VAT on employee leasing – instructions for companies providing health care and medical services and social services
Employee leasing means that a company leases its employees to another company in exchange for payment. The recipient company is responsible for the supervision and direction of the leased employees’ work. The recipient company also decides what tasks the employees will conduct.
Employee leasing in health care and medical services
In general, employee leasing is a service subject to VAT. However, employee leasing may be exempt from VAT if it is comparable to sales of health care and medical services in VAT assessment.
Employee leasing can be considered comparable to sales of health care and medical services if the following requirements are met:
- The services are conducted by health care professionals.
- The employees are leased for the purposes of conducting health care and medical services. Tasks conducted in a supporting role, such as the tasks of an orderly at a hospital, are not considered health care and medical services.
- The service recipient for whom the leased employees work is a public-sector health care unit or a private-sector health care unit registered as a service provider in the service provider register Soteri. The leasing of employees to another employee leasing company that in turn leases the employees forward is subject to VAT.
Leasing health care professionals as employees to sheltered housing communities or home care services is not exempt from VAT because in these cases the health care and medical services are not being provided directly to the patient. In these cases, the employee leasing activity is considered to take place for the purposes of producing social services.
Example: A limited company leases its shareholders and employees to provide medical services to a wellbeing services county. The company shareholders and employees working as substitutes are all medical doctors. The limited company may sell the service to the wellbeing services county as a VAT-exempt health care and medical service even though the limited company is not registered in Soteri.
Employee leasing in social services
Sales of social services are exempt from VAT. However, employee leasing for the purposes of providing social services is subject to VAT because it is not considered sales of social services.
Employee leasing for social services is subject to VAT if both of the following requirements are met:
- The employees go to work for a defined period of time under the direction and supervision of a wellbeing services county or a private-sector service provider.
- The wellbeing services county or private-sector service provider that receives the employees is ultimately responsible for the social services provided to customers.
For example, if a contract is made for a certain number of work hours to be conducted for a certain amount of pay, the transaction is considered an instance of employee leasing.
In addition, if health care professionals are being leased for work that mainly consists of the provision of social services, the leasing of the employees is not considered a VAT-exempt social service. In these cases, the job description of the health care professionals may include small-scale health care services, such as distributing medicine or measuring blood pressure, in addition to social service tasks.
Example: Your company is registered in Soteri. You sell home care services to a wellbeing services county. The wellbeing services county buys home care for the elderly in the county from your company. Your company can invoice the home care as VAT-exempt social services as long as the service provider and its service unit are registered in Soteri.
Your company also invoices the wellbeing services county for providing substitutes for the county’s employees. Your company’s employees are practical nurses. The employees work their shifts as part of home care services provided by the county. When the employees are conducting their tasks, they are under the direction and supervision of the wellbeing services county’s management. This part of your company’s operation is considered employee leasing, not sales of social services. Your company must therefore issue an invoice including VAT to the wellbeing services county.