- Background of the Case: The ruling addresses whether mandatory payments made by pharmaceutical companies, specifically Novo Nordisk, in Hungary can be classified as a tax or a price reduction for VAT purposes. These payments are related to public subsidy schemes for prescription medicines sold at subsidized prices to consumers.
- CJEU’s Ruling on Payments: The CJEU determined that the payments could be considered a tax, as they are legally mandated and do not constitute added value or part of the economic consideration for the supplied medicines. However, these payments may also be recognized as a price reduction under Article 90(1) of the VAT Directive.
- Interpretation of VAT Directives: The court’s ruling highlights the distinction between direct and indirect taxes on turnover. It concluded that if a payment is structured as a direct tax borne by suppliers, it may qualify as a price reduction for VAT purposes, while indirect taxes are included in the taxable amount under Article 78(a). This classification emphasizes the need for clarity in how such payments are treated under VAT law.
Source: kluwertaxblog.com
See also
- C-248/23 (Novo Nordisk) – Judgment – Reduction taxable amount on ex lege payments to the State health insurance agency
- Roadtrip through ECJ cases: Focus on Promotional activities/Discounts (Art. 79, 87, 90(1))
- C-462/16 – Boehringer Ingelheim Pharma GmbH & Co. KG – Discounts reduce the VAT value of pharmaceutical supplies
- C-717/19 – Boehringer Ingelheim – Reduction of the taxable amount – Agreement between pharmaceutical company and health insurer
- Join the Linkedin Group on ECJ VAT Cases, click HERE
- VATupdate.com – Your FREE source of information on ECJ VAT Cases
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
