ECJ C-248/23 (Novo Nordisk) – Question – Reduction taxable amount on ex lege payments to the State health insurance agency

The ECJ released the question in the case C-248/23 (Novo Nordisk).

Context:

Article in the EU VAT Directive

Article 90(1) of the EU VAT Directive 2006/112/EC.

Article 90
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.

Facts

The applicant Novo Nordisk A/S is a company established in Denmark which is engaged in the manufacture and distribution of pharmaceutical products and sells, as part of its activities, the pharmaceutical products it manufactures in Hungary. The public health insurer NEAK decides whether a medicine should be included in the list of subsidized medicines after a study that takes into account various aspects, and then determines the amount of the subsidy. The price of medicines, which is the taxable amount for VAT purposes, consists of two components: firstly, the subsidy from NEAK and secondly, the ‘personal contribution’ paid by the patient. The pharmacy therefore pays VAT on both the amount paid by the patient and the NEAK. Novo Nordisk A/S has made payments to NEAK on the sale of medicines and pays a contribution of 20% or 10% on the subsidy of all medicines sold by it (hereinafter: statutory payment obligation). Novo Nordisk A/S filed a corrective VAT return for January 2016 with the Hungarian tax authority and reduced the amount of VAT due for that period by reference to payments it had made under the legal obligation to pay, which was rejected by the tax authority. The applicant has appealed against this. Novo Nordisk A/S filed a corrective VAT return for January 2016 with the Hungarian tax authority and reduced the amount of VAT due for that period by reference to payments it had made under the legal obligation to pay, which was rejected by the tax authority. The applicant has appealed against this. Novo Nordisk A/S filed a corrective VAT return for January 2016 with the Hungarian tax authority and reduced the amount of VAT due for that period by reference to payments it had made under the legal obligation to pay, which was rejected by the tax authority. The applicant has appealed against this.

Consideration:

It follows from the case-law of the Court that Article 90 of the VAT Directive must be interpreted as meaning that a price reduction granted by a pharmaceutical company to a private health insurer under national law leads, according to that article, to a reduction of the taxable amount in favor of this pharmaceutical company. This article precludes national legislation which provides that a pharmaceutical company may not deduct from its taxable amount for VAT the part of its turnover from the sale of medicines that is subsidized by the public health insurance company.

The referring court observes that distributors of medicinal products owe an amount of 10% and 20% of the producer price for medicinal products financed by the public authorities. The characteristic of this is that the national tax authorities collect the amounts and check the payments, but immediately transfer the collected amounts to the NEAK. Compliance with the payment obligation means that the taxable drug distributor does not receive part of the consideration. The defendant argues that the legal obligation to pay is not a price reduction because it is not provided to the final consumer, so that there is no direct link between the consideration for the sale by the debtor, the payment and the consideration paid by the final consumer.

Source ecer.minbuza.nl

Questions

Must Article 90(1) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax be interpreted as precluding the national legislation at issue in the main proceedings, under which a pharmaceutical company which makes payments ex lege to the State health insurance agency based on the revenue obtained from publicly funded pharmaceutical products is not entitled subsequently to reduce the taxable amount, by reason of the fact that the payments are made ex lege, that payments made under a funding volume agreement and investments made by the company in research and development in the health sector may be deducted from the base amount for the payment obligation, and that the amount payable is collected by the State tax authority, which immediately transfers it to the State health insurance agency?

AG Opinion

Decision

Summary

Source