VAT Rate on Dental Prosthesis Components Sold Separately – CAAD Case 344/2015-T

Arbitral Decision[1]

The arbiters Counselor Maria Fernanda dos Santos Maçãs (President), Dr. Susana Maria Afonso Claro (Member) and Dr. Sílvia Oliveira (Member), appointed by the Deontological Council of the Administrative Arbitration Centre (CAAD) to form the Collective Arbitral Court, constituted on 7 September 2015, with respect to the above-identified proceeding, have decided as follows:

I. REPORT

1.1

A…, Lda., Legal Entity No. …, with registered office at…, No.…, apartment…, in ... (hereinafter referred to as the "Claimant"), submitted a request for arbitral pronouncement and constitution of a Collective Arbitral Court, on 29 May 2015, pursuant to the provisions of article 4 and No. 2 of article 10 of Decree-Law No. 10/2011, of 20 January [Legal Framework for Tax Arbitration (RJAT)], in which the Tax and Customs Authority is the Respondent (hereinafter referred to as the "Respondent").

1.2

The Claimant intends for the Collective Arbitral Court to be so good as to determine "(…) the annulment of the additional VAT assessments, the assessments of compensatory interest (…) relating to the years 2011, 2012 and 2013, in the amount of €: 202,528.24 (…)".

1.3

The request for constitution of the Collective Arbitral Court was accepted by the Esteemed President of CAAD and immediately notified to the Respondent on 2 June 2015.

1.4

Given that the Claimant did not proceed with the appointment of an arbiter, in accordance with the provisions of article 6, No. 2, subparagraph a) of the RJAT, the undersigned were designated as arbiters on 27 July 2015 by the President of the Deontological Council of CAAD, with the appointment being accepted within the legally prescribed time and terms.

1.5

On the same date, the Parties were duly notified of such appointment and did not express an intention to refuse the appointment of the arbiters in accordance with the provisions of article 11, No. 1, subparagraphs a) and b) of the RJAT, together with articles 6 and 7 of the Deontological Code.

1.6

In conformity with what is prescribed in subparagraph c), No. 1, of article 11 of the RJAT, the Collective Arbitral Court was constituted on 7 September 2015.

1.7

Having the Claimant requested the production of testimonial evidence, by arbitral dispatch dated 17 October 2015, the date of 19 November 2015 was scheduled for the hearing (pursuant to article 18 of the RJAT).

1.8

By arbitral dispatch dated 8 November 2015, it was decided by the Arbitral Court: i) to set aside the hearing scheduled for 19 November 2015, given that both Parties waived the production of evidence; ii) to dispense with the holding of the meeting provided for in article 18 of the RJAT, in accordance with the principles of the tribunal's autonomy in conducting the proceeding, in order to promote celerity, simplification and informality thereof; and iii) to designate 6 March 2016 as the time limit for issuing the arbitral decision.

1.9

The Respondent submitted a request to attach to the file the documents requested by the Claimant in the arbitration request.

1.10

The parties did not submit arguments.

1.11

In the arbitration request submitted by it, the Claimant invoked, in summary:

a) Not to agree with the corrections made by the Tax Authority, as it has always been its understanding "(…) as well as that of all companies engaged in the same activity (…) that the products in question are fully classified under item 2.6 of List I attached to the VAT Code, which provides for taxation at the reduced rate (…) of (…) orthopaedic apparatus and other prosthetic or compensatory material intended to replace, in whole or in part, any limb or organ of the human body (…)", whereas the correction made by the Respondent was based "on the content of the Binding Information resulting from the Dispatch of 2007.05.11, issued in Process T1…, according to which with regard to dental implants that item only covers the transmission of prostheses consisting of a single unit, that is, implant + connection pieces + tooth, so that the parts, pieces and accessories, when transacted separately, due to lack of classification under the aforementioned item are taxed at the normal rate".

b) The "application underlying this binding information must be considered abusive, since the legal text is perfectly clear, in not restricting its application to prostheses that wholly replace a human limb or organ, it being sufficient that it replaces in part that limb or organ for it to be taxed at the reduced rate".

c) Indeed, "in any legal provision we must know how to interpret and know how to reach its scope", "hence the item (…) of List I attached to the VAT Code, cannot be subject to a restrictive interpretation as the Tax Authority intends, to the extent that the item is clear in its interpretation".

d) In the case at hand, it matters "to see the final product, regardless of whether it is sold as a whole or sold in phases" since "the spirit of the legislator in creating item 2 was not to benefit taxpayers at the expense of others, but rather in the face of equal situations to tax equally" since "nothing in the letter of the law leads to restricting its application to situations of transmission of complete implant goods".

e) In fact, "in no circumstance can prostheses be applied to patients simultaneously", being applied first "the implant and only after it has been verified that there is no rejection of it can the abutment and connection pieces be placed".

f) To this extent, "the majority of the components are made to measure, which justifies their purchase in phases as they are being applied".

g) A prosthesis "is not only the combination of implant + connection pieces + tooth, but that any of the aforementioned components is itself, and by itself alone, a prosthesis", concluding that "any of the items marketed by the claimant, with the exception of dentistry tools, are to be considered as prostheses, as such classified under item 2.6 of List I attached to the VAT Code, and their transmission is taxed at the reduced rate and not at the normal rate".

h) In light of the foregoing, "from the interpretation of the Tax Authority would result the impossibility of application, to any dental implant, of the reduced rate, given that (…) it is not possible to acquire, at the beginning of treatment, a complete prosthesis for a given patient (…)", limiting the applicability of item 2.6 of List I attached to the VAT Code "(…) to fixed dental prostheses, which is totally unacceptable and does not accord with the spirit of the law" (see arbitral decision No. 429/2014-T, of 24 November 2014).

i) Accordingly, "the disputed VAT assessments suffer from error regarding the legal basis, due to incorrect interpretation of item 2.6 of List I to the VAT Code", whereby "the assessments of compensatory interest, being consequential acts of the assessments (…) are affected by the same defect", which would justify "the annulment of the assessments that are the subject of the (…) arbitration proceeding (…)", "(…) in the total amount of €:202,528.24";

j) The Claimant concludes by formulating the requests for annulment of the additional VAT assessments and compensatory interest assessments.

1.12

The Respondent submitted a response and attached the investigative file, arguing, for the rejection of the request for arbitral pronouncement, in summary, as follows:

a) The Claimant has no reason, as "it is the understanding of the Tax Authority (…) that prosthetic materials are only taxed at the reduced rate if they are intended for the purpose defined in the item, that is, to replace part of the body with deficiency or illness or its function", whereby "such interpretation implies (…) that goods consisting of parts, pieces and accessories of such prostheses are not covered by item 2.6, given that, in addition to not being prostheses, they are not suitable to fulfil, considered individually, the function of replacing a part of the body or its function".

b) Indeed, "item 2.6 only covers the transmission of the article which, in itself, constitutes an artificial piece that replaces the organ of the human body or part of it (…)", whereby "in dental implant prosthesis, the normal tax rate applies to the transmission of connection or fixing pieces, given that these, by themselves (…) do not fulfil the function described in item 2.6 of List I attached to the VAT Code".

c) Additionally, "taking into account that situations of taxation at the reduced rate constitute exceptions to the application of the normal VAT rate and, through this, represent a deviation from the application of the general system of taxation, the Court of Justice of the European Union (CJEU) has been guided, in this matter, by the application of the principle of strict interpretation".[2][3]

d) Thus, "in determining the meaning of tax norms and in qualifying the facts to which they apply" it is important to distinguish, in the case under analysis, "the concept of implant from the concept of prosthetic material".

e) In fact, "the issue should be focused on whether item 2.6 of List I is intended to tax at the reduced rate the transmission of prostheses, whatever type they may be, or whether the legislator intended to cover here also the sale of all types of fixing devices that are not prostheses (…) which, when considered in isolation (…) do not replace a limb or an organ of the human body".

f) In this context, "contrary to what the taxpayer intends, it does not appear to have reception in the letter of the law the thesis that item 2.6 encompasses the marketing of all types of pieces intended for fixing prostheses or for their connection, rather than referring to the prosthesis itself, a finished product fit for the replacement of an organ or part of the human body" (emphasis ours).[4]

g) According to the position it currently defends on this matter, "item 2.6 is restricted to complete goods as those which, by themselves, can replace an organ or limb of the human body and not any elements that are used individually in the process of replacement".

h) In these terms, "the goods in question, transacted by the taxpayer, are not prosthetic material", whereby "despite being specific materials for a given dental treatment, the concept of dental prosthesis is not applicable to them, being (…) considered (…) as specific accessories of the prosthesis".[5]

i) Indeed, "the titanium implant and the abutment are only components, each performing the function for which they were designed, of support and fixing of the prosthesis, but which, by themselves, objectively considered, do not perform nor replace the function of the dental organ".[6]

j) By virtue of the principle of neutrality which flows from the Treaty of Rome and which is set forth in the VAT Directive (2006/112/EC), and which is "systematically invoked by the Commission to oppose national legislation deemed incompatible with Community rules, as well as by tax administrations and taxpayers of the various Member States (...)", principle which opposes "(…) differentiation in the taxation of goods or services of identical nature, being deemed to exist when the tax does not influence consumer choice".

k) Thus, "if we are talking about neutrality regarding the taxation of different types of prosthesis we must compare the transmission of removable prosthesis with that of fixed prosthesis and not with that of fixed prosthesis plus fixing and connection pieces", otherwise "the principle of neutrality may come into crisis if different rates apply to the materials necessary for the preparation of each of the different types of prosthesis".[7]

l) In these terms, "only the application of the same rate to the pieces, parts and accessories, in this case, the normal rate, guarantees the neutrality of the tax, preventing any discriminatory treatment between the different types of prostheses".

II. PROCEDURAL REVIEW

2.1

The request for arbitral pronouncement is timely, as it was submitted within the time limit provided in subparagraph a) of No. 1 of article 10 of the RJAT.

2.2

The parties enjoy legal personality and capacity, are legitimate regarding the request for arbitral pronouncement and are duly represented, in accordance with the provisions of articles 4 and 10 of the RJAT and article 1 of Ordinance No. 112-A/2011, of 22 March.

2.3

The Court is competent to consider the request for arbitral pronouncement formulated by the Claimant.

2.4

No exceptions requiring consideration were raised.

2.5

No procedural defects were found, requiring consideration of the merits.

III. MERITS

III.1 FACTUAL MATTERS

§1. Proven Facts

The following facts are judged to be proven:

a) The Claimant's corporate purpose is the research, development, manufacture, distribution and commercialization of odontological medical products (as alleged by the Claimant in article 1 of the request for arbitral pronouncement and not contested by the Respondent).

b) In the context of its activity, the Claimant markets, in Portuguese territory, articles for dental implantology, of which dental implants, abutments and connection pieces stand out, such articles being intended for dental clinics and dentists who perform dental implantology (as alleged by the Claimant in articles 10 and 11 of the request for arbitral pronouncement and not contested by the Respondent).

c) The Claimant is a limited liability company and is classified, for VAT purposes, under the normal quarterly periodicity system since the resumption of its activity on 09 October 2009 (as per the administrative file attached by the Respondent).

d) The Claimant was subject to a tax inspection (OI2014…), with respect to VAT (partial scope), relating to the years 2011, 2012 and 2013, commencing on 12 June 2014 and concluding on 07 November 2014 (as per the administrative file attached by the Respondent).

e) The tax inspection action identified in the preceding point resulted in the preparation of a Draft Tax Inspection Report, by means of which the following arithmetic corrections of VAT were communicated to the Claimant by Official Letter No. …/…, of 11 November 2014:

Year 2011

"Additional VAT Assessment No. … (period 1103T), in the amount of €:5,523.60 (…), Additional VAT Assessment No. … (period 1106T), in the amount of €:10,392.79 (…), Additional VAT Assessment No. … (period 1109T), in the amount of €:11,497.91 (...), Additional VAT Assessment in Tax Period 201110-201112, in the amount of 16,242.22 (…)".

"Compensatory Interest Assessment No. …(period 1103T), in the amount of €:785.11 (…), Compensatory Interest Assessment No. … (period 1106T), in the amount of €:1,372.42 (…), Compensatory Interest Assessment No. … (period 1109T), in the amount of €:1,402.43 (...), Interest Assessment (period 201110-201112), in the amount of €:1,819.12 (…)".

Year 2012

"Additional Assessment, tax period 201201-201203, in the amount of €:11,276.99 (…), Additional Assessment, tax period 201204-201206, in the amount of €:10,079.63 (…), Additional Assessment, tax period 201207-201209, in the amount of €:8,586.45 (...), Additional Assessment, tax period 201210-201112, in the amount of 24,889.22 (…)".

"VAT Interest Assessment, tax period 201201-201203, in the amount of 1,151.79 (…), VAT Interest Assessment, tax period 201204-201206, in the amount of 926.77 (…), VAT Interest Assessment, tax period 201207-201209, in the amount of 703.85 (...), Interest Assessment (period 201210-201212), in the amount of 1,789.29 (…)".

Year 2013

"Additional Assessment, tax period 201301-201303, in the amount of 9,036.78 (…), Additional Assessment, tax period 201304-201306, in the amount of 12,447.25 (…), Additional Assessment, tax period 201307-201309, in the amount of 41,416.27 (...), Additional Assessment, tax period 201310-201312, in the amount of 27,374.94 (…)".

"VAT Interest Assessment, tax period 201301-201303, in the amount of 561.51 (…), VAT Interest Assessment, tax period 201304-201306, in the amount of 646.57 (…), VAT Interest Assessment, tax period 201307-201309, in the amount of 1,738.34 (...), VAT Interest Assessment, tax period 201310-201312, in the amount of 866.99 (…)".

f) According to the Draft Tax Inspection Report, the corrections made result from the "improper application of the reduced rate, to the transactions of implants and other accessories (abutments and screws), in the years 2011, 2012 and 2013 (…)", a procedure which "(…) lacks any legal basis, due to lack of classification of such goods in any of the lists attached to the VAT Code, namely in item 2.6 of List I (…)" (as per the administrative file attached by the Respondent).

g) In the context of the notification referred to in point e), above, the Claimant was also notified that, within 15 days, it could exercise its right to be heard, in writing or orally, on the draft corrections presented (as per document No. 14 attached to the request and administrative file attached by the Respondent).

h) The Claimant did not exercise its right to be heard, despite being notified in accordance with the preceding point (as per document No. 14 attached to the request).

i) The Claimant was notified of the final version of the Tax Inspection Report, through Official Letter No. …/…, of 09 December 2014, with the arithmetic VAT corrections identified in point e), above, being communicated to it.

j) Following the corrections made with respect to VAT, in the years 2011, 2012 and 2013, the Respondent issued the following tax assessment notices:

k) Following the corrections made with respect to VAT, in the years 2011, 2012 and 2013, the Respondent issued the following compensatory interest assessment notices:

l) The total of the assessments identified above amounts to EUR 202,528.24, relating to the total value of VAT and compensatory interest assessed with reference to the years 2011, 2012 and 2013, as indicated by the Claimant in the request and supported by the documents attached to the file and identified above.

m) Implants, abutments and crowns represent prosthetic material.

n) The tooth constitutes an organ of the human body.

§2 Unproven Facts

a) No evidence was obtained of payment of the additional VAT assessments and compensatory interest assessments that are the subject of the request for arbitral pronouncement.

b) No other facts were found to be unproven with relevance to the arbitral decision.

§3. Reasoning on Factual Matters

Regarding the proven factual matters, the Court's conviction was based on the free appraisal of the positions adopted by the parties on factual matters, the content of the documents attached to the file (notably the administrative file), as well as on the knowledge possessed by the Court by virtue of the exercise of its functions (art. 412, No. 2 CPC, now subsidiarily applicable in accordance with the terms provided in art. 29, No. 1, e) of the Legal Framework for Tax Arbitration), both of the fact consisting of the circumstance that the tooth is an organ of the human body, and of the fact that abutments, crowns and dental implants assume the nature of prosthetic material (see decisions, now attached, handed down in Proceedings Nos. 67/2015-T and 293/2015-T, in which the legal subject matter of the decision is reconducted, in essence, to the issue in question in the present action and in which the Arbiter-President in the action now being decided, intervened in that same capacity).

III.2 Matters of Law

1. The legal issue to be considered in this arbitration proceeding relates to the request, formulated by the Claimant, for the annulment of the additional VAT assessments identified, made by the Tax and Customs Authority, and expressed in additional VAT assessments relating to the years 2011, 2012 and 2013, in the amount of €188,764.05, to which were added the respective compensatory interest in the amount of €13,764.19.

2. The aforementioned additional assessments are based on the circumstance that the Respondent considers applicable to the transmissions that have as their object dental implants and abutments, the normal VAT rate [of 23%, applicable by virtue of the provisions of article 18, No. 1, subparagraph c) of the VAT Code] whereas, according to the understanding of the Claimant (and reflected in the self-assessment made by it), to such transactions the reduced VAT rate of 6% should be applied, applicable by virtue of the provisions of article 18, No. 1, subparagraph a) of the VAT Code.

3. In accordance with the rules of Directive No. 2006/112/EC, of 28 November (VAT Directive), taxable transactions are subject to the tax, rates and conditions of the Member State in which they are located.

4. In accordance with the provisions of articles 96 and 97 of the aforementioned Directive, the normal VAT rate is fixed at a percentage of the taxable value that cannot be less than 15% (until 31 December 2015), and Member States may, in accordance with the provisions of article 98 of the same Directive, apply one or two reduced rates at a percentage that cannot be less than 5%.

5. Reduced rates may only be applied to the supply of goods and the provision of services in the categories listed in Annex III of the VAT Directive (as amended by Directive 2009/47/EC).

6. On the other hand, in accordance with the provisions of No. 3 of article 98, "when applying the reduced rates provided for in No. 1 to categories relating to goods, Member States may use the Combined Nomenclature to delimit each category with precision", that is, the use of the Combined Nomenclature to delimit each category with precision is a mere possibility which, as such, may or may not be used for this purpose by Member States, whereby the determination and definition of the operations which may benefit from a reduced rate under these provisions of the VAT Directive are within the competence of each of the States.

7. With Directive 92/77/EEC, of the Council, of 19 October 1992, Community harmonization of VAT rates was carried out, with a view to the entry into force of the internal market, which occurred on 1 January 2003, each Member State having, until that date, full autonomy to fix the number of rates and their level.

8. Annex III of the VAT Directive contains the list of supplies of goods and provision of services to which the reduced rates provided for in article 98 of the aforementioned Directive may be applied, and contemplates, in the respective point 4 (for the purposes which are of interest to us in the case under analysis), the realities "medical equipment, auxiliary material and other appliances normally used to alleviate or treat deficiencies, for the exclusive personal use of disabled persons, including the repair thereof, as well as car seats for children".[9]

9. It follows from the foregoing that the possibility of applying a reduced rate of tax is merely a power that Member States may or may not use, but, should they avail themselves of such possibility, they must do so in accordance with the rules of EU law.

10. In this context, it is also important to note that the different goods and services to which Member States may apply reduced tax rates are limited to specific situations, resulting from a consensual position adopted between them, in which it is recognized that such goods or services, by reason of their social, educational, or cultural character, are considered to be of first necessity, as will be the case in the situation under analysis (health).

11. The VAT Code provides in No. 1 of its article 18 the following tax rates:

a) "For imports, supplies of goods and provision of services listed in List I attached to this act, the rate of 6%";

b) "For imports, supplies of goods and provision of services listed in List II attached to this act, the rate of 13%";

c) "For all other imports, supplies of goods and provision of services, the rate of 23%".

1. With regard to the applicability of the different rates referred to in the preceding point, in accordance with the provisions of article 18 of the VAT Code, the normal tax rate shall be applicable whenever the good or service in question does not fall within one of the two reduced rates provided for in Lists I and II attached to the Code.

2. Should there be a case of groupings of various commodities forming a distinct commercial product, it should be taken into account that, when they do not undergo changes in nature, nor lose their individuality, the rate corresponding to them shall apply or, if different rates apply, the higher one (article 18, No. 4, of the VAT Code).

3. In accordance with the provisions of point 2.6 of List I attached to the VAT Code, the following represent goods subject to reduced rate "orthopaedic apparatus, surgical-medical belts and medicinal stockings, wheelchairs and similar vehicles, manually or motor-driven, for disabled persons, apparatus, devices and other prosthetic or compensatory material intended to replace, in whole or in part, any limb or organ of the human body or for the treatment of fractures and lenses for the correction of vision, as well as orthopaedic footwear, provided prescribed by medical prescription, in accordance with the terms regulated by the Government", the normal rate applying only on a subsidiary basis, that is, should there be no application of one of the reduced rates referred to in point 11, above).

4. In this context, it will be important to ascertain whether, in the case under analysis, we are faced with a single transaction or with principal and ancillary transactions since, when a transaction comprises several supplies of goods and/or provision of services, the question arises as to whether it should be considered as a single transaction or as several distinct and independent transactions, which must be assessed separately (this question is especially important, from a VAT perspective, namely for the purposes of applying the tax rate and the provisions relating to exemptions).

5. It is particularly important to verify whether the "individualized" transmission of dental implants, abutments and connection pieces may be taxed at the reduced rate of 6% as it falls within the scope of point 2.6 of List I attached to the VAT Code.

6. In fact, what is at issue is to ascertain whether dental implants, abutments and crowns represent or not "prosthetic or compensatory material intended to replace, in whole or in part, any limb or organ of the human body (…)", it being relevant for this purpose to determine what the notions of prosthetic material and organ of the human body mean, as well as to verify whether the goods transacted are included in prosthetic material and whether they are intended to replace, totally or partially, an organ of the human body.

7. In this context – notions of prosthetic material and organ of the human body, the Court avails itself, in accordance with the provisions of art. 412, No. 2 of the CPC, of the factuality alleged and proven in similar arbitration proceedings, identified above (67/2015-T and 293/2015-T), handed down at CAAD.

8. From the said evidence, it resulted (as is explained in detail in the factual decision handed down there) that the tooth is an organ of the human body, integral to the stomatognathic system, associated with the functions of mastication, speech, smiling, tactile sensation and swallowing and constituted, from an anatomical point of view, by root, crown and periodontium, each of these constituent parts of the organ (tooth) being inseparable from the others.

9. From it further resulted that the implant constitutes prosthetic material intended to replace the root; that the crown, molded in the laboratory in a manner personalized for each patient, constitutes prosthetic material intended to replace the natural crown and that the abutment represents prosthetic material by which the connection between the implant and the crown is ensured.

10. In fact, it has been taken as established in the arbitral case law handed down in this matter that, in scientific terms, it is understood:

• By tooth, "the organ of the human body, constituted by three parts: root, neck and crown";

• By implant, "a prosthetic structure, in the form of a screw, intended to replace the root";

• By prosthetic construction, one which "is intended to replace the natural crown";

• "That the abutment represents the prosthetic element that ensures the connection between the implant and the crown";

• "That the crown is molded in the laboratory in a manner personalized for each patient";

• "That the aforementioned elements (implant, abutment and crown) constitute prosthetic material";

• "That prosthetic material is any artificial element introduced into the human body".

1. From the concepts enumerated above it results that these are the only ones to attribute, with precision and scientific rigor, the correct meaning to the terms under analysis (implant, abutment and crown), all others being irrelevant, namely when, in incorrect lay language, other senses are incorrectly attributed to them, in particular, when the entire dental reconstruction is incorrectly referred to as an implant or when the crown is referred to as a prosthesis.

2. Given the aforementioned factual premises, it is verified that, in the case at hand, each one of the goods that are the object of transmission by the Claimant represents prosthetic material, which is intended to replace, in whole or in part, an organ of the human body, that is, a human tooth.

3. In the same sense points the fact that the most common method of placing dental implants is a procedure of "staged surgery", whereby:

i) "The first stage consists of the surgical burial of the implant (which replaces the root of the tooth) level with the bone, but within the gums (this protects the implant while it heals)";

ii) "At the end of the healing process, the dental implant needs to be surgically exposed by removing the overlying gums. In this second stage, the surgeon checks the implant to confirm that integration was successful and places the fixing abutment which penetrates the gum";

iii) "In a third stage, following the completion of the healing process which delimits the space to be occupied by the implant, the dental crown (artificial tooth in porcelain or other material) is fabricated and placed on the osseointegrated dental implant".

1. Each one of the goods that are the object of transmission by the Claimant, in the case at hand, represents, in short, prosthetic material, which is intended to replace, in whole or in part, an organ of the human body – the tooth –, thus ensuring the maintenance of the specific functions thereof, namely of incision, cutting and grinding of food.

2. Thus unsustainable is the understanding that the Portuguese legislator intended to restrict the application of the reduced rate, as the Respondent intends, only when transactions are concerned that involve prosthetic materials that represent "complete goods".

3. In this matter, it is important to note that the meaning and scope of the reduced rate applied in this field should take into account the good rules of hermeneutics, taking into account not only the grammatical element, but also its context, reason for being and pursued purposes.

4. Indeed, right away, the letter of the provision seems to indicate that dental implants are classified in the aforementioned list, as there is prosthetic material intended to replace an organ of the human body, in this case, the dental apparatus.

5. In fact, nothing in the letter of the law leads us to restrict its application to situations of transmission of "complete goods" of implant, in the sense that the Respondent intends to convey.

6. Moreover, as will be seen in greater detail below, such a concept does not exist as such, but rather dental reconstructions whose realization implies the use of three pieces (implant, abutment and crown) which, according to surgical technique, are introduced in phases into the patient's mouth, then giving rise, taken together, to an implant.

7. The three pieces referred to in the preceding point are unusable except for the composition of a prosthesis composed thereof, whereby, as there are no "complete goods" of implant (in the sense defended by the Respondent), the understanding of the latter ends up denying the benefit of the reduced rate to this type of prostheses, thus putting into question, without an attendable rational reason, the ratio legis that presided over the acceptance of this item in the terms in which it is drafted – the protection of public health.

8. In fact, the goods in question constitute prosthetic material (and not material for prosthesis), with the substitutive function of part or the entirety of an organ of the human body, intended to promote, in particular, the adequate performance of the mastication function.

9. In this manner, the interpretation defended by the Respondent, to the effect that the reduced rate would only apply when the transaction concerns a "single unit implant" (suitable for fulfilling the function of replacing a part of the body or its function), fails to be sustainable, as the said interpretation finds no support in the literal element of the norm, constituting a view that represents the adoption of a regime other than that legally provided, without acceptance in the legal text and, therefore, incapable of being sustainable within the framework of the present litigation.

10. As is also clarified in Arbitral Decision No. 429/2014-T, of 24 November 2014 and in Arbitral Decision No. 530/2014-T, of 21 May 2015 (both relating to the same type of issue being analyzed here), in no segment of the norm is it required that prosthetic materials be transmitted in an aggregated manner, and in the second of the decisions identified above it is stated that "such interpretation has not the slightest verbal correspondence with the letter of the Law".

11. On the other hand, such a perspective, in addition to not finding acceptance in the letter of the law (which, by itself, in accordance with the provisions of No. 2, article 9 of the Civil Code, excludes the possibility of representing an adoptable understanding) and resting on an erroneous notion of implant, would always be incapable of practical application, thus constituting an understanding that is inapplicable by nature.

12. The pieces used in the reconstruction of the human tooth, as a whole, are not found for sale on the market in unitary packages, but are sold separately.[10][11]

13. On the other hand, each of the pieces in question is applied, in the treatment process, in temporally distinct phases, whereby it does not become necessary (nor, frequently, appropriate), the acquisition of all of them at the same moment, in particular, because the selection of the type of abutment to adopt only occurs in the post-surgical phase (of implant placement).[12]

14. Thus, as these pieces do not constitute the object of transmission in commercial transactions, the understanding that the reduced VAT rate of 6% would only apply when the acquisition and sale of the so-called "joint units" of pieces is concerned is unfounded.

15. Even if the elements making up the prosthetic reconstruction of the entirety of the tooth were saleable together, the interpretation that the aforementioned reduced rate would apply only when such elements were acquired separately would always be revealed, on the one hand, to be inconsistent with the reason for being of the norm (and, thus, with the teleological element that justifies it) and, on the other hand, to be offensive of fundamental legal principles and values.

16. Indeed, the legal fixing of a reduced VAT rate is justified so as to create the possibility of easier access, by citizens, to health care involving the use of the materials in question, it being that legislative intention "to guarantee and promote public health within the scope of oral health" that justifies that, within article 9 of the VAT Code, it is provided that exempt from tax are "services provided in the exercise of the professions of physician, dentist, midwife, nurse and other paramedical professions" [subparagraph a)] and that, likewise exempt from tax, are "services provided in the exercise of their activity by dental technicians" [subparagraph b)] (emphasis ours).

17. Being, thus, the objective of the legislator, to ensure access to health care (which it considers essential), incomprehensible would it be if the reduced VAT rate were applied when the treatment materials were sold together and no longer when they were sold separately, creating, without justification (and in violation of the principle of equality), unequal treatment between patients equally in need of health care, all the more so in that, in accordance with the provisions of article 64, No. 1 of the Constitution of the Portuguese Republic (CRP) "everyone has the right to health protection and the duty to promote and defend it" and, according to No. 3 of the same article, "it is a priority responsibility of the State (…) to guarantee access for all citizens, regardless of their economic condition, to preventive, curative and rehabilitation medical care".

18. In these terms, unequal treatment would be even more flagrant when the patient needed only one or some of the aforementioned prosthetic materials for their treatment to be complete.[13][14]

19. Incomprehensible it would be that, by reason of the type of pathology of the oral cavity that may affect the various patients, these should have to bear, as a result, different VAT rates, merely because the acquisition of the pieces necessary for their treatment was made in a joint or separate manner.

20. It is thus demonstrated that, although each one of the aforementioned prosthetic materials represents, in itself, an autonomous unit, of transaction subject to the application of the reduced rate, this will be applicable to all the pieces involved in the treatment of the oral pathology, regardless of the manner in which the pieces are placed.

21. On the other hand, it should be noted that a contrary understanding would induce patients, with lesser economic capacity and in need of prostheses integrally replacing one or more teeth, to opt for traditional compact prostheses (commonly referred to as plates), to benefit from a more accessible price, when such a solution implies greater discomfort for the patient and lesser quality of such an alternative.

22. With this type of understanding, the opposite effect to that which the constitutional norm proposes would be produced, since instead of promoting the quality of health services (with the application of the reduced rate) to which it is intended that citizens have access, it would foster regression and recourse to means of dental treatment technically markedly inferior, with the added aggravation that such effect would be reflected, in unequal treatment, at the level of economically less favored citizens, thus violating the principle of uniformity of VAT (in accordance with which similar economic activities should be treated in the same manner).[15]

23. Indeed, the principle of equality would be offended also from the point of view of the producer and supplier of the goods in question, in that the subject who produced or sold the goods together would benefit from privileged tax treatment relative to one who only did so separately, which finds no support in the reasons justifying the reduction of the rate, representing, consequently, a distortion of the rules of the European Union in force in fiscal matters, violation of the imposition of competitive neutrality.[16]

24. Nor is it an argument capable of sustaining the understanding defended by the Respondent the allegation that there must be restrictive interpretation as to exceptions to the application of the normal VAT rate, should not be accepted.

25. In fact, the only defensible principle would be that, in the case of an exception regime, the interpreter cannot extend such regime to other situations, even if they repute them analogous, being thus forbidden to extend the legally provided benefit to other hypotheses, not contained in the law.

26. Thus, the interpreter must proceed, not to a restrictive interpretation, but to a strict interpretation of the law, that is, to a declarative interpretation of the provision to be applied, the administrative power not being able to distort the meaning of the result of the exercise of legislative power.[17]

27. From the adequate interpretation of the norm under analysis it results that the reduced VAT rate should apply to the implant, abutment and crown, as prosthetic materials, whereby sustaining the non-application of the reduced VAT rate to the aforementioned prosthetic materials, in disrespect of the legally fixed regime, would offend the security and confidence that the legal wording must be able to ensure to the citizens subject to the norm.

28. Thus, either by recourse to community rules, or by simple application of the good rules of hermeneutics, the result achieved would always be the same, that is, one can only conclude that in item 2.6 of List I attached to the VAT Code are included not only prosthetic materials constituted by a single piece, but also prosthetic materials susceptible to application composed.

29. Indeed, if the Respondent's understanding were accepted, a discriminatory treatment would be introduced [if only because it would be, namely, against the provisions of articles 5, No. 2 and 7, No. 3 of the General Tax Law (LGT)] and arbitrary between the different dental prostheses since, on the one hand, prostheses composed of a single piece would benefit from the reduced rate of 6% but, on the other hand, "composite" prostheses would be taxed at the normal rate.

30. Now, in accordance with the provisions of the aforementioned normative, taxation respects the principles of generality, equality, legality and material justice, not discriminating "(…) any profession or activity nor prejudices the practice of legitimate acts of a personal character, without prejudice to exceptional increases or benefits determined by economic, social, environmental or other purposes".

31. It will also be important to take into account the rules that govern VAT, in accordance with EU law, with the respective transposition at the internal level and with the administrative and judicial interpretation that has been carried out regarding them, especially by the CJEU.[18]

32. In general terms, VAT is a general tax on consumption, of an indirect and multi-phase nature, which tends to reach every act of consumption, being pointed out as its principal characteristic its respective neutrality.[19]

33. Being it customary to distinguish the neutrality of transaction taxes with respect to their effects on consumption and on production, it can be affirmed that there exists neutrality with respect to consumption, when the tax does not influence the choices of the various goods or services by consumers, whereby, in general terms, in accordance with the principle of neutrality, taxation should not interfere with economic decisions nor in price formation, implying the extension of the scope of application of this tax to all phases of production and distribution and to the sector of provision of services.[20][21]

34. The principle of neutrality is set forth in the VAT Directives, being systematically invoked by the Commission to oppose national legislation deemed incompatible with the rules of EU law, as well as by tax administrations and taxpayers of the various Member States, having been, numerous times, applied by the CJEU.[22]

35. The application of this principle of neutrality should be taken into account in the essential phases of the life of VAT and, consequently, within the scope of the rules relating to objective and subjective scope, location, exemptions and exercise of the right to deduction.

36. In these terms, the CJEU has been concerned, in particular, with the concretization of the objectives of the common system, in guaranteeing the neutrality of the tax burden of all economic activities, whatever their objectives or results, in ensuring economic operators equal treatment, in achieving a uniform definition of certain elements of the tax, in guaranteeing legal certainty and in facilitating actions tending to its implementation.[23]

37. In fact, the CJEU has always sought to draw the due consequences of the equality of treatment in VAT of similar activities and the absence of the impact of the extension of production and distribution chains on the amount of tax received by tax administrations, being in light of this basic principle that the tax should be interpreted and applied, so as to ensure a uniform system that guarantees fair competition in the space of the European Union.

38. In accordance with the CJEU's understanding, the principle of fiscal neutrality also includes two other principles frequently invoked by the Commission, that of the uniformity of VAT and that of the elimination of distortions of competition.

39. Indeed, the CJEU has been pointing out that the principle of fiscal neutrality implies that all economic activities must be treated in the same manner, the same occurring with respect to economic operators who carry out the same transactions.[24]

40. Thus, provision of similar services, which are in competition with one another, should not be treated differently from a VAT perspective.[25]

41. The CJEU has also clarified that the delimitation of goods and services that may benefit from reduced rates must be done according to objective characteristics, that is, in accordance with the jurisprudence of the CJEU, the institution and maintenance of distinct VAT rates for similar goods or services are only admissible if they do not violate the principle of fiscal neutrality inherent in the common VAT system, in respect of which Member States must transpose the community rules.[26]

42. As the CJEU makes a point of emphasizing, it results from the community rules that the determination and definition of the operations that may benefit from a reduced rate are within the competence of the Member States but, as the Commission has been pointing out in its reports on reduced rates, one of the greatest problems with the application of the rates consists precisely in the optional character of such application and in the non-existence of common definitions for the categories of goods and or services covered.

43. Nevertheless, in the exercise of this competence Member States must respect the principle of fiscal neutrality, principle which opposes that, in particular, similar commodities or provision of services (in competition with one another) be treated differently from a VAT perspective, so that the aforementioned products must be subject to a uniform rate.[27]

44. Since the reduced rate is the exception, the fact that its application is limited to concrete and specific aspects, is consistent with the principle according to which exemptions or derogations must be interpreted in strict terms, provided that the principle of neutrality of the tax is not violated.[28]

45. Indeed, the application of one or two reduced rates is a possibility recognized to Member States (by derogation from the principle according to which the normal rate applies), whereby Member States will not be able, in particular, to interpret the concepts used in Annex III of the Directive in a selective manner so that, without regard to objective criteria, different treatment is granted to identical realities.

46. In fact, being certain that the determination of the operations subject to reduced VAT rate is within the competence of the Member States, no abstract definitions existing for this purpose in community legislation, it is necessary that the principle of neutrality be respected, being thus contrary to the principles of EU law a taxation at reduced rates of the tax which, being selective, violates the fundamental characteristics of fiscal neutrality, objectivity and uniform rate of taxation, not allowing that subgroups be instituted within an economic activity, with the intent of applying different taxation rates to them, no objective reason existing that would justify such difference in treatment.[29]

47. The principle of objectivity requires the application of a sole rule to taxable transactions of the same nature, there being a presumption of similarity when the transactions in question correspond to various variants of a sole and same taxable transaction included in one of the categories of Annex III of the VAT Directive.

48. In this regard, although it flows from the provisions of article 2 of the VAT Directive that each transaction must normally be considered distinct and independent, in certain circumstances, several formally distinct transactions, susceptible of being carried out separately and thus giving rise, in each case, to taxation or exemption, must be considered as a single transaction when they are not independent.[30][31]

49. In this context, and in accordance with the established jurisprudence of the CJEU, we will be "(…) faced with a single transaction, in particular where one or several elements must be considered the main transaction, whereas, conversely, one or several elements must be considered ancillary transactions that share the same tax treatment as the main transaction" it being that "a transaction must be considered ancillary to a main transaction when it does not constitute for the clientele an end in itself, but a means of benefiting on the best conditions from the service main service of the service provider".

50. It may also be considered that one is faced with a single transaction when two or several elements or acts supplied by the taxpayer are so closely linked that they form, objectively, a single indivisible economic transaction whose decomposition would have an artificial nature.

51. Thus, the CJEU emphasizes that "(…) when a transaction is constituted by a set of elements and acts, all circumstances in which the transaction in question develops must be taken into account, to determine, on the one hand, whether one is in the presence of two or more distinct transactions or of a single transaction, and, on the other, if, in the latter case, this single transaction must be qualified as a provision of services"; the same occurring when "(…) two or several elements or acts supplied by the taxpayer to the consumer are so closely connected that they form, objectively, a single indivisible economic transaction whose decomposition would have an artificial nature" (emphasis ours).

52. Again in the same sense, cite the Judgment of the CJEU of 10 March 2011 (Joined Cases C-497/09, C-499/09, C-501/09 and C-502/09), in accordance with which it is stated that, for the purposes of applying the reduced rate, it would be necessary to ascertain "(…) whether, from the point of view of VAT, the various activities in question in each of the main proceedings should be treated as distinct transactions taxable separately or as complex single transactions composed of several elements".

53. Now, if the discriminatory treatment that the Respondent sustains were to be admitted we would be essentially faced with an intolerable offense to the principle of neutrality that governs VAT at the level of EU law, treating equal goods in a different manner without any attendable rational reason, a fact which violates the rules that govern that tax as well as all the jurisprudence of the CJEU, including that which above has already been stated.

54. As is known, in accordance with the provisions of No. 2 of article 11 of the LGT, whenever, in tax norms, terms proper to other branches of law are employed, they must be interpreted in the same sense in which they have there, unless otherwise flows directly from the law.

55. For its part, in accordance with the provisions of No. 3 of the aforementioned normative, it is determined that, persisting doubt about the meaning of the applicable scope norms, account must be taken of the economic substance of the tax facts.

56. Thus, the Community legislator, the European Commission and the jurisprudence of the CJEU determine that, in the use of the concepts employed for the purposes of applying reduced rates, Member States must have regard to the economic effects in question so as not to put into question the essential principle of the neutrality of the tax.

57. If the understanding defended by the Respondent were accepted we would be faced with a difference in treatment for identical realities resulting not from the VAT Directive but from a deficient application thereof by the Tax Administration of a Member State of the EU.

58. Notwithstanding the fact that derogation norms (as is the case with the norm which enables Member States to apply reduced tax rates) must be applied restrictively, we must not confuse such an imperative with a selective application of the same, a completely distinct reality which puts into question the most basic characteristics of the tax.

59. In this context, it is important once again to emphasize that, contrary to what the Respondent alleges, there does not exist the single piece in the factual sense of "complete good" that the Respondent wishes to attribute to it, but only that of dental reconstruction which may imply, as such, the application, jointly or separately of "implant, abutment and crown", with a view to the replacement total or partial of an organ of the human body.

60. Thus, the fact that such pieces are marketed separately cannot affect their classification and qualification, for VAT purposes, prevalence being given to substance over form.

61. In reality, what is at issue in the present proceedings falls within the legal provision of item 2.6 of List I attached to the VAT Code, consisting of "(…) apparatus, devices and other prosthetic or compensatory material intended to replace, in whole or in part, any limb or organ of the human body", it being certain that, as above mentioned, the ratio legis which leads the legislator to accept the application of the reduced VAT rate in such situations (the protection of health) constitutes the essential teleological subsidy that leads us to this interpretation.

62. It is thus revealed, by all the foregoing, to be without any foundation, the understanding sustained by the Respondent to the effect that the goods in question are not prostheses, as well as that the same goods are not suitable "to fulfil, considered individually, the function of replacing a part of the human body or its function".

63. Indeed, all elements of interpretation of the tax norms invocable for the effect, as well as the characteristics of VAT and the interpretation that the CJEU has been making thereof, lead us to conclude that, in the case under analysis, the reduced VAT rate provided for in item 2.6 of List I attached to the VAT Code should be applied to the transmission of implants, abutments and crowns, whereby one should conclude that the Claimant has reason in the request for arbitral pronouncement formulated.

64. As a consequence, it is considered applicable to the act of transmission of prosthetic materials in which implant, abutment and crown are expressed, the reduced VAT rate of 6%, in accordance with the provisions of article 18, No. 1, a) of the VAT Code and with point 2.6 of List I attached to the VAT Code, whereby one concludes that the disputed VAT assessments, relating to the years 2011, 2012 and 2013, suffer from error regarding the legal basis, due to incorrect interpretation of the provisions in the aforementioned item 2.6 of List I identified above (as the supplies of goods at the origin of the request find perfect and direct legal classification in the literal element of the norm contained in point 2.6 of the aforementioned List).

IV. DECISION

Accordingly, this Collective Arbitral Court decides:

• To declare the request for arbitral pronouncement submitted by the Claimant as meritorious, declaring illegal and annulling, as a consequence, the tax acts (of additional VAT assessment and compensatory interest assessments relating to the years 2011, 2012 and 2013) that are the object of challenge in the present action.

V. VALUE OF CASE

Taking into account the provisions of articles 306, No. 2 of the CPC, article 97-A, No. 1 of the CPPT and article 3, No. 2 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the case is fixed at € 202,528.24 (two hundred and two thousand, five hundred and twenty-eight euros and twenty-four cents).

VI. COSTS

In accordance with article 22, No. 4 of the R.J.A.T., the amount of costs is fixed at € 4,284.00 (four thousand two hundred and eighty-four euros), in accordance with Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, to be charged to the Tax and Customs Authority.

Let notice be given.

Lisbon, 6 March 2016.

[1] The writing of the present decision is governed by the orthography prior to the Orthographic Agreement of 1990, except with respect to transcriptions made.

[2] In this context, the Respondent cites the Judgment of 18 January 2001, handed down in Case Commission v Spain (C-83/99).

[3] In this matter, the Respondent also cites the Judgment of 17 January 2013, likewise handed down in Case Commission v Spain (C-360/11).

[4] In this matter, the Respondent cites the Judgment handed down by the STA, in the context of Case 01689/13, in accordance with which "(…) the product which is expressly not contemplated unequivocally in List I cannot benefit from the reduced VAT rate".

[5] The Respondent states that "according to (…) the opinion of the Association of Dentists (…) such goods serve as support for the dental prosthesis".

[6] The Respondent states that "it is the Claimant itself that admits that there may even be situations in which the goods marketed by it may never come to be applied, which means that its actual function would never be realized, not coming to fulfil the end for which it should be intended when linked to the remaining components", concluding that "it is this spirit of the law that informs the system" (see joint dispatch No. 26026/2006, of 22/12, OR II Series).

[7] In this matter, the Respondent cites Attorney Juliane Kokott in the conclusions presented in Case TNT (Judgment of 23 April 2009, Proc. C-357/07, Coll., p. I-5189), in accordance with which, "the principle of fiscal neutrality opposes that commodities or services of a similar nature, which are therefore in competition with one another, be treated differently from the point of view of value added tax (…). In this context, the principle of fiscal neutrality, which is at the base of the common system of tax and must be taken into account in the interpretation of the provisions of exemption, does not allow that economic operators who carry out the same transactions be treated differently in the matter of collection of value added tax (...). It includes the principle of elimination of distortions of competition resulting from differentiated treatment from the point of view of value added tax (...)".

[8] As per the administrative file attached by the respondent.

[9] This wording is similar to that of the former Annex H of the Sixth Directive amended by Directive 92/77/EEC (since repealed).

[10] There are, for example, numerous references of abutments, obtainable from different suppliers, it being a matter of selecting in each case that which best suits the clinical situation of the patient under treatment.

[11] By way of example, it should be noted that the crown is molded, by the technician, in the laboratory, exactly to measure and in accordance with the characteristics of the dental structure of the patient, in accordance with the mold taken for that purpose.

[12] Thus, it would not make sense (and, in practice, does not happen) the joint marketing of such pieces, no "single implant units" being transacted.

[13] The prosthetic material may be necessary to replace only part of the organ that the tooth represents, in particular, when the implant piece is embedded in the patient's maxilla only to prevent bone absorption and not to serve as support for the application of abutment and crown.

[14] This also happens if, for example, the patient has a root, making unnecessary the application of an implant that would serve as support for the prosthetic crown created in the laboratory and which needs to be applied to the patient in question.

[15] Being necessary, in obedience to the principle of objectivity, as is emphasized in the Arbitral Decision issued in the context of Proceeding No. 429/2014-T to apply "one sole and same rule to taxable transactions of the same nature, there being a presumption of similarity when the transactions in question correspond to various variants of one sole and same taxable transaction included in one of the categories of Annex III of the VAT Directive".

[16] Whose importance is also emphasized, jurisprudentially, at the internal level (CAAD), in particular, in the Arbitral Decision handed down in the context of proceeding No. 429/2014-T, of 24 November 2014 and, external, in the Rompelman case (Judgment of 22 June 1993, Proc. 268/83), when this type of neutrality constitutes one of the aspects making up fiscal neutrality.

[17] In this matter, see Arbitral Decision handed down in the context of Proceeding No. 171/2013-T, of 12 June 2014.

[18] Indeed, as has been peacefully understood by jurisprudence [and is a corollary of the obligation of preliminary reference provided for in article 267 of the Treaty on the Functioning of the European Union (which replaced article 234 of the Treaty of Rome, former article 177)], the jurisprudence of the CJEU has binding character for national Courts, when it has as its object issues connected with EU law.

[19] Cfr., Xavier de Basto, in "The taxation of consumption and its international coordination", CCTF No. 164, Lisbon, 1991, p. 39 to 73 and Clotilde Celorico Palma, in "Introduction to Value Added Tax", IDEFF Cadernos No. 1, Almedina, 6th edition, September 2014, pp. 19 to 34.

[20] As Xavier de Basto maintains, in the work identified in the preceding footnote note, and cited in arbitral decision No. 429/2014-T, of 24 November 2014, "neutrality with respect to consumption depends exclusively on the degree of objective coverage of the tax and the structure of the rates, being outside the question of designing a consumption tax completely neutral. Some exemptions will always have to be granted (.....) and, probably, there will be differences in the rate applicable to the different transactions of goods and provision of services".

[21] According to the same author, ibidem, p. 29, "in a generic formulation, by neutrality is understood the characteristic of a tax which is analyzed as not altering the relative prices of the alternatives on which the choices of economic agents fall, not thus originating distortions of their behavior. In another formulation, equally technical, it would be said that a neutral tax will be one which, by producing, as any tax cannot help but produce, income effects, is free of substitution effects".

[22] As emphasized by Francis Lefebre (author Francisco Xavier Sanchéz Galhardo) - Memento Experto, VAT: Community Jurisprudence, Directive 2006/112/EC, Updated to 31 December 2007, Editions Francis Lefebre, 2008, p. 68, "es habitual la referencia al principio de neutralidad como fundamental en el funcionamiento del IVA, de suerte que la mecánica del impuesto se supone que ha de evitar cualquier situación discriminatoria o de distorsión en el funcionamiento de las empresas".

In this context, also see Michel Guichard, in "L'esprit des lois communautaires en matière de TVA: du principe de neutralité", Review of Tax Law No. 36, 2001, pp. 1205-1212.

[23] In this sense, see Ramírez Gómez, in "Jurisprudencia del Tribunal de Justicia de las Comunidades Europeas en Materia de IVA", Editorial Aranzadi, Pamplona, 1997, pp. 232 et seq.

[24] In this context, see Judgment of 20 June 1996, Case Wellcome Trust, Proc. C-155/94 (Coll, p. I-3013, No. 38) and Judgment of 7 September 1999, Case Gregg, Proc. C-216/97 (, Coll., p. I-4947, No. 20).

[25] In this matter, see, in particular, Judgments of 12 June 1979, Case Nederlandse Spoorwegen, Proc. 126/78, Rec., p. 2041, of 11 October 2001, Case Adam, Proc. C-267/99 (Coll., p. I-7467, No. 36), of 23 October 2003, Case Commission/Germany, Proc. C-109/02 (Coll., p. I-12691, No. 20) and of 26 May 2005, Case Kingscrest Associates and Montecello, Proc. C-498/03 (Coll., p. I-4427, No. 41).

[26] In this context, see Judgment of 23 October 2003, Case Commission v Germany, in which the CJEU came to reinforce the objective character of the situations in which the application of reduced VAT rates is permitted, concluding that, in the case of goods or similar services and that are in competition with one another, it is not admissible that they be treated in a discriminatory manner.

[27] See, in this sense, the Judgment of 3 May 2001, Case Commission/France, Proc. C-481/98 (Coll., p. I-3369, No. 22) and the Judgment of 11 October 2001, Case Adam, already cited, Nos. 35 and 36.

[28] In this matter, see the Judgment of 18 January 2001, Case Commission/Spain, Proc. C-83/99 (Coll. p. I-00445).

[29] In this matter, see the conclusions of the Judgment of 23 October 2003, Case Commission/Germany, Proc. C-109/02 (Coll., p. I-12691).

[30] In this context, see Judgment of 25 February 1999, Case CPP, Proc. C-39/96 (Coll- p. I-973, No. 29) and Judgment of 27 October 2005, Case Levob Insurance and OV Bank, Proc. C-41/04 (Coll. p. I-9433, No. 20).

[31] This occurs, for example, when, at the end of an analysis even if merely objective, it is verified that one or several transactions constitute a main transaction and that the other or other transactions constitute one or several ancillary transactions that share the tax destiny of the main transaction.