On June 8, 2006, the ECJ issued its decision in the case C-106/05 (L.u.p.).
Context: (Sixth VAT Directive – Exemptions – Article 13A(1)(b) and (c) and (2)(a) – Medical care provided by bodies other than those governed by public law – Medical care provided in the exercise of a medical profession – Medical tests carried out by a laboratory governed by private law outside a centre for treatment on prescription from general practitioners – Conditions for the exemption – Member States’ discretion – Limits)
Article in the EU VAT Directive
Articles 2(a), 13A(1)(b), 13A(1)(c) of the Sixth VAT Directive (Artilces 2, 132(1)(b), 132(1)(c) of the EU VAT Directive 2006/112/EC).
Article 132 (Exemptions for certain activities in the public interest)
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 nature;
(c) the provision of medical care in the exercise of the medical and paramedical professions as defined by the Member State concerned;
Facts
- L.u.P. is a private limited company under German law whose sole shareholder is Dr Scharmann, a pathologist. It carries out medical tests, inter alia, for companies operating laboratories with which are affiliated the general practitioners who prescribed those tests as part of the care they provide.
- The Finanzamt found that those services were subject to VAT.
- The Finanzamt’s decision was upheld by the Finanzgericht on the grounds, first, that although L.u.P. is an ‘other bod[y] providing medical … tests’ within the meaning of Paragraph 4(16) of the UStG, the services in question were not provided ‘under medical supervision’ within the meaning of that provision and, second, that L.u.P. did not establish that, for each of the previous calendar years at least 40% of its services had been provided to persons specified in Paragraph 4(15)(b) of the UStG.
- L.u.P. brought an appeal on a point of law (‘Revision’) against that decision before the Bundesfinanzhof.
- In its order for reference, the Bundesfinanzhof finds that the Finanzgericht was correct in finding that the services in question were not exempt under Paragraph 4(16)(c) of the UStG, since it has been established that those services were not provided in sufficient proportion to persons specified in Paragraph 4(15).
- That court does, however, express doubts, first, as to whether the services in question must be regarded as being ‘closely related activities’ to ‘medical care’ provided by ‘hospitals’ within the meaning Article 13A(1)(b) of the Sixth Directive or as being ‘the provision of medical care in the exercise of the medical and paramedical professions’ within the meaning of Article 13A(1)(c) of that directive.
- The Bundesfinanzhof states, first, that whilst medical tests assist in the diagnosis of patients and could thus be regarded as medical care within the meaning of Article 13A(1)(c) of the Sixth Directive, the laboratories carrying out those tests do not generally provide their services in the context of a relationship of trust, which precludes application of the exemption provided for in that provision (Case C‑141/00 Kügler [2002] ECR I‑6833, paragraph 35). That court states, second, that, although Case C‑76/99 Commission v France [2001] ECR I‑249, paragraph 20, indicates that medical tests are, in the Court of Justice’s view, activities closely related to medical care within the meaning of Article 13A(1)(b) of that directive, the services of doctors who have prescribed those tests are, in its view, exempt under Article 13A(1)(c) of that same directive. The latter provision does not, however, apply to activities closely related to medical care.
- According to the national court, if the services in question are exempt under Article 13A(1)(c) of the Sixth Directive, then Paragraph 4(16)(c) of the UStG does not properly transpose the provisions of that directive. Moreover, if those services fall within the scope of Article 13A(1)(b) of that directive, it queries whether the exemption of activities closely related to hospital and medical care may be refused on the basis of the conditions laid down in that paragraph and in paragraph (2) of that article, whereas the medical care itself is exempt even if it does not fulfil those conditions. The wording of Article 13A(1)(b) allows for that interpretation, but the condition laid down in that provision regarding eligible centres for treatment could also be interpreted as covering only hospital and medical care and not activities closely related thereto. Moreover, access to medical and hospital care would be made more difficult if more stringent requirements were applied to the exemption of activities closely related to that care. That situation would also be contrary to the principle of fiscal neutrality, as hospitals and other centres for medical treatment and diagnosis would be placed at a fiscal disadvantage if they did not carry out their medical tests themselves.
Questions
Do the provisions of Article 13A(1)(b) and (2) of the [Sixth Directive] allow for the tax exemption for medical laboratory tests ordered by general practitioners to be made subject to the conditions specified in those provisions, even where medical care by such practitioners is exempt from taxation in any event?
AG Opinion
Article 13A(1)(b) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment must be interpreted as meaning that medical-test services such as those at issue in this case are acts of ‘medical care’ performed by ‘other … establishments of a similar nature’ within the meaning of subparagraph (b).
Decision
Article 13A(1)(b) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment is to be interpreted as meaning that medical tests which have as their purpose the observation and examination of patients for prophylactic purposes, carried out, like those at issue in the main proceedings, by a laboratory governed by private law outside a centre for treatment on prescription from general practitioners, may come within the exemption provided for by that provision as medical care provided by another duly recognised establishment of a similar nature within the meaning of that provision.
Article 13A(1)(b) and (2)(a) of that directive does not preclude national legislation which makes the exemption of such medical tests subject to conditions which, first, do not apply to the exemption of care provided by the general practitioners who prescribed them and, second, are different from those applicable to closely related activities to medical care within the meaning of the first-mentioned provision.
Article 13A(1)(b) of the same directive precludes national legislation which makes the exemption of medical tests carried out by a laboratory governed by private law outside a centre for treatment subject to the condition that they be carried out under medical supervision. However, that provision permits such legislation to make the exemption of those tests subject to the condition that at least 40% of those services must be intended for persons insured by a social security authority.
Summary
Source
Similar ECJ cases
- Exemption for hospital & medical care (Art. 132(1)(b))
- Exemption – Provision of medical care in the exercise of the medical and paramedical professions (Art. 132(1)(c))
Reference to the case in the other EU MS
Newsletters
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