VAT Exemption Waiver and Communication Requirements: CAAD Case 167/2015-T

ARBITRAL AWARD

The arbitrators José Poças Falcão (arbitrator president), Clotilde Celorico Palma and António Sérgio de Matos (arbitrator members), designated by the Deontological Council of the Administrative Arbitration Centre to form the Arbitral Tribunal, constituted on 22.05.2015, agree as follows:

I. Report

1. A... Lda., Legal Entity no..., with registered office at ..., ...-... ... (hereinafter referred to as the Claimant) submitted a request for the constitution of a collective arbitral tribunal, pursuant to articles 2, no. 1, and 10, no. 1, subsection a), of the Legal Framework for Arbitration in Tax Matters (Decree-Law no. 10/2011, of 20 January, hereinafter referred to as RJAT), in which the Tax and Customs Authority is the respondent, with a view to the declaration of illegality and annulment of several assessments of Value Added Tax ("VAT") and the corresponding compensatory interest, relating to the taxation periods from 2010.03Q to 2014.03Q, in the total amount of €122,718.14, namely:

Additional Assessment no. ... (Doc. 1), Additional Assessment no. ... (Doc. 2), Additional Assessment no. ... (Doc. 3), Additional Assessment no. ... (Doc. 4), Additional Assessment no. ... (Doc. 5), Additional Assessment no. ... (Doc. 6), Additional Assessment no. ... (Doc. 7), Assessment no. ... (Doc. 8), Assessment no. ... (Doc. 9), Assessment no. ...(Doc. 10), Assessment no. ... (Doc. 11), Assessment no. ... (Doc. 12), Assessment no. ... (Doc. 13), Assessment no. ... (Doc. 14), VAT Assessment Demonstration no. 2014... (Doc. 15), VAT Assessment Demonstration no. 2014... (Doc. 16), VAT Assessment Demonstration no. 2014... (Doc. 17), VAT Assessment Demonstration no. 2014... (Doc. 18), VAT Assessment Demonstration no. 2014... (Doc. 19), VAT Assessment Demonstration no. 2014... (Doc. 20), VAT Assessment Demonstration no. 2014... (Doc. 21), VAT Assessment Demonstration no. 2014... (Doc. 22), VAT Assessment Demonstration no. 2014... (Doc. 23), VAT Assessment Demonstration no. 2014... (Doc. 24), Account Settlement Demonstration no. 2014... (Doc. 25), Account Settlement Demonstration no. 2014... (Doc. 26), Account Settlement Demonstration no. 2014... (Doc. 27), Account Settlement Demonstration no. 2014... (Doc. 28), Account Settlement Demonstration no. 2014... (Doc. 29), Account Settlement Demonstration no. 2014... (Doc. 30), Account Settlement Demonstration no. 2014... (Doc. 31), Account Settlement Demonstration no. 2014... (Doc. 32), Account Settlement Demonstration no. 2014... (Doc. 33), Account Settlement Demonstration no. 2014... (Doc. 34), Account Settlement Demonstration no. 2014... (Doc. 35), Account Settlement Demonstration no. 2014... (Doc. 36), Account Settlement Demonstration no. 2014... (Doc. 37), Account Settlement Demonstration no. 2014... (Doc. 38), Account Settlement Demonstration no. 2014... (Doc. 39), Account Settlement Demonstration no. 2014... (Doc. 40), Account Settlement Demonstration no. 2014... (Doc. 41), Account Settlement Demonstration no. 2014... (Doc. 42), Account Settlement Demonstration no. 2014... (Doc. 43), Account Settlement Demonstration no. 2014... (Doc. 44), VAT Interest Assessment Demonstration no. 2014... (Doc. 45), VAT Interest Assessment Demonstration no. 2014... (Doc. 46), VAT Interest Assessment Demonstration no. 2014... (Doc. 47), VAT Interest Assessment Demonstration no. 2014... (Doc. 48), VAT Interest Assessment Demonstration no. 2014... (Doc. 49), VAT Interest Assessment Demonstration no. 2014... (Doc. 50), VAT Interest Assessment Demonstration no. 2014... (Doc. 51), VAT Interest Assessment Demonstration no. 2014... (Doc. 52), VAT Interest Assessment Demonstration no. 2014... (Doc. 53), VAT Interest Assessment Demonstration no. 2014... (Doc. 54).

1. The Claimant requests:

a) The annulment of all assessments, additional assessments and account settlement statements corresponding to VAT, as well as the account settlement/assessment statements corresponding to compensatory interest; and

b) The condemnation of the Tax Administration to pay the Appellant indemnity interest, pursuant to article 43 of the General Tax Code (LGT), up to the full reimbursement of the amounts of VAT and compensatory interest provided for in the assessments, additional assessments and account settlement statements.

1. The request for the constitution of the arbitral tribunal was accepted by the President of CAAD and automatically notified to the Tax and Customs Authority on 13-03-2015.

In accordance with the provisions of subsection a) of no. 2 of article 6 and subsection b) of no. 1 of article 11 of the RJAT, as amended by article 228 of Law no. 66-B/2012, of 31 December, the Deontological Council designated as arbitrators of the collective arbitral tribunal Judge Dr. José Poças Falcão, Prof. Dr. Guilherme d'Oliveira Martins and Dr. António Sérgio de Matos, who communicated their acceptance of the assignment within the applicable timeframe.

On 06-05-2015, the parties were duly notified of such designation, and did not express any intention to refuse the designation of the arbitrators, in accordance with the combined provisions of article 11, no. 1 subsections a) and b) of the RJAT and articles 6 and 7 of the Deontological Code.

Thus, in accordance with the requirements of subsection c) of no. 1 of article 11 of the RJAT, as amended by article 228 of Law no. 66-B/2012, of 31 December, the collective arbitral tribunal was constituted on 22-05-2015.

Subsequently, the arbitrator Prof. Dr. Guilherme d'Oliveira Martins, with due justification, resigned from his functions, which led the Honourable President of the Deontological Council to replace him with Prof. Dr. Clotilde Celorico Palma.

Following this change to the arbitral panel, and taking into account the provisions of article 9-3 of the RJAT, it was decided that there was no need to repeat any procedural act – See decision of the Court President of 3-1-2016.

1. In support of its claims, the Claimant alleges, in summary:

a) The Appellant made the declaration in question – of waiver of VAT exemption – verbally at the Tax Service of ... within the timeframe to which it was obliged under the applicable law, and was not provided with any documentation evidencing such fact, and moreover, even if that had occurred, as provided in article 52, no. 1, of the Portuguese VAT Code (CIVA), the period for the taxpayer to file and preserve in good order all books and respective supporting documents is 10 years, a period that has clearly already been exceeded, and the Appellant cannot be prejudiced by not having in its possession such documentary evidence, as has been the uniform understanding of case law;

b) The VAT additional assessments suffer from illegality – due to being unintelligible because of the lack of reasoning, since the Appellant, faced with five different documents, all of them sent by the AT as the supposed result of the Inspection, was left not knowing exactly which document was to be used for payment and what the remaining documents were for;

c) The Appellant is unable to understand the mathematical operations contained in the account settlement statements, nor does it understand whether the assessment demonstrations contain the assessments within themselves, merely demonstrate them, or whether the assessments are found in such account settlement documents;

d) The VAT additional assessments suffer from illegality due to the tax inspection procedure having omitted essential formalities such as the examination of witnesses indicated to provide the Appellant with the opportunity to defend itself and prove the facts it alleges, and having violated a series of principles to which it is bound, such as the principles of inquiry, the search for material truth, etc.;

e) They suffer from illegality due to violating the principle of justice and proportionality in that the State, by obliging the Appellant to pay the amount corresponding to the totality of VAT that it deducted, without taking into account what it assessed, unlawfully enriches itself, since the amount paid exceeds the amount deducted.

f) They suffer from illegality by being materially unconstitutional in the interpretation they make of articles 12, no. 1, subsection a) and 52, no. 1 of the CIVA, by violating the principle of justice and the principle of proportionality and by being vitiated by the defect of violation of law and error in the factual and legal presuppositions regarding the application of such articles.

1. The Tax and Customs Authority submitted a response and attached the administrative file, invoking:

5.1 As a preliminary matter, that "assessment demonstrations" do not translate to acts of assessment of taxes for the purpose of determining whether they are affected by any illegality.

5.2 And, by way of objection, in summary, the following:

a) Based on the documents provided by the Claimant's chartered accountant, the Tax Inspection Services concluded that A... was accredited by a competent body as a training entity, at least from 08-08-2007, and that since that date, it was automatically covered by the exemption regime for operations carried out within the scope of professional training;

b) In that regard, it should have presented the respective declaration of changes within 15 days from the date of accreditation, informing the AT that it had begun to carry out exempt operations, thus becoming exempt from the filing of periodic tax declarations;

c) Or, if it wished to exercise the option for taxation, it could have waived the exemption, in accordance with subsection a) of no. 1 of article 12 of the CIVA, opting for the application of tax to the operations carried out;

d) Not having exercised such option, it should be considered as falling within the exemption regime, and therefore, from the date of recognition as a training entity, the Claimant continued, incorrectly, to exercise the right to deduct the tax borne on goods acquired and, at the same time, continued to inappropriately assess tax, which is due to the State in accordance with the provisions of articles 2, no. 1, subsection c) and 27, no. 2 of the CIVA;

e) With regard to the classification of the Claimant in terms of VAT, there is no doubt whatsoever that it has, since the beginning of its activity, been assessing and deducting VAT as a taxable person subject to the normal VAT taxation regime;

f) The AT does not accredit the competent bodies in the field of professional training and rehabilitation, and since it is only from this accreditation that such bodies can begin to perform services exempt from VAT, it proceeded to confirm with official bodies, and it is certain that, by consultation of the list of accredited bodies published by DGERT – Directorate-General for Employment and Labour Relations, it was only possible to confirm that the Claimant was recognized by that body as a training entity from 08/08/2007;

g) It is irrelevant, for the purposes of assessing and deciding the present legal question, the fact that the Claimant, possibly, was accredited as a training entity, as it alleges, since 2002, since the AT was always unaware of such fact and, in any event, any additional VAT assessment that the AT intended to carry out would always have to respect the statute of limitations for the right to assess tax;

h) It is certain that the Claimant, as an accredited training entity, from 08/08/2007, enjoyed an incomplete exemption in terms of VAT;

i) Even if the Claimant now sought to prove that it made the option verbally, the fact is that it would have had to do so by delivering a declaration of commencement or of changes, as the case may be, see no. 2 of article 12 of the CIVA, and that, in accordance with the then article 34 A of the CIVA, even if it could verbally make such declaration, this would always be dependent on the competent tax service having adequate computer systems to, immediately, proceed to the entry of such data in the AT's computer system so that they would be confirmed by the declarant, after their printing on a standardized document;

j) If the Claimant had indeed, on a date it cannot specify, exercised its right to waive the VAT exemption, this would be easily proven either by the AT, through data it would have entered in the system, or by the Claimant itself, which would not fail to have a formal document in its possession confirming such fact;

l) If the AT has no computer record of the option to waive the exemption made by the Claimant before 20/06/14, one can safely conclude that this is due to the fact that it never, before that date, made such waiver.

m) With regard to the unintelligibility of the assessments invoked by the Claimant, a ground which, fundamentally, may be reduced to the defect of lack of reasoning, it should be said, first and foremost, that the Claimant cannot claim to see or give the Tribunal the impression that the assessments, assessment demonstrations and account settlement demonstrations it received are isolated in the procedure, since it knows perfectly well that all the notifications made to it were made as a consequence of an inspection procedure within which, moreover, it exercised the right to be heard;

n) Necessarily, all assessments made to it after the Tax Inspection Report and relating to those taxation periods would always refer to the reasoning, factual and legal, that is contained in that same report, from which, the claimant was in perfect conditions to understand the reasons, factual and legal, that led to the notifications of the assessments made and to the specific amount that they reflected, having been capable of effectively opposing them, as is proven by the present request for arbitral pronouncement;

o) The Tax Inspection Services complied, within the scope of the inspection procedure, with all the principles to which they are bound, namely those to which the Claimant makes reference to justify its request for annulment of the assessments in question.

It concludes by requesting the dismissal of the present action and states that the assessments should be maintained in the exact terms issued by the AT.

1. On 20-11-2015, the meeting provided for in article 18 of the RJAT was held, followed by the production of evidence requested (testimony of party and witnesses) – See respective minutes.

2. The Parties submitted successive written submissions, maintaining, in essence, the arguments set out in the initial pleadings.

II. Preliminary Examination

1. The parties have legal personality and capacity, are legitimate and are duly represented (articles 4 and 10, no. 2, of the RJAT and article 1 of Regulation no. 112-A/2011, of 22 March).

8.1. The Tax and Customs Authority raises a preliminary question which we can summarize as follows: the acts challenged are "assessment demonstrations" and these are not assessment acts capable of permitting annulment on the basis of illegality.

The truth, however, is that the question raised by the AT appears to be without valid foundation or to constitute a false issue.

And this becomes clear immediately since in the claimant's own request for arbitral pronouncement the Claimant alleges it seeks "(...) the annulment of the acts of assessment of VAT and of the acts of assessment of the corresponding compensatory interest of the taxation periods (...)" .

It is true that the Claimant formulates the following final conclusive request, petitioning:

"(...)a) The annulment of all assessments, additional assessments and account settlement statements corresponding to VAT, as well as the account settlement/assessment statements corresponding to compensatory interest; and

b) The condemnation of the Tax Administration to pay the Appellant indemnity interest, in accordance with article 43 of the LGT, up to the full reimbursement of the amounts of VAT and compensatory interest provided for in the assessments, additional assessments and account settlement statements (...)" .

However, it is absolutely clear that the crux of the claim is the annulment of the acts of assessment, with the account settlement statements being invalidated as a logical consequence of the possible annulment of the tax acts that gave rise to them and were clearly subject to arbitral challenge.

The preliminary question raised by the AT is thus unfounded.

8.2. There are no circumstances that would prevent the Court from hearing the merits of the case.

III. Merits

III.1. Factual Matters

1. Proven Facts

As a preliminary note, it should be noted that the Tribunal is not obliged to rule on all the matters alleged, but rather has a duty to select only that which is relevant to the decision, taking into account the ground (or grounds) of claim that support the claim formulated by the claimant (see articles 596, no. 1 and 607, nos. 2 to 4, of the Code of Civil Procedure, as amended by Law 41/2013, of 26/6) and to state whether it considers it proved or not proved (see article 123, no. 2, of the Code of Tax Procedure).

According to the principle of free appraisal of evidence, the Tribunal bases its decision, regarding the evidence produced, on its intimate conviction, formed from the examination and evaluation it makes of the means of proof brought to the case and in accordance with its experience of life and knowledge of people (see article 607, no. 5, of the Code of Civil Procedure, as amended by Law 41/2013, of 26/6). Only when the probative force of certain means is pre-established by law (e.g., the full probative force of authentic documents – see article 371 of the Civil Code) does the principle of free appraisal not govern the appraisal of the evidence produced.

9.1. Based on the evidence produced at the hearing, on the elements contained in the case file and in the administrative file attached to the record, all analyzed critically by the Tribunal, the following facts are considered proven (with respect to some of the facts, the respective special and specifically relevant elements of proof):

a) The Appellant commenced business with the trading name B... –..., Lda, on 24/01/1996, with CAE 52488 (See. Doc. 55, attached to the Initial Petition);

b) On 28/01/1999, it filed a Declaration of Changes at the Tax Service of ..., having changed its trading name to "A ... - …, Lda." (See doc. 56, attached to the Initial Petition);

c) It currently carries out the activity of professional training, to which corresponds the Portuguese Classification of Economic Activities – CAE 85591, having submitted the accreditation request to the Institute for Innovation in Training (INOFOR) in early 2002 (See doc. 57, attached to the Initial Petition);

d) On 06/03/2002, it was notified of accreditation as a training entity, by decision of the Management Committee of INOFOR, with the express indication that this decision took effect from 08/02/2002, for a period of one year, in the field of Design, Organization and Promotion, Development / implementation (See Doc. 57, attached to the Initial Petition);

e) By letter no..., dated 21/04/2003, the Appellant was notified of the decision issued on 31 March 2003 by the Management Committee of INOFOR, of the renewal of that accreditation, for a period of three years, with effect from 08/02/2003 (See Doc. 58, attached to the Initial Petition);

f) In 2006, the accreditation was again renewed for a period of eighteen months, by decision of the Management Council of the Institute for Quality in Training, I.P (IQF), with effect from 08/02/2006 (See Doc. 59, attached to the Initial Petition);

g) In 2007, the accreditation was also renewed for a period of three years, with effect from 08/08/2007, by decision of the Management Council of the IQF (See Doc. 60, attached to the Initial Petition);

h) In 2010, the renewal was completed, which is still in force, by decision of the Director-General of the Directorate-General for Employment and Labour Relations, dated 12/10/2010, with effect from 08/08/2010 (See Doc. 61, attached to the Initial Petition);

i) When the Appellant approached the Tax Service of... in January 2014 to obtain a certificate evidencing that it had communicated to the Tax and Customs Authority (AT) its right to waive the VAT exemption, the AT official invoked that the record of the exercise of such right by the Appellant was non-existent in the computer system;

j) The Appellant alleges that it exercised such right verbally, in a timely manner, but is unable to specify the date, nor does it possess documentary evidence of such fact;

k) On 15 January 2014, the Claimant requested the AT to issue a certificate of the classification under which its activity fell, as well as the date from which the company was classified under the respective VAT regime (See doc. 63, attached to the Initial Petition);

l) The AT Service of ... issued the certificate attached to the Initial Petition as Doc. 64, the contents of which are reproduced here, from which it is extracted, among other things, that the company's principal activity is Professional Training, CAE-85591, as well as that it is classified under the normal taxation regime, with quarterly periodicity, in terms of VAT, since 24/01/1996;

m) Subsequently, following a request for clarification submitted by the Claimant's chartered accountant – within the scope of the activity of A..., the POPH (Human Potential Operational Programme) had requested proof of its waiver of the VAT exemption, since being certified by the Directorate-General for Employment and Labour Relations (DGERT), it should be covered by the exemption regime – the Directorate of VAT Services, through its Design Division I, provided the "Information" no..., dated 28-04-2014, in which it concludes the following:

"i) A... is accredited by a competent body as a training entity from 2010/08/08, and therefore, from then on, is automatically covered by the exemption regime for operations carried out in the context of professional training;

ii) It should have presented the declaration of changes within 15 days from the date of accreditation (2010/08/08), informing the AT that it had begun to carry out exempt operations, thus becoming exempt from the filing of periodic tax declarations;

iii) Should it wish to waive the exemption, this must be done through the submission of the declaration of changes, which takes effect on the date of its submission, marking therein the waiver of the exemption;

iv) From the date of recognition as a training entity, it continued, incorrectly, to exercise the right to deduct the tax borne on goods and services acquired for the carrying out of operations and, at the same time, continued to assess tax, and therefore tax is due to the State;

(…)" ;

n) The Claimant was subject to a tax inspection analysis carried out under the Service Orders nos. .../…/…/…/…, issued within the scope of activity code ...-... ­VAT Reclassification;

o) The aforementioned inspection analysis was of limited scope – VAT – in accordance with the provisions of subsection b) of no. 1 of article 14 of the Supplementary Rules of the Tax Inspection Procedure (RCPIT) and originated from information no..., dated 2014/04/28, from Design Division I of the VAT Services Directorate (DSIVA);

p) On 11/07/2014, the Project of the Tax Inspection Report was notified, and the Appellant presented its right to be heard on 28/07/2014, via fax and registered mail (See Doc. 62, attached to the Initial Petition);

q) Through letter no..., dated 10/09/2014, the Appellant was notified of the Final Tax Inspection Report (See Doc. 65, attached to the Initial Petition);

r) The AT dispensed with the examination of witnesses indicated by the Appellant, stating for this purpose that: "there are no facts requiring proof, since the proposed corrections result from the application of the law, that is, the taxpayer did not comply with the formal requirements set out in the VAT Code, since being engaged in an exempt activity but having opted to assess VAT on its active operations, was legally obliged to formalize this option through the waiver of that exemption."

s) With regard to the declaration of changes of activity, both the Directorate of VAT Services and the Directorate of Finances of ... understood that the Appellant should submit a new declaration of change of activity to formalize the Right to waive the VAT exemption, thus appearing in its database, which ended up being done on 20/06/2014 (See doc. 66, attached to the Initial Petition);

t) From 13/12/2004, the AT, specifically the Tax Service of ..., issued certificates stating that "A..., Lda., taxpayer no..., with registered office in..., ..., has its tax situation regularized, since it is not indebted to the National Treasury for any taxes or tax payments and respective interest (…)." (See Docs. 67, 68, 69, 70, 71, 72, 73 and 74, attached to the Initial Petition);

u) The majority of the applications submitted for the issuance of such certificates expressly contained that they were intended to benefit from community support and public funds, specifically from POEFDS (Operational Programme for Employment, Training and Social Development);

v) The Claimant declared the commencement of business on 24.01.1996, with CAE 47420 - RETAIL TRADE TELECOMMUNICATIONS EQUIPMENT, SPEC. ESTAB and, from 06.03.2008, with CAE 85591 - the activity of "PROFESSIONAL TRAINING".

w) Following the certificate mentioned in subsection l), C..., the Claimant's chartered accountant, sent on 14.03.2014 an e-mail addressed to DSRC (Directorate of Taxpayer Registry Services and to DSIVA (Directorate of VAT Services), where it requested an opinion on the following questions (see pages ... of the administrative file):

"1 - Classification

• I am the chartered accountant for the entity with NIPC - ... and CAE 85591, regarding which we were asked for proof that the waiver of the VAT exemption had been requested, considering that this classification is automatic;

• The company requested a certificate from the local Tax Service requesting information about the company's classification in terms of VAT, since when that classification has been in effect and whether the company was ever classified under the exemption regime. The certificate that was issued makes no reference to the exemption;

• POPH are requesting that we show a declaration that we have waived the exemption regime, because they say that due to the fact that the company is certified by DGERT, it would have automatically been covered by the exemption regime and in which it should remain by not having waived the same and that it also should not assess VAT.

2 - Doubt

• Is the classification under Art. 9 of the CIVA automatic and how does it work or does it have to be requested and what is the procedure?

• How can the company present information binding on POPH?

• For your information to be binding, is it enough to send a document signed by me as a chartered accountant, or is an application signed by the company's representative necessary?"

x – In response, in addition to the conclusions already contained in subsection m), DSIVA, in the same "Information" no..., dated 28.04.2014, further clarified what follows (see pages ... of the administrative file):

« (...) 4. Consultation of the Taxpayer Registry System confirms that, since 06/03/2008, it has been carrying out the activity of professional training, and is classified under the normal taxation regime, quarterly periodicity, thus exercising the right to deduct the tax borne and assessing VAT on the operations carried out, since it did not possess any accreditation certificate issued as a competent entity in the field of professional training and rehabilitation, in order to be covered by the exemption provided for in subsection 10) of article 9 of the CIVA (final part), which stipulates that exempt from tax are services the purpose of which is professional training, as well as related services, such as the provision of accommodation, food and teaching material, carried out by public law bodies or by entities recognized as having competence in the fields of professional training and rehabilitation by the competent ministries. "

1. From consultation of the list of accredited entities published by DGERT - through its website, it is verified that A... is recognized by that body as a training entity from 2010/08/08. For this reason, from the moment it obtained the certification as a training entity, it became automatically, in operations carried out in the context of professional training, covered by the mentioned exemption.

2. Nevertheless, within 15 days, it was obliged to proceed with the change of its classification through the submission of a declaration of changes, in accordance with articles 32 and 35, both of the CIVA, informing the Tax and Customs Authority (AT) that it had begun to carry out operations exempt under subsection 10) of article 9 of the CIVA and which do not confer the right to deduction.

3. If it wished to exercise the option for taxation, it could have waived the exemption, in accordance with subsection a) of no. 1 of article 12 of the CIVA, opting for the application of tax to the operations carried out. As long as this does not happen, the taxable person is carrying out exempt operations that do not confer the right to deduction.

...

1. With regard to the classification of the present claimant, it should be noted that, given that it is an entity recognized as having competence in the fields of professional training and rehabilitation and the operations carried out have been, since that recognition (2010/08/08), covered by the exemption regime provided for in article 9 of the CIVA, not having waived the exemption, the tax borne on inputs is not susceptible to the right to deduction.

2. However, proceeding incorrectly and in accordance with the normal VAT taxation regime under which it has been classified since the beginning of its activity, it continued to file periodic declarations, assessing tax on the operations carried out and deducting the tax paid on goods and services it acquired from other taxable persons.

3. In accordance, the tax assessed on operations is due to the State, by force of the provisions of subsection c) of no. 1 of article 2 and no. 2 of article 27 of the CIVA.»

z – The Tax Inspection Services proceeded, with regard to the VAT considered to be improperly deducted by the Claimant in the years 2010, 2011, 2012, 2013 and 2014, with the following corrections:

aa) From the Tax Inspection Report, specifically its Chapter IX – Right to Be Heard and the analysis of the exercise of such right, the following is extracted, with relevance for the present case:

"(...) in points 1 to 5 it states that the Report errs with regard to the date on which the taxable person delivered the declaration of changes of activity in order to change from CAE 047420 "Retail Trade Telecommunications Equipment, Spec. Estab." to CAE 85591 "Professional Training', which according to him, was delivered on 28 January 1999.

Having analyzed the entire situation through the elements contained in the AT's database in the "Taxpayer Management and Registry System" application as well as through consultation with the tax service of ..., where the taxpayer's individual file is kept, we confirm that the project of corrections is not affected by any error, since on 28-01-1999, there is no declaration of changes of activity delivered by the taxable person to change the activity to CAE 85591 "Professional Training".

On this date, there are only Official Change Declarations, made by AT services, but which do not change the taxable person's CAE to "Professional Training".

On 29-06-2001 the taxable person delivered a declaration of changes, where the activity appears with CAE 52488 "Retail Trade Other New Products in Special Estab.", but maintains the classification it had in VAT, Normal Regime Quarterly, since the beginning of activity on 24-01-1996, not waiving the exemption, as fields 10 and 13 were not marked, where the taxable person exercised the option for the taxation regime.

On 31-03-2005 the taxable person delivered a new declaration of changes, where it only alters the NIF of the chartered accountant, on 18-03-2008 it alters the accounting regime under IRC, opting for the General Regime for determination of Taxable Profit and indicates the Bank Identification Number (NIB). Again, on 29-06-2012, it presents a declaration of changes where it only alters the NIB and the identification of the chartered accountant.

Now, the taxable person did not alter either the CAE or exercise the option for taxation, the CAE being altered officially by the services on 06-03-2008, so when the taxable person delivered the declaration of changes on 18-03-2008, the CAE was already 85591 - Professional Training. However, the taxable person did not effect the waiver of the exemption in any of the declarations of changes delivered (prints of SGRC and photocopies of the declarations of change of activity attached).

The fact that the company has been accredited since 08-02-2002 does not prevent it from having complied with the rules imposed in the VAT Code regarding the waiver of the exemption, since it is read in point 14 of the Response that "...it is important to emphasize that on the present date the taxable person since its accreditation as a training entity on 08/02/2002 has successively and continuously renewed the status of accredited entity...". Point 15 states that "...the taxable person was notified of the approval of its accreditation request with INOFOR on 05/-03/-2002, a date relevant for counting the period for the purpose of opting for waiver of the exemption, provided for in no. 10 of article 9 of the VAT Code ".

However, the taxable person did not proceed in this manner, since, as is said in the Project Report, "...A..., within 15 days, was obliged to proceed with the change of its classification through the submission of a declaration of changes, in accordance with articles 32 and 35, both of the CIVA, informing the Tax and Customs Authority (AT) that it had begun to carry out operations exempt under subsection 10) of article 9 of the CIVA and which do not confer the right to deduction.

Should it wish to exercise the option for taxation, it could have waived the exemption, in accordance with subsection a) of no. 1 of article 12 of the CIVA, opting for the application of tax to the operations carried out. As long as this does not happen, the taxable person is carrying out exempt operations that do not confer the right to deduction."

In point 17 of the Response the taxable person says that "...in 2002 (year of accreditation for the first time) the taxable person made this communication verbally at the tax service of ...

In point 18 it states "what happens is that the declaration of waiver is not contained in the administrative file of the taxable person, existing in that tax service.

Now, as provided for in article 34 A of the CIVA, the taxable person had this alternative at its disposal, but there were also rules, stipulated in that article, that both the services and the declarant had to comply with. (...)

We therefore conclude that although the declarations could be made verbally, they had to be entered into the computer system and printed on a document duly verified by the taxable person's chartered accountant. As it was found, such document is not in the computer system, nor in the possession of the tax service, nor of the taxable person itself, and therefore it is concluded that such verbal declaration was not made, which is why the AT was unaware that "A..." was an entity accredited by a competent body as a training entity.

Throughout the numerous points of the Response, the taxable person invokes that, if it could not exercise the right to deduction within the exemption, it also could not assess, but it did assess. Then, it questions, should not corrections also be made to the assessments.

As already referred to in the project report, the tax assessed on operations is due to the State, by force of the provisions of subsection c) of no. 1 of article 2 and no. 2 of article 27 of the CIVA, (...)

That is, having the taxable person improperly assessed VAT on its operations, this should have been paid to the State within the period mentioned in no. 2 of article 27 of the CIVA.

In point 36 of the Response it states that "...in the event of any failure on the part of the taxable person, it would translate into the absence of a mere declaration of option of waiver of the exemption."

In point 37 it says that "...non-compliance with a mere formal requirement ... cannot lead to the result proposed in the Report".

We cannot agree with the taxable person since the formal requirements embodied in the CIVA are to be complied with, otherwise one would be distorting the law. [...]

This inspection process was conducted, in its entirety and exclusively, in the installations of the Tax Administration, through the analysis of information, declarations of the taxable person, as well as all elements available in the AT's database.

Having the taxable person filed all VAT declarations where it is assumed that it declared truthfully all the tax assessed and deducted, and having already entered the State's coffers the positive difference between the assessed and deducted, only that which was improperly deducted is missing.

Thus, the correction proposed in the project report only covers the restoration of the improperly deducted tax, so that all the tax assessed can be paid to the State".

bb) Assessments were issued which the Claimant attaches to the Initial Petition as Docs. 1 to 54 and which have as the voluntary payment deadline the dates 12.12.2014 and 31.12.2014.

9.2. Facts Not Proved

It was not proved that the Claimant communicated to the Tax and Customs Authority (AT) its right to waive the VAT exemption before 20-06-2014.

9.3. Justification for the Determination of Factual Matters

The proven facts are based on the documents existing in the case file, in the administrative file and on the agreement of the Parties, with no controversy regarding them.

The evidence produced at the hearing by the Appellant was not convincing, since both the managing partner of the Claimant, ... and the witness ... (former chartered accountant of the company) were unable to specify facts susceptible to giving the Tribunal the conviction that A... had communicated verbally to the AT its right to waive the VAT exemption. Moreover, both failed in the imperative to explain why they did not persist in obtaining documentary proof of the exercise of such right when, sometime in 2002, this objective would have been frustrated due to an alleged printing difficulty in the paper at the Tax Service where they said they had gone for that purpose.

At most and regarding this matter, doubts would subsist about this reality - which it would be incumbent on the Claimant to prove - and which would always lead (these doubts) to the verbal communication within the terms and time alleged being considered not proved – See articles 414 of the Code of Civil Procedure and 346 of the Civil Code.

And, as alleged by the AT, regarding the document presented by the Claimant at the meeting of the Arbitral Tribunal of 20/11/15 and which is a copy of a notice (see no. 1 of article 57 of the General Tax Inspection Regulations), as well as the respective notification of the facts ascertained in the misdemeanor proceedings, although the Claimant seeks with these to give the idea that the AT would have assumed therein that it recognized that it was an entity accredited as a training entity since 2002, it is not proved that this was not merely a reproduction of what the Claimant itself invoked.

On the other hand, what is certain is that such misdemeanor proceedings are distinct from the inspection proceedings that gave rise to the assessments, subject matter of the present proceedings, and in the document now attached by the Claimant nothing is said about whether that date was or was not ascertained by the AT or whether it merely reproduces what was being invoked by the Claimant itself.

Therefore, in accordance with the aforementioned and documented Information no..., dated 28-04-2014 of DSIVA, "(...)consultation of the Taxpayer Registry System confirms that, since 06/03/2008, it (the Claimant) has been carrying out the activity of professional training, and is classified under the normal taxation regime, quarterly periodicity, thus exercising the right to deduct the tax borne and assessing VAT on operations carried out, since it did not possess any accreditation certificate issued as a competent entity in the field of professional training and rehabilitation, in order to be covered by the exemption provided for in subsection 10) of article 9 of the CIVA (final part),
(...)
5. From consultation of the list of accredited entities published by DGERT – through its website, it is verified that A... is recognized by that body as a training entity from 2010/08/08. For this reason, from the moment it obtained the certification as a training entity, it became automatically covered by the mentioned exemption in the operations carried out in the context of professional training.

That is, for legal purposes the AT can only confirm what is alleged by the claimant through consultation of the list of accredited entities published by DGERT and, in accordance with the same, the claimant is recognized by that body since 08/08/2010.

In any case, the fact that the claimant is, or is not, an accredited entity since 2002, might only possibly be relevant in terms of determining the degree of negligence on its part, all the greater since it is certain that it allowed more than 10 years to pass without effecting the waiver of the exemption. Which means, in practical terms, that the AT could only exercise its right to assess, taking into account the statute of limitations, from 2010.

For its part, Ms. Inspector ..., of the Directorate of Finances of ..., in essence, merely confirmed the information that at the Tax Service of ..., there is no record, physical or computer, of the exercise of such right of waiver by the Claimant.

III.2. Legal Matters

The following are, in summary and if correctly understood, the issues raised:

a) Whether the assessments and account settlements suffer from illegality by translating a violation of the provisions of articles 9, no. 10) and 12, subsection a), of the CIVA (error regarding the factual and legal presuppositions of the taxation);

b) Whether such additional assessments and account settlements suffer from illegality by being unintelligible, due to lack of reasoning;

c) Whether these additional VAT assessments suffer from illegality due to the omission of essential formalities in the tax procedure (e.g., examination of witnesses) and violation of the principles of inquiry, search for material truth, etc.;

d) Whether such assessments violate the principle of justice and proportionality [payment of the totality of VAT deducted without the AT taking into account what was previously assessed and paid in an amount exceeding the deducted amount];

e) Whether there is unconstitutionality in the interpretation made by the AT of articles 12, no. 1/a) and 52, no. 1, of the CIVA [violation of the principle of Justice and the principle of proportionality in addition to error in the factual and legal presuppositions regarding the application of such articles].

And if the Tribunal has a duty to appraise, in principle, the issues raised by the parties, on the other hand, it does not have a duty to appraise all arguments formulated – this is what has been repeatedly stated by Case Law (See inter alia, Decision of the Plenary Session of the 2nd Section of the Supreme Administrative Court, of 7 June 95, case 5239, in Official Gazette – Appendix of 31 March 97, pages 36-40 and Decision Supreme Administrative Court – 2nd Sec – of 23 April 97, Official Gazette/Appendix of 9 October 97, p. 1094).

Article 124 of the Code of Tax Procedure (applicable to tax arbitration by force of article 29 of the RJAT) provides:

"1. In the decision, the court shall appraise as a priority the defects that lead to the declaration of non-existence or nullity of the challenged act and, then, the defects argued that lead to its annulment.

1. In the referred groups the appraisal of the defects is made in the following order:

a) In the first group, that of defects whose substance determines, according to the prudent discretion of the judge, more stable or effective protection of the offended interests.

b) In the second group, that indicated by the appellant whenever it establishes between them a relationship of subsidiarity and no other defects are argued by the Public Ministry or, in other cases, that fixed in the previous subsection".

In the assumption, which is endorsed (See, for example, Decisions of the Supreme Administrative Court of 23-5-1991 – Plenary – Case 22444-A; of 2-2-1995, - Case 17036-A; 25-5-1995 – Plenary – Case 27800) that the Tribunal is not obliged to know all the defects imputed to the challenged act, it is justified that an order of priority be established in the knowledge of the defects, very especially – as appears to be the case – when the appellant/claimant imputes the defects according to a relationship of subsidiarity.

Thus, it is understood that the appraisal of the defects imputed to the act in a logic that avoids, for better or more effective protection of the offended interests, an annulling decision motivated by mere defects of form capable of execution of the judgment with the performance by the AT of acts with the same meaning of the annulled act, merely with the elimination of the formal defect that affected it.

In any case, it should always be noted that, as regards the unintelligibility of the assessments and the defect of lack of reasoning, the assessment demonstrations and account settlement demonstrations that the Claimant received were made to it as a consequence of an inspection procedure within which it exercised the right to be heard, with reference made to the reasoning, factual and legal, contained in the corresponding report, the reasons for dismissal of such defects.

Moreover, it is clear from the request for pronouncement that the Claimant clearly understands the reasons and grounds for the assessments.

And as to the exercise of the right to waive the VAT exemption, nothing further will be added or invoked on such matter when it is certain that it has been demonstrated that such right was not exercised before 20-6-2014.

What is immediately revealed as essential to justify the legality of the assessments subject matter of the present arbitral pronouncement.

Also, regarding the documentary elements purportedly probative of the waiver and the exemption from the duty to maintain or exhibit the documents after the 10-year period provided for in article 52, no. 1 of the CIVA, is an irrelevant question in the case, to the extent that it is the Claimant itself that alleges it made the verbal request for exemption and was not provided by the AT with documentary proof.

And regarding the alleged violation of the principle of justice and proportionality resulting from the payment of the totality of VAT deducted without the AT taking into account what was previously assessed and paid in an amount exceeding the deducted amount, is a matter equally irrelevant, or with all due respect, which does not even make sense given the nature of the tax itself.

In truth, refund consists of the return to the taxable person of VAT tax borne by it in excess during a given time period. In turn, the mechanism of VAT deduction consists in the faculty that the taxable person has to be able to deduct from the tax levied on the taxable operations it carried out, the tax that was invoiced to it in its acquisitions of goods or services from other VAT taxable persons (see Clotilde Celorico Palma, Introduction to Value Added Tax, Notebooks of the Institute of Tax and Financial Economics, no. 1, 2nd edition, Almedina, 2005, p. 157 et seq and Decision of the Supreme Administrative Court - 2nd Section of 25/11/2004 – Case no 216/04)

Now, in order for the Claimant to be able to deduct the VAT relating to goods and services acquired for the exercise of its activity/corporate purpose, it had to have waived the exemption (which it did not, as was seen) and opted for the application of VAT, in accordance with the provisions of subsection a) of no. 1 and no. 2 of article 12 of the CIVA.

Thus, in the case at hand, since the presuppositions for the waiver of the exemption from, at least, the year 2007 were not met, the operations carried out by the Claimant, of providing professional training services, were exempt from VAT and the Claimant could not assess VAT nor could it deduct the VAT borne.

If the State (AT) received, possibly, more tax (VAT) than it would have received if the Appellant were within the exemption regime, as alleged by the Claimant, it is its own responsibility, since, through negligence, choice or any other reason, the Claimant did not use that faculty of waiver.

There is therefore no, under this aspect, the slightest basis to invoke the violation of the principle of justice and proportionality.

Finally, a word regarding alleged interpretative unconstitutionalities to say that neither do they surprise nor does the Claimant even allege which concrete constitutional norms, in its perspective, were violated by the AT.

Let us now look in more detail at the situation sub judice.

10. The Exemption for Professional Training

It was with the Sixth VAT Directive that an attempt was made to harmonize the exemptions in internal transactions that Member States could grant, given that in the Second Directive this matter was left to the exclusive discretion of national legislators.

The main concern underlying the exemption regime provided for in the Sixth Directive was to establish a common list of exemptions so as to make it possible, as results from its preamble, for own resources to be collected uniformly in all Member States.

In choosing the operations exempt from value added tax, the Community legislator was inspired, when adopting the Sixth Directive, on the one hand, by the exemptions already existing in Member States, and on the other hand, attempted to limit the number of exemptions, given that these constitute an exception to the general principle that all supplies of goods and services carried out for consideration by a taxable person are subject to VAT.

Thus, essentially for reasons of a social, cultural and political nature, the VAT Directive provides for a series of exemptions, which, however, apply to a set, despite everything, limited of services, given the broad tax base of VAT.

In the VAT Directive, the regulation of exemptions is systematized by distinguishing "exemptions for the benefit of certain activities of general interest", "exemptions for the benefit of other activities" (internal exemptions), "exemptions related to intra-community operations and exemptions on import", "exemptions on export", "exemptions applicable to international transport", "exemptions applicable to certain operations assimilated to exports", "exemptions applicable to supplies of services provided by intermediaries" and "exemptions applicable to operations related to international traffic in goods".

As regards exemptions in internal operations, and in particular exemptions for the benefit of certain activities of general interest, the Sixth Directive proceeded as we have seen to their harmonization, seeking to achieve a limited list of exemptions, which permits a broad tax base.

In our legislation, the exemptions applicable to education and professional training are contained in nos. 9 to 11 of article 9 of the CIVA and correspond to the exemptions provided for in subsections i) and j) of no. 1 of article 132 of the VAT Directive, which in turn correspond to the exemptions already previously provided for in the Sixth VAT Directive, more specifically in subsections i) and j) of no. 1 of Part A of its article 13.

Subsection i) of no. 1 of article 132 of the VAT Directive covers both education and professional training under the heading of Exemptions for the benefit of certain activities of general interest, determining the following: "1. Member States shall exempt the following operations:

(…)

i) The education of infants and young people, school or university teaching, vocational training or retraining, and also the supply of goods and services closely related thereto, carried out by public law bodies pursuing the same objective and by other bodies that the Member State concerned considers to be pursuing similar objectives;"

As the legislator begins by emphasizing in article 131 of the VAT Directive, the "… exemptions provided for in Chapters 2 to 9 apply without prejudice to other Community provisions and on the conditions fixed by the Member States to ensure the correct and simple application of the said exemptions and to prevent any possible fraud, evasion or abuse."

The exemptions in internal operations provided for in article 9 of the CIVA, in accordance with the provisions of the VAT Directive, apply fundamentally to certain activities of public interest or to activities regarding which the application of VAT is particularly complex, as for example the case of financial and insurance and reinsurance operations.

These exemptions are characterized by being incomplete, simple, partial, or not conferring the exercise of the right to deduct the VAT borne. That is, in these exemptions the beneficiary taxable person does not assess tax on its active operations, but does not have the right to deduct the VAT borne for their implementation.

The national legislator chose to transpose the exemptions for education and professional training in separate provisions, namely nos. 9 and 11 and no. 10 of article 9 of the CIVA.

In accordance with the provisions of no. 10 of the aforementioned provision, exempt from VAT are supplies of goods and services which have as their object professional training, as well as supplies of goods and supplies of related services, such as, for example, the provision of accommodation, food and teaching material, provided they are carried out by public law bodies or by entities recognized as having competence in the fields of professional training and rehabilitation by the competent ministries.

That is, for the purposes of the application of this exemption, the fulfillment of: (i) an element of an objective nature - the promotion of courses or actions aimed at the initiation, qualification, improvement, conversion or specialization in professional training of trainees, and of (ii) an element of a subjective nature, which is embodied in the need that the services be provided by a public law body or by a training entity recognized as having competence in the field of professional training. For the purposes of application of this latter requirement, the Tax Administration naturally refers to the specific legislation of the sector. Thus, immediately in accordance with Dispatch no. 51/88, of 7.10.88, of the State Secretary for Employment and Vocational Training, published in the Official Gazette, II series, of 27.10.88, it was determined that it would be the responsibility of the Institute of Employment and Professional Training to recognize that the entities referred to in the second part of no. 10 develop professional training or rehabilitation services.

It should be noted that, generally speaking, the exemptions included in the CIVA and in the Internal Tax Regulations function automatically, with no need for the taxable person to request their application, and precisely in this situation is the exemption with which we are now concerned.

As is clarified, "The exemptions in internal operations provided for in article 9 of the Code apply fundamentally to certain activities of public interest or to activities regarding which the application of VAT is particularly complex, as for example the case of financial and insurance and reinsurance operations.

These exemptions are characterized in the following terms:

a) They are incomplete, not conferring the right to deduct the tax borne. Exceptions are only the specific situations provided for in article 20, no. 1, subsection b), IV), of the CIVA, relating to insurance and reinsurance operations, in case the recipient is established or domiciled outside the EU or that are directly linked to goods intended to be exported to countries not belonging to the EU;

b) They are exhaustive;

c) They are automatic, not requiring an act of recognition by the Tax Administration;

d) In some exceptional situations provided for in article 12, the possibility of waiving the exemption is granted, with the taxable person beginning to apply VAT in the normal terms to its operations and, consequently, to be able to deduct the tax borne for their implementation;"

Being this precisely the situation of the Claimant, being an entity recognized for the purpose, as results from the facts given as proved, it is concluded, consequently, that the training actions it provides are automatically exempt from VAT, should not assess tax on these operations, with the exercise of the right to deduct the VAT borne for their implementation being prevented, unless the waiver of the exemption is duly exercised, in the terms that follow.

11. The Waiver of the Exemption for Professional Training

Due to the fact that exemptions under VAT can be detrimental, the Community legislator, on an exceptional basis, made possible in some situations the right to waive the exemption, with the taxable person, in normal terms, beginning to assess and deduct the VAT borne. However, the exercise of this right is dependent on the fulfillment of procedural conditions required by the Member States.

As we mentioned, in incomplete exemptions, the operator is outside the tax mechanism, being treated as a final consumer, whereas in complete exemptions, or in zero-rated situations, the operator is an integral part of the tax mechanism, being able to deduct it in general terms. For this very reason, the Community legislator came to permit, in exceptional cases, that Member States grant the right to waive certain exemptions, with taxable persons beginning to apply tax in general terms, i.e., to assess and deduct the VAT borne, so as not to increase the price of their operations.

Now, the exemption for professional training is precisely in that exceptional situation, being capable of waiver, and taxable persons covered by it can waive the exemption, that is, supplies of services which have as their object the professional training referred to in no. 10 of article 9 can be taxed by an express option made by the taxable persons, subsection a) of no. 1 of article 12 of the CIVA).

Regarding the exercise of this option, the following should be taken into account:

a) Generally speaking, the option is global, that is, it applies to the totality of operations carried out by the taxable person;

b) It is effected through the submission of a declaration of commencement or of changes, as the case may be;

c) It takes effect from the submission of the aforementioned declarations;

d) The taxable person is obliged to remain in the regime chosen for a minimum period of five years, becoming subject to all obligations arising from that regime.

That is, it is particularly important for this purpose to emphasize that the national legislator, in accordance with the rules of the VAT Directive, determined that in order for the automatic exemption applicable to professional training to cease to operate, it is necessary for the taxable person to formalize the waiver through the proper declaration.

12. Rules of Subjective Scope

The rules of subjective scope contained in article 2 of the CIVA indicate to us who are the taxable persons for VAT purposes.

In accordance with the general rules, the taxable persons for VAT purposes are natural or legal persons who inappropriately mention VAT on an invoice (article 2, no. 1, subsection c)).

It is understandable that the Community legislator was concerned with making a taxable person one who inappropriately mentions VAT on an invoice or equivalent document. Indeed, what occurs in these circumstances is that the beginning of the chain of assessment and deduction of tax is being initiated, with the effects arising therefrom.

As such, if a taxable person who is exempt inappropriately mentions VAT on the invoice, such tax must be delivered to the State.

This does not, however, preclude the possibility of the taxable person making the appropriate VAT adjustments in accordance with the provisions of article 78 of the CIVA, should the respective conditions of application be met.

IV. Framework of the Disputed Situation

1. In the specific case it is proved that the Claimant carries out activities of professional training and is recognized as such by the competent entities, thus being automatically covered by the exemption relating to professional training included in no. 10 of article 9 of the CIVA.

As we have referred, it is not incumbent on the AT, naturally, to accredit the competent entities in the field of professional training and rehabilitation, and only from such accreditation can such entities begin to carry out, automatically, services exempt from VAT. Now, the AT, by consultation of the list of accredited entities published by the Directorate-General for Employment and Labour Relations, confirmed that the Claimant was recognized by that body as a training entity from 8 September 2008, and therefore, as an accredited training entity, automatically enjoyed from that date an incomplete exemption in terms of VAT, a fact which precluded the deduction of VAT borne.

Notwithstanding the Claimant invoking that it waived the exemption verbally, and therefore was able to deduct the VAT borne for the carrying out of training actions, the fact is that, as results from the facts not proved, it is not proved that it did.

Indeed, even if the Claimant sought to prove that it made the option verbally, the fact is that it would have had to do so by delivering a declaration of commencement or of changes, and that, in accordance with the then article 34 A of the CIVA, even if it could verbally make such declaration, this would always be dependent on the competent tax service having adequate computer systems to, immediately, proceed to the entry of such data in the AT's computer system so that they would be confirmed by the declarant, after their printing on a standardized document.

If the Claimant had, even on a date it cannot specify, exercised its right to waive the VAT exemption, such fact would be provable by the AT through the data it would have entered in the system, as well as by the Claimant itself, which should possess a formal document in its possession confirming such fact.

Now, it happens that, as we have seen, the AT has no computer record of the option to waive the exemption made by the Claimant before 20 June 2014.

1. As regards the assessment and remittance of VAT by the Claimant, the rules of subjective scope contained in article 2 of the CIVA indicate to us that the taxable persons for VAT purposes are natural or legal persons who inappropriately mention VAT on invoices. As such, if a taxable person who is exempt inappropriately mentions VAT on the invoice, such tax must be delivered to the State. However, the taxable person may make the appropriate VAT adjustments in accordance with the provisions of article 78 of the CIVA, should the respective conditions of application be met.

2. In these terms, this Tribunal should rule that the request for declaration of illegality and annulment of the VAT assessments in question is unfounded, with the result that the other requests formulated are prejudiced.

IV. Judgment

In accordance with the above, the arbitrators in this Tribunal agree to:

A - Rule totally unfounded the request for annulment of the acts in question, namely:

Additional Assessment no. ... (Doc. 1), Additional Assessment no. ... (Doc. 2), Additional Assessment no. ... (Doc. 3), Additional Assessment no. ... (Doc. 4), Additional Assessment no. ... (Doc. 5), Additional Assessment no. ... (Doc. 6), Additional Assessment no. ... (Doc. 7), Assessment no. ... (Doc. 8), Assessment no. ... (Doc. 9), Assessment no. ...(Doc. 10), Assessment no. ... (Doc. 11), Assessment no. ... (Doc. 12), Assessment no. ... (Doc. 13), Assessment no. ... (Doc. 14), VAT Assessment Demonstration no. 2014... (Doc. 15), VAT Assessment Demonstration no. 2014... (Doc. 16), VAT Assessment Demonstration no. 2014... (Doc. 17), VAT Assessment Demonstration no. 2014... (Doc. 18), VAT Assessment Demonstration no. 2014... (Doc. 19), VAT Assessment Demonstration no. 2014... (Doc. 20), VAT Assessment Demonstration no. 2014... (Doc. 21), VAT Assessment Demonstration no. 2014... (Doc. 22), VAT Assessment Demonstration no. 2014... (Doc. 23), VAT Assessment Demonstration no. 2014... (Doc. 24), Account Settlement Demonstration no. 2014... (Doc. 25), Account Settlement Demonstration no. 2014... (Doc. 26), Account Settlement Demonstration no. 2014... (Doc. 27), Account Settlement Demonstration no. 2014... (Doc. 28), Account Settlement Demonstration no. 2014... (Doc. 29), Account Settlement Demonstration no. 2014... (Doc. 30), Account Settlement Demonstration no. 2014... (Doc. 31), Account Settlement Demonstration no. 2014... (Doc. 32), Account Settlement Demonstration no. 2014... (Doc. 33), Account Settlement Demonstration no. 2014... (Doc. 34), Account Settlement Demonstration no. 2014... (Doc. 35), Account Settlement Demonstration no. 2014... (Doc. 36), Account Settlement Demonstration no. 2014... (Doc. 37), Account Settlement Demonstration no. 2014... (Doc. 38), Account Settlement Demonstration no. 2014... (Doc. 39), Account Settlement Demonstration no. 2014... (Doc. 40), Account Settlement Demonstration no. 2014... (Doc. 41), Account Settlement Demonstration no. 2014... (Doc. 42), Account Settlement Demonstration no. 2014... (Doc. 43), Account Settlement Demonstration no. 2014... (Doc. 44), VAT Interest Assessment Demonstration no. 2014... (Doc. 45), VAT Interest Assessment Demonstration no. 2014... (Doc. 46), VAT Interest Assessment Demonstration no. 2014... (Doc. 47), VAT Interest Assessment Demonstration no. 2014... (Doc. 48), VAT Interest Assessment Demonstration no. 2014... (Doc. 49), VAT Interest Assessment Demonstration no. 2014... (Doc. 50), VAT Interest Assessment Demonstration no. 2014... (Doc. 51), VAT Interest Assessment Demonstration no. 2014... (Doc. 52), VAT Interest Assessment Demonstration no. 2014... (Doc. 53), VAT Interest Assessment Demonstration no. 2014... (Doc. 54).

B – Rule that the other questions raised are prejudiced; and

C – Condemn the Claimant to pay the costs of the proceedings, which are fixed at €3,060.00

Value of the case: € 122,718.14

Lisbon and CAAD, 13-1-2016

The Collective Arbitral Tribunal,

José Poças Falcão
(President)

A. Sérgio de Matos
(Member)

Clotilde Celorico Palma
(Member)

[Footnotes as in original]