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H7. Medical exemptions
Distinction between the exemptions​
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- Medical care in hospital v. medical care outside hospital
"[47] Next, as correctly pointed out by the Advocate General in points 44 to 46 of her Opinion, the criterion for drawing a clear distinction between the two tax exemptions provided for in Article 13A(1)(b) and (c) is less the nature of the service than the place where it is provided. The Court has held that, under Article 13A(1)(b), it is appropriate to exempt services encompassing a whole range of medical care in establishments pursuing social purposes such as the protection of human health, whereas letter (c) of the same provision exempts services provided outside hospitals and within the framework of a confidential relationship between the patient and the person providing the care (Commission v United Kingdom, cited above, paragraph 33)." (Dornier C-45/01)
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"[36] It follows that Article 13(A)(1)(b) and (c) of the Sixth Directive, which have separate fields of application, are intended to regulate all exemptions of medical services in the strict sense. Article 13(A)(1)(b) exempts all services supplied in a hospital environment while Article 13(A)(1)(c) is designed to exempt medical services provided outside such a framework, both at the private address of the person providing the care and at the patient's home or at any other place." (Kugler C-141/00)
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- Professionals exemption applies to medical care outside a hospital setting
"[40] It follows that only medical care provided in the exercise of the medical and paramedical professions, outside a hospital setting, for the purpose of prevention, diagnosis or treatment qualifies for exemption under Article 13(A)(1)(c) of the Sixth Directive, to the exclusion of other activities relating to general care and domestic help." (Kugler C-141/00)
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Purpose​
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- Reducing the cost of medical care
"[25] As the Court has previously held, the exemptions provided for in Article 13A(1)(b) of the Sixth Directive and letter (c) of the same provision both have the objective of reducing the cost of health care (Dornier, paragraph 43; and Case C‑307/01 D’Ambrumenil and Dispute Resolution Services [2003] ECR I‑13989, paragraph 58)." (LUP C-106/05)
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Medical care​
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- Services which have as their purpose diagnosis, treatment, cure of diseases/health disorders
"[27] ​It follows that the concept of ‘medical care’ in Article 13A(1)(b) of the Sixth Directive and that of ‘the provision of medical care’ in letter (c) of the same provision are both intended to cover services which have as their purpose the diagnosis, treatment and, in so far as possible, cure of diseases or health disorders (see, to that effect, Dornier, paragraph 48)." (LUP C-106/05)
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- Medical interventions carried out for a non-therapeutic purpose not medical care
"[38] The Court has already held, in Case C-384/98 D. [2000] ECR I-6795, at paragraph 18, that the concept of ‘provision of medical care’ does not lend itself to an interpretation which includes medical interventions carried out for a purpose other than that of diagnosing, treating and, in so far as possible, curing diseases or health disorders." (Kugler C-141/00)
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- Therapeutic purpose not interpreted narrowly
"[29]​ It should be borne in mind that, whilst ‘medical care’ and ‘the provision of medical care’ must have a therapeutic aim, it does not necessarily follow that the therapeutic purpose of a service must be confined within a particularly narrow compass... " (LUP C-106/05)
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- Maintaining or restoring human health included
"[29]​ ...Accordingly, medical services effected for the purpose of protecting, including maintaining or restoring, human health may benefit from the exemption under Article 13A(1)(b) and (c) of that directive (see, to that effect, Case C‑212/01 Unterpertinger [2003] ECR I‑13859, paragraphs 40 and 41; and D’Ambrumenil and Dispute Resolution Services, paragraphs 58 and 59)..." (LUP C-106/05)
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- Prophylactic services to persons not suffering any disease/health disorder included
"[29]​ ... The Court’s case-law is to the effect that medical services effected for prophylactic purposes may benefit from the exemption under Article 13A(1)(c) of the Sixth Directive. Even in cases where it is clear that the persons who are the subject of examinations or other medical interventions of a prophylactic nature are not suffering from any disease or health disorder, the inclusion of those services within the meaning of ‘medical care’ and ‘the provision of medical care’ is consistent with the objective of reducing the cost of health care, which is common to both the exemption under Article 13A(1)(b) and that under (c) of that paragraph...
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[31] ... the Court finds that, in the light of the objective of reducing health care costs pursued by the abovementioned exemptions, medical tests such as those at issue in the main proceedings, which have as their purpose the observation and examination of patients for prophylactic purposes, may constitute ‘medical care’ within the meaning of Article 13A(1)(b) of the Sixth Directive or ‘the provision of medical care’ within the meaning of letter (c) of the same paragraph (see, to that effect, Commission v France, paragraph 30)." (LUP C-106/05)
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Examples re medical care​
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- Psychotherapeutic treatment by qualified psychologists is medical care
"[50] It follows from the foregoing considerations that the term medical care in Article 13A(1)(b) of the Sixth Directive must be interpreted as covering all provision of medical care envisaged in letter (c) of the same provision, including services provided by persons who are not doctors but who provide paramedical services, such as psychotherapeutic treatment given by qualified psychologists." (Dornier C-45/01)
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- Laboratory tests are medical care (even to persons who are not ill), not just closely related
"[30] Moreover, medical tests which, as in the present case, are prescribed by general practitioners as part of the care they provide may contribute towards maintaining human health because, like any medical service effected for prophylactic purposes, they allow for the observation and examination of patients before it becomes necessary to diagnose, care for or heal a potential illness." (LUP C-106/05)
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- General care/domestic help not medical care (may be welfare)
"[44] In this connection, it need only be stated that it is clear from the terms in which Article 13(A)(1) of the Sixth Directive is couched that, while the provision of care of a therapeutic nature is exempt by virtue of Article 13(A)(1)(c), the provision of general care and domestic help by an out-patient care service to those in a state of physical or economic dependence, as the persons to whom Kügler supplied services were, is in principle linked to social assistance, so that it falls within the concept of services closely linked to welfare and social security work referred to in Article 13(A)(1)(g) of the Sixth Directive." (Kugler C-141/00)
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Identity of provider of medical care​
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- Company providing medical care can qualify for medical professional exemption
"[20] The Court has held that the exemption envisaged in Article 13A(1)(c) of the Sixth Directive is not dependent on the legal form of the taxable person supplying the medical or paramedical services referred to in that provision (Case C-141/00 Kügler [2002] ECR I-6833).
[21] The answer to the third question must therefore be that since the exemption envisaged in Article 13A(1)(c) of the Sixth Directive is not dependent on the legal form of the taxable person providing the medical or paramedical services referred to in that provision, psychotherapeutic treatment provided by a foundation governed by private law and given by psychotherapists employed by the foundation may benefit from that exemption." (Dornier C-45/01)
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"[30] The principle of fiscal neutrality precludes, inter alia, economic operators carrying on the same activities from being treated differently as far as the levying of VAT is concerned. It follows that that principle would be disregarded if the possibility of relying on the exemption which is envisaged for the provision of medical care referred to in Article 13(A)(1)(c) were dependent on the legal form in which the taxable person carries on his activity (see, to that effect, Gregg, cited above, paragraph 20)." (Kugler C-141/00)
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Activities upstream from those provided by the ultimate service provider ​
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- Medical care exemption applies to subcontracted laboratory tests
"[37] The Commission’s argument that it follows from the case-law concerning exemptions that activities carried out upstream from those provided by the ultimate service provider are not exempt (Case 107/84 Commission v Germany [1985] ECR 2655, paragraph 20; Case C‑240/99 Skandia [2001] ECR I‑1951, paragraphs 40 and 41; Case C‑235/00 CSC Financial Services [2001] ECR I‑10237, paragraphs 39 and 40; and Case C‑472/03 Arthur Andersen [2005] ECR I‑1719, paragraph 39), so that only medical tests carried out by laboratories on behalf of patients in the context of a direct contractual relationship with those patients comes within the scope of Article 13A(1)(b) of the Sixth Directive, must also be rejected, as that case-law relates to the interpretation of other exemptions, the wording and objectives of which are different from those pursued by that provision (see, to that effect, Case 107/84 Commission v Germany, paragraph 13)." (LUP C-106/05)
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- Individuals can rely on exemption for medical care provided by bodies governed by public law etc.
"[19] That interpretation, to the effect that the terms 'establishment‘ and 'organisation‘ do not refer only to legal persons, is, in particular, consistent with the principle offiscal neutrality inherent in the common system of VAT and in compliance with which the exemptions provided for in Article 13 of the Sixth Directive must be applied (see, to that effect, Case C-283/95 Fischer [1998] ECR I-3369, paragraph 27).
[20] The principle of fiscal neutrality precludes, inter alia, economic operators carrying on the same activities from being treated differently as far as the levying of VAT is concerned. It follows that that principle would be frustrated if the possibility of relying on the benefit of the exemption provided for activities carried on by the establishments or organisations referred to in Article 13A(1)(b) and (g) was dependent on the legal form in which the taxable person carried on his activity." (Gregg C-216/97)
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CLOSELY RELATED SUPPLIES
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Meaning of closely related​
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- Does not call for especially narrow interpretation in light of purpose
"[23] As the Advocate General noted in point 23 of his Opinion, that concept does not, however, call for an especially narrow interpretation since the exemption of activitiesclosely related to hospital and medical care is designed to ensure that the benefits flowing from such care are not hindered by the increased costs of providing it that would follow if it, or closely related activities, were subject to VAT." (Commission v. France C-76/99)
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- Does not include supplies which are an end in themselves rather than a means of better enjoying other types of service
"[34] In this case, it is common ground that the psychotherapeutic treatment given in Dornier's out-patient facility by qualified psychologists generally constitutes services provided to the patients as an end in themselves and not as a means of better enjoying other types of services. In so far as that treatment is not ancillary to hospital or medical care, it is not an activity closely related to services exempted under Article 13A(1)(b) of the Sixth Directive.
[35] Accordingly, the Court finds that psychotherapeutic treatment given in an out-patient facility of a foundation governed by private law by qualified psychologists who are not doctors is an activity closely related to hospital or medical care within the meaning of Article 13A(1)(b) of the Sixth Directive only when such treatment is actually given as a service ancillary to the hospital or medical care received by the patients in question and constituting the principal service."(Dornier C-45/01)
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Examples​
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- Transport of sample for the purpose of testing is closely related
"[24] For the purpose of any possible exemption from VAT for the act of transmitting medical samples, it is appropriate to have regard to the purpose for which those samples are taken. Thus, where a duly authorised health-care worker orders, for the purpose of making his diagnosis and with a therapeutic aim, that his patient should undergo an analysis, the transmission of the sample, which logically takes place between the taking of the sample and the analysis itself, must be regarded as closely related to the analysis and must therefore be exempt from VAT (see, as regards services which, since they do not have a therapeutic aim, must be subject to VAT, Case C-384/98 D v W [2000] ECR I-0000, paragraph 19)." (Commission v. France C-76/99)
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