Olivia Mitchell (Dublin South, Fine Gael)
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Question 79: To ask the Minister for Finance regarding the charging of VAT for the provision of medical doctors to the public health service by recruitment agencies, the reason VAT is chargeable on the salary earned by the doctor and not just on the agency's fee in view of the fact that all of these doctors are independent contractors providing a medical service to the public health system and therefore like other medical services should be VAT exempt, the agency manages the schedule of these doctors and provides the link with the recruiting hospital, but does not directly employ them, therefore making them different to other categories of health care staff; and if he will make a statement on the matter. [10264/12]

Olivia Mitchell (Dublin South, Fine Gael)
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Question 80: To ask the Minister for Finance regarding the charging of VAT for the provision of medical doctors to the public health service by recruitment agencies, the reason VAT is chargeable on the salary earned by doctors at 23% when many hospitals are under severe budgetary pressure and one extra doctor could be recruited by the VAT paid on just four doctors; and if he will make a statement on the matter. [10265/12]

Olivia Mitchell (Dublin South, Fine Gael)
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Question 81: To ask the Minister for Finance his views that charging public sector bodies VAT does not earn money for the Exchequer in view of the fact that it all comes out of the public purse and the processing of said VAT places a huge administrative burden on organisations, therefore increasing costs and reducing revenue to the Exchequer; and if he will make a statement on the matter. [10266/12]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 79, 80 and 81 together.

I am advised by the Revenue Commissioners that VAT is chargeable on the supply of goods and services within the State by a taxable person. The charge to VAT arises regardless of whether the person who is supplied with the goods or services is VAT-registered, exempt from VAT or a private individual. The charging of VAT on supplies of goods and services to public sector bodies is in accordance with the VAT Consolidation Act 2010 (as amended) and the EU VAT Directive 2006/112/EC with which domestic VAT legislation in all Member States must conform.

The Revenue Commissioners are conscious of the compliance burden associated with collecting and accounting for fiduciary taxes and have, in recent years, responded by making it easier to comply through the provision of improved information and the availability of more electronic channels of communication.

The supply of a professional medical care service, as supplied by the public health service, is an exempt activity for the purposes of VAT in accordance with both national and EU legislation. The consequences of the activity being exempt from VAT is that health service providers do not charge VAT on fees charged to patients and health service providers cannot recover VAT charged to them on their inputs. The European Court of Justice has interpreted medical care services as those services that are carried out for the purposes of protecting, including maintaining or restoring, a patient's health, or diagnosing, treating, and if possible, curing diseases and health disorders.

Recruitment agencies do not provide medical care services. Rather, they provide staff to suppliers of medical care services. The provision of staff, including doctors, is a service that is liable to VAT at the standard rate, currently 23%. Where a recruitment agency supplies doctors to a public health service, and that doctor remains an employee of the recruitment agency rather than becoming an employee of the health service, then VAT must be charged on the total amount that the recruitment agency is entitled to receive from the health service for the supply of the doctor.