Taxidermy: getting under the skin of tax law
Out, damned spot
(In memory of Pearl, the wire-haired German pointer who loved a juicy bone)
It being Halloween and this being my thirteenth month of bloggin’, my mind has turned to ghoulish things. There’s has been a spate of recent judgements of the European Court (four in six months no less) on the application of VAT to what may be loosely termed ‘body parts’.
The VAT exemption for medical care as set out in the EC legislation covers hospital and medical care and ‘closely related activities,’ carried out by certain types of providers. The supply of human blood, organs and milk is also exempt.
In Belgian State v N De Fruytier
Ms De Fruytier, who transported human organs and samples for various hospitals and laboratories was required to account for tax on her supplies. The European Court decided in favour of the tax authority, concluding that the exemption for the supply of human organs did not apply to the ‘transporting, in a self-employed capacity, of human organs and samples for hospitals and laboratories.’ Have a heart, guys.
The Danish case of CopyGene A/S v Skatteministeriet
related to the operations of a private stem cell bank that collected, transported, analysed and stored the umbilical cord blood of newborn children with a view to using the cord stem cells contained in the blood to treat the child in the event of serious disease in the future. The tax authority issued a ruling that tax was chargeable on the supplies.
Once again the European Court upheld the tax authority ruling, on the grounds that the stem cell bank’s activities were not ‘closely related’ to hospital and medical care since the medical care provided in a hospital environment to which those activities were potentially related had not ‘been performed, commenced or yet envisaged’. The same fate lay in store – same court, same conclusion – in Future Health Technologies Ltd v HMRC
, a UK case relating to supplies made by a company which collected, tested, processed and stored umbilical cord blood stem cells for future therapeutic use.
In the final case of the somewhat grisly quartet, Finanzamt Leverkusen v Verigen Transplantation Service International AG
related to a German biotechnology company engaged in the extraction of cells from patients’ joint cartilages, which were then multiplied them in a laboratory, and prepared for reintegration into the patients’ bodies. The tax authority issued an assessment charging VAT on these activities. In this case, however, the European Court flexed its muscles in favour of the company , finding that the activities did in fact constitute the provision of medical care, and, accordingly, the company’s supplies were exempt from VAT.
Vampires reading this before heading out for a night on the town will no doubt be heartened to learn that supplies of human blood, organs and tissue are VAT-free. As with all things VAT-related, however, it’s not quite that simple: supplies of recombinant Factor VIII (a commercially produced blood clotting protein) are taxable on account of their not being derived from human blood or tissue, whereas the virtually indistinguishable plasma-derived Factor VIII is tax-free.
By the way, sales of skeletons and human bones are taxable. So, in principle, is exorcism.