In a significant clarification issued on 15 September 2026, the General Directorate of Taxes (GDT) published Circular No. 8/2026 addressing the VAT treatment of dental and medical clinic services. Contrary to widespread belief, holding a professional license from the Ministry of Health and Social Protection does not automatically exempt a clinic from VAT obligations. Under Article 38 of Law No. 92/2014 on VAT, medical services are exempt only when performed by licensed professionals within the scope of their license and provided the clinic meets the definition of a ‘medical institution’ under the Health Care Law No. 10/2014. The circular emphasizes that many private clinics operate as commercial entities offering mixed services (e.g., aesthetic procedures, sale of medical products), which are subject to the standard 20% VAT rate.
Key Takeaways
- Exemption Scope Limited to Core Medical Acts: Only services directly related to diagnosis, treatment, and rehabilitation of patients, performed by licensed physicians or dentists, qualify for VAT exemption. Ancillary services such as cosmetic dentistry, wellness packages, and sale of orthodontic appliances are taxable at 20%. Clinics must separate revenue streams in their accounting records and apply the correct VAT rate to each service category.
- Mandatory VAT Registration Threshold Applies: Clinics with annual turnover exceeding 10,000,000 LEK must register for VAT regardless of exemption status for certain services. Voluntary registration is permitted above 5,000,000 LEK. Once registered, the clinic must charge VAT on all taxable supplies, file monthly returns, and maintain fiscalized invoicing. The exemption applies only to specific services, not to the entity as a whole.
- Risk of Retrospective Assessment: The GDT has announced a targeted audit campaign for Q4 2026 focusing on clinics that have not registered for VAT despite exceeding the threshold, or that incorrectly apply blanket exemption. Penalties for non-registration include retroactive VAT liability plus 0.06% daily interest and fines up to 10% of undeclared taxable turnover under Article 119 of Law No. 9920/2008. Clinics are advised to conduct a service-by-service VAT analysis before year-end.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement