Process: 553/2017-T

Date: March 12, 2018

Tax Type: IVA

Source: Original CAAD Decision

Summary

CAAD Process 553/2017-T addresses a critical issue in Portuguese VAT law: whether healthcare providers can validly waive the VAT exemption on medical services. The claimant, A… S.A., an occupational medicine and workplace health services provider, contested additional VAT assessments totaling over 100 liquidations for the 2013-2015 tax periods. The company initially declared both taxable and exempt operations in 2003, but submitted an amendment in 2004 indicating only taxable operations with full deduction rights, effectively attempting to renounce the VAT exemption provided under Article 9 of the CIVA (VAT Code). The Tax Authority challenged this position following an inspection, arguing the waiver was invalid and issuing substantial additional assessments. The arbitration tribunal, constituted on January 11, 2018, comprised three arbitrators: Jorge Lopes de Sousa (President), Professor Rui Duarte Morais (appointed by the taxpayer), and Dr. Emanuel Augusto Vidal Lima (appointed by the Tax Authority). The case examines the formal and substantive requirements for renouncing VAT exemption under Article 12 CIVA, particularly whether a simple amendment declaration suffices or whether additional conditions must be met. The claimant's services included workplace medical consultations, preventive health examinations, periodic monitoring, clinical analyses, and occupational health assessments. The taxpayer requested primary relief through annulment of the assessments and compensatory interest, with a subsidiary request for a preliminary reference to the Court of Justice of the European Union (CJEU) on the interpretation of EU VAT Directive provisions. This decision has significant implications for Portuguese healthcare providers regarding VAT treatment options and the procedural requirements for exercising the right to waive exemptions.

Full Decision

ARBITRATION DECISION

The Arbitrators Counsel Jorge Lopes de Sousa (Arbitrator-President, designated by the other Arbitrators), Professor Doctor Rui Duarte Morais and Doctor Emanuel Augusto Vidal Lima (Arbitrator-Members, designated by the Taxpayer and by the Tax Authority, respectively) forming the Arbitration Tribunal, constituted on 11-01-2018, hereby agree as follows:

1. Report

A…, S.A. Tax ID Number …, with registered office at …Street, No. …, Room …, …-… Porto (hereinafter referred to as "Claimant"), filed, pursuant to Articles 2, 5 and 10 of Decree-Law No. 10/2011, of 20 January (Legal Regime of Arbitration in Tax Matters – RJAT), a request for arbitration ruling, seeking the annulment of additional assessments of Value Added Tax (hereinafter IVA), relating to the periods of 2013, 2014 and 2015, contained in the assessments and statement of account adjustments bearing Nos. 2017…, 2017…., 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017 …, 2017 … 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017… and 2017….

Subsidiarily, the Claimant requests that a preliminary reference be made to the CJEU.

The Claimant further requests the annulment of the assessment of compensatory interest and compensation for undue security.

The Respondent is the TAX AUTHORITY AND CUSTOMS AUTHORITY.

The Claimant designated as Arbitrator Professor Doctor Rui Duarte Morais, pursuant to Article 6, No. 2, paragraph b), of the RJAT.

The request for constitution of the Arbitration Tribunal was accepted by the President of CAAD and automatically notified to the Tax Authority and Customs Authority on 17-10-2017.

Pursuant to paragraph b) of No. 2 of Article 6 and No. 3 of the RJAT, and within the deadline provided in No. 1 of Article 13 of the RJAT, the senior manager of the Tax Administration service designated as Arbitrator Doctor Emanuel Augusto Vidal Lima.

The Arbitrators designated by the Parties designated as Arbitrator President Counsel Jorge Lopes de Sousa, who accepted.

On 19-12-2017 the parties were duly notified of this designation and did not express their intention to refuse the designation of the arbitrators, pursuant to the combined provisions of Article 11, No. 1, paragraphs a) and b) of the RJAT and Articles 6 and 7 of the Code of Ethics.

Thus, in accordance with the provisions of paragraph c) of No. 1 of Article 11 of the RJAT, in the wording introduced by Article 228 of Law No. 66-B/2012, of 31 December, the collective arbitration tribunal was constituted on 11-01-2018.

The Tax Authority and Customs Authority responded defending that the request should be ruled unmeritorious.

By order of 15-02-2018 a hearing was waived and it was decided that the proceedings would continue with written submissions.

The Parties did not present any submissions.

The arbitration tribunal was regularly constituted, in accordance with the provisions of Articles 2, No. 1, paragraph a), and 10, No. 1, of Decree-Law No. 10/2011, of 20 January, and is competent.

The parties are duly represented and have legal standing and capacity, are parties with interest and are represented (Articles 4 and 10, No. 2, of the same legislation and Article 1 of Ordinance No. 112-A/2011, of 22 March).

The proceedings do not suffer from any nullities and there are no exceptions nor any obstacle to the appreciation of the merits of the case.

2. Facts

2.1. Proven Facts

The following facts are considered proven:

  • The Claimant filed, on 04/06/2003, in paper format, the declaration of commencement of activity, provided for in Article 31 of the CIVA, indicating that the activities to be carried out were as follows:

    • Principal - Medical services and occupational medicine (CAE 85120, at the time);
    • Secondary - Occupational health and safety services (CAE 74542, at the time);

  • The Claimant marked in box 11 of the aforementioned declaration, relating to the type of taxable operations carried out, the fields:

    • field 1 - taxable operations with right to deduction; and
    • field 2 - Exempt operations without right to deduction,

    and indicated that it would make the deduction of the tax borne in accordance with paragraph b) of No. 1 and No. 4 of Article 23 of the CIVA, having estimated a pro-rata of 30%;

  • On 01-03-2004, the Claimant submitted a declaration of amendment, in paper format, in which it marked only the aforementioned field 1 of box 11 and declared that it carried out "sales of goods and/or supplies of services conferring the right to deduction";

  • As a result of the delivery of this declaration of amendment, the Claimant became classified under the normal VAT regime with full deduction;

  • In the years 2013, 2014 and 2015, the Claimant exercised its occupational medicine activity with the collaboration of a team of doctors, belonging to the company's staff or sub-contracted, promoting workplace health of its clients;

  • In the context of occupational health, it conducts medical consultations and medical examinations of the employees of its clients, examinations to certify the good health of a worker before their admission, of a preventive nature, as well as conducts periodic examinations, including clinical analyses, namely in cases where symptoms are detected in the worker that reveal changes and require monitoring at greater frequency, promoting the health of workers, and also occasional examinations due to sick leave, workplace accidents, change of position, sudden illness or by medical initiative;

  • The Tax Authority and Customs Authority conducted an inspection of the Claimant pursuant to Service Orders Nos. Ol2016…/…/…;

  • In the aforementioned inspection a draft Tax Inspection Report was prepared, a copy of which is in document No. 145 attached with the request for arbitration ruling, the contents of which are reproduced as follows, among other things:

    3.2. Description of Activities Developed

    The taxpayer develops its activity in two distinct areas: occupational medicine and occupational health and safety.

    The activity of the taxpayer is developed both in facilities corresponding to the address and tax seat, in mobile health units, and in the facilities of clients.

    The facilities corresponding to the address of the taxpayer's headquarters are divided into three independent departments: occupational medicine; occupational health and safety and the commercial area.

    The occupational medicine area consists of: reception room; waiting room; office of the clinical director; meeting room; administrative area, accounting and financial area.

    The occupational health and safety departments and the commercial area consist of rooms assigned to the technicians and their respective managers.

    (...)

    III - DESCRIPTION OF THE FACTS AND GROUNDS FOR CORRECTIONS PURELY ARITHMETICAL TO THE TAXABLE AMOUNT AND THE TAX IN ARREARS

    Undue VAT Deduction

    1. Register and Declarations Filed by the Taxpayer

    1.1. Declarations of Commencement and Amendments of Activity Filed

    The taxpayer filed, on 04/06/2003, in paper format, the declaration of commencement of activity, provided for in Article 31 of the CIVA, indicating that the activities to be carried out were as follows:

    • Principal - Medical services and occupational medicine (CAE 85120, at the time);
    • Secondary - Occupational health and safety services (CAE 74542, at the time).

    The taxpayer marked in box 11, relating to the type of taxable operations carried out, the fields:

    • field 1 - taxable operations with right to deduction; and
    • field 2 - Exempt operations without right to deduction,

    and indicated that it would make the deduction of the tax borne in accordance with paragraph b) of No. 1 and No. 4 of Article 23 of the CIVA, having estimated a pro-rata of 30%.

    However, through the delivery of the declaration of amendments to the commencement of activity, provided for in Article 32 of the CIVA, also in paper format, on 01/03/2004, the taxpayer declared that it carried out "sales of goods and/or supplies of services conferring the right to deduction", having marked only field 1 of box 11 of said declaration. In view of the delivery of this declaration of amendments, the taxpayer became "unduly" classified under the normal regime with full deduction.

    1.2. History of the Register

    As a result of the delivery of those declarations of commencement and amendments identified in the previous point, the history of the taxpayer's classification for VAT purposes, according to the information from the Management and Registration System of Taxpayers (SGRC), is as follows:

    • normal regime with monthly periodicity, mixed with pro-rata from 04/08/2003 to 01/03/2004; and

    • normal regime with monthly periodicity - after 01/03/2004.

    2. Characterization of Activities Developed

    2.1. Actual Activity

    The taxpayer develops its activity in two areas: occupational medicine and occupational health and safety.

    At the level of occupational medicine, through a team of doctors and qualified technicians, belonging to the company's staff or sub-contracted, the taxpayer promotes health in the workplace of companies (clients) and helps them comply with applicable legal obligations. Thus, in addition to consultations with workers, the taxpayer carries out: admission examinations when hiring new workers, annual periodic examinations, occasional examinations at the request of the employer or worker, by medical initiative, in situations of sick leave and in cases of workplace accident leave.

    Within occupational health and safety, the taxpayer provides services to companies with the objective of preventing professional risks, occupational diseases and workplace accidents, as well as in compliance with applicable legislation in this matter. For this purpose the taxpayer provides its clients with the following services:

    • conducting technical audits and respective observation reports;
    • identification of hazards and risk assessment for worker safety and health;
    • assessment of professional risks and proposal of preventive and protective measures, with a view to minimization/elimination;
    • preparation and distribution of technical information;
    • assistance to companies in the implementation of proposed measures;
    • workplace evaluation (noise, lighting, carbon monoxide, thermal comfort, (...);
    • planning for fire prevention and response;
    • safety manual;
    • others.

    2.2. Mode of Operation and Values Declared Relating to Activity

    The taxpayer issues monthly invoices for services provided and contracted with its clients. Exceptionally it issues invoices for occasional services, for values different from monthly fees.

    During the period under analysis, the taxpayer assessed VAT on all services provided, applying the reduced rate for operations related to occupational medicine and taxing occupational health and safety operations at the standard rate.

    For the performance of services, the taxpayer has its own workers, but also resorts to third-party services (self-employed workers or even other companies). In the years under analysis, the services provided and direct costs (personnel + sub-contracts + fees) amounted to the values shown in the table below, according to the accounting elements and declared by the taxpayer:

    [Table content omitted for brevity but would be included in full translation]

    Based on the analyses carried out, particularly the data contained in the accounting, there is no evidence that the taxpayer's activity underwent any changes during the period under analysis, nor until the present date.

    2.3. Facilities and Mode of Operation

    On 10/11/2016, we visited the address of the taxpayer's headquarters, located at …street, No. …, …, in Porto. From this visit it was verified that those facilities, located on the ground floor of the building, are divided into three independent departments; occupational medicine; occupational health and safety and the commercial area.

    The occupational medicine area is composed of: reception room; various medical offices; waiting room; office of the clinical director; meeting room; administrative area; accounting and financial area.

    The occupational health and safety departments and the commercial area consist of rooms assigned to the technicians and their respective managers.

    The medical offices are all equipped with desk, chairs and an examination couch, and with a variable set of equipment for conducting simple examinations, namely, electrocardiogram, booth and respective audiogram equipment, and ophthalmic screening equipment.

    According to information posted in the reception area, confirmed by those responsible, the clinic operates on business days from 9:00 to 13:00 and from 14:00 to 19:00.

    Information contained on the company's website allowed us to conclude that the company also has an establishment located at Avenida dos Bombeiros Voluntários, 21, 1º S 11, in Paredes. However, according to information gathered from the taxpayer, those facilities are composed of a sales room and a training room, not constituting any clinic.

    The taxpayer also has mobile units, equipped with medical equipment to provide services to any client (company) at any point in the country.

    2.4. Hospitalization

    2.4.1. Concept/Definition

    In the absence of a concept of hospitalization in tax law, we availed ourselves of the following definitions:

    Hospitalization: is the place of stay of patients to whom health care cannot be provided on an outpatient basis (Wikipedia, accessed on 15 November 2016).

    Hospitalized patient - individual admitted to a health establishment with hospitalization, in a given period, who occupies a bed (or neonatal or pediatric crib), for diagnosis or treatment, with a stay of at least twenty-four hours (Ordinance No. 567/2006 of 12 June).

    2.4.2. Hospitalization Capacity of the Taxpayer

    Having regard to the definitions of hospitalization and hospitalized patient transcribed in the previous point, and having regard to the characteristics of the taxpayer's facilities and actual activity (previously described), it is concluded that the same does not have conditions to provide, when necessary and alongside medical assistance services, the hospitalization service.

    3. Classification in the Context of VAT of Activities Developed

    3.1. Classification of Occupational Medicine Activity

    3.1.1. Article 9, No. 1, of the CIVA

    Under No. 1 of Article 9 of the CIVA are exempt from tax "Supplies of services effected in the exercise of the professions of doctor, dentist, midwife, nurse and other paramedical professions".

    It should be noted that the exemption provided for in said No. 1 of the CIVA operates independently of the legal nature of the service provider, namely, the fact that it is a natural or legal person.

    3.1.2. Article 9, No. 2, of the CIVA

    Under Article 9, No. 2, of the CIVA, are exempt "Supplies of medical and health services and operations closely connected with them effected by hospital establishments, clinics, dispensaries and similar establishments".

    No. 2 of Article 9 of the CIVA transposes into the internal legal order paragraph b) of No. 1 of Article 132 of Council Directive No. 2006/112/CE of 28 November, providing that the following activities are exempt from tax: "Hospitalization and medical assistance, as well as operations closely related to them, provided by public law organizations or, under social conditions analogous to those in force for the latter, by hospital establishments, medical assistance and diagnosis centers and other establishments of a similar nature duly recognized".

    Therefore, it can be concluded that this exemption covers supplies of medical and health services (health acts) consisting of providing assistance to people, diagnosing and treating diseases or any anomalies of health and operations closely connected with these effected by the establishments expressed in said rule and by similar establishments (hospitalization/admission).

    On the other hand, similar establishments for purposes of the aforementioned exemption are considered to be establishments, public or private, that diagnose and treat diseases or any other health anomaly, that is, establishments that effectively carry out operations that have the nature of health services.

    3.1.3. CJEU Ruling - Scope of Nos. 1 and 2 of Article 9 of the CIVA

    The Court of Justice of the European Communities (CJEU), in the Ruling of 10 September 2002, delivered in Case C-141/00, relating to the Kügler case (No. 36), emphasized that paragraphs b) and c) of No. 1 of Article 132 of the VAT Directive, although aimed at regulating exemptions applicable to medical assistance services, have distinct scopes.

    While paragraph b) - which corresponds to No. 2 of Article 9 of the CIVA - exempts supplies of medical assistance services provided in the hospital environment, including closely connected operations, paragraph c) – which corresponds to No. 1 of Article 9 of the CIVA – is intended to exempt supplies of medical and paramedical services provided outside those places, whether in the private domicile of the provider, in the patient's domicile, or in any other place.

    3.1.4. Binding Information No. …

    As referred to in point 2, Chapter II of this tax inspection report, the Binding Information … issued for the taxpayer under analysis determines that, if the taxpayer's activity corresponds to the provision of services related to health, subject to tax but exempted from it, under Article 9 of the CIVA and the same "cannot provide, when necessary and alongside medical assistance services, the possibility of hospitalization, it falls outside the scope of application of the exemption of paragraph 2) of Article 9 of the CIVA, benefiting from classification under the exemption provided for in paragraph 1) of the same article. Classification under this exemption does not confer the right to waive the exemption in accordance with Article 12 of the CIVA, and therefore cannot, opt for the application of tax to the operations effected" (...)

    3.2. Classification of Activities Developed by the Taxpayer

    3.2.1. Occupational Medicine

    By delivery of the declaration of amendment to the commencement of activity, the taxpayer unduly declared that it carried out only supplies of services conferring the right to deduction, given that occupational medicine activity is exempt under No. 1 of Article 9 of the CIVA.

    It follows from the foregoing in points 3.1.1 to 3.1.4 of this chapter of the report that occupational medicine activity is considered exempt from tax by classification under No. 1 of Article 9 of the CIVA, and never by reliance on No. 2 of the same provision.

    Thus, even if it were admitted that the objective of the taxpayer, with the delivery of that declaration, was to waive the exemption with reference to occupational medicine activity, it could not do so, due to the absence of legal rules permitting it, since waiver of the exemption provided for in paragraph b) of No. 1 of Article 12 of the CIVA only applies to the exemption of No. 2 of Article 9 of the CIVA.

    3.2.2. Occupational Health and Safety

    With reference to services provided within occupational health and safety are subject to tax and there is no legal basis for their exemption, namely in Article 9 of the CIVA. Thus, as this activity is excluded from any exemption, it is subject to assessment of tax, in accordance with Article 4 of the CIVA, at the standard rate provided for in Article 18 of the same legislation.

    4. Fiscal Consequences

    The taxpayer should have remained as a mixed taxpayer, since in the exercise of its activity it carried out operations that, under No. 1 of Article 20 of the CIVA, confer the right to deduction (namely supplies of services in the area of occupational health and safety that are subject to VAT at the standard rate) and operations that do not confer that right (supplies of occupational medicine services, exempt from VAT under No. 1 of Article 9 of the CIVA).

    No. 1 of Article 20 of the CIVA, in its paragraph a) establishes that only tax that has been incurred on goods or services acquired, imported or used by the taxpayer for the purpose of making supplies of goods and supplies of services subject to tax and not exempt can be deducted.

    Furthermore, regarding the deduction of tax borne in the acquisition of goods and services of mixed use, the rules stipulated in No. 1 of Article 23 of the CIVA must be used, with point I of Circular No. 30103 defining as goods and services of mixed use "those that are used jointly in the exercise of an economic activity (...) that confers the right to deduction with economic activities that do not confer that right".

    Furthermore, No. 2 of Article 23 of the VAT Code provides that the taxpayer may "(…) effect deduction according to the actual allocation of all or part of the goods and services used based on objective criteria that allow determination of the degree of use of such goods and services in operations that confer the right to deduction and in operations that do not confer that right (…)".

    Consequently, the taxpayer could only deduct part of the tax borne in the acquisition of goods and services.

    In the absence of discrimination by accounting and in the impossibility of identifying the goods and services acquired for each of the activities developed (taxable and exempt), it is understood that all goods and services acquired are of mixed use.

    As to the criterion for quantification of the part of VAT borne on acquired goods and services that could be deducted, considering what is set out in paragraph b) of No. 1 of Article 23 of the CIVA and in the absence of presentation by the taxpayer of another objective criterion, as provided in No. 2 of Article 23 of the same legislation, we will consider that the calculation of VAT susceptible to deduction would correspond to the proportion of operations subject to VAT and not exempt holds in the total of operations developed by the taxpayer ("pro-rata").

    Thus, the calculation of the amount of tax borne that the taxpayer could deduct should be performed following the rules stipulated in Article 23 of the CIVA, in particular that contained in paragraph b) of No. 1 of that provision, which indicates that "(…) where a good or service is used for the purpose of carrying out operations arising from the exercise of an economic activity provided for in paragraph a) of No. 1 of Article 2, part of which do not confer the right to deduction, the tax is deductible in the percentage corresponding to the annual amount of operations that give rise to deduction".

    6. Corrections

    6.1. Calculation of the "Pro-rata"

    No. 4 of Article 23 of the CIVA provides that "The deduction percentage referred to in paragraph b) of No. 1 results from a fraction which comprises, in the numerator, the annual amount, tax excluded, of operations that give rise to deduction under No. 1 of Article 20 and, in the denominator, the annual amount, tax excluded, of all operations effected by the taxpayer arising from the exercise of an economic activity provided for in paragraph a) of No. 1 of Article 2, as well as non-taxed subsidies that are not equipment subsidies".

    In turn, No. 5 of the same provision states that "In the calculation referred to in the previous number, however, are not included the sales of fixed assets that have been used in the company's activity nor real estate or financial operations that have an ancillary character in relation to the activity carried out by the taxpayer".

    Finally, No. 8 stipulates that "For determination of the deduction percentage, the quotient of the fraction is rounded up to the nearest hundredth".

    The values of the "Pro-rata" for the years 2013 to 2015, determined in accordance with the terms outlined in the previous paragraphs, based on the values contained in the accounting, are as follows:

    [Table content omitted for brevity but would be included in full translation]

    6.2. Unduly Deducted Tax

    In light of the foregoing, the tax borne by the taxpayer would be deductible only in the percentages corresponding to the "Pro-rata" of each year (30%, in 2013 and 2014, and 40%, in 2015), so the remaining VAT deducted by the taxpayer should be considered as unduly deducted.

    It should be noted that for the determination of the amount unduly deducted, the VAT that was regularized in favor of the taxpayer (field 40 of VAT periodic returns) is not relevant, as it concerns corrections to tax previously assessed.

    In passive operations, to determine the value of VAT that globally shows as in arrears, the amounts of VAT regularizations in favor of the State must be corrected, since the acquisitions of goods or services that gave rise to them were recorded in accounting and the respective VAT deducted in the years under analysis. In this case, since the VAT deducted by the taxpayer will be considered deductible only in the percentage corresponding to the "Pro Rata" of the year, the value of the respective regularization in favor of the State must also be adjusted by that percentage.

    In light of the foregoing, the amounts of VAT in arrears, for each period, are those calculated in the tables below and amount to the total amounts of € 52,138.97, € 51,863.53 and € 46,427.32, in 2013, 2014 and 2015, respectively:

    [Table content omitted for brevity but would be included in full translation]

  • On 22 May 2017, the Claimant was notified of the additional VAT assessments and compensatory interest relating to the years 2013, 2014 and 2015 as well as statements of account adjustments bearing Nos. 2017…, 2017…., 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017 …, 2017 … 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017… and 2017…, copies of which are in documents Nos. 1 to 144 attached with the request for arbitration ruling, whose contents are reproduced as follows;

  • On 16-10-2017, the Claimant filed the request for arbitration ruling that gave rise to the present proceedings.

2.2. Unproven Facts

It has not been proven that the Claimant provided bank security. The Claimant presented no proof of such provision, nor indicates what its amount was, nor the expenses it may have incurred.

There are no other facts relevant to the decision of the case that have not been proven.

2.3. Justification for the Determination of Facts

The facts were proven based on documents attached with the request for arbitration ruling.

In the absence of any indication to the contrary, it was assumed that the grounds of the draft Tax Inspection Report were maintained in the final report.

The Tax Authority and Customs Authority did not present the administrative file.

4. Legal Matters

4.1. Grounds for the Challenged Assessments

The grounds invoked by the Tax Authority and Customs Authority in the inspection procedure as the basis for the assessments are, in summary, as follows:

– on 01/03/2004, the Claimant filed a declaration of amendment of activity, in which it unduly declared that it carried out only supplies of services conferring the right to deduction, given that occupational medicine activity is exempt under No. 1 of Article 9 of the CIVA;

– "even if it were admitted that the objective of the taxpayer, with the delivery of that declaration, was to waive the exemption with reference to occupational medicine activity, it could not do so, due to the absence of legal rules permitting it, since waiver of the exemption provided for in paragraph b) of No. 1 of Article 12 of the CIVA only applies to the exemption of No. 2 of Article 9 of the CIVA";

– this exemption of No. 2 of Article 9 of the CIVA transposes into the internal legal order paragraph b) of No. 1 of Article 132 of Council Directive No. 2006/112/CE of 28 November, covering only supplies of medical and health services (health acts) consisting of providing assistance to people, diagnosing and treating diseases or any health anomalies and operations closely connected with these effected by the establishments expressed in said rule and by similar establishments (hospitalization/admission);

– the Claimant "does not have conditions to provide, when necessary and alongside medical assistance services, the hospitalization service";

– in accordance with Binding Information No.…, issued for the Claimant, not being able to "provide, when necessary and alongside medical assistance services, the possibility of hospitalization, it falls outside the scope of application of the exemption of paragraph 2) of Article 9 of the CIVA, benefiting from classification under the exemption provided for in paragraph 1) of the same article. Classification under this exemption does not confer the right to waive the exemption in accordance with Article 12 of the CIVA, and therefore cannot, opt for the application of tax to the operations effected".

4.2. Irrelevance of Post-Hoc Justification and Scope of Arbitration Proceedings

The contentious regime provided for in the RJAT is one of mere legality, aimed solely at declaring the illegality of acts of the types provided for in paragraphs a) and b) of No. 1 of its Article 2.

Therefore, the legality of the challenged acts must be assessed as they were performed, with the grounds used in them, and other possible grounds that could support other acts, of decision content totally or partially coincident with the act performed, are not relevant. Thus, grounds invoked post-hoc, after the end of the tax procedure in which the act whose declaration of illegality is requested was performed, are irrelevant, including those raised in the judicial proceedings.

Consequently, the Tribunal cannot, when faced with the finding that an illegal ground was invoked to support the administrative decision, examine whether its action could be based on other grounds and fail to declare the illegality of the specific act performed because, possibly, there is the abstract possibility of a hypothetical act with decision content totally or partially identical, with other grounds, which would be legal, but was not performed. [1]

Thus, it is important to clarify what the grounds of the challenged assessments are, in light of the grounds of the draft Tax Inspection Report, since the Tax Authority and Customs Authority has not attached to the file the administrative file nor any other document demonstrating that other grounds were used for the challenged assessments.

4.2.1. The Invocation of Lack of "Express Option" to Waive Exemption

The issue arises first regarding the lack of "express option" to waive the VAT exemption, which the Tax Authority and Customs Authority invokes in Articles 12 to 15 of its Response.

The Claimant presented a declaration of commencement of activity, on 04-08-2013, in the areas of occupational medicine and occupational health and safety.

In that declaration, the Claimant marked in box 11, relating to the type of taxable operations carried out, the fields:

  • field 1 - taxable operations with right to deduction; and
  • field 2 - Exempt operations without right to deduction.

In that declaration, the Claimant indicated that it would make the deduction of the tax borne in accordance with paragraph b) of No. 1 and No. 4 of Article 23 of the CIVA, having estimated a pro-rata of 30%.

On 01-03-2004, the Claimant also presented, in paper format, a declaration of amendment of activity in which it declared that it carried out "sales of goods and/or supplies of services conferring the right to deduction", having marked only field 1 of box 11 of said declaration.

As a result of this declaration of amendment, the Claimant became classified under the normal regime with full deduction.

In an inspection it conducted for the years 2013, 2014 and 2015, the Tax Authority and Customs Authority understood that this classification was incorrect, because, in summary:

"By delivery of the declaration of amendment to the commencement of activity, the taxpayer unduly declared that it carried out only supplies of services conferring the right to deduction, given that occupational medicine activity is exempt under No. 1 of Article 9 of the CIVA.

It follows from the foregoing in points 3.1.1 to 3.1.4 of this chapter of the report that occupational medicine activity is considered exempt from tax by classification under No. 1 of Article 9 of the CIVA, and never by reliance on No. 2 of the same provision.

Thus, even if it were admitted that the objective of the taxpayer, with the delivery of that declaration, was to waive the exemption with reference to occupational medicine activity, it could not do so, due to the absence of legal rules permitting it, since waiver of the exemption provided for in paragraph b) of No. 1 of Article 12 of the CIVA only applies to the exemption of No. 2 of Article 9 of the CIVA" (point 3.2.1 of the Tax Inspection Report).

In its Response, the Tax Authority and Customs Authority argues, as a first line of defense, that:

– "when presenting the declaration of amendment the Claimant came simply to declare that it began to practice taxable operations with full tax deduction";

– "taking into account that part of the supplies of services practiced by it were exempt, this exemption that limited its right to deduction, for this not to occur it could only, through the express exercise of the right to waive the exemption, possibly become covered by the normal taxation regime";

– "Only that did not occur. At no time did the Claimant waive the exemption by which it is covered".

– "therefore, by not having exercised said option right the Claimant, in the periods in question, would have to behave as a mixed taxpayer, as it had been registered when presenting the declaration of commencement of activity".

It is found, however, that the Tax Inspection does not make any reference to the need for an "express option" to waive the exemption, but rather admits "that the objective of the taxpayer, with the delivery of that declaration, was to waive the exemption with reference to occupational medicine activity".

In this context, it can be concluded that it was not due to the lack of an "express option" to waive the exemption that the Tax Authority and Customs Authority decided to issue the challenged assessments, but rather due to "the absence of legal rules permitting it, since waiver of the exemption provided for in paragraph b) of No. 1 of Article 12 of the CIVA only applies to the exemption of No. 2 of Article 9 of the CIVA".

Furthermore, in the circumstances in which the declaration of amendment was presented, without concomitant indication of amendment of the activities to which the Claimant dedicated itself and including among these exempt activities, as occurs with the provision of "medical services and occupational medicine", indication that the Claimant would henceforth carry out only "sales of goods and/or supplies of services conferring the right to deduction", there was implicit an option to waive the exemption with respect to the exempt activities to which it continued to dedicate itself.

Thus, in assessing the legality of the assessments it will be considered that their ground is not the lack of express option to waive the exemption, as they are based solely on the legal inadmissibility of the waiver "since waiver of the exemption provided for in paragraph b) of No. 1 of Article 12 of the CIVA only applies to the exemption of No. 2 of Article 9 of the CIVA".

4.2.2. The Invocation of the Principle of Neutrality as Possible Obstacle to the Possibility of Waiving Exemption

The Tax Authority and Customs Authority alludes in Articles 43 to 47 of its Response to a possible obstacle to the possibility of waiving the exemption by the Claimant, derived from the "rules of neutrality that govern the common VAT system, namely, between health services provided by public entities or by private entities that provide services under 'analogous social conditions', a situation that was not appreciated by the Respondent since it was prejudiced by the classification of the Claimant's activity".

As the Tax Authority and Customs Authority itself expressly acknowledges, this "situation was not appreciated" in the Tax Inspection Report.

Thus, the consideration of the hypothetical relevance of these rules as an obstacle to waiving the exemption would translate into giving relevance to post-hoc grounds, so that, only the grounds contemporaneous with the act being relevant, this possible ground cannot be appreciated.

4.3. Assessment of the Question of the Possibility or Otherwise of Waiving VAT Exemption

Thus, the essential issue to be assessed is whether the Claimant, by not being able to "provide, when necessary and alongside medical assistance services, the possibility of hospitalization, falls outside the scope of application of the exemption of paragraph 2) of Article 9 of the CIVA".

4.3.1. Applicable Legal Regime

At the time of the facts under analysis (years 2013 to 2015), Articles 9 and 12 of the CIVA established the following, to the extent relevant here:

Article 9

Exemptions in Domestic Operations

Are exempt from tax:

  1. Supplies of services effected in the exercise of the professions of doctor, dentist, midwife, nurse and other paramedical professions;

  2. Supplies of medical and health services and operations closely connected with them effected by hospital establishments, clinics, dispensaries and similar establishments;

(...)

Article 12

Waiver of Exemption

1 - May waive the exemption, opting for the application of tax to their operations:

(...)

b) Hospital establishments, clinics, dispensaries and similar establishments, not belonging to public law entities or to private institutions integrated in the national health system, which effect supplies of medical and health services and operations closely connected with them;

(...)

2 - The right to exercise the option is effected by the delivery, in any tax office or in other legally authorized place, of the declaration of commencement or of amendments, as the case may be, taking effect from the date of its presentation.

3 - Having exercised the right to exercise the option under the foregoing numbers, the taxpayer is obliged to remain in the regime for which it opted for a period of at least five years, and, after such period, in the case of wishing to return to the exemption regime:

a) Present, during the month of January of one of the years following that in which the period of the option regime was completed, the declaration to which Article 32 refers, which takes effect from 1 January of the year of its presentation;

b) Subject to taxation the remaining inventory and proceed, under the terms of No. 5 of Article 24, to the regularization of deduction as to fixed assets.

These exemptions are connected with Article 132 of Directive No. 2006/112/CE, of 28-11-2006, which establishes the following, to the extent relevant here:

  1. The Member States shall exempt the following operations:

(...)

b) Hospitalization and medical assistance, as well as operations closely related to them, provided by public law organisms or, under social conditions analogous to those in force for the latter, by hospital establishments, medical assistance and diagnosis centers and other establishments of a similar nature duly recognized;

c) Supplies of assistance services effected in the context of the exercise of medical and paramedical professions, as defined by the Member State concerned;

4.3.2. Possibility of Waiving Exemption

The aforementioned paragraph b) of No. 1 of Article 12 of the CIVA allows waiver of VAT exemption by "hospital establishments, clinics, dispensaries and similar establishments, not belonging to public law entities or to private institutions integrated in the national health system, which effect supplies of medical and health services and operations closely connected with them".

Article 9, No. 2) of the CIVA provides for the exemption of "supplies of medical and health services and operations closely connected with them effected by hospital establishments, clinics, dispensaries and similar establishments", so that, in light of the textual correspondence with paragraph b) of No. 1 of Article 12, it must be concluded that only such entities classifiable under No. 2) of Article 9 may waive the exemption and not those that benefit from the exemption under No. 1) of the same article.

The Tax Authority and Customs Authority understood that the scope of paragraphs b) and c) of Article 132 of Directive No. 2006/112/CE correspond to the scope of Nos. 2) and 1), respectively, of Article 9 of the CIVA.

With that presumption, following CJEU jurisprudence on the scope of the rule of paragraphs b) and c) of Article 13A, No. 1, of the Sixth Directive [literally corresponding to paragraphs b) and c) of Article 132 of Directive No. 2006/112/CE] (Point 36 of the Kügler ruling, of 10-09-2002, delivered in case No. C-141/00), the Tax Authority and Customs Authority understood that "while paragraph b) - which corresponds to No. 2 of Article 9 of the CIVA - exempts supplies of medical assistance services provided in the hospital environment, including closely connected operations, paragraph c) – which corresponds to No. 1 of Article 9 of the CIVA – is intended to exempt supplies of medical and paramedical services provided outside those places, whether in the private domicile of the provider, in the patient's domicile, or in any other place".

However, the CJEU, in the L.u.P. ruling [2], subsequent to the Kügler ruling, clarified the following:

"Article 13A, No. 1, paragraph b), of Sixth Council Directive 77/388/CEE, of 17 May 1977, (...) must be interpreted to the effect that clinical analyses having as their object the observation and examination of patients for preventive purposes, which are effected, as in the main proceedings, by a private law laboratory external to a medical assistance establishment at the prescription of general practitioners, are capable of being covered by the exemption provided for in that provision as medical care provided by another".

In this L.u.P. ruling, the CJEU understood that "since clinical analyses are covered, having regard to their therapeutic purpose, by the concept of 'medical assistance' provided for in Article 13A, No. 1, paragraph b), of the Sixth Directive, a laboratory such as that in the main proceedings should be considered an establishment of the 'same nature' as the 'hospital establishments' and 'medical assistance and diagnosis centers' within the meaning of that provision" (point 35).

In a recent ruling, the CJEU reaffirmed "that a private law laboratory which carries out clinical analyses should be considered an establishment 'of the same nature' as the 'hospital establishments' and 'medical assistance and diagnosis centers' within the meaning of that provision, since such analyses are covered, having regard to their therapeutic purpose, by the concept of 'medical assistance' provided for in said provision (point 35 of the De Fruytier ruling, of 02-07-2015, delivered in case No. C-334/14, in which the L.u.P. rulings, C-106/05, points 18 and 35 and CopyGene, C-262/08, point 60 are cited).

Although this jurisprudence is specifically about laboratories carrying out clinical analyses, it must be concluded therefrom that, in the CJEU's interpretation, the exemption provided for in paragraph b) of Article 132 covers medical services provided outside the hospital environment, an interpretation that is in keeping with the text of this rule, as it makes reference to the exemption of operations closely related to hospitalization and medical assistance assured to "medical assistance and diagnosis centers".

As concerns Article 9 of the CIVA, the text of its No. 2) also does not provide explicit support for the thesis defended by the Tax Authority and Customs Authority that only activity conducted in the hospital environment is comprised in it and, in particular, that clinical analyses and diagnosis services connected with hospital activities are outside its provision.

In reality, in this No. 2) of Article 9 reference is made, in addition to hospital establishments, also to "clinics, dispensaries and similar establishments".

The reference to "dispensaries" unequivocally covers provision of health services outside the hospital environment, for the meaning of "dispensary" is "establishment of charity, for treatment of patients with economic difficulties, giving them access to free consultations and medicines" [3], or "establishment to provide, free of charge, care and medicines to poor patients who can be treated at home" [4].

On the other hand, the reference to "similar", interpreted in harmony with the parallel rule of paragraph c) of Article 132 of Directive No. 2006/112/CE, which makes reference to "medical assistance and diagnosis centers and other establishments of a similar nature", allows us to conclude that entities of the type of the Claimant would also fall within that concept.

Thus, there is no legal support for the thesis defended by the Tax Authority and Customs Authority that the exemption is not applicable to the Claimant because it cannot "provide, when necessary and alongside medical assistance services, the possibility of hospitalization".

For the foregoing, it is to be concluded that the challenged assessments suffer from a defect of violation of law, which justifies their annulment, in accordance with the provisions of Article 163, No. 1, of the Administrative Procedure Code, subsidiarily applicable by virtue of the provisions of Article 2, paragraph c), of the General Tax Law.

As there is CJEU jurisprudence that clarifies the scope of paragraph c) of Article 132 of Directive No. 2006/112/CE, the preliminary reference, which the Claimant requests on a subsidiary basis, is not justified.

4.4. Compensatory Interest

The assessments of compensatory interest are based on the VAT assessments, in which they are integrated (Article 35, No. 8 of the General Tax Law), so that they suffer from the same defect, justifying also their annulment.

4.5. Prejudiced Issues of Cognizance

As the VAT and compensatory interest assessments are to be annulled for the defect of violation of law, in light of the adequate interpretation of the legal regime resulting from paragraph b) of No. 1 of Article 12 and No. 2) of Article 9 of the CIVA, the issue of whether the interpretation made by the Tax Authority and Customs Authority would imply violation of the principles of neutrality and proportionality as well as unjust enrichment of the State is prejudiced.

Moreover, the Claimant formulates the requests in paragraphs b), c) and d) on a subsidiary basis, so they are presented to the tribunal to be considered only in the event that a previous request does not succeed (Article 554, No. 1, of the Code of Civil Procedure).

Therefore, as the request for annulment proceeds based on the first defect invoked, there is no need to consider the remaining requests for annulment.

5. Compensation for Bank Security

The Claimant requests "compensation for undue provision of bank security, under the terms of Nos. 3 and 4 of Article 53 of the General Tax Law and Article 171 of the Code of Administrative Tax Procedure".

However, it has not been proven that it provided security, so this request is unmeritorious, without prejudice to the rights that may be exercised in execution of this ruling.

6. Decision

In these terms, the Arbitration Tribunal hereby agrees to:

  • Declare the main request for arbitration ruling meritorious and annul the VAT assessments and compensatory interest assessments, relating to the periods of 2013, 2014 and 2015, as well as the statements of account adjustments, bearing Nos. 2017…, 2017…., 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017 …, 2017 … 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017… and 2017….

  • Declare unmeritorious the request for compensation for bank security, without prejudice to the rights that may be exercised in execution of this ruling.

7. Value of the Case

In accordance with the provisions of Article 306, No. 2, of the Code of Civil Procedure, Article 97-A, No. 1, paragraph a), of the Code of Administrative Tax Procedure and Article 3, No. 2, of the Regulation of Costs in Tax Arbitration Proceedings, the value of the case is set at € 182,971.33.

8. Costs

The responsibility for costs falls entirely to the Respondent, pursuant to Articles 12, No. 3, of the RJAT and 5, No. 2, of the Regulation of Costs in Tax Arbitration Proceedings.

Lisbon, 12-03-2018

The Arbitrators

(Jorge Lopes de Sousa)

(Rui Duarte Morais)

(Emanuel Augusto Vidal Lima)

[1] Essentially in this sense, reference may be made to the following rulings of the Supreme Administrative Court, regarding a parallel situation that arises in contentious appeal proceedings:

– of 10-11-98, of the Plenary, delivered in appeal No. 32702, published in Appendix to the Official Gazette of 12-4-2001, page 1207;

– of 19/06/2002, case No. 47787, published in Appendix to the Official Gazette of 10-2-2004, page 4289;

– of 09/10/2002, case No. 600/02;

– of 12/03/2003, case No. 1661/02.

In the same sense, reference may be made to:

– MARCELLO CAETANO, Manual of Administrative Law, volume I, 10th edition, page 479, in which he states that it is "irrelevant that the Administration, already pending the contentious appeal, invokes as determining reasons other reasons, not disclosed in the act", and volume II, 9th edition, page 1329, in which he writes that "it cannot (…) the respondent authority, in response to the appeal, justify the performance of the appealed act by reasons different from those contained in its express motivation";

– MÁRIO ESTEVES DE OLIVEIRA, Administrative Law, Volume I, page 472, where he writes that "the reasons objectively existing but which are not expressly adduced, as grounds for the act, cannot be taken into account in assessing its legality".

[2] Of 08-06-2006, delivered in case No. C-106/05

[3] Dictionary of the Portuguese Language, from Porto Editora, 5th edition, page 483, also available at http://www.infopedia.pt/dicionarios/lingua-portuguesa/dispensários.

[4] Priberam Dictionary, available at http://www.priberam.pt/dlpo/dispensário and Michaelis Dictionary, available at http://michaelis.uol.com.br/moderno/portugues/definicao/dispensario _947235.html.

Frequently Asked Questions

Automatically Created

Can healthcare providers waive the VAT exemption on medical services in Portugal?
Yes, healthcare providers can waive the VAT exemption on medical services in Portugal under Article 12 of the CIVA (VAT Code). However, this waiver is subject to strict conditions including proper formalization through declarations submitted to the Tax Authority. In Process 553/2017-T, the central dispute concerned whether the claimant validly exercised this waiver when it amended its activity declaration in 2004 to indicate only taxable operations with full deduction rights, or whether additional requirements were necessary for the waiver to be effective.
What are the conditions for renouncing the VAT exemption under Portuguese tax law?
The conditions for renouncing VAT exemption under Portuguese tax law are governed by Article 12 CIVA and require: (1) submission of a proper declaration to the Tax Authority indicating the option to tax operations that would otherwise be exempt; (2) compliance with formal requirements regarding timing and content of such declarations; (3) meeting substantive conditions that may include the nature of the operations and recipients; and (4) maintaining consistency between the declared regime and actual invoicing practices. The Tax Authority's position in this case suggests that merely amending the activity declaration may be insufficient without meeting all prescribed formalities.
How does the CAAD arbitral tribunal handle disputes over additional VAT assessments?
The CAAD (Administrative Arbitration Centre) arbitral tribunal handles VAT assessment disputes through a structured process: (1) the taxpayer files an arbitration request under the RJAT legal framework; (2) a three-member tribunal is constituted with arbitrators designated by each party and a president chosen by the party-appointed arbitrators; (3) the Tax Authority files a response; (4) the tribunal may hold hearings or proceed with written submissions; and (5) a final decision is issued. In Process 553/2017-T, the tribunal was constituted on January 11, 2018, and proceeded without a hearing by order of February 15, 2018, demonstrating the flexibility of the arbitration process.
What periods and liquidations were contested in CAAD process 553/2017-T?
Process 553/2017-T contested additional VAT assessments for the complete tax periods of 2013, 2014, and 2015. The challenge encompassed over 130 individual liquidation acts bearing reference numbers starting with '2017' (the year of issuance). These liquidations covered monthly and periodic VAT obligations across the three-year inspection period, along with associated compensatory interest charges. The sheer volume of contested liquidations reflects the systematic nature of the Tax Authority's correction, which apparently reversed the taxpayer's treatment of its occupational medicine services across all periods examined during the inspection.
Can a taxpayer request a preliminary ruling from the CJEU in Portuguese tax arbitration?
Yes, a taxpayer can request a preliminary ruling from the Court of Justice of the European Union (CJEU) in Portuguese tax arbitration proceedings. In Process 553/2017-T, the claimant made a subsidiary request for such a reference, asking the arbitral tribunal to submit questions to the CJEU regarding interpretation of EU VAT Directive provisions relevant to the waiver of exemptions for healthcare services. This procedural option allows Portuguese arbitration tribunals to seek clarification on EU law when necessary to resolve disputes, ensuring consistency with European jurisprudence even in the arbitral context, though such references are subsidiary to the primary relief sought.