Order;Information — ECLI:EU:C:2020:111
Date: 2020-02-26
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-630/19 — 1 
Case C-630/19 
Summary of the request for a preliminary ruling under Article 98(1) of the 
Rules of Procedure of the Court of Justice 
Date lodged:  
23 August 2019 
Referring court:  
Tribunal Arbitral Tributário (Centro de Arbitragem 
Administrativa — CAAD) (Portugal)  
Date of the decision to refer:  
7 August 2019 
Applicant:  
PAGE Internacional Lda. 
Defendant:  
Autoridade Tributária e Aduaneira (Portugal) 
  
Subject matter of the main proceedings 
(Value Added Tax — Deductibility of expenditure on food — Reference for a 
preliminary ruling) 
The question referred 
Must Article 168(a) and Article 176 of Council Directive 2006/112/EC of 
28 November 2006 on the common system of value added tax and the principles 
of VAT neutrality and of proportionality be interpreted as meaning that the 
Portuguese legislature is entitled, under Article 21(1)(d) and 21(2)(d) of the 
Código do Imposto sobre o Valor Acrescentado (Value Added Tax Code) … to 
limit the deductibility of the input VAT on expenditure on food to 50%, even 
where the taxable person demonstrates that all that expenditure has been fully 
applied to the carrying on of its taxed economic activity?  
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-630/19 
 
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Provisions of EU law relied upon 
Article 168(a) and Article 176 of Council Directive 2006/112/EC of 28 November 
2006 on the common system of value added tax (‘the VAT Directive’) and the 
principles of VAT neutrality and of proportionality. 
Provisions of national law relied upon 
Article 21 of the VAT Code and Article 73 of the Lei Geral Tributária (General 
Tax Law, ‘the LGT’) 
Brief description of the facts and the main proceedings 
1 The applicant is a limited liability company that has, since 31 March 2008, carried 
on the commercial activity of film, video and TV programme production and, 
since 28 April 2008, the commercial activity ‘Other business support service 
activities’. 
2 The applicant has been covered by the ordinary monthly VAT scheme since 
1 January 2010. 
3 In carrying on its activity, the applicant organises promotional events for its 
customers’ products and brands. 
4 For the purposes of carrying on its activity, it acquires goods and services (inputs) 
of various kinds, including the services of actors and promoters and make-up, 
audiovisual production, IT, multimedia and catering services. 
5 The applicant purchased catering services from MEGA CIRCULO-Catering 
Unipessoal Lda. in order to include them in the handling services it supplies and 
which represent the remuneration for the value it adds in the context of managing 
all the components of the final project, taking that service and its cost into account 
in the contractual offer it sent to its customers. 
6 The invoices that the applicant issues to its customers show the supply of a single 
service described as a ‘film production/filming service’. 
7 The applicant declared a VAT credit of EUR 83 561.49 in the periodic declaration 
for October 2016 and applied for a refund of the whole of that amount. 
8 The defendant tax authority informed the applicant that it had to substantiate the 
refund claim and submit a series of items so that it could confirm whether or not 
the applicant was entitled to a refund of the tax credit it had claimed. 
9 The applicant did not submit any supporting documents in respect of the amount 
of the VAT credit it sought to have refunded.  
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10 Given that, since 2013, the applicant claimed a refund of the whole of the credit in 
various periods, the proposed adjustments were made by a supplementary 
assessment in the periods prior to October 2016 and, in the period corresponding 
to October 2016, by means of a reduction of the amount of the credit reclaimed, in 
proportion to the amount found to have been unduly deducted. 
11 Since it did not agree with the findings in the report drawn up on the basis of a tax 
inspection, on 15 November 2017 the applicant brought an administrative appeal 
before the defendant tax authority. 
12 On 3 September 2018, its administrative appeal having been dismissed, the 
applicant applied for this arbitral tribunal to be constituted. 
Fundamental arguments of the parties in the main proceedings 
13 The applicant applies for a declaration that the supplementary VAT assessments 
for the periods between May 2013 and October 2016 are unlawful, and for 
annulment of the order dismissing the administrative appeal, arguing, in 
particular, that the tax authority has infringed Article 21(1) of the VAT Code and 
Article 73 of the General Tax Law, since it believes, contrary to what the 
defendant tax authority asserts, that Article 21 of the VAT Code is a provision that 
defines taxable transactions in negative terms, and can always be refuted by 
evidence to the contrary. 
14 Article 21 of the VAT code, headed ‘Exclusions from deductibility’, reads as 
follows: 
‘1. Nevertheless, the input tax on the following expenditure will not be deductible: 
… 
(d) expenditure relating to accommodation, food, beverages and tobacco, and 
expenditure on receptions, including that relating to the hosting of non-members 
of the undertaking and those relating to immovable property or parts of such 
property and the fitting-out thereof, intended primarily for those receptions; 
… 
2. However, that tax will be deductible in the following situations: 
… 
(d) the expenditure referred to in Article 21(1)(c) and (d), with the exception of 
expenditure on tobacco, incurred to meet the direct needs of participants, relating 
to the organisation of conferences, trade fairs, exhibitions, seminars, lectures and 
similar events, where it arises under contracts entered into directly with the 
service provider or through entities lawfully authorised for that purpose and it can 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-630/19 
 
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be demonstrated that they contribute to the carrying out of taxable transactions, in 
respect of which 50% of the tax will be deductible; 
…’ 
15 The applicant contends that the list contained in Article 21 of the VAT Code 
merely lists expenses in relation to which the legislature presumes there is 
personal use by the economic operator that incurs them or which involve a risk 
that business use cannot be separated from personal use. 
16 The purpose of that article is therefore to deter business actors from incurring 
expenditure unrelated to their business activity and, above all, to prevent them 
from abusing the deductibility mechanism in relation to expenditure incurred that 
does not contribute to the carrying on of the taxable output transactions. 
17 According to the applicant, it is always possible to rebut the presumptions 
contained in provisions that define taxable transactions in negative terms, as is the 
case with the deductibility regime, in accordance with Article 73 LGT which 
provides that ‘the presumptions established in provisions that define taxable 
transactions are always rebuttable’, with the effect that if the taxpayer 
demonstrates that the expenditure in question relates to its business activity, 
because it contributes directly to the carrying on of taxable output transactions, 
that expenditure must be deductible, since there would otherwise be a cumulative 
impact and the taxable person would be taxed rather than the final customer, 
thereby infringing the principle of neutrality. 
18 The applicant states that the expenditure on food/catering services at issue is 
incurred to meet the dietary needs of participants in the promotional campaigns 
that it markets to international customers, and that, when it is filming at locations 
where there are no restaurants, it is vital that it obtains food for the participants 
since, if it did not do so, its production costs for the events could increase 
exponentially. 
19 In its view, there is therefore no doubt that the expenditure on food relates directly 
to its business and is a fundamental part of managing that business properly, and 
that the input VAT should not be excluded from deductibility, under 
Article 21(1)(d) of the VAT Code, since there would otherwise be an infringement 
of the principles of neutrality and proportionality underlying the entire VAT 
scheme. 
20 The applicant also contends in that regard that the expenditure arising from 
feeding the participants in promotional videos/films is not covered by the 
exclusion regime under Article 21(1)(d) of the VAT Code, because it is included 
in the regime of exceptions established in Article 21(2)(c).  
21 Under Article 21(2)(c), deductibility is not excluded when food expenditure is 
incurred by a taxable person acting in its own name but on behalf of a third party, 
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provided that expenditure is passed on to the third party with a view to it being 
reimbursed. 
22 However, the defendant tax authority finds that the expenditure at issue is not 
covered by that latter regime, which involves the taxpayer acting on behalf of a 
third party and the expenditure in question being broken down in the invoice or, 
alternatively, invoiced separately. 
23 The applicant disputes the defendant tax authority’s assertion that the expenditure 
must be invoiced separately, arguing that no such requirement is apparent from 
the legislation and that, in essence, the customer bears the entire cost of the 
catering and also the handling service supplied by the applicant itself. 
24 Furthermore, according to the applicant, the defendant tax authority’s argument 
that the applicant should have paid tax on the aforementioned supply of food 
services, in so far as that service is considered to be supplied in the national 
territory where it is performed in that territory, in accordance with Article 6(8)(c) 
of the VAT Code, should also be rejected. 
25 The applicant submits that the supply of services by it is taxed in national territory 
not under the special rule of taxation at the place of supply contained in 
Article 6(8)(c) of the VAT Code, but in accordance with the ordinary rule under 
Article 6(6)(a) of that code, which enshrines the principle of taxation at 
destination. 
26 Lastly, the applicant believes the conduct of the defendant tax authority to be 
contrary to the principles of justice, trust and good faith since, because that 
authority had already ruled on the same question in the context of an earlier 
external inspection in which it gave precise specific instructions on how the 
business carried on by the applicant should be declared for the purposes of VAT, 
and the applicant made that declaration precisely as indicated by that authority. 
27 The defendant tax authority, for its part, challenges the applicant’s arguments, 
taking the view that the applicant has failed to demonstrate the facts on which it 
relies either by means of invoices or of the annexed documents, which according 
to the defendant are nothing more than mere budgets. 
28 Accordingly, in order to substantiate the tax deducted, the applicant submitted 
copies of various invoices relating to catering services supplied by MEGA 
CIRCULO — CATERING UNIPESSOAL LDA, that is to say, food expenditure. 
29 However, the defendant tax authority is of the view that, although the food 
expenditure forms part of non-exempt taxable transactions, the input VAT on that 
expenditure is, under the legislation, not deductible (see Article 21 of the VAT 
Code). 
30 Article 21(2)(c) of the VAT Code does indeed establish an exception from the 
exclusion under Article 21(1)(d), although only in the case of a transaction where 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-630/19 
 
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the person acquiring the service is acting in its own name but on behalf of a third 
party. 
31 However, in the situation at issue, even were one to accept, which the defendant 
tax administration does not, that the customer wishing to purchase the ‘film’ 
goods, may have (tacitly) appointed the applicant as its ‘agent’, the applicant 
could not deduct the VAT included in the invoices, because the requirements set 
out in Article 21(2)(c) of the VAT Code relating to the need for that expenditure 
to be passed on with a view to being reimbursed, are not satisfied. 
32 The defendant tax authority specifies that the aforementioned Article 21(2)(c) 
concerns a transaction in which the taxable person that acquires the service acts in 
its own name but on behalf of a third party, that is to say, under an agency without 
representation, by means of which the agent, acting in its own name, acquires the 
rights and assumes the obligations arising from the acts it concludes, and is bound 
to transfer the rights it acquires to the principal, in a separate transaction. 
33 Nevertheless, when an economic operator acquires the service consisting of 
supplying meals at the filming location, even though it forms part of the carrying 
on of its business and notwithstanding that this cost is reflected in the final price 
of the service, as a general rule it does not place the orders on behalf of its 
customer, since that input is acquired at an earlier stage, in the same way as the 
other inputs required by the work it is to perform, in particular, actors, producers, 
sound technicians and so on, and it is therefore natural that its input cost, like the 
other costs, is included in the series of costs comprising the budget for the work. 
34 According to the defendant tax authority, that food service was not specified 
separately in detail in the invoice, even though in accordance with the legislation 
it could and should have been broken down, by means of a separate invoice or by 
identifying the service under a separate item in the main invoice, thereby making 
it possible to verify that the provisions governing the tax had been complied with. 
35 Accordingly, the defendant tax authority claims, the applicant’s arguments should 
be rejected, since the established exception to the exclusion of deductibility only 
applies where the amount relating to that expenditure is shown, separately from 
the service supplied, simply for the purposes of reimbursement. 
36 Lastly, the defendant tax authority asserts that it is not necessary to refer to the 
Court of Justice of the European Union for a preliminary ruling on this case, since 
such a referral is only justified on the basis of a specific provision and an 
objective well-founded doubt as to how to interpret that provision, and because 
the arbitral tribunal, having full jurisdiction and being fully competent to interpret 
national law, can sufficiently resolve the underlying issue. 
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Brief description of the grounds for the request for a preliminary ruling 
37 The purpose of these proceedings is to determine whether the national legislature 
can prevent or limit exercise of the right to deduct expenditure where it has been 
proven that it relates to the carrying on of the taxed business activity of the taxable 
person. 
38 Article 168 of the VAT Directive enshrines the general principle that the input 
VAT borne by the taxable person in respect of supplies to that person of goods or 
services, carried out or to be carried out by another taxable person, is assessed and 
is deductible, provided the goods and services are used for the purposes of its 
taxed transactions.  
39 The Portuguese legislature, for its part, provided as follows in Article 19 of the 
VAT Code, under the heading ‘Deductibility’: 
‘1. In order to calculate the tax due, taxable persons shall, in accordance with the 
following articles, deduct the following from the tax chargeable on taxable 
transactions carried out by them: 
(a) the tax due or paid on the acquisition of goods and services from other 
taxable persons; 
…’ 
40 Article 21 of the VAT Code then lists the situations in which the tax is not 
deductible, because it is believed that tax fraud could arise if it were, which have 
been enshrined in the VAT Code since Portugal’s accession, although it has 
subsequently been made permissible to deduct a percentage of certain expenditure 
that was previously completely non-deductible, as occurred with the food 
expenditure at issue. 
41 That limitation on deductibility established by the national legislature is based on 
Article 176 of the VAT Directive, which reads as follows: 
‘The Council, acting unanimously on a proposal from the Commission, shall 
determine the expenditure in respect of which VAT shall not be deductible. VAT 
shall in no circumstances be deductible in respect of expenditure which is not 
strictly business expenditure, such as that on luxuries, amusements or 
entertainment. 
Pending the entry into force of the provisions referred to in the first paragraph, 
Member States may retain all the exclusions provided for under their national laws 
at 1 January 1979 or, in the case of the Member States which acceded to the 
Community after that date, on the date of their accession.’ 
42 That article enshrines a ‘standstill’ clause in respect of the limitations on the 
deductibility of VAT on certain expenditure. 
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43 Under that article it is therefore for the Council, acting unanimously on a proposal 
from the Commission, to determine in general terms the expenditure on which the 
VAT is not deductible, which to date it has not done. It is for each Member State, 
for its part, to establish the limitations on the exclusions from deductibility on the 
terms described. 
44 In the situation at issue in the main proceedings, it is therefore important to 
determine, in the light of the provisions governing VAT in the European Union, 
which currently take the form of the VAT Directive, as it has been transposed into 
the national legal order, and having regard to the principles of VAT neutrality and 
of proportionality, whether or not the taxable person can deduct the entirety of the 
food expenditure relating to the organisation of events (in this case, catering 
services for participants in filming), where it is effectively proven that the 
expenditure in question was applied entirely to the carrying on of its taxed 
business activity. 
45 The matter to be resolved is considered to be relevant and has not yet been 
clarified, since doubts remain as to the precise interpretation of those provisions. 
46 It cannot be said that the act in question is clear or that it has been adequately 
clarified by the case-law of the Court of Justice of the European Union. 
47 Indeed, in the light of the EU law principle that national law must be interpreted in 
conformity with EU law, this arbitral tribunal finds that it is necessary that the 
Court of Justice of the European Union rule on the question that arises in this case, 
under Article 267 TFEU, and is bound to refer the question, since its decision 
cannot be appealed except in the case, which will not necessarily arise, that it 
conflicts with a judgment of the Tribunal Central Administrativo (Central 
Administrative Court, Portugal) or of the Supremo Tribunal Administrativo 
(Supreme Administrative Court, Portugal) on the same fundamental question of 
law.