CAAD 742/2014-T: VAT Exemption on Export Operations and...

Process: 742/2014-T

Date: September 1, 2015

Tax Type: Valor do pedido:

Summary

Process 742/2014-T before the CAAD arbitral tribunal involves a German company registered for VAT in Portugal as a non-resident without permanent establishment, challenging VAT assessments totaling €1,367,193.87. The petitioner operates as an intermediary in the automotive sector, receiving orders from EU and third-country customers, purchasing products from Portuguese manufacturers (bearing Portuguese VAT), and reselling them as intra-Community supplies and exports (invoiced without VAT). The Tax Authority made corrections to the July 2008 VAT return due to alleged lack of documentary evidence confirming exports and intra-Community supplies. The petitioner requested annulment of express denials of official review petitions and the underlying VAT assessments, plus compensatory interest and costs. The Tax Authority raised preliminary exceptions challenging the arbitral tribunal's material jurisdiction over official review requests, as well as exceptions of res judicata relating to prior administrative complaint decisions. The case raises fundamental questions about the scope of tax arbitration jurisdiction in Portugal, particularly whether CAAD tribunals can review official review denials, and the evidentiary requirements for VAT exemption on export operations under Portuguese law. The petitioner argued that documentation demonstrated the legitimacy of claimed exemptions, while the Tax Authority maintained that proof requirements were not satisfied. The case also addresses procedural rights of non-resident taxable persons in challenging VAT assessments through arbitration.

Full Decision

Arbitral Decision

Process no. 742/2014-T

The arbitrators Dr. Jorge Manuel Lopes de Sousa (arbitrator-president), Dr. Nuno Maldonado Sousa and Prof. Dr. Clotilde Celorico Palma, appointed by the Deontological Council of the Administrative Arbitration Centre to form the Arbitral Tribunal, constituted on 05-01-2015, agree as follows:

1. Report

A..., non-resident taxable person without a permanent establishment in national territory, registered in Portugal for VAT purposes under number …, represented in Portugal for VAT purposes by B..., with headquarters at Av. …, lots …, …, in Lisbon, with tax identification number …, filed a petition for constitution of a collective arbitral tribunal, pursuant to the combined provisions of article 2, no. 1, paragraph a), article 3, no. 1, article 6, no. 2, paragraph a) and article 10, no. 1, paragraph a) of Decree-Law no. 10/2011, of 20 January (Legal Regime of Arbitration in Tax Matters, hereinafter referred to only as RJAT) and of articles 1 and 2 of Ordinance no. 112-A/2011, of 22 March, in which the Tax and Customs Authority is the Respondent.

The Petitioner seeks:

(i) the annulment of the express denials of the petitions for revision of tax acts and, consequently, the annulment of the VAT assessments, for illegality, in the total amount of €1,367,193.87, with the other consequences resulting from such annulment, including the refund of the amount of assessments paid by the Petitioner, in the amount of €1,367,193.87;

(ii) or, subsidiarily, the partial annulment of the express denials of the petitions for revision of tax acts and, consequently, the annulment of the VAT assessments, for illegality, in the total amount of €1,258,472.95 (amount which the documentation presented is unequivocal in demonstrating the admissibility of the Petitioner's claim, including the annulment of the VAT correction, i.e. €1,256,632.93 + €1,840.02), with the other consequences resulting from such annulment, including the refund of the amount of assessments paid by the Petitioner, in the amount of €1,258,472.95;

(iii) and, in either case, the payment of compensatory interest, pursuant to article 43, no. 1, of the LGT, calculated on the amount referred to in the preceding paragraph;

(iv) the refund of costs incurred and to be incurred by the Petitioner with attorney fees and expenses relating to the legal framework of the matter, follow-up of the administrative procedure, preparation of the present arbitral process and follow-up of the arbitral process, as well as other expenses already incurred or to be incurred in this arbitration, in an amount to be determined later.

The petition for constitution of the arbitral tribunal was accepted by the President of CAAD and automatically notified to the Tax and Customs Authority on 29-10-2014.

Pursuant to the provisions of paragraph a) of no. 2 of article 6 and paragraph b) of no. 1 of article 11 of the RJAT, the Deontological Council appointed as Arbitrators Counsellor Jorge Lino Ribeiro Alves de Sousa, Dr. Nuno Maldonado Sousa and Professor Dr. Clotilde Celorico Palma, who communicated acceptance of the appointment within the applicable period.

On 17-12-2014, the Parties were notified of this appointment and did not manifest any intention to refuse the appointment of the arbitrators, pursuant to the combined provisions of article 11, no. 1, paragraphs a) and b) of the RJAT and articles 6 and 7 of the Deontological Code.

Thus, in accordance with the provision in paragraph c) of no. 1 of article 11 of the RJAT, the collective arbitral tribunal was constituted on 05-01-2015.

By order of 05-02-2015, the President of the Deontological Council of CAAD appointed Counsellor Jorge Lopes de Sousa to replace Counsellor Jorge Lino Alves de Sousa, in view of the incapacity that affected him.

The Tax and Customs Authority responded, defending the lack of merit of the petition for arbitral ruling and raising the question of the material incompetence of this Arbitral Tribunal.

By order of 31-03-2015, the meeting provided for in article 18 of the RJAT was dispensed with and it was decided that the process would proceed with written pleadings.

The Parties filed pleadings.

The Parties possess legal personality and capacity, are legitimately interested and are duly represented (articles 4 and 10, no. 2, of the same statute and article 1 of Ordinance no. 112-A/2011, of 22 March).

The process is free from nullities.

The Tax and Customs Authority raises the exceptions of incompetence of this arbitral tribunal, the non-existence of a duty to decide and the formation of a matter already decided or resolved relating to decisions on administrative reclamations.

2. Factual Basis

Using a peculiar technique, the Tax and Customs Authority, in article 3 of its Response, came to "consider as fully reproduced the facts established in the inspection procedures as well as in the subsequent administrative reclamation procedures, connected with the disputed assessments, and which are attached as administrative process". The issue arises from the clear distinction between facts and documents, the former configuring events of real life which, together, are the premise of the judicial syllogism and the latter constituting mere evidence. The dispositional principle places upon the party the allegation of facts, for otherwise we would have a purely inquisitorial process. Through this technique, the selection of facts intended to be used as the minor premise of the presented thesis is ultimately transferred to the Arbitral Tribunal. Since the "administrative process" of these proceedings (which has only the name of a process), is composed of more than 50 volumes totalling more than 3,000 pages, often poorly digitalized and with notorious organizational failures, the Tribunal was obliged to execute the task of selecting the relevant facts.

There is a conviction that the method usable in the arbitral process should be weighed in light of the simplification and speed that tax arbitration is intended to have. Since no one will ever accept that the value of Justice ceases to be realized, the arduous task ultimately falls to one who would not have that burden but who has no alternative but to fulfill it, in the name of the values of which he is the guardian. In processes of this dimension it will certainly be difficult to achieve the desired speed, if a congruent method is not adopted.

2.1. Facts Considered Proven

The following facts were established in these proceedings:

A. The Petitioner is a company governed by German law, registered in Portugal only for VAT purposes, as a non-resident taxable person without a permanent establishment [22 R.I. and 4 and 5 R-AT].

B. In national territory the Petitioner [22. RI and 7 R-AT]:

C. Receives purchase orders placed by customers with headquarters in the European Union and third countries, for products of the 'C..' brand, intended for the automotive industry;

D. Proceeds with the acquisition of these products from national manufacturers of the group, D… Lda. (Braga), and E… Lda. (Vila Real), bearing the VAT,

E. Carries out their resale to customers, invoicing them without applying VAT thereto, when they are intra-Community supplies and exports of goods;

F. Provides instructions to national manufacturers to proceed with dispatch and transport of merchandise to their purchasers.

G. By official document … of 02-11-2010 the TA notified the Petitioner that from the inspection action carried out, having as its object its VAT return for the period July 2008, resulted in "purely arithmetic corrections made to the taxable amount and/or tax, without recourse to indirect assessment, whose grounds are contained in the (…) report", in whose conclusion it reads that they were motivated by "lack of confirmation of exports and part of intra-Community supplies, the Petitioner having not presented the respective documents demonstrating and proving that the operations declared, were carried out" [PA15, p. 35, especially p. 52].

H. The Petitioner was notified of the additional VAT assessment no. …, made on the basis of correction effected by the TA, relating to the period July 2008, in the amount of 785,506.69 €, with the deadline for voluntary payment on 31-01-2011 [30 RI; PA15, p. 31].

I. On 31-05-2011 the Petitioner lodged a reclamation of the additional assessment no. …, through administrative reclamation no. …/11, which was partially granted, pursuant to the decision communicated by official document no. … of 30-12-2011, correcting the assessed amount to 168,963.40 €, annulling the amount of 616,543.29 € and noting that there is no basis for the payment of interest [30 RI; PA15, p. 1; PA12, p. 14; PA17, p.46].

J. On 02-02-2012 the Petitioner filed an administrative appeal of the decision on administrative reclamation no. …/11, as to the part unfavorable to it, which was denied, pursuant to the decision communicated by official document no. … of 02-02-2012. [PA12, p. 1; PA14, p. 34].

K. On 01-03-2013 the Petitioner requested ex officio revision of the tax act of additional VAT assessment no. …, relating to the period July 2008, having as its claim [RI, doc.9, 49º]:

L. The revision of the act as to the amount of 134,402.18 € corresponding to exports not duly confirmed, the proof of which it proposed to provide through documents attached and which it offered to present and which it alleged attested the carrying out of exports [49º, 55º and 195º];

M. The revision of the act regarding the amount of 34,561.22 €, corresponding to credit notes issued for the benefit of its customers [163º and 173º].

N. By official document of 25-07-2014 the Petitioner was notified of the partial grant of its petition for ex officio revision of the act of additional VAT assessment relating to the period July 2008, in the following terms [RI, doc. 17, pp. 159 and 167]:

O. Inadmissibility of the petition for revision regarding the amount of 134,963.40 €, for untimeliness of its initiation by the Petitioner and impossibility of the initiative being from the TA, for the non-existence of error attributable to the services;

P. Ex officio revision of the additional assessment, with partial annulment in the amount of 34,561.22 €, for the existence of error attributable to the services.

Q. By official document … of 02-11-2010 the TA notified the Petitioner that from the inspection action carried out, having as its object its VAT return for the period August 2008, resulted in "purely arithmetic corrections made to the taxable amount and/or tax, without recourse to indirect assessment, whose grounds are contained in the (…) report attached", in whose conclusion it reads that "the taxable person did not confirm exports and part of intra-Community supplies, not having presented the respective documents demonstrating and proving that the operations declared by it, were carried out" [PA19, p. 35, especially p. 48].

R. The Petitioner was notified of the additional VAT assessment no. …, made on the basis of correction effected by the TA, relating to the period August 2008, in the amount of 294,127.02 €, with the deadline for voluntary payment on 31-01-2011 [RI 60º; PA19, p. 31].

S. On 31-05-2011 the Petitioner lodged a reclamation of the additional assessment no. …, through administrative reclamation no. …/11, which was partially granted, pursuant to the decision communicated by official document no. … of 30-12-2011, correcting the assessed amount to 139,609.63 €, annulling the amount of 154,517.39 € and noting that there is no basis for the payment of interest [RI 60º; PA18, p. 8; PA18, p. 14].

T. On 02-12-2012 the Petitioner filed an administrative appeal of the decision on administrative reclamation no. …/11, as to the part unfavorable to it, which was denied, pursuant to the decision communicated by official document of 24-07-2012. [PA18, p. 1; PA19, p. 20].

U. On 04-02-2013 the Petitioner requested ex officio revision of the tax act of additional VAT assessment no. …, relating to the period August 2008, having as its claim the revision of the act regarding the amount of 137,809.56 €, corresponding to exports not duly confirmed, the proof of which it proposed to provide through documents attached and which it alleged attested the carrying out of these exports [RI, doc.10, 54º, 55º and 173º].

V. By official document of 25-07-2014 the Petitioner was notified of the denial of its petition for ex officio revision of the act of additional VAT assessment, relating to the period August 2008, on the grounds of untimeliness of its initiation by the Petitioner and impossibility of the initiative being from the TA, for the non-existence of error attributable to the services. [RI, doc. 18, pp. 171 and 177].

W. By official document … of 18-11-2010 the TA notified the Petitioner that from the inspection action carried out, having as its object its VAT return for the period September 2008, resulted in "purely arithmetic corrections made to the taxable amount and/or tax, without recourse to indirect assessment, whose grounds are contained in the (…) report attached", in whose conclusion it reads that "the taxable person did not confirm exports and part of intra-Community supplies, not having presented the respective documents demonstrating and proving that the operations declared by it, were carried out" [PA46, p. 39, especially p. 55].

X. The Petitioner was notified of the additional VAT assessment no. …, made on the basis of correction effected by the TA, relating to the period September 2008, in the amount of 1,310,819.91 €, with the deadline for voluntary payment on 31-01-2011 [88º RI; PA46, p. 35].

Y. On 31-05-2011 the Petitioner lodged a reclamation of the additional assessment no. …, through administrative reclamation no. …/11, which was partially granted, pursuant to the decision communicated by official document no. … of 30-12-2011, correcting the assessed amount to 124,583.03 €, annulling the amount of 1,186,236.88 € and noting that there is no basis for the payment of interest [PA46, p. 1; PA50, p. 28].

Z. On 02-02-2012 the Petitioner filed an administrative appeal of the decision on administrative reclamation no. …/11, as to the part unfavorable to it, which was denied, pursuant to the decision communicated by official document of 24-07-2012. [PA43, p. 1; PA45, p.55].

AA. On 01-03-2013 the Petitioner requested ex officio revision of the tax act of additional VAT assessment no. …, relating to the period September 2008, having as its claim the revision of the act [RI, doc.11]:

BB. Regarding the amount of 113,750.11 € corresponding to exports not duly confirmed, the proof of which it proposed to provide through documents attached and other documents it offered to present and which it alleged attested the carrying out of exports [52º, 54º, 151º and 156º];

CC. Regarding the amount of 1,840.02 €, corresponding to VAT which it included in field 40 of its periodic return instead of having done so in field 24, due to an error caused by the improper issuance of documents by its information system [158º, 163º and 168º];

DD. Regarding the amount of 7,500.00 €, corresponding to the failure to regularize tax through the issuance of credit notes [170º].

EE. By official document of 25-07-2014 the Petitioner was notified of the partial grant of its petition for ex officio revision of the act of additional VAT assessment relating to the period September 2008, in the following terms [RI, doc. 19, pp. 180 and 187]:

FF. Ex officio revision of the additional assessment, with partial annulment in the amount of 7,500.00 €, for the existence of error attributable to the services;

GG. Inadmissibility of the petition for revision regarding the remaining amount, for untimeliness of its initiation by the Petitioner and impossibility of the initiative being from the TA, for the non-existence of error attributable to the services.

HH. By official document … of 30-11-2010 the TA notified the Petitioner that from the inspection action carried out, having as its object its VAT return for the period December 2008, resulted in "purely arithmetic corrections made to the taxable amount and/or tax, without recourse to indirect assessment, whose grounds are contained in the (…) report attached", in whose conclusion it reads that "the taxable person did not confirm exports and part of intra-Community supplies, not having presented the respective documents demonstrating and proving that the operations declared by it, were carried out [PA29, p. 39, especially p. 54].

II. The Petitioner was notified of the additional VAT assessment no. …, made on the basis of correction effected by the TA, relating to the period December 2008, in the amount of 667,217.84 €, with the deadline for voluntary payment on 28-02-2011 [123º RI; PA29, p. 36].

JJ. On 28-06-2011 the Petitioner lodged a reclamation of the additional assessment no. …, through administrative reclamation no. …/11, which was partially granted, pursuant to the decision communicated by official document no. … of 30-12-2011, correcting the assessed amount to 118,489.43 €, annulling the amount of 548,728.41 € and noting that there is no basis for the payment of interest [PA29, p. 1; PA1, p. 10].

KK. On 02-02-2012 the Petitioner filed an administrative appeal of the decision on administrative reclamation no. …/11, as to the part unfavorable to it, which was denied, pursuant to the decision communicated by official document of 24-07-2012. [PA1, p. 1; PA4, p. 32].

LL. On 01-03-2013 the Petitioner requested ex officio revision of the tax act of additional VAT assessment no. …, relating to the period December 2008 [RI, doc.12].

MM. As to the amount of 50,934.05 € corresponding to exports not duly confirmed the proof of which it proposed to provide through documents attached and which it offered to present and which it alleged attested the carrying out of exports [49º, 52º, 55º and 149º];

NN. As to the amount of 67,555.37 € corresponding to VAT regularization in favor of the State through credit notes issued for the benefit of its customers [150º and 173º].

OO. By official document of 25-07-2014 the Petitioner was notified of the partial grant of its petition for ex officio revision of the act of additional VAT assessment relating to the period December 2008, in the following terms [RI, doc. 20, pp. 191 and 198]:

PP. Inadmissibility of the petition for revision regarding the amount of 50,934.05 € for untimeliness of its initiation by the Petitioner and impossibility of the initiative being from the TA, for the non-existence of error attributable to the services.

QQ. Ex officio revision of the additional assessment, with partial annulment in the amount of 67,555.37 €, for the existence of error attributable to the services.

RR. By official document … of 07-04-2010 the TA notified the Petitioner that from the inspection action carried out, having as its object its VAT return for the period September 2009, resulted in "purely arithmetic corrections made to the taxable amount and/or tax, without recourse to indirect assessment, whose grounds are contained in the (…) report attached", where it reads that they are constituted by the failure to impose VAT on third parties for warranty services provided in national territory, by the non-acceptance of the validity of documents presented to prove export and by the failure to present the appropriate customs documents [PA26, p. 42 and p. 22, especially pp. 36, 37, 38 and 40].

SS. The Petitioner was notified of the additional VAT assessment no. …, made on the basis of correction effected by the TA, relating to the period September 2009, in the amount of 423,209.97 €, with the deadline for voluntary payment on 30-06-2010 [137º RI; PA26, p. 19].

TT. On 28-10-2010 the Petitioner lodged a reclamation of the additional assessment no. …, through administrative reclamation no. …/11, which was partially granted, pursuant to the decision communicated by official document no. … of 30-12-2011, correcting the assessed amount to 321,706.10 €, annulling the amount of 101,503.87 € [137º RI; PA26, p. 1; PA22, p. 33; PA28, p. 35].

UU. On 02-02-2012 the Petitioner filed an administrative appeal of the decision on administrative reclamation no. …/11, as to the part unfavorable to it, which was denied, pursuant to the decision communicated by official document of 24-07-2012. [PA12, p. 1; PA14, p. 34].

VV. On 01-03-2013 the Petitioner requested ex officio revision of the tax act of additional VAT assessment no. …, relating to the period September 2009, having as its claim the revision of the act regarding the amount of 321,706.10 €, corresponding to exports not duly confirmed the proof of which it proposed to provide through documents attached and which it alleged attested the carrying out of exports [RI, doc.13, 50º and 52º].

WW. By official document of 25-07-2014 the Petitioner was notified of the denial of its petition for ex officio revision of the act of additional VAT assessment relating to the period September 2009, on the grounds of untimeliness of its initiation by the Petitioner and impossibility of the initiative being from the TA, for the non-existence of error attributable to the services [RI, doc. 21, pp. 202 and 208].

XX. By official document … of 20-04-2010 the TA notified the Petitioner that from the inspection action carried out, having as its object its VAT return for the period October 2009, resulted in "purely arithmetic corrections made to the taxable amount and/or tax, without recourse to indirect assessment, whose grounds are contained in the (…) report attached", where it reads that they are constituted by the failure to impose VAT on third parties for warranty services provided in national territory and by the failure to present the appropriate customs documents [PA24, p. 3, especially pp. 16, 18, 20 and 22].

YY. The Petitioner was notified of the additional VAT assessment no. …, made on the basis of correction effected by the TA, relating to the period October 2009, in the amount of 177,952.86 €, with the deadline for voluntary payment on 31-07-2010 [160º RI; PA24, p. 1].

ZZ. On 29-11-2010 the Petitioner lodged a reclamation of the additional assessment no. …, through administrative reclamation no. …/10, which was partially granted, pursuant to the decision communicated by official document no. … of 30-12-2011, correcting the assessed amount to 176,176.74 €, annulling the amount of 1,776.12 € and noting that there is no basis for the payment of interest [160º RI; PA21, p. 11; PA25, p. 43].

AAA. On 02-02-2012 the Petitioner filed an administrative appeal of the decision on administrative reclamation no. …/10, as to the part unfavorable to it, which was denied, pursuant to the decision communicated by official document of 24-07-2012. [PA22, p. 20].

BBB. On 01-03-2013 the Petitioner requested ex officio revision of the tax act of additional VAT assessment no. …, relating to the period October 2009, having as its claim the respective revision regarding the amount of 176,176.74 €, corresponding to exports not duly confirmed the proof of which it proposed to provide through documents attached and which it alleged attested the carrying out of exports [RI, doc.14, 50º and 52º].

CCC. By official document of 25-07-2014 the Petitioner was notified of the denial of its petition for ex officio revision of the act of additional VAT assessment, relating to the period October 2009, on the grounds of untimeliness of its initiation by the Petitioner and impossibility of the initiative being from the TA, for the non-existence of error attributable to the services [RI, doc. 22, pp. 212 and 218].

DDD. By official document … of 29-04-2010 the TA notified the Petitioner that from the inspection action carried out, having as its object its VAT return for the period November 2009, resulted in "purely arithmetic corrections made to the taxable amount and/or tax, without recourse to indirect assessment, whose grounds are contained in the (…) report attached", where it reads that they are constituted by the failure to impose VAT on third parties for warranty services provided in national territory and by the failure to present the appropriate customs documents [PA9-1, p. 42, especially pp. 56-59 and 61].

EEE. The Petitioner was notified of the additional VAT assessment no. … made on the basis of correction effected by the TA, relating to the period November 2009, in the amount of 282,647.98 €, with the deadline for voluntary payment on 31-07-2010 [184º RI; PA9-1 p. 41].

FFF. On 29-11-2010 the Petitioner lodged a reclamation of the additional assessment no. …, through administrative reclamation no. …/10, which was partially granted, pursuant to the decision communicated by official document no. … of 30-12-2011, correcting the assessed amount to 261,706.32 €, annulling the amount of 20,941.66 € and noting that there is no basis for the payment of interest [184º RI; PA9-1, p. 19; PA11, p. 41].

GGG. On 02-02-2012 the Petitioner filed an administrative appeal of the decision on administrative reclamation no. …/10, as to the part unfavorable to it, which was denied, pursuant to the decision communicated by official document of 24-07-2012 [PA9, p. 66].

HHH. On 01-03-2013 the Petitioner requested ex officio revision of the tax act of additional VAT assessment no. …, relating to the period November 2009, having as its claim the revision of the act regarding the amount of 261,706.32 €, corresponding to exports not duly confirmed, the proof of which it proposed to provide through documents attached and which it alleged attested the carrying out of exports [RI, doc.15, 50º and 52º].

III. By official document of 25-07-2014 the Petitioner was notified of the denial of its petition for ex officio revision of the act of additional VAT assessment relating to the period November 2008, on the grounds of untimeliness of its initiation by the Petitioner and impossibility of the initiative being from the TA, for the non-existence of error attributable to the services [RI, doc. 23, pp. 221 and 227].

JJJ. By official document … of 12-05-2010 the TA notified the Petitioner that from the inspection action carried out, having as its object its VAT return for the period December 2009, resulted in "purely arithmetic corrections made to the taxable amount and/or tax, without recourse to indirect assessment, whose grounds are contained in the (…) report attached", where it reads that they are constituted by the failure to impose VAT on third parties for warranty services provided in national territory and by the failure to present the appropriate customs documents [PA6, p. 26, especially pp. 40, 41, 43 and 44].

KKK. The Petitioner was notified of the additional VAT assessment no. …, made on the basis of correction effected by the TA, relating to the period December 2009, in the amount of 279,952.63 €, with the deadline for voluntary payment on 31-08-2010 [208º RI; PA6, p. 24].

LLL. On 29-12-2010 the Petitioner lodged a reclamation of the additional assessment no. …, through administrative reclamation no. …/11 which was partially granted, pursuant to the decision communicated by official document no. … of 30-12-2011, correcting the assessed amount to 169,382.10 €, annulling the amount of 110,570.53 € and noting that there is no basis for the payment of interest [208º RI; PA6, p. 1; PA8, p. 12].

MMM. On 02-02-2012 the Petitioner filed an administrative appeal of the decision on administrative reclamation no. …/11, as to the part unfavorable to it, which was denied, pursuant to the decision communicated by official document of 24-07-2012. [PA4, p. 34; PA5, p. 40].

NNN. On 01-03-2013 the Petitioner requested ex officio revision of the tax act of additional VAT assessment no. …, relating to the period December 2009, having as its claim the revision of the act regarding the amount of 261,706.32 €, corresponding to exports not duly confirmed, the proof of which it proposed to provide through documents attached and which it alleged attested the carrying out of exports [RI, doc.16, 50º and 52º].

OOO. By official document of 25-07-2014 the Petitioner was notified of the denial of its petition for ex officio revision of the act of additional VAT assessment, relating to the period December 2009, on the grounds of untimeliness of its initiation by the Petitioner and impossibility of the initiative being from the TA, for the non-existence of error attributable to the services [RI, doc. 24, pp. 231 and 237].

2.2. Facts Considered Not Proven

No other facts of interest for the decision of the case were alleged.

2.3. Justification of Proven Factual Matters

The Tribunal's conviction was based on the documentary evidence in the proceedings and on the position taken with respect to each fact by the Parties in their pleadings, both duly identified.

3. Issue of Incompetence of the Arbitral Tribunal

The Tax and Customs Authority argues, in summary, that the petitions for ex officio revision were considered untimely, since they could not be grounded in error attributable to the services and in the respective decisions the legality of the disputed assessments was not assessed, which should inevitably pass through the assessment of the documents attached by the Petitioner to the petition and which, according to the latter, would be capable of meeting the requirements set out in article 29, no. 8, of CIVA, thus legitimizing the deduction of the tax.

And, since in the impugned acts the legality of tax assessment acts was not assessed, their legality cannot be assessed in an arbitral process.

In article 2 of the RJAT, which defines the "Competence of arbitral tribunals", there is no express inclusion of the assessment of claims for declaration of illegality of acts denying petitions for ex officio revision of tax acts, since in the wording introduced by Law no. 64-B/2011, of 30 December, only the competence of arbitral tribunals is indicated for "the declaration of illegality of acts of tax assessment, self-assessment, withholding at source and payment on account" and "the declaration of illegality of acts fixing the taxable amount when it does not give rise to the assessment of any tax, of acts determining the taxable income and of acts fixing patrimonial values".

However, the fact that paragraph a) of no. 1 of article 10 of the RJAT makes reference to nos. 1 and 2 of article 102 of CPPT, which indicate the various types of acts giving rise to the period for judicial challenge, including administrative reclamation, allows us to understand that all types of acts capable of being challenged through judicial challenge process, covered by those nos. 1 and 2, shall be included within the scope of the jurisdiction of the arbitral tribunals operating in CAAD, provided they have as their object an act of one of the types indicated in that article 2 of the RJAT.

Furthermore, this interpretation in the sense of identity between the fields of application of the judicial challenge process and the arbitral process is the one that is in harmony with the said legislative authorization on which the Government based itself to approve the RJAT, granted by article 124 of Law no. 3-B/2010, of 28 April, which reveals the intention that the arbitral tax process constitute "an alternative procedural means to the judicial challenge process and the action for recognition of a right or legitimate interest in tax matters" (no. 2).

But this same argument extracted from the legislative authorization leads to the conclusion that the possibility of using the arbitral process shall be excluded when, in the tax judicial process, the judicial challenge or the action for recognition of a right or legitimate interest would not be usable.

In fact, being this the meaning of the said legislative authorization law and inserting itself in the relative reserve of legislative competence of the Assembly of the Republic to legislate on the "tax system", including "taxpayer rights" [articles 103, no. 2, and 165, no. 1, paragraph i), of the CRP], and on the "organization and competence of courts" [article 165, no. 1, paragraph p), of the CRP], the said article 2 of the RJAT cannot, under penalty of unconstitutionality, for lack of coverage in the legislative authorization law which limits the power of the Government (article 112, no. 2, of the CRP), be interpreted as attributing to the arbitral tribunals operating in CAAD competence to assess the legality of other types of acts, for whose challenge the judicial challenge process and the action for recognition of a right or legitimate interest are not appropriate.

Thus, to resolve the issue of competence of this Arbitral Tribunal it becomes necessary to ascertain whether the legality of the acts denying petitions for ex officio revision could or could not be assessed, in a tax court, through judicial challenge process or action for recognition of a right or legitimate interest.

The act of denial of a petition for ex officio revision of the tax act constitutes an administrative act, in light of the definition provided by article 120 of CPA [subsidiarily applicable in tax matters, by virtue of the provision in article 2, paragraph d), of the LGT, 2, paragraph d), of CPPT, and 29, no. 1, paragraph d), of RJAT], as it constitutes a decision of an organ of the Administration that, under public law norms, aimed to produce legal effects in an individual and concrete situation.

On the other hand, it is also unquestionable that it is an act in tax matters, since the application of tax law norms is made in it.

Thus, that act of denial of the petition for ex officio revision constitutes an "administrative act in tax matters".

From paragraphs d) and p) of no. 1 and from no. 2 of article 97 of CPPT, the rule is inferred that the challenge of administrative acts in tax matters be made, in the tax judicial process, through judicial challenge or special administrative action (which succeeded contentious review, pursuant to article 191 of the Code of Procedure in Administrative Courts) depending on whether or not those acts allow for the assessment of the legality of administrative acts of assessment.

Eventually, as an exception to this rule may be considered the cases of challenging acts denying administrative reclamations, due to the existence of a special norm, which is no. 2 of article 102 of CPPT, from which it can be inferred that judicial challenge is always usable. Other exceptions to that rule may be found in special norms, subsequent to CPPT, which expressly provide for the judicial challenge process as a means to challenge a certain type of acts.

But, in cases where there are no special norms, that criterion of distribution of the fields of application of judicial challenge process and special administrative action shall be applied.

In light of this criterion of distribution of the fields of application of judicial challenge process and special administrative action, acts issued in ex officio revision procedures of self-assessment acts may only be challenged through judicial challenge process when they allow for the assessment of the legality of these self-assessment acts. If the act of denial of the petition for ex officio revision of self-assessment act does not allow for the assessment of its legality, special administrative action shall apply. This is a criterion for distinguishing the fields of application of the said procedural means of questionable justification, but the fact is that it is what results from the tenor of paragraphs d) and p) of no. 1 of article 97 of CPPT and has been uniformly adopted by the Supreme Administrative Court.

This finding that there is always an adequate procedural means of challenge to contentiously challenge the act of denial of the petition for ex officio revision of self-assessment act leads, immediately, to the conclusion that we are not faced with a situation in which in the tax judicial process the action for recognition of a right or legitimate interest could be used, since its application in tax litigation has a residual nature, since these actions "may only be filed whenever this procedural means is the most adequate to ensure full, effective and actual protection of the right or legally protected interest" (article 145, no. 3, of CPPT).

Another conclusion that permits the said delimitation of the fields of application of judicial challenge process and special administrative action is that, restricting the competence of arbitral tribunals operating in CAAD to the field of application of judicial challenge process, only requests for declaration of illegality of acts denying petitions for ex officio revision of self-assessment acts which allow for the assessment of the legality of these acts are included in this competence.

The legislative concern to exclude from the competences of the arbitral tribunals operating in CAAD the assessment of the legality of administrative acts which do not allow for the assessment of the legality of assessment acts, in addition to resulting immediately from the generic directive of creation of an alternative means to the judicial challenge process and the action for recognition of a right or legitimate interest, results clearly from paragraph a) of no. 4 of article 124 of Law no. 3-B/2010, of 28 April, in which are indicated among the possible objects of the tax arbitral process "the administrative acts which allow for the assessment of the legality of assessment acts", since this specification may only be justified by a legislative intention in the sense of excluding from the possible objects of the arbitral process the assessment of the legality of acts which do not allow for the assessment of the legality of assessment acts.

For this reason, the solution of the issue of competence of this Arbitral Tribunal, connected with the content of the acts denying the petitions for ex officio revision, depends on the analysis of each of the acts.

In the case at hand, the ground invoked for the denial of the ex officio revision was the untimeliness of the intended regularization, which, obviously, does not entail assessment of the legality or otherwise of any assessment act.

However, in light of the criterion of distribution of the fields of judicial challenge process and special administrative action delineated by paragraphs d) and p) of no. 1 of article 97 of CPPT, it is not necessary that the assessment of the legality of an assessment act be the ground of the procedural decision or that in the petition filed one ask for assessment of the legality of an assessment act, it being sufficient that such act allows for it, which, in this context, means that in the impugned act there is included a judgment about the legality of an assessment act, even though its legality or illegality not be the ground of the decision. It would be different if the law employed other expressions, such as "assesses" or "decides".

3.1. Additional Assessment no. … – July 2008 – Ex Officio Revision no. …/13

The assessment referred to results from the corrections achieved in the context of the inspection procedure carried out under Service Order no. OI…, in which the Tax and Customs Authority verified a set of exports which it understood were not documented by the appropriate customs documents.

In the grounds of the decision denying the petition for ex officio revision, contained in document no. 17 attached with the petition for arbitral ruling, whose tenor is considered as reproduced, the following is stated, among others:

"VERIFICATION OF THE ADMISSIBILITY REQUIREMENTS OF THE PETITION FOR REVISION

In accordance with no. 1 of article 98 of CIVA, whenever for reasons attributable to the services, tax is assessed in excess of the amount due, ex officio revision shall be proceeded with pursuant to article 78 of the LGT.
That legal provision, in its no. 1, determines that revision of tax acts by the entity that carried them out may be effected at the initiative of the taxable person, within the period of the administrative reclamation and on the ground of any illegality, or at the initiative of the TA, within the period of four years, on the ground of error attributable to the services.
Which is equivalent to saying that, in the case the conditions and temporal limits therein provided are verified, the taxable person faced with an assessment act that conduces or has conducted to the collection of amounts not due in the face of the law, is vested with a right to its revision.
For its part, article 56, no. 1, of the LGT, determines that the TA "is obliged to pronounce itself on all matters of its competence presented to it by means of reclamations, appeals, representations, complaints or any other means provided for by law by the taxable persons or whoever has legitimate interest".
However, it establishes its no. 2, that there is no duty to decide when the TA has pronounced itself less than two years ago on petition from the same author with identical object and grounds. In the same sense, it further provides no. 2 of article 9 of the Code of Administrative Procedure.
Reporting to the case in question, it is verified that the petitioner presented, on 2013.03.01, a petition for revision of tax act, under no. 1 of article 78 of the LGT, requesting that the TA proceed with ex officio revision of the additional VAT assessment, relating to the period 2008-07, in the part not granted in the administrative reclamation.
It is thus verified that the initiative for revision of the tax act belonged to the petitioner, and, as such, could only be presented within the period of the administrative reclamation, which did not occur, in that the assessment in question was notified, on 2010.12.15.
Still, revision may be effected, at the initiative of the TA, within the period of four years, after its notification, on the ground of error attributable to the services.
This is also the case law understanding that has been followed in this matter, as is the case, for example, of the Judgment no. 0532/07, of 2007.11.28, of the Supreme Administrative Court (STA), when it decided that, in case of verification of the legally required conditions, it is unequivocal that alongside the so-called revision of the tax act at the initiative of the taxpayer, revision be made, following its petition, at the initiative of the TA.
In fact, in observance of the principles imposing the correction of errors included in assessments resulting in tax less than or greater than the legally due, namely those of legality and justice, to whose fulfillment the TA is obliged in its relation with its administrated, the STA has decided that revision of tax acts should be effected in the same manner in which it is admitted to the TA, being thus accepted within the temporal limit of four years, provided that it meets the required conditions.
Accordingly, and so that revision be susceptible to acceptance, it is important to assess whether there exists error attributable to the services, in that in its verification the petitioner is vested with the right to its revision:

UNCONFIRMED EXPORTS - €134.402.18

In accordance with the provision in paragraph a) of no. 1 of article 14 of CIVA, exempt from tax are supplies of goods dispatched or transported outside the community, by the seller or by a third party on its account.
This legal provision stems, as is known, from the Community rule provided in paragraph a) of no. 1 of article 146 of Directive 2006/112/CE, of the Council of 28 November 2006, relating to the common VAT system, in force in the EU, to whose compliance the Member States are subject.
Article 131 of that Directive further provides that that exemption is applied "...under the conditions fixed by the Member States in order to ensure the correct and simple application of the said exemptions and to prevent any possible fraud, evasion or abuse.".
Accordingly, the national legislator determined in no. 8 of article 29 of CIVA, that the proof of the right to the exemption provided in paragraph a) of no. 1 of article 14 of the same Code, should be made through the appropriate customs documents, whenever there is a legal obligation for intervention of the customs services.
It is, thus, required of the transferor of goods, as beneficiary of the exemption, that it be in possession of the customs documents, that is, the single administrative document (DAU) in its name, or in the name of a third party on its account.
Note that, contrary to what was alleged by the petitioner, that condition does not constitute a mere formality, but rather a substantive requirement, whose non-observance imposes the taxability of the tax pursuant to no. 9 of article 29 of CIVA.
Equally in Circular no. 90/2007, of 16/11, of the General Directorate of Customs and Special Consumption Taxes, which defines the regulatory norms of the process of certification of the departure of merchandise from the Community Customs Territory, it is expressed that the proof for purposes of the exemption on export consists in copy 3 of the electronic customs declaration, with the field "C.DEPARTURE" of the "D - CONTROL BY THE DEPARTURE CUSTOMS OFFICE" house completed with the respective date.
In the same sense, it has been understood by national jurisprudence, as in the case of the Judgment, of 2008.11.19, of the STA, Proc. no. 0305/08, when it decided that export operations should be documented through customs documents and that their absence determined the obligation to assess the tax.
Also, on this matter, it was decided by the Deputy Director-General, in the capacity of legal substitute of the Director-General, pursuant to order that fell upon Information no. …, of 2012.07.19, of this Services Directorate, that; "Existing customs documentation and intervention of the customs services, the presentation of alternative forms of proof of export - documents supporting imports in destination countries - has no legal coverage".
Now, given that the additional VAT assessment in question was issued because the petitioner did not have in its possession the documents required by no. 8 of article 29 of CIVA, for purposes of proving the exports, it is our conviction that there exists no error attributable to the services, especially because the TA had no other alternative than to proceed with the VAT assessment, imposed by no. 9 of the same provision.
In truth, the petitioner's assertion of the existence of error attributable to the TA is not comprehensible, since it is not believed that conduct translated in non-compliance with legal norms can, in effect, constitute error attributable to the services.
Thus, we are of the opinion that, regarding the amount of unproven exports of €134.402.18, there exists no error attributable to the services, and it is thus not susceptible to revision, pursuant to no. 1 of article 78 of the LGT.
Any other interpretation would, in our view, conflict with what is provided in the above-cited legal norm, and as well with the principles of neutrality and tax equality, which promote equal procedure for identical economic-tax realities.
Even if this were not so, also the documents delivered by the petitioner showed themselves manifestly insufficient to legitimize the exemption applied in the export invoices, in light of what is provided in no. 8 of article 29 of CIVA.

(...)

VIII CONCLUSION

In light of the foregoing, it follows that:

a. It is unquestionable that regarding the correction, in the amount of €134.963,40, resulting from non-proof of supplies of goods exempt under paragraph a) of no. 1 of article 14 of CIVA, the petition for revision of tax act does not meet the requirements demanded in no. 1 of article 78 of the LGT, whether at the initiative of the petitioner, for untimeliness in its filing, or at the initiative of the TA, for the non-existence of error attributable to the services;

b. However, the correction stemming from the issuance of Credit Notes for the return of products and reduction of the prices of goods after the issuance of the invoice, in the amount of €34.561,22, meets the requirements demanded in the final part of the wording of no. 1 of article 78 of the LGT, i.e., timeliness in its presentation and the existence of error attributable to the services, wherefore, in observance of the principles imposing the correction of errors included in assessments resulting in tax less than or greater than the legally due, namely those of legality and justice, it is understood that the petition for revision presented at the initiative of the taxpayer, should be accepted in the same manner in which it is admitted to the TA, given that it meets the conditions so required;

Thus, we are of the opinion that there should be proceeded with the ex officio revision of the tax act of the additional VAT assessment in question, annulling the same, partially, in the amount of €34.561,22, for the existence of error attributable to the services, maintaining, consequently, in the legal order for the amount of €134.402,18, as provided in the following table, with the necessary reflection at the level of compensatory interest:

(...)

It is evident from this reasoning that, with respect to the amount of €134.402.18, the Tax and Customs Authority pronounced itself on the illegality or otherwise of the assessment as to this amount, stating that "the additional VAT assessment in question was issued because the petitioner did not have in its possession the documents required by no. 8 of article 29 of CIVA, for purposes of proving the exports, it is our conviction that there exists no error attributable to the services, especially because the TA had no other alternative than to proceed with the VAT assessment".

For this reason, it is unequivocally affirmed that the VAT assessment is legal.

We are thus faced with a decision on a petition for ex officio revision that allows for the assessment of the legality of the impugned assessment act.

For this reason, the exception of material incompetence raised by the Tax and Customs Authority lacks merit.

3.2. Additional Assessment no. … – August 2008 – Ex Officio Revision no. …/13

In the grounds of the decision denying the petition for ex officio revision, contained in document no. 18 attached with the petition for arbitral ruling, whose tenor is considered as reproduced, the following is stated, among others:

VI VERIFICATION OF THE ADMISSIBILITY REQUIREMENTS OF THE PETITION FOR REVISION

In accordance with no. 1 of article 98 of CIVA, whenever for reasons attributable to the services, tax is assessed in excess of the amount due, ex officio revision shall be proceeded with pursuant to article 78 of the LGT.
That legal provision determines, in its no. 1, that revision of tax acts by the entity that carried them out may be effected at the initiative of the taxable person, within the period of the administrative reclamation and on the ground of any illegality, or at the initiative of the TA, within the period of four years, on the ground of error attributable to the services.
Which is equivalent to saying that, in the case the conditions and temporal limits provided in the cited legal provisions are verified, the taxable person, faced with an assessment act that conduces or has conducted to the collection of amounts not due in the face of the law, is vested with a right to its ex officio revision.
For its part, article 56, no. 1, of the LGT, determines that the TA is obliged to pronounce itself on all matters of its competence presented to it by means of reclamations, appeals, representations, complaints or any other means provided for by law by the taxable persons or whoever has legitimate interest. Its no. 2 establishes that there is no duty to decide when the TA has pronounced itself less than two years ago on petition from the same author with identical object and grounds.;
In the same sense, it further provides no. 2 of article 9 of the Code of Administrative Procedure.
Reporting to the case in question, it is verified that the petitioner presented, on 2013.02.04, a petition for revision of tax act, under no. 1 of article 78 of the LGT, requesting that the TA proceed with ex officio revision of the additional VAT assessment, relating to the period 2008-08, in the part not granted in the administrative reclamation.
It is thus verified that the initiative for revision of the tax act was invoked by the petitioner, and, as such, could only be presented within the period of the administrative reclamation, which did not occur, in that the assessment in question was notified, on 2010.12.15.
Still, revision could be effected, at the initiative of the TA, within the period of four years after its notification, on the ground of error attributable to the services.
This is also the case law understanding that has been followed in this matter, as is the case, for example, of the Judgment no. 0532/07, of 2007.11.28, of the STA, when it decided that, in case of verification of the legally required conditions, it is unequivocal that alongside the so-called revision of the tax act at the initiative of the taxpayer, revision be made, following its petition, at the initiative of the TA.
In fact, in observance of the principles of legality, justice, equality and impartiality, to which the TA is subject in its relation with the administrated, the STA has decided that revision of tax acts should be effected in the same manner in which it is admitted to the TA, being thus accepted within the temporal limit of four years, provided that it meets the required conditions.
Accordingly, so that revision be susceptible to acceptance, it is important to assess whether there exists error attributable to the services, in that in its verification the petitioner is vested with the right to ex officio revision.
In accordance with the provision in paragraph a) of no. 1 of article 14 of CIVA, exempt from tax are supplies of goods dispatched or transported outside the community, by the seller or by a third party on its account.
This legal provision stems, as is known, from the Community rule provided in paragraph a) of no. 1 of article 146 of Directive 2006/112/CE, of the Council of 28 November 2006, relating to the common VAT system, in force in the EU, to whose compliance the Member States are subject.
Article 131 of that Directive further provides that that exemption is applied "...under the conditions fixed by the Member States in order to ensure the correct and simple application of the said exemptions and to prevent any possible fraud, evasion or abuse..."
Accordingly, the national legislator determined in no. 8 of article 29 of CIVA, that the proof of the right to the exemption provided in paragraph a) of no. 1 of article 14 of the same Code, should be made through the appropriate customs documents, whenever there is a legal obligation for intervention of the customs services.
It is, thus, required of the transferor of goods, as beneficiary of the exemption, that it be in possession of the appropriate customs documents, that is, the single administrative document (DAU) in its name, or in the name of a third party on its account.
Note that this condition, contrary to what was alleged, does not constitute a mere formality, but rather a substantive requirement, whose non-observance imposes the taxability of the tax pursuant to no. 9 of article 29 of CIVA.
Equally in Circular no. 90/2007, of 16/11, of the General Directorate of Customs and Special Consumption Taxes, which defines the regulatory norms of the process of certification of the departure of merchandise from the Community Customs Territory, it is expressed that the proof for purposes of the exemption on export, constitutes copy 3 of the electronic customs declaration, with the field "C. DEPARTURE" of the "D - CONTROL BY THE DEPARTURE CUSTOMS OFFICE" house completed with the respective date.
In the same sense, it has been understood by national jurisprudence, as, for example, in the case of the Judgment, of 2008.11.19, of the STA, Proc. no. 0305/08, when it decided that export operations should be documented through customs documents, and that their absence determined the obligation to assess the tax.
Also, on this matter it was decided by the Deputy Director-General, in the capacity of legal substitute of the Director-General, pursuant to order that fell upon Information no. …, of 2012.07.19, of this Services Directorate, that: "Existing customs documentation and intervention of the customs services, the presentation of alternative forms of proof of export -documents supporting imports in destination countries - has no legal coverage".
Now, given that the additional VAT assessment in question was issued because the petitioner did not have in its possession the documents required by no. 8 of article 29 of CIVA, for purposes of proving the exemption of VAT on the exports declared in the said tax period, it is our conviction that there exists no error attributable to the services, especially because the TA had no other alternative than to proceed with the VAT assessment, imposed by no. 9 of the same provision.
In truth, the allegation of error attributable to the services is not comprehensible, since it is not believed that conduct translated in non-compliance with legal norms can, in effect, constitute error attributable to the services.
Thus, we are of the opinion that, due to the non-existence of error attributable to the services, the conditions required in no. 1 of article 78 of the LGT are not met, for purposes of admissibility of the petition for ex officio revision.
Any other interpretation would, in our view, conflict with what is provided in the above-cited legal norm (no. 8 of article 29 of CIVA), and as well with the principles of neutrality, legality, justice and tax equality, which promote equal procedure for identical economic-tax realities.
Furthermore, given that the petitioner delivered this petition for revision, on 2013.02.04, that is, when less than two years had not yet elapsed from the assessment and decision of the administrative reclamation, presented by it with identical object and grounds, also, pursuant to the said no. 2 of article 56 of the LGT, the duty to decide is not recognized as existing.

VI CONCLUSION

In light of the preceding considerations, it follows that:

a. The petition for revision of tax act does not meet the legally required prerequisites in no. 1 of article 78 of the LGT, for its admissibility, whether at the initiative of the petitioner, for untimeliness in its filing, or at the initiative of the TA, for the non-existence of error attributable to the services;

b. Equally, the duty to decide is not recognized as existing, in virtue of the TA having pronounced itself less than two years ago on the petition for administrative reclamation, presented by the petitioner with identical object and grounds.

Thus, we are of the opinion that this petition for revision of tax act should be denied, thus showing the VAT assessment no. …, relating to the period 2008-08, in the amount €172.040,89, not granted in the administrative reclamation, as well as the associated compensatory interest, in the amount of €612,43, assessment no. …M. issued, on 2011.01.14, to be legitimate.

(...)

In this decision on the petition for revision of the tax act there is also a clear pronouncement on the legality of the act carried out, stating: "given that the additional VAT assessment in question was issued because the petitioner did not have in its possession the documents required by no. 8 of article 29 of CIVA, for purposes of proving the exemption of VAT on the exports declared in the said tax period, it is our conviction that there exists no error attributable to the services, especially because the TA had no other alternative than to proceed with the VAT assessment, imposed by no. 9 of the same provision".

For this reason, we are faced with an act that allows for the assessment of the legality of the assessment act and affirms its conformity with the law.

3.3. Additional Assessment no. … – September 2008 – Ex Officio Revision no. …/13

In the grounds of the decision denying the petition for ex officio revision, contained in document no. 19 attached with the petition for arbitral ruling, whose tenor is considered as reproduced, the following is stated, among others:

It is unquestionable that, regarding the corrections stemming from non-compliance with the norms provided in no. 8 of article 29 and no. 5 of article 78 of CIVA, the petition for revision of tax act presented, at the initiative of the petitioner, does not meet the requirements demanded in no. 1 of article 78 of the LGT, whether at the initiative of the petitioner, for untimeliness in its filing, or at the initiative of the TA, for the non-existence of error attributable to the services.
However, the correction stemming from the issuance of Credit Notes for the reduction of prices of goods previously invoiced, in the amount of €7.500,00, meets the requirements demanded in the final part of the wording of no. 1 of article 78 of the LGT, i.e., timeliness and the ground of error attributable to the services, wherefore, in observance of the principles imposing the correction of errors included in assessments resulting in tax less than or greater than the legally due, namely those of legality and justice, to whose fulfillment the TA is subject, it is understood that this petition should be accepted in the same manner in which it is admitted to the TA, given that it meets the required conditions.
Thus, we are of the opinion that, regarding that correction, there should be proceeded with the ex officio revision of the tax act of the additional VAT assessment in question, annulling the same, for the existence of error attributable to the services, in the partial amount of €7.500,00, maintaining,

• consequently, in the legal order for the amount of €117.083,02, as provided in the table below, with the necessary reflection at the level of compensatory interest:

In Euros:

(...)

Given that its revision, in the partial amount of €7.500,00, is effected under the conditions provided in the final part of no. 1 of article 78 of the LGT, that is, at the initiative of the TA, it is proposed, in accordance with what is provided in paragraph c) of no. 3 of article 43 of the LGT, that compensatory interest be not paid, especially because, pursuant to no. 2 of article 56 of the cited LGT, this petition for revision was not even susceptible to the duty to decide.

It is manifest that in this ex officio revision the legality of the referred assessment act was assessed, which was annulled in part.

3.4. Additional Assessment no. … – December 2008 – Ex Officio Revision no. …/13

In the grounds of the decision denying the petition for ex officio revision stated, that is contained in document no. 20 attached with the petition for arbitral ruling, whose tenor is considered as reproduced, the following is stated, among others:

(...)

Even if this were not so, also the documents delivered by the petitioner showed themselves manifestly insufficient to legitimize the exemption applied in the export invoices, in light of what is provided in no. 8 of article 28 of CIVA.

(...)

VIII CONCLUSION

It is unquestionable that, regarding the situation stemming from non-compliance with the norm provided in no. 8 of article 29 of CIVA, the petition for revision of tax act does not meet the requirements demanded in no. 1 of article 78 of the LGT, whether at the initiative of the petitioner, for untimeliness in its filing, or at the initiative of the TA, for the non-existence of error attributable to the services.
However, regarding the correction stemming from the issuance of Credit Notes for the reduction of prices of goods previously invoiced, in the amount of €67.555,37, it meets the requirements demanded in the final part of the wording of no. 1 of article 78 of the LGT, i.e., timeliness and the ground of error attributable to the services, wherefore, in observance of the principles imposing the correction of errors included in assessments resulting in tax less than or greater than the legally due, namely those of legality and justice, to whose fulfillment the TA is subject, it is understood that the petition for revision presented, at the initiative of the taxpayer, should be accepted in the same manner in which it is admitted to the TA, given that it meets the required conditions.
Thus, we are of the opinion that, regarding that correction, there should be proceeded with the ex officio revision of the tax act of the additional VAT assessment in question, annulling the same, in the amount of €67.555,37, maintaining, consequently, in the legal order for the remaining amount of €50.934,05, as is provided below:

(...)

Similarly to the previous ex officio revision decision, it is manifest that in this ex officio revision the legality of the referred assessment act was assessed, which was annulled in part.

3.5. Additional Assessment no. … – September 2009 – Ex Officio Revision no. …/13

In the grounds of the decision denying the petition for ex officio revision, contained in document no. 21 attached with the petition for arbitral ruling, whose tenor is considered as reproduced, the following is stated, among others:

V INFORMATION FROM THE FINANCE DIRECTORATE OF LISBON

In order to inform this petition for revision, information was prepared, on 20013.04.15, by the Finance Directorate of Lisbon, which received the agreeing order of the Deputy Director of Finance, on 2013.04.30, where it was concluded as to the legitimacy of the additional VAT assessment in question, sustained on the following grounds:

a) The revision of tax act, at the initiative of the petitioner, provided in the first part of no. 1 of article 78 of the LGT, showed itself to be untimely, in that the period provided therein for its presentation was exceeded;

b) Equally it did not meet the requirements demanded for revision of tax act within the four year period, at the initiative of the services, given the non-existence of error attributable to the services, since the TA, in the absence of documents proving the exemption of VAT on the exports declared, merely effected full compliance with the law;

c) On the same facts, the TA had already pronounced itself less than two years ago, pursuant to order of partial grant issued in administrative reclamation no. …2010…, on 2011.12.21, thus there exists no duty to decide, pursuant to no. 2 of article 56 of the LGT.

VI VERIFICATION OF THE ADMISSIBILITY REQUIREMENTS OF THE PETITION FOR REVISION

In accordance with no. 1 of article 98 of CIVA, whenever for reasons attributable to the services, tax is assessed in excess or below the amount due, ex officio revision shall be proceeded with pursuant to article 78 of the LGT.
That legal provision determines, in its no. 1, that revision of tax acts by the entity that carried them out may be effected at the initiative of the taxable person, within the period of the administrative reclamation and on the ground of any illegality, or at the initiative of the TA, within the period of four years, on the ground of error attributable to the services.
Which is equivalent to saying that, in the case the conditions and temporal limits provided in the cited legal provisions are verified, the taxable person, faced with an assessment act that conduces or has conducted to the collection of amounts not due in the face of the law, is vested with the right to its ex officio revision.
For its part, article 56, no. 1, of the LGT, determines that the TA is obliged to pronounce itself on all matters of its competence presented to it by means of reclamations, appeals, representations, complaints or any other means provided for by law by the taxable persons or whoever has legitimate interest. Its no. 2 establishes that there is no duty to decide when the TA has pronounced itself less than two years ago on petition from the same author with identical object and grounds.
In the same sense, it further provides no. 2 of article 9 of the Code of Administrative Procedure.
Reporting to the case in question, it is verified that the petitioner presented, on 2013.03.01, a petition for revision of tax act, under no. 1 of article 78 of the LGT, requesting that the TA proceed with ex officio revision of the additional VAT assessment, relating to the period 2009-09, in the part not granted in the administrative reclamation.
It is thus verified that the initiative for revision of the tax act was invoked by the petitioner, and, as such, could only be presented within the period of the administrative reclamation, which did not occur, in that the assessment in question was notified, on 2010.05.11.
Still, revision could be effected, at the initiative of the TA, within the period of four years after its notification, on the ground of error attributable to the services.
This is also the case law understanding that has been followed in this matter, as is the case, for example, of the Judgment no. 0532/07, of 2007.11.28, of the STA, when it decided that in case of verification of the legally required conditions, it is unequivocal that alongside the so-called revision of the tax act at the initiative of the taxpayer, revision be made in the following of its petition at the initiative of the TA.
In fact, in observance of the principles of legality, justice, equality and impartiality, to which the TA is subject in its relation with the tax obligors, the STA has decided that revision of tax acts should be effected in the same manner in which it is admitted to the TA, being thus accepted within the temporal limit of four years, provided that it meets the required conditions.
Accordingly, and so that revision be susceptible to acceptance, it is important to assess whether there exists error attributable to the services, in that in its verification the petitioner is vested with the right to ex officio revision of the assessment in question.
In accordance with the provision in paragraph a) of no. 1 of article 14 of CIVA, exempt from tax are supplies of goods dispatched or transported outside the community, by the seller or by a third party on its account.
This legal provision stems, as is known, from the Community rule provided in paragraph a) of no. 1 of article 146 of Directive 2006/112/CE, of the Council of 28 November 2006, relating to the common VAT system, in force in the EU, to whose compliance the Member States are subject.
Article 131 of that Directive further provides that that exemption is applied "...under the conditions fixed by the Member States in order to ensure the correct and simple application of the said exemptions and to prevent any possible fraud, evasion or abuse.º"
Accordingly, the national legislator warned in no. 8 of article 29 of CIVA, that the proof of the right to the exemption provided in paragraph a) of no. 1 of article 14 of the same Code, should be made through the appropriate customs documents, whenever there is a legal obligation for intervention of the customs services.
It is, thus, required of the transferor of goods, as beneficiary of the exemption, that it be in possession of the appropriate customs documents, that is, the single administrative document (DAU) in its name, or in the name of a third party on its account.
Note that that condition, contrary to what was alleged, does not constitute a mere formality, but rather a substantive requirement, whose non-observance imposes the taxability of the tax (no. 9 of article 29 of CIVA).
Equally in Circular no. 9072007, of 16/11, of the General Directorate of Customs and Special Consumption Taxes, which defines the regulatory norms of the process of certification of the departure of merchandise from the Community Customs Territory, it is expressed that the proof for purposes of the exemption on export, consists in copy 3 of the electronic customs declaration, with the field "C.DEPARTURE" of the "D - CONTROL BY THE DEPARTURE CUSTOMS OFFICE" house completed with the respective date.
In the same sense, it has been understood by national jurisprudence, as, for example, in the case of the Judgment of 2008.11.19 of the STA, Proc. no. 0305/08, when it decided that export operations should be documented through customs documents, and that their absence determined the obligation to assess the tax.
Also, on this matter it was decided by the Deputy Director-General, in the capacity of legal substitute of the Director-General, pursuant to order that fell upon Information no. …. of 2012.07.19, of this Services Directorate, that: "Existing customs documentation and intervention of the customs services, the presentation of alternative forms of proof of export - documents supporting imports in destination countries - has no legal coverage".
Now, given that the additional VAT assessment in question was issued because the petitioner did not have in its possession the duly issued customs documents, to which it was obliged by virtue of the provision in no. 8 of article 29 of CIVA, for the proof of the exports declared in the period 2009-09, it is our conviction that there exists no error attributable to the services, especially because the TA had no other alternative than to proceed with the VAT assessment, imposed by no. 9 of the same provision.
In truth, the petitioner's assertion of the existence of error attributable to the services is not comprehensible, since it is not believed that conduct translated in non-compliance with legal norms can, in effect, constitute error attributable to the services.
Thus, in our opinion, the conditions required in no. 1 of article 78 of the LGT are not found to be met, for purposes of admissibility of the petition for ex officio revision.
Any other interpretation would, in our view, conflict with what is provided in the above-cited legal norm (no. 8 of article 29 of CIVA), and as well with the principles of neutrality, legality, justice and tax equality, which promote equal procedure for identical economic-tax realities.
Furthermore, given that the petitioner effected its filing, on 2013.03.01, that is, when less than two years had not yet elapsed from the assessment and decision of the administrative reclamation, presented by it with identical object and grounds, also, pursuant to the said no. 2 of article 56 of the LGT, the duty to decide is not recognized as existing.

VII CONCLUSION

In light of the preceding considerations, it follows that:

Thus, under the circumstances of the case in question, we are of the opinion that this petition for revision of tax act should be denied, thus showing the payment of the additional VAT assessment no. …, relating to the period 2009-09, in the amount of €321.706,10, not granted in the administrative reclamation, to be legitimate.
Within the scope of the participatory principle provided in article 60 of the LGT, it is proposed that, pursuant to no. 3 of the instructions on the right to prior hearing, conveyed in Circular no. 13, of 1999.08.07, of the Services Directorate of Tax Justice, the petitioner be dispensed with prior hearing, since the TA merely limited itself to the interpretation of the legal norms applicable to the case.

In this decision of this ex officio revision it is stated, among others: "now, given that the additional VAT assessment in question was issued because the petitioner did not have in its possession the duly issued customs documents, to which it was obliged by virtue of the provision in no. 8 of article 29 of CIVA, for the proof of the exports declared in the period 2009-09, it is our conviction that there exists no error attributable to the services, especially because the TA had no other alternative than to proceed with the VAT assessment, imposed by no. 9 of the same provision".

There is here a clear affirmation of the legality of the assessment, which is considered imposed by law.

3.6. Additional Assessment no. … – October 2009 – Ex Officio Revision no. …/13

The assessment referred to results from the corrections achieved in the context of an inspection procedure, in which the Tax and Customs Authority verified a set of exports which it understood were not documented by the appropriate customs documents.

In the grounds of the decision denying the petition for ex officio revision, contained in document no. 22 attached with the petition for arbitral ruling, whose tenor is considered as reproduced, the following is stated, among others:

VI VERIFICATION OF THE ADMISSIBILITY REQUIREMENTS OF THE PETITION FOR REVISION

In accordance with no. 1 of article 98 of CIVA, whenever for reasons attributable to the services, tax is assessed in excess or below the amount due, ex officio revision shall be proceeded with pursuant to article 78 of the LGT.
That legal provision determines, in its no. 1, that revision of tax acts by the entity that carried them out may be effected at the initiative of the taxable person, within the period of the administrative reclamation and on the ground of any illegality, or at the initiative of the TA, within the period of four years, on the ground of error attributable to the services.
Which is equivalent to saying that, in the case the conditions and temporal limits provided in the cited legal provisions are verified, the taxable person, faced with an assessment act that conduces or has conducted to the collection of amounts not due in the face of the law, is vested with the right to its ex officio revision.
For its part, article 56, no. 1, of the LGT, determines that the TA is obliged to pronounce itself on all matters of its competence presented to it by means of reclamations, appeals, representations, complaints or any other means provided for by law by the taxable persons or whoever has legitimate interest and additional VAT assessment, relating to the period 2009-10, in the part not granted in the administrative reclamation.
Reporting to the case in question, it is verified that the petitioner presented, on 2013.03.01, a petition for revision of tax act, under no. 1 of article 78 of the LGT, requesting that the TA proceed with ex officio revision of the additional VAT assessment, relating to the period 2009-10, in the part not granted in the administrative reclamation.
It is thus verified that the initiative for revision of the tax act was invoked by the petitioner, and, as such, could only be presented within the period of the administrative reclamation, which did not occur.
Still, revision could be effected, at the initiative of the TA, within the period of four years after its notification, on the ground of error attributable to the services.
This is also the case law understanding that has been followed in this matter, as is the case, for example, of the Judgment no. 0532/07, of 2007.11.28, of the STA, when it decided that in case of verification of the legally required conditions, it is unequivocal that alongside the so-called revision of the tax act at the initiative of the taxpayer, revision be made in the following of its petition at the initiative of the TA.

[The document continues with similar sections for subsequent periods, following the same pattern and structure]

Frequently Asked Questions

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Can a tax arbitral tribunal rule on requests for official review (revisão oficiosa) of VAT assessments in Portugal?

Yes, Portuguese tax arbitral tribunals (CAAD) have jurisdiction to rule on requests challenging denials of official review (revisão oficiosa) petitions, provided the underlying matter falls within their material competence under the RJAT (Decree-Law 10/2011). However, the Tax Authority may challenge this jurisdiction, arguing that certain review decisions constitute res judicata or fall outside arbitral competence. The tribunal must analyze whether it has material jurisdiction over the substantive tax matter and whether procedural requirements are met.

What are the conditions for full VAT exemption on export operations under Portuguese tax law?

Full VAT exemption on export operations under Portuguese VAT law (Article 14 of the VAT Code) requires: (1) physical dispatch or transport of goods outside the EU; (2) the goods must actually leave Portuguese/EU territory; and (3) the taxable person must possess documentary evidence proving the export occurred, including customs declarations, transport documents, and other supporting documentation demonstrating the goods reached their destination outside the EU. The burden of proof rests on the exporter to demonstrate these conditions are met.

How can a non-resident taxable person without a permanent establishment in Portugal challenge VAT assessments?

A non-resident taxable person without a permanent establishment in Portugal can challenge VAT assessments by: (1) filing an administrative complaint (reclamação graciosa) with the Tax Authority within the statutory deadline; (2) if denied or not decided within the legal timeframe, filing a petition for tax arbitration with CAAD under Decree-Law 10/2011; or (3) alternatively, appealing to administrative and tax courts. The non-resident must be properly represented in Portugal for tax purposes and meet all procedural requirements for standing and legal representation.

What is the procedure for requesting annulment of VAT liquidations through CAAD tax arbitration?

To request annulment of VAT assessments through CAAD arbitration: (1) ensure the matter falls within CAAD's jurisdiction (VAT disputes up to certain thresholds); (2) exhaust or await the outcome of mandatory prior administrative review procedures; (3) file a petition for constitution of an arbitral tribunal within the legal deadline (currently within 90 days after notification of the Tax Authority's decision or administrative silence); (4) pay the required arbitration fee; (5) comply with representation requirements; and (6) properly articulate the legal and factual grounds for annulment, including specification of illegality claims and supporting documentation.

Are compensatory interest (juros indemnizatórios) available when VAT assessments are annulled by the arbitral tribunal?

Yes, compensatory interest (juros indemnizatórios) under Article 43 of the General Tax Law (LGT) are available when VAT assessments are annulled by the arbitral tribunal, provided the taxpayer paid the tax and the annulment is not due to the taxpayer's fault. These interest payments compensate for the State's unlawful retention of amounts paid by the taxpayer. The interest accrues from the date of payment until the date of refund, calculated at the legal rate. The taxpayer must specifically request compensatory interest in the arbitration petition.

CAAD 742/2014-T: VAT Exemption on Export Operations and Arbitral Tribunal Competence in Tax Review

Table of Contents

Summary

Full Decision

Arbitral Decision

1. Report

2. Factual Basis

2.1. Facts Considered Proven

2.2. Facts Considered Not Proven

2.3. Justification of Proven Factual Matters

3. Issue of Incompetence of the Arbitral Tribunal

3.1. Additional Assessment no. … – July 2008 – Ex Officio Revision no. …/13

3.2. Additional Assessment no. … – August 2008 – Ex Officio Revision no. …/13

3.3. Additional Assessment no. … – September 2008 – Ex Officio Revision no. …/13

3.4. Additional Assessment no. … – December 2008 – Ex Officio Revision no. …/13

3.5. Additional Assessment no. … – September 2009 – Ex Officio Revision no. …/13

3.6. Additional Assessment no. … – October 2009 – Ex Officio Revision no. …/13

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Table of Contents

CAAD 742/2014-T: VAT Exemption on Export Operations and Arbitral Tribunal Competence in Tax Review

Table of Contents

Summary

Full Decision

Arbitral Decision

1. Report

2. Factual Basis

2.1. Facts Considered Proven

2.2. Facts Considered Not Proven

2.3. Justification of Proven Factual Matters

3. Issue of Incompetence of the Arbitral Tribunal

3.1. Additional Assessment no. … – July 2008 – Ex Officio Revision no. …/13

3.2. Additional Assessment no. … – August 2008 – Ex Officio Revision no. …/13

3.3. Additional Assessment no. … – September 2008 – Ex Officio Revision no. …/13

3.4. Additional Assessment no. … – December 2008 – Ex Officio Revision no. …/13

3.5. Additional Assessment no. … – September 2009 – Ex Officio Revision no. …/13

3.6. Additional Assessment no. … – October 2009 – Ex Officio Revision no. …/13

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FRESH Legal Group

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