Tax Insights October 2021 - Changes to Belgian VAT exemption for (para)medical activities

As from January 1st 2022 the material and personal scope of the VAT exemption related to medical services will change significantly. 

What does this mean in practice? 

PERSONAL SCOPE (QUALITY OF THE SERVICE PROVIDER)

Currently, only the regulated medical and paramedical professionals can benefit from the VAT exemption for their activities performed outside any hospital environment. Non-regulated paramedical professionals cannot apply this exemption.

As from January 1st 2022, non-regulated paramedical professionals (as chiropractors, osteopaths and acupuncturists) could also benefit from the VAT exemption under certain conditions.

MATERIAL SCOPE (NATURE OF THE SUPPLIES PERFORMED)

The new legislation reduced the material scope when it comes to activities performed within a hospital environment.

Whereas to date, all services performed by regulated (para)medical professionals in the ordinary course of their activities are covered by the exemption, this will be strictly limited to activities pursuing a therapeutic goal (regardless of whether these are performed inside a hospital environment or outside).

CONSEQUENCES

In practice, these new rules will result in consequences for a number of health professionals which can now apply the VAT exemption if persuing a therapeutic goal. On the other hand, docters and hospitals risk that part of their activities (non-therapeutic treatments or certain additional services rendered by hospital) can not longer benefit from a VAT exemption and now qualify as (mixed) VAT taxable persons. As such, they will be confronted with many aspects of VAT administration such as the invoicing obligation, the periodic filing of VAT returns,  but also the right to deduct input VAT (and possible VAT revisions on investment goods, etc.) 

Moreover, the VAT liability will depend on a criterion that will generate many disputes, namely whether a medical treatment has a therapeutic purpose or not.

ACTION

It is important to anticipate these changes well in advance in order to be fully compliant and ready by January 1, 2022, as this does require a thorough analysis of the risks and benefits and and a timely set up of the compliance obligations. 

Should you need further information on this topic or any related VAT assistance, feel free to reach out our Tax Team ([email protected]) who will be more than pleased to help you.

RSM Belgium I Tax

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