Summary
Full Decision
TAX ARBITRATION JURISPRUDENCE
Case No. 32/2019-T
Decision Date: 2019-09-04
VAT
Claim Amount: €60,494.79
Subject Matter: VAT – Waiver of Exemption – Health Services – Dental Medicine and Odontology.
ARBITRAL DECISION (consult full version in PDF)
The arbitrators Judge José Poças Falcão (arbitrator president), José Coutinho Pires and Álvaro Caneira (arbitrator members), appointed by the Deontological Council of the Center for Administrative Arbitration to form this Arbitral Tribunal, hereby agree as follows:
I. Report
1. A..., S.A., NIPC..., with registered office at ..., n.º..., ..., Room ..., ...-... ..., in its capacity as Claimant and incorporating company, following a merger operation by incorporation of company B..., Ld.ª, NIPC..., submitted a request for the constitution of an Arbitral Tribunal in tax matters and a request for arbitral pronouncement, pursuant to the provisions of subparagraph a) of n.º 1 of article 2.º and subparagraph a) of n.º 1 of article 10.º, both of Decree-Law no. 10/2011 of 20 January - Legal Regime for Arbitration in Tax Matters (RJAT) – and article 11.º of Decree-Law no. 81/2018 of 15 October, seeking the declaration of illegality and annulment of acts of assessment of Value Added Tax (VAT) and compensatory interest, relating to various quarterly periods of the years 2010 to 2013, in the total amount of €60,494.88.
The Claimants also request the refund of the tax wrongfully collected, plus the corresponding indemnity interest calculated in accordance with legal provisions.
The Respondent is the TAX AND CUSTOMS AUTHORITY (AT).
2. As the basis of the request, filed on 16-01-2019, the Claimant, in summary, alleges that the tax acts in question are founded on the AT's understanding that the health services provided by B..., as they do not involve hospitalization/admission of the respective recipients, are not covered by the scope of article 9.º, n.º 2, of the VAT Code but rather by n.º 1 of the same article, and consequently the possibility of waiver of exemption pursuant to article 12.º, n.º 1, subparagraph b), of the same Code is excluded.
Reacting against such understanding, the Claimant, relying on extensive arbitral jurisprudence issued on the same matter, contends that, as clearly results from the letter of the law, hospitalization/admission does not constitute a requirement of the exemption provided for in n.º 2 of article 9.º of the cited Code, and it is absolutely unambiguous that medical clinics, which include dental clinics, are exempt from VAT pursuant to the aforementioned provision and, as such, may waive the exemption in accordance with subparagraph b) of n.º 1 of article 12.º of the same statute.
3. In response to the request, the AT pronounced itself in the sense of the dismissal of the present request for arbitral pronouncement, considering that the tax acts contested should be maintained in the legal order and, accordingly, deciding on the acquittal of the respondent entity.
4. The request for constitution of the arbitral tribunal, filed on the basis of commitment to tax arbitration of judicial challenge filed on 30-06-2014, pursuant to article 11.º of Decree-Law no. 81/2018 of 15/10, was accepted by the President of CAAD and automatically notified to the Tax and Customs Authority (AT).
5. Pursuant to the provisions of subparagraph a) of n.º 2 of article 6.º and subparagraph b) of n.º 1 of article 11.º of Decree-Law no. 10/2011 of 20/01, as amended by article 228.º of Law no. 66-B/2012 of 31/12, the Deontological Council appointed as arbitrators of the Collective Arbitral Tribunal the present signatories, who communicated acceptance of the assignment within the applicable timeframe.
6. Duly notified of this appointment, the parties did not manifest their intention to refuse the appointment of arbitrators in accordance with the combined provisions of article 11.º, n.º 1, subparagraphs a) and b) of RJAT and articles 6.º and 7.º of the Code of Ethics.
7. Thus, in accordance with the provisions of subparagraph c) of n.º 1 of article 11.º of RJAT, as amended by article 228.º of Law no. 66-B/2012 of 31/12, the collective arbitral tribunal was constituted on 27-03-2019.
8. The regularly constituted arbitral tribunal is materially competent, given the provisions of articles 2.º, n.º 1, subparagraph a), of RJAT.
9. The parties, duly represented, possess legal personality and capacity and have standing (articles 4.º and 10.º, n.º 2, of RJAT, and article 1.º of Administrative Order no. 112-A/2011 of 22/03). The standing of the Claimant, as the incorporating company in the context of a merger process, derives from the global transfer of the rights and obligations of the merged company – B... – to which the contested acts relate, by virtue of the provisions of articles 97.º to 112.º of the Commercial Companies Code (Doc.1).
10. No nullities have occurred and no preliminary questions or exceptions have been raised, so nothing prevents judgment on the merits, and thus the present case is in conditions for final decision to be rendered.
11. Having regard to the knowledge that results from the procedural documents submitted by the parties, which is considered sufficient for the decision, the Tribunal considered it unnecessary to hold the meeting referred to in article 18.º of RJAT.
12. Thus, by order of 17-05-2019, subject to express and reasoned opposition by either Party, the meeting provided for in article 18.º of RJAT was dispensed with and it was decided that the case would proceed with optional written submissions in successive periods of 20 days, with 10-09-2019 being set as the anticipated deadline for the issuance and notification of the arbitral decision.
13. The decision met with the agreement of the Parties. Only the Claimant submitted written submissions, reaffirming, in substance, the position already previously expressed in the request for arbitral pronouncement.
II. Factual Matter
14. With relevance to the assessment of the questions raised, the following factual elements are highlighted, which, based on documentary evidence attached to the proceedings, are considered proven:
14.1 The Claimant, following a merger operation registered on 22 December 2016, incorporated into its sphere company B..., Ldª, holder of NIPC ... (Doc. 1).
14.2. By virtue of the aforementioned merger and consequent global transfer of the assets of the incorporated company to the sphere of the Claimant, it succeeded to the rights and obligations thereof.
14.3. B... is a commercial company by quotas that, until the date of its incorporation into the sphere of the Claimant, engaged in the activities of dental medicine and related activities from the beginning of its business.
14.4. B... has always had as its activity the practice of medicine, in particular dental medicine and odontology, developed by dental physicians, odontologists and pediatric dentists, carried out in offices, clinics and similar establishments, without admission/hospitalization.
14.5. On 14 June 2010 it filed at the Tax Office of ... ..., a declaration of commencement of business, declaring that this had been commenced on the 1st of the same month, being framed, for VAT purposes, in the normal quarterly regime.
14.6. The aforementioned declaration also provides, as to the type of operations, that it carries out only operations that confer the right to deduction (Doc.8).
14.7. Following the declaration of commencement of business and its framing within the general VAT regime, B... submitted the respective periodic declarations, showing the assessment of tax relating to services rendered and the consequent deduction of tax incurred in the acquisition of goods and services for the performance of active operations (Docs.6 and 7).
14.8. On 16 August 2013, B... requested, for the period 2013 06, a VAT refund in the amount of €8,630.57.
14.9. Following the aforementioned request, the Tax Services initiated tax inspection procedures relating to the years 2010 to 2013.
14.10. In the course of the aforementioned tax inspection procedures, B... was notified of the respective draft inspection reports, through letters nos. .../..., of 7-11-2013 and .../..., of 27-11-2013 (Docs. 9 and 10).
14.11. In an initial approach, as is apparent from the aforementioned draft reports, the AT's understanding is expressly stated that medical and related services provided by clinics are VAT exempt, pursuant to n.º 2 of article 9.º of the VAT Code and, in accordance with subparagraph b) of n.º 1 of article 12.º of the VAT Code, may be subject to waiver of exemption. However, since B... did not exercise the right to waive the exemption, it could not deduct the tax it incurred in the acquisition of goods and services intended for the performance of exempt operations.
14.12. The aforementioned draft reports being notified to the taxpayer, it exercised the right to a hearing following which the AT issued final reports (Docs. 6 and 7), invalidating the previous draft reports.
14.13. In accordance with these final reports, B... is denied the deduction of the VAT it incurred in the acquisition of goods and services necessary for the performance of its activity, on the grounds that this activity would be exempt from VAT under article 9.º, n.º 1, of the VAT Code and not under n.º 2 of the same statute, being that exemption not susceptible to waiver with the consequent option for the general taxation regime.
14.14. This understanding is substantiated, identically, in both reports, in the following terms:
[Content redacted in original document]
14.15. Following the inspection action, VAT refund requests were denied, the correction was made to the tax deducted by B... in the periods 2010 to 2013 and the official framing of the same was determined within the exemption regime provided for in article 9.º, n.º 1, of the VAT Code as of the commencement date of business.
14.16. The aforementioned conclusions were duly notified to the taxpayer through Letter no. .../..., of 17-01-2014, of the Tax Inspection Services of the Finance Department of ..., and subsequently, the corresponding additional assessments of tax and compensatory interest were made, relating to the quarterly tax periods 2010 to 2013, in the total amount of €60,494.88 (Doc.2):
-
Assessments nos. ..., ..., ..., relating to the year 2010, totaling the amount of €12,580.51, of tax and compensatory interest, the deadline for voluntary payment of which ended on 31-03-2014;
-
Assessments nos. ..., ..., ..., 2014..., relating to the year 2011, totaling the amount of €29,074.73, of tax and compensatory interest, the deadline for voluntary payment of which ended on 31-03-2014;
-
Assessments nos. 2014..., 2014..., 2014... and 2014... relating to the year 2012, totaling the amount of €16,164.96, of tax and compensatory interest, the deadline for voluntary payment of which ended on 07-04-2014.
-
Assessments nos. 2014... and 2014..., relating to the year 2013, totaling the amount of €2,674.68, of tax and compensatory interest, the deadline for voluntary payment of which ended on 07-04-2014;
14.17. B... made voluntary payment of the tax and compensatory interest assessed in the above-mentioned assessments within the respective deadlines (Doc. 5).
14.18. On 30-06-2014, B..., filed judicial challenge against the above-identified assessment acts (Doc.2).
14.19. The competent case was brought before the Administrative and Tax Court of ... – Organizational Unit ..., under number .../14...B…, where it was pending decision at the date of entry into force of Decree-Law no. 81/2018 of 15/10, whose article 11.º, n.º1, determines that "taxpayers may, until 31 December 2019, submit to tax arbitral tribunals, within their respective competencies, the claims formulated in judicial challenge proceedings that are pending decision in first instance in tax tribunals and that were filed therein by 31 December 2016, with exemption from payment of court costs."
14.20. Pursuant to the provisions of the aforementioned legal rule, B... submitted, with the Administrative and Tax Court of ..., a request requesting the termination of the judicial challenge proceedings on the grounds that it would commit them to the Arbitral Tribunal, as evidenced by the electronic judicial certificate of the respective request (Doc. 4).
15. There are no facts relevant to the decision that have not been proven.
III. Cumulation of Claims
16. The present request for arbitral pronouncement relates to various VAT assessments, relating to quarterly periods of the years 2010 to 2013. However, given the identity of the tax facts, the tribunal competent to decide and the grounds of fact and law invoked, the tribunal considers that nothing prevents, given the provisions of articles 3.º of RJAT and 104.º of CPPT, the cumulation of claims.
IV. Matters of Law
17. In the request for arbitral pronouncement, the Claimant submits to this tribunal's review the legality of the VAT assessment acts, relating to the periods 2010 to 2013, identified in the petition and attached documents (Doc. 2), invoking, in substance, the fact that the incorporated company B... engaged in an activity covered within the scope of the exemption provided for in n.º 2 of article 9.º of the VAT Code and, consequently, susceptible to waiver and option for general taxation, in accordance with article 12.º, n.º 1, subparagraph b), of the aforementioned statute.
18. For its part, the AT, in its response to the present request for arbitral pronouncement, maintains the position already assumed in the decision rendered on the final tax inspection report, which constitutes the basis of the tax acts now contested, to the effect that the activity developed by the company in the aforementioned years falls within the scope of exemption provided for in n.º 1 of article 9.º of the VAT Code, and is therefore not susceptible to waiver. From this fact it follows, according to the AT, the illegality of the deductions made by B..., given that that exemption, configured as simple or incomplete, does not confer the right to deduction, in accordance with subparagraph a) of n.º 1 of article 20.º of the VAT Code. It also contends that the tax assessed by B... to the respective customers, even if wrongfully, must be remitted to the State coffers, given what is provided for in subparagraph c) of n.º 1 of article 2.º of the VAT Code.
19. In substance, the Respondent (AT) bases its position on the jurisprudence of the Court of Justice of the European Union – Decision of 10-09-2002, rendered in case C-141/00, Kugler – sustaining that "the exemption provided for in n.º 1 of article 9.º of the VAT Code operates independently of the legal nature of the service provider, namely the fact that it is a natural or legal person, given that that exemption is based on subparagraph c) of n.º 1 of article 132.º of Directive 2006/112/CE, of the Council, of 28 November (which reformulated Directive 77/388/CEE, of the Council, of 17 May, commonly called the Sixth Directive)." This exemption covers the provision of medical and paramedical services, provided that they are supplied outside the hospital environment, that is to say, either in the private home of the provider, or in the home of the patient, or in any other place.
20. In the event that the aforementioned services are provided in a hospital environment (hospitalization/admission), they fall within the scope of the exemption provided for in n.º 2 of article 9.º of the VAT Code, a norm that transposes into internal law article 132.º, n.º 1, subparagraph b), of Directive 2006/112/CE, of the Council, of 28/11, which provides that Member States shall exempt from VAT the following operations: "Hospitalization and medical care and also the operations closely linked therewith, provided by public law entities or, on conditions analogous to those applying to such entities, by hospital establishments, medical care and diagnostic centers and other establishments of the same nature duly recognized."
21. According to the AT, "this exemption covers the provision of medical and health services (health acts) which consist of providing assistance to persons, diagnosing and treating diseases or any health anomalies, and the operations connected therewith, carried out by the establishments expressly mentioned in the aforementioned norm or by similar establishments (hospitalization/admission)".
22. Sustaining the understanding that grounds the contested acts, the AT concludes: "32º. Regarding the conformity of this delimitation of the scope of application of n.ºs 1 and 2 of article 9.º of the VAT Code with Community law, it is evident from the Kugler Decision that subparagraphs b) and c), although designed to regulate the exemptions applicable to medical care services, have distinct scopes. 33º. In fact, whereas subparagraph b) – which corresponds to n.º 2 of article 9.º of the VAT Code – exempts the provision of medical care services in a hospital environment, including closely connected operations; 34.º subparagraph c) – which corresponds to n.º 1 of article 9.º of the VAT Code – is intended to exempt the provision of medical and paramedical services supplied outside such places, whether in the private home of the provider, or in the home of the patient, or in any other place."
23. Thus, the AT concludes, the scope of the exemption provided for in n.º 2 of article 9.º of the VAT Code invoked by the Claimant is restricted to situations in which the providers permit hospitalization/admission, which, as results from the inspection report, and indeed is confirmed by the Claimant, does not occur in the present case.
24. In substance, the question at issue, then, is whether the activity of dental medicine developed by B... in the years 2010 to 2013 falls within the scope of the exemption provided for in n.º 1, as the Respondent (AT) contends, or in n.º 2 of article 9.º of the VAT Code, as the Claimant's understanding, it being the case that only in the latter case would waiver of exemption be permitted pursuant to subparagraph b) of n. º1 of article 12º of that Code.
25. The question at issue, then, is to assess the legality of the AT's decision on the framing of B...'s activity for VAT purposes, given that it is in this framing that the contested tax acts are grounded.
26. It is thus relevant to have regard to the legal provisions relating to VAT exemption enjoyed by health service provisions, set forth in Community law and norms that transpose it into internal law.
27. At the date of the accession of the Portuguese Republic to the European Communities, the exemptions in question were provided for in subparagraphs d) and c) of article 13.º, Part A, of Directive 77/388/CEE (Sixth VAT Directive), in the following terms:
"Article 13º
A) Exemptions for the benefit of certain activities of general interest
- Without prejudice to other Community provisions, Member States shall exempt, under the conditions they lay down with a view to ensuring correct and simple application of the following exemptions and to prevent any possible fraud, evasion and abuse:
...
b) Hospitalization and medical care, and also the operations closely linked therewith, provided by public law entities or, on conditions analogous to those applying to such entities, by hospital establishments, medical care and diagnostic centers and other establishments of the same nature duly recognized;
...
c) The provision of medical care services carried out within the exercise of medical and paramedical activities, as defined by the Member State in question;
28. The above-mentioned directive was subsequently repealed by article 411º of Directive 2006/112/CE, of the Council, of 28/11/2006, relating to the common system of VAT, which reformulated, on a consolidated basis and with formal adaptations, the previous directives – 1st and 6th. The aforementioned norms, without alteration of content, now appear in articles 131º and 132º, n.º 1, subparagraphs b) and c) of the current VAT Directive.
29. The aforementioned Community provisions were transposed into internal law by n.ºs 1 and 2 of article 9.º of the VAT Code, with the following wording:
"Article 9.º - Exemptions on internal operations - The following are exempt from tax:
1 - The provision of services carried out in the exercise of the professions of physician, odontologist, midwife, nurse and other paramedical professions;
2 - The provision of medical and health services and the operations closely linked therewith carried out by hospital establishments, clinics, dispensaries and similar establishments;"
30. It should be noted that with regard to the scope of the exemption provided for in n.º 2 of article 9.º, the Portuguese Republic, in its Act of Accession, made use of the possibility of derogation conferred by article 28.º, n.º 3, subparagraph b) of the Sixth Directive then in force, to the effect of continuing to exempt from VAT various operations listed in Annex F of that Directive, among which are included the "Operations carried out by hospital establishments not referred to in A), 1, b), of article 13º;". This derogation, in force on a transitional basis, remains currently in force, as provided for in article 377.º of Directive 2006/112/CE.
31. In accordance with n.º 3, subparagraph c), of article 28.º of the Sixth Directive, to which article 391.º of Directive 2006/112/CE now corresponds, it is conferred on the Member States that have opted to exempt those operations the possibility of granting to taxpayers the right to opt for taxation of those operations.
32. The Portuguese State made use of the possibility admitted in Community law through subparagraph b) of n.º 1 of article 12.º of the VAT Code, whose wording, currently in force, is as follows:
"Article 12.º - Waiver of exemption
1 - May waive exemption, opting for the application of tax to their operations:
...
b) The taxpayers referred to in n.º 2) of article 9.º, who are not public law legal entities, in relation to the provision of medical and health services and operations closely linked therewith, which do not result from agreements with the State, within the health system, under the terms of the respective basic law;"
33. From the above-transcribed legislation, it results, in summary, that the VAT exemptions enjoyed by medical services provided for in n.ºs 1 and 2 of the respective Code are mandatory, not conferring the right to exemption of tax incurred for their performance, only being susceptible to option for the taxation regime, by way of waiver of exemption, those falling within that n.º 2, but only on the condition that the respective provider is not a public law legal entity.
34. The right of option, under the aforementioned conditions, is exercised by submitting to the Tax Authority the declaration of commencement of business or of alterations, as the case may be, taking effect as of the date of its submission, as results from n.º 2 of article 12.º of the VAT Code.
35. However, the AT understands that the activity developed by B..., because exercised outside the hospital environment, is not covered within the scope of n.º 2 of article 9.º of the CIVA but rather within n.º 1 of the same statute, and is consequently not susceptible to waiver.
36. Under these circumstances, the question at issue, given that no doubt is raised in the grounds of the assessments regarding the formalism relating to waiver of exemption, consists, first of all, in ascertaining whether the position assumed by the AT is correct in considering that only activity exercised in a hospital environment falls within n.º 2 of article 9.º of the VAT Code and that B...'s activity was not exercised in that environment, being rather developed in its facilities without the services rendered involving hospitalization or admission of patients.
37. This question has already been raised and assessed in numerous arbitral decisions and, with regard to it, solid doctrine has been established to the effect that the exemption in question covers the provision of health care performed by hospital establishments, and establishments of the same nature, independently of whether the provision is carried out in a hospital environment involving, or not, the admission of patients.
38. Pronouncing itself on a matter in all respects identical to that which is the object of the present request for arbitral pronouncement, the arbitral tribunal did so, in a decision rendered in arbitral case 168/2015-T:
"The Tax and Customs Authority understood that the fields of application of subparagraphs b) and c) of article 132.º of Directive no. 2006/112/CE correspond to the fields of application of n.ºs 2) and 1), respectively, of article 9.º of the CIVA, and with this premise, in the wake of jurisprudence of the CJEU on the field of application of the norm of subparagraphs b) and c) of article 13.º - A, n.º 1, of the Sixth Directive [literally corresponding to subparagraphs b) and c) of article 132.º of Directive no. 2006/112/CE], understood that that subparagraph c) and, consequently, n.º 1 of article 9.º of the CIVA, encompasses the provision of health care services by legal entities and that 'subparagraph b) of this provision exempts all services provided in the hospital environment, whereas subparagraph c) is intended to exempt medical services provided outside that scope, both in the private home of the provider and in the home of the patient, or in any other place' (point 36 of the Kügler judgment, of 10-09-2002, rendered in case no. C-141/00).
However, the CJEU, in the L.u.P. judgment ([2]), subsequent to the Kügler judgment, clarified that
'Article 13.°, A, n.º 1, subparagraph b), of the Sixth Council Directive 77/388/CEE of 17 May 1977, (...) should be interpreted to the effect that clinical analyses which have as their object the observation and examination of patients for preventive purposes, which are carried out, as are those at issue in the main proceedings, by a private law laboratory external to a medical care establishment under the prescription of general practitioners, are susceptible to being covered by the exemption provided for in that provision as medical care provided by another'.
In this L.u.P. judgment, the CJEU understood that 'since clinical analyses are covered, having regard to their therapeutic purpose, by the concept of "medical care" provided for in article 13.°, A, n.º 1, subparagraph b), of the Sixth Directive, a laboratory such as that at issue in the main proceedings should be considered an establishment of "the same nature" as "hospital establishments" and "medical care and diagnostic centers" within the meaning of that provision' (point 35).
Reinforcing the foregoing is what results from point 35 of the De Fruytier judgment, of 02-07-2015, rendered by the CJEU in case no. C-334/14, in which the L.u.P. judgments, C-106/05, points 18 and 35 and CopyGene, C-262/08, point 60, are cited, affirming that 'a private law laboratory that carries out clinical analyses should be considered an establishment "of the same nature" as "hospital establishments" and "medical care and diagnostic centers" within the meaning of that provision, since those analyses are covered, having regard to their therapeutic purpose, by the concept of "medical care" provided for in the aforementioned provision' (point 35).
For that reason, it must be concluded that, in light of the jurisprudence of the CJEU, the exemption provided for in subparagraph b) of article 132.º covers the services rendered by entities of the types that the Claimant provides, regardless of whether the provision occurs or not in a hospital environment, an interpretation that is in manifest harmony with the text of this norm, in making reference to the exemption of operations closely related to hospitalization and medical care provided to 'medical care and diagnostic centers'.
With regard to article 9.º of the CIVA, the text of its n.º 2), also does not provide explicit support for the thesis defended by the Tax and Customs Authority that only activity exercised in a hospital environment falls within it and, in particular, that the provision of clinical analysis services and diagnostic operations connected with hospital activities is outside its scope.
In fact, in this n.º 2) of article 9.º, reference is made, in addition to hospital establishments, also to 'clinics, dispensaries and similar establishments'.
The reference to 'dispensaries' unambiguously encompasses the provision of health care services outside that hospital environment, since the meaning of 'dispensary' is that of 'a charitable establishment for the treatment of poor patients, giving them access to free consultations and medicines' ([3]), or 'an establishment for providing, free of charge, care and medicines to poor patients who may be treated at home' ([4]).
On the other hand, the reference to 'similar establishments', interpreted in harmony with the parallel norm of subparagraph c) of article 132.º of Directive no. 2006/112/CE, which makes reference to 'medical care and diagnostic centers and other establishments of the same nature', allows the conclusion that entities of the type of the Claimant, which provides health care services consisting of clinical analyses and diagnostics in connection with hospital establishments, would also fall within that concept.
Thus, there is no textual support for the thesis defended by the Tax and Customs Authority that the exemption applicable to establishments of the type of the Claimant is not provided for in n.º 2 of article 9.º of the CIVA.
39. In the same sense, referring to a situation also identical to that dealt with in the present case, the arbitral tribunal pronounced itself, in a judgment rendered in case 355/2018:
"Given that the Claimant's activity is exercised outside the hospital environment, the Tax and Customs Authority contends that the exemption applicable to it is under the terms of n.º 1 of article 9.º of the CIVA.
However, it is not apparent from the aforementioned judgment that, as the Tax and Customs Authority affirms, only hospitals are covered by the scope of subparagraph b) of article 132.º cited above.
In our view and in keeping with the previous Judgments rendered at CAAD, the CJEU, in the L.u.P. judgment (of 8 June 2006, rendered in case no. C-106/05), subsequent to the judgment referred to by the Respondent, clarified that 'Article 13.°, A, n.º 1, subparagraph b), of the Sixth Council Directive 77/388/CEE of 17 May 1977, (...) should be interpreted to the effect that clinical analyses which have as their object the observation and examination of patients for preventive purposes, which are carried out, as are those at issue in the main proceedings, by a private law laboratory external to a medical care establishment under the prescription of general practitioners, are susceptible to being covered by the exemption provided for in that provision as medical care provided by another'.
In this L.u.P. judgment, the CJEU understood that 'since clinical analyses are covered, having regard to their therapeutic purpose, by the concept of "medical care" provided for in article 13.°, A, n.º 1, subparagraph b), of the Sixth Directive, a laboratory such as that at issue in the main proceedings should be considered an establishment of "the same nature" as "hospital establishments" and "medical care and diagnostic centers" within the meaning of that provision' (point 35).
Reinforcing the above is what results from point 35 of the De Fruytier judgment, of 02-07-2015, rendered by the CJEU in case no. C-334/14, in which the L.u.P. judgments, C-106/05, points 18 and 35 and CopyGene, C-262/08, point 60, are cited, affirming that 'a private law laboratory that carries out clinical analyses should be considered an establishment "of the same nature" as "hospital establishments" and "medical care and diagnostic centers" within the meaning of that provision, since those analyses are covered, having regard to their therapeutic purpose, by the concept of "medical care"'.
In this matter, therefore, the jurisprudence of the Community courts is sufficiently clear, to the effect that, as was written in the decision of arbitral case 168/2015-T, "the exemption provided for in subparagraph b) of article 132.º covers the services rendered by entities of the types that the Claimant provides, regardless of whether the provision occurs or not in a hospital environment, an interpretation that is in manifest harmony with the text of this norm, in making reference to the exemption of operations closely related to hospitalization and medical care provided to 'medical care and diagnostic centers'."
40. Following the jurisprudence referred to, it is concluded that B..., incorporated by the Claimant in a merger process, was, by reason of the activity it developed, covered by the VAT exemption provided for in article 9.º, n.º 2, of the respective Code, and could, considering its nature as a private institution, waive such exemption, opting for the application of the general taxation regime to the active operations carried out by it.
41. From the factual elements deemed proven it is apparent that the aforementioned company, having declared that it would perform exclusively operations subject to and not exempt from VAT, was framed in the general VAT regime, from then on proceeding to assess VAT on the operations carried out by it and deducting the tax incurred for their performance.
42. In light of the foregoing, it is concluded that the AT's understanding of the framing of B... for VAT purposes has no legal support, and therefore the assessments made are vitiated by the defect of erroneous application of the law.
Of the right to indemnity interest
43. In addition to the annulment of the assessments and consequent refund of the amounts wrongfully paid, the Claimant also requests that it be recognized the right to indemnity interest, pursuant to article 43.º of the LGT.
44. Indeed, under the terms of the provision of n.º 1 of the aforementioned article, indemnity interest shall be due "when it is determined, in administrative reconsideration or judicial challenge, that there was error attributable to the services from which results payment of the tax debt in an amount higher than legally due." Besides the means referred to in the norm that is transcribed, we understand that, as results from n.º 5 of article 24.º of RJAT, the right to the aforementioned interest may be recognized in the arbitral proceedings and, thus, the claim is known.
45. The right to indemnity interest alluded to in the provision of the LGT above referred to presupposes that tax was paid in an amount higher than due and that this derives from error, of fact or of law, attributable to the services of the AT.
46. In the case before us, it is manifest that, as a result of the illegality of the assessment acts, for the reasons pointed out hereinabove, the Claimant made payment of amounts manifestly not due.
47. It also results from the proceedings that the illegality of the assessment acts that are the object of the present case is directly attributable to the Respondent (AT), which, on its own initiative, carried them out without legal support, suffering from an incorrect assessment of the legally relevant facts and incorrect application of the legal norms to the specific case.
48. It is thus recognized to the Claimant the right to the indemnity interest requested, calculated, at the legal rate, on the amounts wrongfully collected, from the date of the respective payment until the moment of effective refund (cfr. LGT, art.43.º, n.º 1 and CPPT, art. 61.º).
V. Decision
On the grounds and for the reasons set forth, the Arbitral Tribunal decides:
a) Judgment is rendered in favor of the request for arbitral pronouncement;
b) The annulment of the official VAT assessments relating to the years 2010 to 2013, which are the object of the present case, is determined, with the consequent refund of the amounts wrongfully collected;
c) The Tax and Customs Authority is condemned to pay to the Claimant indemnity interest, in accordance with the provisions of articles 24.º, n.º 5, of RJAT, 43.º, n.º 1, of the LGT and 61.º of the CPPT.
Value of the case: The value of the case is set at €60,494.88, in accordance with article 97.º-A, n.º 1, subparagraph a) of CPPT, applicable by cross-reference of article 29.º, n.º1, subparagraphs a) and b), of RJAT and article 3.º, n.º 2, of the Regulation of Costs in Tax Arbitration Proceedings.
Costs: Pursuant to article 22.º, n.º 4, of RJAT, and in accordance with Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, the amount of costs is set at €2,448.00, at the expense of the Respondent (AT).
Lisbon, 4 September 2019
The Arbitrator President
(José Poças Falcão)
The Arbitrator Member
(José Coutinho Pires)
The Arbitrator Member
(Álvaro Caneira)
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