Commentary

V6.266 Liability of supplies and activities of hospitals and nursing homes

Part V6 Business by business

V6.266 Liability of supplies and activities of hospitals and nursing homes

Hospitals and nursing homes

V6.266 Liability of supplies and activities of hospitals and nursing homes

Introduction

The origin of the favourable VAT treatment accorded to hospitals and nursing homes is to be found in Directive 2006/112/EC. The Directive requires member states to grant wide-ranging exemptions from VAT to supplies made by certain institutions in connection with the provision of health care and welfare, which it designates activities in the public interest:

  1.  

    •     hospital and medical care and closely related activities undertaken by bodies governed by public law or, under social conditions comparable to 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 (Directive 2006/112/EC, art 132(b))

  2.  

    •     the supply of services and of goods closely linked to welfare and social security work, including those supplied by old people's homes, by bodies governed by public law, or by other bodies recognised by the member state concerned as being devoted to social well-being (Directive 2006/112/EC, art 132(g))

Since the applicability of the exemption is restricted by a requirement to consider the status of the supplier, certain activities which might otherwise have been regarded as provision of health care or welfare, such as those carried on by unregistered nursing homes without charitable status, must fall outside its scope.

Member states are also allowed discretion to apply a 'reduced rate' of VAT to supplies of certain other goods and services commonly used by hospitals and nursing homes, such as

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