April 01
Dolores Utrilla
25th March 2020

New pending case regarding the interpretation of the VAT Directive when applied to pharmaceutical companies

A request for a preliminary ruling (C-717/19) lodged by the Administrative and Labour Court of Budapest (Fővárosi Közigazgatási és Munkaügyi Bíróság) in the case Boehringer Ingelheim RCV GmbH & Co. KG Magyarországi Fióktelepe v Nemzeti Adó- és Vámhivatal Fellebbviteli Igazgatósága has been subject to official publication.

The preliminary reference comprises two questions regarding the interpretation of the Value Added Tax (VAT) Directive 2006/112 when applied to pharmaceutical companies.

The first question concerns the interpretation of Article 90(1) of the VAT Directive, setting out that 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.

The Hungarian court asks whether Article 90(1) precludes a provision of national law under which a pharmaceutical company which, pursuant to an agreement it is not obliged to enter into, makes payments to the state health insurance agency based on the revenue obtained from pharmaceutical products and which, therefore, does not retain the full amount of the consideration for those products, is not entitled subsequently to reduce the taxable amount, solely because the payment method is not set out in advance in its commercial policy and the payments are not principally for promotional purposes.

The second question to the Court of Justice revolves around the meaning of Article 273 of the VAT Directive. This provision allows Member States to impose other obligations which they deem necessary to ensure the correct collection of VAT and to prevent evasion, subject to the requirements of equal treatment, of not giving rise to formalities connected with the crossing of frontiers in trade between Member States, and of not imposing additional invoicing obligations over and above those laid down in Chapter 3 of the Directive.

In this regard, and in the case that the first question is answered in the affirmative, the referring court asks whether Article 273 precludes a provision of national law under which, in order to be able subsequently to reduce the taxable amount, an invoice made out to the person entitled to the refund providing proof of the transaction giving entitlement to that refund is required, even though the transaction that enables the subsequent reduction in the taxable amount is duly documented and can subsequently be verified, is based in part on truthful, publicly available information, and enables the tax to be collected correctly.

The request is available here.


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