Information;Order — ECLI:EU:C:2023:440
Date: 2023-05-24
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-690/22 – 1 
Case C-690/22 
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: 
9 November 2022 
Referring court: 
Supremo Tribunal Administrativo (Portugal) 
Date of the decision to refer: 
12 October 2022 
Appellant: 
Shortcut – Consultadoria e Serviços de Tecnologias de Informação, 
Lda 
Respondent: 
Autoridade Tributária e Aduaneira 
  
Subject matter of the main proceedings 
The purpose of the appeal being heard by the Supremo Tribunal Administrativo 
(Supreme Administrative Court) is to determine whether the interpretation 
adopted by the Autoridade Tributária e Aduaneira (Tax and Customs Authority; 
‘the Tax Authority’) and the lower courts with regard to the meaning and scope of 
the provisions of Article 36(5)(b) of the Código do Imposto sobre o Valor 
Acrescentado (Value Added Tax Code; ‘the VAT Code’) is compatible with the 
common system of VAT, in the light of Directive 2006/112/EC, as regards the 
exercise of the right to deduct input tax, by the appellant, on the basis of the 
invoices at issue. Legal formalities relating to invoices – ‘Quantity and usual 
name of the services provided’ – Itemisation of the services – Right of deduction 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-690/22 
 
2  
Subject matter and legal basis of the request 
Interpretation of EU law, specifically, 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) – Article 267 TFEU. 
Question referred for a preliminary ruling 
Must Article 178(a), Article 219, Article 220(1), Article 226(6) and Article 273 of 
Council Directive 2006/112/EC of 28 November 2006, on the common system of 
value added tax, be interpreted to mean that the description ‘application 
development services’, used in the invoices which are the subject matter of the 
main proceedings to identify the extent and characteristics of the services 
provided, is sufficient, where that description has not prevented the Tax Authority, 
in the context of a tax audit, from seeing whether the services described in those 
invoices tallied with reality and from establishing ‘false invoicing’? 
Provisions of European Union law relied on 
Council Directive 2006/112/EC of 28 November 2006 on the common system of 
value added tax (‘Directive 2006/112’), especially, Article 226(6). 
Provisions of national law relied on 
Article 19(2)(a), Article 19(3) and (6) and Article 36(5)(b) of the VAT Code. 
‘Article 19 
Right of deduction 
[…] 
2 – The right of deduction shall only be conferred by the tax referred to in the 
following documents […]: 
a) in invoices issued in compliance with the legal formalities; 
[…] 
3 – The tax resulting from a simulated transaction or where the price 
appearing in the invoice is false cannot be deducted. 
[…] 
6 – For the purposes of the exercise of the right of deduction, invoices 
containing the elements stated in Articles 36 or […] shall be regarded as having 
been issued in compliance with the legal formalities’ 
SHORTCUT 
 
3 
‘Article 36 
Time limit for issuance and formalities relating to invoices 
[…] 
5 – Invoices must state their date of issue, be numbered sequentially and 
contain the following details: 
[…] 
b) the quantity and usual name […] of the services provided, specifying the 
information necessary to determine the applicable tax rate […]’. 
Succinct presentation of the facts and procedure in the main proceedings 
1 The company Shortcut – Consultadoria e Serviços de Tecnologias de Informação, 
Lda (‘the appellant’), carries on the activity of ‘information technology 
consultancy’. 
2 The appellant was the subject of an external audit by the tax inspection services of 
the Direção de Finanças do Porto (Porto Finance Directorate) in relation to the 
2011 financial year. 
3 In that audit, it was established that the appellant invoiced the company Take a 
City for information technology services, which the latter company entered into its 
accounts. In practice, the appellant subcontracts external personnel specialising in 
information technologies, such that those services were provided by the 
companies Planeta Virtual, Globalmédia and Senhor Melão and were identified in 
the invoices, respectively, as ‘application development services’ and ‘consultancy 
for the development of applications’, ‘application integration services’ and 
‘application development services’. 
4 Following that audit, on 21 February 2015, a correction was made to the VAT and 
the unpaid tax was calculated. The Tax Authority reached the conclusion that the 
four invoices concerned, issued by the appellant, were based on simulated 
transactions and that the tax stated in them had been deducted improperly. It also 
considered that those invoices did not comply with the legal formalities, because 
the description of the services provided to which they referred was excessively 
generic, and for that reason as well the tax could not be deducted. 
5 Consequently, the Tax Authority made additional assessments of the VAT and the 
relevant compensatory interest, for a total amount of EUR 76 085.91, in respect of 
the months of February and June 2011. 
6 On 31 August 2015, the appellant challenged those assessments in the Tribunal 
Administrativo e Fiscal do Porto (Porto Administrative and Finance Court). In its 
judgment of 16 October 2019, that court acknowledged that, on the basis of the 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-690/22 
 
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indications which the Tax Authority had recorded in the audit report, it was not 
possible to reach the conclusion that the provision of the services in question was 
simulated and, therefore, the contested assessments could not be upheld on that 
ground (simulation of transactions). However, it held that those tax decisions 
should be upheld ― and the right to deduct the tax stated in the invoices 
concerned should be refused ― on the basis of non-compliance with the legal 
formalities provided for in Article 36(5) of the VAT Code, as regards the 
identification of the services provided to the appellant. The court therefore 
dismissed the appeal. 
7 The appellant brought an appeal against that judgment before the Tribunal Central 
Administrativo Norte (Northern Central Administrative Court), which, in its 
judgment of 27 October 2021, dismissed that appeal, considering that the invoices 
did not comply with the formal requirements provided for in Article 36(5) of the 
VAT Code, with regard to the description of the services provided, and that the 
documents provided by the appellant did not allow that defect to be rectified. 
8 The appellant then appealed to the referring court, the Supreme Administrative 
Court, requesting that the judgment under appeal and, consequently, the tax 
decisions in question be reversed and that its right to deduct the tax be recognised. 
The essential arguments of the parties in the main proceedings 
Position of the appellant 
9 The appellant asserts that the question forming the subject matter of the appeal to 
the referring court is of great importance, above all economically, given that 
issuing invoices is one of the most common commercial acts in the course of 
business. The mechanism for the assessment and collection of VAT is based on 
the invoices issued by companies and, when the Tax Authority prevents VAT 
from being deducted, a tax debt is generated which could threaten the economic 
and financial equilibrium of those companies. 
10 It is, then, necessary to know what latitude the Tax Authority enjoys when it 
comes to applying the rules that govern the issuance of invoices and whether the 
criteria it uses to refuse the right to deduct the tax may be based on an undesirable 
discretion. 
11 The appellant considers that the four invoices at issue comply with all of the 
formal requirements provided for in Article 36(5) of the VAT Code, in particular, 
that relating to the quantity and usual name of the services provided. 
12 Analysing the report by the tax inspection services, it clearly emerges that the 
service provider entities appearing in the invoices in question are companies 
involved in the provision of services in the field of information technology, 
namely, in the activity of consultancy and the creation and integration of software 
SHORTCUT 
 
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applications. The reference to the services provided in each of those invoices not 
only identifies their ‘nature’, it also reflects their ‘usual name’. 
13 The above-mentioned report does not even assert that the description appearing in 
the invoices does not make it possible to identify the nature of the services 
provided, confining itself to concluding that ‘they contain a very generic reference 
to the services provided’. 
14 The tax inspection services have not, at any point, claimed that an alleged 
irregularity in the preparation of the invoices at issue has prevented them from 
knowing the nature and extent of the services provided and they have relied 
precisely on the content of the invoices in order to reach the conclusion that such 
services were simulated commercial transactions. 
15 The tax inspection services have not had any difficulty in identifying the ‘quantity 
and usual name […] of the services provided’ (Article 36(5)(b) of the VAT Code), 
nor the ‘extent and nature of the services rendered’ (Article 226(6) of Directive 
2006/112). 
16 Consequently, the Tax Authority formulated grounds the sole purpose of which 
was to protect its position in the event that its argument relating to ‘simulation’ 
failed in the context of a judicial appeal. 
17 Moreover, the lower courts, without justification, made up for the lack of 
‘evidence of simulation’ in order to refuse the right to deduct the tax, basing their 
decision exclusively on alleged irregularities in the preparation of the invoices in 
which the deducted VAT was calculated. 
18 The appellant notes that the judgment of the Court of Justice of 15 September 
2016, Barlis 06 – Investimentos Imobiliários e Turísticos (C-516/14, 
EU:C:2016:690), provides a clear criterion for making an appropriate and fair 
decision regarding this question and it considers that the court whose decision is 
under appeal incorrectly applied the case-law stemming from that judgment. 
19 The appellant recalls that, in the ruling of that judgment, the Court of Justice 
found that ‘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’. 
20 The appellant maintains that it must be found that the lower courts were obliged to 
examine whether the Tax Authority had the information necessary to determine 
whether the invoices at issue satisfied the substantive conditions. 
21 Lastly, the appellant argues that the provision of the VAT Code to which these 
proceedings relate is the result of the transposition of Directive 2006/112 into the 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-690/22 
 
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Portuguese legal system, such that it is appropriate to request a preliminary ruling 
from the Court of Justice. 
Position of the Tax Authority 
22 The Tax Authority notes that the conduct of the appellant with regard to the 
invoices could be related to the incentives offered by the Agência para a 
Competitividade e Inovação (Agency for Competitiveness and Innovation; ‘the 
IAPMEI’), in particular, in the area of the System of Incentives for the 
Qualification and Internationalisation of Small and Medium-sized Enterprises. It 
considers that the transactions carried out with the companies Take a City, Planeta 
Virtual, Globalmédia and Senhor Melão – all of which, incidentally, are part of 
Grupo Planeta Virtual – are simulated transactions as far as their actual 
performance is concerned and the purpose of them was to provide evidence of 
investment expenditure and, possibly, demonstrate the merit of the projects 
submitted to the IAPMEI by the companies of Grupo Planeta Virtual. 
23 So, the Tax Authority takes the view that, given that the transactions at issue were 
simulated, in accordance with the provisions of Article 19(3) of the VAT Code, 
the appellant has deducted the tax improperly, such that, consequently, that tax 
has not been paid into the coffers of the State. 
24 In any event, the Tax Authority considers that the invoices concerned do not 
respect the provisions of Article 36(5)(b) of the VAT Code, as they contain a very 
generic reference to the services provided, and, therefore, in accordance with 
Article 19(2)(a) of the VAT Code, the tax could not be deducted in any case. 
Position of the Deputy Prosecutor-General 
25 The Procurador-Geral Adjunto (Deputy Prosecutor-General) considers that the 
deduction of the VAT stated in the invoices in question cannot be accepted, in so 
far as those invoices do not comply with the legal requirements laid down in 
Article 36(5)(b) of the VAT Code. 
26 He maintains that the legal requirements relating to invoices must be respected, in 
order to make it possible to verify the specific service that has been provided, 
when it was provided, where, in what quantity/to what extent and to whom, given 
that invoices may give rise to the right to deduct tax and that neither invoices nor 
VAT deductions can be duplicated. 
27 The invoices in question do not comply with the provisions of Article 36(5)(b) of 
the VAT Code, because the description of the services provided takes the form of 
a generic reference and no reference is made to their quantity or extent. 
28 He states that the formalistic nature of VAT – in which the essential role played 
by the invoice, as well as the need for it to be issued in compliance with the legal 
formalities, stands out – is not disputed. 
SHORTCUT 
 
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29 The invoice is important because it allows the purchaser to justify the exercise of 
the right of deduction and it allows the Tax Authority to verify the transaction that 
is subject to VAT and check that the taxable amount is correct and that the tax has 
been calculated correctly. 
30 In short, invoices containing generic descriptions such as ‘application 
development services, consultancy for the development of applications and 
application integration services’ do not allow the specific service provided to be 
ascertained precisely. 
Succinct presentation of the reasoning in the request for a preliminary ruling 
31 The referring court states that it is necessary to decide two questions. First, 
whether the invoices at issue comply with the formal requirements of 
Article 36(5) of the VAT Code, as regards the description of the services 
provided. Second, if the answer to the first question is that they do not, whether 
that non-compliance prevents the VAT from being deducted, when it has not 
prevented the Tax Authority from verifying whether the commercial dealings 
expressed in the invoice were true and reaching the conclusion, in the context of 
an audit, that those dealings were simulated transactions. 
32 The referring court specifies that this appeal solely relates to compliance with the 
legal formalities for invoices, in the light of the provisions of Article 36(5)(b) of 
the VAT Code, as regards the itemisation of the services, and to the consequent 
existence of the prerequisites for the right of deduction, in accordance with the 
provisions of Article 19(2)(a) and Article 19(6) of the VAT Code. 
33 Indeed, the question relating to the simulation of the transactions referred to in the 
invoices has already been settled, as the Tax Authority has not been able to prove 
its theory. 
34 Therefore, what has to be decided in this appeal is whether, in this specific case, 
the descriptor ‘application development services’, which appears in the invoices, 
complies with the above-referenced legal provision. 
35 The referring court submits that the solution adopted in this case must take 
account of the fact that the interpretation of national legislation must comply with 
Article 226 of Directive 2006/112, which lists, specifically, the details which have 
to appear, for VAT purposes, in invoices that are issued; in particular, in point (6), 
which refers to the ‘extent and nature of the services rendered’. 
36 The referring court refers to paragraph 27 of the judgment Barlis 06 – 
Investimentos Imobiliários e Turísticos, cited above, in which the Court of Justice 
held that ‘the objective of the details which must be shown in an invoice is to 
allow the tax authorities to monitor payment of the tax due and, if appropriate, the 
existence of the right to deduct VAT’. It also cites paragraph 41 of the judgment 
of the Court of Justice of 15 November 2017, Rochus Geissel (C-374/16, 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-690/22 
 
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EU:C:2017:867), which emphasised that ‘as regards the teleological interpretation 
of Article 226 of the VAT Directive, the purpose of the details which must be 
shown on an invoice is to allow the tax authorities to monitor the payment of the 
tax due and the existence of a right to deduct VAT’. 
37 The referring court notes that the question of whether the invoices at issue comply 
with the legal requirements must be viewed in the light of that case-law, from 
which it emerges that the formal requirements laid down in law with regard to 
invoices are not an end in themselves. 
38 Moreover, the referring court refers to a judgment of its own, in which it states 
that such requirements only ‘find their justification in the objective of monitoring 
payment of the tax and combating fraud and tax evasion’. 
39 However, bearing in mind the objectives pursued with the insistence on 
formalities in invoices, it is a peculiar feature of the present case that the Tax 
Authority, despite considering that the invoices did not itemise the services 
provided, reached the conclusion that the transactions referred to in them were 
simulated (even if that conclusion was subsequently found to be groundless in 
judicial proceedings). 
40 Consequently, the referring court has decided to suspend the proceedings and, 
pursuant to Article 267 TFEU, submits the above-stated question referred for a 
preliminary ruling for consideration by the Court of Justice.