas. Iron reinforcement and its reinforcements. Concreting of entire area, concrete finishing and joint cutting, unforming and cleaning throughout the intervention area carried out at your work site at.... 50% of the budget value";

• Invoice no. 136 issued on 02.12.2013, in the amount of €19,500.00, plus VAT at the rate of 23%, of €4,485.00, totalling €23,985.00, with the description "Work marking, installation of concrete panels (illegible). Formwork in all surrounding areas. Iron reinforcement and its reinforcements. Concreting of entire area, concrete finishing and joint cutting, unforming and cleaning throughout the intervention area carried out at your work site at.... 50% of the budget value";

• The aforementioned invoices do not contain the mention of "VAT due by the purchaser";

• The Claimant's accounting records revealed payments made to B... Lda. through cheques in the amount of €89,669.50 (VAT included);

• On 14.10.2013, the Claimant made payment to B... Lda. of an amount of €22,078.50, as evidenced by the copy certified by Bank F... S.A. of cheque no....;

• The VAT contained in the invoices issued by B... Lda. with respect to the work at ... was not subject to assessment and delivery to the State;

• In the context of the tax inspection, the SIT proposed in the respective Report, whose content is fully reproduced, corrections to taxable profit in the context of IRC and corrections in the context of VAT for undue deduction of tax borne by the provision of services of taxable person B... Lda., in the amount of €16,019.50;

• The Claimant was notified of the draft Tax Inspection Report (hereinafter TIR) to exercise the right of prior hearing, having done so on 27 September 2016;

• The TA maintained the corrections initially proposed in the TIR, of which the Claimant was notified in November 2016, concluding in the following terms "The taxable person deducted the VAT contained in the invoices issued by taxable person B..., Lda. In light of what is described in the previous points, under no. 3 of article 19 of the VAT Code, VAT resulting from a simulated operation or in which the price contained in the invoice or equivalent document is simulated cannot be deducted. Furthermore, in light of the provision of article 19 of the VAT Code, A... could never deduct the VAT of said invoices since this could only be deducted by it if the assessment had been carried out by it as referred to in no. 8 (...)";

• On 27 January 2017, by decree of the Lisbon Tax Directorate, the Claimant is notified of the Draft Corrections of the Internal Inspection Report conducted for the fiscal year 2014, in the context of IRC, and the Claimant exercised its right of hearing;

• As a consequence of the correction made to the VAT for the period of 2013.12T, the balance of the excess to be reported resulted in tax to be delivered to the State in the period 2014.03T;

• On 02 February 2017, the Claimant made payment of the additional assessments it was subject to, relating to the year 2013 (2013.12T) and 2014 (2014.03T);

• On 02 May 2017, the Claimant deducted the request for constitution of the Arbitral Tribunal that gave rise to the present process (cfr. electronic request to CAAD).

2. Facts Not Proven

The following facts were not deemed proven:

• The Claimant did not present proof of payment of the amount of €67,591.00, corresponding to the value of the invoices issued by B... Lda., due by virtue of the subcontract allegedly concluded with that entity. Such proof could be carried out through copies of front and back of cheques or financial evidence of movement of the company's bank accounts, under the terms provided for in article 63-C of the General Tax Law (LGT).

• Beyond the works contract, the Claimant did not attach to the record any complementary documentary evidence demonstrating the contracting of B... Lda. for the execution of a work at Docapeixe at.... Now, in its capacity as a contractor that assumes original responsibility before the Works Owner, it would be normal, at least, to have collected from the contracted subcontractors their respective permits proving their qualification for the exercise of civil construction activity, however, in this case, the Claimant did not attach to the record either the building permit or any other documentary element indicative of the contracting and participation of B... Lda. in the execution of civil construction work described in the invoices questioned by the TA.

With regard to the oral evidence produced at the meeting, it did not appear convincing, and there were contradictions between the statements previously made by the Claimant, in the context of the administrative procedure, affirming that Mr. D... had worked at the work site of... as a worker or service provider of B... Lda., a fact that was subsequently disproven by the witness at the meeting.

Furthermore, the witness Mr. D... did not reveal direct and consistent knowledge of the facts pertinent to the question under analysis, his testimony was generic, vague and of diminished probative value.

As for witness D..., he is an employee of the Claimant, a site technician and allegedly the site manager of..., however, his statements revealed numerous contradictions, in particular by affirming that he had prepared the budgets for said work and, subsequently, in an evasive manner, that he did not know the work price. On the other hand, when asked to identify some of the workers from the work at..., in a works contract that he stated had a considerable duration (almost a year), in which B... Lda. participated in various phases, he stated that he did not know how to identify any of them, and that if he saw them he did not know them, although he knew Mr. E... "who only went to the work at the beginning" and later contradicting the previous statement "that he went to the work and came when necessary and with whom I spoke".

In these terms, the statements made by Mr. G... should be evaluated with due reservations, since as an employee of the Claimant, the economic relationship of dependence is likely to affect the impartiality and independence of his testimony.

Note that regarding the witness's knowledge of the construction services provided by B... Lda., and on the works contract at..., strong doubts arise as to the actual execution of the works, in that no detailed facts were presented about the normal vicissitudes that occur in a works contract, with the witness limiting itself to making unclear and generic considerations.

3. Motivation

With respect to matters of fact, the Tribunal does not have to rule on everything that was alleged by the parties, but rather has the duty to select the facts that matter for the decision and to distinguish the proven from the unproven (cf. art. 123, no. 2, of the Tax and Customs Procedural Code (CPPT) and article 607, no. 3 of the Code of Civil Procedure (CPC), applicable ex vi article 29, no. 1, paragraphs a) and e), of the RJAT).

Thus, the facts pertinent to the adjudication of the case are selected and defined according to their legal relevance, which is established in view of the various plausible solutions of the question(s) of law (cf. previous article 511, no. 1, of the CPC, corresponding to the current article 596, applicable ex vi article 29, no. 1, paragraph e), of the RJAT).

Thus, having regard to the positions assumed by the parties, in light of article 110, no. 7 of the CPPT, the documentary and witness evidence and the administrative procedure attached to the record, the facts listed above were deemed proven, with relevance to the decision.

4. Legal Issues

4.1. Preliminary Issue

In the request for arbitral ruling, the Claimant defends the annulment of the additional VAT assessments nos. ... and ... for the periods of 2013.12T and 2014.03T issued in 2016, in the amounts of €4,044.27 and €14,061.15, respectively, invoking preliminarily that with respect to the period of 2014.03T it was never notified of any administrative procedure, internal inspection or service order, and that, in its understanding, no substantiation exists for the additional assessment act beyond the demonstration of VAT assessment.

Now, with due respect, given the evidence, the Claimant is not correct.

As has been proven, the assessment relating to the period 2014.03T results from the settlement to the Claimant's current account as a result of a correction made to the VAT assessed in the period 2013.12T, in the context of the inspection procedure launched for the years 2011, 2012 and 2013.

It was further proven that from the internal inspection action resulted corrections, in the context of IRC, and in the context of VAT, for undue deduction of tax borne by the provision of services of taxable person B... Lda. Such corrections were duly substantiated in the TIR, and the legal formalities were observed in the exercise of the right to be heard, insofar as the Claimant exercised its right of hearing, pronouncing itself on the draft decision, and was subsequently notified thereof. Thus, in the exercise of the right to be heard, the Claimant obtained full knowledge of the position sustained by the TA, defending itself against it with the aim of having its claim accepted.

As a consequence of the proposed corrections, although the infraction occurred in the period of 2013, with an excess of VAT to be reported for the year 2014, the additional assessments issued would have to include the settlement to the taxable person's current account, without such determining the opening of a new inspection procedure on facts covered by a previous procedure. Indeed, the settlement to the current account did not result in a credit for the Claimant, but a value to be paid that was duly substantiated in the context of the TIR and notified under article 62 of the Tax and Customs Inspection Procedure Code (RCPITA).

Consequently, it results from the evidence that the taxable person was notified of the result of the internal inspection action for fiscal year 2013 carried out by the SIT, which determined the correction of the value declared by the Claimant in the field of the excess to be reported (emphasized by us), precisely due to a correction to the period 2013.12T.

Thus, it cannot be stated that there was an absence of inspection procedure and substantiation of the tax act relating to the assessment for the period 2014.03T.

Furthermore, it should be noted that in its action, the TA is subject to the principle of proportionality expressly enshrined in article 266, no. 2, of the Constitution of the Portuguese Republic (CRP), in article 63, no. 4 of the LGT and in article 7 of the RCPITA. The principle of proportionality imposes on the TA the duty to inconvenience taxpayers only to the extent strictly necessary for the purposes it has in view and, therefore, must act diligently in the fulfillment of its duties of inspection, being inadmissible, by virtue of that principle, to subject the taxpayer to repetitive or simply unnecessary inspection acts.

Accordingly, the settlement assessment issued to the Claimant for the period 2014.03T falls within the competence of the TA to reconcile the current VAT accounts and to determine the tax owed by the taxable person as a consequence of the correction presented, in the context of VAT deducted in 2013. It would not make sense, with respect to the year 2014, to impose the opening of a new inspection procedure accompanied by new investigative steps, which would redundantly result in the repetition of the steps taken in the context of the previous administrative procedure.

Therefore, what was alleged by the Claimant on the matter lacks any support, in particular as a ground for alleged illegality of the act and, consequently, its request for annulment.

From this follows the conclusion of the unfoundedness of the vice invoked by the Claimant of absence of administrative procedure and lack of substantiation, with respect to the VAT assessment relating to the period 2014.03-T.

4.2. Of the Issue to be Decided

The substantive issue to be decided in the present case is to ascertain whether the VAT of the invoices issued to the Claimant by supplier B..., Lda., should or should not be subject to deduction, having regard to the allegation by the TA of the existence of indications that the invoices issued do not correspond to real and effective provision of services, but rather to false invoices.

Now, since VAT is a tax of Community origin, it is necessary to make some preliminary considerations regarding the nature and scope of the right to deduction, taking into account the rules governing this tax in accordance with European Union law, with its transposition at the domestic level and the administrative and judicial interpretation that has been carried out on them, especially by the Court of Justice of the European Union (CJEU).

In this regard, it will be important to analyze the question of VAT deductibility, taking into account the interpretation of articles 168 of the VAT Directive (DVAT) and articles 19, no. 3 of the VAT Code, giving special attention to the CJEU's understanding on the deduction of VAT resulting from a simulated operation.

4.3. Of the Right to Deduction in Cases of Fraud

The right to deduction is an integral part of the VAT mechanism and cannot, in principle, be limited, being exercised immediately in relation to the totality of VAT that has encumbered upstream operations.[2]

In this understanding of the principle of neutrality, the system established by the DVAT allows taxable persons to deduct VAT that has encumbered acquisitions of goods and services intended for taxable activity. It should be noted that the CJEU refers to the principle of VAT neutrality in yet another meaning, according to which the VAT system should not interfere with economic decisions, nor with the formation of prices throughout the economic circuit.

Accordingly, the mechanism of the right to deduction allows the taxable person to purge from its burden the VAT borne upstream by removing the cumulative effect and cascade taxation that characterized previous systems of consumption taxation. Thus, the right to deduction is based on the so-called method of tax deduction, credit method, indirect subtractive method or also invoice method.

As provided for in the DVAT, the VAT Code determines, as a general rule, the deductibility of tax owed or paid by the taxable person on acquisitions of goods and services made from other taxable persons.

Entering into the field of the case at hand, it is important to note that the CJEU has repeatedly stated that the fight against fraud, tax evasion and possible abuses constitutes a recognized and encouraged objective by the DVAT, and taxable persons cannot, fraudulently or abusively, take advantage of the norms of Union law.[3]

It falls, therefore, to the national authorities and to the courts of the Member States to refuse the right to deduction if it is demonstrated, in the face of objective elements, that that right is invoked fraudulently or abusively.[4]

Accordingly, the right to deduction that has been exercised fraudulently may be refused, or when the taxable person knew or should have known that it was participating in VAT fraud (even if the operation in question meets the objective criteria on which the concepts of transfers of goods made by a taxable person acting as such are based).

In the same sense, when confirming that the right to deduction, once arisen, subsists even when the taxable person has not been able, for reasons beyond its control, to use the goods or services that gave rise to the deduction in the context of taxable operations, the CJEU makes the reservation that this will only occur "in the absence of fraudulent or abusive circumstances".[5]

On the other hand, it results from the CJEU's jurisprudence that it is not compatible with the right to deduction regime to refuse that right to a taxable person who did not know nor could know that the operation in question was part of a fraud committed by the supplier or that another operation included in the supply chain, prior or subsequent to that carried out by said taxable person, was vitiated by VAT fraud.[6]

The provisions of article 19, nos. 3 and 4, of the VAT Code are intended precisely to enshrine the impediment of the right to deduction resulting from fraudulent operations.

First, bearing in mind that only VAT that has encumbered acquisitions of goods and services intended for the exercise of taxable activity carried out by the taxable person confers the right to deduction, necessarily VAT that does not relate to actual transfers of goods or provision of services does not confer the right to deduction, therefore no. 3 of article 19 of the VAT Code makes explicit that "VAT resulting from a simulated operation or in which the price contained in the invoice or equivalent document is simulated cannot be deducted". This legal provision, in view of its formulation, applies both in situations of absolute simulation, of which false invoices constitute the paradigm in the context of VAT, and in situations of relative simulation, one of whose variants may constitute the simulation of the operation value.

This conception that the right to deduction presupposes that VAT has encumbered actual provision of services or transfers of goods is widely recognized by national jurisprudence by stating that "The right to deduct VAT paid upstream can only exist, according to the very nature of things, with respect to tax actually borne in economic operations actually occurred. Otherwise, we would be faced with a mere intellectual or virtual archetype and not a tax that aims to broadly affect the real consumption of goods and services at various stages of the economic circuit. The inadmissibility of deduction of tax relating to a simulated operation or in which the price is simulated, positively affirmed in no. 3 of article 19 of the VAT Code, corresponds, in this way, to a forced conclusion or resulting from the very nature of the tax, whose formal explanation is only justified for reasons of clarity"[7].

Finally, it should be noted that it was already the understanding of the CJEU that the simulated nature of the operation may not prevent the exercise of the right to deduct VAT, when such does not entail the risk of loss of tax revenue.[8]

5. Application to the Specific Case

The TA argues that the company supplying the Claimant is a taxable person issuing false invoices, without adequate business structure that would allow it to execute the work described in the invoices issued to the Claimant, and in this context, the subcontract awarded to said supplier for participation in a work at ..., at "Docapeixe" (as identified by the Claimant in the Request for Arbitral Ruling) is false.

Indeed, according to the TA, the Claimant was never able to present the documentary elements proving the presence of that supplier at the work site, nor was it able to identify any of the participating workers, and finally, was completely unable to prove the payment circuit, contractually fixed with subcontractor B... Lda.

Without prejudice to the foregoing, the TA argues that the deduction would always be improper because it is a matter of civil construction services, with VAT self-assessment incumbent upon the purchaser, and it has been proven that the Claimant did not self-assess the corresponding tax.

Thus, according to the TA, the facts demonstrate a high probability of falsity of the invoicing in question.

Countering said arguments, the Claimant contends that the work took place, and that the execution of the subcontract aimed to ensure compliance with the works contract concluded with C..., the Claimant's client. The Claimant further argues that it always complied with payment conditions with B... Lda., and that proof was produced in the record, both documentary and testimonial, of the execution of the subcontract by that entity.

It adds that it is not the Claimant's responsibility to control its suppliers, having verified that the invoices issued fully complied with the formal and substantive requirements, which should be sufficient for the purpose of exercising the right to deduction. In this regard, the Claimant accuses the TA of not having fulfilled the burden of proof that falls upon it and of violating the principle of presumption of veracity of taxpayers' declarations.

Finally, it argues that the additional assessments arise only because the company B... Lda. did not deliver the assessed tax to the State, the TA intending to subject the Claimant to the payment of the same tax twice.

In this context, it will be important to ascertain whether the TA gathered serious indications that the invoices issued by B... Lda. to the Claimant do not describe any commercial transaction, being false invoices, since in accordance with no. 3 of article 19 of the VAT Code, the Claimant could not have deducted the tax relating to these supplies.

Let us begin by referring to the burden of proof in the context of the corrections under analysis.

As has been repeatedly and uniformly emphasized by the jurisprudence of our superior courts, when the TA disregards invoices that it considers false, the rules of burden of proof of article 74 of the LGT apply, with the TA being responsible for proving that the legal presuppositions that legitimize its action are verified, that is, that there are serious indications that the operation described in the invoice does not correspond to reality, the burden of proof then falling upon the taxpayer to prove the veracity of the transaction.[9]

It should be borne in mind that the TA does not have to prove the falsity of the invoices[10], but has to allege facts that translate a high probability that the operations referred to in the invoices are simulated, undermining the legal presumption of veracity of taxpayers' declarations and the data contained in their accounting, enshrined in article 75 of the LGT. It will therefore be incumbent upon the TA to carry out at least indirect evidence, resorting to "facts indicative of which will be sought to extract, with the aid of the rules of common experience, science or technique an inference as to the facts indicated. Conclusion or proof is not obtained directly but indirectly through a judgment of normal relationship between the index and the subject matter of proof.[11]

As stated in the judgment of the Administrative Court of Appeal, 23 November 2012[12] "with regard to the evidence that the Administration must carry out in the distribution of the burden of proof of which we noted above, what is essential is that it carries out facts sufficient indicators by which the Court can conclude, by virtue of the natural laws known to men and which function as maxims of experience, the high probability (or even certainty) that the transaction declared by those parties does not correspond to the reality materialized in that invoice."

In this task, the TA may make use of elements obtained through cross-checking inspection, with other taxpayers, to obtain said indications, so that such indicators of falsity of the invoices do not necessarily have to come from elements of the taxpayer itself under inspection.

Let us see, then, not losing sight of the legal framework drawn up regarding the burden of proof and, considering the facts found in the context of the inspection, with a view to answering the question of whether it results from the facts that the TA provided evidence of the verification of indications that allowed it to conclude that the invoices for which the VAT therein was disregarded (four invoices issued by B...[13]) did not have underlying economic operations conducted between this company and the Claimant.

In case of affirmation, it will be important to know whether the Claimant has managed to demonstrate in Court that, despite the indications gathered, they are real, that is, such economic operations actually existed between the entities involved.

See below.

Elements of Evidence Gathered by the TA

It results from the set of elements collected in the context of the inspection procedure that the TA's main argument to conclude that the subcontract awarded to B... Lda. does not constitute a real provision of services is based on the knowledge that i) this company did not have human and organizational structure, ii) was issuing false invoices and iii) in the absence of a minimally tangible accumulation of documentary evidence of the actual execution of a works contract.

Now, considering that the Claimant did not know B... Lda. (which was informally referred to it by D...) and, therefore, did not maintain a stable commercial relationship with it, it is indeed doubtful, abnormal and inexplicable the informality that characterized the entire relationship established during the negotiation and subsequent execution of the subcontract in the work at....

Note that in a work that, according to what the Claimant stated, had significant commercial relevance, embodied in the replacement of the roof of "Docapeixe" (note that the location is identified on the official website as ... of ....[14] and not Docapeixe), the following probative picture is found:

• A works contract is attached to the record concluded with B... Lda., whose object identifies the work in question in the following terms "formwork, concreting, iron reinforcement, concrete finishing located in ... (...)" and in the same clause was added handwritten "replacement of roof: installation of roof structure and related work"[15];

• From the clause "Execution Deadlines" only the initial deadline appears "start of work: 15 September 2013."[16];

• Although the contract contains a reference to an approved work schedule between the parties[17], no reference to said schedule is found in the record. Now, it is normal practice in a medium-sized works contract to draw up an approved work schedule by the parties that includes, for example, a schedule with the tasks to be performed, the deadline for each task, and the deadline for conclusion of the works;

• A copy of the building permit of the subcontractor was not attached to the record;

• None of the B... Lda. workers were identified, the Claimant having been stated to the SIT that Mr. D... worked at the work site at ... in service of that company, a fact that was disproven by the witness to the Arbitral Tribunal[18];

• No work measurement maps were attached to the record, which could be evaluated as a complementary means of the actual execution of the work and services provided by the subcontractor in that same context;

• Despite witness G... stating that he prepared the budgets for the work in question, although he was unaware of the final value, the Claimant did not attach to the record any budget;

• Despite witness G... stating that a work folder existed, the Claimant did not attach to the record any element forming part of said folder, which is not incomprehensible, as the work folder is a relevant element in any work, as it contains controllable data that is precisely of interest for the defense of the contractor's contractual position;

• Attendance sheets of workers were not attached to the record;

• No correspondence, private notes, records or exchange of emails between the parties was exhibited;

• There is no receipt, acknowledgment document or other proof of payments in cash or through vouchers allegedly made by G... to the workers of the subcontractor, as stated by the witness to the Arbitral Tribunal[19];

• The Claimant only presented a copy certified by Bank F... S.A. of a cheque in the amount of €22,078.50, despite the total value of the subcontract amounting to €69,650.00 plus VAT at the legal rate in force;

• Through elements obtained by means of cross-checking inspection, the TA became aware that B... Lda. is an entity issuing false invoices, and its managing partners emigrated to Germany;

• Through an inspection action carried out on B... Lda., the SIT gathered evidence that the company lacked business, technical, human and logistical structure for the execution of the works contract.

Now, concatenating these elements, and considering the fragility and incongruence of the testimonies of the witnesses offered by the Claimant, it must be concluded that the performance of a provision of services by B... Lda. to the Claimant has not been proven.

Indeed, the picture described corresponds to a factuality that is implausible, considering that the Claimant was not even able to prove payment for services provided by B... Lda., in particular through bank transfers, or at least discharge receipts, which in a scenario of normality in the exercise of business activity can never occur.

With respect to the TA's action, we understand that it fulfilled the task incumbent upon it in the search for material truth to ensure taxation in accordance with the law and in the measure of the taxpayer's capacity as estimated by the latter: to demonstrate a factual framework in which it is permissible to disregard the presumption of veracity of the Claimant's accounting (articles 74 and 75, no. 2, paragraphs a) and b)), given the indications collected, from which it follows that the taxpayer's account is based on facts that diverge absolutely from how commercial relationships between entrepreneurs are usually conducted, which constitutes a founded indication that the accounting does not reflect the real taxable matter of the taxpayer.

Thus, it is permissible for it to conclude that the operations are simulated, at least partially or in their amount, and therefore, such invoices do not correspond to operations that have actually taken place, at least as terms of such invoices follow.

Absence of Counter-Evidence

Given that the credibility of the Claimant's records has been seriously questioned and serious doubt has been raised about the effectiveness of the alleged provision of services, which given the factuality described with an extremely high degree of probability can be considered not to exist (article 75 of the LGT), it was now incumbent upon the Claimant to provide counter-evidence of the reality of the facts on which its accounting is based, given the destruction of the presumption of credibility (veracity) thereof.

However, the Claimant failed to provide such evidence, quite the contrary. The Claimant sought to sustain a factual framework that offends common sense, by presupposing a set of facts that are highly improbable and implausible, in total divergence with a normal course (even if negligent and with severe unpreparedness) of commercial conduct. Recall that the Claimant does not prove a significant part of the price of the works contract with B... Lda., and although it has as its corporate purpose the execution of works, it is not equipped with the minimum documentary elements required in a works contract.

In truth, it is difficult to understand the Claimant's option to favor the use of witness evidence over documentary evidence, when the matter involved undermining the strong indications gathered by the TA of falsity of the invoices and it is clear that the testimonies given were not only inconsistent, but also revealed a reduced knowledge of the circumstances of the specific case.

Thus, on the one hand, the Claimant was unable to present documents that could fully clarify the execution of the work at ... and the subcontracting of B... Lda., and on the other hand, did not care to justify minimally (through credible complementary witness evidence) the reasons underlying the option for a model of action based on almost absolute informality, alongside a service provider that subcontracted only once.

Now, as it follows from the jurisprudence of the Superior Administrative Court, cited above, in these circumstances, the counter-evidence would be incumbent upon the Claimant[20]. Therefore, having proven by the TA the verification of the legal presuppositions that legitimize its action, it is incumbent upon the taxpayer to demonstrate the veracity of the transactions, which, in the stated terms, he failed to do, by not demonstrating the existence of the tax facts that he alleged as the basis for his right. It is sufficient for the TA to demonstrate the verification of the "index facts" - objective and credible indications - which, joined together and appreciated in light of the rules of experience, allowed it to conclude with high probability of the absence of real and effective transactions.[21]

In conclusion, the Tribunal understands that the Claimant, unlike the TA, did not satisfy its burden of proof.

Of the Irrelevance of Relative Simulation

It could be admitted that part of the works were actually carried out by B... Lda., or that they were carried out in their entirety but for a value less than that contained in the invoices. However, any of these facts would have to be demonstrated by the Claimant, prejudiced as it is by the presumption of veracity of its records and demonstrated as it is, by the TA, the serious improbability of any commercial relationship between Claimant and B... Lda., at least as reported by the Claimant's accounting, as well as the total fragility of the corresponding supporting documentation (article 75 of the LGT). And the fact is that the Claimant failed to demonstrate that the services were actually provided, nor what the real price thereof was.

Thus, the simulation of the operations is demonstrated, in the sense in which it is accepted by tax law and for purposes of taxation (article 39 of the LGT), a burden that fell upon the TA (articles 74 and 75 of the LGT), without sufficient counter-evidence having been produced that would permit concluding that, at least, part of the operation actually took place, a burden that would fall upon the Claimant (article 74 of the LGT).

By not destroying the evidence made by the TA, instead confirming it through fragile and inconsistent witness evidence, and maintaining the assertion of the complete veracity of the invoices and its accounting, the Claimant makes it irrelevant to know whether there was absolute or relative simulation, as even if we were facing this second alternative, the Claimant failed to demonstrate that part and what value were actually contracted to B... Lda., in what terms and for what reasons.[22]

Violation of Legal Provisions Relating to the Right to Deduct VAT in Civil Construction Services

As the TA refers, the Claimant's conduct also violates a set of legal provisions relevant that are intended precisely to guarantee the legality of the exercise of the right to deduction in the context of VAT borne upstream (nuclear in the economy of the tax) when civil construction services are at issue.

The rules of subjective incidence of article 2 of the VAT Code indicate to us that taxable persons are natural or legal persons who exercise the activities listed in said provision. Now, in the case at hand, by application of the general rules, the service provider would be the VAT taxable person.

As observed, however, by Clotilde Palma, there are situations in which "the purchaser of services or goods becomes a taxable person for the tax by its acquisition. These are the so-called reverse charge situations, reversal of the tax debt or inversion of the subjection or of the taxable person, that is, in these cases, the debt reverts from the service provider to the purchaser. As the purchaser is the subject of the tax, it must act accordingly, assessing the tax, and being assigned the right to deduct the VAT paid for the acquisition of the services, under the terms of the provision of article 19, no. 1, paragraphs c) and d)."[23]

In the case at hand, precisely one of these situations of inversion of the VAT taxable person occurs.

Indeed, Decree-Law no. 21/2007, of 29/01, which is applicable here, established, as can be read in its respective preamble, "a set of measures intended to combat certain situations of fraud, evasion and abuse that have been occurring in the realization of real estate operations subject to taxation, following in this matter experience previously acquired in other Member States of the European Union".

And, further on, it is added that "Outside the scope of operations provided for in nos. 30 and 31 of article 9 of the VAT Code, but still in the field of some provision of services relating to real property, namely in civil construction work carried out by contractors and subcontractors, this decree-law adopts, equally, another power conferred by Directive no. 2006/69/CE, of the Council, of 24 July. Thus, by way of the inversion of the taxable person, it becomes incumbent upon the purchasers or recipients of those services, when they are configured as taxable persons with the right to total or partial deduction of the tax, to proceed with the assessment of the VAT owed, which may also be subject to deduction under the general terms. With this measure, certain situations are intended to be safeguarded which result in prejudice to the public treasury, currently arising from the birth of the right to deduct the VAT borne, without such tax reaching the State coffers. (...)".

In this sequence, article 2, no. 1, paragraph j), of the VAT Code, came to provide that "The following are taxable persons: (...) j) Natural or legal persons referred to in paragraph a) who have a place of business, establishment or residence in national territory and who carry out operations that confer the right to partial or total deduction of the tax, when they are purchasers of civil construction services, including the remodeling, repair, maintenance, conservation and demolition of real property, under the regime of contract or subcontract."

On the other hand, Decree-Law 21/2007, of 29/01, amended article 36 of the VAT Code, which came to provide that "In the situations provided for in paragraphs i), j) and l) of no. 1 of article 2, as well as in other situations where the recipient or purchaser is the debtor of the tax, invoices issued by the transferor of goods or service provider must contain the expression 'VAT - self-assessment".

In light of the foregoing, it is apparent that, under the terms of article 2, paragraph j) of the VAT Code, as a taxable person of VAT, it was incumbent upon the Claimant to proceed with self-assessment of VAT, relating to the invoices issued by its supplier B... Lda., a circumstance that did not occur, therefore, it is also in this seat that the Claimant is not right, the additional assessment carried out by the TA not deserving any criticism.

In conclusion, and under the terms explained above, the request for arbitral ruling presented by the Claimant is judged to be entirely without merit.

IV. DECISION

Accordingly, it is decided in this Arbitral Tribunal to judge entirely without merit the request for arbitral ruling formulated by the Claimant and, in consequence:

• To maintain in the legal order the tax acts of additional assessment subject to the present request, in the total amount of €18,125.42;

• To absolve the Respondent of all claims formulated, including the payment of default interest;

• To condemn the Claimant in the costs of the process.

V. VALUE OF THE PROCESS

The value of the process is fixed at €18,125.42, under the terms of article 97-A, no. 1, a), of the Tax and Customs Procedural Code, applicable by virtue of paragraphs a) and b) of no. 1 of article 29 of the RJAT and of no. 2 of article 3 of the Regulation of Costs in Tax Arbitration Processes.

VI. COSTS

The value of the arbitration fee is fixed at €1,224.00, under the terms of Table I of the Regulation of Costs in Tax Arbitration Processes, to be paid by the Claimant, since the request was entirely without merit, under the terms of articles 12, no. 2, and 22, no. 4, both of the RJAT, and article 4, no. 4, of the aforementioned Regulation.

Notify accordingly.

Lisbon, 17 January 2018

The Arbitrator

(Filipa Barros)

[1] Acronym for Legal Framework for Tax Arbitration.

[2] See, among others, Judgment of 22 December 2010, Dankowski, C-438/09, nos. 22 and 23.

[3] Among others, judgment of 21 February 2006, Halifax C-255/02, nos. 68 and 71; of 27 October 2011, Tanoarch, C-504/10, no. 50; of 21 June 2012, Mahagében and Dávid, C-80/11 and C-142/11, no. 41; and of 6 December 2012, Bonik, C-285/11, nos. 35 and 36.

[4] Cf. judgments of 6 June 2006, Kittel and Recolta Recycling, C-439/04 and 440/04 no. 55; and judgments already referenced Mahagében and Dávid, no. 42; Bonik, no. 37.

[5] Judgment of 8 June 2000, Schloβstraβe, C-396/98, no. 42.

[6] Cf., among others, judgments of 12 January 2006, Optigen C-354/03, C-355/03 and C-484/03, nos. 52 and 55; and, already referenced, Kittel and Recolta Recycling, nos. 45, 46 and 60, Mahagében and David, no. 47, and Bonik, no. 41.

[7] See judgment of the Superior Administrative Court, proceeding no. 026635, of 17-04-2002.

[8] Judgment of 27 September 2007, Albert Collée, C-146/05, no. 37.

[9] Among others, Court of Appeal of the Northern Region of 24-01-2008, proceeding no. 2887/04 Viseu; of 27-01-2011, proceeding no. 455/05.7BENF.

[10] Judgment of the Superior Administrative Court, of 27/10/2004, proceeding no. 0810/2004

[11] In this sense, Alberto Xavier, Concept and Nature of the Tax Act, p. 154, Almedina.

[12] Proceeding no. 1523/05.0BEVIS- Aveiro.

[13] Point 28 of the proven facts.

[14] http://www... pt/pt/rede-lotas-e-postos-vendagem/item/lota-de-....html

[15] Point no. 16 of the proven facts.

[16] Point no. 17 of the proven facts.

[17] Point no. 17 of the proven facts.

[18] Point no. 23 of the proven facts.

[19] Point no. 27 of the proven facts.

[20] See Judgment of the Superior Administrative Court, proceeding no. 0774/09 of 21/04/2010.

[21] See Judgment of the Superior Administrative Court, proceeding no. 0951/11 of 2014/02/26.

[22] In the sense sustained here and, in particular, on the subject of simulation and the distribution of the burden of proof, see Joaquim Miranda Sarmento and Paulo Marques, "False Invoices in VAT – The Evolution in Law, Jurisprudence and Doctrine", in VAT – Current Problems, p.s 173 et seq., Coimbra Publisher, 2014.

[23] Cfr. Introduction to Value Added Tax, IDEFF Notebooks, no. 1, 5th ed., Almedina, Coimbra, 2011, pp. 83/84.