Roadtrip through ECJ Cases – Focus on ”Exemption for hospital & medical care” (Art. 132(1)(b))

Last update: August 6, 2025

What Article 132(1)(b) Says

It mandates that Member States exempt from VAT:

“Hospital and medical care and closely related activities undertaken by bodies governed by public law or by other organizations recognized as having similar purposes.”

Why It Matters

1. Supports Public Health Systems
- Ensures that essential healthcare services are not burdened by VAT, keeping costs lower for patients and providers.
- Applies to hospitals, clinics, and medical professionals operating under public law or recognized non-profit entities.
2. Promotes Equal Access
- By exempting VAT, it helps make healthcare more accessible and affordable, aligning with EU social policy goals.
3. Legal Clarity for Providers
- Defines which entities and services qualify for exemption, reducing ambiguity for healthcare providers and tax authorities.
4. Limits Commercial Exploitation
- The exemption is not automatic for private providers. They must meet specific criteria (e.g., non-profit status, public recognition) to qualify.
5. Interacts with Articles 133 and 134
- Article 133 allows Member States to extend exemptions to private entities under certain conditions.
- Article 134 restricts exemptions if services are not essential or are mainly for profit.

⚖️ ECJ Case Law Impact

The European Court of Justice has interpreted Article 132(1)(b) in several cases, emphasizing:

The substance of the service matters more than the provider’s legal form.
Exemptions apply only if the service is closely related to medical care and not primarily commercial.

Article in the EU VAT Directive

Articles 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 nature;

ECJ Cases Decided