VAT on Medical Services
The Revenue have recently updated their rules in regard to vat and medical professionals. The good news, on this occasion, is that VAT probably won't impact on most GPs and medical professionals, however it will affect some and I've set out below a short review of the rules. This should help you establish if VAT might be an issue for you:
Why is VAT being applied now?
It's generally accepted that most medical services are exempt from VAT. A recent European Court case found that if the principal purpose of the medical service was the "protection, maintenance or restoration of the health of an individual" then the service would be exempt from VAT, otherwise it would be subject to VAT.
What medical services are exempt?
In principle, Revenue accept that medical care services supplied by "recognised medical and healthcare professionals" are exempt from VAT where they are carried out for the purposes of "protecting, (including maintaining or restoring a patient's health) or diagnosing, treating and if possible, curing diseases and health disorders". The vast majority of normal day-to-day medical services provided by GPs to their patients will remain exempt.
What medical services are subject to VAT?
This is not an exhaustive list but the following are some of the more common activities that are considered vatable: medico-legal reports, doctors providing expert opinion in connection with court cases, paternity testing, homeopathy, acupuncture, aromatherapy, laser treatment for cosmetic purposes, certain cosmetic surgery procedures, etc The full list is available on the revenue website www.revenue.ie.
Do I need to charge VAT?
If your income from vatable sources (like those listed at No.3 above) is likely to exceed €37,500 in a twelve month period then you are obliged to register for VAT and charge VAT on those vatable supplies. Large practices take note that the limit is €37,500 regardless of whether you are a sole trader, partnership, limited or unlimited company.
What rate of VAT should I charge?
This depends on the nature of the service you are providing. It could be 13.5% or 23%. For example, medico-legal reports are liable to VAT at the standard rate of 23% whereas certain cosmetic surgery procedures are liable to VAT at the reduced rate of 13.5%. It is your responsibility to charge the appropriate VAT rate.
I think I should be charging VAT what should I do?
If you think your level of turnover from these vatable supplies is likely to exceed the threshold please contact our office immediately to discuss same.
What happens if I do nothing?
It is your responsibility to find out if you should be charging VAT. If you had a Revenue Audit and it transpired that you should be registered and charging VAT then you would be liable for the VAT you should have charged plus interest and penalties.
Can I reclaim VAT on my purchases?
Yes, if you are required to register then you can reclaim VAT on a proportion of your purchases. This will be relatively small for most practitioners.