Looking beautiful, some people care more about it than others, but it’s a fact that personal care plays a big part in our day-to-day lives. The use of Botox, fillers and other cosmetic procedures to boost our self-confidence is also becoming increasingly popular. One treatment clinic after another is popping up to provide us with a tighter jawline, fuller lips and less wrinkles. Can these clinics also make use of the medical exemption?
The medical exemption
The Dutch Value Added Tax law 1968 includes the medical exemption. This exemption can be applied to activities that can be regarded as ‘healthcare of humans by BIG professionals’, as the legal definition reads.
The BIG registration of a doctor provides clarity on which treatments may be performed by a doctor, according to the requirements that apply in the Netherlands. Treatment clinics (often) employ BIG-registered doctors who perform these cosmetic procedures.
Human healthcare includes all actions performed for the purposes of diagnosing, treating and, as much as possible, curing diseases or health problems, as well as protecting, maintaining or restoring the health of people. You may imagine that cosmetic treatments do not directly fall under this definition.
The State Secretary has provided clarification in his decision on the application of the medical exemption. The exemption does not apply to cosmetic treatments that are solely intended to enhance one’s appearance. In order to qualify for the medical exemption, there must be a therapeutic goal.
The Court of Justice of the European Union ruled in the PFC Clinic AB judgment that cosmetic/aesthetic services, insofar as they serve, treat or care for people who have to undergo an aesthetic procedure as a result of illness, injury or congenital defect, can fall under the concept of ‘medical care’, unless the procedure is purely cosmetic. Medical problems with a psychological nature also fall under the concept of ‘medical care’.
If a patient wants to undergo a cosmetic procedure due to psychological problems – in our opinion this goes beyond insecurity about their appearance- as a result of physical abnormalities, then in our opinion there is a therapeutic goal. The assessment of this is the responsibility of the treating physician.
In practice, a discussion may arise as to whether a cosmetic doctor has correctly made use of the medical exemption. In principle, the task of assessing the presence of a therapeutic goal lies with the physician and the inspector of the Tax Authorities cannot request access to the medical file because of professional confidentiality, but this does not mean that the doctor can simply say that all treatments have this goal. If this is not plausible based on the facts, there is a risk that the judge may decide that the entrepreneur has not satisfied the burden of proof for applying the exemption and thereby rejects the application of the exemption entirely.
Do you have any questions about the application of the medical exemption? We are happy to assist you.