IVA on medication, veterinary and healthcare equipment 'too low', says EU

REDUCED-RATE value-added tax on certain medication, medical equipment and veterinary supplies is 'illegal', claims the European Commission.

Medicines, healthcare products and materials that may be use to prevent, diagnose, treat, relieve or cure illnesses should attract IVA at the full rate of 21 per cent, and not the 'middle' rate of 10 per cent, according to an EU ruling from 2010.

The higher-rate IVA is not applied to items used for relieving or treating inherent deficiencies, or for purely personal use or employed solely for the permanently disabled.

This means veterinary treatment equipment and medication should also be taxed at 21 per cent, because 'personal use', 'use by the disabled' or 'pharmaceutical products' are definitions that can only be applied to humans rather than animals, according to the Commission.

Items exempt from higher-rate IVA for use by persons include needles, blood-pressure reading machines, latex gloves, masks, disposable caps, gowns or socks, gauze, plasters, thermometers or 'white coats'.

Spain's government has been ordered to increase IVA on non-exempt items with immediate effect and to pay the costs of the European court investigation.

If it does not do, large fines will be imposed.

This means healthcare costs for the State will rise dramatically, and pet-owners could face much larger vet bills.