When Can Hospitals Claim VAT Deduction on Mandatory Equipment in Light of Case C-513/24?

The Advocate General of the Court of Justice of the EU, in case C-513/24, concluded that the mere statutory obligation of a hospital to acquire minimum technical and material equipment does not automatically give rise to a right to deduct VAT. What is decisive is not the fact that the equipment is required by law, but whether the specific acquisition has a direct and immediate link to taxable supplies, or whether it forms part of the general overhead costs of the taxpayer’s overall economic activity.

The dispute concerns a Czech hospital which, in addition to VAT-exempt healthcare services, also carried out certain taxable transactions, and applied a proportional VAT deduction on part of the required equipment. It argued that without this minimum equipment it would not be able to provide healthcare services at all. However, according to this opinion, that alone is not sufficient.

Based on the Advocate General’s assessment, the mere fact that national legislation imposes an obligation to acquire certain equipment does not automatically mean that it constitutes a general overhead cost of the entire economic activity. What is decisive is not the legal obligation itself, but the objective purpose and the actual link of the given equipment to the taxpayer’s individual activities. The right to deduct must therefore be assessed according to the actual purpose and use of the specific equipment.

In the case of hospitals whose main activity is VAT-exempt, mandatory equipment will generally not give rise to a right to deduct VAT merely because it is necessary for operation. Such a right may arise only if, in a specific case, its link to taxable activity is demonstrated.

In conclusion, the mere statutory obligation to have minimum equipment is not sufficient to claim the right to deduct VAT.