VAT on Healthcare Services in Cyprus

What healthcare services are exempt from VAT in Cyprus?

Medical and healthcare services provided by regulated healthcare professionals — doctors, dentists, nurses, physiotherapists and other registered practitioners — are exempt from VAT in Cyprus. The exemption applies to the medical care itself — diagnosis, treatment, therapy and related professional services. Hospital and clinic services provided in a healthcare context are also exempt. The key criterion is that the services must be of a medical nature provided by a qualified and regulated professional.

Healthcare services that are VAT exempt

• Medical consultations and examinations by registered doctors
• Surgical procedures performed by qualified surgeons
• Dental treatment — fillings, extractions, crowns, dental surgery
• Physiotherapy and occupational therapy by registered therapists
• Nursing care provided by registered nurses
• Psychological and psychiatric treatment by registered practitioners
• Diagnostic services — X-rays, blood tests, scans when provided as part of medical care
• Hospital accommodation and related medical care

Healthcare-related services that may be taxable at 19%

• Purely cosmetic procedures with no therapeutic purpose — aesthetic surgery, Botox for cosmetic purposes
• Gym memberships and fitness services even if medically recommended
• Health insurance premiums — these are exempt financial services not medical services
• Sale of over-the-counter medicines in a retail pharmacy — some reduced rates may apply
• Administrative services provided to healthcare businesses by non-medical staff
• Equipment hire to healthcare businesses by non-healthcare suppliers
• Medical reports provided to insurance companies or legal proceedings

The cosmetic procedures boundary

The distinction between exempt therapeutic medical services and taxable cosmetic procedures is important for private clinics and medical spas. A rhinoplasty performed to correct a breathing obstruction is therapeutic — exempt. The same procedure performed purely for aesthetic reasons is cosmetic — taxable at 19%. A dermatologist treating a skin condition — exempt. A dermatologist providing chemical peels purely for cosmetic improvement — taxable. The purpose of the procedure determines the VAT treatment.

Partial exemption for healthcare businesses

A private clinic providing both exempt medical services and taxable cosmetic procedures has a partial exemption position. Input VAT on costs directly related to exempt medical services is irrecoverable. Input VAT on costs directly related to taxable cosmetic services is recoverable. Shared costs — premises, reception staff, administration — must be apportioned. The partial exemption calculation requires careful tracking of which costs relate to which activities.