Order;Information — ECLI:EU:C:2020:721
Date: 2020-09-17
Language of the case: Portuguese
Court formation: Eighth Chamber
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: Portugal

Summary C-837/19 — 1 
Case C-837/19 
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: 
19 November 2019 
Referring court: 
Tribunal Arbitral Tributário (Centro de Arbitragem 
Administrativa — CAAD) (Tax Arbitration Tribunal (Centre for 
Administrative Arbitration)) (Portugal) 
Date of the decision to refer: 
8 November 2019 
Applicant: 
Super Bock Bebidas, S. A. 
Defendant: 
Autoridade Tributária e Aduaneira (Tax and Customs Authority) 
  
Subject matter of the main proceedings 
The request for a preliminary ruling has been made in the course of proceedings 
between SUPER BOCK BEBIDAS, S. A. (‘Super Bock’) and the Autoridade 
Tributária e Aduaneira (Tax and Customs Authority; ‘the Tax Authority’), in 
which the former is seeking to have a decision dismissing its administrative appeal 
overturned and its VAT returns for the periods from 1 September 2016 to 
31 December 2017 partially cancelled. There are questions over the deductibility 
of VAT paid by Super Bock on the cost of accommodation, food, transport, 
vehicle operating leases, tolls and fuel. 
Purpose and legal basis of the request for a preliminary ruling 
The question raised here is whether VAT on the cost of accommodation, food, 
transport, vehicle operating leases, tolls and fuel is deductible under the VAT 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-837/19 
 
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rules. Specifically, a decision is requested on whether Article 21 of the VAT Code 
(Exclusions from the right to deduct) complies with EU law. 
Questions referred 
1) Was a new Member State permitted, pursuant to the second paragraph of 
Article 17(6) of the Sixth Council Directive of 17 May 1977 (which states 
that Member States ‘may retain all the exclusions provided for under their 
national laws when this Directive comes into force’), to introduce exclusions 
from the right to deduct VAT into its domestic legislation on the date of its 
accession? 
2) Is the scope of the second paragraph of Article 17(6) of the Sixth Council 
Directive the same as that of the second paragraph of Article 176 of Council 
Directive 2006/112/EC of 28 November 2006 (which states that Member 
States that acceded to the Community after 1 January 1979 may retain all the 
exclusions provided for under their national laws on the date of their 
accession), as regards the relevant date for determining which ‘exclusions 
provided for under their national laws’ may be retained? 
3) If, under the Sixth Directive, Portugal was able to retain all the exclusions 
provided for under its national laws on 1 January 1989 (the date on which 
the Sixth Directive came into force in Portugal), was that possibility altered 
by Directive 2006/112/EC, in which the relevant date is given as the date of 
accession (1 January 1986)? 
4) Is it contrary to the second paragraph of Article 176 of Council Directive 
2006/112/EC of 28 November 2006 that, on the date of Portugal’s accession 
to the European Communities, regulations (such as those in Article 21(1) of 
the VAT Code) came into force introducing exclusions from the right to 
deduct tax in respect of certain costs (including the cost of accommodation, 
food, drink, vehicle leases, fuel and tolls), where those regulations had 
already been published and were originally intended to come into force 
before accession but were postponed until the accession date? 
5) Should Article 168(a) of Directive 2006/112 and the neutrality principle be 
interpreted as precluding a Member State’s domestic legislation from 
retaining regulations containing exclusions from the right to deduct (such as 
the rules in Article 21(1) of the VAT Code on the cost of accommodation, 
food, drink, vehicle leases, fuel and tolls) that apply even where it is 
demonstrated that the goods and services that were purchased were used for 
the purposes of the taxable person’s taxed transactions? 
6) Do Article 176 of Directive 2006/112 and the proportionality principle 
preclude exclusions from the right to deduct that are not provided for in the 
directive but which Member States may retain under the second paragraph 
of Article 176 from applying where it is demonstrated that the costs in 
SUPER BOCK BEBIDAS 
 
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question are of a strictly business nature and the goods and services were 
used for the purposes of the taxable person’s taxed transactions? 
Provisions of EU law cited 
Sixth Council Directive of 17 May 1977 on the harmonization of the laws of the 
Member States relating to turnover taxes — Common system of value added tax: 
uniform basis of assessment (77/388/EEC): Article 17(6), second paragraph. 
Council Directive 2006/112/EC of 28 November 2006 on the common system of 
value added tax: Article 168(a) and Article 176. 
Provisions of national law cited 
Decreto Ley n.º 394-B/84, de 26 de diciembre, por el que se aprueba el Código del 
impuesto sobre el valor añadido (Decree-Law No 394-B/84 of 26 December 1984 
approving the Code on value added tax (VAT)): Article 21(1). 
Article 21 
Exclusions from the right to deduct 
1. However, tax in connection with the following costs shall be excluded from 
the right to deduct: 
a) Costs in connection with the acquisition, manufacture or import, lease, use, 
alteration and repair of passenger cars, recreational craft, helicopters, 
aeroplanes, motorbikes and motorcycles. ‘Passenger car’ means any motor 
vehicle, including a trailer, which, by virtue of its construction and 
equipment, is not intended solely for the transport of goods or for 
agricultural, commercial or industrial use, or any vehicle intended for 
combined use or for passenger transport which has no more than nine seats, 
including the driver’s seat. 
b) Costs in connection with fuel normally used in motor vehicles, other than 
purchases of diesel, liquefied petroleum gases (LPG), natural gas and 
biofuels, where 50% of the tax may be deducted, except in the case of the 
goods listed below, where the entirety of the tax on consumption of diesel, 
LPG, natural gas and biofuels may be deducted: 
i) Heavy passenger vehicles; 
ii) Authorised public transport vehicles, other than hire cars; 
iii) Machines that use diesel, LPG, natural gas or biofuels, and machines 
that have been allocated a registration plate by the competent authorities, 
provided that, in both cases, they are not registered vehicles; 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-837/19 
 
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iv) Tractors used solely or principally in agricultural cultivation 
operations; 
v) Goods vehicles weighing more than 3 500 kg. 
c) Transport and business travel costs for the chargeable person and his staff, 
including tolls. 
d) Costs in connection with accommodation, food, drink, tobacco and reception 
costs, which include costs in connection with receiving persons who are not 
part of the undertaking and costs in connection with buildings or parts of 
buildings, and their fittings, which are intended principally to house such 
persons. 
e) Entertainment costs and luxury expenditure, which means any expenditure 
which, by its nature or in view of the sum involved, does not form part of 
normal operating costs. 
Brief summary of the facts and the main proceedings 
1 Super Bock is a commercial company whose registered office is in Portugal. Its 
principal activity is brewing beer and its secondary activities are the production of 
soft drinks and other non-alcoholic beverages, wholesale trade in alcoholic 
beverages, and the publication of magazines and other periodicals. 
2 Super Bock is a taxable person liable to VAT under the normal monthly system. 
3 The company made VAT returns for the months from September 2016 to 
December 2017 in which it did not deduct input VAT on the cost of meals and 
accommodation, vehicle operating leases, fuel and tolls. 
4 In the course of its business, Super Bock incurred a series of costs during the 
period in question that were essential to its operations and were related to the 
normal pursuit of its corporate purpose, in particular the cost of meals, 
accommodation, vehicle leases, tolls and fuel. 
5 Staff in the applicant’s commercial, marketing and technical assistance 
departments often need to travel in order to perform their work, particularly with 
regard to contacts with distributors, setting up and dismantling events, providing 
technical assistance and launching new supply points. The company has therefore 
put in place internal procedures designed specifically to verify the expenditure 
involved, to enable the company to monitor their impact. 
6 Expenditure is only approved where it has actually been incurred for business 
purposes directly related to Super Bock’s activities. 
7 The company filed an administrative appeal in respect of the VAT returns for the 
above period, which was rejected. 
SUPER BOCK BEBIDAS 
 
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Main arguments of the parties to the main proceedings 
The main arguments put forward by Super Bock are as follows: 
‒ the nature of VAT is that it is a tax applicable at various stages, which is 
intended to apply to all acts of consumption in a way that ensures the tax is 
neutral; 
‒ any circumstance that calls into question the right to deduct and, therefore, 
the neutrality of the tax, can be justified only on non-fiscal grounds, and the 
law must provide ways to minimise that situation; 
‒ the right to deduct VAT established in Article 167 et seq. of Directive 
2006/112 is part of the VAT mechanism and, in principle, may not be 
restricted; 
‒ in terms of domestic law, the legislature has established, in particular, that 
the VAT on certain costs — specifically, those listed in Article 21 of the 
VAT Code — is to be excluded from the right to deduct; 
‒ those exclusions from the right to deduct are not admissible in view of the 
principles and rules established by Directive 2006/112, and in view in 
particular of Article 176 of that directive, which replaced the rule in 
Article 17(6) of Directive 77/388, and the ‘standstill’ clause; 
‒ before Portugal acceded to the European Communities it had no VAT Code 
since that code came into force precisely on the date of its accession, namely 
1 January 1986; 
‒ the restrictions on the right to deduct introduced in Portugal are in breach of 
the abovementioned ‘standstill’ clause (as they did not exist before Portugal 
acceded to the EU) and, to that extent, they are invalid on the grounds that 
they are contrary to Directive 2006/112/EC, as held by the Court of Justice 
of the European Union in Case C-414/07; 
‒ because the scheme constitutes an exception to the principle of the right to 
deduct VAT, it must be interpreted restrictively; 
‒ even if the restrictions in Article 21 of the VAT Code were to be accepted as 
valid, they could never be interpreted entirely literally, but would have to be 
harmonised with the other rules and fundamental principles of VAT and, of 
course, with the neutrality principle; 
‒ the scope of the right to deduct VAT must apply to any tax borne by 
economic operators on their inputs, and it is a fundamental tenet of this right 
to deduct that the tax must have been incurred in purchasing goods and 
services used in taxed transactions; 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-837/19 
 
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‒ even if the exclusion from the right to deduct were to be allowed, it would 
always have to be interpreted restrictively and should not be permitted 
where there is shown to be a genuine connection or relationship between the 
inputs and the taxed activity; 
‒ underlying those cases where the right to deduct is excluded is a 
presumption that there is no connection or relationship, or only a partial one, 
between the costs concerned and the taxed activity carried on by the 
undertaking; 
‒ the VAT paid on the costs referred to above should be deemed deductible 
where there is shown to be a direct and inextricable link to a taxable activity 
that is not exempt from tax; 
‒ for that reason the presumption underlying the exclusion from the right to 
deduct established in the abovementioned Article 21 of the VAT Code must 
be considered to have been rebutted; 
‒ the fact that the Tax Authority believes that Article 21 of the VAT Code 
establishes an irrebuttable presumption is in breach of the principles on 
which VAT is based. 
In essence, the arguments of the Tax and Customs Authority are as follows: 
‒ under Article 21 of the VAT Code, the tax paid on certain costs is excluded 
from the right to deduct, even where the costs in question are necessary in 
order to carry on the relevant activity; 
‒ the exclusions from the right to deduct established in Article 21 of the VAT 
Code were authorised under the ‘standstill’ clause in Article 17(6) of the 
Sixth Directive [which corresponds to Chapter 3, ‘Restrictions on the right 
of deduction’, Articles 176 and 177, of Council Directive 2006/112/EC of 
28 November 2006 on the common system of value added tax (‘the VAT 
Directive’)], which was an option adopted by the national legislature; 
‒ although the legislature may accept that the goods or services referred to in 
Article 21 of the VAT Code could be used for business purposes, in view of 
the difficulty or even impossibility of verifying the ‘actual use’ made of the 
goods in question, and in order to prevent fraud, the abovementioned article 
was included, which prevents deduction of the input tax on goods and 
services that are not essential to the productive activity or that can easily be 
diverted to private consumption; 
‒ while the goods or services referred to in Article 21 of the VAT Code could 
be used for business purposes, in order to prevent high levels of fraud the 
article lists a series of goods and services that are excluded from the right to 
deduct the tax paid on them; those goods and services include 
accommodation, meals and transport; 
SUPER BOCK BEBIDAS 
 
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‒ with regard to the purchase or leasing of motor vehicles, it does not appear 
to be enough that the goods are used to carry on the business of the 
undertaking. 
Brief summary of the reasons for the request for a preliminary ruling 
● The reference for a preliminary ruling is needed in order to clarify what the 
relevant date is that marks the latest point at which exclusions from the right to 
deduct could be introduced into Member States’ legislation in cases where the 
coming into force of the Sixth Directive (1 January 1989) postdates the accession 
to the European Communities (1 January 1986), which is the case with Portugal. 
Under a literal interpretation of Article 17(6) of the Sixth Directive, the latest 
point at which exclusions to the right to deduct could be established would be the 
coming into force date of the Sixth Directive rather than the date of accession. 
However, subsequently, after Council Directive 2006/112/EC of 28 November 
2006 had come into force, the Court of Justice of the European Union signalled 
the admissibility of a teleological interpretation under which, under Article 17(6) 
of the Sixth Directive, it is the date of accession that is the relevant date in 
determining whether exclusions from the right to deduct can be introduced. 
● Moreover, turning to Council Directive 2006/112/EC of 28 November 
2006, which replaced the Sixth Directive, Article 176 of this directive provides a 
reformulation of the ‘standstill’ clause, which allows exclusions from the right to 
deduct to be retained only if they were already provided for under national laws 
on the date of accession (1 January 1986) rather than up to the date on which the 
Sixth Directive came into force in Portugal (1 January 1989). 
The wording of that final part of Article 176 of Directive 2006/112/EC and the 
wording of the final part of Article 17(6) of the Sixth Directive are clearly 
different, as they contain different dates for the latest point at which it is 
permissible to provide for exclusions from the right to deduct under national laws. 
In any event, even if Article 17(6) of the Sixth Directive is taken to refer to the 
date on which the directive comes into force in the Member State, there is a 
question over whether Article 176 of Directive 2006/112/EC has altered this 
provision, with the result that exclusions from the right to deduct are admissible 
only if they were provided for under national laws on the accession date. 
● There is also the question of determining whether, in order to satisfy the 
requirement in Article 176 that exclusions from the right to deduct must be 
‘provided for under their national laws’ on the date of accession, it is sufficient 
for the exclusions in question to be provided for in a legal text that was 
published before that date, or whether the national legislation must already 
be in force on that date. 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-837/19 
 
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If the answer to that question is ‘no’, then, in view of the fact that the accession 
date is the same as the coming into force date of the exclusions from the right to 
deduct provided for in the VAT Code, it is necessary to determine whether, in 
order to satisfy the abovementioned requirement, it is sufficient that the 
exclusions in question do not come into force after the accession date, and they 
can be considered to be provided for under national laws on the date of accession 
provided that they had already come into force on that date. 
● There is a presumption underlying the exclusion from the right to deduct 
the tax on certain costs that at least part of those costs does not relate to the 
taxable person’s business activity as strictly defined. 
Consequently, particularly in the light of the principles of neutrality and 
proportionality, it is relevant to ask whether that presumption can be rebutted 
by evidence that the transactions to which the exclusion applies relate to the taxed 
activity, as has been demonstrated in these proceedings.