WRITTEN QUESTION E-0740/01

by Gilles Savary (PSE) to the Commission

(9 March 2001)

Subject: VAT on radiology equipment

Does the Commission take the view that the technical flat-rate fee received from social security bodies for scanner and MRI tests is exempt from VAT pursuant to Article 13(A)(1)(b) and (c) of Council Directive 77/388/EEC(1) of 15 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes (known as the Sixth VAT Directive)?

Is there a difference in treatment depending on whether the body which owns the equipment is a legal entity involved in commercial activities (company limited by shares, limited liability company, economic interest grouping) or not (nonstock corporation)?

(1) OJ L 145, 13.6.1977, p. 1.

Answer given by Mr Bolkestein on behalf of the Commission

(31 May 2001)

Article 13A(1)(b) of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes - Common system of value added tax: uniform basis of assessment, exempts from VAT 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. Article 13A(2) allows Member States to set certain conditions where the exemption is granted to bodies other than those governed by public law. In addition, Article 13A(1)(c) exempts from VAT the provision of medical care in the exercise of the medical and paramedical professions as defined by the Member State concerned.

Although these exemptions are broadly the same in all Member States, it is left to national governments to define the exact coverage. This is because the nature of health systems vary from state to state. As a result the VAT exemption overall may vary slightly across the Community.

The provision of a scan or a magnetic resonance imaging (MRI) test to a patient will come within these exemptions provided that there is a service provided by one of the eligible bodies, for a consideration in accordance with Article 6 of the Directive. In some Member States where a patient receives diagnosis, they may be required to pay a proportion of the examination fee with the bulk of the charge being paid by a health insurance fund. This third party consideration will not affect the exemption.

Where the diagnosis is provided by a body other than one governed by public law, the VAT status of the supply will be dependent on whether it is provided under social conditions comparable to those applicable to bodies governed by public law and whether the Member State in question has set conditions in accordance with Article 13A(2). These conditions include, for example: non-profit making aims; voluntary management; approved pricing structures; and the unlikelihood of any competitive distortion.

It is possible, therefore, that within the terms of the Sixth VAT Directive, a legal entity involved in commercial activities with the intention of profit, could be excluded from the exemption in some Member States under the provisions of these articles.