Reduced VAT Rate on Dental Implants and Abutments for Implantology – CAAD Ruling 762/2014-T

ARBITRAL DECISION

I – REPORT

On 06 November 2014, A…, LDA., Tax Identification Number …, with registered address at …, no. …, …-… …, filed a petition for the constitution of an arbitral tribunal, pursuant to the combined provisions of Articles 2 and 10 of Decree-Law no. 10/2011, of 20 January, which approved the Legal Regime for Arbitration in Tax Matters, as amended by Article 228 of Law no. 66-B/2012, of 31 December (hereinafter, abbreviated as RJAT), seeking the declaration of illegality of tax assessment acts issued for Value Added Tax (VAT) and respective compensatory interest, relating to various tax periods of the years 2010 and 2011, in the total amount of €56,935.25, as well as the decision of tacit dismissal of the administrative review request.

To substantiate its petition, the Applicant alleges, in summary, that the aforementioned acts are vitiated by illegality on the following grounds:

i. error regarding the factual and legal prerequisites, since they were based on an incorrect interpretation and application of Article 18, paragraph 1, subsection a) of the VAT Code and item 2.6 of List I attached thereto;

ii. breach of essential formalities;

iii. defect in reasoning.

On 10-11-2014, the petition for constitution of the arbitral tribunal was accepted and automatically notified to the Tax Authority.

The Applicant did not appoint an arbitrator, therefore, pursuant to subsection a) of paragraph 2 of Article 6 and subsection a) of paragraph 1 of Article 11 of the RJAT, the President of the Ethics Council of the CAAD designated the undersigned as arbitrator of the singular arbitral tribunal, and the latter communicated acceptance of the appointment within the applicable timeframe.

On 02-01-2015, the parties were notified of this designation and did not manifest the intention to refuse it.

In accordance with the provision in subsection c) of paragraph 1 of Article 11 of the RJAT, the Arbitral Tribunal was constituted on 20-01-2015.

On 20-02-2015, the Respondent, duly notified for this purpose, presented its defense relying solely on contestation.

On 17-04-2015, the hearing referred to in Article 18 of the RJAT was held, at which the witnesses presented by the Applicant were examined.

Having been granted a period for submission of written arguments, the parties submitted them, pronouncing themselves on the evidence produced and reiterating and developing their respective legal positions.

A period of 30 days was set for the rendition of the final decision following submission of the arguments.

The Arbitral Tribunal is materially competent and is regularly constituted, in accordance with Articles 2, paragraph 1, subsection a), 5 and 6, paragraph 1, of the RJAT.

The parties have legal standing and capacity, are legitimate and are legally represented, in accordance with Articles 4 and 10 of the RJAT and Article 1 of Ordinance no. 112-A/2011, of 22 March.

The proceedings do not suffer from nullities.

Thus, there is no obstacle to examining the merits of the case.

All things considered, it is necessary to render

II. DECISION

A. MATTERS OF FACT

A.1. Facts Found to be Proven

1. Under three internal inspection orders – IO…, IO… and IO… – corrections were made to the Applicant in the VAT domain, of which it was notified in December 2013.

2. The corrections made relate to the application of the reduced VAT rate to dental implants and abutments intended for dental implantology.

3. In the tax inspection report, it appears, among other things, that:

• following "analysis of the average tax rates evidenced in the periodic declarations submitted pursuant to Article 29 of the Regime for VAT on Intra-Community Transactions (RITI) it proved unequivocal that, regarding a significant part of intra-community acquisitions of goods made in the years 2010 to 2012, the tax was collected by the taxpayer at a rate different from the normal rate";

• "Following analysis of the elements provided, we verified that the taxpayer made, in the years 2010 and 2011, among other things, from operator B… SL, (…) intra-community acquisitions of various types of dental implants and abutments, having applied, in the collection of tax with reference to such intra-community acquisitions of goods, the reduced rate referred to in Article 18, paragraph 1, subsection a) of the VAT Code.";

• "Pursuant to item 2.6 of List I attached to the VAT Code (corresponding to item 2.5 in the wording prior to Decree-Law no. 102/2008, of 20 June) the reduced VAT rate referred to in Article 18, paragraph 1, subsection a) of the respective Code only covers '... apparatus, devices and other prosthetic or compensatory material intended to replace wholly or in part any limb or organ of the human body...'";

• "with respect to implants applied in dental medicine, these are nothing more than mere osseointegrable metal roots (upper part of the mouth) or in the mandible (lower and mobile part of the mouth) intended exclusively to serve as support or base for a structure of one or more artificial teeth (crown, bridge, etc.), such that, unless they are transacted together with the connecting pieces and the tooth or set of artificial teeth (that is, implant + connecting pieces + tooth), they do not appear to be capable of replacing, supplying or rehabilitating the functions of the incapacitated organ or organs of the body (…) and to that extent do not meet the conditions necessary for the corresponding classification under the aforementioned item.";

• "the procedure adopted by the taxpayer, consisting in the application of a VAT rate different from the normal rate for purposes of collecting the tax due on intra-community acquisitions of dental implants and abutments, lacks any basis whatsoever, due to lack of classification of such goods under any of the lists attached to the VAT Code.".

1. The Tax Authority thus considered that the taxpayer maintained its activity of marketing orthodontic medical devices used in the constitution of prostheses, having proceeded to collect VAT at the reduced rate.

2. The aforementioned corrections amount to €53,997.75 for period 1012, €608.35 relating to period 1103 and €1,789.25 relating to period 1105, as shown in the following table:

[Table content as shown in original]

1. The Applicant filed an administrative review request of the aforementioned assessments on 28.04.2014.

2. Pursuant to Decree-Law 151-A/2013 of 31.10, the Applicant proceeded to pay the additional assessments.

3. Following the formation of the presumption of tacit dismissal of the administrative review request, the Applicant filed the present petition for arbitral decision.

4. By order dated 26-11-2014, the amount of €2,937.50, relating to compensatory interest, was annulled, since it was paid unduly, as the payment of the tax took place pursuant to the regime of Decree-Law 151-A/2013 of 31.10.

5. A tooth is composed of two parts, the root (internal part of the tooth) and the crown (the external part of the tooth).

6. In the absence of one or more teeth, these are replaceable by an osseointegrated dental implant and an artificial crown, the former being a substitute for the root, and the latter replaces the external and visible part of the tooth.

7. The replacement of a tooth involves the implantation of its two components: the root, through an osseointegrated dental implant, and the artificial tooth, through the artificial crown, using a transepithelial abutment.

8. Dental implants were developed to replace the roots of lost teeth, existing in various sizes and formats, being placed in the maxilla or mandible, and are manufactured in series and acquired directly from suppliers.

9. The transepithelial abutment may be of different shapes and sizes but is also manufactured in series and acquired directly from suppliers.

10. The artificial crown is the product of a process of an artisanal nature, being manufactured specifically for each individual by a specialized dental laboratory technician, requiring a mold of the patient's mouth, which is provided by the dental practitioner to the dental prosthetics technician.

11. A dental implant is thus an artificial tooth fixed in the gums or mandible so as to replace missing teeth and consists of a metal root that, after being placed within the maxilla, ends up forming with it a unique structure, supporting an artificial crown or serving as a base for a fixed bridge, restoring chewing and phonetic capacity.

12. Oral rehabilitation with implants is a clinical procedure that develops in four distinct phases, spaced in time so as to permit the definitive connection between the implant and the bone - the so-called osseointegration process.

13. The first phase consists in the placement of the dental implant, an element in pure titanium, which even ensures proprioceptive sensitivity to the patient.

14. In the second phase - the so-called osseointegration period - the implant rests within a bone for a normal period of three months in order to achieve a firm, direct and lasting connection between the implant and the bone.

15. This process requires the absence of forces on the implant, leaving it submerged or attached to a provisional tooth without load.

16. After the osseointegration period, the third phase begins: the implant is exposed, ceasing to be buried in the bone to pass through the gum via the connecting abutment - the transepithelial abutment.

17. The fourth phase consists in the application of the artificial crown or dental prosthesis in ceramic or acrylic.

A.2. Facts Found Not to be Proven

With relevance to the decision, there are no facts that should be considered as not proven.

A.3. Reasoning of the Proven and Unproven Matters of Fact

With respect to the matters of fact, the Tribunal does not need to pronounce itself on everything that was alleged by the parties, but rather has the duty to select the facts that matter for the decision and distinguish the proven from the unproven matters (cf. Article 123, paragraph 2, of the Tax Code of Procedure and Process and Article 607, paragraph 3 of the Civil Code of Procedure, applicable by virtue of Article 29, paragraph 1, subsections a) and e), of the RJAT).

In this manner, the pertinent facts for adjudication of the case are chosen and selected according to their legal relevance, which is established in attention to the various plausible solutions of the legal question(s) (cf. previous Article 511, paragraph 1, of the Code of Civil Procedure, corresponding to the current Article 596, applicable by virtue of Article 29, paragraph 1, subsection e), of the RJAT).

Thus, having into consideration the positions assumed by the parties, in light of Article 110/7 of the Tax Code of Procedure and Process, the documentary and testimonial evidence and the case file attached to the proceedings, the facts listed above were considered proven, with relevance to the decision.

In particular, the facts found as proven in points 10 to 21 took into account the testimonial evidence produced, all witnesses having testified faithfully, demonstrating direct knowledge of the matter on which they pronounced themselves, reflected in the proven facts.

B. LAW

Before entering into the substantive question that is presented for resolution, it is necessary to remove the effects of the order dated 26-11-2014, by means of which the amount of €2,937.50, relating to compensatory interest, was annulled, since it was paid unduly, as the payment of the tax made by the Applicant took place pursuant to the regime of Decree-Law 151-A/2013 of 31.10.

This revocation, expressly accepted by the Applicant, occurred after the filing of the petition for arbitral decision, which took place on 06-11-2014, but before the constitution of the Tribunal, which occurred on 20-01-2015.

From the same it follows, straightaway, that, in that part, there is a futility of proceedings, which must be declared.

The same does not affect the value of the case, which is understood to be that indicated by the Applicant in its Initial Petition, nor the distribution of costs, as it is considered, in agreement with the Distinguished Counselor Jorge Lopes de Sousa (Tax Code of Procedure and Process - 6th edition, volume II, page 310), that "when an act is annulled or its nullity or non-existence declared, it should be understood that it was the tax administration that gave rise to the proceedings by performing an act in non-compliance with the law".

The Applicant submits to the Tribunal's consideration, in summary, the following questions:

i. error regarding the factual and legal prerequisites, since the tax acts subject of the present proceedings are based on an incorrect interpretation and application of Article 18, paragraph 1, subsection a) of the VAT Code and item 2.6 of List I attached thereto;

ii. breach of essential formalities in the contested tax acts, by disregard of the duty of prior notice; and

iii. defect in failure to provide reasoning.

As no vices that would lead to nullity or non-existence of the contested act have been raised, and as the Tribunal has not been expressly requested to examine the questions raised in a determined order, it is necessary to know, in accordance with Article 124 of the Tax Code of Procedure and Process, the vice "whose substantiation determines, according to the judicious discretion of the adjudicator, the most stable or effective protection of the offended interests", which in this case will be the alleged failure to meet the factual and legal prerequisites of the act subject of the present proceedings.

Let us examine this then.

At issue is whether the interpretation that the Tax Authority makes of item 2.6 of List I attached to the VAT Code is acceptable, and by means of which it considers that the reduced VAT rate only applies to the single unit of implant.

Indeed, the Tax Authority understands that it should be considered that "goods consisting of parts, components and accessories of such prostheses are not covered by item 2.6, given that, in addition to not being prostheses, they are not apt to fulfill, considered individually, the function of replacing a part of the body or its function".

For the Tax Authority, "item 2.6 only covers the transmission of the article that, in itself, constitutes an artificial piece that replaces an organ of the human body or part thereof, that is, autonomously or as a unit".

In the Tax Authority's perspective, "the titanium implant and the abutment are only components, each performing the function for which they were conceived, of support and fixation of the prosthesis, but that, per se, objectively considered, do not perform nor replace the function of the dental organ.", "are components, parts, pieces, fractions … of what will be, once placed on the patient, the prosthesis".

Furthermore, the Tax Authority considers that "the legislator refers to prosthetic material and not to material for prosthesis (for application in a prosthesis), which indicates the exclusion of connecting or fixing parts of prostheses, such as those transacted by the taxpayer.".

Thus, still in the same perspective, the VAT exemption that now concerns us would relate only to "«complete goods» understood as those that, by themselves, can replace an organ or limb of the human body and not any elements that are used individually in the replacement process.", "products specifically designed for the correction or compensation of deficiencies or for the replacement, total or partial, of organs or limbs of the human body.", such that "In the case at hand, now under discussion, the question must be focused on the fact of understanding whether the different pieces that make up a fixed dental prosthesis, at the marketing phase, should be subject to the reduced VAT rate.", and that, always in the Tax Authority's opinion, "if we are talking about neutrality with respect to the taxation of different types of prosthesis we have to compare the transmission of the removable prosthesis with that of the fixed prosthesis. And not with that of the fixed prosthesis plus fixing and connecting pieces."

Let it be said, preliminarily, that the understanding persisted in by the Tax Authority, at its various levels, is not subscribed to.

Indeed, this understanding is not subscribed to, first and foremost, regarding a suggested conditioning of the exemption to the final phase of the chain of transmissions of the goods in question, excluding from the scope thereof the "marketing phase". It is understood that the fact that the Applicant is an intermediary and, as such, sells such goods not to their final recipient but to professionals who, in turn, will sell them, applying them, to the final recipients, does not exclude it from the scope of the exemption, since nothing in the law supports such restriction.

Neither is the Tax Authority's understanding subscribed to, according to which osseointegrable dental implants and transepithelial abutments would be "parts, components and accessories" of prostheses, not being "apt to fulfill, considered individually, the function of replacing a part of the body or its function", being "only components, each performing the function for which they were conceived, of support and fixation of the prosthesis".

Indeed, such understanding appears to be contradictory in its own terms, it not being understood how, considering that it is characteristic of the prosthesis the "function of replacing a part of the body or its function", one can consider that, in the manner in which the Tax Authority does, implants and abutments are mere means "of support and fixation of the prosthesis", since without the implants and abutments, the remaining part of what is – for the Tax Authority – the prosthesis, would also not be capable of individually ensuring "the function of replacing a part of the body or its function", such that in fact… there would be no prosthesis. That is: in accordance with the thesis sustained by the Tax Authority, there would be no fixed dental prostheses, since each of the elements that make it up, considered and applied individually (it being certain that their joint application, all at once, is clinically impossible), would not be capable of ensuring the replacement of the bodily function that they aim, collectively, to provide.

Implants and abutments should not be thus, it is judged, "additions" of fixation and connection, in the measure that they add nothing to the prosthesis, not least because without them the prosthesis does not exist.

In this manner, it is considered that the prosthesis, as an object intended to ensure "the function of replacing" a tooth, by means of a fixed implant, comprises the osseointegrable implant, the transepithelial abutment and the artificial crown. It is this set, as a whole, that ensures the "function of replacing" a tooth, and not just one of those elements, separated from the rest.

Nor is the understanding suggested by the Tax Authority subscribed to, that the osseointegrable implant and the transepithelial abutment would be, in essence, mere materials acquired for the manufacture of the prosthesis. It is instead considered that such goods are already finished parts of the prosthesis itself, since they have no other purpose, application or utility than their insertion in the human body, so as to ensure "the function of replacing" a tooth, and that, by their very nature, the prosthesis in question has no possibility of being "completed" except when implanted in the human body, and in the course of a process that extends substantially over time. In fact, it is not seen how it can be sustained that either the osseointegrable implant or the transepithelial abutment, properly finished, would be equivalent, for example, to raw titanium that is going to be transformed into the first, or to any other element, raw material, or component that, by means of a transformation process, or even an assembly process, is going to become the prosthesis. On the contrary, it is considered that both the osseointegrable implant and the transepithelial abutment, properly finished, are parts of the final prosthesis, the process of their implantation in the human body, aimed at the replacement of the tooth, not being a transformation process, or even an assembly process, but truly an application process of the prosthesis in that same body, in accordance with the medically necessary procedures for this purpose.

Furthermore, disagreement is also expressed with the reading presented by the Tax Authority, relating to the text of the norm with which we are concerned, when it states that "the legislator refers to prosthetic material and not to material for prosthesis (for application in a prosthesis), which indicates the exclusion of connecting or fixing parts of prostheses, such as those transacted by the taxpayer.". Indeed, it is understood that in referring to "prosthetic material", and not, simply, to "prosthesis", the legislator is, precisely, giving the indication opposite to that presented by the Tax Authority, wishing, expressly, not to limit itself only to the prosthesis, as a singular object ("complete good", in the Tax Authority's terminology).

This same understanding was already unanimously adopted, with regard to a question entirely identical to that of the present proceedings, in proceeding 429/2014-T of the CAAD[1], where it was considered in summary that:

"It is important to note that the meaning and scope of the reduced rate applied in this domain should give consideration to the good rules of hermeneutics, taking into account not only the grammatical element, but also its respective context, reason for being and purposes pursued by item 2.6, and should result in a declarative interpretation (and not a restrictive one, contrary to what the Tax Authority argues).

Now, from the outset, the text of the provision seems to indicate that dental implants are encompassed in the aforementioned list, as we are faced with prosthetic material intended to replace an organ of the human body, in this case, the dental apparatus.

Indeed, nothing in the text of the law leads us to restrict its application to situations of transmissions of "complete goods" of implant, in the sense that the Tax Authority wishes to convey.

Furthermore, it follows from the facts found as proven that such a concept does not exist as such, existing instead implants constituted by the three parts now in question – crown, implant and abutment, which, in accordance with surgical technique, are introduced in phases into the patient's mouth, thus giving rise, as a whole, to an implant. In reality, these three parts are inseparable and unusable except for the composition of an implant as a composite prosthesis.

Such "complete goods" of implant not existing, in the sense that the Tax Authority wishes to convey, the understanding of the Tax Administration ends up denying the benefit of the reduced rate to this type of prosthesis, thus calling into question, without an attendable rational reason, the ratio legis that led the legislator to accept the application of the reduced VAT rate in such situations – the protection of public health. Indeed, if such understanding were accepted, an arbitrary discriminatory treatment would be introduced between different dental prostheses. On the one hand, prostheses comprised of a single part would benefit from the reduced rate of 6%, on the other hand, "composite" prostheses would be taxed at the normal rate. This fact is discriminatory, offending, from the outset, in particular, the provisions of Articles 5, paragraph 2 and 7, paragraph 3 of the General Tax Code. Indeed, in accordance with the provisions of the first aforementioned normative, of the heading 'Purposes of taxation', taxation respects the principles of generality, equality, legality and material justice. In turn, in accordance with the provision in Article 7, paragraph 3, "Taxation does not discriminate any profession or activity nor prejudices the practice of legitimate acts of a personal nature, without prejudice to exceptional increases or benefits determined by economic, social, environmental or other purposes".

But we would essentially be faced with an intolerable offense to the principle of neutrality that governs this tax at the level of European Union Law, treating equal goods in a distinct manner without any attendable rational reason, a fact that violates the rules governing this tax as well as all the jurisprudence of the CJEU to which we alluded.

As is known, in accordance with the provision in paragraph 2 of Article 11 of the General Tax Code, whenever the terms specific to other branches of law are employed in tax norms, they should be interpreted in the same sense that they have therein, unless otherwise directly resulting from the law. In turn, in paragraph 3 of the aforementioned normative, it is provided that, if doubt persists regarding the meaning of the rules of incidence to be applied, regard should be had to the economic substance of the tax facts. Now, what the Union legislator, the European Commission and the jurisprudence of the CJEU determine is that, in the use of the concepts employed for purposes of application of reduced rates, the Member States should regard the economic effects at issue so as not to put into question the essential principle of neutrality of the tax.

That is, if the understanding conveyed by the Tax Authority in the concrete case were accepted, we would have a difference in treatment for identical realities resulting not from the VAT Directive but from a deficient application thereof by the Tax Administration.

It is certain that derogation norms, as is the case with the norm that enables Member States the application of reduced tax rates, should be applied restrictively, but we should not confuse this fact with selective application, a completely distinct reality that puts into question the most basic characteristics of the tax.

In this context, it is important to further note that the invocation, by the Tax Authority, of the argument of the Combined Nomenclature does not proceed, since this Nomenclature was created for purposes of statistics and application of the common customs tariff and has no relevance whatsoever with respect to the classification of goods and services for purposes of VAT in Portugal.

The only case in which in the VAT Code recourse is made to the Combined Nomenclature to define the scope of the tax regime of goods is provided in Article 14, paragraph 1, subsection i) thereof, for purposes of determining the regime of exemption (complete or zero rate), in accordance with which there are exempt "transmissions of supplies of goods placed on board warships classified by code 8906 00 10 of the Combined Nomenclature, when they leave the country for destination to a port or anchorage located abroad", a provision not applicable in the situation at hand.

Being certain that, in accordance with the provision in Article 98, paragraph 3, of the VAT Directive, Member States may use the Combined Nomenclature to delimit with exactitude each category subject to the reduced rate, equally certain is that the Portuguese legislator did not adopt this option.

That is, for purposes of VAT it is irrelevant the classification that implants, crowns and abutments deserve in the Combined Nomenclature.

Now, in this context, it is important once again to note that, as has been proven, the three "parts" now at issue – implant, crown and abutment – cannot be used separately, being specially designed and manufactured for the production of a piece designated as an implant. Indeed, contrary to what the Tax Authority alleges, there does not exist the single piece implant in the factual sense that it wishes to grant it, but only the implant constituted, as such, by implant, crown and abutment, inseparable parts having in view this reality.

It is abundantly clear that the fact that such parts are marketed separately, as in the case cited, the mere fact that segregated invoicing (with separate codes) or autonomous invoicing (in separate invoices) occurs cannot affect the classification and qualification for purposes of VAT, taking precedence the form over the substance.

In reality, what is at issue in the present proceedings and has been proven is subsumed in the legal provision of item 2.6 of List I attached to the VAT Code, consisting of "… apparatus, devices and other prosthetic or compensatory material intended to replace, wholly or in part, any limb or organ of the human body".

And, it must be reiterated, the ratio legis that leads the legislator to accept the application of the reduced VAT rate in such situations – the protection of public health – is exactly the same that leads us to this interpretation.

It is to be noted, finally, that, from the jurisprudence now cited, even if, as the Tax Authority claims, such "complete goods" of implant supposedly existed, in the sense that it wishes to convey, we would still have to recognize that the crown, the abutment and the implant would be configured as a single piece or, at the very least, even if erroneously not understood in this manner, as accessory parts, and as such should be taxed at the reduced rate, following the treatment of the principal operation.

That is: whether only by resort to the Union rules or by simple application of the good rules of hermeneutics, the result is the same – one can only conclude that in item 2.6 of List I attached to the VAT Code there are included both implants composed of a single piece and composite implants.

Indeed, all the elements of interpretation of tax norms that can be invoked for this purpose, as well as the characteristics of VAT and the interpretation that the CJEU has been making of the same, lead us to conclude that, in the present case, the reduced VAT rate provided in item 2.6 of List I attached to the VAT Code should be applied to the transmission of implants, crowns and abutments now under analysis, terms in which the Applicant is given reason.

In view of the foregoing, it is concluded that the VAT assessments contested suffer from error in their legal prerequisites, due to erroneous interpretation of item 2.6 of List I of the VAT Code."

It is thus concluded that the assessments subject of the present proceedings suffer from a vice in their respective factual and legal prerequisites, as alleged by the Applicant, and should, as such, be annulled in their entirety, and thus the examination of the remaining questions raised is rendered unnecessary.

The Applicant combines with the request for annulment of the tax act subject of the present proceedings, the request for condemnation of the Tax Authority to the payment of compensatory interest on the amount paid by it following notification of the assessments now annulled.

A prerequisite for the award of compensatory interest is that the error in which the Tax Authority labored be imputable to it (cf. Article 43 of the General Tax Code).

In the case at hand, it is manifest that, following the illegality of the assessment acts, for the reasons pointed out above, there is grounds for reimbursement of the tax paid by the Applicant, by virtue of the provisions of the aforementioned Articles 24, paragraph 1, subsection b), of the RJAT and 100 of the General Tax Code, as this is essential to "restore the situation that would have existed if the tax act subject of the arbitral decision had not been performed".

It is also clear in the record that the illegality of the tax assessment act contested is directly imputable to the Respondent, which, on its own initiative, performed it without legal support, suffering from an erroneous appraisal of the legally relevant facts and consequent application of the legal norms to the concrete case.

Thus, the Applicant is entitled to receipt of compensatory interest, in accordance with the provisions of Articles 43, paragraph 1, of the General Tax Code and 61 of the Tax Code of Procedure and Process.

Compensatory interest is owed to the Applicant from the date on which it made the payment of the tax obligation in question in the proceedings, until full reimbursement of the amount paid, at the legal rate.

C. DECISION

In these terms, the Tribunal decides in this Arbitral Tribunal to find the arbitral petition filed entirely well-founded and, in consequence,

a) Declare the futility of proceedings, with respect to the amount of €2,937.50, corresponding to compensatory interest included in the assessments subject of the present proceedings, annulled by order dated 26-11-2014;

b) Annul the assessments subject of the present proceedings, in the remaining part, condemning the Tax Authority to restore the amount unduly paid by the Applicant, plus compensatory interest, counted from the date of such payment until full restitution;

c) Condemn the Respondent in the costs of the proceedings, in the amount of €2,142.00.

D. Value of the Proceedings

The value of the proceedings is set at €56,935.25, in accordance with Article 97-A, paragraph 1, a), of the Tax Code of Procedure and Process, applicable by virtue of subsections a) and b) of paragraph 1 of Article 29 of the RJAT and paragraph 2 of Article 3 of the Regulation of Costs in Tax Arbitration Proceedings.

E. Costs

The arbitration fee is set at €2,142.00, in accordance with Table I of the Regulation of Costs in Tax Arbitration Proceedings, to be paid by the Tax Authority, since the petition was entirely well-founded, in accordance with Articles 12, paragraph 2, and 22, paragraph 4, both of the RJAT, and Article 4, paragraph 4, of the aforementioned Regulation.

Let notification be made.

Lisbon

29 May 2015

The Arbitrator

(José Pedro Carvalho)

[1] https://caad.org.pt/tributario/decisoes/decisao.php?s_processo=&s_data_ini=&s_data_fim=&s_resumo=implantes&s_artigos=&s_texto=&id=431.