Online medical services and VAT exemption


In the era of the coronavirus pandemic, many industries have shifted to providing online medical services. This issue has also partially affected the medical industry, because quite a large group of medical services in the form of consultations is provided remotely. In principle, medical services benefit from the VAT exemption at issue. However, are the same rules applicable to online services? We will try to answer this question.

VAT exemptions and the provision of medical services

First, let us analyze the provisions of the VAT exemption.

The described problem should be started with the presentation of the content of Art. 43 sec. 1 point 18 of the VAT Act. This provision indicates that services in the field of medical care for the prevention, preservation, rescue, restoration and improvement of health, as well as the supply of goods and services closely related to these services, performed as part of medical activity by medical entities are exempt from tax.

It follows from the above that the exemption in question is subjective and objective in nature, which means that two parallel conditions must be met jointly. Firstly, the taxpayer must be a medical entity, and secondly, it must provide medical care services for the prevention, preservation, rescue, restoration and improvement of health.

In the event of failure to meet at least one of the above-mentioned the prerequisites for tax exemption does not apply.

Entrepreneurs who perform medical activities involving the provision of health services are also considered to be a medical entity.

It is worth emphasizing that pursuant to Art. 3 sec. 1 of the act on medical activity, the medical activity consists in providing health services. They may be provided through ICT systems or communication systems.

Medical services understood as services for the prevention, preservation, rescue, restoration and improvement of health are exempt from VAT. What is also important, it is an unlimited exemption, therefore, regardless of the amount of turnover, the taxpayer will be statutorily exempt from tax.

Objective scope of medical services exemption

However, the key aspect in the context of the problem presented here is the way in which the material scope of the described exemption is shaped. Specifically, it is about explaining what exactly are the services for the prevention, preservation, rescue, restoration and improvement of health.

The scope of this concept includes activities that include making a diagnosis, providing medical assistance and, to the extent possible, treating diseases or health disorders.

The main goal of a medical service is always the protection, maintenance or restoration of health, which requires the possibility of assessing the patient's health in order to make a correct diagnosis and to propose an appropriate therapeutic procedure tailored to the requirements of a particular person.

Following the tax interpretations issued (e.g. the letter of February 7, 2020 issued by the Director of the National Tax Information, 0114-KDIP4.4012.749.2019.2.KS), we can indicate that the term "prevention" means all actions and measures used to prevent something undesirable, eliminate the causes of adverse phenomena; are actions and measures used to prevent disease.

The term "preserving", in turn, is understood as keeping something unchanged, intact or undamaged despite the passage of time or unfavorable circumstances, maintaining. When interpreting the word "rescue", one should refer to the words "rescue" and "rescue". "To save" is to try to save, to keep something, while "rescue" is understood as all means and methods of saving human life and providing help in dangerous conditions.

On the other hand, the word "restore" means to bring something back to its previous state, to bring something back, to restore something in its original form, to resume, to renew, to put someone in this situation, in the same state as before. "Improvement" is changing the state of something for the better, improving something, getting better, getting better.

In the context of assessing the possibility of applying a tax exemption, each medical service should be analyzed in terms of the indicated premises.

Only those services aimed at preventing, treating, improving and restoring disease diseases are medical services which are exempt from VAT.

Provision of online medical services

We have already learned all the conditions that must be met for the exemption specified in Art. 43 sec. 1 point 18 of the VAT Act has been applied.

Now is the time to go to the answer to the question posed in the title, namely whether the exemption on the same terms is used by medical services provided remotely in an online form?

In response, it should be noted that the form in which the described services are provided is irrelevant to the possibility of taking advantage of the exemption. The exemption applies both in the case of direct contact medical services, as well as when such a service is provided remotely, e.g. online.

This position, favorable for taxpayers, is also confirmed in the interpretations issued recently. For example, the Director of KIS, in the individual interpretation of May 29, 2020, No.

The application of the tax exemption cannot be determined by the type of means of communication by which a given service is performed. The online platform is only a tool that can be used to provide a service to preserve, rescue, restore and improve patient health.

It is worth pointing out here that the position of both the tax authorities and administrative courts has changed in favor of taxpayers only recently. It was clear from previous judgments that online medical services could not benefit from the VAT exemption.

For example, the Provincial Administrative Court in Poznań in the judgment of August 8, 2013, file ref. Act I SA / Po 245/13, decided that the medical service requires direct contact between the doctor and the patient, which leads to the conclusion that online treatment is not possible, because no one will examine the patient via the Internet, conduct therapy or heal. Therefore, it is impossible to provide medical care services without a thorough examination of a given person, their observation and care in the process of medical activities, and these are the basic conditions that define these services and the tax exemption.

It is to be hoped that the new position favorable to taxpayers will be maintained and confirmed in further interpretations and court judgments.

It is necessary to fully agree with the presented interpretation. The regulations do not specify the form in which the provision of medical services is to take place, so the linguistic interpretation does not allow for differentiating between services provided in-store and online services.

In addition, one should also take into account the purposive interpretation, which indicates that the decisive factor is the purpose of the service, and not whether there is direct contact with the patient.

In the light of the recent dominant jurisprudence, it is possible to exempt from VAT medical services provided online under Art. 43 sec. 1 point 18 of the VAT Act.

The issue of VAT exemption for online medical services is an example of a subject in relation to which a change in the approach of the tax authorities and administrative courts has recently been observed. This is a change for the better, which should also be assessed positively in the era of the ongoing coronavirus pandemic, when the number of online services is increasing.