Amendments to the VAT exemption for medical and hospital care
The Belgian Parliament adopted new legislation which changes the scope of the VAT exemption for medical and hospital care. The amendments concern two aspects of the exemption: (1) the nature of the exempt activities (i.e. material scope); and (2) the qualification of the service providers (i.e. personal scope). The trigger for the amendments was a judgement of the Belgian Constitutional Court of 5 December 2019 which annulled several provisions of the exemption in article 44 §§ 1, 2 of the VAT Code (VATC). The new legislation will be effective as from 1 January 2022.
Material scope of the medical and hospital care exemption
The new provisions explicitly exclude non-therapeutic services from the scope of the exemption, in line with the judgements of the Court of Justice of EU and the Belgian Constitutional Court. Under the new provisions, interventions and treatments that are aesthetic in nature or have other non-therapeutic aim are not covered by the VAT exemption for medical and hospital care. Examples of non-therapeutic services may include the supply of medical expert reports or medical certificates. The exclusion of non-therapeutic services from the scope of the VAT exemption applies regardless whether these services are provided in or outside of a hospital.
Furthermore, the amendments incorporate exceptions to the exempt supplies of hospitals by aligning the wording of Article 44 § 2, 1°, a) VATC, with that of article 134 of the VAT Directive 2006/112/EC. Accordingly, a new provision stipulates that the supply of services and goods by hospitals are not granted the exemption for medical and hospital care, in the following cases:
- where the supply is not essential for the exempt transactions; or
- where the basic purpose of the supply is to obtain additional income for the hospital through transactions which are in direct competition with those of commercial enterprises subject to VAT.
For example, the following services are excluded from the VAT exemption: the provision of a television or telephone for remuneration in a patient's room; the sale of drinks outside the regular meals during a hospital stay; the provision of a parking space for remuneration to patients, visitors or employees; the provision of hairdressing or manicure services for remuneration.
Personal scope of the medical care exemption
The amendments extend the personal scope of the exemption for medical care provided outside of hospitals. Accordingly, the exemption will not only apply to professionals of regulated medical and paramedical professions (e.g. osteopaths and chiropractors), but also to those with adequate qualifications to provide equally qualifying services . The amendment does not change the personal scope of the exemption for medical services provided in hospitals.
In the light of the jurisprudence of the Court of Justice of EU and the Belgian Constitutional Court, the new provision of article 44, § 1 of the VATC (i.e. exemption for medical care outside of hospitals) will apply to the following two categories of professionals:
- regulated professions: This category includes the professionals of occupations referred to in the “Coordinated Law” of 10 May 2015 concerning the practicing of healthcare professions, and the practitioners referred to in article 2, § 1, 2°, second section of the Law of 29 April 1999 concerning non-conventional health- and paramedical care;
- non-regulated professions: This category covers professionals and practitioners who are not included in the first category above, if they meet the following cumulative conditions:
- they are holders of a certificate issued by an institution which is recognised by the competent authority of the country in which the institution is established; and
- based on that certificate, they have the necessary qualifications to provide medical care at a comparably high quality to the medical care provided by the professionals of the first category.
The new legislation will be effective as from 1 January 2022. It can have implications for service providers of medical and hospital care, depending on the current VAT treatment of their services. If you provide such services, we advise you to review your current VAT administration in light of the new rules and implement any necessary adjustments. If you have any questions on how the new rules specifically impact your services, do not hesitate to reach out to us.