The Spanish General Tax Directorate (DGT) has ruled, through the binding consultation number V2636/2019, dated September 26, 2019, as regard the application of the VAT exemption established in Article 20, section One, Number 3, of the VAT Law, related to the provision of healthcare services, which are provided to the final client by an entity that puts the patient in contact with the hospital through a mobile telephone application.

In the case under consultation, the consultant puts patients (their clients) in contact with the doctors of the hospital, who provide the medical service, through a mobile telephone application or app, through which the medical consultation is carried out.

The hospital invoices its medical services to the consulting entity, who in turn invoices to the final client-users in its own name. In addition, to promote its economic activity, the consultant contracts the services of commercial agents, who provide a service in exchange for a commission.

Firstly, the DGT reminds that Article 20. One.3 of the VAT Act establishes the exemption of the tax for “assistance to natural person by medical or health professionals, whatever the person is the recipient of such services”. In addition, “the exemption includes the provision of medical, surgical and health care, related to the diagnosis, prevention and treatment of diseases, including those of clinical analysis and radiological examinations”.

Therefore, the exemption has two requirements: one of an objective nature referred to the nature of the services that must be of assistance to natural persons related to the diagnosis, prevention or treatment of diseases, and one of a subjective nature referred to the condition that must have those who provide the aforementioned services, that is, a medical or healthcare professional. If these requirements are met, the service will be VAT exempt, even if it is provided through a commercial company or are invoiced to a commercial company (recipient).

On the other hand, taking into account that Article 11.Two.15 of the VAT Act establishes that in mediation and agency or commission operations in which the agent acts on his own name, it must be understood that he has received and rendered by itself the corresponding services, the DGT considers that, in the present case, the entity that provides the service to the final customer is the consultant through the app and that invoices the patient, therefore, if he receives a health service exempt from the hospital, will also provide a VAT exempt health service to the users of the app.

Finally, the services of commercial agents are subject and not exempt from VAT.

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