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V0939-14 2 April 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IVA · exención

Rehabilitation healthcare services are VAT exempt, but accommodation and transport are not

A commercial company partially owned by a Norwegian municipality has requested a ruling regarding the VAT liability of its rehabilitation and assistance services. The Directorate-General for Taxes (DGT) has determined that healthcare services are exempt, whereas accommodation, catering, and transport services are subject to tax.

The question raised

1. Whether the applicant can apply the non-taxability of services provided by public entities through commercial companies, on the grounds that the company constitutes a technical-legal organ of the Norwegian municipality and its compatibility with the provision of services to third parties, other than the Norwegian citizens sent by the Norwegian municipality.

The DGT's ruling

Healthcare services (diagnosis, prevention, or treatment) provided by medical or healthcare professionals are exempt from VAT. However, accommodation, catering, and transport services are not ancillary to the healthcare activity, but rather constitute an end in themselves for the recipient. Therefore, the latter services are subject to tax. The entity must apply the pro rata rule for VAT deduction when carrying out activities both with and without the right to deduction.

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