CJEU: Fees for registration for medical procedures may be exempt from VAT
The Court of Justice of the European Union has ruled on whether consultations on the prescription of medical procedures can be regarded as activities closely related to the provision of medical and healthcare services that are exempt from VAT.
Thermas, a spa operating company, invoiced its clients for spa registration fees without VAT. The Portuguese tax authority disagreed with the scheme and assessed additional output VAT. The subsequent dispute made its way to the CJEU.
In its judgment, the CJEU confirmed that traditional spa services prescribed by a doctor and having a therapeutic function qualify as medical care exempt from VAT.
According to the CJEU, the purpose of exempting the related supplies is to ensure that the provision of medical care does not become unaffordable due to the increased cost of providing that care to the final consumer. The activity of drawing up a personal file containing information on the client's state of health and the care prescribed may be closely related to medical care if it is an integral part of the planned provision of care, i.e., if the consultation by the doctor is necessary for the provision of such care.
If the registration is merely a possibility to purchase prescribed care or if the contents of the health file are not necessary for the provision of care, the exemption from VAT does not apply even if the prescribed care is not available without the payment of the registration.
The CJEU pointed out that when assessing whether to apply a VAT exemption, it is always necessary to check whether the medical service is provided by an establishment listed in the VAT Directive (i.e., a public or other entity of a comparable nature).