Brian Cowen (Laois-Offaly, Fianna Fail)

This is a technical area involving interpretation of the EU VAT directives. Where the home care packages are provided directly by the private company, medical treatment or the administering of medication by medical professionals is VAT-exempt provided the costs of such services are invoiced separately, while all other elements of the package are subject to the reduced rate of VAT, which is 13.5% in Ireland.

The European Court of Justice has handed down a number of rulings on the scope of the exemption from VAT for medical services. The court judgments confirm that services provided other than for the purposes of diagnosing and treating illnesses cannot avail of the exemption and the nature of the service, not the legal form of the provider, determines whether the exemption applies. The court judgments stress the requirement to strictly interpret the exemption and that the exemption only applies to the provision of medical care and not to all services that may be supplied in the exercise of the medical and paramedical professions.

With regard to such services being treated differently for VAT purposes in other member states, the VAT rating and regime for the provision of goods and services is subject to requirements of the EU Sixth VAT Directive, with which domestic VAT law must comply. It was possible, however, for other members states to have treated the provision of home care in a different manner prior to this directive coming into effect on 1 January 1991. In such circumstances, the member state was allowed under EU law to continue to treat the service in the same manner. My Department is examining in consultation with the Office of the Revenue Commissioners and the Department of Health and Children the scope within the relevant EU directives to exempt the provision of such services from VAT in the future. The VAT rate that applies depends on the service provided. The home care services exempt from VAT include the administering of medication by a medical professional and medical treatment by a medical professional while the services subject to the reduced VAT rate include personal care, including hygiene, exercise or therapy, housework, meals on wheels, gardening, home repairs and so on. A small number of services such as shopping and visiting are subject to the standard VAT rate, which is 21% in Ireland.

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