ECJ C-802/19 (Firma Z) – Judgment – Adjustments of taxable amount; domestic and intra-Community supplies of medicinal products; discounts under health insurance scheme

On March 11, 2021, the ECJ issued its decision in the case C-802/19 (Firma Z). This case relates to the taxation of provision of medicinal products subject to statutory health insurance schemes.

Article in the EU VAT Directive

Articles 2(1), 13(1), 20, 90 and 138 of the EU VAT Directive 2006/112/EU

Article 2 (Taxable Transaction)

1. The following transactions shall be subject to VAT:
(a) the supply of goods for consideration within the territory of a Member State by a taxable person acting as such;
(b) the intra-Community acquisition of goods for consideration within the territory of a Member State by:
(i) a taxable person acting as such, or a non-taxable legal person, where the vendor is a taxable person acting as such who is not eligible for the exemption for small enterprises provided for in Articles 282 to 292 and who is not covered by Articles 33 or 36;
(ii) in the case of new means of transport, a taxable person, or a non-taxable legal person, whose other acquisitions are not subject to VAT pursuant to Article 3(1), or any other non-taxable person;
(iii) in the case of products subject to excise duty, where the excise duty on the intra-Community acquisition is chargeable, pursuant to Directive 92/12/EEC,
within the territory of the Member State, a taxable person, or a non-taxable legal person, whose other acquisitions are not subject to VAT pursuant to Article 3(1);
(c) the supply of services for consideration within the territory of a Member State by a taxable person acting as such;
(d) the importation of goods.

Article 13 (Taxable Person)

1. States, regional and local government authorities and other bodies governed by public law shall not be regarded as taxable persons in respect of the activities or transactions in which they engage as public authorities, even where they collect dues, fees, contributions or payments in connection with those activities or transactions.
However, when they engage in such activities or transactions, they shall be regarded as taxable persons in respect of those activities or transactions where their treatment as nontaxable persons would lead to significant distortions of competition.
In any event, bodies governed by public law shall be regarded as taxable persons in respect of the activities listed in Annex I, provided that those activities are not carried out on such a small scale as to be negligible.

Article 20 (Taxable Transaction – Supply of Services)

“Intra-Community acquisition of goods” shall mean the acquisition of the right to dispose as owner of movable tangible property dispatched or transported to the person acquiring the goods, by or on behalf of the vendor or the person acquiring the goods, in a Member State other than that in which dispatch or transport of the goods began.

Where goods acquired by a non-taxable legal person are dispatched or transported from a third territory or a third country and imported by that non-taxable legal person into a Member State other than the Member State in which dispatch or transport of the goods ends, the goods shall be regarded as having been dispatched or transported from the Member State of importation. That Member State shall grant the importer designated or recognised under Article 201 as liable for payment of VAT a refund of the VAT paid in respect of the importation of the goods, provided that the importer establishes that VAT has been applied to his acquisition in the Member State in which dispatch or transport of the goods ends.

Article 90 (Taxable Amount)

1. In the case of cancellation, refusal or total or partial non-payment, or where the price is reduced after the supply takes place, the taxable amount shall be reduced accordingly under conditions which shall be determined by the Member States.
2. In the case of total or partial non-payment, Member States may derogate from paragraph

Article 138 (Exemption for intra-EU supplies)

1. Member States shall exempt the supply of goods dispatched or transported to a destination outside their respective territory but within the Community, by or on behalf of the vendor or the person acquiring the goods, for another taxable person, or for a non-taxable legal person acting as such in a Member State other than that in which dispatch or transport of the goods began.
2. In addition to the supply of goods referred to in paragraph 1, Member States shall exempt the following transactions:
(a) the supply of new means of transport, dispatched or transported to the customer at a destination outside their respective territory but within the Community, by or on behalf of the vendor or the customer, for taxable persons, or non-taxable legal persons, whose intra-Community acquisitions of goods are not subject to VAT pursuant to Article 3(1), or for any other non-taxable person;
(b) the supply of products subject to excise duty, dispatched or transported to a destination outside their respective territory but within the Community, to the
customer, by or on behalf of the vendor or the customer, for taxable persons, or non-taxable legal persons, whose intra-Community acquisitions of goods other
than products subject to excise duty are not subject to VAT pursuant to Article 3(1), where those products have been dispatched or transported in accordance with Article 7(4) and (5) or Article 16 of Directive 92/12/EEC
(c) the supply of goods, consisting in a transfer to another Member State, which would have been entitled to exemption under paragraph 1 and points (a) and (b) if it had been made on behalf of another taxable person.

Facts

In the year at issue (2013), the applicant supplied, from the Netherlands, prescription-only medicinal products to Germany, to persons insured under the
statutory health insurance scheme, on the one hand, and to persons insured under private health insurance schemes, on the other hand. In both cases, it made payments (‘discounts’), referred to as compensation for participation, in exchange for answers to questions about the respective illnesses.
The applicant charged the statutory health insurance funds for the supplies to persons insured under a statutory health insurance scheme, and those supplies are the sole subject of the present dispute. The statutory health insurance funds paid on the basis of social security legislation.
Since 1 October 2013, the applicant assumed, in relation to those supplies, that the place of supply was in the Netherlands, that it could benefit from tax exemption for intra-Community supplies there and that the statutory health insurance funds would be liable to pay tax on intra-Community acquisitions in the national territory. It also assumed that the discounts paid by it had reduced the taxable amount for VAT.
The tax office did not share the applicant’s view and issued a tax assessment notice, against which the applicant filed an objection and brought an action,
without success. The applicant challenges the dismissal of its action by way of its appeal on a point of law, in which it asserts, in particular, that it is entitled to a tax adjustment on account of a reduction in remuneration in accordance with the judgment of the Court of Justice of 24 October 1996, Elida Gibbs (C-317/94, EU:C:1996:400)

Question

Based on the judgment of the Court of Justice of the European Union of 24 October 1996, Elida Gibbs, C-317/94 (EU:C:1996:400), is a pharmacy which supplies medicinal products to a statutory health insurance fund entitled to reduce the taxable amount as a result of a discount granted to the persons insured under a health insurance scheme?

In the event that this is answered in the affirmative: Is it contrary to the principles of neutrality and equal treatment in the internal market if a pharmacy in the national territory is able to reduce the taxable amount, but a pharmacy which supplies the statutory health insurance fund by means of an intra-Community, tax-exempt supply from another Member State is not able to do so?

EULawLive

AG Opinion

None

Decision

Art. 90 para. 1 of the Council Directive 2006/112 / EC of November 28, 2006 on the common VAT system is to be interpreted as meaning that a pharmacy established in a member state is not entitled to reduce its tax base if it makes exempt intra-Community supplies of pharmaceutical products in this Member State to a statutory health insurance company based in another Member State, and grants a discount to the persons insured with this health insurance company.

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