Tax exemption of services related to health care

Several current decisions and resolutions of the BFH have dealt with the question of whether or not the tax exemption pursuant to Section 4 (14) (a) or (b) UStG can be applied to certain medical and health-promoting services.

On August 2, 2018 (V R 37/17), the Fifth Senate decided that the turnover generated by a medical doctor's emergency and on-call services at sports events or similar events was subject to the tax exemption pursuant to Section 4 (14) (a) UStG. In the case at hand, the plaintiff (a medical doctor) had checked the event area in advance, advised the organizers with regard to possible health hazards and conducted continuous tours throughout the event in order to detect health hazards at an early stage. When necessary, he carried out medical examinations and treatments. The BFH considered this to be a tax-exempt medical service that directly serves the protection and maintenance of human health and, therefore, fulfils a therapeutic purpose.

By contrast, the Eleventh Senate did not acknowledge a therapeutic purpose regarding the services of a health centre where the customers themselves could decide on the stay, duration, and scope of the services. With its decision of January 11, 2019 (XI R 29/17), the Court therefore ruled that the services of the health centre were not tax-exempt according to Section 4 (14) (b) UStG and that the plaintiff could not directly apply the - broader - regulation provided in Article 132 (1) (b) of the EU VAT Directive. The court held that there was no therapeutic purpose since the services provided were independent of a medically diagnosed disease – even though the Eleventh Senate also pointed out that tax-exempt curative treatments could also include protective measures relating to the preservation or recovery of health.

The question as to whether the turnover of a telephone hotline operating on behalf of health insurance funds is subject to the tax exemption pursuant to Art. 132 (1) (c) of the EU VAT Directive Section 4 (14) (a) UStG was referred to the European Court of Justice (ECJ) by resolution of the BFH of September 18, 2018 (XI R 19/15). The telephone hotline advises insured persons on various health and disease issues. In addition, the BFH requested the ECJ to clarify whether the provision of counselling by medical assistants and nurses, who, in approximately one-third of the cases are supported by a medical doctor, complies with the professional qualifications required for the tax exemption.

It remains to be seen how the ECJ will react on the legal issues raised. While a tax exemption is more likely to be affirmed following the above-mentioned judgment of the Fifth Senate, a different point of view is also conceivable by reference to the argumentation of the Eleventh Senate - even though it referred to Art. 132 (1) (c) of the EU VAT Directive.

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