Process: 607/2016-T

Date: May 19, 2017

Tax Type: IVA

Source: Original CAAD Decision

Summary

In CAAD Arbitration Process 607/2016-T, a Portuguese dental clinic challenged VAT self-assessments totaling approximately €46,900 for periods between 2013-2014, arguing that bioresonance therapy services provided by Dr. B, a qualified dental surgeon, should be exempt from VAT under Article 9(1) of the Portuguese VAT Code. The clinic contended that bioresonance constitutes a medical therapeutic practice performed within the scope of dental medicine, using EU-certified equipment and specific dental health programs to diagnose and treat pathologies through electromagnetic frequencies. The Claimant relied on Article 132(1)(c) of EU Directive 2006/112/EC, which exempts medical and paramedical services, and invoked CJEU jurisprudence supporting broad interpretation of medical service exemptions. The Tax Authority (AT) rejected this position, arguing the taxpayer failed to prove: (1) Dr. B actually exercises dental surgery specialty; (2) bioresonance is used exclusively for dental treatments; and (3) the equipment includes the dental module. AT emphasized that training certifications lacked dental specialization references and that the burden of proof rests with the taxpayer per Article 74(1) of the General Tax Law. The Respondent highlighted that while EU law provides the framework for medical service exemptions, Member States retain authority to define qualifying professions and conditions. This case exemplifies the tension between expansive interpretation of medical service VAT exemptions and the requirement for taxpayers to substantiate that services fall within legally defined professional scopes, particularly for alternative or complementary therapies performed by conventionally trained healthcare professionals.

Full Decision

ARBITRATION DECISION

The Arbitrator Dr. Filipa Barros (sole arbitrator), appointed by the Deontological Council of the Administrative Arbitration Centre ("CAAD") to form the Singular Arbitral Tribunal, constituted on 26 December 2016, decides as follows:

I. REPORT

A… Ltd., legal person no. …, with registered office at Street … no. …, …-…, …, hereinafter "Claimant", comes, pursuant to the provisions of article 2, no. 1, paragraph a), and articles 10 et seq. of Decree-Law no. 10/2011, of 20 January, hereinafter referred to as "RJAT"[1], requesting the constitution of an Arbitral Tribunal to rule on the illegality and consequent annulment of the self-assessed acts of Value Added Tax (VAT) identified with the nos. …, …, …, … and …, relating to the periods 2013/06T, 2013/09T, 2013/12T, 2014/06T, 2014/09T, which resulted in the payment respectively of €10,826.03, €6,106.26, €11,600.89, €13,272.76 and €5,095.99, as well as the annulment of the assessments of default interest and compensatory interest and the decision to reject the administrative complaint.

To substantiate its request, the Claimant considers, in summary, that Dr. B… is a dental surgeon, exercising a medical activity in which it resorts – namely, with regard to the diagnosis and treatment of problems and dysfunctions – to bioresonance. Such services are provided by the Claimant with the aid of its own equipment duly certified by the European Union for this purpose, being provided to its users within the scope of dental-medical treatments, through the use of specific programs for dental health professionals.

The Claimant contends that a large part of the treatments it performs through bioresonance consist of therapeutics developed by it within the scope of its activity as a dental surgeon, applying knowledge of molecular physics in the modulation of the device, which, in turn, once properly programmed, emits electromagnetic frequencies on the patient's body, for the purpose of self-regulating the organism and correcting existing imbalances of various kinds, contributing to the patient's general health. Indeed, bioresonance makes it possible to neutralize and reverse the frequency pattern of harmful substances and, on the other hand, intensify the healthy frequency component.

In this regard, the Claimant refutes the understanding defended by AT (Tax Authority) according to which the said activity is not framed within the scope of the exemption provided for in article 9, no. 1 of the VAT Code, because, in the Claimant's view, it should be considered as a health therapeutic.

It also notes that such understanding is consistent with the provisions of paragraph c) of article 132 of Directive 2006/112/EC (hereinafter DIVA)[2], in determining that Member States must exempt "the provision of assistance services within the exercise of medical and paramedical professions, as defined by the Member State in question".

Now, the provision of services in question is intended to prevent and treat diseases, being developed within the scope of the exercise of the dental surgeon profession, by a properly qualified service provider, therefore the Claimant, supported by the jurisprudence of the CJEU, defends the verification of the necessary prerequisites for the application of the exemption provided for in no. 1 of article 9 of the VAT Code. If the AT's understanding prevailed, the Claimant would be conditioned in the application of the therapeutics that it believes to be the most appropriate for the diagnosis and cure of the pathologies of its respective users, which would not be admissible.

It further states, following the jurisprudence of the CJEU, that although Dr. B… exercises an activity that does not belong to the specific/traditional domain of the activity for which he received academic training – in the case in question, dental medicine – it is indubitable that the bioresonance and acupuncture through bioresonance services, provided by the Claimant, are activities of provision of health care, which aim to diagnose and, insofar as possible, correct existing imbalances so as to improve the health of its users, and it is certain that, even if it were understood, which is not conceded, that Mr. Dr. B… would not have the qualifications for the provision of the services in question, it would still be said that he is at least in a position to ensure these services at an equivalent level of quality.

Finally, appealing to the principles of equality and fiscal neutrality, it concludes that to admit the application of the VAT exemption to bioresonance practiced by a graduate in another branch of medicine (other than dental medicine) without this same activity being exempt when practiced by a dental surgeon would be clearly illegal, assuming that both have the same specialization for the exercise of that activity.

On 11 October 2016, the request for constitution of the Arbitral Tribunal was accepted by the Honourable President of CAAD and immediately notified to the Respondent pursuant to legal terms.

The Claimant did not appoint an arbitrator.

Thus, pursuant to the provisions of no. 1 of article 6 and paragraph b) of no. 1 of article 11 of the RJAT, by decision of the Honourable President of the Deontological Council, duly communicated to the parties, within the legally prescribed periods, the undersigned was appointed as arbitrator of the Singular Arbitral Tribunal, who communicated to the Deontological Council and to the Administrative Arbitration Centre the acceptance of the appointment within the period stipulated in article 4 of the Code of Deontology of the Administrative Arbitration Centre.

In accordance with the provisions of paragraph c) of no. 1 of article 11 of Decree-Law no. 10/2011, of 20 January, as amended by article 228 of Law no. 66-B/2012, of 31 December, the Singular Arbitral Tribunal was constituted on 26 December 2016, followed by the relevant legal procedures.

The Respondent, duly notified for this purpose, presented its response in which it defends the lack of merit of the request for arbitral ruling.

To this end, it invokes that, without prejudice to the professional qualification of Mr. Dr. B… as a dental surgeon, no evidence was attached to the proceedings tending to prove that he exercises such specialty, and no evidence in his individual name or in the name of the company. On the other hand, there is no evidence that the Claimant uses bioresonance exclusively within the scope of dental-medical treatments provided by it.

Contrary to what is alleged by the Claimant, the declarations of the manufacturer of the bioresonance machine used by the taxpayer and the certifications attached to the proceedings do not allow to affirm that Dr. B… possesses the dental module of the machine, with no reference in the certification of the training obtained to any dental specialization. Moreover, since self-assessed VAT is in question against which the respective complaint was presented, the burden of proof lies with it, pursuant to article 74, no. 1 of the General Tax Law.

Consequently, AT considers that it is not enough to affirm that bioresonance and acupuncture services are provided within the scope of dental medical treatments; it is necessary to comply with the burden of proof of the alleged facts, especially since the provision of services underlying the determination of the taxable base self-declared in the VAT periods in question respect the exercise of the dental medical activity, the only activity for which Dr. B… has academic qualification.

The Respondent bases its understanding on the provisions of paragraph c) of no. 1 of article 132 of the DIVA, which provides that the granting of exemption "to medical and paramedical professions" is determined under the conditions "defined by the Member State in question". Consequently, the responsibility for delineating the professional notions invoked by it and, by implication, the rules required for the exercise of the profession was transferred to the internal legislation of each Member State.

In this vein, it invokes the provisions of Decree-Law no. 279/2009 of 6 October, as well as Decree-Law no. 127/2014 of 22 August and Ordinance no. 167-A/2014 of 21 August, legislation that requires providers of dental medical services to be duly qualified and legally recognized by the competent entities, fit for clinical practice, with no evidence, in the case in question, of any recognition or licensing of the Claimant for operation as a private health unit, for example, the license granted by the health regulatory entity, insurance policy, the internal regulation, the nominative record of the care provided, among others.

Additionally, if by academic hypothesis the framing of the said activity in paramedical professions or in non-conventional therapies were to be admitted (hereinafter TNC), AT considers that the Claimant, through its partner and only service provider, does not prove that it exercises any of the professions, whether dental surgeon, paramedic or non-conventional therapy professional, as in this regard the Claimant has not presented evidence in the proceedings of possessing academic qualification and the certification required for this purpose.

Finally, AT emphasizes that the guidance issued by the jurisprudence of the CJEU in decisions C-443/04 and C-444/04 invoked by the Claimant reinforces the interpretation made in the inspection procedure, inasmuch as the provision of services performed by the Claimant, insofar as they are general medical services of character, and not the dental medical activity for which the provider is qualified, are outside the specific qualifications required by law, and cannot benefit from the presumption of quality present in the jurisprudence of the CJEU, nor from the application of the VAT exemption provided for medical and paramedical acts.

The Respondent concludes by maintaining the decision to reject the administrative complaint and by the lack of merit of the request for arbitral ruling.

On 10 February 2017, the Claimant submitted a petition to the proceedings reporting the enactment and publication of Law no. 1/2017 of 16 January, which recognizes the exemption, in the context of VAT, to professionals who dedicate themselves to the exercise of TNC, arguing that bioresonance would be a therapeutic framed in TNC, concluding, once again, in favor of the merit of the request for arbitral ruling.

On 22 February 2017, the Respondent in the exercise of its right to reply invokes that a position contrary to that argued in the request for arbitral ruling is defended in this latter submission, recalling that in the first it was alleged that Mr. Dr. B… is a dental surgeon, exercising a medical activity in which it resorts to bioresonance for the diagnosis and treatment of dysfunctions, services that are provided within the scope of dental-medical treatments to its users. Consequently, having the Claimant set aside the application of the regimes provided for in TNC, it does not make sense to seek to apply to the case the provisions of Law no. 1/2017 to the exercise of an activity that it claims has a medical nature and to acts related to the exercise of the dental surgeon profession.

Finally, it argues that bioresonance is excluded from the scope of application of Law no. 1/2017 as it is not one of the recognized TNC, being outside the scope of material application of the said law.

On 22 March 2017, the meeting provided for in article 18 of the RJAT took place, in which, among other things, the interrogation of the witness presented by the Claimant, Mr. C…, and the interrogation of the witness presented by the Respondent Mr. D… took place (cf. Minutes of the Meeting of the Singular Arbitral Tribunal).

By request submitted at the Meeting of article 18 of the RJAT, on 22 March 2017, the Claimant requested the attachment to the proceedings of 6 documents to prove the facts alleged in the request for arbitral ruling, the Tribunal having granted to the Respondent a period of 10 days for reply.

On 29 March 2017, the Respondent, exercising its right to reply in relation to the documents attached, requests the removal thereof, given the absence of reasons for supervening circumstances or the invocation of reasons inherent to the impossibility of presenting such evidence together with the request for arbitral ruling or at any time prior to the Meeting of article 18 of the RJAT.

By order of 31 March 2017, the Tribunal ordered the removal of the documents attached to the proceedings due to lack of verification of the prerequisites of objective and subjective supervening circumstances, provided for in article 423, no. 1 of the CPC and in article 10, no. 2, paragraphs c) and d) of the RJAT.

Written allegations were presented by the Claimant, followed by the allegations of the Respondent.

In the allegations presented, the parties reiterated in essence the positions defended in their respective submissions, as summarized below.

A) Allegations of the Claimant

As a preliminary point, it contests the removal of the six documents attached in the arbitral meeting, defending the application to the arbitral proceedings of article 125 of the CPA, pursuant to which the attachment of documents to the proceedings would be admissible until the arbitral decision is rendered if the same are shown to be convenient as is the case in question, requesting that the Tribunal consider evaluating at the time of the decision in question the documents attached to the proceedings.

Subsequently, the Claimant emphasizes the facts that it considers proven, specifying the clarifications provided by the testimony evidence presented by the parties.

It considers that at the time the Inspection Report (RIT) was drawn up, although Law no. 71/2013, of 2 September, had already entered into force, it was the understanding of AT that, in the absence of, for purposes of VAT exemption, equivalence between TNC and paramedical professions, the services provided within the scope of the former were subject and not exempt from VAT, as they were not covered by the exemption provided for in no. 1 of article 9 of the VAT Code. Now, starting from this premise, AT incurred in various errors of reasoning and substantiation as to the position assumed in the present case: on the one hand, AT did not feel the need to explore the fact that the Claimant also exercises its activity within the scope of TNC, restricting its analysis to the alleged exclusion of services provided from the scope of the medical profession; on the other hand, it did not deepen the discovery of material truth with regard to TNC, having understood that bioresonance in itself was a TNC that would not be included in the set listed either in article 3, no. 2 of Law no. 45/2003, of 22 August, or in article 2 of Law no. 71/2013, of 2 September.

However, according to the Claimant, neither in the RIT nor in the decision rejecting the administrative complaint are the objective criteria, which do not result from common sense, set out on the basis of which AT will have concluded that bioresonance is, in itself, a TNC, and such idea should be set aside by the testimony of witness Dr. C…, who clarified that bioresonance is an apparatus used for the diagnosis and treatment of diseases.

The Claimant further states that AT did not produce evidence that it does not exercise, through the use of bioresonance, dental medicine, having based itself on criteria of common sense, inappropriate to support the exclusion of services provided by the Claimant from medicine and paramedics for purposes of no. 1 of article 9 of the VAT Code.

Therefore, it understands that AT did not fulfill the duty of substantiation that fell upon it, as it does not explain to what extent bioresonance is not used by the Claimant for the exercise of dental medicine, nor did it fulfill the burden of proof that fell upon it – notwithstanding that it is a self-assessment – that through bioresonance acts are not practiced within the scope of the medical profession.

It concludes, reaffirming that, for purposes of VAT, the services provided will benefit, in any case, from VAT exemption: either in light of no. 1 of article 9 of the VAT Code, as services provided in the exercise of the medical profession, or pursuant to article 8-A of Law no. 71/2013, of 2 September, added by Law no. 1/2017, as services provided within the scope of TNC. In this way, the VAT self-assessments relating to the periods of taxation of 2013/06T, 2013/09T, 2013/12T, 2014/06T and 2014/09T, as well as the respective assessments of interest and the decision rejecting the administrative complaint must be annulled, with the other legal consequences.

On 26 April 2017, the Respondent presented its counter-allegations.

B) Counter-Allegations

The Respondent reiterates everything it has sustained in the previous submissions, and alerts to the fact that the Claimant is reformulating and innovating its substantiation with each submission it presents. Indeed, in the request for arbitral ruling it stated that "Dr. B… is a dental surgeon exercising a medical activity in which it resorts – namely with regard to the diagnosis and treatment of problems and dysfunctions to bioresonance", this therapy appearing in the clinic's price table. Subsequently, in the second submission presented and at the stage of allegations, the cause for the alleged annulment of the self-assessments differs and the activity exercised would be exempt because bioresonance is presented as a complementary means through which homeopathy or acupuncture are exercised, in the use of competencies that were attested solely by the Claimant's witness.

Thus, in the Respondent's view, no evidence was made of the training or academic qualification for the use of the Mora machine in treatments of any kind, Dr. B… not having proven qualifications for the practice of medical acts other than those of stomatology.

However, according to the evidence gathered, the Respondent understands that Dr. B… does not exercise his activity within the scope of his qualifications as a dental surgeon, as several indications point in that direction, namely it was not proven that Dr. B… possessed one of the complementary modules of the Mora machine referred to as a dental module, it was stated by the Claimant that in the clinic "traditional dental medicine" is not practiced, no single invoice was presented that identified the services actually provided (save those mentioned in the interrogation of witnesses that contained the generic mention of "services provided") and the absence in the clinic of any equipment or materials used by dental surgeons.

Well, in this regard, the Respondent concludes that it is not because the Claimant has academic training in dental medicine that every act it practices automatically passes to be qualified as a medical act.

As for the possibility of such acts being subject to framing in paramedical professions or in TNC, the Claimant does not prove that it exercises any of the professions described, whether paramedic or non-conventional therapist, not having presented evidence of possessing academic qualifications for this purpose, nor the sufficient certification for their respective exercise, such as the professional license issued by the Central Administration of the Health System, I.P. (ACSS).

As to the defect of lack of substantiation invoked, for the first time, at the stage of allegations, the Respondent invokes the principle of stability of the instance, relying on the jurisprudence delivered by the Supreme Administrative Court, pursuant to which it is incumbent upon the appellant, (except in exceptional cases of official knowledge or supervening knowledge), the burden of setting out in the petition of impugnation all the facts and reasons of law that substantiate its request, under penalty of impossibility of knowledge of new issues.

It concludes by defending itself, as a precautionary measure, that it substantiated its position clearly and coherently both at the inspection procedure stage and at the administrative complaint stage, having this been notably perceived by the Claimant, requesting, therefore, the total lack of merit of the request for arbitral ruling.

II. CASE SANATION

The Arbitral Tribunal is materially competent and regularly constituted, pursuant to articles 2, no. 1, paragraph a), 5 and 6, no. 1 of the RJAT.

The parties have legal personality and capacity, prove to be legitimate and are regularly represented, (cf. articles 4 and 10, no. 2 of the RJAT and article 1 of Ordinance no. 112-A/2011 of 22 March).

The proceedings are not vitiated by nullities.

III. GROUNDS FOR DECISION

1. Facts Deemed Proven

The facts were deemed proven based on the documents attached in the context of the administrative proceedings, the request for arbitral ruling, the testimony evidence and the response presented by AT, as indicated below.

  1. The Claimant commenced its activity on 12.01.2001, having as its corporate purpose the provision of general clinic, dental medicine, physical rehabilitation, acupuncture, homeopathy, massage, shiatsu and ayurvedic services and commerce of dietetic and cosmetic products;

  2. For purposes of VAT, the Claimant is a taxable person classified under the normal quarterly periodicity regime;

  3. The Claimant is classified for the exercise of three activities, namely:

a. Clinical general practice medical activity – ambulatory (CAE 86210) – main activity;

b. Dental medicine and odontological activity (CAE 86230) – secondary activity;

c. Retail trade of cosmetic and hygiene products, in specialized establishments (CAE 47750) – secondary activity;

  1. In the exercise of its activity, the Claimant has its partner – Dr. B… – as the only service provider of the clinic who conducts consultations applying bioresonance;

  2. The certification displayed by Dr. B… for the practice of bioresonance was granted by company E…, which in turn commercializes the bioresonance machine of the brand …;

  3. The following appears in the document of certification of the bioresonance machine: "E… confirms that the Mora machine and its accessories are sold exclusively to doctors or certified natural health professionals, pursuant to German Law. Additionally, the dental module of the machine can only be made available to dental surgeons or dental surgeons.";

  4. The invoices issued by the Claimant contained in their description the generic mention of "services provided", a fact that led the tax inspection services to seek to know what type of services were provided in the clinic; cf. testimony of witness Dr. D…;

  5. Dr. B… is a dental surgeon, being registered with the Order of Dental Surgeons;

  6. Bioresonance is a machine that can be used as a means of diagnosis, and that also functions for the treatment of diseases "in the same way that it is a complementary apparatus such as an ultrasound, an x-ray (…), an echocardiogram, through which pathologies are identified and treatment is administered via electromagnetic waves". Cf. testimony of witness Dr. C…;

  7. Bioresonance has an information system "through which the entire normal organic structure is registered, for example in the eye we have the cornea registered through electromagnetic information. It is a technique of multifaceted diagnosis and therapy, because I can treat what is treated with medications, through the registration in the Mora", cf. testimony of witness Dr. C…;

  8. By way of example "I take furosemide which is a potent diuretic, I go to the Mora machine, register the information of the medication and the patient begins to urinate." cf. testimony of witness Dr. C…;

  9. With regard to Dr. B…'s training, it is stated that he is a "stomatologist doctor but who did not stop there, he knows a lot of medicine, at the level of biochemistry and biophysics". The witness further explained that "the teeth are related to different organs and dental pathology appears because there are organic disturbances that condition dental pathology, indeed the lesion in a tooth or another is related to organic pathology", cf. testimony of witness Dr. C…;

  10. Dr. B… undertook specific training in Chinese medicine, having completed a specialization course in traditional Chinese medicine "not conferring a degree", completed on 10-02-2017;

  11. In the exercise of his activity "Dr. B… exercises conventional medicine and integrative medicine (...) Dr. B… serves the patient well, without side effects (...) treating the patient globally." cf. testimony of witness Dr. C…;

  12. With respect to the services actually provided in Dr. B…'s clinic, the following examples were presented:

a) "A colleague of mine (...) who unfortunately already died with colon neoplasia, 7 pulmonary metastases, had already had 2 removed by tarotomy, I took him to Dr. B…, the diagnosis of the virus as the cause of cancer was made, because bioresonance goes to the cause (...) the treatment was done and two months later he had no metastases." cf. testimony of witness Dr. C…;

b) "Cytomegalovirus (an understandable name of a virus) (...) in transplant patients is a problem because it causes very serious pneumonias. We applied ganciclovir (understandable name of a medication) which consisted of an extremely expensive therapy with well-marked side effects, Dr. B… asked me if I would give him an empty vial of that medication, registered the information in bioresonance and he started treating patients with cytomegalovirus through that information". cf. testimony of witness Dr. C…;

c) "I felt tingling and alterations in the sensitivity of my feet, I did not feel well in my intestines, (...) I started to have difficulty walking, I asked other colleagues and nobody came to a diagnosis of the situation (...) I was with an intoxication, I went to Dr. B… he made the diagnosis and I started the therapy. (...) he also detected problems in the right valve, in the tricuspid and in the root of the pulmonary artery cf. testimony of witness Dr. C…;

  1. With respect to the performance of dental treatments by Dr. B…, the following was stated: "I treated my teeth because I had different amalgams and upon the alert of Dr. B… they were being harmful. It was not Dr. B… who did the treatment of the amalgams, it was my dental surgeon". cf. testimony of witness Dr. C…;

  2. At the inspection procedure stage, it was ascertained through analysis of the Claimant's accounts that Dr. B… issued invoices exempt from VAT pursuant to article 9, no. 1 of the VAT Code;

  3. At the inspection procedure stage, it was ascertained that the invoices recorded in the accounts presented as description "provision of services" without indication of any specific service. cf. testimony of witness Dr. D…;

  4. Equally, at the inspection procedure stage, it was ascertained through analysis of the Claimant's accounts the absence of records of purchases of material typical of those exercising the activity of orthodontics, or dental medicine, namely, no records were found of purchases of amalgams, composites, drills or implants. cf. testimony of witness Dr. D…;

  5. On account of the doubts raised in the context of the analysis of the Claimant's accounts, regarding the nature of the services actually provided, the Tax Inspection Services (SIT) went to Dr. B…'s clinic. cf. testimony of witness Dr. D…;

  6. In the clinic, no dentist chairs or any equipment typical related to the exercise of dental medicine were found; cf. testimony of witness Dr. D…;

  7. It was equally ascertained that the clinic was divided into several offices equipped with the Mora machine, and there was also "a capsule in which people place themselves inside to treat problems related to cholesterol and hypertension, also a microscope that performed blood analysis, shelves with medications and vials and a spiral-shaped equipment that the Doctor said was used to treat people with cancer, so we saw nothing of dental medicine;" cf. testimony of witness Dr. D…;

  8. Following the inspection procedure, the SIT contacted Dr. C…, responsible for a dialysis clinic, to whom Dr. B… provided recurrent services, in order to understand the possible connection with Dr. B…'s training as a dental surgeon; cf. testimony of witness Dr. D…;

  9. It was stated by Dr. C… to the SIT that Dr. B… provided medical monitoring of patients in the urinary area who were undergoing renal treatment; cf. testimony of witness Dr. D…;

  10. Within the inspection action, the SIT contacted the Medical Order, having ascertained that Dr. B… was not registered in that order; cf. testimony of witness Dr. D…;

  11. The inspection action carried out to the Claimant was initiated with Service Order no. OI2013…, of limited scope and relating to Income Tax on Legal Persons (IRC) of 2010, 2011 and 2012, as well as VAT of 2014/06T;

  12. In parallel, with Service Order no. OI2014…, another inspection was initiated, of general scope, relating to IRC and VAT of 2013;

  13. In the course of the said inspections, the final report was drawn up, contained in the administrative file, which is hereby deemed to be fully reproduced, concluding, namely the following: "The taxable person exercises the activity of non-conventional medicine in the area of bioresonance. Although he has training in the area of dental medicine, Dr. B… exercises only the medical activity in that non-conventional area. It should be noted that Dr. B… is registered in the Order of Dental Surgeons, but in fact does not exercise such specialty in his individual name or in the name of the company. Although he also has as a secondary CAE the trade of natural products, he does not exercise such activity. In fact, the taxable person does not exercise any of the activities that he considers as secondary."

  14. In the course of the inspection action, the Claimant proceeded to voluntarily regularize the violations ascertained, through the delivery of substitute declarations, which gave rise to the self-assessed VAT acts relating to the periods 1306T, 1309T, 1312T, 1406T and 1409T, in addition to the respective assessments of default interest and compensatory interest;

  15. On 30 October 2014, through Office no. …, the Claimant was notified of the Inspection Report presented, which is hereby deemed to be fully reproduced, appearing, namely, the following:

"As mentioned, the taxable person provides services in the area of non-conventional medicine, developing its activity in the area of bio-resonance.

To the extent that this activity does not fall within conventional medicine, it has no framing in the exemption referred to in paragraph 1) of article 9 of the VAT Code. This is the scope of application that results from the rule, which has been established by the various doctrine issued by the VAT Services Department.

It should be noted that pursuant to the provisions of paragraph c) of no. 1, item A of article 13 of the Sixth Directive, the exemption of the tax was provided for the provision of assistance services within the exercise of medical and paramedical activities, as they are defined by the Member State in question. As regards the framing or not of the so-called paramedical activity within the scope of the said exemption, reveals Decree-Law no. 261/93, of 24 July, legislation that regulates the exercise of professional activities in health, designated as paramedical activities, listed in the Annex to the said legislation.

The activity of bio-resonance is not provided for there.

On the basis of the described, the taxable person could not sustain the non-assessment of services provided in paragraph 1) of article 9 of the VAT Code because it does not benefit from it due to lack of framing.

However, having no other basis, it did not assess VAT on the provision of bio-resonance services.

Thus, lacking any other legal framing for this purpose, the services provided are subject to VAT with no exemption applicable to them."

  1. Disagreeing with the content of the Inspection Report, on 16 January 2016, the Claimant submitted an administrative complaint against the VAT self-assessed acts carried out in the course of the inspection procedure, and also referring to the self-assessment of the period 1409T;

  2. On 6 May 2016, by Office no. … issued by the Finance Directorate of…, Justice and Tax Litigation Division – Contentious, the Claimant was notified of the draft decision rejecting the said complaint and to exercise the Right to Be Heard;

  3. The Claimant exercised the right to be heard on 24 May 2016;

  4. Through Office no. …, dated 11 July 2016, issued by the Finance Directorate of…, Justice and Tax Litigation Division – Contentious, the Claimant was notified of the final decision rejecting the Administrative Complaint;

  5. The Claimant ceased activity effective 31 August 2016, on the grounds of article 34, no. 1, paragraph b) of the VAT Code;

  6. On 11 October 2016, the Claimant filed the request for constitution of the Arbitral Tribunal that gave rise to the present proceedings (cf. electronic request to CAAD).

2. Facts Not Proven

  1. Regarding the services provided in the Claimant clinic, no evidence was brought to the proceedings that its partner and only service provider Dr. B…, exercises the activity of dental surgeon providing services and developing therapeutics in the area of dental medicine;

  2. Regarding the use of bioresonance, no evidence was brought to the proceedings that this technique has been applied in therapeutics in the area of dental medicine;

  3. Regarding the treatments carried out by Dr. B… in the field of the various pathologies described in the proceedings by the two witnesses interrogated, namely through the use of bioresonance, as well as other therapeutics generically identified as non-conventional therapeutics, no evidence was brought to the proceedings of the existence of academic qualifications to practice medical acts beyond those relating to the exercise of dental medicine;

  4. Regarding the fulfillment of the requirements required for operation as a private health unit, no evidence was brought to the proceedings that the Clinic Dr. A… meets the technical requirements for operation applicable in the fields of medicine and dental medicine.

3. Motivation

With respect to the factual matter, the Tribunal does not have to pronounce on everything that was alleged by the parties, it being incumbent on it, rather, with the duty to select the facts that matter for the decision and to discriminate the proven matter from the unproven (cf. art. 123, no. 2 of the Tax Code of Procedure and Process and article 607, no. 3 of the CPC, applicable ex vi article 29, no. 1, paragraphs a) and e), of the RJAT).

In this way, the facts pertinent to the trial of the case are chosen and delimited based on their legal relevance, which is established in attention to the various plausible solutions of the question(s) of Law (cf. previous article 511, no. 1 of the CPC, corresponding to the current article 596, applicable ex vi article 29, no. 1, paragraph e), of the RJAT).

Thus, taking into account the positions assumed by the parties, in light of article 110, no. 7 of the Tax Code of Procedure and Process, the documentary and testimonial evidence and the administrative file attached to the proceedings, the above listed facts were considered proven, with relevance to the decision.

4. MATTERS OF LAW

A) On the Preliminary Ruling to the CJEU

The Claimant, in its request for arbitral ruling, requests that the referral of the proceedings to the CJEU be ordered, pursuant to the provisions of article 267 of the Treaty on the Functioning of the European Union (TFEU), if it is understood that the non-conformity of the VAT assessments in question with European Union Law is not sufficiently clear or settled in the jurisprudence of the Court of Justice.

As referred to in Point 7 of the recommendations to national courts relating to the presentation of preliminary ruling proceedings (2012/C 338/01), of the CJEU[3]:

"the role of the Court in the context of a preliminary ruling proceeding is to interpret European Union law or pronounce on its validity, and not to apply this law to the factual situation underlying the main proceeding. This role falls to the national judge and, therefore, it is not for the Court to pronounce on questions of fact raised in the context of the dispute in the main proceeding or on possible divergences of opinion as to the interpretation or application of the rules of national law".

It is further recalled, in Point 12 of those same recommendations that the preliminary ruling to the said Court should not take place when:

i) there already exists jurisprudence on the matter (and when the possibly new framework does not raise any real doubt as to the possibility of applying such jurisprudence to the concrete case); or

ii) when the correct way to interpret the legal rule in question is unequivocal.

Consequently, it is continued in Point 13, "a national court may, in particular when it considers itself sufficiently enlightened by the jurisprudence of the Court, decide for itself on the correct interpretation of European Union law and its application to the factual situation of which it is aware".

Finally, as stated in Point 18 of those same recommendations, "The national court may submit a request for a preliminary ruling to the Court as soon as it considers that a decision on the interpretation or validity is necessary to deliver its decision.".

In the case, it is not considered that a decision on the interpretation of community rules is necessary to deliver a decision, nor does the Claimant demonstrate this, basing in large part its own argument on the interpretation it makes of the abundant jurisprudence delivered by the CJEU on the matter discussed in the proceedings.

Consequently, and as will be demonstrated below, it is understood that the available jurisprudence of the CJEU sufficiently clarifies, in terms that the correct interpretation of European Union law and its application to the factual situation of which one is aware can be decided.

In this way, and for the foregoing, the request for a preliminary ruling is rejected.

B) On the Lack of Substantiation

The Claimant comes to consider, for the first time, at the stage of final allegations that AT did not fulfill its duty to substantiate its decision regarding the non-applicability of the exemption of article 9, no. 1 of the VAT Code to the services provided by Dr. B….

Thus, it argues, on the one hand, that AT did not explain how it will have concluded that bioresonance is in itself a non-conventional therapeutic, a conclusion that in its view is set aside by the interrogation of witnesses, and on the other hand, it failed to prove that Dr. B… does not exercise dental medicine nor, consequently, substantiated why it considers that Dr. B… does not exercise dental medicine when he resorts to bioresonance. Bearing in mind the defect of lack of substantiation derived from the failure to fulfill the burden of proof that fell upon it, the Claimant requests the annulment of the VAT self-assessed acts relating to the periods of taxation 2013/06T, 2013/09T, 2013/12T, 2014/06T and 2014/09T, as well as the respective assessments of interest.

According to Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa "As regards substantiation, the Constitution of the Portuguese Republic guarantees to administered parties the right to express and accessible substantiation of all administrative acts (a concept in which tax acts fit in light of the provisions of article 120[4] of the CPA) which affect rights or legally protected interests (article 268, no. 3 of the CRP). In no. 4 of the same article 268, the interested parties are guaranteed contentious impugnation, on the grounds of illegality, against any administrative acts, regardless of their form, that injure their rights or legally protected interests"[5], which means that in tax matters there is the establishment of the duty of substantiation of the decision acts of tax procedures and of tax acts embodied in article 77 of the General Tax Law. The constitutional and legal requirement of substantiation is intended to allow the interested parties to know what the facts and legal grounds are that underlie the conduct of the administrative entity in order to accept the legality of the act practiced by the administrative entity or to challenge it. As the above-mentioned Authors state " (…) the substantiation must provide to the recipient of the act the reconstitution of the cognitive and evaluative itinerary traveled by the authority that practiced the act, so that it can be clearly known the reasons why it decided in the way it decided and not in a different way."[6]

In the Inspection Report, the factual reasons that motivated the proposed corrections relating to the above-mentioned periods are clearly identified.

If the Claimant had not had that perception and conviction when receiving the Inspection Report, it had at its disposal the possibility of resorting to the procedure provided for in article 37 of the Tax Code of Procedure and Process to remedy the defect of form, relating to the lack or insufficiency of substantiation of the Inspection Report that it alleges, but it did not do so, according to the evidence produced and brought to the proceedings.

Additionally, the Claimant presented an administrative complaint, followed by its request for arbitral ruling, as well as several requests, documents in which it discussed the arguments presented by the Respondent in the Inspection Report, without ever invoking that the substantiation contained therein was insufficient, only manifesting its disagreement with the fiscal framing proposed in the Inspection Report for the services provided by Dr. B… as subject to VAT and not exempt from it.

Now, the inspection report contains all the factual and legal elements, the proposed corrections, the applicable rules, the administrative interpretation emanated by the VAT Services Department on the matter under discussion, in short the entire path taken by AT to justify the proposed corrections, making abundantly clear what led to deciding in a certain direction and not in any other.

Therefore, one cannot but be surprised that until the moment of the final allegations – a submission intended to discuss the factual matter and the legal issues that already form part of the proceedings – the Claimant has not felt the need to invoke the defect of lack or insufficiency of substantiation, not manifesting any difficulty in understanding the cognitive itinerary traveled by AT, having even formulated several critical judgments on the acts in question.

For the reasons above described, the argument raised by the Claimant of lack or insufficiency of substantiation of the VAT self-assessed acts relating to the periods of taxation 2013/06T, 2013/09T, 2013/12T, 2014/06T and 2014/09T is without merit.

C) On the Merits of the Case

According to the understanding of AT, the corrections in question in the present arbitral action are based on the understanding that the sole partner and dental surgeon in the service of the Claimant, Mr. Dr. B…, does not possess academic qualifications for the practice of medical acts other than those of stomatology, and according to what was ascertained by the Tax Inspection Services in the course of the inspection procedure, no evidence was found that in the said health establishment dental medicine acts are practiced.

Thus, according to AT, although he is a dental surgeon, Dr. B… exercises a medical activity of general scope, using a bioresonance apparatus, a circumstance that prevents the application of the exemption provided for in article 9, no. 1 of the VAT Code.

Additionally, AT defends that no evidence was brought to the proceedings proving that Dr. B… exercises the activity of paramedic or professional of a TNC regulated by Law, no professional qualifications or the holding of a professional license issued by the Central Administration of the Health System having been exhibited for this purpose, to exercise the said therapeutics. Thus, as the conditions for the exercise of TNC provided for in Law no. 45/2004, of 22 August, regulated by Law no. 71/2013, of 2 September, are not met, the operations practiced by the Claimant are subject to VAT and not exempt from it.

It is therefore necessary to assess the soundness of such grounds. Let us examine the issue starting with the applicable legal provisions.

At issue in the proceedings, then, is the exemption provided for in article 9, no. 1) of the VAT Code, which prescribes the following:

"The following are exempt from the tax: 1) The provision of services effected in the exercise of the professions of physician, dentist, midwife, nurse and other paramedical professions;"

Now, article 9 of the VAT Code lists certain operations, which, because they are considered to be of general or social interest and with aims of relevant importance, are covered by the exemption provided for in this article, the aim being to relieve, both administratively and financially, the activities identified in it.

It is important to note that the exemption provided for in article 9, no. 1 of the VAT Code results from the transposition of the provisions of article 132, no. 1, paragraph c) of the VAT Directive, corresponding to the previous paragraph c) of no. 1 of part A of article 13 of Directive 77/388/CEE, of 17 May 1977 ("Sixth Directive"), pursuant to which exemption from tax is determined on "the provision of assistance services within the exercise of medical and paramedical professions, as defined by the Member State in question".

Thus, the question to be decided is whether the activity pursued by the Claimant, performed solely by Dr. B…, is capable of being framed within the said exemption, taking into account the rules governing this tax in accordance with European Union Law, with its respective transposition at the internal level and with the administrative and judicial interpretation that has been carried out on them, especially by the Court of Justice of the European Union (CJEU).

The substance of the operations in question, relevant for tax purposes, and which is demonstrated and admitted by the Claimant, is that this, through its sole partner, Dr. B…, performs diagnoses and applies treatments to its patients, using a bioresonance apparatus.

Dr. B… is a dental surgeon, trained in dental medicine, who is registered with the Order of Dental Surgeons, and has not demonstrated in the proceedings to possess academic training in general clinic or in any other medical specialties, at the date to which the tax acts in question relate. It is further added that, although the activities pursued by the Claimant were the practice of general clinical medicine, ambulatory, (main activity), dental medicine and odontology (secondary activity) and retail trade of cosmetic and hygiene products (secondary activity), it was not proven that the Claimant had other health professionals in its employment.

According to the words of the Claimant, the services provided do not consist in the performance of "classic dental treatments", such as the detection and removal of cavities, the application of amalgams, the extraction of teeth, the performance of implants, among others. It is equally a fact accepted by the Claimant that in its respective facilities it is not possible to detect the presence of the "classic equipment" that constitutes the fixed assets of a clinic where dental treatments are performed, such as a dentist's chair, amalgams, drills, among others (point 21 of the probative material).

Moreover, at the stage of final allegations, it is the Claimant itself that highlights "the professional activity exercised by Dr. B… is integrative medicine".

Furthermore, where doubts may arise as to the nature of the services provided, the Claimant's witness, Dr. C…, took care to decisively clarify the Tribunal by stating that Dr. B… is a physician who treats the most diverse organic disturbances, namely of a respiratory, pulmonary, intestinal, renal, urinary, cancerous nature, (point 15 of the probative material) statements corroborated by the witness of the Respondent, who in the context of the inspection procedure felt the need to go to the Claimant's facilities, having found alongside bioresonance equipment "a capsule in which people place themselves inside to treat problems related to cholesterol and hypertension, also a microscope that performed blood analysis, shelves with medications and vials and a spiral-shaped equipment that the Doctor said was used to treat people with cancer, so we saw nothing of dental medicine;".

Now, from the analysis of the testimony of the two witnesses interrogated, it is possible to infer that despite the set of knowledge of this dental surgeon having its origin in the study of teeth and their relation to other pathologies in different organs, Dr. B… does not treat the teeth of his patients, but rather deals with the general health of the patient, with his activity focusing on a very broad spectrum of diseases, ranging from renal, respiratory, gastric, hormonal domains to the treatment of cancer.

On the regulation contained in paragraph c) of no. 1 of article 132 of the VAT Directive, the CJEU stated in several decisions[7] that it has an objective character defining the exempt provision of services based on the nature of the services provided, without mentioning the legal form of the provider. For this reason, for the exemption to operate, two requirements must be met:

  1. That they are medical or paramedical services;

  2. Provided by persons who possess the required professional qualifications.

It is equally important to note that paragraph c) of no. 1 of article 132 of the VAT Directive determines that the granting of the exemption to medical and paramedical professions is operated under the conditions "defined by the Member State in question". In this sense, Member States are granted autonomy to define the conditions for the exercise of these professions as well as the activities considered within the scope of them, provided they do not call into question the principle of neutrality.[8]

The fact that the community command refers the definition of the framing of these professions to the internal rules of each Member State presupposes, as a condition of the exemption, that the provision of services be ensured in accordance with the internal legislation of the Member State in question, thus leaving outside the exemption the provision of services exercised in breach of the said rules.

Indeed, the discretion conferred on Member States encompasses not only the power to define the qualifications required to exercise the said professions, but also the power to define the specific activities of services covered by those professions.[9]

Now, in accordance with the Statute of the Medical Order,[10] medicine as a public service can only be exercised by registration in the Medical Order, this being a necessary legal condition, under penalty of unlicensed practice of the profession. In the proceedings, it was proven that there is no physician registered in the Medical Order in the service of the Claimant providing services other than those of dental medicine, a situation that directly violates the provisions of that Statute, namely article 118.

For its part, pursuant to article 8 of the Statute of the Order of Dental Surgeons,[11] the provision of medical assistance services that goes beyond the scope of dental medicine defined as "The study, prevention, diagnosis, treatment of anomalies and diseases of the teeth, mouth, jaws and ancillary structures." is not authorized.

Now, having been proven the performance by the Claimant of treatments as diverse as respiratory, cancerous, intestinal, renal, cholesterol nature, among others, and these being carried out by a dental surgeon, such provision of services does not appear to be capable of being qualified as dental medicine acts, in accordance with the said article 8, instead configuring, above all, the unlicensed exercise of medicine.

As for the licensing of the Claimant, it was not proven that the company is licensed as a private health unit, pursuant to the provisions of Decree-Law no. 127/2014 of 22 August,[12] nor that it is holder of licenses issued by the Regional Health Authority of Lisbon, and of the registration of the establishment with the Health Regulatory Entity, conditions indispensable for the development of its activity in national territory.

In light of the elements brought to the proceedings, as well as of the legal regime applicable to the activity allegedly exercised by the Claimant, it is surprising the affirmation that the evidence made by the Respondent relating to the non-exercise of dental medicine is based on common sense reasoning, being considered as such, according to the Claimant, the allegation by AT of the absence in its facilities of a dentist's chair, drills, equipment typical of a dental medicine office, such as amalgams, orthodontic material, implant material.

Contrary to the understanding of the Claimant, there are minimum legal parameters that must be ensured by dental clinics or offices, both in terms of installations and in terms of health equipment, provided for in Ordinance no. 167-A/2014 of 21 August[13], which contradict the Claimant's thesis, according to which a dental clinic will not lose its essence, even if, at the limit, it operates independently of compliance with the minimum requirements stipulated for the typology of health care that it proposes to provide, as long as the provision of services, whatever the services, are ensured by a physician.

Still on the matter of proof of the exercise of dental medicine by the Claimant, it should be noted that the declaration attached to the proceedings issued by company E…, - the entity that commercializes the bioresonance equipment, - does not make it possible to prove that it has actually acquired the dental module, as what such a document proves is only what is stated in it, that "the dental module of the machine can only be made available to dental surgeons or dental surgeons." (point 6 of the probative material).

Effectively, as the Claimant rightly notes, the circumstance of being a self-assessment does not alter the presumption of truthfulness enjoyed by the taxpayer's statements (article 75 of the General Tax Law), nor the obligation incumbent on AT to prove the verification of the (binding) legal prerequisites of its action, (article 74 of the General Tax Law), belonging instead to the taxpayer to present sufficient proof of the illegitimacy of the act when such prerequisites are shown to be verified.

That is, and to the extent that it matters for these purposes, it is incumbent on AT to bring to the proceedings the adequate elements to support its corrective action, in the sense of demonstrating, in accordance with the diligence carried out and the indicators collected, that the Claimant does not exercise dental medicine, providing services of various kinds that exceed the professional qualifications of its sole provider, and that, therefore, the conditions for the application of the exemption provided for in no. 1 of article 9 of the VAT Code are not met.

For its part, and based on the principle of the declarative system of our legal order, it was incumbent on the Claimant to demonstrate merely that despite such indicators, the declared still adheres to reality.

It turns out that the Claimant did not do so, rather confirming, through the elements brought to the proceedings, the legality of the corrections proposed in the Inspection Report.

On the use of bioresonance in the treatments administered by the Claimant, it should be noted that AT did not prove that bioresonance falls within the scope of an activity of non-conventional medicine, although it demonstrated that the provision of services in question, even if performed with recourse to bioresonance, have nothing to do with dental medicine.

For its part, according to the testimony of the Claimant's witness, Dr. C…, bioresonance is a means of diagnosis and treatment of patients, fundamental in the exercise of medical activity. The Claimant further clarifies that, although this does not qualify as a TNC, insofar as it is possible to provide acupuncture and homeopathy services, which the Claimant allegedly also did, it should be relevant for purposes of applicability of the VAT exemption, on the basis of Law no. 1/2017 of 16 January, which amends Law no. 71/2013, of 2 September, which regulates Law no. 45/2003, of 22 August, regarding the professional exercise of TNC activities, applying to it the VAT exemption regime provided for in article 9, no. 1 of the VAT Code.

Now, in the absence of other evidence elements, beyond the witnesses interrogated, in particular Dr. C…, physician and patient of the clinic, who clarified the nature of the services provided, (note that the invoices issued by the Claimant presented in the description the manifestly insufficient mention of "provision of services"[14]) what was proven, and admitted by the Claimant, is that bioresonance is a machine, constituting an auxiliary means used to perform a set of provision of services, within the scope of the various areas of medicine in which the Claimant operates, and for which it did not demonstrate, as was incumbent on it, to possess the due qualifications.

Therefore, as to the type and content of the activity developed, what was proven was the exercise of medicine, bioresonance being used for the diagnosis and treatment of problems relating to the general health of patients.

Thus, in the factual framework described, the administrative doctrine emanated via Circular Office no. 30189, of 02-05-2015[15], is not applicable to the Claimant, because the Claimant stated, and it is proven, that Dr. B… is a dental surgeon who exercises his activity in various domains of medicine, this circumstance being determinative to set aside the application of Law no. 71/2013 of 2 September.

Proceeding with the analysis of the arguments invoked, it is understood, as the Claimant rightly points out, that a physician cannot be conditioned, for reasons of a fiscal order, in the principle of free choice of the appropriate therapeutic for the diagnosis and cure of the pathologies applied to users, however, it should be emphasized, Dr. B…, as a dental surgeon, did not demonstrate possessing qualifications to treat problems of general clinic and even of other medical specialties.

Now, applying with the necessary adaptations the reasoning developed by the CJEU in decision C-555/2015 of 14 April, "Member States are, to be sure, authorized not to consider a certain profession as paramedical and, therefore, to exclude it from the VAT exemption or to reserve it to providers who have the professional qualifications laid down in the relevant national regulations and solely with respect to the specific assistance service activities for which such qualifications are required (…).

  1. However, it follows from the jurisprudence of the Court of Justice that the requirement of a correct and straightforward application of exemptions does not allow Member States to undermine the objectives pursued by the VAT Directive or the principles of European Union law, in particular the principle of equal treatment, which is expressed, as regards VAT, in the principle of fiscal neutrality(…).

Now, to the extent that the Claimant dedicates itself to the treatment of renal, respiratory, hormonal, intestinal, cancerous pathologies, among others, which escape the scope of dental medicine, as defined by the Code of that specialty, it would be necessary to prove the professional qualifications of the service provider to perform such operations, and compliance with the necessary conditions for their exercise, it not being possible to affirm that these are demonstrated in the case in question.

The CJEU develops this argument by referring in points 34 and 35 "In this regard, as regards, first, the objective pursued by article 132, no. 1, paragraph c), of the VAT Directive, it should be recalled that the requirement laid down by that provision, according to which the provision of assistance services must be effected within the exercise of the paramedical professions as defined by the Member State in question, is intended to ensure that the exemption applies only to the provision of assistance services provided by providers with the required professional qualifications (…).

  1. It follows from this that the exclusion of a certain profession or of a specific assistance service activity from the definition of paramedical professions provided for by the national regulations for purposes of the exemption of article 132, no. 1, paragraph c), of the VAT Directive must be capable of being justified on objective grounds based on the professional qualifications of the assistance service providers and, therefore, by considerations relating to the quality of the services provided.(…)".

Moreover, the CJEU understands, resuming previous jurisprudence:

"37. As regards, second, the principle of fiscal neutrality, which is inherent in the common VAT system, it should be recalled that this principle precludes provision of services that are similar and therefore in competition with each other being treated differently as regards VAT.

  1. In this regard and as regards specifically the profession of physiotherapist, the Court of Justice has already emphasized that it is necessary to verify whether the persons exercising that profession have, for the provision of specific assistance services, professional qualifications apt to ensure those services a level of quality equivalent to that of services provided by persons who, under that same national regulations, benefit from the exemption (…).

  2. It is for the referring court to determine whether, in light of all those elements, the exclusion of certain activities carried out by a physiotherapist from the scope of the exercise of paramedical professions, for purposes of the VAT exemption provided for in article 132, no. 1, paragraph c), of the VAT Directive, exceeds the limits of the power of discretion conferred on Member States by that provision (…)."

That is, making concrete what matters for the present case, according to the CJEU, it is for each Member State to define, in its internal law, the medical and paramedical professions within the scope of which assistance services are exempt from VAT, Member States having a power of discretion in this regard which encompasses not only the power to define the qualifications required to exercise the said professions, but also the power to define the specific assistance service activities covered by those professions, being authorized not to consider as medical or paramedical and to exclude from the VAT exemption a certain profession or to reserve it to providers who have the professional qualifications laid down in the relevant national regulations and solely with respect to the specific assistance service activities for which those qualifications are required (emphasis ours).

Still in accordance with the same jurisprudence, it falls to the national courts to examine whether the competent authorities, by refusing such recognition, respected the limits of the discretion granted to them, or whether, on the contrary, they exceeded the limits of such discretion, taking into account:

a) The objective pursued by the exemptions, taking into account that the provision of assistance services must be effected within the exercise of the medical and paramedical professions as defined by the Member State in question, aimed at ensuring that the exemption applies only to the provision of assistance services provided by providers with the required professional qualifications;

b) That the exclusion of a certain profession or of a specific assistance service activity from the definition of medical and paramedical professions provided for by the national regulations for purposes of the exemption of article 132, no. 1, paragraph c), of the VAT Directive must be capable of being justified on objective grounds based on the professional qualifications of the assistance service providers and, therefore, by considerations relating to the quality of the services provided;

c) The principle of fiscal neutrality inherent in the common VAT system, taking into account that this principle precludes provision of services that are similar and therefore in competition with each other being treated differently as regards VAT and, as regards specifically the profession of physician (a profession that is in fact exercised by Dr. B…), it being necessary to verify whether the persons exercising that profession have, for the provision of these services, professional qualifications apt to ensure a level of quality equivalent to that of services provided by persons who, under that same national regulations, benefit from the exemption.

d) Finally, in light of the principle of neutrality, the CJEU directs the referring court to weigh whether the services provided by this dental surgeon in question in the proceedings are effectively in competition with those provided by other dental surgeons who benefit from the VAT exemption provided for in no. 1 of article 9 of the VAT Code.

Thus being, from the point of view of the fiscal framing of the activity developed by the Claimant, and of the assessment of whether or not there is a distortion of competition, as recommended by the CJEU, it is irrelevant whether bioresonance is used as a therapeutic technique or as a diagnostic one, whether associated with electro-acupuncture or homeopathy, since bioresonance represents for the Claimant a "means" and not an end in itself.

Appealing to the said interpretive criteria, the Claimant would be in competition with the other dental surgeons, if it treated the same pathologies that these dental surgeons legitimately – that is, within the legal competencies of their profession – treat.

In this respect, and as regards the freedom to choose the means used, physicians, and dental surgeons in particular, must, as the Claimant states, be free to use the means that, in their judgment, are appropriate to pursue, in the best way, the purposes of their services, these being, and not those, to define them.

It should therefore be emphasized that it is the requirement of lack of qualifications of the dental surgeon in the service of the Claimant to treat disturbances of health in general that prevents the application of the exemption of article 9, no. 1 of the VAT Code, and not the fact that he uses bioresonance or any other conventional or non-conventional therapeutics, on the basis of the said principle of freedom to choose the means used.

Indeed, the jurisprudence of the CJEU is clear as to the essentiality of the existence of professional qualifications in compliance with the legal framework in force, in the exercise of the professions of physicians and paramedics, as defined by the internal legislation of each Member State.

As a result of the foregoing, the services provided must be framed within the legal scope of the exercise of the respective profession, it being incumbent on dental surgeons to use all means, conventional or otherwise, to treat what is incumbent on a dental surgeon to the extent of their professional qualifications: "anomalies and diseases of the teeth, mouth, jaws and ancillary structures."[16]

To the contrary, contrary to what is alleged by the Claimant, outside the legal framework of a competition (in the legal sense) that the neutrality of VAT postulates, the exercise of a medical activity provided in breach of the required professional qualifications cannot be considered as competitive, in terms of invoking the protection of the principle of neutrality of VAT.

In these terms, the Claimant could not benefit, as it sought, from the exemption provided for in article 9, no. 1 of the VAT Code, there being nothing, from this point of view, to censure the tax acts sub iudice.

IV. DECISION

In these terms, this Arbitral Tribunal decides that the arbitral request filed by the Claimant is totally without merit and, in consequence:

a) To maintain the VAT self-assessments above identified, relating to the periods of taxation 2013/06T, 2013/09T, 2013/12T, 2014/06T, and 2014/09T, as well as the respective assessments of interest;

b) To maintain the decision rejecting the Administrative Complaint;

c) To absolve the Tax and Customs Authority from payment of compensatory interest;

d) To condemn the Claimant to payment of the costs of the proceedings.

V. VALUE OF THE PROCEEDINGS

The value of the proceedings is fixed at € 47,743.56, pursuant to article 97-A, no. 1, a), of the Tax Code of Procedure and Process, applicable by force of paragraphs a) and b) of no. 1 of article 29 of the RJAT and of no. 2 of article 3 of the Regulation of Costs in Tax Arbitration Proceedings.

VI. COSTS

The value of the arbitration fee is fixed at €2,142.00, pursuant to Table I of the Regulation of Costs in Tax Arbitration Proceedings, to be paid by the Claimant, since the request was totally without merit, pursuant to articles 12, no. 2, and 22, no. 4, both of the RJAT, and article 4, no. 4, of the said Regulation.

Notify.

Lisbon, 19 May 2017

The Arbitrator

(Filipa Barros)

[1] Acronym for Legal Regime of Tax Arbitration.

[2] Directive 2006/112/EC, of 28 November, published in OJ no. L 347, of 11 December 2006.

[3] See in Official Journal of the European Union, C-338/1 of 6.11.2012.

[4] Current article 148 of the Administrative Procedure Code

[5] In "General Tax Law – Annotated and Commented", 4th Edition – Encontro da Escrita 2012, p. 675.

[6] In "General Tax Law – Annotated and Commented", 4th Edition – Encontro da Escrita 2012, p. 675.

[7] Among others, Decision of 10 September 2002, C-141/00, Kugler.

[8] Decision of 27 April 2006, C-443/04 and C-444/04, Solleveld.

[9] See C-443/04 and C-444/04, Solleveld.

[10] Law no. 117/2015, of 31 August.

[11] Law no. 124/2015, of 2 September.

[12] Law that amended Decree-Law no. 279/2009 of 6 October, in force at the date of the facts discussed in the proceedings.

[13] Amends Ordinance no. 268/2010, of 12 May.

[14] Point 18 of the probative material.

[15] As petitioned in the request submitted by the Claimant on 03-05-2017.

[16] Article 8 of the Statute of the Order of Dental Surgeons.

Frequently Asked Questions

Automatically Created

Is bioresonance therapy performed by a dentist exempt from VAT under Portuguese tax law?
Based on CAAD Process 607/2016-T, bioresonance therapy performed by a dentist faces significant VAT exemption challenges under Portuguese law. While the dental clinic argued that bioresonance constitutes a medical therapeutic within the scope of dental medicine, the Tax Authority rejected this claim due to insufficient evidence that the services were provided exclusively within dental practice or that the dentist possessed specific qualifications for bioresonance in dentistry. The burden of proof lies with the taxpayer to demonstrate the service qualifies under Article 9(1) of the VAT Code.
What does Article 9(1) of the Portuguese VAT Code establish regarding medical and dental service exemptions?
Article 9(1) of the Portuguese VAT Code establishes VAT exemptions for medical and dental services provided by qualified healthcare professionals. This provision implements Article 132(1)(c) of EU Directive 2006/112/EC, which requires Member States to exempt medical and paramedical services. However, the exemption applies only to services that fall within the legally defined scope of the professional's qualification and are recognized as medical or paramedical activities under Portuguese law. Member States retain discretion to define the conditions and professional qualifications required for exemption.
How does EU Directive 2006/112/EC Article 132(1)(c) apply to paramedical services for VAT purposes?
Article 132(1)(c) of EU Directive 2006/112/EC mandates VAT exemption for 'provision of assistance services within the exercise of medical and paramedical professions, as defined by the Member State in question.' While CJEU jurisprudence supports broad interpretation of medical service exemptions to protect healthcare accessibility, Member States retain authority to define qualifying professions and set conditions. In CAAD Process 607/2016-T, this provision was central to the dispute over whether bioresonance by a dentist qualifies as an exempt paramedical service, with Portugal requiring proof that services fall within the professional's recognized scope of practice.
Can a dental clinic claim VAT refunds on self-assessed VAT paid on bioresonance treatments?
Claiming VAT refunds on self-assessed VAT paid on bioresonance treatments requires the dental clinic to prove the services qualify for exemption under Article 9(1) of the VAT Code. In Process 607/2016-T, the clinic challenged approximately €46,900 in self-assessed VAT through CAAD arbitration after an administrative complaint rejection. However, the Tax Authority emphasized that under Article 74(1) of the General Tax Law, the burden of proof rests with the taxpayer to demonstrate: (1) the professional qualification for the specific treatment; (2) the services were provided within the scope of dental medicine; and (3) the treatment methodology is recognized as medical or paramedical practice.
What is the CAAD arbitral tribunal procedure for challenging VAT self-assessments in Portugal?
The CAAD arbitral tribunal procedure for challenging VAT self-assessments follows Decree-Law 10/2011 (RJAT). Taxpayers file a request for arbitration under Article 2(1)(a) and Articles 10 et seq., challenging the illegality of self-assessed acts, including principal tax, default interest, and compensatory interest. The process includes: (1) acceptance by CAAD President; (2) notification to Tax Authority; (3) appointment of arbitrator(s) by the Deontological Council if parties don't appoint; (4) tribunal constitution; (5) Tax Authority's response; and (6) decision. In Process 607/2016-T, the Singular Arbitral Tribunal was constituted on December 26, 2016, with Dr. Filipa Barros as sole arbitrator appointed by the Deontological Council.