Application of Professional Services Withholding Tax (PSWT) to payments made to Medical Practitioners under a contract of insurance in respect of relevant medical expenses

1. Background

Payments made by authorised health insurers to registered medical practitioners or their employers under contracts of insurance are relevant payments for PSWT purposes.

This eBrief deals with claims for credit for PSWT where a payment is made in the name of an individual medical practitioner but the medical practitioner does not have beneficial entitlement to the payment and has received it in the capacity of an employee/office holder.

2. Professional Services Withholding Tax (PSWT)

2.1 Section 522 TCA 1997 (as amended by Section 17(1)(b) Finance (No.2) Act 2013)

Historically, practitioners provided medical services in their capacity as self-employed individuals and a requirement under section 522 Taxes Consolidation Act 1997 (TCA 1997) provided that authorised insurers make payments for such medical services directly to the practitioner who provided the medical services.

Section 522 TCA 1997 has now been amended and provides that where the medical practitioner provided the medical services as an employee/office holder, then the authorised insurer must make the payment to the individual’s employer.

2.2.1 Payments made up to and including 31st December 2013

For payments made up to and including 31st December 2013, Section 522 stipulated that, where under a contract of insurance, a claim in respect of relevant medical expenses is made to an authorised insurer, that insurer shall, subject to section 529A, discharge the claim by paying the benefit of the claim to the practitioner who provided the relevant services.

2.2.2 Payments made on or after 1st January 2014

With effect from 1st January 2014, an authorised medical insurer may make a payment of benefit arising from a claim under a contract of insurance to, as appropriate –

• the practitioner who provided the professional services or
• where the practitioner who provided the professional services is an employee/office holder, the employer of the practitioner.

3. Entitlement to credit for PSWT deducted

In applying section 522 TCA 1997 authorised insurers are not expected to enquire into the employment status of the practitioner who provided the service. If the service is invoiced by a company which claims that the practitioner provided the service in his/her capacity as an employee/office holder, then payment may be made to the company.

By the same token, the fact that the payment is made to a company which claims to employ a practitioner will not of itself constitute evidence that an employer/employee relationship exists. Where the practitioner and the company which claims to be the employer are connected, then Revenue will consider all the facts in deciding whether to accept that

• the private practice is being carried on by the medical practitioner in his or her personal capacity; or
• the private practice is being carried on by a company.

Where Revenue accepts that the private practice is being carried on by the medical practitioner in his or her personal capacity, Revenue’s view is that the person chargeable to tax on the profits arising from that practice is the medical practitioner. Where such profits derive, in whole or in part, from payments from which PSWT has been deducted, the medical practitioner may claim the credit for the PSWT deducted from those payments.

Where Revenue accepts that the private practice is being carried on by a company, Revenue’s view is that the person chargeable to tax on the profits arising from that practice is the company. Where such profits derive, in whole or in part, from payments from which PSWT has been deducted, the company may claim a credit for the PSWT deducted from those payments. If the PSWT Deduction Certificate is in the name of the employee or office holder of that company, the company may claim the credit for the PSWT so deducted.

4. Tax and Duty Manual updated

Part 18.01.04 of the Income Tax, Capital Gains Tax and Corporation Tax and Duty Manual has been updated to reflect these provisions.

29 September 2014