Important: On 16 August 2016, the Oberfinanzdirektion (OFD) Frankfurt/Main issued a directive providing as follows:
If a group practice carries out not only professional but also commercial activities, the entire joint activity is treated as a commercial business with the corresponding tax consequences. This also applies, for example, to group practices providing integrated care.
Under integrated care, contracts are concluded between the physician and the health insurance fund covering both medical treatment and the supply of pharmaceuticals and medical aids through the payment of flat-rate case fees. Where such flat-rate case fees are agreed with group practices, the commercial component — namely the supply of pharmaceuticals and medical aids — results in a commercial infection of the practice's entire income. The same applies to the supply of so-called "factor preparations" within the meaning of the German Medicinal Products Act by medical group practices to haemophilia patients for self-treatment at home.
Note: A commercial infection of the entire activity of a group practice only occurs if the net commercial turnover exceeds the de minimis threshold of 3 percent of total net turnover and, in addition, the amount of EUR 24,500 per year (the so-called "minor importance threshold").
Commercial infection can be avoided by establishing a sister partnership with identical ownership that takes over the commercial activity of the group practice.
Frequently asked questions
Frequently asked questions
When does integrated care lead to commercial infection of a joint medical practice?
If a joint medical practice receives flat-rate case fees under integrated care that cover not only medical treatment but also the supply of pharmaceuticals and medical aids, a commercial component arises. According to the tax authorities (OFD Frankfurt/Main, ruling dated 16.08.2016), this commercial component infects all income of the joint practice, so that the entire activity qualifies as a commercial business.
What is the de minimis threshold for commercial infection in joint medical practices?
Commercial infection occurs only if commercial net revenues exceed both 3 percent of total net revenues and the absolute amount of EUR 24,500 per year. Both thresholds must be exceeded cumulatively. Below this de minimis limit, the joint practice retains its classification as a freelance partnership.
How can commercial infection of a medical group practice be avoided?
Commercial infection can be avoided by establishing a sister partnership with identical ownership. This separate entity handles the commercial activities, such as the dispensing of medications and medical aids. The actual group practice then remains exclusively engaged in professional activities and retains its tax classification as a freelance practice.
What are the tax consequences of commercial infection of a joint medical practice?
If a joint medical practice carries out commercial activities in addition to professional services, all income is treated as commercial (so-called infection effect under § 15 Abs. 3 Nr. 1 EStG). The main consequences are trade tax liability on all income and, where applicable, an obligation to prepare a balance sheet. Classification as professional income ceases entirely.
Does the so-called Abfärberegelung (commercial infection rule) also apply to the supply of factor preparations to haemophiliacs?
Yes. The supply of so-called factor preparations within the meaning of the German Medicinal Products Act by joint medical practices to haemophiliacs for self-administration at home also constitutes a commercial activity. It can therefore likewise trigger a commercial infection of the entire income of the joint practice, provided the de minimis threshold is exceeded.