Leasing of staff does not constitute tax exempt healthcare

by Felicia Johansson, Victor Elovsson and Ebba Perman Borg


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On 15 May 2024, the Swedish Supreme Administrative Court (the “HFD”) rendered a ruling in case no. HFD 2024 not. 23, determining that a company's leasing of staff does not qualify as tax-exempt healthcare.

In the case at hand, a Swedish company employed a licensed psychologist and provided neuropsychiatric assessments to healthcare institutions and other companies that had contracts with a county region (the clients). The psychologist conducted the assessments on the client's premises, but approximately 90% of the work was carried out on the company's own premises. The client was responsible for determining the duration of the assignment and remuneration was paid at a fixed rate per investigation. Moreover, the client's procedures and working methods, as well as the applicable requirements under its agreement with the county region, were to be adhered to when carrying out the assignment. The client had overall responsibility for determining which tasks were to be performed and which patients were to benefit from the measures. 

In accordance with the Swedish VAT Act (2023:200), and the EU VAT Directive 2006/112/EC, healthcare is exempted from taxation. However, the Swedish Administrative Courts have ruled on several occasions that the exemption has not been applicable where private health care providers sell services to healthcare institutions. The Council for Advance Tax Rulings did not consider that the company supplies qualified a tax-exempt healthcare. The ruling was appealed to HFD.

With reference to established case law, HFD determined that all the circumstances described indicated that the psychologist employed by the company performed the medical measures on behalf of the clients and in such a way that he may be considered part of the respective client’s organisation. Although the psychologist was employed by the company on an independent basis, HFD noted that the purpose of the contract was for the company to provide a resource with a certain level of expertise so that the purchasers could fulfil their obligations under their contracts with patients and the county region. Consequently, HFD concluded that the company's provision was not that of healthcare, but rather the leasing of staff. Therefore, the company's supplies were not considered healthcare services exempted from taxation, nor had it been established that the services were closely related to healthcare. Two judges were dissenting and considered the services to constitute VAT exempt healthcare services. 

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