Comments on ECJ C-513/24 – Guidelines of the AG of the EU for VAT deduction for Czech hospitals

Case Overview: Advocate General Rantos has provided guidelines regarding VAT deduction for costs incurred by a Czech hospital, Oblastní nemocnice Kolín, in purchasing necessary goods to deliver health services. The hospital provides both VAT-exempt health services and services that allow VAT deduction, leading to a dispute over the right to deduct VAT on equipment purchases.
Czech Tax Authority’s Position: The Czech tax authorities argue that there is no right to deduct VAT for costs associated with services that provide VAT-exempt health services. The hospital contends that it should be allowed to deduct VAT on goods essential for meeting the minimum equipment requirements to obtain healthcare licenses.
Advocate General’s Conclusion: Rantos concludes that the costs for acquiring equipment necessary for providing health services do not automatically qualify for VAT deduction, as they do not have a direct and immediate link to the hospital’s overall economic activity. However, he notes that there may still be conditions under which a right to deduct VAT could exist.