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New position – contracting of medical care personnel will be liable to VAT

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As previously reported in Tax matters, the Supreme Administrative Court has announced a judgment (HFD 2018 ref. 41) implying that VAT is to be levied on a staffing agency’s contracting of qualified medical care personnel. Since the delivery of HFD’s judgment, the industry has been waiting for a clarification on how the Swedish Tax Agency will interpret this new situation. The Tax Agency has now published their position signaling a significant change in the application of the regulations in this context compared with the Agency’s previous practice.

The Tax Agency’s new opinion will affect the contracting of both medical and dental care personnel.

In its decision, HFD determined that the contracting of medical care personnel does not, in itself, comprise a VAT exempt service. The Tax Agency is of the opinion that the term “contracting of personnel” covers the situation when it is the purchaser of the services who is responsible for leading the work, determining the work methods and defining the work duties, whilst the provider of the service is disposing manpower.

According to the Tax Agency’s interpretation, it is only an entity providing medical care on its own account and under its own responsibility, that is, an entity operating a medical care facility providing medical care directly to the patient, who can be considered to provide VAT exempt medical care services. Consequently, the Tax Agency is of the view that staffing agencies and doctors establishing their own company for contracting personnel to a medical care facility are, as a major rule, to levy 25 percent VAT on such operations.

Even if the contracting of personnel is not classified as a medical care service, itself, this service can, still, be seen as VAT exempt if it can be considered as closely related activities to the medical care or dental care services being provided. In order for the contracting of personnel to be seen as closely related activities with medical care or dental care services, three criteria must be met according to the Tax Agency:

  • Both the provider of the personnel and the purchaser are to operate medical care facilities, which primarily (more than 75 percent) provide medical or dental care.
  • The provider’s service has to be of absolute necessity for the VAT exempt medical or dental care service
  • The main purpose of the service cannot be to secure further revenue by operating in direct competition with commercial companies who are required to pay VAT.

As this opinion implies a change in relation to the Tax Agency’s previous stance as regards this matter, the Agency intends to take no decisions negatively affecting companies until after 1 July 2019.


HFD’s decision and the Tax Agency’s opinion will imply major VAT effects within the medical care and dental care industries and will also imply risks leading to increased unfair competition between private and public medical care operators.

All medical and dental care companies contracting or purchasing services from medical care personnel providers should analyze the VAT effects arising from the changed legal position and should consider how their operations should be organized to minimize the risk of VAT issues.

If you have any questions as to how this will affect your operations, you are most welcome to contact us.

Do you have any questions on Value Added Taxes, customs and excise duties?

Henrik Ivarsson

Henrik Ivarsson

Henrik Ivarsson arbetar med momsfrågor på PwC:s kontor i Kristianstad.
010-212 85 25
Henrik Ivarsson works with Value Added Taxes at PwC's Kristianstad office.
+46 10 212 85 25

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