Judgment;Summary — ECLI:EU:C:2022:18
Date: 2022-01-13
Language of the case: Portuguese
Court formation: Seventh Chamber
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: Portugal

Translation C-513/20 – 1 
Case C-513/20 
Request for a preliminary ruling 
Date lodged:  
13 October 2020 
Referring court:  
Supremo Tribunal Administrativo (Supreme Administrative Court, 
Portugal) 
Date of the decision to refer:  
1 July 2020 
Appellant:  
Autoridade Tributária e Aduaneira (Tax and Customs Authority) 
Respondent:  
Termas Sulfurosas de Alcafache, S.A. 
  
Supremo Tribunal Administrativo 
(Supreme Administrative Court) 
[…] 
ORDER OF THE TAX LITIGATION CHAMBER OF THE SUPREMO 
TRIBUNAL ADMINISTRATIVO (SUPREME ADMINISTRATIVE COURT) 
I. Background 
I.1. By judgment of 14 June 2018, the Tribunal Administrativo e Fiscal de Viseu 
(Administrative and Tax Court, Viseu) upheld the administrative action brought 
by Termas Sulfurosas de Alcafache, S.A., and, accordingly,  
a. partially annulled the contested assessments (relating to VAT and 
default interest for the 2010, 2011 and 2012 tax years), in so far as they 
do not recognise the exemption from VAT applicable to the amounts 
charged for ‘thermal registration’ and the provision of ‘traditional 
EN 
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thermal cure’ services, and made a reverse pro rata correction to the 
amount of deductible VAT; 
b. annulled the implied decisions dismissing the administrative appeals 
processed under Nos […]; 
c. annulled the decisions dismissing the applications in the 
reconsideration proceedings Nos […]. 
1.2. Being in disagreement with that judgment, the representative for the 
Fazenda Pública (Public Treasury) brought an appeal before the Supremo Tribunal 
Administrativo (Supreme Administrative Court) in which she made a number of 
allegations culminating in the following conclusions: 
A – This appeal is directed against the judgment delivered on 14 June 2018, more 
specifically, against that part of it which finds to be contrary to law, in particular 
Article 9 of the CIVA (Portuguese VAT Code), the corrections for VAT purposes 
made on the ground that thermal registration is subject to, and not exempt from, 
VAT, and accordingly annuls the contested assessments (ex officio assessments to 
VAT and default interest for the tax years 2010, 2011 and 2012).  
B – The fundamental legal question which must be answered in this case is 
whether certain supplies of services effected by the applicant fall within the scope 
of the exemption from value added tax (VAT) provided for in Article 9(2) of the 
Portuguese VAT Code, in particular on the ground that these are ‘supplies closely 
related to the supply of medical and healthcare services’. 
C – In order to be able to answer that question, it is necessary, first, to interpret the 
provision establishing that exemption, by attempting to define its terms in so far as 
this is possible and necessary, and, secondly, to interpret the substance of the 
facts, with a view to determining whether they may be brought within the scenario 
envisaged in that provision. 
D – The reasons for this appeal have to do with both of the abovementioned 
issues: the interpretation of the provision and the interpretation of the facts. 
E – Article 9(2) of the Código do IVA (Portuguese VAT Code) (‘the CIVA’) (the 
provision establishing the exemption in question) must be interpreted in 
accordance with EU law and with the relevant case-law of the Court of Justice of 
the European Union (‘the Court of Justice’). 
F – That statutory provision transposes into domestic law Article 132(1)(b) of 
Council Directive 2006/112/EC of 28 November 2006 on the common system of 
value added tax (‘the VAT Directive’). 
G – The abovementioned provision of the CIVA must be interpreted in 
accordance with the interpretation of the corresponding provision of EU law 
which has been adopted by the Court of Justice: it is a long-standing principle of 
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EU law that the courts of the Member States have a duty to interpret their 
domestic law in accordance with EU law (judgment of the Court of Justice of 
4 July 2006, C-212/04, Adeneler and Others). 
H – It follows from the very wording of Article 132 of the VAT Directive that the 
exemptions for which it provides are binding on the Member States from the point 
of view of their scope. Member States may not ― other than in exceptional cases 
which are expressly specified ― refrain from regarding as exempt the activities 
referred to in that article and may exempt those activities only to the extent laid 
down in that article. So states the Court of Justice in the judgment in Skatteverket 
[judgment of the Court of Justice of 21 March 2013, C-91/12, PFC Clinic AB]. 
I – According to the settled case-law of the Court of Justice, the exemptions 
provided for in Article 132 of the VAT Directive constitute independent concepts 
of EU law whose purpose is to avoid divergences in the application of the VAT 
system from one Member State to another [judgment of 25 February 1999, 
C-349/96, CPP, paragraph 15; judgment of 15 June 1[9]89, 348/87, Stichting 
Uitvoering Financiële Acties v Staatssecretaris van Financiën, paragraph 11, and 
judgment of 28 January 2010, C-473/08, Eulitz, paragraph 25]. 
J – It follows from settled case-law that the exemptions provided for in 
Article 132 of the VAT Directive do not exempt every activity performed in the 
general interest but only those listed and described in great detail in that provision 
(see, in particular, the judgments of 11 July 1985, Commission v Germany, 
107/84, paragraph 17; of 20 November 2003, d’Ambrumenil and Dispute 
Resolution Services, C-307/01, paragraph 54, and Eulitz, paragraph 26). 
K – However, the interpretation of those terms must be consistent with the 
objectives pursued by those exemptions and comply with the requirements of the 
principle of fiscal neutrality inherent in the common system of VAT. Thus, the 
requirement of strict interpretation does not mean that the terms used to specify 
the exemptions referred to in Article 132(2) should be construed in such a way as 
to deprive the exemptions of their intended effect (see, in particular, the judgment 
of 14 June 2007, Haderer, C-445/05, paragraph 18 and the case-law cited, and the 
abovementioned judgment in Eulitz, paragraph 27 and the case-law cited). 
L – Consequently, the concept of ‘medical care’, contained in Article 132(1)(b) of 
the VAT Directive [and the concept of ‘the provision of medical care’, referred to 
in Article 132(1)(c) of that directive,] both cover services that have as their 
purpose the diagnosis, treatment and, in so far as possible, cure of diseases or 
health disorders (see the judgments of 21 March 2013, C-91/12, PFC Clinic, 
paragraph 25, and of 10 June 2010, C-86/09, Future Health Technologies, 
paragraphs 37 and 38). 
M – Article 132(1)(b) must be interpreted restrictively: the terms used to designate 
the exemptions contained in Article 132 of the [VAT] Directive must be 
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interpreted strictly given that they are exceptions to the general principle that VAT 
is levied on each supply of services effected for consideration by a taxable person. 
N – On the other hand, the way in which that article was applied by the Court of 
Justice in De Fruytier (judgment of 2 July 2015, C-334/14, De Fruytier), and even 
more so in Klinikum Dortmund (judgment of 13 March 2014, C-366/12, Klinikum 
Dortmund), both relating to healthcare services, shows that the Court currently 
adopts a restrictive interpretation of the provisions that exempt medical and 
healthcare services from VAT. 
O – The Court of Justice could not have been clearer: the provision in question is 
intended to exempt medical services in a strict sense. 
P – What may be inferred from the judgment of the Court of Justice is that, 
while there is no need for a particularly restrictive interpretation of the 
‘therapeutic purpose’ of a supply, the provision in question must the subject of a 
restrictive interpretation such that only medical services in a strict sense and those 
‘closely related’ to these are to be regarded as falling within the scope of the 
exemption. 
Q – The contested provision ― Article 9(2) of the CIVA ― envisages two 
scenarios or situations: i) ‘medical and healthcare services’; and ii) ‘supplies 
closely related’ to those services. There would not appear to be any further doubt 
that, in the factual circumstances that gave rise to the present case, the only matter 
open to debate is the classification [of the services in question] as ‘supplies 
closely related to the supply of medical and healthcare services’. 
R – The corresponding expression contained in Article 132(1)(b) of the VAT 
Directive is ‘hospital and medical care and closely related activities’. 
S – The VAT Directive does not contain, either in Article 132 or elsewhere, a 
definition of the concept of ‘hospital and medical care and closely related 
activities’. 
T – So far as concerns the amount charged for thermal registration, the lower 
court confines itself to establishing that, ‘… since this amount is charged for the 
provision of thermal treatments, already regarded as being exempt from VAT, this 
too should be regarded as being exempt, since it is charged only after a medical 
consultation has been conducted and on condition that a qualified doctor has 
prescribed the thermal treatment in question’. With all due respect, which must 
not prevent this matter from being opened up to debate, the question must asked 
whether the lower court’s position is vitiated by its failure to discharge its 
obligation to adopt a restrictive interpretation of the provisions in question. 
U – Let us return to the judgment in De Fruytier and let us ascertain whether, in 
that judgment, the Court of Justice properly applied the concept of hospital and 
medical care and closely related activities: are we dealing with a ‘supply, effected 
at a point in time prior or subsequent to a (diagnostic) service to which that supply 
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is linked or related in the sense that it contributes towards the delivery of that 
service’, with the result that the supply may be regarded as being ancillary to, or 
instrumental in, the principal service? Are we dealing with a supply which, 
‘although it does not represent a purpose in itself for the customer, serves to 
ensure that the principal service is of better quality or is provided under better 
conditions? (the text in inverted commas reflects the conceptual approach to this 
issue which has been taken in legal literature, in particular, LAIRES, Rui (2012), 
O IVA nas Atividades Culturais, Educativas, Recreativas, Desportivas e de 
Assistência Médica ou Social, Coimbra: Almedina I IDEFF, pp. 133-4, and 
NEVES, Filipe Duarte (2010), Código do IVA e Legislação Complementar, 
Comentado e Anotado, Oporto: Vida Económica, p. 178). 
V – In both cases the answer is obviously in the affirmative. And yet, for the 
Court of Justice, the supply in question is still not a supply closely related to a 
healthcare service. This highlights the fact that the definitions provided in legal 
literature are not consistent with the recent case-law of the Court of Justice. 
X – In support of that position, regard must be had to another judgment of the 
Court of Justice, in Case C-366/12 (judgment of 13 March 2014, C-366/12, 
Klinikum Dortmund), in which the Court held, by way of final conclusion, that the 
provision by a hospital pharmacy of cytostatic drugs to cancer patients in the 
course of outpatient treatment did not qualify for the exemption from VAT. While 
it true that that case was not concerned with ‘closely related [activities]’, the 
discussion of that concept is nonetheless useful for the purpose of highlighting 
how restrictive the Court’s interpretation of the exemptions applicable to medical 
services was in 2015. 
Y – It is not possible, on the basis of the abovementioned cases of the Court of 
Justice, to define ‘[activities] closely related’ to the supply of medical and 
healthcare services, but what can be said is that the Court of Justice requires the 
provision in question to be interpreted restrictively. 
Z – On the other hand, the only valid dividing line drawn to date can be found in 
De Fruytier: activities which exhibit with the ‘principal’ supply of medical care a 
connection as direct as, or less direct than, that which was present in that case 
cannot be regarded as ‘supplies closely related to medical or healthcare services’. 
AA – It may be inferred from the foregoing that the amount charged by the 
applicant for thermal registration cannot be classified as a ‘supply closely related 
to’ the supply of medical or healthcare services. 
AB – […] The judgment under appeal, in reference to the tax inspection document 
and its various annexes, states the following: the amount charged by the taxable 
person (the applicant) for ‘thermal registration’ is paid only once a year; its 
payment does not entail the provision of treatments, since payment for registration 
entitles users only to purchase the treatments they wish to take but not to receive 
them. 
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AC – Accordingly […]: ‘… in the case at issue, it is clear that the payment made 
by “thermal registration” users does not amount to payment for medical services, 
does not therefore constitute [payment for] an actual supply of medical care, or the 
protection, prevention or reinstatement of health, and does not qualify for the 
exemption provided for in Article 2([1]) of Article 9 of the CIVA’.  
AD – Furthermore, […] the information contained in the draft dismissal of the 
application for reconsideration […] supports the inference that Decree 15401 of 
20 April 1928 (legislation governing thermal spas), provided for a ‘registration 
fee’ as follows: registration could take place only after the user had been 
examined by the medical director or by a doctor specialising in hydrology who 
was authorised to practise medicine in the thermal spa; registration took place 
after the doctor responsible for conducting the examination had duly completed 
the patient’s file; [registration] involved the payment of a fee without which the 
user could not begin thermal treatments. Decree 15401 of 20 April 1928 was 
repealed by Decree-Law No 142/2004 of 11 June 2004, which no longer provides 
for a registration fee and this, therefore, is no longer prescribed by law. 
AE – On the other hand, ‘references to documents which are already contained in 
the case file must not be regarded as an allegation of fact, since all procedural 
vicissitudes must be known ex officio’; see Jorge Lopes de Sousa, CPPT anotado 
e comentado, 6th edition, p. 225, which refers to the judgments of the STA 
(Supreme Administrative Court) […]. 
AF – The payment by users of a variable sum for registration does not equate to 
payment for medical services provided in hospital following hospitalisation or 
provided by doctors, dentists, midwives, nurses or paramedics, but it does equate 
to the right to enjoy a number of services. According to the applicant, ‘it is the 
route by which users have access either to a medical consultation or to the 
treatments prescribed’. As such, it does not constitute an actual supply of medical 
care, or of a service for the protection, prevention or reinstatement of health, and 
does not therefore qualify for the exemption provided for in Article 2(1) of the 
CIVA. 
AG – The lower court reached the contrary conclusion: in its view, as that amount 
is charged for the provision of thermal treatments, which are already regarded as 
being exempt, this too must be regarded as being exempt, since it is charged 
exclusively after a medical consultation and on condition that a qualified doctor 
prescribes the abovementioned treatments. This is the only ground on which that 
conclusion is based. 
AH – The judgment [under appeal] does not put forward the slightest argument to 
demonstrate how the activities at issue fall (even implicitly) within the scope of 
the concept of ‘supplies closely related to [medical services] provided by 
hospitals, clinics, health centres and other such establishments’. 
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AI – Neither is it apparent how the [lower] court arrived at that conclusion, given 
that this does not follow from the legislation, the court does not put forward any 
kind of interpretative argument and makes no reference to legal literature or case-
law to support its interpretation. 
AJ – As has already been noted, case-law has not yet defined the concept of 
‘hospital and medical care and closely related activities’. The most reliable 
information available with respect to its application in a particular case is the 
interpretation of that concept which the Court of Justice adopted in Fruytier. Even 
then, the Court of Justice held that the transport of blood to laboratories did not 
constitute a related activity.  
AK – As a result, the view must be taken that thermal registration cannot be 
classified as a supply ‘closely related to the supply of medical and healthcare 
services’, and that there has been no reasoned demonstration of the opposite 
position. 
AL – Since there are serious doubts about the issue under consideration, it is 
necessary to submit a request for a preliminary ruling to the Court of Justice, and, 
therefore, to stay the appeal proceedings pending a ruling from the Court. 
In the light of all the foregoing, it is requested that the present appeal be upheld 
and the judgment under appeal set aside, and that the legal consequences arising 
therefrom be brought to bear. 
I.3. The respondent submitted a response in which it made a number of 
submissions to the effect that ‘the appeal should be dismissed and the judgment 
under appeal confirmed’. 
I.4. The prosecutor attached to this court issued an opinion in which he concluded 
that: 
‘The judgment under appeal must be censured in relation to that part of it which 
has been challenged. 
The appeal should be upheld and the judgment under appeal set aside in relation to 
that part of it which has been challenged, or, in the event that it is found that the 
question at issue raises serious doubts, a request for a preliminary ruling should be 
made to the Court of Justice, and the present proceedings should be stayed.  
II. Subject matter of the appeal 
In so far as the appeal is directed against that part of the judgment under appeal 
that is unfavourable to the Autoridade Tributária (Tax Authority), the appeal seeks 
a determination as to whether the amounts charged for ‘thermal registration’ do 
not qualify for exemption from VAT since they are not ‘supplies closely related to 
supplies of medical and healthcare services’, in accordance with the provisions of 
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Article 9(2) of the Portuguese VAT Code and of Article 132(1)(b) of Council 
Directive 2006/112/EC of 28 November 2006 (VAT Directive).  
In the event that the application of the latter provision raises doubts, it will be 
necessary to determine whether the abovementioned question should be submitted 
for assessment by the Court of Justice by way of a reference for a preliminary 
ruling, and whether the present proceedings should be stayed. 
III. Grounds 
III. 1. Grounds of fact 
From the facts presented as established in the judgment under appeal, it follows in 
particular that the applicant charged users of the Alcafache thermal baths, which is 
regarded as being a primary care unit not forming part of the National Health 
Service and not capable of providing hospitalisation, amounts for ‘thermal 
registration’ which, during 2010, 2011 and 2012 amounted in total to 
EUR 87 003.00, EUR 72 654.00 and EUR 55 627.50 respectively, as detailed in 
the tax inspection document forming the basis of the assessments to VAT on those 
amounts, at a rate of 23% plus default interest, which were issued ex officio by the 
Autoridade Tributária (Tax Authority). 
That document further states […]: 
‘… Where a user approaches the reception desk and informs the receptionist of 
the service he is looking for, two procedures may be applied: 
1. If the customer is looking for a ‘traditional thermal cure’ service, he must 
compulsorily undergo a prior medical consultation, conducted by one of the 
doctors specialising in hydrology within the thermal spa facilities, in order to 
receive a prescription for the treatments to be performed. 
At that point, the user pays for the consultation, plus an amount for ‘thermal 
registration’ (described on the company’s website as “thermal waters 
registration”), valid for the entire year, and for the treatments prescribed (which he 
may undergo at that time or later, given that the prescription is valid until 
31 December of the year in which it is issued), to which the taxable person applies 
the VAT exemption by mentioning on the invoice Article 9(2) of the CIVA. 
[Treatments] are paid for before they start. 
The company’s official website contains the following warning: ‘please bear in 
mind that all registrations are individual and personal and are made with a view 
to the arrangement of a medical appointment. The treatments to be performed will 
be prescribed at a later date by our doctor specialising in hydrology’. 
[…] 
AUTORIDADE TRIBUTÁRIA E ADUANEIRA 
 
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2. If the customer wishes to book a ‘thermal spa’ service, the medical 
consultation is optional in the case of treatments of up to three days […] 
The user does not have to pay anything for ‘thermal registration’, whether or not a 
medical consultation takes place’. 
The […] same document goes on to say: 
‘… in order to be able to take advantage of the treatments included in the 
‘traditional thermal cure’ package, users not only have to undergo a medical 
consultation but must also register.  
At the time of registration, the user pays an amount, described by the taxable 
person as being for ‘thermal registration’, which, in the years 2011 and 2012, was 
EUR 30, EUR 33 and EUR 36 respectively, and without which users cannot start 
hydrological treatments […]’. 
That […] document later states: 
1. [The Authority] has established the existence of an item charged to the 
customer on the ‘thermal invoice/receipt’ or the ‘thermal advance’ for 
‘thermal registration’. 
2. As has already been shown, on 18 May 2014, the company made the 
following written statement […]: 
‘“Thermal registration” includes the service of opening and annually 
updating each spa user’s individual file, which, inter alia, includes his 
clinical history (it being noted that the Alcafache Spa does not allow users 
to take thermal treatments unless they have first attended a medical 
consultation), and falls within the scope of Article 9(2) [of the CIVA], in the 
light of circular […]. It is valid for one spa season, which is to say that it is 
valid until the last day of the year in which the thermal baths are in 
operation’. 
3. The consideration for the compulsory payment of the abovementioned 
amount is the ability to take advantage of hydrological treatments, which 
may or may not be performed. 
4. So far as concerns the amount charged to the taxable person for ‘thermal 
registration’: 
a. it is paid only once a year; 
b. its payment does not entail the performance of treatments; 
c. the ‘registration’ payment entitles users only to buy the treatments they 
are looking for, but not to have those treatments performed. 
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The judgment under appeal also regards it as established that the services known 
as ‘traditional thermal cures’, which include a number of treatments 
(ENT/respiratory tract and rheumatology), perform a therapeutic function which is 
not present in other types of service by the name of ‘thermal wellbeing’ or 
‘thermal spa’, which are also provided in the abovementioned thermal baths. 
III. 2. Grounds of law 
In accordance with Article 9(2) of the Código sobre el IVA (Portuguese VAT 
Code), the following, in particular, are to be exempt from VAT: 
― ‘the supply of medical and healthcare services and closely related supplies 
effected by hospitals, clinics, health centres and other such establishments’. 
That provision transposes into domestic law Article 132(1)(b) of Council 
Directive 2006/112/EC of 28 November 2006 (VAT Directive), which also 
provides that ‘hospital and medical care and closely related activities’ are to be 
exempt from VAT.  
According to the abovementioned provision of the CIVA, the VAT exemption is 
to apply to transactions closely related to ‘the supply of medical and healthcare 
services’ where these are provided in ‘hospitals’ and other such establishments. 
As regards the necessary assessment of whether there is a direct relationship 
between ‘thermal registration’ and medical care (or the supply of healthcare 
services, to use the wording of the CIVA), it is not clear, in the light of the criteria 
already defined by the Court of Justice, whether the abovementioned amounts 
charged for ‘thermal registration’ are to be regarded as closely related to medical 
care. 
Certain considerations may support the conclusion that this is the case, such as, 
for example, the fact that [‘thermal registration’] includes the service of opening 
each user’s individual file, which sets out the clinical history entitling the user to 
purchase treatments forming part of the package by the name of ‘traditional 
thermal cures’, the nature of which as a supply of services and as an activity 
exempt from VAT is not in issue. 
There are doubts, however, about whether the abovementioned amounts paid for 
‘thermal registration’ may be included within the framework of the supply of 
medical care services referred to in Article 132(1)(b) of the VAT Directive. 
Furthermore, a consultation of the ‘www.curia.europa.eu/juris/’ website will show 
that there is nothing to indicate that the Court of Justice has already adjudicated in 
its case-law on whether amounts paid for ‘thermal registration’ are subject to 
VAT. Neither did it refer to that question in particular in its judgment in De 
Fruytier, cited above. 
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Finally, in the light of the requirements arising from the principles of the primacy 
of EU law and conform interpretation, in connection with [the observance of] 
which the reference for a preliminary ruling is an essential instrument ― 
inasmuch as it ensures the desired uniformity of interpretation and application of 
EU law in all the Member States, as well as the cohesion of the EU system of 
judicial protection and the principle of effective judicial protection for the rights 
of individuals ―, it is considered useful and necessary to ask the Court of Justice 
to give a preliminary ruling, in accordance with Article 267 TFEU, on the 
following question concerning the interpretation of Article 132(1)(b) of the VAT 
Directive: 
― May payments made in return for the service of opening, for each user, an 
individual file setting out the clinical history entitling the user to purchase 
‘traditional thermal cure’ treatments be included within the concept of 
‘closely related activities’, provided for in Article 132(1)(b) of the VAT 
Directive, and may they, as such, be regarded as being exempt from VAT?  
[…]