Summary
Full Decision
ARBITRAL TAX JURISPRUDENCE
Case No. 636/2018-T
Date of Decision: 2019-08-23
VAT
Value of Claim: € 14,143.34
Subject Matter: VAT - Provision of services. Non-Conventional Therapeutics. Exemption under Art. 9(1) VATA and Art. 8-A of Law No. 1/2017. Interpretive Laws.
ARBITRAL DECISION
1. Report
..., hereinafter referred to as "Claimant," "Taxable Person" or simply "TP," with tax identification number ... and registered address at Street ..., nos. ... and ..., ...-... ..., submitted to the CAAD, pursuant to Articles 2, No. 1 (a) and 10, No. 1 (a) of the Legal Framework for Tax Arbitration (Decree-Law No. 10/2011 of 20 January, hereinafter "LFTA"), a request for review of its claim for declaration of illegality of tax assessment acts and, thus, a request for constitution of the Arbitral Tribunal.
The Claimant therefore petitions for the declaration of illegality of tax assessment acts, more specifically self-assessments of VAT made through amended declarations, relating to the years 2012, 2013, 2014, and 2015. In this case, monthly declarations - the first dated January 2012 - as the Claimant was then subject to the general monthly reporting regime. To which in this Decision we shall also refer as relating to the periods from 201203T to 201512T.
The amended declarations underlying the Assessments in dispute were submitted by the Claimant in connection with a tax inspection to which it was subject, which originated from service orders nos. OI2016.../... /.../..., through which the Tax and Customs Authority sought to assess the tax treatment applied by the Claimant under VAT for services rendered in non-conventional therapeutic activities. Inspection proceedings in the course of which the Claimant was notified to regularize its tax situation.
The Claimant, which is an Association with (among other) charitable purposes, submitted the amended declarations voluntarily, as stated in its Request for Arbitral Decision. The situations for which VAT was assessed through this process correspond to "VAT relating to services provided by professionals who did not have qualifications as doctor, nurse or other paramedical profession."
The Claimant further clarifies in its Request for Arbitral Decision (hereinafter also "RAD") that the services to which the VAT assessments whose annulment is sought in the present proceedings relate were provided within the scope of non-conventional therapeutics, specifically relating to "acupuncture therapeutics, osteopathy, homeopathy and naturopathy."
From the amended periodic VAT declarations in dispute resulted a total amount to be paid by the TP to the State of € 14,143.34. The Claimant proceeded to pay this amount.
Subsequently, a Law entered the Legal Order (Law No. 1/2017, of 16 January, hereinafter also "Law No. 1/2017," "Law 1/2017" or "the Law") by means of which the VAT regime applicable to services provided within Non-Conventional Therapeutics ("NCT") would undergo changes. The legislator attributed interpretive character to this Law, and the Claimant understood this Law to have effects on the situation at issue in the present proceedings and, specifically, that the exemption contained in Article 9(1) of the VAT Code ("VATC") became applicable to the case - to the invoices underlying the amended declarations aforementioned.
For this reason, on 02.03.2017, it filed an Administrative Review ("AR") in which it sought the annulment of the Assessments resulting from the amended declarations above (hereinafter, together, also "the Assessments"). With respect to this AR, a dismissal decision was issued, dated 12.09.2018, following which the Claimant filed the Request for Arbitral Decision that gives rise to the present proceedings.
After stating that the Respondent did not grant the AR, nor the request for official review which it also submitted, the Claimant refers to the dismissal decision of the AR, exposing that it was based on, and we summarize: i) understanding divergent from the Claimant's regarding the temporal application of Law No. 1/2017, as a result of which part of the VAT taxation periods in dispute would not be covered by the respective regime, as prior to the entry into force of the Law, thus not benefiting from the exemption under Article 9(1); ii) non-compliance in some of the invoices in question with the requirements of Article 36 of the VATC; iii) in some invoices, in addition to what is mentioned in ii), the exemption not being applicable in view of the issuing entity; and iv) non-presentation by the Claimant of accounting documentation discriminating the exempt operations and their providers.
In opposition to these arguments, the Claimant exposes, in summary: Law No. 1/2017 should be understood as being interpretive of Article 9(1) itself of the VATC; should this not be understood as such, then it should be considered as being interpretive of Law No. 71/2013, producing effects from the date of entry into force thereof; the arguments of the Tax Authority regarding the insufficiency of elements in the invoices do not stand (in view of information that the Tax Authority had collected within the inspection procedure above), nor does the argument regarding proper discrimination of invoices and documentation in the Claimant's accounting (being cognizant of all the facts in question and cfr. Article 74, No. 2 of the LGT); it is not because in the case of certain invoices issued by a third entity to the Claimant the exemption under Article 9(1) could be understood (which the Claimant does not concede) as not being applicable that the petition in the AR could be entirely dismissed but rather, at most, could be partially dismissed.
To conclude, as it does, that the assessment acts in dispute suffer from the defect of violation of law, by violation of the principle of inquisitorial procedure and substantive truth.
Accordingly, the Claimant requests: (i) the annulment of the Assessments and the refund of the amounts paid, as well as (ii) compensatory interest.
The Respondent is the Tax and Customs Authority (hereinafter "Tax Authority" or "Respondent").
The request for constitution of the Arbitral Tribunal was accepted by the President of the CAAD and notified to the Tax Authority on 21.12.2018.
Pursuant to Article 11, No. 1 (b) of the LFTA, the Ethics Board designated the undersigned as arbitrator of the sole arbitral tribunal, who timely accepted the appointment.
On 06.02.2019 the parties were notified of the designation of the arbitrator and did not express intention to challenge it, cfr. Article 11, No. 1 (a) and (b) of the LFTA and Articles 6 and 7 of the Ethics Code.
Pursuant to Article 11, No. 1 (c) of the LFTA, the sole Arbitral Tribunal was constituted on 26.02.2019.
Notified for this purpose, the Tax Authority filed a Response, arguing for the total rejection of the RAD and the consequent maintenance of the Assessments in dispute in the Legal Order.
Referring to the Claimant's request for annulment of the self-assessments submitted for voluntary regularization during inspection proceedings, the Respondent, understanding that the Claimant's arguments lack merit, exposes, in summary, as follows: the Claimant develops conventional and paramedical health activities as well as other health and NCT activities, as determined in the inspection procedure above indicated, of external scope and partial coverage (VAT), to which it was subject between March and July 2016; in the said inspection procedure it was determined that the Claimant had not assessed any tax regarding NCT service provisions because it had considered the respective activities exempt under Article 9(1); given that the same activities were not, at the time of the inspection procedure, covered by the said exemption, the appropriate corrections were made for the periods in question, determining the missing VAT amount; the Claimant, while the inspection procedure was still ongoing, voluntarily regularized part of the situation detected by the Tax Inspection Services ("TIS") in this regard, submitting amended periodic declarations, relating to the four years above, which it did "acknowledging that some of these service provisions were not effectively exempt (because they were provided by professionals who did not have qualifications as doctor, nurse or other paramedical profession)."
It further states that, regarding the remaining situations detected by the TIS, additional assessments were issued, regarding which the Claimant filed a separate AR and subsequent Administrative Appeal. Dismissed, and regarding which the Claimant subsequently filed a separate RAD, which gave rise to the arbitral proceedings under case No. 360/2018-T. It further states that the Claimant also submitted, in parallel, a request for official review, having as its object the totality of the situations, i.e., both the self-assessments in dispute in the present proceedings and the additional assessments resulting from the said inspection procedure. Official review that is pending.
It clarifies that, as is known to the Claimant, it is proceeding to review the Assessments now in dispute - within the said official review procedure - as regards the periods 201312T to 201512T (cfr. Articles 44 to 46 of the Response).
And here, it should be clarified, underlies a distinction, central to the defense as presented by the Respondent, between two distinct periods of time. That which precedes the date of 02.10.2013, and that subsequent to it. That is, in the Respondent's understanding, the self-assessments in dispute (their legality) must be assessed in two distinct "blocks" (the expression is ours). Those of periods 201203T to 201309T, on the one hand, and those of periods 201312T to 201512T, on the other.
From the outset, the Respondent argues on matters of Law, reviewing the body of legislation applicable to the case and Administrative Doctrine, and finally developing its understanding regarding rules on temporal application of interpretive laws.
According to the Respondent, Law No. 1/2017, to which the legislator attributed the qualification of interpretive law, should be understood as retroacting its effects to the date of entry into force of Law No. 71/2013. Specifically, 02.10.2013.
Thus, after referring to the descriptions of physical invoices and those of the "SAF-T billing" not being coincident, and the billing in question involving a variety of service provisions, including shiatsu, lymphatic drainage, reiki, naturopathy, osteopathy, therapeutic massage, acupuncture, among others, and that part of the provisions in question came to benefit from exemption by virtue of Law No. 1/2017, it proceeds to distinguish.
Regarding the Assessments referring to periods 201312T to 201512T, in which it understands the exemption deriving from Law No. 1/2017 is in effect, it refers to what is to be assessed in the official review procedure, in order to determine the values of provisions eligible for exemption cfr. Article 9(1), and which will depend on which of the same are included in the list of legally provided NCTs.
As for the Assessments relating to periods 201203T to 201309T, periods to which it understands the VAT regime introduced by Law No. 1/2017 (the exemption) is not to be applied (as it was not yet in effect), it presents arguments in the present proceedings in defense of the self-assessment acts of that temporal period not being affected by legal defects. And in this sense - of the legality of the self-assessments of that temporal period - prior to 02.10.2013 - it develops the arguments we now summarize.
Not being applicable, in the temporal period in question, the VAT exemption for NCT service provisions, which were not integrated in the provision of Article 9(1) before the entry into force of Law No. 71/2013, and the Respondent having demonstrated, as was its burden, that the service provisions in dispute referred to that temporal period correspond effectively to NCTs, to them the exemption regime of Article 9(1) is not applicable.
Further to what precedes - which corroborates by referring to what is contained in the TIR in the inspection procedure above mentioned - that it concluded that there is no proof that the Claimant also provided conventional medical services, all evidence then collected indicating to the contrary. Moreover, it was concluded that the NCT service provisions are properly accounted for by the Claimant "in accounts 721121 and 721122." And that although, in some cases, the professionals who provided services were qualified to exercise medical and/or paramedical professions, it was not demonstrated that the services provided by them were provided in the exercise of that professional activity. Being that the same (services) fall within the scope of NCT service provisions. Moreover, the Tax Authority fully fulfilled the burden of proof that rested upon it, and, given that these are self-assessments, it was incumbent upon the Claimant to prove the contrary.
By order of 29.03.2019 this Tribunal decided to dispense with the meeting provided for in Article 18 of the LFTA and to notify the parties to submit optional written arguments.
The Claimant submitted its arguments, reiterating what was already stated in the RAD. It further adds that the justification of the challenged act is the matter contained in the TIR, and it is incumbent upon the Tribunal to assess "the assessment acts, as they were practiced" and not based on new facts alleged by the Respondent "some only in this forum." Moreover, it states that, in this same context, it makes no sense to invoke that a procedure for official review is pending, whose period for tacit dismissal would have already elapsed.
Notified of the Claimant's arguments, the Respondent submitted its own, in which it reiterated what was already stated in the Response, and exposed, among other matters, that the Claimant contests the dismissal in the administrative review proceedings no. ...2017... in which it requested the annulment of the self-assessments resulting from voluntary regularizations and, thus, it is incumbent upon the Claimant to prove that the values contained in the amended periodic declarations correspond to the indicated operations (the Respondent here having in mind, if we understand correctly, the periods 201312T to 201512T). That, thus, the justification of the TIR cannot be used by the Claimant, in view of Article 74 of the LGT, and even because it did not regularize all the proposed corrections. Moreover, the Claimant cannot here invoke the tacit dismissal of the official review, under penalty of untimeliness of the request. It states that, in the meantime, an arbitral decision was issued in case No. 360/2018-T which had as its object the additional assessments resulting from the inspection procedure. And, moreover, that as regards the periods 201203T to 201309T, not only did the Claimant fail to fulfill the burden of proof that rests upon it (and which would be understood, if we are correct, to prove that the NCTs would have been provided by professionals qualified to practice medical or paramedical professions in the exercise of these professional activities), but also "the interpretation cannot be accepted that Law No. 1/2017 of 16.01 extends the exemption to all NCTs, even before its entry into force." Making, at this point, reference to arbitral decisions supporting its understanding.
The Arbitral Tribunal was properly constituted, is competent and the parties have judicial personality and capacity, are legitimately constituted and are duly represented, cfr. Articles 4 and 10, No. 2 of the LFTA and Article 1 of Ordinance No. 112-A/2011 of 22 March.
The case does not suffer from nullities and there is no matter of exception, nothing preventing the tribunal from addressing the merits of the case.
2. Factual Matters
2.1. Proven Facts
The following facts are considered proven:
a) The Claimant is a private law association established under Portuguese law that has as its purpose, among others, the pursuit of charitable objectives, promoting and protecting health through the provision of preventive, curative and rehabilitation care and also through the activities proper to a retirement home for the elderly.
b) On the Claimant's website – http://www... – it appears, at the time of the inspection procedure originating from Service Orders nos. OI2016.../... /.../..., that it has the objective to pursue scientific, cultural and charitable purposes and promote health through the provision of preventive, curative and rehabilitation care, with three areas of intervention: complementary medicines, podology clinics – B..., and a retirement home – ... (v. TIR, p. 5).
c) Since 17 January 2007 the Claimant is registered as a health care provider with the Health Regulatory Entity, with an establishment registered under number E... (v. Certification of the HRE of 12 July 2018 – doc. 8 attached with the RAD).
d) The Claimant is a VAT taxable person, registered for VAT as of 1 January 2012, at the time of the facts at issue in the present proceedings subject to the general monthly reporting regime, and as of 01.01.2017 subject to the quarterly reporting regime, maintains organized and computerized accounting, and adopts in the taxation period in question the rules of the SNC (v. TIR, p. 10 and PA - 01 – p. 71).
e) The Claimant develops conventional and paramedical health activities, as well as other health and non-conventional therapeutic (NCT) activities and is registered to exercise principal commercial activity under CAE 87301 and secondary activity with CAE 86210.
f) The Claimant had not initially assessed VAT regarding NCTs because it had considered the respective activities exempt under Article 9(1) of the VATC.
g) The Claimant was subject to an inspection procedure originating from Service Orders nos. OI2016.../... /.../..., for the years 2012, 2013, 2014 and 2015, all external, of partial scope (VAT), through which the Tax and Customs Authority sought to assess the tax treatment applied regarding VAT for services provided in non-conventional therapeutic activities. (v. TIR, pp. 4-5)
h) In the course of the inspection procedure the Claimant, after being notified of warning letters, submitted on 11, 14 and 15 March 2016, a total of 46 amended periodic VAT declarations. (cfr. PA)
i) The self-assessment acts in dispute refer to the years 2012, 2013, 2014 and 2015 and correspond to 46 amended VAT declarations through which the TP regularized the VAT relating to services provided by professionals who did not have qualifications as doctor, nurse or other paramedical profession. (cfr. RAD, 4th point)
j) The operations regarding which the tax was assessed correspond to services provided within non-conventional therapeutics. (cfr. RAD, 5th point)
k) The inspection procedure in g) (hereinafter "the Inspection Procedure") is subject to the opinion contained in the TIR prepared in the inspection procedure originated in Service Orders nos. OI2016.../... /.../..., attached to the proceedings (hereinafter "the TIR"). (v. doc. 2 – Opinion of the Team Leader and Order - notification of the TIR - pp. 3-4).
l) From the TIR, attached to the proceedings and which is here reproduced in full, it contains, among other things: (i) "(…) the warning letter was sent, registered mail, to the taxable person, (official letter no. ... of 18/02/2016 (…)" and "(…) the external service orders were initiated on 16/03/2016 (…)." (v. p. 4); (ii) "(...) there is no correspondence between the description of services in printed invoices and the description contained in the TP's billing program extracted by this and provided to the Tax Authority within the inspection procedure." (v. p. 14); (iii) "(...) it is proposed to assess VAT on NCT services provided by the TP, since they do not constitute active operations covered by the exemptions provided for in Article 9 of the VATC, and thus constitute operations subject to tax assessment, at the defined rate (...)". (v. p. 34); (iv) "However, after notification of warning letters and before the start of inspection procedures, on 11, 14 and 15 March 2016, the taxable person submitted 46 amended VAT periodic declarations, relating to the 4 years under review (...), in which it recorded in field 3 of the respective monthly declarations, values of service provision at the rate of 23%." (v. p. 36); (v) "It is thus verified that the taxable person partially regularized the nature of the service provisions described above, considering that some of these service provisions were not exempt." (v. pp. 36-37); (vi) "In the course of the inspection procedure, the taxable person voluntarily regularized in part the situation detected, effecting for this purpose the submission of the following amended periodic VAT declarations, annex 9." (v. p. 40)
m) The voluntary regularizations made by the TP - individually identified on pages 37 to 39 of the TIR - totaled € 14,143.34 in tax, with those relating to 2012 in the amount of € 3,050.02, 2013 in the amount of € 3,532.92, 2014 in the amount of € 3,428.55, and 2015 in the amount of € 4,131.85 (cfr. Table, p. 39 of the TIR).
n) On 02.03.2017 the Claimant filed an Administrative Review, attached to the proceedings and which is hereby reproduced, which came to proceed under No. ...2017..., in which it sought the annulment of the VAT self-assessments embodied in the amended declarations, on the grounds that Law No. 1/2017 had meanwhile entered the Legal Order ("Given the interpretive nature conferred on Law No. 71/2013") and thereby the respective service provisions underlying became covered by the exemption of Article 9(1) of the VATC, concluding, in point 10 of the AR, that the service provisions "should now, given the said interpretive norm, be considered exempt, from the entry into force of Law No. 71/2013, of 2 September." (v. RAD, 6th point; v. doc. 3 attached with the RAD)
o) Notified of the draft decision of the AR the Claimant exercised its right of Hearing, where it concluded requesting partial grant of the AR, discriminating in attached table the value of the service provisions in question, separating those prior to and those after 02.10.2013 (v. RAD, Annex 1 to doc. 5), and requesting, ultimately, in the written right of Hearing of 21.08.2018, the partial grant by the amount of € 13,549.37, with the annulment of the self-assessments from the beginning of 2012. (v. doc. 5_5.1, attached with the RAD)
p) In the written right of Hearing, dated 21.08.2018, which is hereby reproduced, it can be read, in point 3., "(…) the disputed operations regarding which tax was assessed correspond, as is referred to in the Inspection Report and as is transcribed, to "46 amended VAT declarations through which it regularized the VAT relating to services provided by professionals who did not have qualifications as doctor, nurse or other paramedical profession," that is, in its overwhelming majority to services within non-conventional therapeutics." (v. doc. 5_5.1, attached with the RAD).
q) By order of the Head of the Administrative Justice Division of the Lisbon Regional Tax Office, dated 12.09.2018, the Administrative Review was dismissed.
r) In the dismissal order of the AR, which is hereby reproduced, it can be read, among other things: (i) that the disputed matter concerns "the classification of NCT service provision, and the question of whether these are covered by the exemption provided for in No. 1 of Article 9 of the VATC, as occurs with paramedical activities."; (ii) that "the claimant proceeded to submit amended periodic VAT declarations (…) pursuant to Articles 29 and 41 of the VATC"; (iii) that in assessing the disputed question two situations must be taken into account: Whether the NCT activities being exercised are or are not provided for in Article 2 of Law No. 71/2013; Whether the professionals exercising these activities are or are not holders of a professional credential issued by the Central Administration of the Health System, I.P., also taking into account the transitional regime provided for in Article 19 of said law."; (iv) that "Given the interpretive nature attributed to Article 8-A, the tax exemption applies from the entry into force of Law No. 71/2013, that is, from 02-10-2013. (…) only from that date are NCTs covered by the exemption and provided that the exemption requirements referred to above are met, by which reason the year 2012 and part of 2013, is not covered by that exemption, by which reason the said regularizations are shown to be legal."; (v) that in its right of Hearing the Claimant stated, among other matters, "that the disputed operations regarding which tax was assessed correspond to amended VAT declarations through which it regularized the tax inherent to services provided by professionals who did not have qualifications as doctor, nurse or other paramedical profession, corresponding in its overwhelming majority to services within non-conventional therapeutics"; (vi) that regarding the elements presented in the right of Hearing "the claimant attached professional credentials (…). However, the invoices presented, in a scattered manner and by way of example, only refer to consultations and treatments, not discriminating the service provided, thus not complying with the legal requirements provided for in Article 36 of the VATC." (v. doc. 6, attached with the RAD)
s) Among the documentation submitted by the TP upon exercise of its right of Hearing in the administrative review procedure, attached to the proceedings and which is hereby reproduced, there are various invoices and receipts with descriptions of services as follows: "Treatment – Dr. C...", "Treatment – Dr. D...", "Osteopathy Consultation", "Follow-up Consultation – Dr. E...", "Homeopathy Consultation", "Clinical Nutrition Consultation", "Naturopathy Consultation", "Consultation – Dr. F...", "Treatment – G...", "Treatment – Dr. H...", "Consultation Fees for the month of January 2015". (v. doc. 5, attached with the RAD), "service provision", "services provided".
t) On 03.03.2017 the Claimant submitted a request for official review which is processed under No. ...2017..., relating to the same periods, with reference, among other things, to the Assessments in dispute, which remains pending. (v. Doc. 7, attached with the RAD; 14th of the Response; II of the Claimant's arguments)
v) The amended declarations were submitted in March 2016 and the Claimant proceeded to payment thereof.
x) On 14.12.2018 the Claimant filed in the CAAD system the Request that gives rise to the present proceedings.
2.2. Unproven Facts
It was not proven that the NCT service provisions underlying the self-assessments in dispute are all covered by the list of NCTs recognized and regulated by the legislator.
There are no other facts of relevance for the decision of the case that have not been proven.
2.3. Justification of the Factual Matters
The facts given as proven were so based on the documents attached to the proceedings, including with the RAD and in the Administrative File ("AF"), critically assessed - all documents that are hereby fully reproduced - and, as well, on the positions expressed by the parties in the written submissions.
The fact given as unproven was so based on critical assessment of the attached documentation, in correlation with the exposition of the parties in the written submissions.
It is for the Tribunal to select, from those alleged by the parties, the facts that matter to the assessment and decision of the case, viewing the hypothetical plausible solutions of the legal questions (v. Article 16, (e) and Article 19 of the LFTA and, furthermore, Article 123, No. 2 of the CPTC and Article 596 of the CPC), encompassing its cognition powers instrumental facts and facts completing or specifying those which the parties alleged (cfr. Articles 13 of the CPTC, 99 of the LGT, 90 of the CPTA and Articles 5, No. 2 and 411 of the CPC).
3. Legal Matters
3.1. Preliminary Issue
3.1.1. Contemporary Justification of the Act
The Claimant states, in its arguments, that it is incumbent upon this Tribunal to assess the act in dispute as per its contemporary justification and that, thus, the Respondent is prevented from bringing to the present proceedings new facts not contained in the justification inherent in the TIR.
However, the Claimant's position is not correct. For while it is true that, as the Claimant correctly states, it is incumbent upon the Tribunal to assess the act in light of its justification, given that we are faced with self-assessment acts, the justification of the same reduces to an act of the TP, by itself practiced. The relevant justification (contemporary to the act) will thus be that which should be understood as underlying the self-assessment act, and it is incumbent upon the Tribunal to assess the legality of the challenged act (the self-assessment act) as it actually occurred.
The justification to which the Respondent resorted to decide as it decided in the dismissal order of the AR (confirming the legality of the self-assessment, which the TP had placed in dispute), which is that contained therein, shall be such as to align with the justification that should be understood as underlying the self-assessment act. Not so with the TIR, contrary to what the Claimant contends. The TIR will contain the contemporary justification, yes, of the additional assessments which the Tax Authority would subsequently carry out, and which are not the subject of these proceedings.
In the case there is further, as a specific matter, the fact that subsequently a legislative change occurred with - allegedly - effects on the contemporary justification of the act, rendering it, we would say, (allegedly) non-conforming to Law, a posteriori.
In summary, given that the first-instance act is the one which is sought to be annulled in the present proceedings, whose legality is requested to be assessed, declaring it illegal, the adjudicator will always have to assess it in light of its contemporary justification, as above, taking into account, in the proceedings, the particularity referred to in the preceding paragraph and, moreover, not being bound by the arguments of the parties "with respect to the inquiry, interpretation and application of rules of law" (cfr. Article 5, No. 3 of the CPC).
3.2. Questions to be Decided
The matter at issue in the proceedings is, first and foremost, one of interpretation and application of rules of Law. To decide regarding the alleged illegality of the self-assessments, one must first decide on the Law.
The following are thus the questions to be decided:
First Question: Whether or not the exemption enshrined in Article 9(1) of the VATC is applicable to NCT service provisions (and, thus, in the abstract to the self-assessments in dispute):
(i) relating to all the periods at issue in these proceedings, i.e., from January 2012 to December 2015?; if the answer is negative:
(ii) relating to the periods 201312T to 201512T?
To answer this question, one must first assess and decide:
What is the moment from which Law No. 1/2017, of 16 January, which the legislator qualified as an interpretive law, produces its effects:
(i) that of its own entry into force, or
(ii) that of the entry into force of Law No. 71/2013, of 2 September, or
(iii) a moment prior to either of the preceding, be it that of the entry into force of Law No. 45/2003, of 22 August or, still, that of the entry into force of Article 9(1) of the VATC?
Depending on what is to be decided in the preceding question, there may still be the need to decide:
Second Question: In the concrete case, does the exemption of Article 9(1) of the VATC apply to the self-assessments in dispute, being them thus affected by illegality? If in the affirmative, to what extent?
Finally, one must decide regarding the requests for refund of the amounts paid (€ 14,143.34) and compensatory interest.
As follows.
First Question: Whether or not the exemption enshrined in Article 9(1) of the VATC is applicable to NCT service provisions (and, thus, in the abstract to the self-assessments in dispute):
(i) relating to all the periods at issue in these proceedings, i.e., from January 2012 to December 2015?; if the answer is negative:
(ii) relating to the periods 201312T to 201512T?
Recapitulating briefly.
In the present proceedings the Claimant seeks to obtain the annulment of the self-assessments which it made, in VAT, through the submission of Amended Declarations in March 2016, in the sequel of warning letters within an inspection procedure then ongoing. The operations underlying correspond to NCT service provisions carried out by professionals without qualifications as doctor, nurse or other paramedical profession, as the Claimant recognizes and accepts; cfr. established factual matter (v. i), proven facts).
The Claimant bases its request on the fact that, after having voluntarily proceeded to the Assessments, a legislative change occurred whose effects retroact, in its understanding, to the situation sub judice. The Claimant refers to the entry into the Legal Order of a Law - Law No. 1/2017, to which we have already referred supra - which, in the understanding for which it argues, had the effect of the service provisions underlying the Assessments coming to be covered by the exemption contained in Article 9(1) of the VATC. And, in this way, having the same come to be affected by illegality.
The Assessments relate to the periods 201203T to 201512T (or, monthly, from 201201 to 201512). The Claimant contends for the applicability of the said Law to all periods in question and thus to all Assessments. Indeed, having the legislator qualified the Law in question as interpretive, the Claimant contends, in the present proceedings, that the authentic interpretation in this regard should be understood as referring to Article 9(1) of the VATC itself. And not to Law No. 71/2013, "which does not contain any provision of a fiscal nature, in particular regarding the scope of VAT incidence."
Should this Tribunal not agree, the Claimant contends that the effects of the Law in question - Law No. 1/2017 - should be understood as retroacting, at least, to the date of entry into force of Law No. 71/2013. With the consequent partial grant of the Request, annulling the Assessments from that date (02.10.2013), which would imply the annulment of the Assessments relating to the periods 201312T to 201512T. Which thus, subsidiarily, it requests.
The Respondent, for its part, understands differently. From the outset, Law No. 1/2017 cannot be understood as retroacting its effects to a date prior to the beginning of the life of Law No. 71/2013.
The Respondent exposes that the amendment to Law No. 71/2013, which Law No. 1/2017 carried out through the addition to the same of Article 8-A, translates the legislator's intention to exempt from VAT service provisions made in the exercise of NCT professions identified and regulated in that Law (No. 71/2013). This is because the article added, under the heading "VAT Regime," determines that professionals dedicating themselves to the exercise of NCTs "referred to in Article 2" are subject to the same VAT regime as paramedical professions, these latter being exempt from VAT under Article 9(1) of the VATC, in accordance with the terms and conditions defined in special legislation.
The Respondent further adds that the application of the exemption depends on the verification of certain requirements, which it identifies (and which refer both to the nature of services and to the quality of their providers) and, furthermore, on service provisions being NCTs among those identified by the legislator, and as such regulated, in Law No. 71/2013.
Subsequently referring to passages of Administrative Doctrine on the matter, specifically Circular Opinion No. 30189, of 02.05.2017 (which revoked the previous Opinion No. 30174, of 26.08.2015), and, furthermore, Service Instruction No. ..., of 02.05.2017, all from the Tax Management Area – VAT. Transcribing, here, among other things and from this latter Instruction: "Considering the interpretive nature attributed to Article 8-A (…), and the enunciation of Article 13 of the Civil Code, it should be understood that the legislator intended to apply the exemption from tax as of the entry into force of Law No. 71/2013, that is, as of 2 October 2013. Therefore: (...) (i) The exemption provided for in section 1) of Article 9 of the VAT Code is not applicable to service provisions made in the exercise of NCT professions before the entry into force of Law No. 71/2013, of 2 September. (...)"
Let us see. And, before we proceed, let us note.
The positions of the parties, although divergent globally, i.e., regarding the illegality of the Assessments (contended by the Claimant and denied by the Respondent), meet - although only partially - on the question regarding temporal application of Law No. 1/2017.
Thus, the Claimant contends that the said applicability occurs from the date of entry into force of Article 9(1) of the VATC. Subsidiarily, and should the Tribunal not understand so, contends that the applicability of the exemption should be dated to the entry into force of Law No. 71/2013, that is, as of 2 October 2013. The latter (entry into force with effects reported to 2 October 2013) being the understanding of the Respondent, on this question now under assessment.
Preliminary Consideration.
Tax credits are not disposable. The Respondent Tax Authority cannot renounce them, being subject as it is to the Principle of indisposability thereof – cfr., in particular, Article 30, No. 2, of the LGT, which provides: "The tax credit is indisposable, and conditions for its reduction or extinguishment can only be fixed in accordance with the principle of equality and tax legality." The principle of indisposability of tax credits constitutes, therefore, a legal limit to the action of the Tax Administration, as derives from the first part of this No. 2. And it is a direct consequence of the principles of tax legality and equality, constitutionally established.
It is incumbent upon the adjudicator to decide the case submitted to judgment by applying the law, which should be interpreted in accordance with the pertinent hermeneutic rules.
Administrative Doctrine binds only the Administration itself. The generic orientations emanating from the Tax Authority fall within the scope of the principle/duty of cooperation that rests upon it. Among other things, they publicly reveal its interpretation of tax norms. Not constituting a source of Law, not being thus binding save internally, the Tax Authority becomes self-bound by them, with the understanding/interpretation that in this measure it is obliged to follow of the norms in question becoming known to taxpayers. Which do not constitute a source of Law and which, thus, as could not be otherwise, do not also bind the Courts, is patent and derives directly, from the outset and among other things, from Article 68-A, No. 4 of the LGT itself.
Tax Law is especially imbued with Constitutional principles and limits. The careful weighing of the legal-constitutional goods in question becomes fundamental in this branch of Law, as could not be otherwise. "The appeal to the Constitution and to its principles in a domain as constitutionally determined as that of Tax Law cannot fail to constitute a way of saving from unconstitutionality certain norms which, applied in a literal manner and without recourse to the ethical-legal principles received from the Constitution, should suffer the censure of the Constitutional Court, to which falls the final decision on the constitutionality of legal norms."; (…) The constitutional principles of taxation constitute the ordering values that structure fiscal laws and endow them with an internal system. (...)" In this context is framed the principle of interpretation of laws in accordance with the Constitution which, translating what has just been stated, is itself "the consequence of the principle that affirms that constitutionality is the main expression of legality." The interpretation in accordance with the Constitution is thus latent, we would say, in this context, as an interpretative canon, in application of the logical element in interpretation, to be applied by the adjudicator. Although always subject, it will be said, to a requirement of reasonableness.
The interpretation in accordance with European Union Law is, also, an inescapable and increasingly relevant interpretative canon, although with greater preponderance in some (tax) matters than in others. Also it in application of the logical element in interpretation, we would say, and also it subject to a requirement of reasonableness. In matters of indirect taxation this interpretation in accordance will be quite relevant. Thinking now, in particular, of VAT. As a tax of Community matrix that it is. Strongly harmonized.
In this tax, of strong harmonization, there are, however, zones of different intensity of that same harmonization, normally referred to as zones of high / medium / low harmonization. The matter of exemptions, for the reasons that we shall better address below, is of the matters included in the zone of high (strong) harmonization.
Having the Jurisprudence of the ECJ a central role to play here. It is certain that, harmonization in VAT is achieved not only by way of Community legislation but also - and to a great extent - by the application that the Court of Justice makes thereof.
Let us proceed.
Having in mind what has just been exposed, we shall now consider three sub-questions, in our view necessarily implied in the iter decidendi to be followed regarding the first question to be decided. Which are as follows:
A) Retroactivity, principle of legality and interpretive laws in tax matters
B) Paramedical versus NCT professions
C) Exemptions in VAT
A) Retroactivity, Principle of Legality and Interpretive Laws in Tax Matters
Article 103, No. 3 of our Constitution (hereinafter also "CRP"), introduced by the 1997 Revision, establishes that "No one may be required to pay taxes which have not been created in accordance with the Constitution, which have a retroactive nature or whose assessment and collection are not carried out in accordance with the law."
The LGT, for its part, embodying in its own way the content of this provision, provides in Article 12, No. 1 that "Tax norms apply to facts subsequent to their entry into force, and no retroactive taxes may be created." A principle which it subsequently develops in the following numbers.
Even before the existence of the express Constitutional provision, supra, both the Doctrine and the Constitutional Court, each in its own way, revealed already the delicacy of the matter, by the manner in which it was treated. If, on the one hand, there were divergent understandings in the Doctrine, and those who, we would say authoritatively, contended that the principle of prohibition of retroactivity already derived from the Constitution of 1933 (v. infra, notes 21-22), on the other, the CC was being quite restrictive in the recognition of situations which it considered as prohibited retroactivity.
At issue is, summarily, to ascertain whether or not it is admissible, in light of the Constitution, the publication of norms which produce effects on legal-tax situations which (at minimum) commenced previously. Saldanha Sanches referred to the subject thus: "The classic debate is here engaged regarding the constitutional admissibility of formal retroactivity of fiscal law, that is, the publication of a norm which, by fiction, produces effects from facts verified before its entry into force."
Until the express introduction of the principle of prohibition of retroactivity, by Article 103, No. 3, a large part (not all) of the Doctrine and, as well, Constitutional Jurisprudence, generally followed the line of understanding that retroactivity in the matter would only be inadmissible when from it would derive an intolerable impairment of the principle of protection of the confidence of citizens and, note, of the community in general.
In 1972 an Acórdão of the STA was pronounced in which the prohibition of retroactivity in tax matters was rooted in the principle of legality (already then expressly established in the matter), which Alberto Xavier refers to approvingly, who contended, precisely, that understanding. Indeed, at the time when there did not yet exist the express establishment, as today, of the principle of retroactivity in tax matters, the Author contended that the same principle already derived from the principle of legality itself in tax matters. And from this principle he extracted not only the criteria for assessing the legitimacy of the retroactive norm but also, for defining what should be understood by retroactive application of tax law.
Without further elaboration, it should be stated that the Constitutional Court, over time and until the introduction of No. 3 of Article 103 in the CRP, developed in this matter, although in some cases not unanimously, a specification of what would be the admissible limits of retroactivity in correlation with the consequences that from the retroactive effects of norms would derive for the principle of protection of confidence.
For its part, as is known, also after the said introduction of No. 3 in Article 103 the CC has been developing its Jurisprudence on this with special attention to the issue of legitimate expectations of taxpayers and protection of legitimate confidence. And, for this purpose, has been developing the understanding that there exist different degrees of retroactivity, namely three, being that of lesser intensity (also called "retrospectivity" or "retroactivity of 3rd degree") in general and in practice (even as a consequence of the operationality of the criteria established by the CC to assess there the question of offense to legal security/protection of legitimate confidence), is not regarded as constituting true and proper retroactivity. Or, rather, is not regarded as constituting prohibited retroactivity for purposes of Article 103, No. 3. Moreover, only that of greater intensity (the also denominated "authentic retroactivity") would be, from the outset and at the outset, in the understanding that has been followed, prohibited by the Constitutional provision in question.
And Constitutional Jurisprudence has thus been developing from the outset regarding "retrospectivity" in the sense just referred (not constituting prohibited retroactivity under Article 103/3) in assessment of taxes whose tax fact is of successive formation, such as they are, from the outset, the IRS and IRC. It is for purposes of example the case of Constitutional Court Acórdão No. 399/2010, of 27 October, which dealt with legislative amendment, in mid-2010, to Article 68 of the IRS Code, altering the respective rates.
As for "authentic retroactivity" (or "retroactivity of 1st degree," or "proper retroactivity") - that which Constitutional Jurisprudence understands to be the only one whose prohibition inescapably, we would say, figures in the Constitutional provision in question - reference may be made, for example, to Constitutional Court Acórdão No. 310/2012, of 20 June, relating to the law which in December 2008 altered No. 3 of (then) Article 81 of the CIRC, increasing rates in the matter of Autonomous Taxation in IRC, or Constitutional Court Acórdão No. 63/2006, of 24.01.2006, relating to Decree-Law No. 43/98, of 3 March, which created a Special Contribution, in whose Regulation the objective incidence of the tax was delimited by reference to the occurrence of a particular instantaneous fact, with the CC thereupon standardizing Jurisprudence to the effect that, given that the tax-generating fact in question is an instantaneous fact, its occurrence prior to the entry into force of the law (in that case, law creating the tax) translates a violation of the principle of prohibition of retroactivity contained in Article 103, No. 3 of the CRP.
Finally, note, still relative to the Jurisprudence that the CC has developed, that the situations under analysis, relating to substantive norms, have generally been of legislative amendments in a sense of worsening the position of taxpayers (and, in that measure also, the development of the understanding regarding the three degrees of retroactivity and related "tests"). Therefore, assessment of retroactivity under a perspective of protection of the position of taxpayers.
And having arrived here we must further state, with possible interest for our proceedings, that, while it is true that, in our understanding, the constituent legislator was not there (Article 130/3 of the CRP) clarifying regarding the question, we have strong arguments to consider that the prohibition at constitutional level of retroactivity in the matter of tax law should be understood, at the outset, as also encompassing situations other than those of norms unfavorable to taxpayers. Having here in particular the principle of legality in tax matters, in our opinion, a role to play. A question to which we shall return, should it prove necessary, further on in this Decision.
This stated, let us now center our attention on interpretive laws, in tax matters.
Having to begin with the principle. What are interpretive laws.
The legislator established in Article 13, No. 1 of the Civil Code ("CC") thus: "The interpretive law integrates itself into the interpreted law, saving, however, the effects already produced by the fulfillment of the obligation (…)." Thus, and because it is destined to interpret a prior law, the legislator tells us, the interpretive law is considered as integrating (being part of) the law which it interprets.
In annotation to this norm Pires de Lima and Antunes Varela state: "This means [that the interpretive law] retroacts its effects to the date of entry into force of the old law, everything occurring as if it had been published on the date when the law interpreted was published."
To interpret legal norms, we know, means to fix the sense and scope with which the normative text should be valid, choosing one sense from among several possible: to extract from the normative text - through the application of proper hermeneutic criteria - the sense with which, from among several that would be possible, the text should be valid. For this purpose establishing guiding criteria - all cfr. Article 9 of the CC (applicable in Tax Law ex vi Article 11, No. 1 of the LGT).
Avoiding further elaboration, it should be stated that authentic interpretation is, also, normative interpretation, but with the particularity of being carried out by a source of law, other than the "usual" interpreters of norms. By which the legislator grants it the faculty of producing its effects from the beginning of the life of the law to whose interpretation it proceeds.
And the question is then posed of knowing - from the outset by the effects of temporal application implied - how to ascertain, faced with a law which the legislator qualified as interpretive (as in our case), whether it truly is or whether, under such cover, we are faced with an innovative law. Being unanimous among Doctrine and Jurisprudence the necessity of verification of a set of requirements in order for a law to be considered as interpretive.
Thus, in the words of Baptista Machado, in order for a law to be truly interpretive, two requirements are necessary, namely: (i) the solution of Prior Law being controversial or, at least, uncertain, and (ii) the solution defined by the new law situating itself within the frameworks of that controversy and thus having been possible for the adjudicator or interpreter to have (previously) arrived at it "without exceeding the limits normally imposed on interpretation and application of law."
From the teaching of Oliveira Ascenção, we add the following requirements: (iii) the new law - "interpretive source" - should be posterior to the interpreted - "interpreted source," (iv) the new law should have precisely the purpose of interpreting the old law, and (v) the "new source" should not be hierarchically inferior to the "interpreted source."
Especially in Tax Law the question of admissibility of interpretive laws is posed, for obvious reasons. The Doctrine is not unanimous in this respect. The Constitutional Court has been accepting the admissibility of interpretive laws in tax matters.
In any event, we shall state, and once it is verified that they are truly interpretive - by the fulfillment of the requirements just referred - such norms shall always and still be, in this branch of Law, submitted to stringent requirements of admissibility. From the outset, to the methodology that the Constitutional Court has been applying in matters of assessment of retroactivity of tax law. And, in our view, not to be disregarded, at the outset, also the need for verification of the respective admissibility, with the due adaptations, when at issue are norms not directly unfavorable to the taxpayer.
B) Paramedical Professions versus NCT Professions
Paramedical professions, like medical professions, have scientific criteria in their genesis. The same does not occur - at least insofar as "science" in the terms known and accepted in Western Culture - in the case of non-conventional therapeutic professions ("NCT professions" or, simply, "NCTs"), as the very name indicates.
And this is, from the outset, reflected by our legislator, whether in the regulation proper to the former, whether in that of the latter. As we shall note, taking the opportunity to scrutinize, at the same time, other notes of relevance in the treatment that was granted by the legislator between us to one and the other.
Thus, in Decree-Law of 1993, which regulates the exercise of paramedical activities, our legislator establishes that: "This diploma regulates the exercise of professional health activities, hereinafter called paramedical activities, which comprise the use of scientific-based techniques with aims of promotion of health and prevention, diagnosis and treatment of disease, or rehabilitation," and that those paramedical activities "are those contained in the list annexed" to the Diploma.
Subsequently, in 1999, our legislator came to regulate "sectors of activities of provision of health care, in particular in the paramedical scope," thus framing, as already in the previous Decree-Law, paramedical activities in the sectors of activities of provision of health care, and declaring to proceed to regulation in the name of respect for the principle of protection of health, which "constitutes a right of individuals and the community, which is realized through the joint responsibility of citizens, society and the State, in freedom of search for and provision of care, in accordance with the Constitution and the law", cfr. Preamble of the respective Diploma, "as derives from basis I of Law No. 48/90, of 24 August." And, further, that "in the public health services that objective [of respect for the principle of protection of health] has expression in the diploma on the career of diagnostic and therapeutic technicians, (...) with need to proceed to a broader regulation which also guarantees in the private sector identical requirements of access to professional exercise, subjecting the provision of health care to the same quality control" as was "the objective of Decree-Law No. 261/93."
The legislator furthermore reiterating, in the Diploma, that the diagnostic and therapeutic professions which it regulates comprise the carrying out of paramedical activities (contained in the annex to Decree-Law No. 261/93) "(...) having as matrix the use of scientific-based techniques (…)," and which are developed "in functional complementarity with other professional groups of health (…)."
Already in the Law of basic framework of NCTs, which arises in the year 2003, one can read: "Non-conventional therapeutics are considered to be those which depart from a philosophical base different from conventional medicine and apply specific processes of diagnosis and therapeutics proper to them." And that there it "establishes the framework for the activity and exercise of professionals who apply non-conventional therapeutics, as defined by the World Health Organization."
Pursuant to this Law (framework law) are guiding principles of NCTs, among others, "The individual right of option for the therapeutic method, based on an informed choice, regarding safety, quality, effectiveness and possible risks," having the legislator also formally established that users of NCT practices "for safeguard of their interests, may report offenses resulting from the exercise of non-conventional therapeutics to organisms with competencies of supervision."
At the end of the Diploma it is determined that it shall be regulated in 180 days.
Regulation arose, only, ten years later. With Law No. 71/2013, of 2 September. In this, our legislator, regulating the framework Law (v. supra), "regulates access to professions within the scope of non-conventional therapeutics, and their exercise, in the public or private sector, with or without profit motive," recognizes technical and deontological autonomy in the professional exercise of NCT practice, and determines that the professions which it identifies (in Article 2) "comprise the carrying out of the activities contained in ordinance (...)" (cfr. Articles 3 and 4), with regulation to be approved in 180 days (cfr. Article 21).
The legislator here too understood to formally establish that NCT professionals "cannot falsely claim that the acts they practice are capable of curing diseases, dysfunctions and malformations," and that users "may always, for safeguard of their interests, report offenses resulting from the exercise of non-conventional therapeutics to organisms with competencies of supervision." (cfr. Articles 9, No. 4 and 12, No. 3)
In Ordinances nos. 207-A/2014 to 207-G/2014 the legislator characterizes each of the (seven) recognized NCTs, in all of them the descriptions of functional contents reporting to methods that are not scientific. Nevertheless, to note, in the framework Law, ten years earlier, the legislator had indicated, among the guiding principles of NCTs the promotion of scientific research in the different areas "aiming to reach high standards of quality, effectiveness and efficacy." (cfr. Article 4, No. 5).
Although the legislation that treats NCTs between us does not benefit from a Preamble framework, let us attempt still a framework.
Our Constitution establishes, in Article 64, the right to protection of health, and sets forth from the outset that the same is realized "Through a national health service (…)." This is the right to protection of health in its positive aspect, established and guaranteed constitutionally between us essentially as a social right. The State was in this scope obliged, first and foremost, to a constitutional duty to create a national health service ("NHS").
"The principal obligation of the State to realize the right to protection of health consists in the creation of a national health service". It is a right to positive prestations on the part of the State, whose precise dimension is dependent on a legislative interposition. Thus, contrary to the «rights, liberties and guarantees,» whose scope and content are essentially determined at the level of constitutional choices (…), the right to protection of health, as a social right, is dependent on a «legislative interposition» (...),» which makes it concrete. From the outset through a Fundamental Law.
The legislator, in the concretization of the right to health, although not being totally free (being obliged to fulfillment of the constitutional program), is not prevented from making choices (provided that basic needs in matters of health protection are guaranteed, respected the principles of universal and general character of the NHS, and not being the options to be considered discriminatory). The CRP does not define a concept of health, and ordinary legislator is not bound to guarantee to all access to health care in a most expansive sense (a state of complete physical, mental and social well-being)." The definition of health needs has, thus, an unavoidable dimension of choice."
Notwithstanding what precedes, it is not ruled out that, for all else as a right established essentially in the social aspect that it is, the fundamental right to protection of health, in relation to it one may consider the ordinary legislator to be authorized, within certain parameters and limits, to an evolutionary action, which we would say desirable and tending to the accompaniment of the unfolding of society and, in this, of the stage of the knowledge of science and the evolution of culture in general. As Rui Medeiros states also in annotation to Article 64, "The Constitutional Court, in Acórdão No. 330/89, left open the question of whether the legislator is authorized to a gradualistic action, taking into account socio-economic considerations and the effective possibilities of the State at each moment. In any event (…) the degree of concretization of the right to protection of health is, not only under reservation of the possible (…), but also under reservation of law and the democratic principle. (...)"
NCTs, observed from this point of view, of the concretization of the right to protection of health by the legislator, must be framed in the question of the breadth with which the constitutional establishment of the principles of universality, equality and gratuity in the matter should be understood. "The Constitution – in a domain in which multiply, in particular, the possibilities offered by the numerous means of diagnosis, therapy and recovery – does not exclude modalities of differentiation, prioritization and selection, whether in relation to the quantum, quality and modum of the services made available (…)."
Independently of what is exposed, certain, to our eyes, is that, for all else, what should be understood by "health" is something that always depends on a time, a space, a historical and cultural context. Which goes hand in hand with the undeniable reality that there have always been and continue to be different conceptions of health, in the history and Western culture, in Eastern tradition, in the concept of the WHO, etc... Differences which necessarily reflect themselves, afterwards, in the modes of concretization of the right to health, in the how of the right to protection of health.
On the other hand, despite an increasingly greater "weight" of supra-national instruments in this scope, in the protection of the right to health it continues to be preponderant the legal framework at the level of each country.
Moreover. Establishing the Portuguese Constitution the right to health with the imposition on the State of a constitutional duty to create an NHS, pre-shaped by structuring principles, even with the margin of "freedom" of the legislator which we mentioned above, its action is necessarily more conditioned between us than it will be in countries with fundamental laws less prescriptive in the matter.
The World Health Organization ("WHO") has been engaged in studies and initiatives of value in this scope, and its most recent document "Strategy for Traditional Medicine, 2014-2023" - aiming to support the WHO Member States to develop policies and action plans which, it is intended, will reinforce the role of traditional medicine (or "non-conventional" or, in some countries, "complementary") in the maintenance of the health of populations - does not fail to be illuminating, among all else, regarding the current "state of the art" at the level of different countries / geographic zones in this respect. The document is part of a global strategy to promote adequate integration, regulation and supervision that may be useful to countries wishing to develop active policies with a view to this type of health care. As explicitly stated in the Preamble thereof, governments and consumers are beginning to take into account practices and professionals of traditional and complementary medicine, and to consider whether the same should come to be integrated in the provision of health services. Because of particular pertinence, still, for our proceedings, note the information contained therein relating to studies on the reasons which lead people to resort to NCTs. There one can read that such reasons are diverse, among others a renewed interest in an integrated vision of health care and the prevention of disease, adding as relevant the importance given by NCTs to quality of life in situations where cure is not possible.
To conclude this sub-question, we shall state that what is exposed above does not detract from the possible potentialities of NCTs, only seeking to situate them in terms of legislation and legal framework and cultural context in the recent past and in the current reality in Portugal, as well as, finally, in the World. It is thus observed, in our understanding, with the contribution of what precedes, that in the current situation (and more so in the past that preceded it) we are not yet (from the outset because our legislator has not yet considered it should occur) at a stage where the medicines also called "alternative" are found on par with the medicine also called "classic" or of activities in the area of health complementary to this (as are the paramedicalsas such as are legislatively recognized), at least in terms of being seen/considered at the same level (whether of reliability and possible risks involved, whether of potential results which they provide) by the generality of the population in our country. The same, concomitantly, in some way reflecting itself in the (in)activity (or, if you will, in the short path traveled) of the Portuguese legislator in the sense of an effective and consequent desideratum to place them in a different position from this.
C) Exemptions in VAT
We are in indirect taxation, before a general tax on consumption, of goods and services, whose main characteristic is that of doing so - taxing consumption - in a "neutral" manner. It is thus that the tax on value added, as the name indicates, is imposed on the value added at each stage of the economic circuit, making its burden fall at the end of the chain, on the final consumer, upon the acquisition by the latter of the good or service. For this to occur, the tax is structured on the basis of the so-called indirect subtraction method, by which each taxable person assesses VAT on its active operations but, on the other hand, deducts the VAT borne by itself upstream in its acquisitions of goods and services, inputs, within the scope of taxed activity. Being the difference between the two amounts, in each reference period/taxation period, the amount to be paid to the State. In essence, the difference between the VAT which it assessed and the VAT which it bore (and which, thus, it will deduct from the amount to be paid to the State).
As is well understood, the objective that is thus sought to be pursued, of neutrality, will function the better the more extensive the base of incidence of the tax and the fewer possible distortions to its functioning in the terms exposed.
Each time a taxable person becomes unable to deduct (subtract) from the amount to be paid to the State the value of VAT borne upstream, the neutrality of the tax is affected. And if the VAT taxable person does not have to assess the tax on its active operations, it may also become unable to deduct the tax it bore upstream in order to be able to carry out, afterwards, those active operations. In this latter situation the taxable person will be in a position similar to that of a final consumer in the structure and functioning of this tax.
Thus, on the one hand, the tax will be the more neutral the more extensive the grant to taxable persons of the right to deduction. And hence that - the condition for qualifying as a taxable person being the exercise of an economic activity - the very concept of economic activity is determining for achieving neutrality: the greater the scope of this concept, the greater the number of taxable persons and, thus, the greater the number of "holders" of the
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