CAAD Ruling on VAT Exemption for Intra-Community Supplies Under Article 14(a) RITI

ARBITRAL DECISION

The arbitral judges, Jorge Lino Ribeiro Alves de Sousa (president), Alexandra Coelho Martins, and Paulo Mendonça, appointed by the Deontological Council of the Centre for Administrative Arbitration (CAAD) to form the Arbitral Tribunal, constituted on 12 June 2014, agree as follows:

A. REPORT

1. On 7 April 2014, A... (A...), legal entity no. ..., hereinafter identified as the Claimant, filed a request for arbitral decision, in accordance with the provisions of Articles 2, n. 1, subparagraph a) and 10 of Decree-Law no. 10/2011, of 20 January (Legal Regime for Arbitration in Tax Matters), hereinafter referred to as "LRAT", in conjunction with subparagraph a) of Article 99 and n. 2 of Article 102 of the Code of Tax Procedure and Process (CTPP), applicable ex vi subparagraph a) of n. 1 of Article 10 of the aforementioned decree-law.

2. The subject matter of the request for arbitral decision concerns two additional VAT assessments, against which gracious complaints and hierarchical appeals were timely filed.

a. The Additional Assessment Act, relating to corrections in VAT, pertaining to the years 2007 (totalling € 245,058.87) and 2008 (totalling € 321,722.63), with the dismissal of the corresponding hierarchical appeal having been communicated to the Claimant on 21.01.2014;

b. The Additional Assessment Act, relating to corrections in VAT, pertaining to the year 2009, which resulted in an Additional Assessment of € 31,520.64, with the dismissal of the corresponding hierarchical appeal having been notified to the Claimant on 09.01.2014.

1. The request for constitution of the Arbitral Tribunal was accepted on 9 April 2014, by His Excellency the President of CAAD and was notified to the Tax and Customs Authority (hereinafter identified as the Respondent), on the same date.

2. The Claimant did not proceed with the appointment of an arbitrator, whereby, pursuant to the provisions of Article 6, n. 1, of the LRAT, the undersigned were appointed by the President of the Deontological Council of CAAD to compose the present collective Arbitral Tribunal, with the appointment having been accepted in accordance with legal requirements.

B. THE CLAIMANT'S ARGUMENTS

1. Following an inspection action, the services of the Tax Administration made corrections in VAT, relating to the years 2007 (totalling € 245,058.87) and 2008 (totalling € 321,722.63).

2. The corrections stem from facts and occurrences typified into three groups:

a. Intra-Community transactions of goods intended for Spanish clients (group 1), whereby the grounds for the dismissal stem from the consideration that, although the acquirers registered in Spain to effect intra-Community acquisitions of goods, no reliable documents were presented that would allow the conclusion that the transmissions of goods in question were actually acquired by the economic operators mentioned in the respective invoices;

b. Intra-Community transactions declared in which the departure of goods from national territory is not confirmed (group 2), on the ground that despite the invoices mentioning as recipient of the goods an operator registered in Spain, the merchandise was delivered to domestic operators, who effected the transmissions within national territory;

c. Intra-Community transactions to ceased taxable persons (group 3), on the ground that the taxable persons were not validly registered, on the date of the operations, as intra-Community acquirers in the country of destination.

1. Having been notified of the aforementioned corrections, the Claimant did not accept the arguments presented by the Respondent.

2. Thus, with respect to the occurrences included in Group 1, the transactions are with clients B..., C... and C....

3. The Claimant contends that the Respondent never questioned that such transactions were actually carried out.

4. That the acquirers were registered as intra-Community operators in Spain on the date of the transaction of the goods.

5. All requirements being thus verified for the exemption provided in subparagraph a) of Article 14 of the RITI to be granted.

6. Which, in the Claimant's view, renders the assessment resulting from the correction carried out defective in various assumptions of fact and law, and cannot be upheld.

7. First and foremost, because the objective evidence presented regarding the effectiveness of the transmission was not properly valued, and more specifically, the delivery of the goods in Spain.

8. The Claimant considers that it made available, in the course of the inspection process, documents relating to each operation, namely invoices, CMRs and identification of the carrier company.

9. It having been demonstrated, through the presentation of documents, the payment of the respective transport of the merchandise (effected by the acquirers) and its unloading in Spain.

10. And that the goods were actually delivered in Spain, at various addresses.

11. A fact irrelevant, in the Claimant's perspective, to the Respondent's legal thesis, as it detected circumstances indicating fraud committed by the acquirers of the merchandise and, as a result of that fact, excluded the assumption that the transactions were real and that the merchandise transacted were actually delivered in Spain.

12. Second, not having recognised that the Spanish operators were actually registered as intra-Community operators in that country, on the date of the operations.

13. The Claimant alleging that proof of such facts stems from the data contained in the inspection report itself.

14. As according to information provided by the Spanish Tax Agency, the removal of the Intra-Community Operators Register for B... "with date of 3-5-2010".

15. Still according to information from the same tax agency, regarding the taxable person C... "... it was proposed to cancel the Intra-Community Operators Register which became effective with date of 8-4-2010".

16. And, finally, following the inspection procedure that the Spanish tax agency carried out, regarding C..., it made explicit that "its cancellation in the Intra-Community Operators Register will be proceeded with".

17. Which leads the Claimant to conclude that it must be established that the three aforementioned operators were duly registered on the date of the operations.

18. Third, having found a justifying reason for the refusal of exemption not provided for in law, embodied in tax evasion or fraud by the acquirer, without the seller knowing or being in a position to be able to know of such tax evasion or fraud.

19. Supporting this understanding on a set of indications detected within the inspection process, in particular the omission of declaration in Spain of acquisitions made by one of the acquirers and the circumstance that the payments of the transactions were made through bank deposits, which lead to the consideration of the hypothesis that the merchandise in question had as acquirer another than the one identified in the invoices.

20. The Claimant considers, in summary, that it fully demonstrated in the inspection procedure that the operations occurred, that the merchandise was transported to Spain and was unloaded there.

21. With respect to group 2, transactions are at issue in the amount of € 21,036.13, relating to the year 2007.

22. The Additional Assessment having as grounds, in that part, the circumstance that despite the invoices mentioning as recipient of the goods an operator registered in Spain, the merchandise would have been delivered to domestic operators, who effected the transmissions within national territory.

23. Since the transport companies presented themselves at A... to proceed with loading and respective transport, with the CMRs having Huelva as destination in Spain, the tax address of the taxable person D..., and without any orders or knowledge on the part of the latter, the merchandise in question was unloaded in Vila Nova de Famalicão.

24. Instructions to which the Claimant reiterates having been unaware, as it could not exercise any interference in the business between the carrier and the acquirer of the goods.

25. An aspect that cannot prejudice the understanding that the taxable event should be assessed in accordance with the destination of the goods, in accordance with the information that the seller could have, and not in accordance with vicissitudes subsequent to the sale.

26. Since there was concluded a contract of purchase and sale in accordance with Article 408 of the Civil Code and, therefore, with the conclusion of such contract the ownership of the merchandise passed to the acquirer.

27. The Claimant concludes that, having the merchandise been sold and loaded with destination to Spain to a buyer registered as an intra-Community operator in the country of destination, the taxable event for the exemption is verified.

28. With respect to group 3, operations are at issue in the amount, respectively, of € 8,743.33 relating to 2007 and € 135,336.96 relating to 2008.

29. Grounding the dismissal on the premise that the buyers had their registration as intra-Community operators "in ceased status", reason why one of the requirements of subparagraph a) of Article 14 of the RITI was not shown to be met.

30. The Claimant considers that if the taxable persons had their registration officially cancelled, without it being possible to know this fact on the date in which it carried out the transactions, the right to the exemption cannot be denied.

31. Having, regarding the clients in question, the now Claimant requested from the General Directorate of Finances of Porto, the validation of the respective tax number.

32. And obtained information, through fax, that each of the numbers in question was "valid and coincident with the name and address".

33. Coming later the authorities of the respective countries to inform that such numbers had officially ceased.

34. The Claimant considers to have acted in accordance with the information it obtained from the Respondent which confirmed to it the validity of the tax numbers and respective addresses, having relied on such information.

35. And that, on the other hand, the Respondent merely alleged proof that the numbers in question were ceased, without indicating that the cessation of the respective numbers was introduced in the VIES system on the date in which the transmissions were made.

36. And, therefore, the fact that would exclude the exemption would not even be indicated, namely, the cessation on the date of the transmissions, inserted in the VIES system on a date prior to the date of the operations.

37. By which, without such proof, the validity of the tax number cannot be questioned, since the Respondent's reasoning rests on the date of cessation of the number, when the relevant factor should be the date of the introduction of the cessation of the number in the VIES system.

38. The Additional Assessment, relating to the year 2009, is also the subject matter of the request for arbitral decision, whose act of dismissal of the hierarchical appeal was notified to the Claimant on 09.01.2014.

39. Following an inspection action, the services of the Tax Administration made corrections in VAT, relating to the year 2009, from which resulted an Additional Assessment in the amount of € 31,520.64.

40. Having been notified of the aforementioned corrections, the Claimant did not accept the arguments presented by the Respondent.

41. The issue is, in essence, the same as that discussed regarding VAT of 2007/2008, in the part relating to intra-Community transactions of goods intended for Spanish clients.

42. Transactions which had, in this concrete situation, as acquirer E..., who was also one of the acquirers of merchandise regarding the years 2007/2008.

43. The goods transacted were acquired by E... and transported to Spain to the address indicated by him.

44. The acquirer was registered as an intra-Community operator in Spain, on the date of the transaction of the goods.

45. Not being lacking any requirement for the exemption of subparagraph a) of Article 14 of the RITI to be granted.

46. Thus, in the Claimant's understanding, the assessments resulting from the corrections carried out are defective in various assumptions of fact and law, and cannot, therefore, be upheld.

47. The additional assessments now in question should be annulled and, consequently, it should be recognised that the operations above referred to (relating to the years 2007/2008 and 2009) were VAT exempt, in accordance with subparagraph a) of Article 14 of the RITI.

48. And, as a consequence, it should be ordered that the Respondent refund the tax in the meantime already paid by the Claimant, together with compensatory interest, at the legal rate, from the date of payment of the tax, until actual reimbursement.

C. IN ITS RESPONSE, THE RESPONDENT INVOKES THE FOLLOWING

1. By dispatch of 13 May 2014, the Respondent partially revoked the contested acts, considering the tax corrections that fell on the operations with company F... were not legitimate.

2. By which, facing a set of assessments, totalling the amount of € 598,302.14, it annulled the amount of € 91,673.65.

3. Terms in which the process should continue, only with respect to the part of the assessments not revoked.

4. Having as basis the facts described hereinafter.

5. The Claimant was subject to a tax inspection procedure by reference to the years 2007 and 2008, from which resulted additional assessments, in VAT, in the total amount of € 566,781.50, together with the corresponding compensatory interest.

6. With the following grounds:

a. Non-verification of the prerequisites of the exemptions in intra-Community transmissions of goods, provided for in subparagraph a) of Article 14 of the RITI, in the amount of € 215,278.80, relating to 2007, and € 186,385.67, relating to 2008;

b. Lack of confirmation of intra-Community transmissions made regarding client D..., in the amount of € 21,036.13, relating to the fiscal year 2007;

c. Certain intra-Community transmissions having as destination ceased taxpayers, in the amount of € 8,743.94, with respect to the fiscal year 2007, and € 135,336.96, relating to the fiscal year 2008 (being that, in the latter amount, is comprised the amount of € 81,734.40, pertaining to operations with F..., whose corrections were meanwhile revoked).

1. The Claimant was likewise subject to a tax inspection procedure relating to the years 2009 and 2010.

2. From the same having resulted assessments that amount to the total value of € 31,250.64, relating to the lack of proof that the merchandise was actually received by the acquirer identified in the invoice and in the place indicated as destination of the goods.

3. This because, in the Respondent's opinion, it was not proved that C... acquired from the Claimant products, in the global amount of € 630,429.00.

4. The Respondent considers that the arguments advanced by the Claimant are manifestly inadmissible, with respect, in concrete, to the errors in the assumptions of fact and law alleged in relation to the years 2007 and 2008, with respect to the three groups of questions raised.

5. On the other hand, and regarding the year 2009, in which additional assessments are at issue in the amount of € 31,520.64, related to the fact that it was not proved that C... acquired products from the Claimant in the global amount of € 630,429.00, the Respondent understands that the arguments presented regarding the situations framed in group 1 are reproduced, which it qualifies as manifestly inadmissible.

6. The Respondent emphasises that, in the scope of the inspection procedures, numerous evidential diligences were carried out, with special emphasis with respect to the commercial relations of the Claimant with the alleged acquirers of the goods, obtaining statements from them, and also information from the Tax Administrations of the other Member States involved. In order then to conclude that the law does not prevent recourse to elements and information obtained from other taxable persons and to the most diverse methods of cross-fiscal inspection.

7. Regarding the tax corrections in the amount of € 215,276.80 (2007) and € 186,385.67 (2008), relating to transmissions of goods made to clients B..., C... and C..., which amounted to € 7,900,214.00, the same were based on a set of circumstances that point to the effect that the requirements provided for in subparagraph a) of Article 14 of the RITI are not met.

8. Circumstances that the Respondent enumerates exhaustively:

a. The intra-Community acquisitions were not declared by the alleged acquirers, being denied by them any contact with the Claimant;

b. Despite the high volume of sales with the clients involved, these were made exclusively through the use of intermediaries, without there being any contact between the Claimant and the acquirers appearing in the invoices;

c. There is no proof that such clients made payment for the merchandise. On one hand, payments were made in cash, on the other, the alleged clients did not have the financial capacity to support such acquisitions;

d. There is no proof that the clients in question requested and paid for any merchandise transport;

e. These are individual taxable persons registered in Spain, of Portuguese nationality, who acquired large quantities of the same products (in particular Coca-Cola), being not credible that the Claimant was unaware of the lack of business structure for use of such products within the scope of its activity;

f. The Tax Administration of Spain proceeded with official cessation of the taxable persons referred to, due to non-compliance with tax obligations in that country.

1. Terms in which the Tax Inspection concluded, on one hand, for the non-existence of proof that B..., C... and C... have contacted A... with a view to carrying out intra-Community acquisitions, paid for the merchandise transacted, obtained and paid the transport of the same and have received the goods in question, and on the other hand, that the assertions of the same are confirmed, to the effect that they have not carried out the intra-Community acquisitions of goods declared by A....

2. The same ground was the basis of the contested assessment relating to the year 2009, and, in particular, to the transmissions of goods in the amount of € 630,413.60, whose acquirer is C... and which led the Tax Inspection to issue a set of Additional Assessments in the total amount of € 31,520.64.

3. For it to have been concluded that the merchandise was acquired by other persons than those mentioned in the invoices, being unknown the quality and regime of the actual acquirers.

4. The Respondent specifying that the contested assessments do not have as a premise the fact that the transmissions did not occur, as the Claimant suggests, but rather that those did not occur having as acquirers the taxable persons contained in the invoices, fact that the putative acquirers themselves confessed.

5. And that, being unknown the true acquirers, as well as their possible condition of VAT taxable person and the regime of taxation by which they were covered, it would not be possible to confirm that we are facing the verification of an intra-Community transmission of goods for the purposes of the regime provided in subparagraph a) of Article 14 of the RITI.

6. With the aggravating circumstance that the supposed acquirers did not declare such acquisitions for tax purposes.

7. On the other hand, there is no, in the Respondent's opinion, any proof of contacts celebrated between the referred parties for such commercial purpose, nor proof of payment associated with such transactions by the alleged acquirers, given that the referred payments were made in cash, which occurred equally with respect to transport services.

8. Moreover, it has been proved, in the Respondent's perspective, that the places of delivery of the goods could not be the addresses mentioned in the invoices and in the CMRs.

9. The Respondent concluding that the Tax Inspection acted correctly in concluding that it was not possible, in light of such factuality, to verify the realisation of the referred transactions with the above-mentioned taxable persons, such conclusion not resulting, as the Claimant suggests, from mere inference made from the fact that the acquirers—buyers—did not declare the transactions in Spain.

10. Similarly, the alleged error in the assumptions of law does not hold, in the Respondent's view, which would relate to the fact of having created a justifying reason for the refusal of exemption not provided for in law: tax evasion or fraud. This because, the goods not having left national territory, there did not even exist an intra-Community transmission capable of the exemption provided for in subparagraph a) of Article 14 of the RITI.

11. Summarily dismissing the questions raised by the Claimant, based on the premise of lack of knowledge as to the actual destination of the goods it sold and the transfer of ownership by virtue of the conclusion of the contract, in accordance with Article 408 of the Civil Code - without, however, attaching any contract. Concluding that the questions relating to the transfer of property are not relevant for the purposes of assessing the objective requirements of the exemption provided for in subparagraph a) of Article 14 of the RITI.

12. The same framework being conferred on the Claimant's argument to the effect that Article 14 of the RITI does not require, for the taxable event of the exemption to be verified, that the merchandise reach its destination.

13. Regarding the transactions carried out with ceased acquirers, the Respondent contests the Claimant's allegation that the assessments in question are defective in the assumptions of fact, as they take as established the date of cessation of the number, when what is relevant is the date of the introduction of the cessation of the number in the VIES system.

14. The Respondent concluding that - it cannot be considered in good faith - a taxable person could not fail to recognise that the terms of the transmissions of goods made do not correspond to what is a transparent and credible commercial practice, if we take into account a standard of normality and the conduct required of an average law-abiding merchant.

15. That is, in the Respondent's perspective, the Claimant had the conditions to know of the purported irregularities related to the operations in question and, even if it did not have awareness of those same irregularities, did not act with the diligence that would be required of it so as to avoid that it be implicated in any fraud committed by the acquirers, not having adopted measures to avoid its own participation in that purported fraud.

16. As such, the Respondent considers that no defect is imputable to the additional assessments at issue, the corrections carried out by the Tax Inspection being due.

17. The Arbitral Tribunal understood that oral arguments were dispensable.

18. Based on the described, the Respondent concludes and requests of this Tribunal the dismissal of the petition.

D. SCREENING DECISION

The Tribunal is materially competent and is regularly constituted, in accordance with Articles 2, n. 1, subparagraph a), 5 and 6, all of the LRAT.

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

No nullities and prior questions affecting the entire process are verified, whereby it is necessary to now proceed with the hearing of the merits of the petition.

E. SUBJECT MATTER OF THE ARBITRAL DECISION

1. The following question is placed before the Tribunal, in accordance with the terms described above:

a. With respect to intra-Community transmissions of goods (ICTs) carried out by the Claimant relating, on one hand, to the years 2007, 2008, and on the other hand, those relating to the year 2009, were the prerequisites for the exemption in VAT, provided in Article 14, subparagraph a) of the RITI, verified?

F. MATTERS OF FACT

a. Facts Proved

1. The present Claimant is a joint-stock company that carries on wholesale trade in food products, beverages and tobacco.

2. The Claimant carried out ICTs in the fiscal years 2007 and 2008.

3. Such ICTs had as destination the taxable persons, registered for VAT purposes in Spain, B..., C... and C....

4. And amounted, in those two years, to the global amount of € 9,491,423.00.

5. Such ICTs were considered VAT exempt, under subparagraph a) of Article 14 of the VAT Regime on Intra-Community Transactions.

6. The Claimant also carried out ICTs in the fiscal year 2009.

7. This time with destination to the Spanish taxable person C....

8. In the global amount of € 630,429.00.

9. ICTs such also considered VAT exempt, under subparagraph a) of Article 14 of the VAT Regime on Intra-Community Transactions.

10. The Claimant carried out all procedures necessary, and provided for by law, in order to ensure of the quality of the taxable persons acquirers as registered for VAT purposes in Spain, having diligently endeavoured to confirm, on the date of the transmissions, that such registrations were valid.

11. Due to lack of agreement regarding the prerequisites assumed for the exemption of such operations, with respect to the years 2007 and 2008, the same were the subject of Additional Assessments relating to VAT, from which resulted corrections in this tax, respectively, in a total of € 245,058.87 and € 321,722.63.

12. Having as basis the same grounds, and with respect to the ICTs supra identified pertaining to the year 2009, the same were likewise subject the subject of Additional Assessment, from which resulted corrections in VAT amounting to € 31,520.64.

13. Additional Assessments with respect to which gracious complaints and hierarchical appeals were timely filed.

14. Hierarchical appeal whose dismissal, with respect to the years 2007 and 2008, was communicated to the Claimant on 21.01.2014.

15. Whereas the dismissal relating to the year 2009 was communicated to the Claimant on 09.01.2014.

16. By dispatch of 13 May 2014, under the provisions of n. 1 of Article 13 of the RTAT, the Respondent partially revoked the contested acts, with special emphasis in the year 2008, considering the tax corrections that fell on the operations with company F... were not legitimate.

17. By which, facing a set of assessments, totalling the amount of € 598,302.14, it annulled the amount of € 91,673.65.

b. Facts Not Proved

1. It is not proved that there was any action or intervention of the Claimant in the situations in which, having been attached the documentation that supports the sending of the merchandise to Spain, the same would have been diverted from its destination.

2. It is not proved that such merchandise was received and then sold in Spain by other persons than the buyer appearing in the invoices and other documents.

3. It is not proved that the carriers, paid by the acquirers of the merchandise, acted, or actually acted in the present situation, according to instructions or orders from the Claimant.

4. It is not proved that are attributable to the Claimant the situations referred to in the information collected by the AT, by means of direct inspection or under the instrument of cross-border cooperation, namely, (i) that the acquisitions were not registered in Spain; (ii) that the places of unloading did not meet the minimum conditions for the purpose; (iii) that they did not correspond, at the time, to the residence of the acquirers; (iv) and, much less, the fact that the acquirers later came to deny having made to the Claimant the purchases of the merchandise in question – it is not proved that any of these pointed out situations is attributable to the Claimant.

c. Substantiation of the Matters of Fact

1. The matters of fact given as proved, which are peacefully recognised and accepted by the parties, rest on the documentary evidence presented.

G. ON THE LAW

1. The fundamental question to be resolved in the present proceedings can be summed up in a relatively direct manner: having the Claimant made sales in favour of taxable persons registered for VAT purposes in another Member State in the years 2007, 2008 and 2009, did it comply with the prerequisites provided in subparagraph a) of Article 14 of the VAT Regime on Intra-Community Transactions, in order that the same may be properly qualified as ICTs and, therefore, exempt from VAT in Portugal?

2. According to the Respondent, the answer should be negative, since in the sales in question there are formal and substantive requirements that do not permit such qualification to operate and, therefore, the operations in question should be framed as domestic transmissions and here subject and not exempt from VAT.

3. Whereas the Claimant understands that the Respondent is not right, sustaining that it complied, in all the operations referenced with the requirements imposed by law, and that no responsibility cannot be attributed to it for consequent facts, which would have taken place in the sphere of the acquirers and which, apparently, could raise questions of legitimacy with respect to the persons involved in the said acquisition operations (in other Member States).

It falls to decide.

1. As a prior point, with relevance to the determination of the concept of ICT, it is important to determine what is understood by transmission of goods for VAT purposes, since this concept serves as the basis for that.

2. According to the legal definition, provided in Article 3, n. 1, of the VAT Code[1]/[2] (VAT Code), we are facing a transmission of goods when there occurs the onerous transfer of tangible goods in a manner corresponding to the right of ownership.

3. Therefore, for a transmission of goods to be qualified as such for VAT purposes, it is necessary that such transaction be:

a. an onerous transfer, in the sense that, as a general rule, only transmissions effected on an onerous basis are subject to VAT, being, in principle, excluded from the scope of this tax transmissions effected on a gratuitous basis;

b. of tangible goods, movable or immovable, being excluded from this concept the onerous transfers of intangible goods, which will be taxed as supplies of services;

c. in a manner corresponding to the right of ownership, that is, even if the transfer of the legal ownership of the good is not proceeded with, it being sufficient that the transfer in question confers on the acquirer the power (economic) of disposition of the goods in question, as if, in fact, it were the owner of the same[3].

1. With respect to the concept of ICT, this does not find legal definition in the RITI. However, this regime defines what should be understood by intra-Community acquisition of goods (IAG), from which it is then possible to construct the concept of ICT "a contrario sensu".

2. Thus, in accordance with Article 3 of the RITI, it is considered, in general, IAG the obtaining of the power of disposition, in a manner corresponding to the exercise of the right of ownership, of a tangible movable good whose expedition or transport to national territory, by the seller, by the acquirer or on behalf of these, with destination to the acquirer, has had its beginning in another Member State.

3. Now, symmetrically, an ICT will correspond to the transmission of the power of disposition, in a manner corresponding to the right of ownership, of a tangible movable good whose expedition or transport to the territory of another Member State, by the seller, by the acquirer or on behalf of these, with destination to the acquirer, has had its beginning in national territory.

4. Article 7 of the RITI assumes special importance in the delimitation of the operations qualifiable as ICT, in that, on one hand, it assimilates to the concept of intra-Community transmission of goods other operations and, on the other, it proceeds to a negative delimitation of some operations not framed within the concept.

5. Thus, a transmission of goods effected on an onerous basis is considered, in addition to those provided for in Article 3 of the VAT Code, the transfer of tangible movable goods dispatched or transported by the taxable person or on his account, with destination to another Member State, for the needs of his enterprise.

6. Following this general rule of assimilation, the range of operations covered by the concept of ICT becomes overly broad, whereby the legislator saw the need to exclude certain transactions, proceeding to a negative delimitation, above all for reasons of administrative simplification. Therefore, in accordance with Article 7, n. 2 of the RITI, the following operations are not considered ICTs:

a. the transfer of goods to be subject to installation or assembly in another Member State in accordance with n. 1 of Article 9 or of goods whose transmission is not taxable in national territory in accordance with nn. 1 to 3 of Article 10, such operations giving rise to simple transmissions of goods located within a Member State;

b. the transfer of goods to be subject to transmission on board a ship, an airplane or a train, during a transport in which the places of departure and arrival are located in the EU, since these have their own location rules provided for in Article 6, n. 3, of the VAT Code;

c. the transfer of goods that consists of export operations and operations assimilated provided for in Article 14 of the VAT Code or in transmissions exempt in accordance with Article 14;

d. the transfer of gas, through a natural gas network or any network connected to it, and transfer of electricity, heat or cold through heating or cooling networks, these being taxed as transmission located within a Member State, with the rules of Article 6 of the VAT Code applying;

e. the transfer of goods to be subject to expert appraisals or any work consisting of supplies of services to be effected to the taxable person, materially executed in the Member State of arrival of the expedition or transport of the goods, provided that, after the execution of the referred work, the goods are re-dispatched to national territory with destination to the taxable person;

f. the transfer of goods to be temporarily used in supplies of services to be effected by the taxable person in the Member State of arrival of the expedition or transport of the goods; and

g. the transfer of goods to be temporarily used by the taxable person, for a period not exceeding 24 months, in the territory of another Member State within which the import of the same good coming from a third country, with a view to temporary use, would benefit from the temporary import regime with full exemption of duties.

1. In summary, these situations embody simple movements of goods that do not give rise to ICTs, being able, in some cases, to give rise to taxation as title of transmissions of internal goods or supplies of services.

2. The principal consequence of the qualification of an operation as an ICT is that this, in a similar manner to export operations, will, in principle, be exempt in the Member State of origin (i.e., in the Member State where the expedition or transport of the good with destination to another Member State has begun), granting to the transmitter the right to the deduction of VAT borne upstream for its realisation, thereby avoiding double taxation of an operation that from an economic point of view constitutes a whole and assuring the neutrality of the tax.

3. However, as will be noted hereinafter, and with particular relevance to the contested assessments, it is not sufficient that an operation be, a priori, qualified as an ICT to assure that the same may benefit from VAT exemption. Thus, in addition to it being necessary that such operation meet the legal prerequisites of the exemption of the tax, provided for in Article 14, n. 1, subparagraph a) of the RITI, the transmitter should be capable of evidencing, in a sufficient manner, the verification of these same prerequisites.

4. Which from the outset implies verifying the prerequisites of the exemption in VAT, provided for in Article 14, subparagraph a) of the RITI.

5. In accordance with Article 14, n. 1, subparagraph a) of the RITI, the following are exempt from VAT: transmissions of goods, effected by a taxable person, dispatched or transported by the seller, by the acquirer or on behalf of these, from national territory to another Member State with destination to the acquirer, when this is a natural or legal person registered for VAT purposes in another Member State, who has used the respective identification number to effect the acquisition and is there covered by a regime of taxation of intra-Community acquisitions of goods. The complexity of the normative provision of the cited article justifies a unitary and detailed analysis of each element, which will be proceeded with hereinafter.

6. Beginning with the concept of transmission of goods.

7. The concept of transmission of goods for VAT purposes is retaken here, contained in Article 3 of the VAT Code, in accordance with which the onerous transfers of tangible goods in a manner corresponding to the right of ownership are relevant.

8. Following the question of the goods dispatched or transported by the seller, by the acquirer or on behalf of these.

9. The concept of expedition does not find legal definition, with a reference, regarding the determination of the taxable event, in Article 12, n. 1 of the RITI, to Article 7 of the VAT Code, in which the notion of placing the goods at the disposal of the acquirer is employed. The CJEU[4] has come to interpret the concept of expedition in the sense that the intra-Community acquisition of a good is only verified and the exemption from intra-Community delivery is only applicable when:

a. the right to dispose of the good as owner has been transferred to the acquirer; and

b. the supplier proves that such good was dispatched or transported to another Member State and that the same physically left the territory of the Member State of delivery.

1. Additionally, in accordance with Article 1, n. 2, subparagraph e) of the VAT Code, intra-Community transport of goods is understood as the transport of goods whose places of departure and arrival are located in the territory of different Member States, the place of departure being that where the transport is actually initiated, not considering the routes effected to reach the place where the goods are located (Article 1, n. 2, subparagraph f) of the VAT Code) and the place of arrival being understood as the place where the transport of the goods actually terminates (Article 1, n. 2, subparagraph g) of the VAT Code).

2. It is also worthwhile to emphasise that, in accordance with Article 1, n. 5 of the VAT Code, any transport of goods whose places of departure and arrival are located in national territory or within another Member State is equated to an intra-Community transport of goods, provided that such transport is directly linked to an intra-Community transport of the same goods.

3. Therefore, the concept of expedition presupposes the physical displacement of a good from one Member State to another, a condition that establishes the difference between an intra-Community operation and one that is carried out within the country, as only thus is it possible for the application of the principle of the attribution of tax revenue to the Member State where final consumption occurs, that is, the principle of destination-based taxation, applicable to intra-Community commerce. Hence the relevance given to the expression "from national territory to another Member State".

4. The requirement that imposes that goods be sent "with destination to the acquirer" places emphasis on the place of arrival, that is, the place where the transport of the goods is actually terminated in the sense of Article 1, n. 2, subparagraph g) of the VAT Code, must coincide with the location of the acquirer mentioned in the invoice, in accordance with Article 27, n. 5 of the RITI.

5. It is an essential condition for the qualification of the operation as an ICT that the acquirer be an entity registered for VAT purposes in the Member State of destination. To that extent, the transmitter should gather, in a moment prior to the consummation of the sale of the goods, the necessary information that permits him to confirm that the registration for VAT purposes is in effect, requesting the identification number for VAT. Should the acquirer not provide the said number and the transmitter not be able to obtain it by other means, this should presume that the entity is not registered, liquidating the tax due, since the ICT in question does not meet the conditions to be exempt.

6. It can sometimes occur that the acquirer is registered for VAT purposes in more than one Member State. In this case, the transmitter should certify himself that the VAT number provided by the acquirer belongs to the Member State of destination of the ICT.

7. It is imposed that the acquirer be covered by a regime of taxation of intra-Community acquisitions of goods. This requirement is aimed at assuring that the IAG will be taxed in the Member State of destination. Thus, should the acquiring entity be covered by a subjective exemption from the tax, e.g., in the case of being a legal person of public law that acts in the exercise of its powers of authority, the ICT will not be exempt, and the transmitter should liquidate VAT.

8. Taking into account the requirements of ICT exemption, above enunciated, one could conclude that the following operations will not be exempt:

a. goods invoiced to customers established outside the EU and delivered in another Member State;

b. goods invoiced to customers established in another Member State and delivered outside the EU;

c. goods invoiced to customers established in another Member State and delivered in national territory;

d. goods invoiced to customers established in national territory and delivered in another Member State.

1. As already emphasised, to assure that the ICT be considered an exempt operation in accordance with the RITI, it is not sufficient that such operation be, in the abstract, qualified as an ICT. It is necessary that the seller be capable of proving that the prerequisites of the exemption are verified in concrete[5]. Thus, the demonstration that there was a transmission of goods and the corresponding proof that the goods were dispatched or transported from national territory by the seller, by the acquirer or on his account, with destination to another Member State assumes high importance, since on it depends the correct non-liquidation and the deduction of the tax borne upstream by the transmitter.

2. Being VAT a tax of broad base and taking into account that Article 4, n. 1 of the VAT Code considers, on a residual basis, as supplies of services the operations effected on an onerous basis that do not constitute transmissions, intra-Community acquisitions or importations of goods, for the exemption of the ICT to operate, the transmitter should, in the first place, have elements that may support the qualification of the operation as a transmission of goods.

3. To that extent, and since the concepts of transmission of goods and supply of services for VAT purposes do not necessarily coincide with civil law concepts, it is necessary to guard against the risk of the operation being qualified as a supply of services, in which case the exemption ceases to operate. By way of example, Article 4, n. 1, subparagraph c) of the VAT Code considers the delivery of movable goods produced or assembled to order with materials that the principal of the work has provided for that purpose to be a supply of services, whether the contractor has supplied, or not, part of the products used.

4. On the other hand, proof of the occurrence of a transmission of goods presupposes analysis, on one hand, of the business that serves as its basis and, on the other, of the effects of such business concretely verified. Thus, since the concept of transmission of goods for VAT purposes rests on the transaction of the tangible thing in a manner corresponding to the exercise of the right of ownership, proof of the legal title of transmission of ownership (e.g., the document that evidences the purchase and sale contract) may appear insufficient, it being still necessary to prove that the economic power of disposition of the good – which normally coincides with its possession – was transferred from the sphere of the seller to the sphere of the acquirer.

5. Proof of the expedition of the good is essential to determine the application or not of the exemption in question, with the burden of such proof falling on the transmitter of the good. The CJEU has already defended it to be admissible, for this purpose, any means of proof, in addition to the presentation of the respective transport document. This understanding was embraced by the Tax and Customs Authority (TA), which ruled[6] that, faced with the absence of a norm that, in VAT legislation, expressly indicates the means considered suitable for proving the verification of the prerequisites of the exemption provided in subparagraph a) of Article 14 of the RITI, it should be admitted that proof of the departure of goods from national territory may be effected by recourse to the general means of proof, namely, through the following alternatives:

a. documents evidencing transport, which, depending on the same being road, air or maritime, may respectively be, the declaration of expedition (CMR), the air waybill ("Airwaybill" - AWB) or the bill of lading ("bill of lading" - B/L);

b. contracts of transport concluded;

c. the invoices of the transport companies;

d. the guides of remission; or

e. the declaration, in the Member State of destination of the goods, on the part of the respective acquirer, of having there effected the corresponding intra-Community acquisition.

1. With respect to ICTs in which the transport of the goods is effected by the acquirer or on his account, specific problems may arise as to the matter of proof of transport or expedition.

2. Here are relevant the situations in which, e.g., the acquirer effects the removal of the goods directly at the seller's establishment, with his own means of transport or by contracting a third party for the purpose, the transmissions of goods under the Incoterms FOB ("free on board") and FOT ("free on truck") and, among others, the cases in which the goods, after having left the seller's facilities, are transported to a logistics platform located in the same territory, leaving later for the Member State of destination without the seller having the possibility of confirming its departure from national territory and arrival in the territory of destination. These are the so-called "takeaway" transactions[7].

3. Just as was already referred to in the Commission Report on the functioning of the transitional VAT regime[8], whenever the buyer takes charge of transport by his own means, the seller cannot satisfy himself with the simple indication that the goods will actually be transported with destination to another Member State.

4. A transport guide or an equivalent document presented at the time of the withdrawal of the merchandise or even a formal commitment subscribed by the buyer do not establish the reality of the transport. Under these conditions, suppliers often express the fear of seeing their responsibility called into question and the exemption of the transmission rejected during a control.

5. Faced with this problematic, it seems to be settled understanding of the Respondent that the question may be overcome, and for that purpose the supplier should request from the acquirer of the goods a declaration in which this certifies that the transport will be effected by it and what the destination of the goods is, or any other document that it considers suitable for the purpose[9].

6. It should be noted that the legislator imposed no time period for the departure of the goods from the Member State of origin for purposes of application of the exemption, with the time period being associated with the issuance of the corresponding invoice (i.e., up to the 15th day of the month following that in which the goods were placed at the disposal of the acquirer, in accordance with Article 27, n. 2 of the RITI).

7. The CJEU has already admitted, in this regard, that delay in the presentation of proof of the expedition of the goods is not relevant for purposes of the non-application of the exemption (except for risk of loss of revenue)[10]. However, it is advisable that such proof be obtained by the supplier by the end of the period for the issuance of the corresponding invoice.

8. The Respondent has already considered that the gap between the issuance of the invoice and the departure of the goods from national territory does not prevent the recognition of the exemption, with the declaration issued by the acquirer of the goods being able to serve as proof for the departure of the goods, even if deferred[11]. Going further, the Respondent has already admitted that there is occasion for the application of the exemption even in cases in which the goods subject to the ICT are delivered in Portugal for manufacture of the final product which, in turn, is destined to be dispatched to another Member State[12].

9. The indication of the tax identification number / VAT number is a fundamental element in transactions effected between taxable persons of different Member States, allowing, within the scope of the VIES system, to make known to the tax administration of the country of destination of the goods the value of intra-Community acquisitions subject to taxation and the identification of the acquirers registered therein for purposes of value added tax.

10. Taking into account that the concept of taxable person of intra-Community acquisitions does not coincide with the concept of taxable person of VAT in transmissions of goods and supplies of services, it would not be sufficient to impose the condition of registration for purposes of this tax, it being necessary – in order to assure that non-taxation in the country of origin corresponds to taxation in the country of destination of the goods – that the acquirer be covered by a regime of taxation of intra-Community acquisitions. In this way, the TA understood that, lacking verification of any of the enumerated conditions, the transmitter has no other alternative but to liquidate the tax corresponding to the value of the transmission it effected[13]. In order to assure that the quality of the acquirer of the ICT will not prevent the qualification of the operation as exempt, the transmitter should:

a. obtain the tax identification number / VAT number of the acquirer;

b. certify himself that the said number belongs to the country of origin of the acquirer; and

c. proceed with the validation of the number in the VIES system, proving that the acquirer is a VAT taxable person.

1. Taxable persons may obtain confirmation of the validity of the VAT number of a taxable person of another Member State through the VIES system (VAT information exchange system), it being advisable to archive proof of the consultation of the validity of the number. VIES consists of an electronic means of transmission of information relating to the VAT registration of companies registered in the EU. Furthermore, the information relating to ICTs is equally transmitted through the VIES system between the administrations of the Member States.

2. It should be noted that VIES is a system updated by the tax administrations of each Member State, which, sometimes, registers errors and omissions that may cause some valid operators to appear as invalid in the system and vice-versa.

3. Without prejudice to other general ancillary obligations, provided for in n. 1 of Article 29 of the VAT Code, taxable persons who effect ICTs must:

a. compulsorily issue an invoice[14] for each ICT effected, which, in addition to the elements provided for in Article 36, n. 5 of the VAT Code, must contain (i) the tax identification number of the taxable person of the tax, preceded by the prefix 'PT' and the VAT identification number of the recipient or acquirer, which must include the prefix of the Member State that assigned it, (ii) as well as the place of destination of the (Articles 23, n. 1, subparagraph b) and 27, n. 5 of the RITI);

b. send a recapitulative statement of transmissions of goods exempt in accordance with Article 14 of the RITI (Article 23, n. 1, subparagraph c) of the RITI); and

c. submit the statistical information of the operations through Intrastat.

1. Invoices must be issued at the latest by the 15th day of the month following that in which the goods were placed at the disposal of the acquirer, by the total amount of the transmissions of goods, even though payments to the taxable person have been effected prior to the date of the transmission of the goods (Article 27, nn. 2 and 3 of the RITI).

2. In summary, it follows from the foregoing that ICTs benefit from exemption if:

a. the goods are dispatched or transported from national territory to the Member State of destination; and

b. in the Member State of destination, the acquirer

i. is a taxable person of the tax, being irrelevant for this purpose its nature (natural or legal person);

ii. has used the VAT identification number to effect the acquisition; and

iii. is covered by a regime of taxation of intra-Community acquisitions of goods.

1. In practical terms, for the exemption not to be called into question, it will be necessary for the crossing of information from various documents, it falling to the transmitter to choose the method most apt to substantiate the exemption. However, when the relevant commercial documents of which this disposes appear to be scarce, its options will also be limited.

2. However, under penalty of violation of the principle of proportionality, tax administrations are not legitimised to overburden the burden of proof that falls on taxable persons who effect ICTs, in the sense that it is not expected that the transmitter produce more proof than that which reasonably is found within its reach within the scope of a typical commercial transaction.

3. The Claimant made sales to various clients over the years 2007, 2008 and 2009, clients that, though appearing to be domestic, presented, with a view to these acquisitions, Spanish VAT numbers.

4. A situation that, by itself, cannot be judged abnormal, since VAT legislation permits this possibility (in certain cases even reaching the point of requiring it as made explicit above) of registration in other Member States.

5. Despite the Claimant, as the Respondent alleges, not having negotiated directly with the buyers, since they used intermediaries for the purpose, such in no way affects the normality of the transactions.

6. It is perfectly acceptable that an economic operator use third parties (intermediaries, agents, etc.) in order that the same negotiate on its behalf certain purchases.

7. Especially when what is at issue is an absolutely undifferentiated product, as are Coca-Cola products.

8. The above-enunciated prerequisites are in no way prejudiced even when it is the acquirer who contracts and pays the companies that proceed with the transport of the merchandise to another EU Member State.

9. The same reasoning being applicable in cases in which the payments for the merchandise are effected through deposits in the bank accounts of the Claimant and not through check, bank transfer or other means that unequivocally identify the payer:

10. Without prejudice to such conduct being able to embody non-compliance with the provision of n. 3 of Article 63-C of the General Tax Law, an infraction sanctionable, at most, as a title of Contra-Offense in accordance with Article 129, n. 3 of the General Regime of Tax Infractions, but being irrelevant to the qualification of an operation as an exempt ICT.

11. The vicissitudes associated with proof by recourse to VIES, to Portuguese tax authorities and those of other countries, that the acquirers were registered as operators, with valid registration, on the date of the operations, whether by errors in VIES itself, by delays in the response of said authorities or by cancellations of registrations with retroactive effects, cannot serve as grounds with a view to denying "a posteriori" to the seller the exemption in VAT associated with the ICTs that it assumed as valid, at the moment of the transmissions, on the basis of the elements that it was required to verify.

12. That is, provided it is proved that the seller, in a diligent manner, as is inferred in the present proceedings, endeavoured to gather all the information necessary for the purpose.

13. In this regard, the Judgment of the Central Administrative Court South, of 30 April 2014 (Proc. no. 07020/13) recognises that VIES suffers from weaknesses associated with the lack of harmonisation of national rules for registration of non-residents and the delay with which VAT models are filled, in combination with VAT exemption in intra-Community transmissions, concluding that the reliability of the data transmitted by VIES is not total, as these depend on declarations submitted by taxable persons.

14. In the same direction, see the Judgment VSTR (C-587/10) in which the CJEU understood that Article 28-C, A, subparagraph a), first paragraph, of Council Directive 77/388/EEC, of 17 May 1977, must be interpreted in the sense that it does not oppose the Tax Administration of a Member State making the exemption from value added tax of an intra-Community delivery dependent on the transmission, by the supplier, of the identification number for purposes of value added tax of the acquirer, under the reserve, however, that the refusal to grant such exemption is not based solely on the circumstance that this obligation was not respected when the supplier cannot, in good faith, and after having taken all measures that can reasonably be required of it, transmit that identification number and transmits, on the other hand, indications capable of sufficiently demonstrating that the acquirer is a taxable person who acts as such in the operation in question.

15. It was not demonstrated that there was any intervention of the Claimant in the situations detected in which, despite all available documentation (CMRs and invoices) pointing to the sending of the merchandise to Spain, the same was diverted from its initial destination, apparently at the behest of the buyer and subsequently sold in Portugal.

16. Or received and then sold in Spain by persons other than the buyer appearing in the invoices and other documents.

17. Since it was not the seller who contracted and paid the services of the transporters, and these acted in accordance with instructions given by third parties.

18. Although all other information collected by the Portuguese TA, by means of direct inspection or under the instrument of cross-border cooperation, points to diverse incongruities, it was not demonstrated that the same are not entirely attributable to the acquirers, with special relevance to (i) the cases in which it will have been proved that the acquisitions were not registered in Spain, (ii) that the places of unloading did not meet the minimum conditions for the purpose, (iii) that they did not correspond, at the time, to the residence of the acquirers or, even (iv) when these later come to deny having made purchases from the Claimant.

19. It was not demonstrated that in the concrete cases the Claimant knew, or should have known, of such incongruities that, ultimately, would place at risk the VAT exemption associated with the ICTs in question.

20. With respect to the burden of proof, the Judgment of the Central Administrative Court South, of 29 March 2011 (Proc. no. 04132/10) reaffirms that it falls to the TA to effect proof to disregard the elements declared by the taxpayers in their respective tax return declarations, regular and delivered within the respective period, taking into account the presumption of veracity and good faith of the same, and for the taxpayer to rebut the indications or facts collected by the latter and on which it grounds the respective assessment.

21. On the other hand, and through the Judgment Mecsek-Gabona Kft (C-273/11) the CJEU understood that in a context of fraudulent operations, Article 138, n. 1 of Council Directive 2006/112/EC, of 28 November 2006, must be interpreted in the sense that it does not oppose the right to exemption from an intra-Community delivery being refused to the seller, should it be concluded, in the light of objective elements, that this did not comply with the obligations incumbent on it as to the matter of proof or that it knew or should have known that the operation it effected was implicated in fraud committed by the acquirer and that it had not taken all reasonable measures within its reach to avoid its own participation in this fraud.

22. And, as to the proofs that taxable persons should provide for purposes of benefiting from VAT exemption, it is up to the Member States to fix, in accordance with Article 131 of Directive 2006/112, the conditions under which they exempt intra-Community deliveries to assure the correct and simple application of said exemptions and prevent possible frauds, evasions and abuses. However, in the exercise of their powers, the Member States must respect the general principles of law that form part of the legal order of the Union, among which are, namely, the principles of legal certainty and proportionality.

23. In these terms, and to the extent that they make a non-compliant application of Article 14, n. 1, subparagraph a) of the RIT, the contested assessments must be annulled in their entirety.

H. VALUE OF THE PROCEEDING

1. In accordance with the provision of Article 315, n. 2 of the CPC and 97-A, n. 1, subparagraph a) of the CTPP and Article 3, n. 2 of the Regulation of Costs in Tax Arbitration Processes, the proceeding is fixed at the value of € 598,302.14 (amount, without dispute, indicated in the petition).

I. COSTS

In accordance with n. 4 of Article 22 of the LRAT, subparagraph a) of n. 1 of Article 97-A of the CTPP and n. 2 of Article 315 of the CPC, the amount of costs is fixed at € 8,874.00 (eight thousand eight hundred and seventy-four Euro), in accordance with Table I attached to the Regulation of Costs in Tax Arbitration Processes.

J. DECISION

Therefore, the members of this Arbitral Tribunal agree in judging the petition for arbitral decision procedurally sound, except for the part in which the instance is subsequently extinguished by the act of partial revocation of the TA.

a. Regarding VAT for 2007/2008

i. The Additional Assessments relating to the years in question should be annulled and it should be recognised that the above-mentioned operations relating to the said years 2007/2008 were VAT exempt, in accordance with Article 14 of the RITI;

ii. Order that the Respondent refund the tax paid by the now Claimant, together with compensatory interest, at the legal rate, from the date of payment of the tax until actual reimbursement, in accordance with the terms provided for in Article 43 of the LGT.

b. Regarding VAT for 2009

i. The Additional Assessment in question should be annulled and, consequently, it should be recognised that the operations referred to above (relating to the years 2009/2010) were VAT exempt, in accordance with Article 14 of the RITI;

ii. Order that the Respondent refund the tax paid by the now Claimant, together with compensatory interest, at the legal rate, from the date of payment of the tax until actual reimbursement in accordance with the terms provided for in Article 43 of the LGT.

c. Condemn the Tax and Customs Authority to pay the costs of the proceeding, in the amount of € 8,874.00 (eight thousand eight hundred and seventy-four Euro).

Lisbon, 30-09-2014

The collective tribunal,

(Jorge Lino Alves de Sousa)

(Alexandra Martins)

(Paulo Mendonça)

[Text elaborated by computer, in accordance with n. 5 of Article 131 of the CPC, applicable by reference of subparagraph e) of n. 1 of Article 29 of the LRAT. The present arbitral decision is drafted in accordance with the spelling prior to the new Orthographic Agreement]

DISSENTING VOTE

I disagree with the decision regarding the situations framed in groups 1 and 2, as I understand that the prerequisites for the application of the exemption provided in Article 14, subparagraph a) of the RITI are not verified, applicable to intra-Community transmissions of goods, based on the following considerations.

Regarding Group 1 Corrections

The Claimant declared having effected intra-Community transmissions of goods to …, … and ….

The Tax and Customs Authority collected a set of documentary evidence contained in the administrative file attached to the proceedings with a view to undermine the presumption of veracity of the Claimant's declarations (Article 75, n. 1 of the LT) with respect to the goods having been transmitted to the declared acquirers.

We are faced with essential facts, contained in the administrative file and not contained in the matters of fact, described in the following files: prg4219_480_2.pdf; OI2011…-OI2011…_pag.1-74.pdfRED.pdf; OI2011…-OI2011…_pags.75-90.pdfRED.pdf; OI2011…-OI2011…_pags.91-221.pdfRED.pdf; OI2009…_Pags._1-92pdfRED.pdf; OI2009…_Pags._93-185pdfRED.pdf; OI2009…_Pags._186-276pdfRED.pdf; OI2009…_Pags._277-369pdfRED.pdf; OI2009…_Pags._370-420pdfRED.pdf; OI2009…_Pags._421-458pdfRED.pdf; and OI2009…_Pags._459-551pdfRED.pdf.

All of these indicator facts constitute sufficient matter for the disregard by the Tax and Customs Authority of the elements declared by the Claimant, in this concrete case, relating to the identity and nature of the acquirers of the goods.

The presumption having ceased, the Claimant would have had to prove, beyond merely declaring, that those acquirers were indeed the buyers of the transacted goods, and such proof is not shown to have been made.

Let us examine the principal argument of the Claimant that all non-compliance of the acquirers, in a context of fraud duly identified and proved in other Member States, stems downstream from its activity [of the Claimant] and cannot be attributed or imputed to it.

It is certain that the Claimant cannot be held responsible nor assume the failures of the acquirers of the goods.

However, it is not a matter of imputing such failures or attributing such responsibility to it. The question that arises is different and is placed at another level, independent of whether the Claimant had or should have known, was or was not implicated in the context of fraud that involved the transactions in question.

What is in discussion is the fact that the Claimant applied an exemption regime to its own operations (to the transmissions of goods effected by it) and did not succeed in demonstrating the prerequisites for the application of such exemption, a burden that fell upon it (Article 74, n. 1 of the LGT).

Now, it not being shown who are the actual acquirers of the merchandise sold (and the respective status of registered taxable persons, in VAT, in another Member State), the transmissions of such merchandise cannot benefit from the regime of exemption of this tax provided for in Article 14, subparagraph a) of the RITI.

Regarding Group 2 Corrections

From the proof made it only results that the merchandise was transported to (and unloaded in) …. The Claimant, even not having the charge of transport to another Member State, should have been equipped with documents that would assure that transport would be effected to that destination.

The Claimant did not thus prove the departure of the goods from national territory. The essential prerequisite of the exemption provided in Article 14, subparagraph a) of the RITI thus fails: that the goods be transported to the territory of another Member State.

In view of the foregoing, I would decide that the transmissions of goods framed in the mentioned groups 1 and 2 are subject to VAT in the sphere of the Claimant, as recommended by the Tax and Customs Authority, not suffering, to that extent, the tax acts of the defect that was imputed to them.

Lisbon, 30 September 2014

Alexandra Coelho Martins

[1] Approved by Decree-Law no. 394-B/84, of 26 December, republished by Decree-Law no. 102/2008, of 20 June, and subsequent amendments.

[2] In accordance with Article 33 of the RITI, in everything that is not contrary to the provisions of the RITI, the general discipline of the VAT Code applies.

[3] In this sense, cf. the judgment of the Court of Justice of the European Union (CJEU) of 8 February 1990, C-320/88, case Shipping and Forwarding Entreprise Safe.

[4] Cf. Judgment of the CJEU of 27/09/2007, C-409/04, case Teleos and others.

[5] Cf., in this regard, the judgments of the STA of 21/02/2001 (Proc. no. 025398) and of 29/04/2004 (Proc. no. 01680/03).

[6] Official Circular no. 30009/99, of 10 December 1999, from the VAT Services Directorate.

[7] The designation can be found in Joep Swinkels, "Zero Rating Intra-Community Transactions", International VAT Monitor, 2005(16).

[8] Report of the Commission to the Council and the European Parliament on the functioning of the transitional VAT regime applicable to intra-Community trade, COM(94) 515, 23 November 1994, par. 95-97.

[9] Dispatch of 28/10/1998, Proc. no. 1941.

[10] Judgment of the CJEU of 27/09/2007, C-146/05, case Albert Collée.

[11] Dispatch of 15/03/2010, Proc. no. 402; Dispatch of 04/08/2010, Proc. no. 876.

[12] Dispatch of 20/01/2011, Proc. no. 1469.

[13] Dispatch of 03/07/1995, Proc. no. 1875.

[14] With respect to the obligation to issue an invoice, it should be underlined that, until 1 December 2013, it was admissible to issue an invoice or equivalent document. However, with the wording given by Decree-Law no. 197/2012, of 24 August, Article 23, n. 1, subparagraph b) of the RITI came to refer only to the invoice, with the reference to equivalent document having been deleted.