Brian Cowen (Laois-Offaly, Fianna Fail)

Under the current scheme of capital allowances available with regard to private hospitals the hospital must have the capacity to afford medical or surgical services all year round, provide a minimum of 70 inpatient beds, outpatient services, operating theatres and on-site diagnostic and therapeutic services and have facilities to provide at least five specialist services, ranging from accident and emergency to oncology and cardiology etc. Section 24 of the Finance Act 2003 extended this relief to private hospitals providing acute services on a day care basis with accommodation for such services of not less than 40 beds.

While the hospital provides services to those patients with private health insurance, 20% of the bed capacity must be available for public patients, and the hospital must provide a discount of at least 10% to the State in respect of the fees to be charged in respect of the treatment of public patients. Rooms used exclusively for the assessment or treatment of patients qualify for the capital allowances and fulfilment of the conditions necessary for qualification for the allowances must be certified annually by the Health Service Executive.

The allowances are subject to a clawback if the building ceases to be a qualifying private hospital within ten years. Capital allowances of 15% per year are available for the first six years with the balance of 10% being written off in year seven.

It should also be noted that the European Commission assessed the scheme of capital allowances for private hospitals under state aid rules. To comply with these rules, the categories of excluded persons outlined in the legislation with regard to private hospitals covers property developers, companies, trusts or those involved in the operation or management of the hospital itself. This provision facilitated a decision by the Commission that the scheme did not represent State aid.

In the context of the review of tax reliefs currently being undertaken by external consultants, I have asked them to review the current scheme of capital allowances for private hospitals. In this regard I will not consider any proposals with regard to private hospitals until the review is complete.

See this speech in context