Order;Information — ECLI:EU:C:2020:311
Date: 2020-04-29
Language of the case: Portuguese
Court formation: Seventh Chamber
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: Portugal

Summary C-756/19 — 1 
Case C-756/19 
Summary of the request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice 
Date lodged:  
15 October 2019 
Referring court:  
Tribunal Arbitral Tributário (Centro de Arbitragem 
Administrativa — CAAD) (Portugal) 
Date of the decision to refer:  
8 October 2019 
Applicant: 
Ramada Storax S.A. 
Defendant: 
Autoridade Tributária e Aduaneira 
  
Subject matter of the main proceedings 
This request for a preliminary ruling concerns proceedings between the company 
RAMADA STORAX, S.A. (‘Ramada’) and the Autoridade Tributária e Aduaneira 
(Tax and Customs Authority; ‘the Tax Authority’), in which the former is seeking 
to have a VAT assessment which produced a smaller refund than it had requested 
declared unlawful. The difference arises over VAT in respect of debts that could 
not be recovered from an insolvent Spanish company (LOGISMA, S.A.; 
‘Logisma’). 
Subject matter and legal basis of the request 
In the present case it is necessary to determine whether, under the legislation 
governing VAT in the European Union, in particular Articles 90 and 273 of the 
VAT Consolidation Directive (Council Directive 2006/112/EC of 28 November 
2006; ‘the VAT Directive’), having regard to the principles of VAT neutrality and 
of proportionality and the way in which that legislation was transposed into the 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-756/19 
 
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Portuguese legal order, through Article 78 of the Código do Imposto sobre o Valor 
Acrescentado (Value Added Tax Code; ‘the VAT Code’), the taxable person 
(Ramada) can make an adjustment for debts deemed irrecoverable in insolvency 
proceedings conducted in Spain under national law, in which the Spanish court 
declared the company established in that Member State (Logisma) insolvent. 
Question referred for a preliminary ruling 
Can Articles 90 and 273 of Council Directive 2006/112/EC of 28 November 2006 
(the VAT Directive), the principles of VAT neutrality and of proportionality and 
the fundamental economic freedoms be interpreted as permitting the Portuguese 
legislature, pursuant to Article 78(7)(b) of the Código do Imposto sobre o Valor 
Acrescentado (Value Added Tax Code), approved by Decree-Law No 394-B of 
26 December 1984, to restrict adjustments of value added tax (VAT) for debts 
deemed irrecoverable in insolvency proceedings to the circumstances referred to 
in that article (that is, where the insolvency has been declared a simplified 
insolvency, once the ruling on the admission and ranking of claims referred to in 
the Código da Insolvência e da Recuperação de Empresas (Corporate Insolvency 
and Recovery Code), approved by Decree-Law No 53 of 18 March 2004, has 
become final, or following approval of the plan, where such plan exists, agreed 
under Article 156 of that code), with the result that rulings by courts of other 
Member States declaring debts claimed in insolvency proceedings irrecoverable 
are not recognised for that purpose? 
Provisions of European Union law relied on 
Council Directive 2006/112/EC of 28 November 2006 on the common system of 
value added tax: Articles 90 and 273. 
Provisions of national law relied on 
Decree-Law No 394-B of 26 December 1984 [approving the Value Added Tax 
(VAT) Code]: Article 78(7)(b) 
‘Article 78 
Adjustments 
[…] 
7 — Taxable persons may also deduct the tax in respect of debts deemed 
irrecoverable:  
[…] 
RAMADA STORAX 
 
3 
(b) In insolvency proceedings, where the insolvency has been declared a 
simplified insolvency, once the ruling on the admission and ranking of claims 
referred to in the Corporate Insolvency and Recovery Code has become final, or 
following approval of the plan, where such plan exists, agreed under Article 156 
of the Code […]’ 
Succinct presentation of the facts and procedure in the main proceedings 
1. In 1997 Ramada entered into a business relationship with Logisma, a company 
having its registered office in Zaragoza (Spain), which consisted of an exclusive 
distribution contract that expired in late 2009. 
2. Under the contract, Ramada supplied goods to Logisma on credit, usually in the 
form of intra-Community supplies of goods (which were ‘zero rated’ in Portugal), 
for which payment was to be made on the due date provided for in the 
representation agreement signed by the two companies, which was a payment 
period of 150 days as stated on the invoices, and Ramada gave Logisma a 
discount, as was customary in the distribution sector, which was negotiated on a 
case-by-case basis and depended on the sales volumes achieved. 
3. Over time, average payment times for the invoices came to exceed the agreed 
payment period, and the debt accumulated by the Spanish company reached 
almost EUR 10 000 000. 
4. In 2007, Ramada supplied Logisma with goods which were delivered in Portugal 
and which, because they were (internal) deliveries of goods, were therefore 
subject to Portuguese VAT at the statutory rate applicable on the date of the 
transactions; this gave rise to receivables that were invoiced (including VAT) and 
fell due that year. These were not paid by Logisma, in spite of action taken by 
Ramada to collect the amounts owed. 
5. Although Ramada had not received the VAT in question, it paid the relevant sums 
to the State with its periodic returns for the relevant tax periods which were 
determined on the basis of the tax becoming chargeable, based on the issue date of 
the invoices for the goods supplied. 
6. In July 2007, Logisma became the subject of voluntary insolvency proceedings 
before a Spanish court (the Tribunal Mercantil de Zaragoza (Commercial Court, 
Zaragoza)) under Spanish law (commencement of insolvency proceedings), which 
is different from the legal regime established in Portugal by the Código da 
Insolvência e da Recuperação de Empresas (Corporate Insolvency and Recovery 
Code; ‘CIRE’).  
7. In 2008, Logisma issued a ‘pagaré’ (a promissory note that has no exact 
counterpart in Portuguese law and which, like the Portuguese ‘livrança’, includes 
a promise to pay) for the sum of EUR 2 726 133.76; this was intended as part 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-756/19 
 
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payment of its debts to Ramada, which had reached a total far in excess of 
EUR 9 000 000.  
8. The promissory note referred only to invoices issued by Ramada between 19 April 
and 27 June 2007, which had not been paid by the due date of 31 December 2008. 
9. In 2010, Ramada submitted a claim in the above insolvency proceedings for the 
amounts it was owed. At all times it employed Spanish lawyers, who not only 
advised it to take this course of action but who also advised it on its claims and on 
the proceedings in Spain. 
10. After the action taken by Ramada, in 2015 the insolvency administrators declared 
that there were insufficient assets to meet all the claims made by creditors, and in 
particular by Ramada. This was confirmed by the Spanish court in 2016. 
11. However, after issuing the promissory note, Logisma made some individual 
payments totalling EUR 1 191 485.93 in respect of the invoices issued by Ramada 
from 18 July 2007 onwards. Ramada allocated these payments to amounts falling 
due after the debts at issue, because the debts in respect of the invoices in question 
were covered by the promissory note. 
12. In 2017, in its periodic return for the November 2017 tax period, Ramada applied 
to the Tax Authority under Article 22(8) of the VAT Code for a VAT refund of 
EUR 424 137.97 in respect of the amounts owed by Logisma for various supplies. 
13. In order to check that the application for a VAT refund was lawful, after 
conducting an internal examination that proved inconclusive, on 29 November 
2018 the Tax Authority began an external tax inspection, which was justified on 
the ground of irregularities in the completion of the periodic return for November 
2017. 
14. On 20 April 2018, the Tax Authority notified the outcome of the inspection, 
informing Ramada of its decision to approve the application for a VAT refund in 
part. It agreed to refund the sum of EUR 237 339.92, but refused the refund of 
EUR 186 804.03 in respect of the debts deemed irrecoverable by Ramada, which 
is the subject matter of the present request for a preliminary ruling. 
15. Logisma never paid Ramada these debts, and many other debts also remained 
unpaid. 
16. Ramada included that VAT adjustment of EUR 186 804.03 in its favour in box 40 
of the periodic return for the tax period at issue. However, it put the adjustment in 
box 3 of the annex to the periodic return, which is intended for ‘other adjustments 
not provided for in Article 78 or in the regime laid down in Articles 78-A to 78-D 
of the VAT Code’, instead of including it in the box and line relating to the 
provisions in Article 78(7)(b) of the VAT Code, which establishes that taxable 
persons may deduct the tax in respect of debts deemed irrecoverable in insolvency 
proceedings where the insolvency has been declared a simplified insolvency, once 
RAMADA STORAX 
 
5 
the ruling on the admission and ranking of claims referred to in the CIRE has 
become final, or following approval of the plan, where such plan exists, agreed 
under Article 156 of that code. 
17. Nevertheless, Ramada filed its application for a VAT refund and attached all the 
documentation required under Article 78(9) of the VAT Code, including an 
auditor’s certificate declaring that the legal requirements for deducting the tax in 
respect of the debts deemed irrecoverable under Article 78(7) of the VAT Code 
had been verified. 
18. As a non-resident company, Logisma applied, pursuant to Decree-Law No 408 of 
31 December 1987, for a refund of the input VAT in the six invoices issued by 
Ramada. 
19. The Portuguese Tax Authority initially refused the application in a decision dated 
17 October 2008 but subsequently, in the light of the evidence submitted (the 
original invoices) and on reconsidering the application, by decision of 11 January 
2010 it approved a refund to Logisma of the input VAT in the invoices issued by 
Ramada. 
20. As it had not obtained payment of the invoices, which totalled EUR 1 076 397.01, 
on 7 October 2010, through its Spanish lawyers, Ramada submitted a claim in the 
insolvency proceedings for the amounts it was owed, as ordinary claims in respect 
of the supply of goods to Logisma from 2007 to 2009. 
21. The amount of the ordinary claims includes the amount of the promissory note 
(EUR 2 726 133.76) issued by Logisma in payment of the invoices that were not 
paid when they fell due. 
22. On 27 June 2011, following the approval of the winding-up plan for Logisma by 
the Spanish courts, the winding-up process began, opening up the possibility that 
the company might obtain payments or contributions from third parties which 
would add to the insolvent company’s assets, thus enabling it to pay certain debts, 
as happened in September 2014. 
23. On 4 September 2015, on an application from Ramada, the Commercial Court, 
Zaragoza issued an order confirming that the company would not receive any 
payment from the winding-up of Logisma. 
24. On 4 November 2016, in a decision against which there was no right of appeal, 
the Juzgado de lo Mercantil No 2 de Zaragoza (Commercial Court No 2, 
Zaragoza) ruled that there were no assets with which to pay creditors, and in 2017 
it ordered the conclusion of the insolvency proceedings.  
25. In late 2017 and early 2018 Ramada proceeded to send correspondence in 
accordance with the terms and for the purposes of Article 78(11) of the VAT 
Code. That correspondence was returned because it could not be delivered to the 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-756/19 
 
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addressee, since Logisma no longer had its office at the premises to which the 
correspondence was to be delivered. 
26. Although 2015 is considered to be the reference year as regards an 
acknowledgement that the debts were irrecoverable on the ground that Logisma 
had neither income nor assets, Ramada made the tax adjustment in the periodic 
return for November 2017, that is, within the period of 4 years laid down in 
Article 98 of the VAT Code. 
27. At no point did the Portuguese Tax Authority contact the Spanish Tax Authority 
to trigger the arrangements for exchange of information or cooperation on tax 
collection. 
Essential arguments of the parties to the main proceedings 
– The Tax Authority excluded the sum of EUR 186 804.03 from the VAT refund 
of EUR 424 137.95 applied for by the taxable person Ramada in the November 
2017 tax period, on the ground that its application for that sum of 
EUR 186 804.03, which was the result of an adjustment made in accordance 
with Article 78(7)(b) of the VAT Code, was not permissible under the current 
law because, although the adjustment stemmed from irrecoverable debts, the 
insolvency proceedings concerning the debtor (Logisma) were not conducted in 
accordance with the CIRE. 
– Ramada disagrees with the position adopted by the Tax Authority, because the 
VAT was calculated in respect of commercial transactions consisting in the 
supply of goods by Ramada to Logisma, and the tax was paid to the State in 
accordance with the law. Therefore, in its opinion, there are no legally valid 
reasons for refusing its right to a refund. 
– Likewise, Ramada disputes the Tax Authority’s argument that the right of 
deduction was exercised more than 4 years after the right arose: in its opinion, 
the deduction could not be made once the winding-up of Logisma commenced 
in 2010. 
– Ramada also questions the Tax Authority’s argument that there is a 
contradiction between the application for the VAT refund and the way in which 
the forms needed to make the application were completed, and that the 
requirement to notify the purchaser that the VAT in question had been 
deducted in its favour was not carried out correctly. 
– Lastly, Ramada claims that it is entitled to the refund of the aforesaid total 
amount, because it was unable to collect the sums owed it by Logisma even 
though it took all the necessary steps to do so. 
– Ramada therefore maintains, contrary to the view of the Tax Authority, that it 
has incontrovertible evidence that it did file claims for the invoices 
RAMADA STORAX 
 
7 
underpinning its application for a VAT refund in the insolvency proceedings 
commenced against Logisma, and that these invoices were confirmed by the 
competent Spanish court. 
Succinct presentation of the reasoning in the request for a preliminary ruling 
This request for a preliminary ruling covers the following points: 
– Whether the VAT assessment of EUR 186 804.03 arising from the partial 
refusal of Ramada’s application in its periodic tax return for November 2017 
for a refund of EUR 424 137.95 is lawful. 
– What relevance should be ascribed to the fact that the debtor company is not 
resident in national territory, and whether that fact prevents the creditor 
company from making the adjustment in accordance with Article 78(7)(b) of 
the VAT Code in respect of the VAT calculated in the invoices for the goods 
supplied, which was paid by Ramada to the State. 
– Whether an entity which is owed sums that it cannot recover is prohibited from 
making an adjustment under Article 78 of the VAT Code for VAT not received 
in a situation where the debtor has been declared insolvent in insolvency 
proceedings before a foreign court; that is, whether the fact that Logisma is a 
Spanish company, and therefore non-resident, and that its insolvency 
proceedings were brought before the Zaragoza court, prevents Ramada, in its 
capacity as a creditor, from proceeding to make an adjustment for the VAT it 
has not been paid. 
– Whether the fact that the debtor is a non-resident company prevents the 
Portuguese State from recovering the VAT cancelled and adjusted by Ramada 
which, under Article 78(11) of the VAT Code, should be assessed by Logisma 
and paid to the Portuguese State, since, otherwise, the Tax Authority would be 
forced to perform the assessments ex officio and demand payment of the tax 
owed. 
– Whether or not the right to make an adjustment has become time-barred, and 
what importance is to be attached to Ramada’s failure to satisfy certain formal 
requirements laid down by law. 
– What framework applies to the VAT adjustment made by Ramada, having 
regard to the common system of VAT (the VAT Directive), the case-law of the 
Court of Justice of the European Union, particularly the case-law cited by 
Ramada (the judgment of 8 May 2019 in Case C-127/18), the general principles 
of EU law and the specific principles governing VAT.