For over 20 years, Estonia has maintained a VAT exemption for all healthcare services, including those performed for aesthetic reasons. At the end of last year, some private clinics received letters from the Tax and Customs Board requesting them to specify which procedures are performed for medical purposes and which for aesthetic reasons.

"We did not agree with this kind of distinction, so we hired lawyers to help and have been disputing the matter with the Tax Board and the Ministry of Finance. We have now received a response that, according to our legislation, aesthetic medical services and aesthetic surgical services are considered healthcare services and are therefore exempt from VAT," explained Pille Kirjanen, president of the Estonian Society of Plastic Surgery.

The Estonian regulation dates back to 2002, but the European directive, which is causing the confusion, originates from years, if not decades, ago.

"When laws are applied, it sometimes turns out that not everything aligns with European directives. The current situation is that our law is more lenient than the European directive and allows a VAT exemption for all healthcare services," said Evelyn Liivamägi, deputy secretary general at the Ministry of Finance.

According to Liivamägi, this is not a move to generate revenue for the budget, but rather an effort to avoid potential infringement proceedings by the European Commission. She confirmed that no such proceedings have been initiated, but Estonia wishes to prevent this possibility.

Under the directive, VAT exemptions apply to procedures carried out for the prevention, maintenance or improvement of health. Liivamägi noted that neither the Tax Board nor the Ministry of Finance should be responsible for determining whether a specific procedure meets these conditions.

According to doctors, it is very difficult, if not impossible, to distinguish between aesthetic and medical procedures.

"Much of medicine is based on agreements, and if we lack definitions to distinguish what is medical and what is not, it becomes very hard to document it separately or ask directed questions to patients," said Kirjanen.

If the Ministry of Finance does not plan to amend the VAT law, the Ministry of Social Affairs also does not see a need to define aesthetic procedures for taxation purposes.

For patients, taxation would mean higher prices.

"In all the countries where these services are subject to VAT in one way or another, prices have clearly risen. Maybe not by as much as a fifth, but definitely upward," Kirjanen noted.

Currently, plastic surgeons are debating the VAT issue, but other fields, such as dentistry, could face similar disputes – for instance, teeth whitening is considered an aesthetic procedure. The Ministry of Finance aims to present its proposals in the first half of next year.

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