The GMS (General Medical Services) System for Dentists in Ireland
The GMS Scheme allows eligible patients (Medical Card holders) to receive certain dental treatments for free, with the dentist being reimbursed by the Health Service Executive (HSE). However, there are specific rules regarding how GMS income is accounted for, especially for dentists operating through a company.
1. How the GMS System Works for Dentists
Dentists treat eligible Medical Card patients for covered procedures.
The HSE reimburses the dentist for services provided.
Covered treatments include:
- Examinations
- Fillings (limited)
- Extractions
- Prescriptions
- Dentures (with prior approval)
2. Key Accounting Rule – GMS Income Must Be Declared in the Dentist’s Name
Even if a dentist operates through a limited company, the GMS contract is personal to the individual dentist, not the company. This means:
GMS payments must Be paid to the dentist personally, NOT to the company
- The HSE only contracts with individual dentists, not dental companies.
- The income received under the GMS must be declared in the name of the dentist personally, not in the company’s name.
- This means that GMS income is taxable as personal income, not company income.
3. Tax Implications for Dentists with GMS Income
If a dentist operates as a sole trader, all their income (both private and GMS earnings) is taxed as personal income under standard Income Tax, USC, and PRSI rules.
However, if a dentist operates through a limited company, there is a complication:
- Private income (non-GMS patients) can be paid to the company and taxed at 12.5% corporation tax (if not withdrawn).
- GMS income must be taxed as personal income (higher tax rates may apply).
- A separate personal tax return (Form 11) must be filed for the dentist’s GMS earnings.
Example:
Dr. Kelly runs a dental practice through Kelly Dental Ltd. She earns:
- €80,000 from private patients (paid into her company).
- €40,000 from GMS patients (paid to her personally).
Tax Treatment:
- The €80,000 private income is taxed within the company at 12.5% corporate tax, unless withdrawn as salary/dividends.
- The €40,000 GMS income is subject to income tax, PRSI, and USC at personal tax rates (up to 52%).
Important: Even though Dr. Kelly runs a company, her personal tax liability increases because GMS income cannot benefit from the corporate tax rate.
4. Strategies to Manage GMS Tax Burden
Since GMS income must be taxed personally, dentists should consider:
Optimising Salary & Pension
- If operating through a company, balancing salary and pensions in the company can help reduce tax exposure.
Pension Contributions
- Making personal pension contributions can reduce taxable income from GMS earnings.
Expense Deductions
- Dentists can deduct allowable expenses (professional fees, insurance, training, etc.) against GMS income.
Consider Splitting GMS and Private Work
- Some dentists limit their GMS work to avoid excessive personal taxation and focus more on private patients.
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