VAT on Dental Prosthesis Materials: Supervening Uselessness and Undue Guarantee Compensation (CAAD 220/2016-T)

ARBITRAL AWARD

The arbitrators José Pedro Carvalho (Chairman Arbitrator), Emanuel Augusto Vidal Lima and João Menezes Leitão (Arbitrator Members), designated by the Ethics Council of the Administrative Arbitration Centre to form the present Arbitral Tribunal, constituted on 29.6.2016, hereby agree as follows:

I. Report[1]

1. A…, S.A., legal entity no. …, with registered office at Building…, …, no. …, Floor…, …, …-… … (hereinafter the Claimant), submitted on 11.04.2016, pursuant to articles 2, no. 1, letter a) and 10 of Decree-Law no. 10/2011, of 20 January, as subsequently amended (Legal Regime for Tax Arbitration, hereinafter LRTA), a request for arbitral pronouncement, in which the Tax and Customs Authority is required (hereinafter, Respondent or TA), concerning additional assessments of Value Added Tax (VAT), in the total amount of €3,786,914.29, and compensatory interest, in the total amount of €472,850.34, relating to the period between January 2010 and January 2013.

2. In accordance with articles 5, no. 3, letter a), 6, no. 2, letter a) and 11, no. 1, letter a) of the LRTA, the Ethics Council of this Administrative Arbitration Centre (CAAD) designated as arbitrators of the collective arbitral tribunal Mr. Dr. José Pedro Carvalho, as Chairman Arbitrator, and Messrs. Drs. Emanuel Augusto Vidal Lima and João Menezes Leitão, as Arbitrator Members, who accepted the appointment.

3. Pursuant to letter c) of no. 1 and no. 8 of article 11 of the LRTA, as per communication from the Chairman of the Ethics Council of the CAAD, the Arbitral Tribunal was constituted on 29.6.2016.

4. In its request for arbitral pronouncement (hereinafter initial petition or IP), the Claimant petitioned, "on the grounds of error regarding the legal prerequisites, incorrect interpretation of item 2.6 of List I annexed to the VAT Code, violation of the neutrality principle, causing manifest distortion of competition rules", the following (cf. final prayer for relief of the IP):

"a) the declaration of illegality and total annulment of the additional VAT assessments and compensatory interest, including the decisions on the Gracious Complaints issued in relation thereto, and,

b) that the TA be condemned to pay an indemnity for undue provision of guarantee, pursuant to articles 53 of the General Tax Law and 171 of the Tax Code of Procedure and Process".

1. Specifically, the Claimant invoked that the disputed assessment acts are based on incorrect interpretation and application by the TA of art. 18, no. 1, letter a) of the VAT Code and item 2.6 of List I annexed to the Code, regarding materials and components intended for dental prostheses, on the grounds that (see art. 182 of the IP):

"1. The legislator in enacting item 2.6 of List I annexed to the VAT Code, did so with the purpose of the higher interest of public health protection;

1. Such objective cannot be reconciled with discriminatory treatment, at the level of VAT taxation, of prostheses composed of a single piece versus prostheses composed of three pieces;

2. Any other interpretation different from the foregoing would appear to be capable of violating the principles of generality, equality, legality and social justice;

3. Similarly, the neutrality principle governing VAT at the level of European Union law would be irretrievably compromised, treating equal goods differently without any rational justification, insofar as (...) the pieces that compose, as a whole, the dental prosthesis, have no other purpose than this;

4. In fact, the treatment of the dental prosthesis is carried out with the phased placement of different components without ever distorting what is the final objective: placement of a dental prosthesis;

5. Even if, by mere academic exercise, doubts were raised regarding the applicable tax provisions, the economic substance of the taxable facts must always be considered, under the principle of primacy of substance over form;

6. While it is true that the application of reduced VAT rates constitutes an exception to the general rule (taxation at the standard rate) and should be applied restrictively, this does not imply that its application be selective and capable of undermining the most basic characteristics of VAT".

7. The table below identifies the additional VAT assessments and compensatory interest whose (il)legality was thus subject to appraisal by this Tribunal:

[Table with assessment details]

1. The TA, pursuant to art. 17 of the LRTA, submitted on 15.9.2016 its response, in which it defended itself by objection and petitioned for a decision determining the dismissal of the request for arbitral pronouncement, with consequent rejection of the claims formulated.

2. By order of 6.10.2016, pursuant to articles 412, no. 2 and 421, no. 1 of the Code of Civil Procedure (hereinafter CCP), applicable by virtue of article 29, no. 1, letter e) of the LRTA, and in compliance with the principles of procedural economy and procedural adequacy, as well as the principles of free conduct of proceedings and free determination of evidence-taking measures deemed necessary by the Tribunal, it was decided to utilize, by attaching to the file, the expert assessment conducted by an individual expert appointed by the Ethics and Disciplinary Council of the Medical and Dental Association, in the context of arbitral process no. 530/2014-T, such assessment having been used as evidence in tax arbitral processes nos. 286/2015-T, 296/2015-T, 585/2015-T and 622/2015-T of the CAAD, which had the same Chairman Arbitrator as the present Arbitral Tribunal, and where the underlying facts were examined.

3. By request submitted on 17.10.2016, the TA communicated the revocation by the Director-General of the TA of the assessment acts challenged in this proceeding, as per the order of 14.10.2016 which was attached, and requested the closure of the file due to the supervening lack of utility of the dispute.

4. Indeed, by order of 14.10.2016, issued on Information no. …/2016, of 03.10.2016, the Director-General of the TA revoked the challenged acts in this arbitral process no. 220/2016-T, based on the following grounds, which are hereby reproduced:

"In the Reply, the TA maintained the position that was, at that date, defended by the VAT Department and which served as the basis for the assessments in question.

However, Information no. 1986 was recently prepared (by the VAT Department), favorably endorsed by the Vice-Director-General of the VAT Tax Management area on the previous day, September 9.

Such information is based on the understanding endorsed by the CEF, in an Opinion dated 14.07.2016, which, for the matter at issue, proposes in conclusion l), "the alteration of the interpretation of item 2.6 of List I, so as to consider that the reduced VAT rate of 6% is applicable to dental prostheses as well as their respective components".

This Opinion was subject to an order by the Director-General, of 26 July 2016.

The aforementioned Information corroborates the sense of the Opinion and alters the understanding, previously in force on the matter, now considering that the components of dental prostheses – implant, abutment and crown – benefit from the application of the reduced rate of 6%, since they are encompassed within the normative provision of item 2.6 of List I annexed to the VAT Code".

1. Notified to pronounce on this request from the TA, the Claimant, by request of 27.10.2016, requested that, accepting the order revoking the acts assessing VAT and compensatory interest for the years 2010 to 2013, which are the subject of these proceedings, the proceedings continue for appraisal and determination of the right to indemnity for guarantee unduly provided, claimed in this arbitral action, and that, accordingly, the TA be condemned in the totality of procedural costs.

2. By order of 3.11.2016 of this Tribunal, considering that, in this case, none of the purposes legally entrusted to it are present, and taking into account the position taken by the parties, pursuant to articles 16, letter c) and 19 of the LRTA, as well as the principles of procedural economy and the prohibition of performing useless acts, it was decided to dispense with the holding of the meeting referred to in article 18 of the LRTA, as well as the submission of arguments by the parties, having set a period of 30 days for issuing the final decision.

3. The arbitral tribunal has jurisdiction to judge the request for arbitral pronouncement (art. 2, no. 1, letter a) of the LRTA), is regularly constituted (arts. 5, nos. 1 and 3, letter a), 6, no. 2, letter a) and 11 of the LRTA), the parties have legal standing and capacity, they have legitimacy (arts. 4 and 10, no. 2 of the LRTA and art. 1 of Ordinance no. 112-A/2011, of 22 March), and they are duly represented.

The conditions for issuing a final decision are therefore met.

II. Issues to be Decided

1. Taking into account the developments in the proceedings which were detailed above (cf. supra nos. 9, 10 and 11), the specific issues that currently merit appraisal and decision within the scope of this arbitral proceeding, having regard to the claims formulated by the Claimant indicated above (no. 4), namely, a) the declaration of illegality and total annulment of the additional VAT assessments and compensatory interest, including the decisions on the gracious complaint issued, and b) the condemnation of the TA to pay an indemnity for provision of undue guarantee, are the following:

i) occurrence of supervening lack of utility of the dispute regarding the instance relating to the request for declaration of illegality and annulment of the additional VAT assessments and compensatory interest;

ii) verification of the alleged right to indemnity for provision of undue guarantee.

III. Factual Basis

1. The selection of facts pertinent to the judgment of the case is always a function of their legal relevance in light of the legal issues under appraisal. Thus, taking into account the issues that, as described above (no. 14), currently merit analysis and decision within the scope of this proceeding, the following facts are considered proven, with interest for their determination, in light of the examination of the documentary evidence produced and the tax administrative procedure (hereinafter TP) attached (consisting of the gracious complaint procedure no. …2015… – VAT January 2010 to January 2012, hereinafter PCP-I, and the gracious complaint procedure no. …2015… – VAT February 2012 to January 2013, hereinafter PCP-II), as well as considering the procedural dynamics specified above in the Report, the material facts and procedural events which are set out below:

I. The Claimant is an anonymous commercial corporation that has, in operational terms, as its activity the sale of dental implants and other connection or fixation pieces of dental prosthesis and provision of training course services in the areas of implantology and related fields (cf. factuality acknowledged in arts. 47 to 50 of the IP and recorded in the Tax Inspection Report, hereinafter TIR, respective page 8, attached as doc. 8 to the IP).

II. The Claimant, which commenced activity in Portugal on 2.1.2007, has been registered since that date in the normal VAT regime, with monthly periodicity (cf. factuality acknowledged in art. 46 of the IP and TIR, p. 6).

III. In the course of the commercial activity carried out, the Claimant effected, in the tax periods between January 2010 and January 2013, domestic supplies of various types of dental implants and other connection or fixation pieces of dental prosthesis, having applied, in the assessment of VAT relating to such active transactions, the reduced rate referred to in letter a) of no. 1 of article 18 of the VAT Code in conjunction with item 2.6 of List I annexed to this legislation (factuality acknowledged in art. 51 of the IP and recorded in the TIR, p. 12).

IV. The Claimant was subject to a tax inspection action carried out pursuant to Service Order no. OI2013…, from which resulted the TIR attached as doc. no. 8 to the IP, in which it was considered that the application, carried out by the Claimant, of the reduced VAT rate referred to in art. 18, no. 1, letter a) of the VAT Code and item 2.6 of List I annexed to the VAT Code, in the domestic supplies of dental implants and other connection or fixation pieces of dental prosthesis, was incorrect, having been written in the TIR the following: "the procedure adopted by the inspected entity, consisting in the application of a VAT rate different from the standard rate for the purposes of assessing the tax due in domestic supplies of dental implants and other connection or fixation pieces of dental prosthesis, lacks any legal basis, due to the failure to fall within any of the lists annexed to the VAT Code, in particular item 2.6 of List I, whereby the domestic supplies of such goods are subject to taxation at the standard rate, pursuant to article 18, no. 1 letter c) of the respective Code" (cf. TIR, pp. 12 to 15).

V. Following the aforementioned TIR and the corrections to the tax due promoted therein, the acts of additional VAT assessment and compensatory interest were issued as identified above in the table reproduced in no. 7, relating to the periods between January 2010 and January 2013, in the total amount of € 4,259,764.63 (cf. documents attached collectively as doc. no. 1 to the IP which are hereby reproduced by reference).

VI. The Claimant submitted a gracious complaint against the aforementioned additional VAT assessments and compensatory interest, as per request received at the Finance Directorate of Porto on 8.5.2015 bearing entry number 2015… (cf. request at fls. 2 to 40 of both PCP-I and PCP-II and doc. no. 4 attached to the IP).

VII. The gracious complaint referred to in the preceding point was the subject of a complete express dismissal notified to the Claimant through Official Letter no. …/…, of 5.1.2016 (complaint procedure no. …2015… – VAT January 2010 to January 2012) and Official Letter no. …/…, of 11.1.2016 (complaint procedure no. …2015…– VAT February 2012 to January 2013), such dismissal being based, in particular, on the following understanding regarding item 2.6 of List I annexed to the VAT Code: "it states that all prosthesis material and its apparatus and devices are subject to the reduced rate, and since a dental prosthesis is a fixed or removable structure consisting of one or more artificial teeth capable of replacing missing teeth, we do not see how dental implants when transacted in isolation, as well as other related material, can be considered prosthesis material, capable of replacing the missing member, in this case, the tooth"; "the products in question that the complainant claims are subject to the aforementioned reduced rate are not expressly and unambiguously contemplated in the mentioned item" (cf. docs. nos. 2 and 3 and 5 and 6 attached to the IP and fls. 78 et seq. of PCP-I and 85 et seq. of PCP-II).

VIII. In the tax execution proceeding no. …2015… and related files, resulting from the additional assessments challenged, bank guarantee no.… was provided, issued by B… on 31.3.2015 in favor of the TA-Tax Service of … for the total maximum amount of €5,418,449.91 (cf. copy of the guarantee attached as doc. no. 13 to the IP; see also the acknowledgment of the provision of bank guarantee in tax execution proceedings nos. …2015…, …2015…, …2015…, …2015…, …2015…, …2015…, …2015…, …2015…, …2015…, …2015…, …2015…, …2015…, …2015…, …2015…, …2015… and …2015… which is found in the information of the TA contained in PCP-I at fls. 74 and PCP-II at fls. 76).

IX. The Claimant bore, up to the date of submission of the request for arbitral pronouncement, costs in commissions for the guarantee indicated in the preceding number in the amount of €67,970.57, and must bear the additional costs that fall due from that date until the TA, as beneficiary, communicates to the Bank its cancellation (cf. the debit notices issued by B… attached in doc. no. 16 to the IP and doc. no. 13 to the IP).

X. The Claimant submitted the request for arbitral pronouncement that gave rise to this proceeding on 11.4.2016, as stated in the CAAD case management system.

XI. In the course of these proceedings, as mentioned above in nos. 10 and 11 of the Report, the Director-General of the TA, by order of 14.10.2016, issued on Information no. …/2016, of 03.10.2016, revoked the challenged acts in these proceedings, as a result of the alteration of the understanding, previously in force on the matter, "now considering that the components of dental prostheses – implant, abutment and crown – benefit from the application of the reduced rate of 6%, since they are encompassed within the normative provision of item 2.6 of List I annexed to the VAT Code" (cf. the order attached to the TA's request mentioned above in nos. 10 and 11).

1. There is no factuality given as unproven that is relevant to the decision of the issues constitutive of the object of the dispute presently under appraisal.

2. The Tribunal's conviction regarding the facts given as proven resulted from the documents attached to the file and contained in the TP, as well as from the acknowledgment of facts effected by the parties, as specified in each of the points of the factual basis set out above.

IV. Law

a) The request for declaration of illegality and annulment of the disputed assessments: the (lack of) utility of the dispute

1. As noted above in the Report (nos. 9 and 10), by its request of 17.10.2016, the TA communicated to the file, as per order of the Director-General of the TA of 14.10.2016, the "revocation of the assessment acts challenged in the pending proceeding", proposing, accordingly, "the closure of the file due to supervening lack of utility of the dispute".

2. By its request of 27.10.2016 (see no. 11), the Claimant, noting, however, that the TA's order revoking the assessments "is silent as to the part of the claim relating to indemnity for guarantee unduly provided", an issue whose appraisal will be the subject of a subsequent point in this decision, requests that the "order revoking the assessment acts, of VAT and compensatory interest for the years 2010 to 2013, which are the subject of these proceedings" be accepted.

3. It is therefore necessary for this Tribunal to verify the utility of appraisal of the claim, formulated by the Claimant in its IP, for declaration of illegality and annulment of the additional VAT assessments and compensatory interest challenged in these proceedings.

4. Supervening lack of utility of the dispute occurs when, due to a fact occurring during the pendency of the case, the solution to the dispute ceases to have interest and utility, which justifies the termination of the instance (cf. art. 277, letter e), of the Code of Civil Procedure, hereinafter CCP). As observed by LEBRE DE FREITAS, JOÃO REDINHA, RUI PINTO, Annotated Code of Civil Procedure, volume 1, 2nd edition, Coimbra Editora, 2008, page 555, the supervening impossibility or lack of utility of the dispute "occurs when, due to a fact occurring during the pendency of the instance, the plaintiff's claim cannot be maintained, by virtue of the disappearance of the subjects or the object of the proceeding, or is satisfied outside the scheme of the remedy sought. In both cases, the solution to the dispute ceases to be of interest – in the former, by the impossibility of achieving the intended result; in the latter, by it already having been achieved by another means".

5. Thus, if, by virtue of new facts occurring during the pendency of the proceeding, the purpose aimed at with the claim deduced in court has already been achieved by another means, then the decision to be issued does not involve useful effect, whereby supervening lack of utility of the dispute occurs in that regard.

6. Now, as results from the procedural circumstances set out above (see supra the factuality given as proven in no. XI), the tax acts challenged in this arbitral proceeding were subject to revocation (cf. art. 79, no. 1 of the General Tax Law, hereinafter GTL), the TA, by the order issued by the Director-General on 14.10.2016, having proceeded to the administrative annulment (annulatory revocation – cf. currently no. 2 of art. 165 of the Administrative Procedure Code of 2015) of those tax acts as it was considered that, due to an error of law regarding the interpretation and application of item 2.6 of List I annexed to the VAT Code, such acts set a tax liability higher than that legally due.

7. It follows from this administrative action that the claim formulated by the Claimant, which had the purpose of declaration of illegality and annulment by this Tribunal of the challenged acts, was prejudiced in that the removal of those acts and their effects from the legal order was achieved by another means after the instance had been initiated. In truth, the subsequent practice of the express act of revocation of the disputed assessments (cf. art. 79, no. 1 of the GTL) implies that the instance relating to the appraisal of the legality of those assessments is extinguished due to supervening lack of utility of the dispute, given that, as their effects have been eliminated by the annulatory revocation, the appraisal, in relation to those assessments, of the alleged vices for purposes of their invalidity ceases to have utility, and the claim to contest them ceases to have an object.

8. In these terms, this Tribunal decides that supervening lack of utility of the dispute is verified as regards the request for annulment of the tax acts which are the subject of this proceeding, which implies the termination of the corresponding instance pursuant to article 277, letter e) of the CCP, applicable ex vi article 29, no. 1, letter e) of the LRTA.

b) The request for condemnation to pay indemnity for provision of undue guarantee

1. As set out above (see no. 4), in its IP the Claimant combined with the request for annulment of the tax acts which are the subject of this proceeding, the request that "the TA be condemned to pay an indemnity for provision of undue guarantee, pursuant to articles 53 of the General Tax Law and 171 of the Tax Code of Procedure and Process".

2. Now, in the aforementioned request of 27.10.2016, the Claimant, after referring that "the situation resulting from the revocation of the acts is not restored unless the Claimant is indemnified for the costs of the guarantee it provided, the right to which is expressly conferred on it in art. 53 of the GTL and whose acknowledgment the same Claimant requested in this arbitral action", requested that these proceedings continue "for appraisal and determination of the right to indemnity for guarantee unduly provided".

3. Well then, it must be recognized that the supervening lack of utility which was decided in the preceding point as regards the claim for annulment of the challenged acts does not extend to the claim for condemnation of the Respondent to pay indemnity for provision of undue guarantee, being therefore a partial lack of utility of the dispute, since the Claimant's interest remains in the resolution of the dispute as regards the indemnity for the damages it claims to have suffered with the provision of the guarantee until the effects of the act revoking the disputed assessments are materialized. It should be recalled, moreover, that art. 171 of the Code of Procedure and Process for Tax Matters (CPPT) provides that: "Indemnification in case of bank guarantee or equivalent unduly provided shall be requested in the proceeding in which the legality of the debt being executed is disputed" (no. 1) and that: "The indemnification must be requested in the complaint, impugnation or appeal or, if its basis is supervening, within 30 days after its occurrence" (no. 2).

4. It is therefore incumbent upon us to appraise such question, having in mind that, according to the guidance that has been consolidated in the decisions of arbitral tribunals of this CAAD (see for example the decisions issued in proceedings nos. 1/2013-T and 43/2013-T), the submission of a request for arbitral pronouncement implies, in accordance with what results from the aforementioned article 171 of the CPPT, that the appraisal of the request for indemnity for undue guarantee must now take place in the arbitral proceeding, in which the "legality of the debt being executed" is disputed.

5. It is well-known that article 53 of the GTL prescribes the following: "The debtor who, in order to suspend execution, offers bank guarantee or equivalent shall be indemnified in full or in part for the damages resulting from its provision, if it has been maintained for a period exceeding three years in proportion to the outcome in administrative appeal, impugnation or opposition to execution which have as their object the debt guaranteed" (no. 1); "The period referred to in the preceding number shall not apply when it is verified in gracious complaint or judicial impugnation that there was error attributable to the services in the assessment of the tax" (no. 2); "The indemnity referred to in number 1 has as its maximum limit the amount resulting from applying to the guaranteed amount the indemnifying interest rate provided for in this law and may be requested in the own proceeding for gracious complaint or judicial impugnation, or autonomously" (no. 3); "Indemnification for provision of undue guarantee shall be paid by deduction from the tax revenue of the year in which payment is effected" (no. 4).

6. Pursuant to this provision, as well observed in the award of the Supreme Administrative Court, of 21.11.2007, proceeding no. 0633/07, "the basis of the right to indemnification lies in the complex fact integrated by the damage resulting from the provision of guarantee and by the illegal action of the administration due to its error, in unduly assessing, forcing the taxpayer to incur expenses with the constitution of the guarantee which, had it not been for that administration's action, would not have been necessary to provide".

7. Thus, demonstrating error attributable to the services leading to the illegality of the challenged act and therefore to the undue provision of guarantee to suspend the tax execution proceeding resulting from the non-payment of the tax liability illegally assessed by the challenged act, the taxpayer is entitled to be reimbursed for the damages incurred with the provision and maintenance of the guarantee.

8. Now, the annulatory revocation of the disputed assessments in these proceedings, which was effected by the order of 14.10.2016 of the Director-General of the TA is based on the assumption of a vice of violation of law, consisting of an error regarding the legal prerequisites of such assessments, due to improper interpretation of item 2.6 of List I annexed to the VAT Code, since, as results from its own terms (cf. the fact proven in XI), it resulted from the alteration of the "understanding, previously in force on the matter, now considering that the components of dental prostheses – implant, abutment and crown – benefit from the application of the reduced rate of 6%, since they are encompassed within the normative provision of item 2.6 of List I annexed to the VAT Code", whereby error attributable to the services in the illegally adopted assessments which are the subject of the revocation is shown to be proven.

9. Furthermore, the aforementioned acts of assessment of VAT and compensatory interest were at the sole initiative of the TA, whereby the Claimant in no way contributed to their being carried out.

10. For its part, it was given as proven (see supra points VIII and IX of the evidence) that the Claimant proceeded to the provision of bank guarantee to suspend the executed proceedings instituted and that it bore, up to the date of submission of this arbitral action, costs in commissions with such guarantee in the amount of €67,970.57 and must bear the additional costs that fall due from that date until the TA, as beneficiary, has communicated to the Bank the cancellation of the guarantee.

11. Thus, the provision of the aforementioned bank guarantee by the Claimant in order to suspend the executed proceeding(s) instituted must be judged to be undue, whereby the Claimant is entitled to be reimbursed for the damages it has actually suffered with the provision of that bank guarantee.

12. In these terms, the Claimant is recognized to have the right to indemnification provided for in the aforementioned article 53 of the GTL for the costs borne with the bank guarantee provided until its cancellation, condemning the Respondent in the amount already determined of €67,970.57 and in whatever is to be determined in liquidation to be processed in execution of judgment (art. 609, no. 2 of the CCP), without prejudice to the limitation of the amount of indemnification established by no. 3 of article 53 of the GTL.

V. Decision

In these terms, this Arbitral Tribunal agrees to:

i) declare the instance extinct as regards the request for declaration of illegality of the assessment acts challenged in these proceedings due to supervening lack of utility of the dispute, pursuant to art. 277, letter e) of the CCP, applicable by virtue of art. 29, no. 1, letter e) of the LRTA;

ii) declare the request to condemn the Tax and Customs Authority to pay indemnification provided for in art. 53 of the GTL, for provision of undue guarantee, to be meritorious, in the amount already determined of €67,970.57 and in whatever is to be determined in liquidation to be processed in execution of judgment, without prejudice to the limitation of the amount of indemnification established by no. 3 of article 53 of the GTL;

iii) condemn the TA in the procedural costs.

VI. Value of the Proceeding

In accordance with the provisions of art. 306, nos. 1 and 2 of the CCP, in article 97-A, no. 1, letter a) of the CPPT, applicable by virtue of letters c) and e) of no. 1 of article 29 of the LRTA and of no. 2 of article 3 of the Regulation on Costs in Tax Arbitration Proceedings (RCTAP), the proceeding is assigned the value of € 4,259,764.63 (four million, two hundred and fifty-nine thousand, seven hundred and sixty-four euros and sixty-three cents).

VII. Costs

In accordance with the provisions of articles 12, no. 2, and 22, no. 4, both of the LRTA, and in article 4, no. 4 of the RCTAP, the value of the arbitration fee is fixed at €53,856.00, pursuant to Table I of the aforementioned RCTAP, to be borne by the Respondent, since, in accordance with the provisions in the final part of no. 3 and in no. 4 of art. 536 of the CCP, applicable ex vi art. 29, no. 1, letter e) of the LRTA, it is attributable to it the fact of the revocation of the disputed assessments which determined the supervening lack of utility of the dispute as regards the request for their annulment and given the merit of what was claimed in this arbitral pronouncement.

Notification ordered.

Lisbon, 2 December 2016.

The Arbitrators

José Pedro Carvalho
(Chairman)

Emanuel Augusto Vidal Lima

João Menezes Leitão

[1] Portuguese orthography resulting from the Orthographic Agreement of the Portuguese Language of 1990 is adopted, with citations updated accordingly.