VAT Spatial Incidence on Cross-Border Services to EU Taxable Persons with Ceased VAT Numbers (CAAD 500/2016-T)

ARBITRAL DECISION

The arbitrators, Judge José Poças Falcão (arbitrator-president), Dr. Álvaro Caneira (appointed by the Claimant) and Professor Doctor António Carlos dos Santos (appointed by the Tax and Customs Authority) agree as follows:

I. Report

1. A… LDA., with its registered office at … Street No. …, …-… …, with tax identification number …, requested the establishment of a collective arbitral tribunal in tax matters, under the combined provisions of Articles 2 and 10 of Decree-Law No. 10/2011, of January 20 (Legal Framework for Tax Arbitration (RJAT)) - with a view to declaring the illegality and annulling the official assessments of Value Added Tax (VAT) relating to the various monthly periods of the years 2013 and 2014, with the consequent reimbursement of the amounts wrongfully collected plus the corresponding indemnification interest, calculated in accordance with legal terms.

2. The assessments in question, in the total amount of € 114,695.86, were duly notified to the Claimant on 10-05-2016, the respective payment having been made in the context of tax enforcement.

3. As the basis for the request for arbitral determination, the Claimant alleges, in summary, that the disputed assessments are vitiated by illegality as a consequence of irregularities in the inspection procedure on whose report they are based, as well as by the fact that these are service provisions whose actual recipients are taxable persons established in another Member State of the European Union.

4. For its part, the Respondent (Tax and Customs Authority – TA), in response to the allegations, argues for the rejection of the request and, consequently, for the maintenance of the disputed assessment acts, on the ground that, as a result of information obtained in the context of administrative cooperation under the VIES system [i], the tax identification numbers of the purchasers under which the transactions in question were carried out are no longer registered.

5. The request for establishment of the arbitral tribunal, presented on 10-08-2016, was accepted by the President of CAAD and automatically notified to the Respondent (TA) on 08-09-2016.

6. In the exercise of the option of appointment of an arbitrator provided for in paragraph b) of section 2 of Article 6 of the RJAT and in compliance with the provisions of paragraph g) of section 2 of Article 10 and section 2 of Article 11, also of the RJAT, the Claimant appointed Dr. Álvaro Caneira as arbitrator.

7. Under the provisions of paragraph b) of section 2 of Article 6 and section 3 of Article 11 of the RJAT, as amended by Article 228 of Law No. 66-B/2012, of December 31, and within the period provided for in section 1 of Article 13 of the RJAT, the head of the Tax and Customs Authority appointed Professor Doctor António Carlos dos Santos as arbitrator.

8. In accordance with sections 5 and 6 of Article 11 of the RJAT, the President of CAAD notified the Claimant of the appointment of the arbitrator by the head of the Tax and Customs Authority on 25-10-2016 and notified the arbitrators appointed by the parties to appoint the third arbitrator who assumes the capacity of arbitrator-president.

9. On 09-11-2016 the arbitrators appointed by the parties informed CAAD of the appointment of Judge Counsellor José Poças Falcão as arbitrator-president.

10. Under the terms and for the purposes of section 7 of Article 11 of the RJAT, the President of CAAD informed the Parties of this appointment on 09-11-2016.

11. Thus, in compliance with section 7 of Article 11 of the RJAT, as amended by Article 228 of Law No. 66-B/2012, of December 31, upon expiry of the period provided for in section 1 of Article 13 of the RJAT, the collective arbitral tribunal was established on 24-11-2016.

12. Properly constituted, the arbitral tribunal is materially competent, having regard to the provisions of Article 2, section 1, paragraph a), of the RJAT.

13. The parties have legal personality and capacity and have standing (Articles 4 and 10, section 2, of the RJAT, and Article 1 of Ordinance No. 112-A/2011, of March 22).

14. On 15-03-2017, the arbitral hearing was held, under the terms and for the purposes provided for in Article 18 of the RJAT, at which the testimony of the witnesses listed by the Claimant was given.

15. Written submissions were made by the representatives of the Claimant and the Respondent.

II. Facts

1. With relevance for the assessment of the issues raised, the following factual elements are highlighted, which, based on the elements in the present proceedings, are considered proven:

16.1. The Claimant is a limited liability company, with a fixed establishment, registered for VAT purposes from July 20, 2010, with CAE 052291-Organization of Transport, falling under the general scheme of Corporate Income Tax and, for VAT purposes, under the monthly periodicity scheme.

16.2. Following a refund requested in its periodic declaration relating to the month of November 2014, subject to internal analysis in accordance with service order No. OI2015…, the Claimant was the recipient of an inspection action, also internal, determined by means of service orders Nos. OI2016… and OI2016…, resulting from the analysis of the said refund request.

16.3. The inspection action, internal and of limited scope for VAT purposes, was limited to the years 2013 and 2014.

16.4. The inspection action took place between March 7 and 14, 2016 and focused on anomalies detected relating to the assessment of tax on transactions carried out in various periods of those years.

16.5. According to the respective inspection report, the competent services of the Tax and Customs Authority (TA) found, in the course of the analysis of the said refund request, that the Claimant had provided intra-community transport services for goods to customers established in the Netherlands, the respective invoices being issued in the names of the purchasers B…, with tax identification number … and C..., with tax identification number NL….

16.6. The said invoices were issued without VAT assessment, stating therein, as justification for non-assessment of tax, the exemption provided for in Article 14, section 1, paragraph q), of the VAT Code (VATA).

16.7. In the understanding of the TA, as it appears from the tax inspection report on which the disputed assessments are based, the transactions in question could not be considered exempt from tax, as they are not covered by the scope of the rule in paragraph q) of section 1 of Article 14 of the VATA, which establishes that the following are exempt from this tax: "q) Service provisions, with the exception of those referred to in Article 9 of this law, that are related to the dispatch or transport of goods destined for other Member States, when the acquirer of the services is a taxable person referred to in paragraph a) of section 1 of Article 2, registered for value added tax and who has used the respective identification number to make the acquisition;"

16.8. By consultation of the VAT information exchange system (VIES system), the TA services found that the acquirers of the transport services referred to in the above invoicing - B… and C… - had ceased their activity, not being registered for VAT purposes since 01-01-2013 and 25-03-2013, respectively.

16.9. Still within the framework of administrative cooperation in the VAT area, the TA requested the collaboration of the Dutch tax authority which, in response to the request made to it, clarified that the said operators had ceased activities since the said dates "further confirming that the invoices of the Portuguese service provider should have been issued in the names and with the VAT numbers of the entities that succeeded them due to changes in either the shareholdings or the respective tax identification numbers."

16.10. Based on the elements referred to above and considering that the transactions in question could not benefit from the exemption provided for in Article 14, section 1, paragraph q), of the VATA, the TA proceeded to the official assessment of VAT relating to service provisions made to the Dutch operators referred to above contained in 160 invoices, calculating annual amounts of 39,650.85 and 75,044.98, with reference to the years 2013 and 2014, respectively, broken down by the corresponding monthly periods, as shown in the tables contained in point 1.3.1 of the Tax Inspection Report.

16.11. After being notified of the inspection report and having exercised its right to be heard, the Claimant was notified on 10-05-2016 of the assessments referred to above.

16.12. Having not made the respective payment within the voluntary payment period, enforcement proceedings were instituted, the Claimant having made payment of the tax already in the context of the various tax enforcement actions brought against it for coercive collection of the tax owed, as certified by a technician of the Tax Services of … - Enforcement Body (see certificate attached to the file).

1. There are no facts relevant to the merits of the decision that have not been proven.

III. Legal Matters

1. While no disagreements arise as to the facts, which are given as entirely proven, the Parties nevertheless display different positions, which are summarized below.

i) Position of the Claimant

1. In support of its request for arbitral determination, the Claimant begins by alleging that the disputed assessments, constituting acts consequent to the tax inspection action undertaken following the refund request it submitted in its periodic declaration of November 2014, must be declared null and void.

2. This understanding is based on the consideration that the inspection procedure itself will be null, which, in the Claimant's view, would entail the nullity of the consequent tax acts.

3. The alleged nullity of the inspection procedure would result, essentially, from the circumstance that:

a) The provisions of Article 49 of the RCPIT were not observed, that is, the subject was not notified of the commencement of the procedure.

b) The inspection procedure exceeded the legal period provided for in Article 36 of the RCPIT.

1. In addition to the alleged nullity of the inspection procedure, from which, as a consequence, the nullity of the disputed tax acts would result, the Claimant, in its argumentation, presents other grounds which, in its view, lead to the illegality of the said acts.

2. On this point, the Claimant alleges that for several years it has provided intra-community transport services for goods to companies B... and C…, VAT taxable persons established in the Netherlands, identified with the tax identification numbers … and…, respectively.

3. After verifying, through the VIES system, the validity of the tax identification numbers provided to it by the purchasers, the Claimant, with regard to the services it provided to them, issued the respective invoices without VAT assessment, invoking, as justification for non-assessment of tax, the exemption provided for in paragraph q) of section 1 of Article 14 of the VAT Code.

4. After verifying this fact, the Claimant considered it unnecessary to verify the validity of those identification numbers for the purpose of carrying out intra-community transactions with reference to each transaction undertaken, continuing always to issue invoices with the identification of the purchasers referred to above, a circumstance which it communicated to the TA through the corresponding recapitulative declarations.

5. According to the Claimant, the circumstance of not verifying, with reference to each transaction, the validity of the tax identification numbers of the purchasers, was based on the fact that, on the one hand, the invoices issued were accepted without any objection by the customers and, on the other hand, that, by including that identification in its recapitulative declarations, it had not been, until 2015, alerted by the TA to the existence of any irregularity or anomaly.

6. The Claimant further reinforces this understanding by the fact that throughout the years 2013 and 2014 the VAT refunds it requested were processed without the TA raising any doubt, all of which led it to believe that no irregularity or anomaly existed in its procedure.

7. The Claimant therefore alleges that the incorrect indication of the customers' VAT numbers results from the fact that it was not duly alerted by the customers to the fact that, due to changes in the articles - change of majority shareholder - and transformation from an unlimited liability company to a limited liability company, B…, which maintained the same corporate name, and C…, which, incorporating other companies, became known as D…., having been assigned, by the Dutch tax authorities, the VAT numbers … and…, respectively.

8. Notwithstanding the fact that the VAT numbers appearing in the invoices issued by the Claimant did not correspond to the current VAT numbers of the acquiring companies, these companies continued to accept and record the invoices issued.

9. With all normality thus being maintained in the business relations of the Claimant with its customer companies, the acquirer only in 2015, when alerted by the TA, became aware of that change in their tax identification.

10. The Claimant thus concludes that the fact that there were only formal changes to the companies receiving the services referred to in the disputed assessments does not modify the applicable VAT scheme because, in substance, the respective legal requirements are maintained: there was no diversion for final consumption since the acquiring companies, notwithstanding the changes referred to, are VAT taxable persons to which the intra-community transaction regime applies, since they continue exactly the same activity as was previously carried out under the previous VAT numbers.

11. In these terms, and with the grounds referred to above, in summary, the Claimant expresses its claim to have the request for arbitral determination considered well-founded, declaring the illegality of the disputed assessments with the consequent restitution of the amounts wrongfully collected, increased by the corresponding indemnification interest, calculated in accordance with legal terms.

12. In its submissions, the Claimant maintains the request, reaffirming the position summarized above as to the scope of the request and its grounds.

ii) Position of the Respondent

1. In its response, referring to the nullity of the inspection procedure invoked by the Claimant as the basis for its request for arbitral determination, the Respondent considers that the invocation of such nullity, on the ground that "no notice letter was sent" has no basis whatsoever, since such requirement is only relevant, according to Article 49 of the RCPIT, when dealing with an external inspection procedure.

2. However, in the present case, the inspection procedures are, as appears from the analysis of the administrative file, of an internal nature, and therefore the law dispenses with the referred notice letter.

3. Thus, "considering, on the one hand, that the Portuguese legal system is based on what is called positive law, and considering, on the other hand, that the RCPIT, in its wording, does not require, at any moment - for procedures of an internal nature - the sending of a notice letter, it is concluded that the request for nullity does not merit acceptance, since it has no legal basis."

4. Pronouncing itself on the request, as regards the substance of the disputed acts, the Respondent considers that "in the context of the exercise of its activity, the Claimant issued invoices relating to transport service provisions to two Dutch taxable persons, B…, VAT number … and C..., VAT number…, having therein mentioned that the said services were exempt under paragraph q), of section 1 of Article 14 of the VAT Code."

5. "In that circumstance, continues the Respondent, no tax was assessed on the transactions covered by the said invoices, the Claimant having considered the said transactions exempt under the said legal provision even though its purchasers were not taxable persons with their seat in national territory, an essential requirement for meeting the said exemption."

6. "On the scope of the said exemption, the Respondent considers that, in addition to requiring that requirement, it is associated with the dispatch of goods from national territory to other Member States, and therefore, given the content of the said invoices, it was necessary to ascertain whether such service provisions were related to the dispatch of goods shipped or transported to the Netherlands, even though the requirement as to the acquirer of the service was not met."

7. "In that circumstance, the tax services, by consulting the database that the Respondent has at its disposal, found that the two clients mentioned in the invoices to which the present proceedings refer had ceased their activity, not being registered for intra-community transaction purposes since 01.01.2013 and 25.03.2013."

8. "In the face of the information obtained, a request for cooperation was made to the Dutch Tax Authority which confirmed the data previously collected, that is, confirmed that the clients mentioned in the invoices of the Claimant had ceased their activity during the first quarter of 2013."

9. "Considering the information obtained, the Respondent understands that it is important to note that parallel to what happens with intra-community supplies of goods in which the supply at origin will only benefit from the exemption when it gives rise to an intra-community acquisition of goods taxed at the destination, it being insufficient to prove only that the goods left national territory, also in the case of the present proceedings, for there to be no tax assessment, it is not enough to say that the service was provided to a Dutch customer."

10. "From the foregoing, the Respondent draws the conclusion that it was incumbent upon the Claimant to prove the nature of its customer acquirers, that is, it was incumbent upon it to prove that it provided services to VAT taxable persons, which it failed to do, since those customers had ceased their activity for VAT purposes on the date the transactions were undertaken. And it was incumbent upon it to prove that the acquirers of transport were VAT taxable persons in the Netherlands for the purpose of not considering that such services were not subject to tax in Portugal."

11. "In conclusive terms, the Respondent expresses its position to the effect that in the case of the present proceedings, the exemption provided for in paragraph q) of section 1 of Article 14 of the VAT Code was not applicable, since according to that provision the acquirer of transport had to be a national taxable person. It matters little, then, that in terms of classification it is said that such service provisions were not, possibly, subject to tax under paragraph a) of section 6 of Article 6 of the VAT Code, or exempt under paragraph q) of Article 14 (as the Claimant wrongly considered them). In truth, whether they fall under one or the other rule, there is a fundamental requirement to be met - the nature of taxable person and its actual confirmation. But in reality, at the time the transactions were undertaken, the Dutch taxable persons mentioned in the invoices of the Claimant were deactivated."

12. "With the grounds set out above in summary, the Respondent concludes that the nullity claim raised by the Claimant must be rejected, as it constitutes a manifest and inescapable legal absurdity"... "the tax assessments made not being vitiated by any illegality as the Claimant seeks to assert."

13. In its submissions, the Respondent maintains, on identical grounds, the position already expressed in the response referred to in the foregoing paragraphs.

iii) On the Merits of the Request

1. The substantive questions that arise for the consideration of the Arbitral Tribunal in the present proceedings concern, essentially:

a) The nullity of the disputed tax acts, resulting from the alleged nullity of the inspection procedure of which they are consequent acts;

b) To determine whether, in the light of the facts given as proven, the requirements for the incidence, in particular spatial incidence, of VAT in national territory are or are not met in case of intra-community transport service provisions of goods and, if so, whether such operations fall within the scope of application of the exemption provided for in Article 14, section 1, paragraph q), of the VATA;

On the Nullity of the Inspection Procedure

1. The Claimant bases its request for arbitral determination on the allegation that the disputed assessments, constituting acts consequent to the tax inspection action undertaken following the refund request it submitted in its periodic declaration of November 2014, must be declared null and void.

2. This understanding is based on the consideration that the inspection procedure itself will be null, since it is found that irregularities were committed in it which, in the Claimant's view, would entail the nullity of the consequent tax acts.

3. According to the Claimant, the nullity of the inspection procedure would result, essentially, from the circumstance that the provisions of Article 49 of the RCPIT were not observed, that is, the taxable person was not notified of the commencement of the procedure and, on the other hand, the inspection procedure exceeded the legal period provided for in Article 36 of the RCPIT.

4. Considering what is alleged by the Claimant, and even if, by mere hypothesis, one were to admit the existence of possible deficiencies in the inspection procedure along the lines indicated in the request, it does not appear that the nullity of the procedure would result therefrom, without prejudice, however, to the possible consideration of its voidability.[ii]

5. However, even the eventual invocation of the voidability of the inspection procedure as a result of the alleged deficiencies in notifying its commencement and its extension in time beyond the legal period, in violation of Articles 49 and 36 of the RCPIT, does not give rise to the voidability of the inspection procedure.

6. In accordance with the prevailing jurisprudence of the STA, which is followed here, the said deficiencies in the procedure constitute mere irregularities, without invalidating effects, if the interested party was given knowledge of the procedure and its object in time to participate in it and if it was given the legal possibility of exercising its right to be heard during the inspection procedure.[iii]

7. With regard to the failure to comply with the period provided for in Article 36 of the RCPIT, the jurisprudence of the superior courts has been oriented towards the understanding that it is merely an organizational period whose violation has as its only consequence the cessation of the suspensory effect of the limitation period provided for in section 1 of Article 46 of the LGT. [iv]

8. However, the approach and in-depth analysis of these questions with respect to the situation under examination is entirely unnecessary in the present case since, from the elements of the proceedings, it can be gathered that the inspection action that generated the disputed assessments resulted from inspection acts inserted in an internal inspection procedure (see RCPIT, Article 13/a)).

9. The rules invoked by the Claimant to substantiate its request for a declaration of nullity of the tax acts as a consequence of nullity of the inspection procedure refer exclusively to external inspection acts, that is, those carried out outside the services of the Tax Administration (see RCPIT, Article 13/b)).

10. Since this is not the present case, the request, in this aspect, must necessarily be considered unfounded.

On the Illegality of the Tax Acts

1. As already mentioned before, the Claimant further bases its request for arbitral determination on the circumstance that the acquirers of the services to which the disputed assessments relate are VAT taxable persons established in another Member State of the European Union (the Netherlands), covered by the general scheme of intra-community transactions and that, from the error committed with respect to the incorrect indication of the VAT numbers, no diversion of services for private consumption resulted.

2. Having regard to the facts established and given as proven, it is necessary to analyze the legal framework of the transactions in question, considering the applicable national and European legislation.

3. The transactions carried out by the Claimant, a VAT taxable person registered in Portugal whose main activity is "Organization of Transport" - (CAE 052291), are qualified as transport service provisions.

4. If transport begins in Portugal and its destination is the Netherlands, we are dealing with intra-community transport service provisions (see VATA, Article 1, section 2, paragraph e) and Directive 2006/112/CE – VAT Consolidation Directive - Article 151).

5. In terms of VAT incidence, the location in Portugal or not of this type of service provision depends on the status of the acquirer, that is, on the question of whether or not it has the nature of a taxable person. If the acquirer is also a taxable person (in another MS) we are dealing with a B2B transaction that is not taxed in Portugal. This solution is derived, a contrario, from the general rule on the location of service provisions, as set out in Article 6, section 6, paragraph a), of the VATA. The transaction will be taxed at destination (Netherlands) under Dutch law (see VAT Consolidation Directive, Article 44).

6. VAT does not apply to this transaction in Portugal. We are not, therefore, dealing with a taxable transaction, but an exempt one. Nevertheless, the transport provider will have the right to deduct the VAT borne upstream, in the case under analysis, by means of refund. It does not assess VAT (since the rules for incidence in Portugal are excluded) but deducts the VAT borne upstream.

7. However, the right to deduction is not based, in this case, on Article 14, section 1, paragraph q), of the VATA (as the Appellant claims and as the TA implicitly accepted when it made refunds requested on that basis), but, unless I am mistaken, emerges by virtue of the provisions of paragraph b) II) of section 1 of Article 20 of the same Code.

8. Indeed, this provision establishes the following: "Only the tax that has been incurred on goods or services acquired, imported or used by the taxable person for the realization of the following transactions may be deducted": "Supply of goods and service provisions which consist of transactions carried out abroad that would be taxable if they were carried out in national territory". We are not, therefore, dealing with exempt transactions, but with transactions located in another Member State ("outside the spatial scope of national VAT").

9. The burden of proving the right to refund lies with whoever invokes it, in this case, the transport provider. The TA was right to refuse the refunds when, after consultation via VIES of the Dutch databases, it found that the acquirers had ceased their activity. From the perspective of legal certainty, there was the risk that we were dealing with undue refunds or obtained fraudulently.

10. However, the TA goes too far when it concludes that the transaction thereby becomes taxed in Portugal. Since the extinction of tax benefits has as its consequence the automatic restoration of the standard taxation, the end of an exemption gives rise, without more, to the right to taxation. However, this automaticity does not occur in the situation of tax exclusion derived from a non-incidence rule.

11. Thus, the VATA (following what is established in the VAT Consolidation Directive) establishes that, in case the acquirer is not a taxable person (a question to be assessed in accordance with Dutch law), we will be dealing with a B2C transaction taxed at origin (Portugal).

12. It is, therefore, the framework that results from the combination of paragraph b) of section 6 of Article 6 of the VATA with paragraph b) of section 10 of the same article. In this case, the right to deduction of the transport provider would follow the general rules of domestic transactions. The burden of proof that the tax fact is located in Portugal lies with the TA. But this fact - that there is a transport service provision to a non-taxable person - cannot be directly inferred from the fact that it appears in a particular database that a certain taxable person has ceased its activity. The information made available by the VIES system may, in fact, be subject to various inaccuracies.

13. Regulation (EC) No. 904/2010, of October 7, 2010 (applicable from January 1, 2012) distinguishes, in the context of intra-community transactions, intra-community supplies of goods (supplies in Portuguese terminology) and intra-community service provisions, considering as such the provisions that must be declared in the recapitulative statement provided for in Article 262 of Directive 2006/112/CE (which corresponds, among us, to the recapitulative declaration provided for in Article 29, section 1, paragraph i), of the VATA).

14. These pieces of information relating to the recapitulative statements, as well as data relating to the identity, activity, legal form and address of persons to whom a VAT identification number has been assigned (by virtue of collection of declarations of commencement, change or cessation of activity and, as well as the date of issue of this VAT identification number) and data relating to VAT numbers issued but which have lost their validity (including the date of this loss) must be stored in an electronic system. It is incumbent upon the MS that collects such information to proceed with their storage "without delay", to ensure that they are updated, complete and accurate and to allow, for a minimum period of five years (Articles 18 to 20 of the cited Regulation), access to the information contained in that database to competent authorities of other Member States (Article 21) and to intra-community operators.

15. In the latter case, according to Article 31 of the said Regulation, "the competent authorities of each Member State ensure that persons involved in intra-community supplies of goods or in intra-community service provisions (...) are authorized to obtain, for the purposes of this type of transaction, confirmation by electronic means of the validity of the VAT identification number of a particular person as well as of the corresponding name and address".

16. The means of access to this information is the VIES system (VAT Information Exchange System) which is a "search engine" (not a database) of the European Commission that obtains the requested information from the national VAT databases.

17. In the case of an invalid response (that is, when the VAT number in question is not registered in the national database), in principle, one of the following situations may occur: either the VAT number does not exist, or it was not activated for commercial transactions between EU countries or the registration has not yet been completed (since some countries require separate registration for transactions between EU countries). It may also occur that the information accessed through the VIES system is, at the moment of access, incomplete or inaccurate (either due to poor information from economic operators in their declarations, or due to negligent execution by the authorities of the Member State that records that information in its databases).

18. Thus, for the TA to be able to consider the acquirer as a private person (and thereby locate the transaction in Portugal in terms of spatial incidence) it is necessary that the acquirer is not actually a true taxable person.

19. The information on cessation of activity accessed through VIES constitutes a presumption in that regard, but like all presumptions established in the context of incidence, it always admits proof to the contrary (see Article 73 of the LGT).

20. In the present case, as appears from the facts given as proven, the acquirers did not cease the actual exercise of their activity, they instead continued to operate, within the context of various business restructurings, with another VAT identification number, without such information having been made available (at least, in time) in the Dutch databases accessible through the VIES system.

21. In these cases, it follows from the Implementing Regulation for VAT – Implementing Regulation (EU) 282/2011, of March 15, 2011 - a general principle whose application in the present case would make it possible to invalidate the presumption of incidence.

22. Indeed, sections 2 and 3 of Article 20 of this regulation respectively establish that the supplier must determine the place of establishment of the taxable person (or of the private person, if applicable) "on the basis of information provided by the recipient and verify that information through normal commercial security measures, such as those relating to identity or payment checks" and that "the information may include the VAT identification number assigned by the Member State where the recipient is established".

23. It is not, therefore, from the outset, the assignment of the VAT number that makes a given operator a taxable person (it is not a requirement required by European law for that purpose), but rather the type of economic activity and transactions it carries out.

24. In the present case, the economic activity continued, as appears from the facts established, but under another VAT identification number, without such information being contained in the Dutch databases accessible through VIES.

25. Since we are dealing with intra-community transport service provisions whose acquirers are VAT taxable persons established in another Member State (the Netherlands) and registered there for the purpose of carrying out intra-community transactions, such services are located, and consequently, subject to taxation in the Member State where those acquirers are established (Directive 2006/112/CE, Article 44).

26. Considering the transactions in question as located in Portugal and proceeding to the official assessment as a consequence of the non-fulfillment of the requirements of the exemption provided for in Article 14, section 1, paragraph q), of the VATA, the TA incurred in error, of fact and of law.

27. In these terms, and with the grounds set out above, the request under consideration merits a favorable decision.

iv) On the Request for Indemnification Interest

1. The Claimant combines with its request for annulment of the tax acts that are the subject of the present proceedings, a request for a decision condemning the TA to payment of indemnification interest.

2. A prerequisite for the awarding of indemnification interest is that there has been an error, of fact or of law, attributable to the TA from which results payment of the tax debt in an amount higher than legally due (see LGT, Article 43, section 1).

3. In the case at hand, it is manifest that, following the illegality of the assessment acts, for the reasons pointed out above, the Claimant made payment of amounts manifestly not legally due.

4. It also results from the file that the illegality of the assessment acts that are the subject of the present proceedings is directly attributable to the Respondent, which, on its own initiative, committed them without legal support, suffering from an incorrect assessment of the legally relevant facts and incorrect application of the legal rules to the concrete case.

5. The right of the Claimant to the indemnification interest requested is thus recognized, calculated at the legal rate, on the amounts wrongfully collected, from the date of their respective payment until the moment of actual refund (see LGT, Article 43, section 1 and CPPT, Article 61).

IV. Decision

In accordance with the foregoing terms and grounds, the Arbitral Tribunal decides:

a) To render the request for arbitral determination well-founded;

b) To determine the annulment of the official VAT assessments relating to the years 2013 and 2014 that are the subject of the present proceedings, with the consequent refund of the amounts wrongfully collected;

c) To order the Tax and Customs Authority to pay to the Claimant indemnification interest, in accordance with Articles 24, section 5, of the RJAT, 43, section 1, of the LGT and 61 of the CPPT.

Value of the case: The value of the case is fixed at € 114,695.86, in accordance with Article 97-A, section 1, paragraph a), of the CPPT, applicable by referral of Article 29, section 1, paragraphs a) and b), of the RJAT and Article 3, section 2, of the Regulation of Costs in Tax Arbitration Proceedings.

Costs: As the Tribunal was not constituted in accordance with the terms provided for in section 1 and paragraph a) of section 2 of Article 6 of the RJAT, there is no fixing of the amount of costs and its apportionment among the parties (See Article 22-4 of the RJAT).

Lisbon, May 9, 2017

The Arbitrator-President

(Judge José Poças Falcão)

The Arbitrator Member,

(Dr. Álvaro Caneira)

The Arbitrator Member,

(Professor Doctor António Carlos dos Santos)

[i] VAT Information Exchange System – Regulation (EU) 904/2010, of October 7, regarding administrative cooperation and the fight against fraud in the field of value added tax.

[ii] See CPA, Articles 161 and 163 and Civil Code of Procedure, Article 195.

[iii] See STA, Decisions of 8.5.2013, Case 0841/11, of 5.11.2014, Case 0914/13, of 29.6.2016, Case 01095/15. In the same sense, TCAS, Decision of 23.10.2012, Case 05792/12 and Arbitral Decision, of 4.3.2016, Case 405/2015-T).

[iv] See STA, Decisions of 7.5.2008, Case 102/08, of 4.6.2008, Case 103/08, TCAS, Decisions of 10.12.2008, Case 080/08, of 12.5.2009, Case 02961/09, and of 29.5.2014, Case 06580/13 and TCAN, Decisions of 24.1.2008, Case 40/03-Braga and of 29.3.2012, Case 37/07.9BEPNF.