Healthcare Staff Leasing in Finland: Navigating VAT Exemption vs. Taxable Supply

Summary

 

• VAT exemption remains possible but narrowly framed: The hiring of healthcare professionals may qualify as VAT‑exempt only where it is economically comparable to the direct provision of healthcare services, and where strict regulatory and factual conditions are met.
• Audit practice has increased uncertainty: Recent Finnish Tax Administration audits have applied inconsistent and more restrictive interpretations, sometimes conflicting with existing guidance and long‑standing Supreme Administrative Court case law.
• Careful structuring is essential: Healthcare providers and staffing companies should reassess contractual arrangements, regulatory status, and documentation to mitigate VAT risk, particularly for historical periods.

 

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Detailed

The VAT treatment of hiring (leasing) healthcare professionals in Finland has become increasingly contentious. While Finnish VAT law and long‑standing administrative guidance allow VAT exemption in certain circumstances, recent tax audits have applied narrower interpretations, creating uncertainty for staffing companies, healthcare providers, and public-sector purchasers. The key issue is whether the arrangement constitutes VAT‑exempt healthcare services or taxable employee leasing.

Legal framework

VAT exemption for healthcare services

Under Section 34–35 of the Finnish Value Added Tax Act (1501/1993), healthcare and medical care services are exempt from VAT when they are provided by:

• Public healthcare units, or
• Private healthcare providers and licensed healthcare professionals operating under statutory supervision. [finlex.fi]

The exemption mirrors Article 132(1)(c) of the EU VAT Directive, which exempts medical care provided in the exercise of medical and paramedical professions.

Employee leasing vs. healthcare services

General rule: employee leasing is taxable

As a starting point, employee leasing is a taxable supply of services subject to Finnish VAT at the standard rate (25.5% as of 2026). [vero.fi]

However, in the healthcare sector, employee leasing may qualify for VAT exemption if it is considered comparable to the direct provision of healthcare services.

Finnish Tax Administration guidance

The Finnish Tax Administration (Vero) has issued detailed guidance specifically addressing employee leasing in healthcare and medical services:

➡ VAT on employee leasing – instructions for companies providing health care and medical services and social services
vero.fi

According to this guidance, employee leasing may be VAT‑exempt only if all of the following conditions are met:

• The leased personnel are licensed healthcare professionals
• They perform actual healthcare or medical care services (not auxiliary or support tasks)
• The recipient is:
  • a public healthcare unit, or
  • a private healthcare unit registered in the Soteri service provider register
• The services are provided directly to patients, not indirectly as part of social services production. [vero.fi]

Where healthcare professionals are leased to another staffing company, or to social care operators, the exemption does not apply and VAT must be charged.

Recent controversy and audits

Diverging interpretations

In recent retrospective audits, the Finnish Tax Administration has in some cases:

• Recharacterised VAT‑exempt healthcare staff leasing as taxable employee leasing, and
• Departed from both existing administrative guidance and Supreme Administrative Court (SAC) case law dating back to 2013.

This issue is highlighted in PwC’s February 2026 analysis:

➡ Finland – How should the hiring of healthcare professionals be treated for VAT purposes?
PwC Knowledge Navigator

PwC notes that audit outcomes have been internally inconsistent and, in certain cases, contrary to published guidance, increasing litigation risk for taxpayers. [knowledgen…or.pwc.com]

Case law considerations

Domestic case law

Finnish Supreme Administrative Court decisions have historically taken a substance‑over‑form approach, focusing on:

• The nature of the service supplied, rather than
• The contractual label or supervision mechanics.

Where the economic reality is the provision of medical care to patients, VAT exemption has been upheld.

Interaction with EU VAT principles

While no recent CJEU case directly addresses Finnish healthcare staff leasing, EU VAT case law consistently holds that:

• VAT exemptions must be interpreted strictly, but
• The functional nature of the service is decisive.

Finnish authorities are therefore constrained by both EU VAT Directive principles and domestic jurisprudence when reassessing healthcare staffing arrangements.

Practical implications for businesses

Healthcare staffing companies and healthcare providers should:

1. Review contractual structures
   • Who bears responsibility for patient care?
   • Is the supplier merely providing labour, or healthcare services?
2. Confirm regulatory status
   • Ensure correct registration in the Soteri register where required. [vero.fi]
3. Assess audit exposure
   • Particularly for historical periods under retrospective review.
4. Document VAT position
   • Align invoicing and VAT treatment with published Vero guidance and SAC precedents.

Conclusion

The VAT treatment of hiring healthcare professionals in Finland remains an area of heightened risk and uncertainty. While the law and guidance still support VAT exemption in clearly defined circumstances, recent audit practices suggest a more restrictive approach by the tax authorities. Until clearer judicial or legislative clarification emerges, proactive risk management and careful structuring are essential.

Key references

• Finnish Tax Administration – VAT on employee leasing in healthcare
  https://www.vero.fi/en/businesses-and-corporations/taxes-and-charges/vat/vat-in-different-lines-of-business/vat-on-employee-leasing–instructions-for-companies-providing-health-care-and-medical-services-and-social-services/ [vero.fi]
• PwC Knowledge Navigator – Hiring of healthcare professionals and VAT
  https://knowledgenavigator.pwc.com/vat-gst-global/news/finland-how-should-the-hiring-of-healthcare-professionals-be-treated-for-vat-purposes/ [knowledgen…or.pwc.com]
• Value Added Tax Act (1501/1993), Finlex
  https://finlex.fi/en/legislation/translations/1993/eng/1501 [finlex.fi]
• Tuokko – VAT Treatment of Social Welfare and Healthcare Services
  https://tuokko.fi/en/vat-treatment-of-social-welfare-and-healthcare-services/ [tuokko.fi]

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