For many years, private clinics have been fighting for VAT exemption on their services. Many tax audits are stuck because the conditions for VAT exemption are highly controversial. A ruling by the German Federal Fiscal Court (BFH) could point to a compromise. The issue is that the part of the service provided by the private clinic that constitutes ‘medical treatment’ could be VAT exempt, while the part that constitutes ‘accommodation’ could be subject to VAT. However, this is only possible if, in each individual case, both components constitute a separate service. If this division is not considered possible, the situation remains unchanged: 100% VAT exempt or 100% subject to VAT.