On Oct 8, 2020, the ECJ issued his decsion on ECJ case C-657/19 (Finanzamt D.) related to providing advice for the care funds set up at the health insurance funds and whether the trabsaction is VAT exempt.
For previous posts on this case. click HERE
Context: Reference for a preliminary ruling – Value added tax (VAT) – Directive 2006/112/EC – Exemptions – Article 132(1)(g) – Supply of services closely linked to welfare and social security work – Preparation of expert reports on the level of care and support needs – Taxable person appointed by the medical service of a care and support insurance fund – Bodies recognised as being devoted to social wellbeing
Article in the EU VAT Directive
Art. 132(1)(g) of EU VAT Directive 2006/112/EC
Art. 132(1)(g) of the EU VAT Directive 2006/112/EU – Article 13A(1)(g) of the Sixth VAT Directive
Article 132 (Exemption)
1. Member States shall exempt the following transactions:
(g) 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 wellbeing;
Facts
- The defendant in the main proceedings is a registered nurse with basic medical training and a diploma in nursing, as well as further training in quality management in the care and support sector. Her professional activities also include a taxable teaching activity in relation to care and support.
- From 2012 to 2014, the defendant in the main proceedings prepared, on behalf of the Medizinischer Dienst der Krankenversicherung Niedersachsen (medical service of the health insurance of Lower Saxony, Germany) (‘the MDK’), expert reports on the care and support needs of patients in order to determine the extent of their entitlement to medical care paid for by the care and support insurance fund. During that period, the MDK furnished her with a monthly statement of services provided, without indicating VAT. The defendant in the main proceedings declared those services as being exempt from VAT.
- As a result of a review, the tax authority formed the opinion that the activity of assessing care and support needs was exempted neither by national law nor by EU law. Consequently, by decisions of 3 February 2015, it increased the turnover declared by the defendant in the main proceedings by the net amounts invoiced to the MDK and fixed the VAT due by the latter for 2012 and 2013, as well as the payment on account of VAT for the first three quarters of 2014.
- Contesting those decisions, the defendant in the main proceedings brought an action before the first-instance court, which action was essentially upheld by that court. Basing itself on Article 132(1)(g) of the VAT Directive, that court found that the preparation of expert reports in the health sector was exempted from VAT as ‘a supply closely linked to welfare and social security work’, within the meaning of that provision. In that context, it observed that, since November 2012, care and support insurance funds had been lawfully able to entrust independent experts with the task of assessing insured persons, with the result that, since she had been appointed by the MDK, the defendant in the main proceedings could rely on that exemption.
- The tax authority appealed on a point of law (‘Revision’) before the referring court, arguing that the national provisions on exemption from VAT, which do not provide for an exemption as regards the assessment services at issue in the main proceedings, are compliant with EU law.
- The referring court observes that, according to national law, the defendant in the main proceedings is not entitled to an exemption from VAT for the assessment services concerned. However, that court does not rule out that she may be able to rely directly on the exemption provided for in Article 132(1)(g) of the VAT Directive for supplies closely linked to welfare and social security work.
- According to that court, it is, however, not certain that the defendant in the main proceedings is entitled to that exemption. In order for her to be so entitled, two conditions must be satisfied. First, as regards the condition that the services concerned must be essential and closely linked to welfare and social security work, the view could be taken that that condition is fulfilled, since services relating to the assessment of care and support needs, such as those provided by the defendant in the main proceedings, enable the care and support insurance fund concerned to assess the state of care and support needs of its insured persons in order to determine their entitlement to welfare and social security services.
- However, there is doubt in that regard, in so far as, according the case-law of the referring court, which makes reference to the judgment of 12 March 2015, ‘go fair’ Zeitarbeit (C‑594/13, EU:C:2015:164), supplies of services are not regarded as being closely linked to social welfare work in cases where they are provided, not directly to the person reliant on care, but to a body for which they are necessary for the performance of its own exempt services for the benefit of that person.
Question
1. In circumstances such as those in the main proceedings, does the preparation by a taxable person of expert reports on the care and support needs of patients for the Medizinischer Dienst der Krankenversicherung (Health Insurance Medical Service) fall within the scope of Article 132(1)(g) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax 1 (Directive 2006/112/EC)?
2. If Question 1 is answered in the affirmative:
(a) In order for an undertaking to be recognised as a body devoted to social wellbeing within the meaning of Article 132(1)(g) of Directive 2006/112/EC, is it sufficient if, as a subcontractor, it supplies services to a body recognised under national law as a body devoted to social wellbeing within the meaning of Article 132(1)(g) of Directive 2006/112/EC?
(b) If Question 2(a) is answered in the negative: In circumstances such as those in the main proceedings, is it sufficient that the expense incurred by the recognised body within the meaning of Article 132(1)(g) of Directive 2006/112/EC is borne entirely by the Health Insurance and Care and Support Insurance Funds in order for a subcontractor of that recognised body also to be regarded as a recognised body?
(c) If Questions 2(a) and 2(b) are answered in the negative: In order for a taxable person to be recognised as a body devoted to social wellbeing, may a Member State subject such recognition to the condition that the taxable person has actually entered into a contract with a social security or social welfare authority, or is it sufficient if a contract with that taxable person could be entered into under national law?
AG Opinion
None
Decison
Art. 132 para. 1 letter g of Council Directive 2006/112/EC of November 28, 2006 on the common system of value added tax is to be interpreted as meaning that
– The preparation of expert reports on the need for long-term care by an independent expert on behalf of the medical service of a long-term care fund, which are used by this long-term care fund to determine the scope of any claims of its insured persons to benefits from social welfare and social security, one closely related to social welfare and the represents a service related to social security insofar as it is essential for the proper generation of sales in this area;
– This provision does not preclude this expert from being denied recognition as an institution with a social character, even if he firstly provides his services as a subcontractor on behalf of the medical service mentioned, which is recognized as such an institution secondly, the costs of drawing up these reports are borne indirectly and at a flat rate by the relevant care insurance fund and thirdly, under national law, the named expert has the option of concluding a contract on the drawing up of the reports directly with this fund in order to benefit from them To get recognition, but has not made use of this possibility.
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