Replacement contracts in radiology and VAT: the die is cast!

By Nathalie Boudet-Gizardin, Partner and Roukiatou Compaore, intern

In a ruling dated July 22, 2025, the Council of State set clear limits on VAT exemptions for replacement contracts. From now on, only one-off replacements or those performed without the replacement being independent can claim it. This is a strong signal for imaging organizations: it is time to review their contractual practices to secure their tax position.

 

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Replacement contracts, essential instruments for continuity of care in the operation of medical imaging centers, raise important legal security issues. As we indicated in our previous article on the subject¹, on a social level, there is a risk of reclassification as an employment contract, the criteria for which the Court of Cassation has already had the opportunity to specify.

In tax matters, administrative doctrine makes the VAT exemption on the fee received by the replaced doctor subject to the condition that the replacement is occasional. Indeed, when the replaced doctor receives a fee from the replacement in return for the provision of his technical facilities and premises, this amount is only exempt if the replacement remains occasional (BOI-RES-TVA-000056). Otherwise, the fees retained by the replaced doctor may be reclassified as rent remunerating the provision of converted premises, therefore subject to VAT.

The decision of the Council of State of July 22, 2025 (no. 497331) provides an important clarification: it returns to the criterion of independence of article 256 A of the CGI in the relationship between doctor replaced and replacement doctor and specifies the distinction between healthcare services exempt from VAT and ancillary transactions subject to VAT.

In this case, SELARL Imagerie 114, a private practice company practicing radiology, had entered into "private practice replacement contracts" with so-called "replacement" doctors. The company collected all the fees and transferred a limited portion to the replacements, retaining approximately 83% of the revenue.

During an accounting audit, the tax authorities reclassified these agreements and subjected this 83% fraction of the fees not paid back to replacement doctors to VAT, considering that it remunerated the provision of premises and equipment (a separate transaction) and not a VAT-exempt provision of care. The SELARL, which contested the validity of the application of VAT on the grounds that " that the replacements are occasional and the fees received relate exclusively to medical services exempt from VAT ", filed a request with the Paris Administrative Court for discharge from VAT arrears. The lower courts (Administrative Court then Paris Administrative Court of Appeal)²) successively rejected the requests of SELARL, a decision confirmed by the Council of State.

1. The independence of replacements: a determining criterion with regard to VAT liability

Before the Administrative Court of Appeal, the SELARL argued that the fees recorded as income for the activity of the replacement doctors – 17% of which were transferred to them – corresponded exclusively to healthcare services provided in its name and on its behalf, thus benefiting from the VAT exemption provided for by Article 261, 4-1° of the General Tax Code (CGI):

“The following are exempt from value added tax: (…) 4. (Liberal professions and various activities): / 1° Care provided to individuals by members of regulated medical and paramedical professions (…).”

The Paris Administrative Court of Appeal rejects this argument with a reasoning that is particularly relevant to practice:

« Neither the provisions of Law No. 90-1258 of 31 December 1990 relating to private practice companies, nor the circumstances that the name of the appellant company appears on the treatment sheets, that this company invoices and directly collects the fees received from patients, that it is civilly liable for the services provided by the replacement doctors and required to take out insurance covering these acts, are sufficient to exclude the possibility that the non-refunded portion of the fees may, in view of the practical and contractual conditions of their intervention, be regarded as consideration for a separate service of making professional premises available provided by the company to the replacement doctors. »

Before the Council of State, the SELARL reiterated its argument: according to it, the replacements were not acting independently but on behalf of the company, so that pursuant to Article 256 A of the CGI, they could not be considered subject to VAT.

The Council of State rejects this argument and confirms the position of the Court of Appeal.

He considers that the latter, by a sovereign assessment free from distortion, was able to consider that despite the fact that the name of the company appeared on the treatment sheets, that the SELARL invoiced and collected the fees and assumed civil liability for the acts carried out, the replacements were not acting in the name and on behalf of the company, so that the replacements should be subject to VAT due to their independence.

Above all, the Council of State emphasizes that no stipulation in the replacement agreements revealed a link of subordination, within the meaning of Article 256 A of the CGI, between the replacements, the replaced doctors or the company.

Therefore, the Court of Appeal did not commit an error of law or an inaccurate characterization of the facts.

2. Strict assessment of the occasional nature of the replacement

The Council of State also points out that the exemption provided for in 1° of 4 of Article 261 of the CGI applies to care provided by medical professionals but does not extend to income from other operations, in particular the provision of fitted-out professional premises.

The SELARL invoked the administrative doctrine, which makes the exemption from VAT on the royalty it received conditional on the occasional nature of the replacements, to request an automatic exemption from VAT. The Council of State rejected this argument, the trial judges having noted that the disputed contracts had a long and regular duration (31,5 months over three years, or 13,5 months over 15 months) and even included the title "regular replacement contract". Under these conditions, these contracts could not be classified as occasional. 

Furthermore, the argument based on the fact that the company had previously submitted the contracts to the Departmental Council of the Order of Physicians, which had validated them, was not accepted by the Court of Appeal to confer on them the occasional character since the other criteria were not met.

Conclusion

By adopting a strict reading of the exemption criteria, the Council of State confirms that the boundary between exempt medical acts and taxable provision services must be drawn rigorously.

Thus, when the replacements work independently and the replacements are regular or long-term, the portion of the fees retained by the practice company constitutes the consideration for a service of providing resources, subject to VAT.

On the other hand, if the company demonstrates that the replacements were truly occasional - within the meaning of § 240 of the BOFiP -, VAT exemption remains possible, even in the absence of a relationship of subordination.

For radiology companies, this decision marks a turning point: the replacement contract, a widely used tool, must be handled with caution. VAT exemption on the fee collected by the company is far from automatic and requires proof of either the occasional nature of the replacement or genuine integration of the practitioner into the structure's activity, which is not without social risk.

Between legal security, ethical constraints and tax risks, radiology companies will now have to carefully arbitrate their terms of collaboration, and exhaustively document their contractual and accounting practices.