EuGH ruling on turnover tax liability
Sales tax liability
In accordance with national VAT law (Section 4 No. 14 letter b of the German VAT Act/UStG), hospital treatment is exempt from VAT provided that the hospital is a facility under public law or is under public law sponsorship, or a private clinic is licensed in accordance with Section 108 of the Fifth Book of the German Social Security Code. Other private clinics that do not have such characteristics are subject to VAT. The European Court of Justice/EuGH has now overturned this unequal treatment.
EuGH ruling
In its ruling of 7.4.2022 (C-228/20), the ECJ considered the aforementioned national regulation to be incompatible with EU law (Article 132 (1) (b) of the VAT System Directive). The national conditions lead to a disadvantage of private hospitals that provide similar services as public institutions. However, the ECJ considers it compatible with EU law if the VAT liability is linked to certain other indicators, such as, among others, the performance of a private hospital in terms of staff, premises and equipment as well as economic efficiency. The aim is to use these conditions and indicators to optimize costs and make high-quality treatment more accessible to individuals. Private clinics that are subject to VAT due to the lack of SGB approval can refer to the aforementioned ruling.
Status: August 29, 2022
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