On September 15, 2016 the Court of Justice of the European Union (CJEU) judged in Case C-516/14 Barlis 06 — Investimentos Imobiliários e Turísticos SA versus Autoridade Tributária e Aduaneira (ECLI:EU:C:2016:690).

This request for a preliminary ruling concerns the interpretation of Article 178(a) and Article 226(6) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1).

The request has been made in proceedings between Barlis 06 — Investimentos Imobiliários e Turísticos SA (‘Barlis’) and the Autoridade Tributária e Aduaneira (Tax and Customs Authority, Portugal) concerning the authority’s refusal to allow the deduction of input value added tax (VAT) paid by Barlis as the recipient of legal services rendered by a firm of lawyers, on the ground that the invoices issued by them did not satisfy the formal requirements laid down by national legislation.

The dispute in the main proceedings and the question referred for a preliminary rulingIn the main proceedings

·   Barlis, which is established in Lisbon (Portugal), operates hotels with restaurants.

·   From 2008 to 2010 Barlis made use of the legal services of a firm of lawyers (‘the legal services in question’), which were the subject of four invoices (‘the invoices at issue’) containing the following descriptions:

–   invoice No 02170/2008 of 26 August 2008: ‘Legal services rendered from 1 December 2007 until the present date’;

–   invoice No 32100478 of 17 December 2008: ‘Fees for legal services rendered from June until the present date’;

–   invoice No 32101181 of 29 April 2009: ‘Fees for legal services rendered until the present date’;

–   invoice No 32104126 of 2 June 2010: ‘Fees for legal services rendered from 1 November 2009 until the present date’.

·   Barlis exercised its right to deduct the VAT shown in those invoices.

·   Following a request by Barlis for reimbursement of VAT, the competent authorities opened review procedures for the years 2008 to 2011. After those checks, the authorities took the view that Barlis was not entitled to deduct the VAT relating to the legal services in question, on the ground that the descriptions in the invoices at issue, issued by Barlis’s lawyers, were insufficient. The authorities therefore proposed VAT corrections in the amount of EUR 8,689.49, representing the sums of VAT deducted in respect of those legal services.

·   Barlis was notified that it could exercise its right to a preliminary hearing, and submitted annexes giving a more detailed description of the legal services in question.

·   However, the competent authorities maintained the proposed corrections, because of the incompleteness of the invoices at issue. In their view, that lack of legal form could not be remedied by adding annexes confirming the missing information, as the annexes were not documents ‘equivalent’ to invoices. Such ‘equivalent documents’ had to satisfy, in themselves, all the requirements of Article 36(5) of the VAT Code, which was not the case with a mere annex.

·   On 31 May 2013 Barlis brought an administrative appeal against that decision, which was dismissed by decision of 25 September 2013 on the ground that the reference to ‘legal services’ in the invoices at issue did not satisfy the requirements of Article 226(6) of Directive 2006/112 or those of the national provisions implementing that directive, in that the reference gave no details of the services that had been supplied or of their individual or total quantities.

·   Following the dismissal of its administrative appeal, Barlis requested on 30 December 2013 the constitution of a single-member arbitration tribunal.

·   The referring tribunal before which the case was brought in those circumstances, the Tribunal Arbitral Tributário (Centro de Arbitragem Administrativa — CAAD) (Tax Arbitration Tribunal (Centre for Administrative Arbitration), Portugal), observes that it has to determine whether the details given in the invoices at issue satisfy the conditions of Article 36(5)(b) of the VAT Code, under which invoices must contain ‘the common name of the goods or services supplied, together with specification of the information necessary to determine the applicable tax rate’.

·   That tribunal notes, however, that the national legislation must be interpreted in conformity with Article 226 of Directive 2006/112, which lists exhaustively the details which must appear in invoices issued for VAT purposes, including, in point 6 of that provision, the ‘quantity and nature of the goods supplied or the extent and nature of the services rendered’.

·   In those circumstances, the Tribunal Arbitral Tributário (Centro de Arbitragem Administrativa — CAAD) (Tax Arbitration Tribunal (Centre for Administrative Arbitration)) decided to stay the proceedings and to refer the following question to the Court for a preliminary ruling:

‘Must Article 226(6) of [Directive 2006/112] be interpreted as permitting the Tax and Customs Authority to regard as insufficient a description on an invoice which states “legal services rendered from such a date until the present date” or merely “legal services rendered until the present date”, where that body may, in accordance with the principle of collaboration, obtain the additional information which it deems necessary to confirm the existence and detailed characteristics of the relevant transactions?’

The CJEU judged as follows:

Article 226 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that invoices mentioning only ‘legal services rendered from [a date] until the present date’, such as those at issue in the main proceedings, do not a priori comply with the requirements of point 6 of that article and that invoices mentioning only ‘legal services rendered until the present date’ do not a priori comply either with the requirements of point 6 or with those of point 7 of that article, which is, however, for the referring tribunal to ascertain.

Article 178(a) of Directive 2006/112 must be interpreted as precluding the national tax authorities from refusing the right to deduct value added tax solely because the taxable person holds an invoice which does not satisfy the conditions required by Article 226(6) and (7) of that directive, even though those authorities have available all the necessary information for ascertaining whether the substantive conditions for the exercise of that right are satisfied.

For further information click here to be forwarded to the text of the judgment as published on the website of the CJEU, which will open in a new window.

Did you know that in our section CJEU Rulings we have made a selection of rulings of the CJEU? We have organized these rulings based on the subject they relate to (e.g. Freedom of establishment, Free movement of capital, Indirect taxes on the raising of capital, etc).

Copyright – internationaltaxplaza.info

Are you looking for a highly motivated new member for your tax team? Then place your Job Ad on International Tax Plaza!

and

Stay informed: Subscribe to International Tax Plaza’s Newsletter! It’s completely FREE OF CHARGE!