Overview
Because most clinic revenue is exempt from VAT, the filing structure differs from an ordinary business. Yet cosmetic procedures are taxable even within the same clinic, so in practice many clinics end up running exempt and taxable operations side by side. On top of that, revenue arrives from separate sources — insured benefits, non-covered charges and auto-insurance treatment fees — and the National Tax Service already holds that data.
VALUE Tax & Accounting starts by setting the standard that separates exempt from taxable across specialties and procedures. We reconcile NHIS payment records, card and cash-receipt sales and auto-insurance treatment fees into a single revenue figure so the status return and the global income tax filing do not diverge, and when taxable treatment begins we handle common input VAT apportionment and the registration deadline as well. For a joint practice, we review profit sharing and the capital structure at the partnership agreement stage.
Key tax issues for medical clinics
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01
Exempt and taxable treatment mix inside one clinic
Treatment by a doctor, dentist or oriental medicine practitioner is exempt in principle, but cosmetic procedures excluded from insurance coverage are taxable. That covers double-eyelid and nose surgery, liposuction, wrinkle removal and facial contouring, tooth whitening, laminates and gum contouring, treatment for blemishes and acne, hair removal, hair transplants and skin regeneration. Once taxable treatment begins, business registration must follow within 20 days to avoid the non-registration penalty.
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02
Cash receipts must be issued even when the patient does not ask
Clinics are a mandatory cash-receipt industry, so any cash payment of KRW 100,000 or more must be receipted even without a request. The KRW 100,000 threshold is judged on the total treatment fee including insured benefits, while the receipt itself covers only the amount actually received in cash, issued each time payment is taken. Missing one draws a penalty of 20% of the unissued amount.
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03
The tax office sees your revenue first
The National Tax Service builds a medical revenue aggregation table from the status return. If the documented amount — card sales, cash receipts and invoices combined — exceeds the patient-borne amount of non-covered charges plus co-payments, the clinic is flagged for under-reported sales. The status return is due by 10 February each year for exempt businesses, and that figure becomes the starting point for the May global income tax filing.
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04
Running both means apportioning input VAT
The moment taxable treatment appears, purchases used for both sides — medical equipment, interior work, rent — must be apportioned as common input VAT. Getting the apportionment basis wrong means paying back the refund you received, so it is safer to estimate the taxable share of revenue before bringing equipment in.
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05
A joint practice is decided by its agreement
A joint practice avoids later disputes only if the partnership agreement spells out the investment amounts, the profit-sharing ratio and how accounts are settled on dissolution. In particular, interest on money an individual borrows to fund their contribution is not deductible as an expense of the joint business, so how capital goes in must be decided before opening.
How VALUE Tax & Accounting responds
Exempt and taxable classification by procedure
We identify taxable items by specialty and procedure name, then settle the registration and filing method.
Advance revenue reconciliation
We reconcile NHIS payments, non-covered charges, card and cash-receipt sales and auto-insurance fees before filing.
Sincere-filing and joint-practice review
We watch the KRW 500 million threshold in advance and review the partnership agreement and capital structure at the opening stage.
Medical clinic tax FAQ
Q Does our clinic have to pay VAT? expand_more
If you only provide treatment, it is exempt as a medical and health service. But cosmetic procedures that fall outside insurance coverage are taxable. Typical examples are double-eyelid and nose surgery, liposuction and wrinkle removal, tooth whitening and laminates, treatment for blemishes and acne, hair removal and hair transplants. Treating complications from cosmetic surgery and reconstructive surgery for congenital deformities are excluded from taxation.
Q Do we issue cash receipts only when the patient asks? expand_more
No. Clinics are a mandatory cash-receipt industry, so any cash transaction of KRW 100,000 or more must be receipted without a request. Whether the KRW 100,000 line is met is judged on the total treatment fee including insured benefits, while the receipt itself covers only the amount received in cash. If payment is split, a receipt must be issued each time, and 20% of any unissued amount is charged as penalty tax.
Q What are the consequences of omitting the business establishment status return? expand_more
A VAT-exempt business must report the prior year's revenue by 10 February each year. The tax office checks that return against NHIS payment data and card and cash-receipt sales, and any gap is classified as suspected under-reporting. Reconciling revenue items before filing reduces what you have to explain later.
Q At what revenue level does sincere-filing confirmation apply? expand_more
Health care, the sector clinics belong to, is subject to sincere-filing confirmation once revenue for the tax period reaches KRW 500 million. If it applies, the global income tax deadline extends to 30 June, but a certified tax accountant's confirmation must be filed with the return. If year-end revenue is near the threshold, it is better to look ahead and prepare.
Q Can we deduct interest on money borrowed to fund a joint practice? expand_more
Interest on a loan an individual takes out to contribute capital to a joint business is not recognised as a deductible expense of that business. This is frequently disputed, so how the contribution is funded and whose name holds the assets are best settled while the partnership agreement is being drafted.