CAAD 631/2017-T: VAT Exemption for Acupuncture Services - Interpretive Law Ruling

ARBITRAL DECISION

The arbitrators Dr. José Poças Falcão (arbitrator-president, designated by the CAAD Ethics Council, following a request submitted by the other Arbitrators), Dr. João Taborda da Gama and Dr. Américo Brás Carlos, designated, respectively, by the Claimant and the Respondent, to form the Arbitral Tribunal, constituted on 14-02-2018, agree as follows:

Report

A..., Lda., NIF..., with headquarters at Rua ..., ..., ...-... Lisbon, (hereinafter referred to as the "Claimant"), submitted a request for arbitral decision pursuant to the combined provisions of Articles 2 and 10 of Decree-Law No. 10/2011, of 20 January (Legal Regime for Arbitration in Tax Matters, hereinafter referred to as "RJAT"), in which the Tax and Customs Authority is Respondent, with a view to reviewing the legality and declaring the nullity of additional Value Added Tax (hereinafter "VAT") assessments with the following numbers:

2016..., of 15-09-2016, in the amount of €38,092.88, 2016..., of 15-09-2016, in the amount of €35,707.88, 2016..., of 15-09-2016, in the amount of €38,420.39, 2016..., of 15-09-2016, in the amount of €42,852.15, 2016..., of 15-09-2016, in the amount of €49,785.95, 2016..., of 15-09-2016, in the amount of €39,829.08, 2016..., of 15-09-2016, in the amount of €44,305.97, 2016..., of 15-09-2016, in the amount of €31,361.62, 2016..., of 15-09-2016, in the amount of €39,956.56, 2016..., of 15-09-2016, in the amount of €40,548.92, 2016..., of 15-09-2016, in the amount of €37,341.88 and 2016..., of 15-09-2016, in the amount of €31,862.18, relating to 2013/01, 2013/02, 2013/03, 2013/04, 2013/05, 2013/06, 2013/07, 2013/08, 2013/09, 2013/10, 2013/11 and 2013/12, respectively, whose payment deadline dates ended on 15-11-2016;

From the additional VAT assessments identified with the numbers 2016..., of 15-09-2016, in the amount of €36,554.82, 2016..., of 15-09-2016, in the amount of €34,257.85, 2016..., of 15-09-2016, in the amount of €39,383.52, 2016..., of 15-09-2016, in the amount of €37,835.06, 2016..., of 15-09-2016, in the amount of €41,793.53, 2016..., of 15-09-2016, in the amount of €35,842.13, 2016..., of 15-09-2016, in the amount of €40,681.60, 2016..., of 15-09-2016, in the amount of €32,671.47, 2016..., of 15-09-2016, in the amount of €43,084.99, 2016..., of 15-09-2016, in the amount of €40,089.44, 2016..., of 15-09-2016, in the amount of €39,305.22 and 2016..., of 15-09-2016, in the amount of €35,043.77, relating to 2014/01, 2014/02, 2014/03, 2014/04, 2014/05, 2014/06, 2014/07, 2014/08, 2014/09, 2014/10, 2014/11 and 2014/12, respectively, whose payment deadline dates ended on 15-11-2016;

From the additional VAT assessments identified with the numbers 2016..., of 19-09-2016, in the amount of €41,262.34, 2016..., of 19-09-2016, in the amount of €34,676.10, 2016..., of 19-09-2016, in the amount of €41,421.30, 2016..., of 19-09-2016, in the amount of €40,824.71, 2016..., of 19-09-2016, in the amount of €40,081.71, 2016..., of 19-09-2016, in the amount of €45,171.73, 2016..., of 19-09-2016, in the amount of €45,573.22, 2016..., of 19-09-2016, in the amount of €37,909.39, 2016..., of 19-09-2016, in the amount of €47,013.32, 2016..., of 19-09-2016, in the amount of €44,377.74, 2016..., of 19-09-2016, in the amount of €38,587.72, and 2016..., of 19-09-2016, in the amount of €32,029.97, relating to 2015/01, 2015/02, 2015/03, 2015/04, 2015/05, 2015/06, 2015/07, 2015/08, 2015/09, 2015/10, 2015/11 and 2015/12, respectively, whose payment deadline dates ended on 18-11-2016;

As well as from the respective interest assessments identified with the numbers 2016..., of 15-09-2016, in the amount of €5,416.20, 2016..., of 15-09-2016, in the amount of €4,959.37, 2016..., of 15-09-2016, in the amount of €5,209.42, 2016..., of 15-09-2016, in the amount of €5,659.63, 2016..., of 15-09-2016, in the amount of €6,416.72, 2016..., of 15-09-2016, in the amount of €4,988.98, 2016..., of 15-09-2016, in the amount of €5,408.54, 2016..., of 15-09-2016, in the amount of €3,724.99, 2016..., of 15-09-2016, in the amount of €4,605.34, 2016..., of 15-09-2016, in the amount of €4,544.38, 2016..., of 15-09-2016, in the amount of €4,057.74 and 2016..., of 15-09-2016, in the amount of €3,353.74, relating to 2013/01, 2013/02, 2013/03, 2013/04, 2013/05, 2013/06, 2013/07, 2013/08, 2013/09, 2013/10, 2013/11 and 2013/12, respectively, whose payment deadline dates ended on 15-11-2016;

From the interest assessments identified with the numbers 2016..., of 15-09-2016, in the amount of €3,735.20, 2016..., of 15-09-2016, in the amount of €3,383.78, 2016..., of 15-09-2016, in the amount of €3,751.55, 2016..., of 15-09-2016, in the amount of €3,479.31, 2016..., of 15-09-2016, in the amount of €3,710.13, 2016..., of 15-09-2016, in the amount of €3,055.76, 2016..., of 15-09-2016, in the amount of €3,334.23, 2016..., of 15-09-2016, in the amount of €2,570.01, 2016..., of 15-09-2016, in the amount of €3,242.38, 2016..., of 15-09-2016, in the amount of €2,884.77, 2016..., of 15-09-2016, in the amount of €2,685.79, and 2016..., of 15-09-2016, in the amount of €2,282.91, relating to 2014/01, 2014/02, 2014/03, 2014/04, 2014/05, 2014/06, 2014/07, 2014/08, 2014/09, 2014/10, 2014/11, 2014/12, respectively, whose payment deadline dates ended on 15-11-2016;

From the interest assessments identified with the numbers 2016..., of 19-09-2016, in the amount of €2,573.42, 2016..., of 19-09-2016, in the amount of €2,044.49, 2016..., of 19-09-2016, in the amount of €2,301.02, 2016..., of 19-09-2016, in the amount of €2,128.75, 2016..., of 19-09-2016, in the amount of €1,962.23, 2016..., of 19-09-2016, in the amount of €2,057.48, 2016..., of 19-09-2016, in the amount of €1,920.46, 2016..., of 19-09-2016, in the amount of €1,464.15, 2016..., of 19-09-2016, in the amount of €1,665.89, 2016..., of 19-09-2016, in the amount of €1,426.14, 2016..., of 19-09-2016, in the amount of €1,104.33 and 2016..., of 19-09-2016, in the amount of €811.02, relating to 2015/01, 2015/02, 2015/03, 2015/04, 2015/05, 2015/06, 2015/07, 2015/08, 2015/09, 2015/10, 2015/11, 2015/12, respectively, whose payment deadline dates ended on 18-11-2016;

And also from the act of dismissal of the administrative complaint No. ...2017..., rendered on 31-08-2017, by order of the Deputy Finance Director, acting in a substitute capacity, and notified through Official Letter No. ..., of 05-09-2017.

The Claimant designated Dr. João Taborda da Gama as Arbitrator, pursuant to the provisions of Article 6, No. 2, paragraph b) of the RJAT.

The request for constitution of the Arbitral Tribunal was accepted by the President of CAAD and automatically notified to the Tax and Customs Authority on 04-12-2017.

Pursuant to the provisions of paragraph b) of No. 2 of Article 6 and No. 3 of the RJAT, and within the deadline provided for in No. 1 of Article 13 of the RJAT, the head of the Tax Administration service designated Dr. Américo Brás Carlos as Arbitrator.

The Arbitrators designated by the Parties submitted a request to the Ethics Council of CAAD for the designation of the President Arbitrator, following which, on 23-01-2018, Judge José Poças Falcão was designated, who accepted the designation.

Pursuant to the provisions and for the purposes of No. 7 of Article 11 of the RJAT, the President of CAAD informed the Parties of this designation on 23-01-2018.

Thus, in accordance with the provisions of No. 7 of Article 11 of the RJAT, following the expiry of the deadline provided for in No. 1 of Article 13 of the RJAT without the Parties raising any objection, the Collective Arbitral Tribunal was constituted on 14-02-2018.

The Tax and Customs Authority submitted a Reply, in which it argued that the request for arbitral decision should be judged unfounded.

By order of 23-03-2018, the holding of a hearing was waived and it was decided that the case would proceed with written submissions.

The Parties submitted written submissions.

The Arbitral Tribunal was properly constituted and is competent.

The parties are duly represented, possess legal personality and legal capacity, and are legitimately parties (Articles 4 and 10, No. 2 of the same statute and Article 1 of Ordinance No. 112-A/2011, of 22 March).

There are no nullities or obstacles to adjudication on the merits of the case.

Statement of Facts

Established Facts

Based on the elements contained in the case file and the administrative file attached to the records, the following facts are considered established:

• The Claimant's main activity consists of the operation of medical and healthcare clinics, aesthetic treatments, physiotherapy, physical rehabilitation, acupuncture, provision of medical and paramedical services, and other health services;

• For VAT purposes, the Claimant is included in the exemption regime of Article 9 from the beginning of its activity;

• The Tax and Customs Authority conducted an external tax inspection of the Claimant for the years 2012, 2013, 2014 and 2015, in compliance with Service Orders OI2016.../... /.../...;

• In this inspection action, the Tax Inspection Report was drawn up, a copy of which is contained in the administrative file, whose content is hereby deemed reproduced, and which states, among other things, the following:

According to the accounting for the periods under analysis, 2012 to 2015, we confirmed that the taxable person's activity consisted exclusively of the provision of Acupuncture and Tui Na services, carried out by acupuncturists, in the clinic areas of the company (Clinic ..., Clinic ..., Clinic ..., Clinic ..., Clinic ..., Clinic ..., Clinic ...).

(...)

For VAT purposes, the taxable person did not comply with its declaratory obligations, insofar as the management considers that the activities they develop (acupuncture and tui na), classified in the field of non-conventional therapeutics, constitute service provisions exempt under Article 9 of the VAT Code. This interpretation, as will be demonstrated in this report, is incorrect, justifying the revision of its classification for VAT purposes, leaving it obliged to file periodic VAT returns pursuant to Articles 29 and 41 of the VAT Code.

(...)

III – DESCRIPTION OF FACTS AND GROUNDS FOR PURELY ARITHMETICAL CORRECTIONS

3.1 – LEGAL FRAMEWORK

3.1.1 – NON-CONVENTIONAL THERAPEUTICS

The basic classification of non-conventional therapeutics was established through Law No. 45/2003, of 22 August, more recently supplemented by Law No. 71/2013, of 2 September, which regulates the exercise of non-conventional therapeutic activities, addressing access to such professions and their exercise, in the public or private sector, with or without profit-making purposes.

No. 2 of Article 3 of Law No. 45/2003 recognized as non-conventional therapeutic activities those practiced within "acupuncture, homeopathy, osteopathy, naturopathy, phytotherapy and chiropractic," with this list being reiterated in paragraphs a), b), c), e), f) and g) of Article 2 of Law No. 71/2013, to which is added, through paragraph d) thereof, traditional Chinese medicine.

Pursuant to No. 1 of Article 3 of Law No. 45/2003, non-conventional therapeutics are considered to be those based on a philosophical foundation different from conventional medicine and applying specific diagnostic and therapeutic processes.

No. 1 of Article 4 of Law No. 45/2003 indicates, as one of the guiding principles of non-conventional therapeutics, the individual right to choose a therapeutic method, based on informed choice regarding safety, quality, efficacy and possible risks.

Another guiding principle of non-conventional therapeutics, referred to in No. 4 of Article 4 of Law No. 45/2003, consists of the protection of user well-being, which includes complementarity with other health professions.

Both Article 5 of Law No. 45/2003 and Article 3 of Law No. 71/2013 establish that technical and ethical autonomy is recognized in the professional exercise of non-conventional therapeutic practice.

Under Article 4, No. 1 of Article 5, Nos. 3 and 4 of Article 6, No. 2 of Article 11, Article 17 and Nos. 2 and 5 of Article 19, all of Law No. 71/2013, the following matters are regulated through ordinances: activities comprised in the exercise of non-conventional therapist professions; course of studies compatible with the degree course required for each area of non-conventional therapeutics; rules for obtaining the required professional credential and fee to be paid therefor; requirements for licensing premises for the exercise of non-conventional therapeutic activities; competencies and operational rules of the Advisory Council for Non-Conventional Therapeutics; determination of the terms for curriculum assessment of candidates for obtaining the professional credential, to be carried out by the Central Health System Administration (ACSS), and the fee to be applied to any issuance of a professional credential with provisional character.

Ordinance No. 207-A/2014 concerns the characterization and functional content of the naturopath profession, with paragraph a) of No. 2 of Article 2 thereof referring to the application of diagnostic, prescription and treatment methods specific to the profession, based on specific axioms and theories, as a result of a holistic, energetic and natural approach to the human being, using, as indicated in No. 1 of the same article, phytotherapy, homeopathy, hydrotherapy, geotherapy, manipulation therapies and other similar methods.

Ordinance No. 207-B/2014 concerns the characterization and functional content of the osteopath profession, with paragraph e) of No. 2 of Article 2 thereof clarifying that osteopathy has as essential components of intervention structural diagnosis, manipulative treatment and other procedures necessary for proper osteopathic practice.

Ordinance No. 207-C/2014 has as its subject the characterization and functional content of the homeopath profession, which, for prevention and treatment, uses homeopathic medicines made from substances called stocks or homeopathic raw materials, and whose theoretical principles on which it is based include, namely, the law of similars, the principle of cure duration, the principle of single remedy, the theory of infinitesimal minimum dose and the theory of chronic disease, as indicated in Nos. 1 and 2 of Article 2 of the aforementioned statute.

Ordinance No. 207-D/2014 concerns the characterization and functional content of the chiropractor profession, which is based on the diagnosis, treatment and prevention of disturbances of the neuromuscular-skeletal system, mainly subluxation (in the chiropractic concept), as well as the effects of these disturbances on the general health status and well-being of the individual, as stated in No. 1 of Article 2 thereof, which places great importance on manual techniques, with or without the use of instruments, including adjustment of subluxation (in the chiropractic concept) and/or manipulation of joints, and which does not resort to medications or surgery, and values biopsychosocial factors in the treatment of the person, in accordance with that clarified, respectively, in paragraphs d) and e) of No. 2 of the same article.

Ordinance No. 207-E/2014 concerns the characterization and functional content of the phytotherapist profession, which, pursuant to No. 1 and paragraph a) of No. 2 of Article 2 of that statute, uses, as therapeutic ingredients, substances derived from plants and implements a holistic, energetic and natural conception of the human being, and diagnostic, prescription and treatment methods specific to the profession based on specific axioms and theories.

Ordinance No. 207-F/2014 has as its subject the characterization and functional content of the acupuncturist profession, with No. 1 of Article 2 thereof referring to the use of diagnostic, prescription and treatment methods specific to acupuncture based on axioms and theories of acupuncture, using the network of meridians, acupuncture points and reflexology zones of the human organism, with the aim of preventing and treating energy, physical and psychic disharmonies, while paragraphs a) and b) of No. 2 of the same article refer to a holistic, energetic and dialectical conception of the human being and a specific philosophy and methodology based on traditional Chinese medicine.

Ordinance No. 207-G/2014 concerns the characterization and functional content of the specialist in traditional Chinese medicine profession, within which diagnostic, prescription and treatment methods specific to the profession are used, based on traditional Chinese medicine theories and its specific methods, namely, stimulation of acupuncture points and meridians through different therapeutic methods, prescription of phytotherapeutic formulas, dietary advice and exercises to promote and recover health, as stated in No. 1 of Article 2 of the aforementioned statute.

3.1.2 - MEDICAL, DENTAL, MIDWIFERY, NURSING AND OTHER PARAMEDICAL PROFESSIONS IDENTIFIED IN NO. 1 OF ARTICLE 9 OF THE VAT CODE

As the CJEU recalls, in the Order handed down in Case C-555/15, of 14 April 2016, regarding Article 132, No. 1, paragraph c), of Directive 2006/112, "26. (...) according to a literal interpretation of this provision, for a professional to be able to benefit from the exemption provided therein, must meet two requirements, namely, on the one hand, to carry out 'services of medical assistance' and, on the other hand, these services must be 'provided within the exercise of medical and paramedical activities, as defined by the Member State in question' (Solleveld and Van den Hout-van Eijnsbergen judgment, C-443/04 and C-444/04, EU:C:2006:257, No. 23)."

It is thus incumbent to ascertain whether the provision of acupuncture services meets the requirements necessary to be assimilated to service provisions effected in the exercise of the professions of physician, dental practitioner, midwife, nurse and other paramedical professions, to which reference is made in No. 1) of Article 9 of the VAT Code.

i) Physicians

Decree-Law No. 203/2004, of 18 August, which defines the legal regime for medical training following the degree in Medicine, with a view to specialization, and establishes the general principles to which the respective process must comply, determines in No. 1 of Article 2 thereof that, following a degree in Medicine, medical internship begins, which corresponds to a unique process of specialized medical training, theoretical and practical, having as its objective to enable the physician to exercise technical differentiation in the respective area of professional specialization.

No. 2 of Article 2 of Decree-Law No. 203/2004 stipulates that, without prejudice to the provisions of the previous number, the autonomous exercise of medicine is recognized from the completion, with success, of the second year of medical internship training, with Nos. 1 and 2 of Article 3 of the same statute establishing that medical internship is structured into areas of professional specialization, which are approved by ordinance of the Government member responsible for the health area, at the proposal of the Medical Association and after consulting the National Medical Internship Council. Pursuant to No. 3 of Article 2 and Annex I of the Medical Internship Regulation, approved by Ordinance No. 251/2011, of 24 June, the medical specialties are the following:

pathological anatomy;

anesthesiology;

angiology/vascular surgery;

cardiology;

pediatric cardiology;

cardiac surgery;

general surgery;

maxillofacial surgery;

pediatric surgery;

reconstructive and aesthetic plastic surgery;

thoracic surgery;

dermatovenerology;

infectious diseases;

endocrinology/nutrition;

dental medicine;

gastroenterology;

medical genetics;

gynecology/obstetrics;

clinical hematology;

immunoallergology;

immunohemotherapy;

sports medicine;

physical medicine and rehabilitation;

general and family medicine; internal medicine;

legal medicine;

nuclear medicine;

occupational medicine;

nephrology; neurosurgery;

neurology;

neuroradiology;

ophthalmology;

medical oncology;

orthopedics;

otorhinolaryngology;

clinical pathology;

pediatrics;

pneumology;

psychiatry;

child and adolescent psychiatry;

radiodiagnosis;

radiotherapy;

rheumatology;

public health; and

urology.

In accordance with the provisions of Article 8 of the Medical Association Statute, approved by Decree-Law No. 282/77, of 5 July, the exercise of medicine is dependent upon registration with the Medical Association, with Article 9 of the same statute establishing that only Portuguese and foreign nationals with degrees in Medicine from Portuguese or foreign schools may register with the Medical Association, provided that, in the latter case, they have obtained official degree equivalence duly recognized by the Medical Association.

The Code of Ethics of the Medical Association and, in Nos. 1 and 2 of Article 32 thereof, respectively, establish that the physician should only make decisions dictated by science and conscience, without prejudice to having freedom to choose diagnostic and therapeutic means, but should refrain from unnecessarily prescribing expensive examinations or treatments or performing superfluous medical acts.

ii) Dental Practitioners

With respect to dental practitioners, No. 2 of Article 3 of the Statute of the Dental Association, approved by Law No. 110/91, of 29 August, qualifies as such the holder of a degree from a higher education institution or dental medicine faculty, Portuguese or foreign, provided that, in the latter case, degree equivalence recognized by the Dental Association (OMD) has been obtained, as well as the person who, holding a degree from another school, obtains such equivalence, in accordance with the legal provisions in force, and also recognized by the OMD, with the respective Article 9 establishing that registration with the OMD is mandatory for the exercise of dental medicine.

Pursuant to No. 1 of Article 19 of the Code of Ethics of the Dental Association, the dental practitioner must refrain from any therapeutic or diagnostic care not scientifically grounded, as well as from reckless experimentation or use of diagnostic or therapeutic processes that could cause alteration of consciousness, with diminution of free determination or responsibility, or provoke morbid states, except with formal consent of the patient or their legal representative, preferably in writing, after having been informed of the risks to which they are exposed, and always in the interest of the patient.

Presently, given the academic and professional qualification of dental practitioner, the term "odontologist," contained in No. 1 of Article 9 of the VAT Code, corresponds in practice to merely a profession that the law itself qualifies as residual in character, whose exercise is dependent on possession of the odontologist title and respective professional card, covering only the professionals identified in the Official Gazette, 2nd Series, No. 270, of 22 November 2002, with any measures intended to regularize future professional situations being expressly prohibited, as determined in Article 2 of Law No. 40/2003, of 22 August, which regulates and disciplines the professional activity of dentistry.

According to No. 1 of Article 7 of the Code of Ethics of Odontologists, contained in Annex I of Ordinance No. 168/2011, of 20 April, odontologists have the duty to ensure their patient receives the best oral health care, within their limits of competence, and to act with the utmost respect and propriety, being obliged, pursuant to No. 11 of the same code, to refrain from applying any therapeutic or diagnostic care not scientifically grounded, as well as from reckless experimentation or use of processes that could cause alteration of consciousness, with diminution of free determination or responsibility, or provoke morbid states.

iii) Nurses and Midwives

The Regulation of Professional Practice of Nursing (REPE), approved by Decree-Law No. 161/96, of 4 September, in No. 1 of Article 4 thereof, conceptualizes nursing as the profession which, in the health area, has as its objective the provision of nursing care to the human being, healthy or ill, throughout the vital cycle, and to the social groups in which the person is integrated, in such a way that they maintain, improve and recover health, helping them to achieve their maximum functional capacity as quickly as possible. Pursuant to Nos. 2 and 3 of Article 4 of the REPE, "nurse" is understood to be a professional qualified with a legally recognized nursing course, to whom a professional title has been awarded that recognizes scientific, technical and human competence for the provision of general nursing care to the individual, family, groups and community, at the levels of primary, secondary and tertiary prevention, and "specialist nurse" is understood to be a nurse qualified with a specialized nursing course or with a specialized higher education course in nursing, to whom a professional title has been awarded that recognizes scientific, technical and human competence to provide, in addition to general nursing care, specialized nursing care in the area of their specialty. As illustrated by No. 5.2 of Annex II of Law No. 9/2009, of 4 September, concerning the recognition of professional qualifications within the EU, the term "midwife," contained in No. 1 of Article 9 of the VAT Code, corresponds to the professional title of specialist nurse in maternal and obstetric health, currently having the complete designation of specialist nurse in maternal, obstetric and gynecological nursing, in accordance with specific competencies contained in Regulation No. 127/2011, of 18 February.

In accordance with No. 4 of Article 4 of the REPE, nursing care consists of autonomous or interdependent interventions to be performed by the nurse within the scope of their professional qualifications, with one of the characteristics of nursing care, indicated in paragraph 3) of Article 5 of the REPE, being the use of scientific methodology, which includes identification of health problems in general and nursing problems in particular, in the individual, family, groups and community; collection and appraisal of data on each situation presented; formulation of nursing diagnosis; development and implementation of plans for the provision of nursing care; correct and appropriate execution of necessary nursing care; assessment of nursing care provided and reformulation of interventions. According to Article 6 of the REPE, the exercise of the nursing profession is conditional on obtaining a professional credential, to be issued by the Nursing Association.

iv) Paramedical Activities

Decree-Law No. 261/93, of 24 August, for its part, regulates health professional activities qualified as paramedical, the definition of which in No. 1 of Article 1 thereof indicates that they comprise the use of scientifically-based techniques for the purposes of promotion of health and prevention, diagnosis and treatment of disease, or rehabilitation, with the general principles and regulation of paramedical professions of diagnosis and therapeutics being defined in Decree-Law No. 320/99, of 11 August, enumerated in that first statute, the definition in No. 1 of Article 3 of which reiterates the use in paramedical activities of scientifically-based techniques for the purposes described above.

Pursuant to No. 1 of Article 2 of Decree-Law No. 320/99, anchored in No. 3 of Article 1 and the Annex of Decree-Law No. 261/93, the following are the professions considered paramedical:

• clinical analysis and public health technician;

• pathological anatomy, cytology and thanatology technician;

• audiology technician;

• cardiopneumology technician;

• dietitian;

• pharmacy technician;

• physiotherapist;

• oral hygienist;

• nuclear medicine technician;

• neurophysiology technician;

• orthoptist;

• orthotics and prosthetics technician;

• dental prosthetics technician;

• radiology technician;

• radiotherapy technician;

• speech therapist;

• occupational therapist;

• environmental health technician.

In accordance with No. 2 of Article 1 of Decree-Law No. 261/93, the activities exercised, within their own competencies, by professionals with mandatory registration in an association of public nature are not covered by this statute, nor are the activities of odontologists, nurses and midwives.

According to No. 1 of Article 2 of Decree-Law No. 261/93, the exercise of paramedical professions is dependent on the holding of a course in a recognized educational institution, a recognized diploma or certificate, or a professional card or equivalent title, with aspects related to access to such professions being regulated in more detail in Article 4 of Decree-Law No. 320/99.

Law No. 65/2014, of 28 August, which establishes the regime for access to and exercise of the podiatrist profession, with or without profit-making purposes, as well as the issuance of the respective professional title, characterizes podiatry, in accordance with paragraph g) of Article 2 thereof, as the health science field that has as its objective the investigation, study, prevention, diagnosis and therapeutics of affections, deformities and alterations of the feet, establishing in No. 1 of Article 7 thereof that the referred profession is equivalent, for all legal purposes, to a paramedical profession. This examination of national regulation governing the professions referred to in No. 1) of Article 9 of the VAT Code, prima facie, allows concluding that it does not encompass the professions whose exercise consists of the performance of service provisions that fall within the legal characterization of non-conventional therapeutics.

3.2 - EXEMPTIONS IN HUMAN HEALTH-RELATED ACTIVITIES

Nos. 1 to 5 of Article 9 of the VAT Code provide for a set of exemptions in the human health area, in particular in the field of medical and health assistance. The said internal provisions are based on the provisions of paragraphs b) to e) of No. 1 of Article 132 of the VAT Directive.

In general terms, the exemptions provided for in Nos. 1 and 2 of Article 9 of the VAT Code, corresponding to paragraphs c) and b) of No. 1 of Article 132 of the VAT Directive, respectively, relate to services having as their objective to diagnose, even if merely for preventive purposes, as well as to treat and, to the extent possible, cure diseases or health anomalies. This point of view has already been expounded by the CJEU in numerous decisions, regarding the provisions of the EU which serve as their basis.

No. 1 of Article 9 of the VAT Code exempts from tax services provided in the exercise of the activities of physician, dental practitioner, midwife, nurse and other paramedical professions. The provision is based on paragraph c) of No. 1 of Article 132 of the VAT Directive, in accordance with which Member States must exempt "services of medical assistance provided within the exercise of medical and paramedical professions, as defined by the Member State in question." With respect to the provision contained in paragraph c) of No. 1 of Article 132 of the VAT Directive, the CJEU, in its judgment of 27 April 2006 (C-443/04 and C-444/04, Solleveld et al., Nos. 29 and 37), emphasized that it is for each Member State to define in its internal law the paramedical professions whose services are exempt from VAT, given that such provision grants Member States discretionary authority in that regard. However, the exemption is to be applied only to services provided by providers with the required professional qualifications.

In Portuguese internal legislation, the definition of paramedical activities is contained in Decree-Law No. 261/93, of 24 August, and Decree-Law No. 320/99, of 11 August, already explained in section 3.1.2. According to No. 1 of Article 2 of Decree-Law No. 261/93, the exercise of paramedical activities depends on the holding of a course in a recognized educational institution, a recognized diploma or certificate, or a professional card or equivalent title. Additionally, Article 4 of Decree-Law No. 320/99, regarding the exercise of diagnostic and therapeutic professions, specifies the conditions for access to such professions.

With respect to the provision currently contained in paragraph c) of No. 1 of Article 132 of the VAT Directive, the CJEU has stated in various rulings, among others in the judgment of 10 September 2002 (C-141/00, Kugler, No. 26), that the same has an objective character, defining exempt operations based on the nature of the services provided, without mentioning the legal form of the provider. For this reason, for the exemption to apply, it is sufficient that the services be medical or paramedical and that they be provided by persons who possess the required professional qualifications, without it being possible to discriminate based on whether the services are provided within the framework of the activity by a natural person or a legal entity.

By contrast, Article 132, No. 1, paragraph b) of the VAT Directive exempts medical and health services provided by hospital establishments, clinics, dispensaries and similar establishments. This exemption extends to operations closely connected with hospitalization and medical assistance, understood as the transfer of goods or provision of ancillary services that logically fit within the framework of the supply of hospitalization and medical assistance services, provided they constitute an indispensable step in the process of provision of exempt services, to achieve the therapeutic purposes pursued. Thus, for the exemption provided for in Article 132, No. 1, paragraph b) of the VAT Directive to apply, it is necessary that:

• there be involved hospitalization or medical assistance or operations closely related thereto;

• assured by organisms; and

• of public law or, under analogous conditions, by other hospital establishments, medical care and diagnostic centers or of the same nature, in any case, duly recognized.

It should be noted that the CJEU has consistently assimilated the concept of medical assistance, provided for in paragraph b), to the concept of service provisions of assistance within the exercise of medical and paramedical professions, provided for in paragraph c).

However, it results from CJEU jurisprudence that the activities of aesthetic medicine, aesthetic, plastic and restorative surgery are not encompassed in the concept of medical assistance.

3.3 - NON-CONVENTIONAL THERAPEUTICS AND THE EXEMPTIONS PROVIDED IN ARTICLE 9, NOS. 1 AND 2 OF THE VAT CODE

In conformity with the above, the understanding assumed by the Tax Authority regarding No. 1 of Article 9 of the VAT Code goes in the direction of limiting the exemption provided therein to service provisions of assistance provided in the exercise of the professions of physician, including dental practitioner, odontologist and nurse, including specialist nurse in maternal and obstetric and gynecological health (former midwife), as well as professions that are qualified as paramedical, the notion and enumeration of which Decree-Laws No. 261/93 and No. 320/99 define. Whence it follows with all clarity that service provisions provided in the exercise of the professions of acupuncturist, specialist in traditional Chinese medicine, phytotherapist, homeopath, naturopath, osteopath and chiropractor are not within the scope of No. 1 of Article 9 of the VAT Code. The understanding of the Tax Authority is supported by the fact that the basis that serves as the matrix for No. 1 of Article 9 of the VAT Code, specifically paragraph c) of No. 1 of Article 132 of the VAT Directive, reduces the granting of the exemption to medical and paramedical professions, as defined by the Member State in question. Contrary to what is verified with respect to the concepts that make up the majority of the norms of the common system establishing VAT exemptions, that provision of EU law assigns to the internal legislation of each Member State the task of outlining the professional notions evoked thereby.

Indeed, as a general rule, the concepts that make up VAT exemption provisions constitute autonomous concepts of EU law, which should be interpreted in the general context of the common system of the tax, and not on the basis of definitions specific to each Member State, in particular not imported from other areas of taxation or other branches of law, except when the provision in question expressly permits it, as occurs in the provision in question in paragraph c) of No. 1 of Article 132 of the VAT Directive. Hence the margin of autonomy granted to Member States, in terms of the consequences to be drawn in VAT proceedings from the definitions of medical and paramedical professions that exist in each, does not impose a uniform interpretation of such concepts. Thus, absent the need to interpret the concepts to which No. 1 of Article 9 of the VAT Code refers in light of the specific context of the common system of the tax, the interpretive rules referred to in Article 11 of the General Tax Law necessarily apply. Now, in the absence of definitions directly adapted in VAT legislation, it follows from No. 2 of Article 11 of the General Tax Law that the content of the term paramedical should be interpreted in the sense attributed to it in other branches of law. This has, in fact, been the scope that No. 1 of Article 9 of the VAT Code, which the Tax Authority, as well as the national courts themselves, have repeatedly attributed to the expression "paramedical professions" contained in that provision, referring, therefore, to the configuration of the respective content given by Decree-Law No. 261/93 and Decree-Law No. 320/99.

In any event, it should be noted that, despite the margin of autonomy conferred on Member States, this does not mean that it is not subject to limitations, whether derived from the objective of paragraph c) of No. 1 of Article 132 of the VAT Directive, or from the principles of EU law applicable to the common system of the tax.

Beginning with a generic reference to the principle of neutrality that informs the common system of VAT, the same has a double content. On the one hand, it requires that economic operators who supply goods or services that are similar and in competition with each other be treated identically with respect to VAT, in order to avoid any distortion of competition. On the other hand, the principle of neutrality implies that taxable persons can, as a general rule, with respect to goods and services acquired for the exercise of their respective activities subject to taxation under this tax, relieve themselves of the VAT levied on such goods and services.

Within the scope of the exemption currently provided for in paragraph c) of No. 1 of Article 132 of the VAT Directive, the CJEU has also referred to the fact that the interpretation thereof is subject to the principle of fiscal neutrality, in the first sense indicated above, as follows from that stated in the judgments of 6 November 2003, C-45/01, Dornier, Nos. 42, 44 and 49), of 27 April 2006 (C-443/04 and C-444/04, Solleveld et al., Nos. 35, 36, 39 and 41) and of 8 June 2006 (C-106/05, L.u.P., Nos. 24, 32, 36 and 48). To this extent, the application of the exemption provided for in paragraph c) of No. 1 of Article 132 of the VAT Directive must encompass, first and foremost, economic operators that are in competition with each other. In this context, it does not appear that the exercise of the professions of acupuncturist, specialist in traditional Chinese medicine, phytotherapist, homeopath, naturopath, osteopath or chiropractor consists of the performance of service provisions that are in direct competition with the exercise of the professions indicated in No. 1 of Article 9 of the VAT Code, and that their taxation collides, at least in a strict sense, with the principle of fiscal neutrality. The benefit of those services does not have in its genesis an undifferentiated choice by patients, but rather a deliberate option by these to resort to its specific methods, there being, consequently, not a relationship of competition with conventional therapeutics, but a relationship of complementarity with them. The CJEU has expressed itself to the effect that the principle of fiscal neutrality constitutes an expression, in the VAT field, of the general principle of equality of treatment, stressing that, while strict violation of the former can only occur with respect to competing economic operators, the aspect related to equality of treatment prevents other types of discrimination in tax matters that affect economic operators who, while not necessarily in a position of competition, are in a comparable situation in other respects.

Regarding the principle of equality of treatment, the CJEU, while not having failed to mention that the terms of a provision of EU law should, as a general rule, be interpreted autonomously and uniformly throughout the EU, in light of the context and objectives pursued, considered that this is not the case when the provision contains an express reference to the law of the Member States to determine its sense and scope. Now, regarding the provision contained in paragraph c) of No. 1 of Article 132 of the VAT Directive, in the judgment of 27 April 2006 (C-443/04 and C-444/04, Solleveld et al., Nos. 29 and 37), the CJEU reiterated that it is for each Member State to define in its internal law the paramedical professions whose services are exempt from VAT, given that such provision grants Member States discretionary authority in that regard, provided it is applied only to services provided by providers with the professional qualifications required by law. Although a reference to the internal law of each Member State occurs in the case of paragraph c) of No. 1 of Article 132 of the VAT Directive, it must not be lost from view, however, that in No. 35 of that same judgment, notwithstanding having recognized the margin of free appraisal attributed to Member States in that provision, the CJEU also added that the requirement of correct and simple application of exemptions does not allow Member States to prejudice the objectives pursued by the Directive, nor the principles of community law, in particular the principle of equality of treatment, which is translated, in VAT matters, into the principle of fiscal neutrality. The different treatment given to non-conventional therapeutics, in light of the autonomy conferred on Member States by paragraph c) of No. 1 of Article 132 of the VAT Directive, reflects, in the first place, the objective difference as to their nature and training requirements of the respective professionals, specific to non-conventional therapeutics covered by Laws No. 45/2003 and 71/2013, and by Ordinances No. 207-A/2014 to 207-G/2014 and the professions identified in No. 1 of Article 9 of the VAT Code.

Still within the framework of differences in objective nature with the professions included in No. 1 of Article 9 of the VAT Code, non-conventional therapeutic activities are based on a philosophical foundation different from conventional medicine and apply specific diagnostic and therapeutic processes, enjoying technical and ethical autonomy, and do not result in the same types of interventions, acts, processes, methods, techniques or specialties associated with the professions mentioned in that provision of the VAT Code.

The WHO itself defines as non-conventional therapeutics those therapeutics based on a philosophical foundation different from conventional medicine and applying specific diagnostic and therapeutic processes, recognizing as such those practiced, in particular, in the exercise of acupuncture, homeopathy, osteopathy, naturopathy, phytotherapy and chiropractic. Regarding the exemption provided for in paragraph b) of No. 1 of Article 132 of the VAT Directive, the CJEU considers that the expression "medical assistance," which appears in paragraph b) of No. 1 of Article 132 of the VAT Directive, encompasses the entirety of the service provisions covered in paragraph c), and that the difference between said paragraphs is not so much in the nature of the services provided, but the place where they are provided. Thus, covered by paragraph b) are health care services delivered in establishments pursuing social purposes of protection of human health, whereas paragraph c) refers to care delivered outside hospital establishments.

In conclusion,

Regarding the classification of non-conventional therapeutics within the scope of Article 9 of the VAT Code, the Tax Authority has pronounced itself at various times in the form of Binding Information, Other Administrative Information and Administrative Instructions, namely:

• 17/12/2004 - Official Letter No. … from the Office of the Director General to the Portuguese Association of Acupuncture Professionals - Classification for VAT and Corporate Income Tax purposes of the exercise of Acupuncture

• 14/01/2005 - Official Letter No. … from the VAT Department to the Portuguese Association of Acupuncture Professionals - VAT classification of acupuncture activity

• 07/03/2005 - Binding Information in Case No. I301 2004003 with order from VAT Department, subject: Medical and paramedical activities. Chiropractor activity

• 11/06/2007 - Information in Case No. I301 2007077, with order from, of Director General Department; subject: Acupuncture.

• 21/08/2007 - Binding Information in Case No. I301 2007027 with order from, VAT Department, subject: Acupuncture.

• 8/09/2008 - Information No. 1764, order from the Director General - VAT classification of acupuncture activity

• 26/08/2015 – Circular Official Letter No. 30174 - VAT Classification of Non-Conventional Therapeutic Activities

In the administrative doctrine produced regarding the activities of non-conventional therapeutics identified, namely acupuncture and chiropractic, the Tax Authority assumed a consistent position over time, clarifying and informing that these activities are subject to VAT at the standard rate and are not exempt therefrom, as is demonstrated.

In the administrative doctrine produced regarding the activities of non-conventional therapeutics identified, namely acupuncture and chiropractic, the Tax Authority assumed a consistent position over time, clarifying and informing that these activities are subject to VAT at the standard rate and are not exempt therefrom, as is demonstrated.

In the first administrative information of 17/12/2004, under Official Letter No. … from the Office of the Director General, for clarification of the VAT and Corporate Income Tax classification of the exercise of Acupuncture, the Tax Authority (then the General Directorate of Tax Revenue), in information prepared for the Portuguese Association of Acupuncture Professionals (APPA), the president of which is Dr. Pedro Choy, clarified the following (cf. in points 3 and 4, which are transcribed):

"3 - According to Decree-Law No. 261/93, of 24/07, statute regulating the exercise of health professional activities designated as paramedical, it is verified, as stated above, that the activity of acupuncture is not included in the aforementioned list, consequently it is not possible to apply the VAT exemption to which paragraph b) of No. 1 of Article 9 of the VAT Code refers, given that it does not fit into any of the professional activities referred to therein.

"4 - In light of the above, it is concluded that the activity of acupuncture does not fit into any of the exemptions referred to in Article 9 of the VAT Code, nor into any other VAT exemption provisions contained in legislation supplementary to that code."

This position was reaffirmed, both in binding information, rendered, among others, in Case 1301 2007027 of 21/08/2007, as in Information No. 135 of 6/10/2007, regarding the classification of acupuncture activities and in Information No. 1764 of the Director General of 08/09/2008, and also in Circular Official Letter No. 30174 of 26/08/2015.

In order to clarify the interpretation of the Tax Authority regarding the exercise of non-conventional therapeutic professions, when the subjective criterion of the exemption provided for in No. 1 of Article 9 of the VAT Code is met (i.e., the possession of qualifications and credentialing in accordance with internal law for the exercise of the professions of physician, dental practitioner, midwife, nurse and other paramedical professions), the VAT Services reiterate that:

• It is incorrect to argue that the Tax Authority considers that services provided for non-conventional therapeutics (in the case under analysis acupuncture) may benefit from the exemption provided for in Article 9, No. 1 and No. 2 of the VAT Code if provided by physicians or paramedics;

• The exemption is applicable only, in specific circumstances, i.e., when, within the exercise of medical or paramedical professions, non-conventional therapeutic techniques are applied, as an ancillary therapy of the medical or paramedical act;

• Consequently, if a physician, nurse or paramedic acts as an acupuncturist, the service provisions by them provided, although of assistance, do not fit within the exercise of a medical or paramedical profession, thus being subject to VAT.

In this manner, the principle of fiscal neutrality is not breached, since only within the exercise of medical and paramedical professions, and only as a complementary or ancillary therapeutic technique, can the services provided by an acupuncturist benefit from the VAT exemption, in view of the strict, but not restrictive, objective of the exemption provided for in No. 1 of Article 9 of the VAT Code.

In the case at hand, the clinic called "As Clínicas I…," are specialized in health services exclusively within the scope of Chinese Medicine, comprising the various disciplines of this ancient medicine, namely, Acupuncture and phytotherapy. As they publicize themselves on their website, https://www.clinicas...php/..., where among other aspects the network of clinics is defined: Almeirim, Aveiro, Cacém, Carcavelos, Cascais, Coimbra, Faro, Évora, Leiria, Lisbon (Av….), Lisbon (…), Lisbon (…), Mafra, Matosinhos, Odivelas, Portimão, Porto (…), Santarém, Salvaterra de Magos, Tomar.

These clinics, although known as "As Clínicas I…," assume the legal form of two private law entities, Clinic A…, Lda, (NIF…) and J…, Lda (NIF…), with the activity of both being attributed to the natural person K…, and, although named as such, do not constitute hospital units, so the service provisions effected therein do not have classification either in No. 1 or in No. 2 of Article 9 of the VAT Code.

In line with the reasoning developed in sections 3.1 to 3.3, above:

• the regulation of non-conventional therapeutic activities provided for in Law No. 45/2003 and implemented in Law No. 71/2013 and respective implementing ordinances does not equate the professions of acupuncture, phytotherapy, homeopathy, traditional Chinese medicine, naturopathy, osteopathy and chiropractic to paramedical professions, a requirement that proves necessary for the recognition of the exemption granted in No. 1 of Article 9 of the VAT Code;

• nor is any exemption expressly recognized in the VAT Code that contemplates non-conventional therapeutic activities, so their exercise constitutes the performance of operations subject to and not exempt therefrom, without prejudice to the professionals exercising them being able to benefit from the special exemption regime provided for in Article 53 of the same statute, if the conditions provided therein are met (as clarified in point 10 of Circular Official Letter No. 30174 of 26/08/2015 of the VAT Department).

3.4 - DETERMINATION OF THE CORRECTIONS PROPOSED FOR VAT PURPOSES

Having regard to the grounds exposed, it is proposed that VAT be assessed on the Acupuncture and Tui Na services provided by the taxable person, since they do not constitute active operations classified in the exemptions provided for in Article 9 of the VAT Code, so they constitute operations subject to tax assessment, at the rate defined in paragraph c) of No. 1 of Article 18 of the same Code.

Thus, the elements necessary for determining the amounts of VAT to be assessed in the fiscal years between 2012 and 2015 were extracted from monthly trial balances through the SAF-T file, with accounts up to level 2, based on the values recorded in Account 72 - Service Provisions, as demonstrated in the following summary tables: (...)

The proposed corrections for VAT purposes, for each fiscal year, are summarized in the following summary table:

[Table for 2013 - Account 72 Service Provision - showing monthly debits, credits, taxable balance and VAT at 23%]

[Table for 2014 - Account 72 Service Provision - showing monthly debits, credits, taxable balance and VAT at 23%]

[Table for 2015 - Account 72 Service Provision - showing monthly debits, credits, taxable balance and VAT at 23%]

Following the inspection, the Tax and Customs Authority issued the VAT assessments No. 2016..., of 15-09-2016, in the amount of €38,092.88, 2016..., of 15-09-2016, in the amount of €35,707.88, 2016..., of 15-09-2016, in the amount of €38,420.39, 2016..., of 15-09-2016, in the amount of €42,852.15, 2016..., of 15-09-2016, in the amount of €49,785.95, 2016..., of 15-09-2016, in the amount of €39,829.08, 2016..., of 15-09-2016, in the amount of €44,305.97, 2016..., of 15-09-2016, in the amount of €31,361.62, 2016..., of 15-09-2016, in the amount of €39,956.56, 2016..., of 15-09-2016, in the amount of €40,548.92, 2016..., of 15-09-2016, in the amount of €37,341.88 and 2016..., of 15-09-2016, in the amount of €31,862.18, relating to 2013/01, 2013/02, 2013/03, 2013/04, 2013/05, 2013/06, 2013/07, 2013/08, 2013/09, 2013/10, 2013/11 and 2013/12, respectively, whose payment deadline dates ended on 15-11-2016;

• The Claimant did not pay the amounts assessed (Article 63 of the request for arbitral decision);

• The Tax and Customs Authority instituted a tax enforcement procedure, which bore the number ...2016..., for coercive collection of the amounts assessed, in the sequence of which a garnishment of balance in the Claimant's bank accounts was effected in the total amount of €12,852.14 (document No. 13 attached with the request for arbitral decision, the content of which is hereby deemed reproduced);

• The Claimant requested the lifting of the garnishment referred to in the preceding paragraph and subsequently filed a complaint against the garnishment;

• On 30-11-2017, the Claimant submitted the request for constitution of the arbitral tribunal that gave rise to the present case.

Unproven Facts

It was not proven that the Claimant submitted a request for waiver of provision of security, which was dismissed.

The established facts are based on the documents attached by the Claimant with the request for arbitral decision and on the administrative file, and are not a matter of controversy.

Reasoning for the Determination of the Statement of Facts

The established facts are based on the documents submitted by the Claimant with the request for arbitral decision.

Statement of Law

Question of the Merits of the Request for Arbitral Decision

The question that is the subject of the case is whether, in the years 2013, 2014 and 2015, the exercise of acupuncture activity was exempt from VAT, when the services were not provided by physicians or nurses. This question has already been decided by an Arbitral Tribunal constituted within the scope of the CAAD, in Case No. 111/2017, of 25.10.2017. Since the facts and law are substantially identical, we shall follow that decision here.

The Claimant did not assess VAT with respect to the activity of provision of such services it developed in 2013, 2014 and 2015, believing it was covered by the exemption provided for in paragraph 1) of Article 9 of the VAT Code, to the extent that it establishes that "the following are exempt from tax (...) provided within the exercise of the professions of physician, dental practitioner, midwife, nurse and other paramedical professions."

Moreover, the Claimant argues that the application of the exemption to the provision of services in question was clarified by Law No. 1/2017, of 16 January, which added to Law No. 71/2013 a new Article 8-A, which establishes that "to professionals who engage in the exercise of non-conventional therapeutics referred to in Article 2 is applicable the same value added tax regime as paramedical professions," a provision which was attributed an interpretive nature by Article 3 of that Law No. 1/2017. The Tax and Customs Authority understood, in summary, that the provision of acupuncture services is not encompassed within this concept of "paramedical professions," so it is not encompassed by the exemption, when the services are not provided by those who exercise the other professions provided for in this provision, namely physicians or nurses.

Regarding the scope of Law No. 1/2017, the Tax and Customs Authority understands, in summary, that it applies only from the entry into force of Law No. 71/2013, of 2 September, because the interpretive law integrates into the interpreted law, in accordance with Article 13 of the Civil Code, and, therefore, only from the entry into force of this Law is the interpretation effected thereby to be applied.

Since there is consensus between the Parties that the interpretive law referred to resolves the question at least from the entry into force of Law No. 71/2013, it is justified that the question of the scope of that Law be addressed as a priority, for, if it has the scope argued by the Claimant, it will be unnecessary to address the remaining questions raised.

3.1. Scope of Law No. 1/2017, of 16 January, in attributing interpretive nature to Article 8-A which was added to Law No. 71/2013, of 2 September

The disagreement between the Parties on this question concerns the time to which the rule is retroactively applied, that "to professionals who engage in the exercise of non-conventional therapeutics referred to Article 2 is applicable the same value added tax regime as paramedical professions," which is contained in the referred Article 8-A.

This Article 8-A defines the VAT regime applicable to professions to professionals who engage in the exercise of non-conventional therapeutics to which Law No. 73/2013 refers, through a reference to the "value added tax regime for paramedical professions."

For this reason, the provision that this Article 8-A interprets is the one that previously defined the VAT regime for those who exercise paramedical professions, clarifying that it also applies to professionals who engage in the exercise of non-conventional therapeutics referred to in Article 2 of Law No. 73/2013.

The provision that establishes the VAT regime applicable to service provisions within the scope of paramedical professions is Article 9, No. 1, paragraph a) of the VAT Code, which establishes that "the following are exempt from tax" "services provided in the exercise of the professions of physician, dental practitioner, midwife, nurse and other paramedical professions."

Thus, the practical scope of Article 8-A of Law No. 1/2017 is to clarify that, for VAT purposes, the professions of those who engage in the exercise of non-conventional therapeutics referred to in Article 2 of Law No. 73/2013, among which acupuncture is included, are considered paramedical professions, for VAT purposes.

For this reason, the provision that is authentically interpreted by Law No. 1/2017 is Article 9, No. 1, paragraph a) of the VAT Code and not Law No. 71/2013, which does not contain any provision of a fiscal nature, in particular on VAT incidence.

The preparatory work for Law No. 1/2017 explicitly corroborates this conclusion that it was intended to interpret Article 9, No. 1, paragraph a) of the VAT Code.

Indeed, in the Bill No. 289/XIII/1st, presented by Members of Parliament of the PSD, which gave rise to the legislative process that led to the approval of that Law No. 1/2017, the following is mentioned:

Following systematically having come to accept the registration of non-conventional therapeutic (NCT) professionals in the VAT exemption regime, doubts and inconsistencies have arisen in the understanding of the Tax Authority (TA) regarding the classification of NCT professionals in the exemption regime provided for in No. 1 of Article 9 of the VAT Code. Indeed, it was transmitted to the National Parliament – including through a petition with approximately 120,000 subscribers – that the TA would have initiated tax inspection procedures aimed at issuing additional VAT assessments for the last four years of activity, corresponding to the statute of limitations period for the right to assess. It was also transmitted to Parliament that NCT professionals would not have assessed VAT on their patients by considering themselves included in the exemption regime, so, as VAT was not normally charged to patients, the economic burden resulting now from the assessment of these four years of additional tax will translate into unsustainable charging for the continuity of activity for most NCT professionals. This belief of the professionals was reinforced by several years of practice and even by the registration of activity classification that the TA itself assigned to those professionals (typically assigning them