The effect of Value Added Tax change on health care services
Ylämö, Katja (2016)
Ylämö, Katja
Haaga-Helia ammattikorkeakoulu
2016
All rights reserved
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-201605259748
https://urn.fi/URN:NBN:fi:amk-201605259748
Tiivistelmä
The aim of this thesis was to examine the effect of value added tax (VAT) change on certain health care services. VAT is a consumption tax which is added on the value of goods and services. The Finnish Tax Administration changed the value added tax (VAT) on Health care services and personnel renting (Terveydenhuollon työvoiman luovutus) to 0% instead of the previous 24% on 19 December 2013. Based on the same decision, VAT on some services such as aesthetic surgery rose from 0% to 24%.
The reason behind this sudden change of VAT was explored, as well as how taxation af-fects business supply and demand, health care service sector employment and how this change of VAT will affect them. The implementation of this VAT change is also evaluated, mainly to see if there have been any interpretational issues.
Primary data for this thesis was obtained from interviews with informants such as tax authorities, aesthetic health care business owners and other related business people (consult-ants and the like).
Secondary data was collected from Finnish law (on VAT and corporate tax), EU law, court decisions (Supreme Administrative Court and The Court of Justice of the European Union), and other publications available (other VAT related theses, articles and recommendations).
Health care personnel renting and aesthetic treatments such as plastic surgery were evalu-ated separately and the opposite change of VAT in their services was estimated. In person-nel renting, the effect on profitability was only temporary and the service sector was able to recover quickly due to increase in prices and other moderate activities. Aesthetic surgery, on the other hand, suffered a great deal from this change of VAT. It was not possible to add the whole 24% of VAT into customer prices but fees still rose in such a way that customers were lost. This, in turn, had an effect on revenue and business employment rate.
Secondary data analysis revealed a correlation between taxation and business profitability in general. When calculating competitiveness, businesses have to take into account different taxes and their effect on profitability. They can choose to provide services in-house or outsource some of the functions. They can also make acquisitions offshore that do not in-volve VAT.
The reason behind this sudden change of VAT was explored, as well as how taxation af-fects business supply and demand, health care service sector employment and how this change of VAT will affect them. The implementation of this VAT change is also evaluated, mainly to see if there have been any interpretational issues.
Primary data for this thesis was obtained from interviews with informants such as tax authorities, aesthetic health care business owners and other related business people (consult-ants and the like).
Secondary data was collected from Finnish law (on VAT and corporate tax), EU law, court decisions (Supreme Administrative Court and The Court of Justice of the European Union), and other publications available (other VAT related theses, articles and recommendations).
Health care personnel renting and aesthetic treatments such as plastic surgery were evalu-ated separately and the opposite change of VAT in their services was estimated. In person-nel renting, the effect on profitability was only temporary and the service sector was able to recover quickly due to increase in prices and other moderate activities. Aesthetic surgery, on the other hand, suffered a great deal from this change of VAT. It was not possible to add the whole 24% of VAT into customer prices but fees still rose in such a way that customers were lost. This, in turn, had an effect on revenue and business employment rate.
Secondary data analysis revealed a correlation between taxation and business profitability in general. When calculating competitiveness, businesses have to take into account different taxes and their effect on profitability. They can choose to provide services in-house or outsource some of the functions. They can also make acquisitions offshore that do not in-volve VAT.