Summary
Full Decision
ARBITRAL DECISION
The Arbitrators José Pedro Carvalho (Presiding Arbitrator), José Ramos Alexandre and Cláudia Rodrigues, appointed by the Ethics Council of the Administrative Arbitration Centre to form an Arbitral Tribunal:
I – REPORT
On 7 August 2015, A…, S.A., legal entity no. …, with registered office at …, …, …-… …, filed a request for constitution of an arbitral tribunal, under the combined provisions of Articles 2 and 10 of Decree-Law no. 10/2011, of 20 January, which approved the Legal Framework for Arbitration in Tax Matters, as amended by Article 228 of Law no. 66-B/2012, of 31 December (hereinafter, briefly referred to as RJAT), seeking the declaration of illegality of the acts of self-assessment of VAT in excess, ascertained in the periodic returns for the twelve monthly periods between January and December 2013, in the amount of €62,821.67, and of the decision on the Administrative Review filed on 05-12-2014, seeking the partial annulment of the acts of self-assessment of Value Added Tax.
To support its request, the Applicant alleges, in summary, that having carried out a review of procedures, and considering verified the requirements for the declaration of illegality of the self-assessments in question (January to December 2013), the Applicant filed, on 05-12-2014, an administrative review against the tax self-assessment acts, with a view to "authorize the refund (or adjustment), pursuant to Article 131 of the CPPT, in favour of the Applicant, of VAT charged in excess in the period between January and December 2013, in the total amount of €62,821.67, sustaining that, within the scope of the activity of production, commercialization and distribution of beverages and other related activities, for commercial reasons, it carries out additional deliveries, to customers and potential customers, of products commercialized by it, with a view to promote the commercialization of its products, and therefore having charged VAT on the delivery of bonuses to customers upon purchase of more (or other products), a practice which it designates as "cross-bonuses", following what it considers to be the understanding of the AT, but which it deems to lack legal foundation.
On 07-08-2015, the request for constitution of the arbitral tribunal was accepted and automatically notified to the AT.
The Applicant did not proceed to appoint an arbitrator, so, pursuant to subparagraph a) of paragraph 2 of Article 6 and subparagraph a) of paragraph 1 of Article 11 of the RJAT, the President of the Ethics Council of the CAAD appointed the undersigned as arbitrators of the collective arbitral tribunal, who communicated acceptance of the assignment within the applicable period.
On 20-10-2015, the parties were notified of these appointments, having manifested no intention to refuse any of them.
In accordance with the provision in subparagraph c) of paragraph 1 of Article 11 of the RJAT, the collective Arbitral Tribunal was constituted on 10-11-2015.
On 17-12-2015, the Respondent, duly notified for this purpose, filed its reply defending itself solely by way of objection.
On 28-01-2016, the hearing referred to in Article 18 of the RJAT was held, where the witnesses presented by the Applicant were examined.
Having been granted a period for the presentation of written submissions, they were presented by the parties, pronouncing on the evidence produced and reiterating and developing their respective legal positions.
A period of 30 days was set for delivery of the final decision, after the AT's submission of its arguments.
The Arbitral Tribunal is materially competent and is regularly constituted, under the terms of Articles 2, paragraph 1, subparagraph a), 5 and 6, paragraph 1, of the RJAT.
The parties have legal personality and capacity, are legitimately interested and are legally represented, under the terms of Articles 4 and 10 of the RJAT and Article 1 of Ordinance no. 112-A/2011, of 22 March.
The proceedings do not suffer from nullities.
Thus, there is no obstacle to the assessment of the merits of the case.
Having considered all of the above, it is necessary to issue
II. DECISION
A. STATEMENT OF FACTS
A.1. Facts found to be proven
1- The Applicant is engaged in the production, commercialization and export of beverages and other products, being classified, for VAT purposes, under the normal monthly system.
2- For commercial reasons, in the market of beverage commercialization there is an entrenched practice of free delivery of products to current and potential customers.
3- Such deliveries aim at an eminently promotional purpose of the products and brands of the now Applicant, based on a diversified commercial policy of customer loyalty strategy and acquisition of new customers, and fall within the "commercial usages" and commercial practices of the sector in which the Applicant operates.
4- It is customary for companies in the beverages sector to carry out such types of deliveries to their current and potential customers.
5- In the period between January and December 2013, the Applicant charged VAT on the said product deliveries it designated as "cross-bonuses" (e.g. bonus of beer "…" of 0.25 liters upon purchase of beer "…" of 0.33 liters; bonus of beer "…" of 0.33 liters, through the purchase of the same beer in a barrel of 50 liters; bonus of soft drinks "…" upon purchase of soft drinks "…"), considering them as gifts.
6- In such deliveries, the Applicant charged VAT on the retail price of the product delivered, insofar as it classified them as gifts for VAT purposes.
7- The free deliveries in question were mentioned in the invoice of the sale of the products itself ("cross-bonus within the invoice") or in a separate invoice, which referenced an initial sales invoice "cross-bonus outside the invoice").
8- The information on the quantity and type of product delivered was mentioned in the document (invoice) sent to the customer, with no reference in that document to the price of the product or the respective tax charged by the Applicant.
9- The products subject to the said free deliveries were intended to be sold by the beneficiaries of said deliveries.
10- The Applicant filed, on 05-12-2014, an Administrative Review seeking the partial annulment of the acts of self-assessment of Value Added Tax ("VAT") which it considered to be in excess, ascertained in the periodic returns for the monthly periods between January and December 2013, in the total amount of €62,821.67.
11- On 27-05-2015, through Official Letter no. …, dated 26-05-2015, the Applicant was notified of the express dismissal of that Administrative Review, with the grounds set out in the Decision handed down in Opinion no. …/2015.
12- From the decision on the said Administrative Review there appears, among other things, the following:
"IV .1.3. Assessment
27. Taking into consideration the allegations made by the Claimant it is found that the question contended here consists in assessing what the legal-tax qualification of the deliveries made by the Claimant to its customers is. that is, whether they should be considered bonuses or gifts, and consequently ascertain whether they are subject to taxation under VAT, or whether, on the contrary, they are excluded therefrom.
28. It so happens that after analysis of the matter underlying the Administrative Review, we find that the Claimant does not have reason, as will be better demonstrated
29. Given the question at issue, it is important to first make the distinction between the concepts of gifts and bonuses, since, depending on the qualification made, the regime to be applied under VAT will be different.
30. With regard to bonuses, these should be understood as goods that are allocated through the acquisition of certain products, which are of the same nature and kind as these, and in that measure, should be considered as falling within the provision of subparagraph b) of paragraph 6 of Article 16 of CIVA and, consequently, be excluded from the taxable base of supplies of goods and supplies of services. so they are not subject to actual taxation under VAT
31. This occurs, namely, with the so-called quantity bonuses (rappel), consisting of goods allocated free of charge due to the quantity of purchases made by the customer, provided that the products constituting the bonus are of the same nature as the goods acquired (equal to those sold by the taxpayer traditionally designated as "Buy 3 and pay 2").
32. Bonuses which, under the terms of paragraph 3 of Article 3 of Ordinance no. 497/2008, of 24 June, are excluded from the concept of gift.
33. This does not occur with the so-called "cross-bonuses".
34. In this case, contrary to what occurs with quantity bonuses, the product allocated is different from the one actually purchased by the consumer, which may consist of items previously placed in the same packaging, as well as may refer to the subsequent allocation of a different product, namely, through the inclusion of a coupon inside the packaging.
35. Regardless of the form of distribution, cross-bonuses do not fall within the provision of subparagraph b) of paragraph 6 of Article 16 of CIVA, falling under the concept of gift.
36. As for gifts, these are subject to taxation under VAT, except if they are considered to be of small value, in accordance with commercial usages, under the terms of the provision in subparagraph f) of paragraph 3 and of paragraph 7 of Article 3, both of CIVA.
37. In fact, this provision makes gifts of goods without consideration equivalent to taxable transactions, when thereon there has been full or partial deduction of VAT, being in that measure, taxable under this tax, however excluding from taxation samples and gifts of small value in accordance with commercial usages.
38. Precisely with the aim of clarifying the indeterminate concepts of "commercial usages" and "small value" the then named Directorate General of Taxes (now Tax and Customs Authority), issued Circular no. 3/87, of 9 February, subsequently amended by Circular no. 19/89, of 18 December, where the understanding was established that such is considered the value not exceeding 3,000$00 (VAT excluded), being also considered, in global terms, that the value of such gifts should not exceed 5/1000 of the volume of business with reference to the previous year.
39. In fact these indeterminate concepts are not specifically provided for in law (nor even at community level, since, on this point the VAT Directive itself resorts to a general clause), so it was natural for their filling by the Tax Administration.
40. Nevertheless, and because the AT came to impose certain limits, in particular, without regard to the various sectors of activity and their respective commercial practices, resorting to a mere internal regulation, without enhanced value, this question was subject to discussion in legal terms, culminating in the publication of the Judgment of the 2nd Section of Tax Litigation of the Supreme Administrative Court, handed down on 21 March 2007, in the context of case no. 1180/06.
41. This Judgment came to consider unconstitutional the setting of maximum limits for the so-called gifts of small value, excluded from taxation, under the terms of the provision in subparagraph f) of paragraph 3 and of paragraph 7 of Article 3 of CIVA. through a circular of the then DGCI (now AT), since, being a matter within the relative reserve of the National Assembly, it comes to establish rules of objective scope without such rules resulting from a statute enacted by the National Assembly, translating into a mere internal regulation without effect for third parties, in which are included taxpayers and courts.
42. As a consequence of the case law emanating from the above-cited SAC Judgment, Circular 19/89 remained in force until 31 December 2007, the legislator having opted, through Law no. 67-A/2007, of 21 December, to adopt the mentioned concepts in a legislative diploma, through the publication of Ordinance no. 497/2008, of 24 June.
43. This Ordinance came to specify what the correct sense of samples and gifts is for VAT purposes and also to clarify what should be understood by "small value" and "compliance with commercial usages", reiterating the understanding contained in the circular previously referred to, and ending the uncertainty implicit in the wording of the provision in question.
44. The question under analysis here has also been, equally, the subject of assessment by the Court of Justice of the European Union, namely, and more recently, in the Judgment handed down in the context of case no. C-581/08, in the case EMI Group, Ltd, in which it was sought that court's assessment of the question of the interpretation to be made with respect to the "concepts of «samples» and «Gifts of small value» which appear in Article 5, paragraph 6, second sentence, of the Sixth Directive 77/388/EEC, of the Council, of 17 May 1977, on the harmonization of the legislation of the Member States relating to turnover taxes - Common system of value added tax".
45. It follows from the mentioned Judgment that it is the understanding of the CJEU that the Member States enjoy a margin of free assessment within the delimitation of the said concepts, being legitimate for them, in particular, as far as gifts are concerned, to set maximum values for the qualification thereof as being of small value, whether in unit terms or for the computation of gifts made annually to the same person, excluding them from taxation.
46. Accordingly, one can only conclude that the solution adopted by the Portuguese legislator is in conformity with community law.
47. Gifts, like samples, translate into an act of free transfer of a good, concretizing such act in a liberality of the giver, without there being on the part of the recipient any consideration.
48. However, contrary to what occurs with samples (paragraph 7 of Article 3 of CIVA, specified in Article 2 of Ordinance no. 497/2008, of 24 June) may be constituted, either by goods commercialized and/or produced by the company itself, or by goods produced by third parties exclusively for that purpose.
49. This means that gifts may relate to other categories of goods, different from those that were transacted by the company in the course of its activity, having a different nature from the products purchased by the customer.
50. In the event they are considered to be of small value, as defined in the already mentioned paragraph 7 of Article 3 of CIVA, specified in Article 3 of the said Ordinance, gifts of small value, as well as samples, are excluded from taxation under VAT, even if deduction of the respective tax supported upstream has been made.
51. To the contrary, if they exceed any of the mentioned limits, they will be subject to taxation, with an obligation to charge tax which will fall on the value attributed to the gift, unless, the right to deduction of the corresponding tax supported upstream has not been exercised.
52. In this case, if goods are involved that are zero-rated for VAT, because the tax that fell on their respective acquisition has been fully or partially deducted, their delivery is assimilated to an onerous supply of goods, being subject to taxation.
53. It is important to note that in addition to the quantitative limits, the legislator also states that it is necessary that they comply with commercial usages, which leaves implicit the idea that they must aim at the achievement of a commercial purpose - the promotion and disclosure of the image of the company and its products.
54. It further follows that, when we are faced with supplies of goods subject to tax in accordance with subparagraph f) of paragraph 3 of Article 3 of CIVA, the taxable value of the transactions is determined under the terms of the provision in subparagraph b) of paragraph 2 of Article 16 of the same legal diploma.
55. In this case, to determine the taxable value, the purchase price should be considered, in the case of the offered goods having been acquired from third parties, or the cost price if they are produced by the giver itself reported to the moment of realization of the transactions (free transfer).
56. As for the obligations incumbent on the taxpayer, pursuant to the provision in paragraph 7 of Article 36 of CIVA, a document must be drawn up containing the date, the nature of the transaction, the taxable value, the applicable tax rate and the amount thereof, and such transactions must also be recorded in the respective periodic return.
57. As for accounting recording, paragraph 1 of Article 4 of the Ordinance provides that "taxpayers must record in appropriate accounts samples and gifts, separately recording the goods constituting their own stocks and those acquired from third parties.".
58. On the other hand, paragraph 3 of Article 37 of CIVA provides that, in these cases, it is not compulsory to pass on the tax, with taxpayers bearing the amount of VAT due, delivering it to the State Treasury.
59. Otherwise, the respective invoice must be issued under the terms of the provision in subparagraph b) of paragraph 1 of Article 29 of CIVA.
60. Taking into account the general considerations made and applying them to the case under analysis, it is easily concluded that it is not found that the Claimant is right.
61. In effect, as follows from the Administrative Review request (see points 9 and 46), as well as from the invoices attached as Documents no. 1 and 2, the goods delivered by the Claimant to its customers, translate into products of a different nature from those that were sold, and should be understood that we are faced with gifts granted to customers.
62. For which reason, the taxpayer, despite qualifying such deliveries as cross-bonuses, gave them the treatment provided for gifts, with all the implications arising therefrom, namely, in terms of passing on the tax and the requirements for issuing invoices.
63. In effect, contrary to what the Claimant argues, one of the distinctive features between the two figures here at issue (bonuses and gifts), is precisely the nature of the goods delivered to customers free of charge.
64. So it cannot be conceived how the taxpayer purports to make it seem, that this distinction is based on the fact that bonuses are devoid of the "animus donandi", characteristic of gifts, since the former have underlying commercial purpose, of promoting sales and of customer loyalty and acquisition, being therefore related to the commercial activity of the Claimant.
65. In fact, both one and the other constitute instruments of sales promotion, such as discounts, vouchers, samples, etc.
66. Being certain that, despite this ultimate purpose, in neither of the cases is the free character of the delivery of goods removed, which presupposes the non-existence of any consideration on the part of the respective recipient.
67. On the other hand, considering that we are faced with gifts, it is important to analyze the other legally provided requirements, in particular, the requirement that they comply with commercial usages.
68. At this point, although the Claimant does not demonstrate it conclusively, it is admitted that the procedure adopted to promote sales, because in general terms it shows as transversal to all sectors of activity, and because the gifts translate into products produced by itself, could be considered compliant with those usages.
69. On the other hand, even if the taxpayer does not make reference to this question, the hypothesis could be considered that such products are excluded from taxation because they fall within the concept of gifts of small value.
70. It so happens that, based on the documents submitted by the Claimant, it is found that the deliveries made do not meet the cumulative requirements provided for in paragraph 7 of Article 3 of CIVA and in paragraph 2 of Article 3 of Ordinance no. 497/2008, of 24 June, so, it is not possible to configure such transactions as gifts of small value for purposes of exclusion from taxation under VAT.
71. Therefore, it appears that the procedure adopted by the Claimant of charging tax on these transactions, is the appropriate one, being in accordance with the correct interpretation of the internal and community legal norms, which are embodied in the administrative doctrine emanating from the AT, previously referred to.
72. It is up to the taxpayer, in the exercise of its commercial activity, to choose the means it considers most appropriate and effective to achieve the intended objectives, having to take into account, among others, the tax implications underlying the same.
73. In that sense, having the taxpayer opted for the delivery of goods of a different nature, as it admits in its Administrative Review, considering them for purposes of taxation as gifts, for which reason it charged VAT on the supply thereof, it cannot now come to claim that they are subject to a different classification from that which follows from CIVA itself and which is applicable to other taxpayers.
74. Much less is it admitted that they are qualified as quantity bonuses, as seems to follow from points 29 and 50, where it states that it is a matter of "( . . .) delivery of more product at the same price ( . . .)" and that "Without prejudice to the above, it further follows that, if, alternatively, the Claimant chose to invoice the value of the product it intends to allocate as a bonus and granted, at the same time, a discount of a value identical to the value of the bonus, there would be no obligation to proceed to any charging of VAT on that supply.".
75. In fact, quantity bonuses translate into the delivery of a product equal to the one sold, presenting itself as a figure very similar to that of the discount, since the offer of one additional unit of a certain product is equivalent, in fact, to a corresponding discount of 50% in the value of that same product, being excluded from taxation under VAT.
76. Which does not occur, as already explained, with cross-bonuses.
77. In the concrete case, there subsist no doubts that we are not faced with quantity bonuses, nor does the taxpayer itself admit it.
78. In effect, although subparagraph b) of paragraph 6 of Article 16 of CIVA refers to "bonuses", without making any distinction between the various categories thereof, it is unanimous understanding and results from the law itself that that expression cannot be interpreted in a broad sense, encompassing any and every type of bonus.
79. This is what occurs with the so-called cross-bonuses, which, as follows from the interpretation of paragraph 7 of Article 3 of CIVA, in conjunction with the provision in paragraph 3 of Article 4 of Ordinance no. 497/2008, of 24 June, are not excluded from the concept of gift, as occurs with quantity bonuses, being subject to the same regime as those.
80. So, even if it is considered that we are faced with cross-bonuses, the truth is that, like gifts that are not of small value, they are subject to taxation under VAT, having to be taken into account for purposes of ascertaining the taxable value.
81. For the foregoing, it is concluded that the VAT self-assessment made by the Claimant does not suffer from the vices invoked, being not only in accordance with internal law, but with the structuring principles of the common VAT system, including the principle of neutrality, and should be maintained in the precise terms in which it was made."
A.2. Facts found not to be proven
1. The VAT charged in excess with respect to the situations referred to in points 5 to 9 of the facts found to be proven amounted to €62,821.67.
A.3. Reasoning regarding the statement of facts proven and not proven
With regard to the statement of facts, the Tribunal does not have to pronounce on everything that was alleged by the parties, but rather it is its duty to select the facts that matter for the decision and to distinguish the proven facts from those not proven (see Article 123, paragraph 2, of CPPT and Article 607, paragraph 3 of CPC, applicable by virtue of Article 29, paragraph 1, subparagraphs a) and e), of RJAT).
Thus, the facts relevant for the adjudication of the case are chosen and selected according to their legal relevance, which is established in view of the various plausible solutions to the legal issue(s) (see former Article 511, paragraph 1, of CPC, corresponding to the current Article 596, applicable by virtue of Article 29, paragraph 1, subparagraph e), of RJAT).
Accordingly, taking into account the positions assumed by the parties, in light of Article 110/7 of CPPT, the documentary evidence and the procedural file attached to the record, as well as the testimonial evidence produced, it was considered proven, with relevance for the decision, the facts listed above.
In particular, the facts listed in points 2 to 8 were corroborated by the witnesses examined, respectively Financial Director, Tax Advisory Director, and Commercial Manager of the Applicant, who, despite the professional relationship they maintain with it, testified clearly and objectively, demonstrating direct knowledge of the facts in question.
The fact found to be proven in point 9 was stated by the first witness examined, and confirmed by the remainder, constituting an instrumental and supplementary fact to those alleged by the Applicant, considered under subparagraphs b) and c) of Article 5 of the Code of Civil Procedure.
The fact found not to be proven is due to the lack of sufficient evidence regarding it, namely as regards the quantification of the value in question. In effect, although the Applicant sustains that the VAT charged in excess amounted to that value, as per the list it presents, it cannot be affirmed, based on that mere listing, that it corresponds to reality.
B. ON THE LAW
As follows from the text of the decision on the administrative review itself, above partially transcribed, "the question contended here consists in assessing what the legal-tax qualification of the deliveries made by the Claimant to its customers is. that is, whether they should be considered bonuses or gifts, and consequently ascertain whether they are subject to taxation under VAT, or whether, on the contrary, they are excluded therefrom".
This was, indeed, the question assessed and decided in the primary act which constitutes the subject matter of the present tax arbitral proceeding, and it is the solution found for such question by the AT that it is now necessary to verify whether it passes the test of legality.
Let us examine it then.
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Essentially, as follows from the decision on the administrative review presented by the Applicant, the AT understood that "the product allocated is different from the one actually purchased by the consumer", so the situations at issue in the present arbitral proceeding "do not fall within the provision of subparagraph b) of paragraph 6 of Article 16 of CIVA, falling under the concept of gift.".
Now, with all due respect, a first lapse of reasoning is detected here, since – as was stated unequivocally by the witnesses, and constitutes, moreover, a matter of common knowledge – the Applicant is a producer, which sells, not to the consumer, but to wholesalers and retailers who, they themselves, sell the products thereof to the consumer.
On the other hand, and equally important as a consequence thereof, as was exhaustively and in detail explained by the witnesses examined, it is verified that the products subject to free delivery in question in the present arbitral proceeding, are intended not to be offered by the purchaser to the final consumers, but – rather – to be sold by him to them.
Hence, the emphasis in the analysis of the question to be decided should be placed not on the circumstance that the products constituting the bonuses are – or are not – different from those that commercially justified their allocation, but, rather, on the concrete contours of the justification and destination of the allocation of those bonuses.
In effect, being at issue, as is the case, free deliveries that are justified by the acquisition of determined quantities of product, and that are intended, not to be consumed, nor to be the subject of free gift, there must be concluded that, what occurs in reality – regardless of the commercial presentation that is given (and the witnesses heard reported in detail the commercial motivations of the procedure adopted) – is that the purchase price of the whole (base product plus bonus product), is discounted, because certain conditions are met.
In other words, what was found to underlie the situation sub iudice, is that the Applicant, to its customers, makes the following proposal: if a certain quantity of product A is purchased, it will sell him, at the same price, that quantity of that product, plus an additional quantity of product B.
It is verified, therefore, that the final price fixed, is not the price solely of the quantities of product A transacted, but, rather, the discounted price of the quantity of product A, plus the quantity of product B, being incomprehensible how the different nature of the products encompassed could reasonably prevent, as the AT contends, the fixing of a global discounted price.
Moreover, since the products constituting the so-called bonuses at issue are intended to be sold to the final consumer, and not transferred free of charge to them, their separate taxation from the global supply under VAT, as results from the understanding adopted by the AT in the decision on the administrative review, would lead to the realization of an unjustified patrimonial gain for the Treasury, insofar as it would be receiving VAT on the entirety of the value of the products offered, both on the part of the giver (in the case of the Applicant), and, subsequently, on the part of the recipient of the gift, when selling the products to its customers, which, in addition to everything else, would be directly contrary to the structuring principle of the neutrality of VAT.
We are not thus, contrary to the understanding in the decision on the administrative review, before any "act of free transfer of a good, concretizing such act in a liberality of the giver, without there being on the part of the recipient any consideration". On the contrary; the transfer was not free, but rather onerous (having as consideration a global discounted price), nor is it verified that to the same there assists any spirit of liberality.
One cannot in any case lose sight of the justification that, in gifts, as well noted in the decision on the administrative review, "to determine the taxable value consideration should be given to the purchase price, in the case of the offered goods having been acquired from third parties, or the cost price if they are produced by the giver itself reported to the moment of realization of the transactions (free transfer).". Such justification, if I am not mistaken, will be grounded in the circumstance that, having been incurred and consequently deducted, VAT in the acquisition or production of the gift, such deduction should be neutralized, by the charging of the same amount, when the free transfer takes place. This ratio has underlying, evidently, the subsequent consumption of the gift or, at the limit, its exempt supply downstream.
Now nothing of this, as was ascertained, is what is verified in the case.
Rather, and contrary to what was judged in the decision on the administrative review, it is considered that the situation at issue in the record, has the same substance, and should have the same treatment, as the so-called quantity bonuses, by, in reality, being essentially the same thing.
In effect, nothing in the applicable legal texts permits ratifying the conclusions of the AT, according to which "quantity bonuses translate into the delivery of a product equal to the one sold" and "When the products offered are diverse, it cannot be considered that a reduction of the effective consideration has occurred", conclusions which have no material foundation and rely, exclusively, on doctrine of the AT itself, and not only does the nature of the bonus delivery at issue in the present proceeding prevent the equation in question, but, on the contrary, it requires it.
That is, as is referred to in the decision on the administrative review itself, quantity bonuses present themselves "as a figure very similar to that of the discount, since the offer of one additional unit of a certain product is equivalent, in fact, to a corresponding discount of 50% in the value of that same product", which is, precisely and as was seen, what occurs in the present case, the different nature of the goods not preventing the character of discount from applying to the global order not being of uniform nature[1].
Thus, although, as is also stated in the decision on the administrative review, "subparagraph b) of paragraph 6 of Article 16 of CIVA refers to "bonuses", without making any distinction between the various categories thereof, it is unanimous understanding and results from the law itself that that expression cannot be interpreted in a broad sense, encompassing any and every type of bonus", the truth is that no material reason exists, as was seen, to exclude the concrete situation sub iudice from the scope of the provision referred to, including the circumstance that "the goods delivered by the Claimant to its customers, translate into products of a different nature from those that were sold", rather, on the contrary, there being substantial reasons that corroborate the subsuming of such situation to the provision in question.
Thus, and in light of the foregoing, it must be concluded that the decision on the administrative review presented by the Applicant suffers from an error in the legal framing of the facts in question, generating voidability that it is necessary to declare, so the arbitral request must proceed, in that part.
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The decision on the administrative review does not, however, exhaust the subject matter of the present arbitral proceeding, which also has as its mediate subject matter the self-assessment acts carried out by the Applicant, whose illegality grounds the request to condemn the AT to refund to the Applicant the VAT charged in excess in the periods in question.
In this part, however, the arbitral request cannot proceed.
As results from the facts proven and not proven, it was not ascertained that the amount of tax to be refunded to the Applicant was that which it claims, or any other.
Thus, being unable the Tribunal to determine what the concrete value of the tax unduly paid by the Applicant is, the request for refund formulated cannot proceed, and it must be concluded that in light of the annulment of the decision on the administrative review, the Tribunal must determine that the case be returned to the Tax Authority and this pronounce on the total amount of the adjustment sought.
In effect, this follows, from the outset, from the obligation of the AT to "Perform the legally due tax act in replacement of the act subject to the arbitral decision", enshrined in subparagraph a) of paragraph 1 of Article 24 of the RJAT, as well as from the annulling effect itself of the present decision, which, removing from the legal order the decisional act on the administrative review, and those dependent on it, causes the procedure to return to the phase immediately prior to the decision of that request, assisting the AT with the legal duty to decide it, in respect of the res judicata that will form, or that is, in the case, the understanding that the circumstance that "the goods delivered by the Claimant to its customers, translate into products of a different nature from those that were sold", does not prevent the situation in question from being framed within the provision of subparagraph b) of paragraph 6 of Article 16 of CIVA.
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C. DECISION
Accordingly, it is decided in this Arbitral Tribunal to judge the arbitral request partially granted and, consequently,
a) Annul the decision dismissing the Administrative Review filed on 05-12-2014;
b) Judge as unfounded the remaining arbitral requests formulated;
c) Condemn the parties to the costs of the proceeding, in the amount of €2,448.00, in the proportion of their respective defeat, fixing in €1,224.00 the part to be borne by the Applicant and in €1,224.00 the part to be borne by the Respondent
D. Value of the Proceedings
The value of the proceedings is fixed at €62,821.67, under the terms of Article 97-A, paragraph 1, a), of the Code of Tax Procedure and Process, applicable by virtue of subparagraphs a) and b) of paragraph 1 of Article 29 of the RJAT and of paragraph 2 of Article 3 of the Regulation of Costs in Tax Arbitration Proceedings.
E. Costs
The value of the arbitration fee is fixed at €2,448.00, under the terms of Table I of the Regulation of Costs in Tax Arbitration Proceedings, to be paid by the parties in the proportion of their respective defeat, as set out above, given that the request was partially granted, under the terms of Articles 12, paragraph 2, and 22, paragraph 4, both of the RJAT, and Article 4, paragraph 4, of the cited Regulation.
Notify the parties.
Lisbon, 21 March 2016
The Presiding Arbitrator
(José Pedro Carvalho - Rapporteur)
The Arbitrator Member
(José Ramos Alexandre)
The Arbitrator Member
(Cláudia Rodrigues)
[1] It should be said, in any case, that it is considered that, contrary to what was said in the decision on the administrative review, in situations of quantity bonuses, such as here, there will not, strictly speaking, be an exclusion "from taxation under VAT". What occurs is that the basis of taxation is the price paid for the whole (base quantity plus bonus).
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