Provision of practice premises
According to a recent ruling of the Finanzgericht Münster of 2 August 2015, Az. 15 K 718/12 U, the provision of practice premises including equipment by a physician to other physicians constitutes neither a medical nor a medical-like service. Accordingly, in the absence of a tax exemption, these services are subject to VAT.
The FG Münster ruled that, for the purposes of the tax exemption, the person of the recipient of the service is not decisive, since the personal requirement for the exemption relates to the supplier, who must be a member of a medical or medical-like profession.
In the case at hand, the claimant operated an eye clinic. The director of the clinic (a physician) was one of the shareholders of the eye clinic. Medical and surgical services were provided exclusively by the treating attending physicians and a joint practice.
Incidentally, an appeal on points of law to the BFH was admitted.
Source: Finanzgericht Münster
Frequently asked questions
Frequently asked questions
Is the provision of practice rooms by a physician to other physicians subject to VAT?
Yes. According to the ruling of the FG Münster of 02.08.2015 (Az. 15 K 718/12 U), the provision of practice rooms including equipment to other physicians constitutes neither a medical nor a quasi-medical service. As no VAT exemption under § 4 Nr. 14 UStG applies, these services are subject to VAT.
Why does the medical treatment VAT exemption not apply to the provision of rooms?
The exemption under § 4 No. 14 UStG requires a medical treatment service. The mere rental of practice rooms and equipment does not meet this substantive requirement, even if the rooms are subsequently used for medical activities.
Does it matter for the tax exemption that the recipient of the service is a physician?
No. The Münster Fiscal Court clarifies that the person-related requirement of the tax exemption concerns the service provider, not the recipient. The provider must themselves be a member of a medical or paramedical profession and render a corresponding service.
What practical significance does the ruling have for hospitals with attending physicians and group practices?
Operators of clinics or practices that lease their rooms and equipment for a fee to attending physicians or group practices must generally pay VAT on these fees. We recommend reviewing existing contracts and invoices for VAT implications.
Is the ruling of the FG Münster final?
No, the FG Münster has allowed an appeal to the Bundesfinanzhof. A definitive ruling by the highest tax court is therefore still pending, so affected cases should be kept open where appropriate.