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In a recent judgment, the Northern Netherlands court clarifies a common discussion in practice, the VAT treatment of management services by a partnership for medical specialists at a hospital. The court ruled that the management activities of the partnership are exempt from VAT. 

For hospitals (and other healthcare institutions) that work together with a partnership for medical specialists, it is important to assess whether the ruling also applies to them.

VAT exemption for management activities by a medical specialist company

What could this mean for your organization?

Already with the introduction of integrated funding, the Tax and Customs Administration took the position that administrative activities and medical management services by a partnership for medical specialists (‘MSB’) at a hospital do not fall under a VAT exemption. In practice, there is a lot of discussion about this position of the tax authorities. It is therefore good news that the Northern Netherlands court has made it clear that the management activities performed by an MSB are exempt from VAT. 

The ruling is important for hospitals (and all other healthcare institutions) that cooperate with an MSB, it may also affect the collaboration with the medical staff association (VMS). Because healthcare institutions have no (or only very limited) right to deduct VAT, the levying of VAT on management services is a cost item. Application of the VAT exemption therefore leads to savings. Using the taxfyle.com/sales-tax-calculator is important in this case.


In the proceedings before the Northern Netherlands Court , the partnership did not pay VAT on the management activities that the partnership performed for the hospital on the basis of the cooperation agreement concluded with the hospital. The management activities of the partnership arise from the chairmanship of the specialist department existing within the partnership. The activities consist of organizing and coordinating the care services within their own specialty.

It is in dispute whether these management activities form part of the medical specialist services provided by the partnership (or are part of it) and are therefore exempt from VAT on the basis of the medical exemption.

Judgment of the court

Management services by a partnership for medical specialists exempt from VAT

Because the management activities are so intertwined with the care activities, the court finds it irrelevant whether there is one action or two actions. In both cases, the application of the medical VAT exemption results in the plaintiff’s management activities being exempt. The partnership has rightly applied the VAT exemption to the management activities, the additional assessment is quashed.

What can you do?

We recommend assessing whether VAT is correctly charged on the management activities and other support services of the MSB (SMS) for the healthcare institution based on this judgment. Depending on the interests and relationship with the Tax Authorities, it may be advisable to proactively seek contact with the Tax Authorities and / or to object to the payment of VAT on a return. Our expectation is that the tax authorities will appeal against the court’s decision. There is therefore no definitive certainty yet.

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