ECJ C-228/20 (I GmbH) – Questions – VAT exemption for private hospital that is not governed by public law and has no agreements with health insurance funds


Article in the EU VAT Directive

Article 132(1)(b) of the EU VAT Directive 2006/112/EC

Article 132
1. Member States shall exempt the following transactions:
(b) hospital and medical care and closely related activities undertaken by bodies governed by public law or, under social conditions comparable with those
applicable to bodies governed by public law, by hospitals, centres for medical treatment or diagnosis and other duly recognised establishments of a similar



The case concerns the question whether transactions related to the operation of a hospital are exempt from sales tax under Paragraph 4 (14) of the UStG and Article 132 (1) (b), respectively, of the VAT Directive.

The applicant is a limited liability company and provides hospital services within the meaning of the German Federal Law on Healthcare Charges and the Law on Hospital Financing. It has received a government license for its business activities. However, it is not a plan hospital of the Land of Lower Saxony, nor is it a public body, so there are no agreements with the statutory or voluntary health insurance funds. This includes patients who pay the costs for nursing themselves in advance, embassy patients, private insured persons, German armed forces.

In the context of a special sales tax audit, the tax authorities’ inspector came to the conclusion that most of the applicant’s transactions are not exempt from sales tax. Only the activities of hospitals approved under § 108 SGB V are exempt from sales tax. However, the applicant is not an approved hospital. The same is clear from Article 132 (1) (b) of the VAT Directive. Hospital nursing is only provided under conditions comparable to those of public law bodies if a significant proportion of the patients are entitled to reimbursement of costs under § 13 SGB V. In this case, the share of this patient group fluctuates around 10%.

The applicant considers that the transactions at issue are exempt from VAT under Article 132 (1) (b) of the VAT Directive. According to her, it operates a hospital recognized according to § 30 GewO, which provides hospital services and medical care as a public body.


With regard to the first question, the referring court takes the view that the applicant is not a body governed by public law, its acts are not exempt under Paragraph 4 (14) (b) of the UStG. In addition, there is no tax exemption under § 4, No. 14 (b) (aa) UStG. The court is inclined to rule that § 4, No. 14 (b) (aa) of the UStG is incompatible with Article 132 (1) (b) of the VAT Directive, since it contains the tax exemption for the services provided by Hospitals operated by enterprises that are not bodies governed by public law are made dependent on need for social security considerations.

With regard to the second question referred for a preliminary ruling, it is relevant, according to the court, if the applicant relies on Article 132 (1) (b) of the VAT Directive, whether hospital care is provided by the applicant under social conditions comparable to the conditions under which bodies governed by public law perform these services. The referring court has doubts as to whether this involves examining the profitability of the hospital or whether the question should be answered from the patient’s point of view, with the relevance of whether the costs of the majority of patients are reimbursed by social security bodies.



Is Paragraph 4, point 14(b), of the Umsatzsteuergesetz (Law on Turnover Tax) (UStG) compatible with Article 132(1)(b) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (‘the VAT Directive’), 1 in so far as hospitals which are not bodies governed by public law qualify for exemption from tax on condition that they are approved within the meaning of Paragraph 108 of the Sozialgesetzbuch (SGB) V (Social Security Code, Book V)?

If Question 1 is to be answered in the negative: When do hospitals governed by private law provide hospital care under social conditions comparable with those applicable to bodies governed by public law within the meaning of Article 132(1)(b) of the VAT Directive?

AG Opinion


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