Germany confirms trade-tax exemption for care billed through intermediaries

The decision, issued on 28 July, concerned a GmbH providing specialist outpatient palliative care during 2015–2018. A cooperative organised part of the care provision, billed health insurers in its own name and paid the GmbH for services delivered by its staff. The tax authority treated those receipts as taxable because the cooperative stood between the provider and insurers. The court rejected that approach.^[2]

Economic cost bearing determines the test

Section 3 No.20(d) of the Gewerbesteuergesetz requires statutory social-insurance or social-assistance bodies to bear all or most care costs in at least 40% of cases during the assessment period. The court held that this concerns who economically bears the costs, rather than the payment route. Direct reimbursement to the care facility is unnecessary. The taxpayer must still prove the threshold, including where reimbursement passes through several parties. This remains a case-count condition, rather than a percentage of revenue.^[2][3]

The facility must actually provide qualifying outpatient care. The court used the definition in section 71(1) of Social Code XI: an independently operated facility providing home-care assistance under the continuing responsibility of a trained care professional. The GmbH delivered the care itself; its contractual obligation to the cooperative did not change that activity’s character.^[2][4]

Relief follows the activity and each company

The exemption does not extend to other commercial activities merely because the company also operates a qualifying care facility. The court distinguished actual care from supplying personnel and confirmed that each company within a German tax consolidation must itself meet the exemption conditions. It did not determine the VAT treatment.^[2][3]

For multinational healthcare groups using shared billing arrangements, the practical implication is to review each operating provider’s services and retain evidence tracing public reimbursement to its care costs. An intermediary’s involvement does not itself prevent exemption, but it makes the reimbursement trail and the distinction between care and other services important to the trade-tax assessment.^[2][3]