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ECJ C-211/18 (Idealmed III) – Opinion – VAT exemption for private hospital

On 10 October 2019 the Advocate General of the European Court of Justice gave its opinion in case C-211/18 (Idealmed III). The case deals with the VAT exemption for hospitals.

Our earlier post here details the questions raised to the court.

Unofficial translation

Facts (simplified)

Idealmed III – Serviços de Saúde SA, a company incorporated under Portuguese law (‘Idealmed’), operates five profit-making medical centers. Idealmed requested to be subject to the normal VAT scheme, i.e. it did not want to apply the VAT exemption for medical activities.

Idealmed entered into a series of agreements with public institutions that are part of various health system subsystems for the provision of medical services at predetermined prices.

The Portuguese tax authorities concluded that the activities of Idealmed are covered by the VAT exemption, without being able to waive that exemption. They therefore decided to change the tax status of Idealmed on their own initiative from taxable to exempt, and they raised an assessment for wrongly deducted input VAT.

Idealmed did not agree with this.

The Tribunal Arbitral Tributário (Centro de Arbitragem Administrativa – CAAD) [Tax Tribunal (Center for Administrative Arbitration), Portugal] decided to refer the following questions to the European Court of Justice Court for a preliminary ruling:

‘Does Article 132 (1) (b) of the VAT Directive preclude a hospital owned by a private-law commercial company which has entered into healthcare services agreements with the State and with legal persons governed by public law?’


According to the AG, taxes are something that everyone usually tries to avoid as much as possible, even though they are one of the two things that are certain in life besides death – a well-known saying. Surprisingly, however, there are situations where taxation is seen as a positive and even desirable thing. This is, among other things, the case for companies that carry out activities that are subject to value added tax (VAT).

As long as such an activity is taxed, this taxation is neutral for the taxpayer, since its economic burden passes to the next stages of trade and is ultimately borne by the consumer. However, if the transactions carried out by the taxable person are exempt from VAT, he bears the economic burden of the tax paid at the earlier stages of trade. Therefore, companies often prefer to submit to taxation rather than opting for exemption.

However, if the exemption is mandatory, this possibility does not exist: it is not possible to abandon it and voluntarily submit to taxation. In the present case, the Court has the opportunity to recall that principle.


The AG is of the opinion that:

  • Hospital care and medical care provided by persons other than are provided under a public-law body under social conditions comparable to those applicable to public-law bodies, are exempt from VAT, irrespective of the share of those services in the total of the services provided by that body.
  • The exemption can be applied, even if the business opted for the general scheme of insurance of its activities before the end of the period in which it was required to remain in the chosen taxation scheme.

Source: Curia (Dutch version, English version not yet available)