Are you a pharmaceutical company selling drugs outlined in the list of special drugs and therapies (“Spezialitätenliste”) in Switzerland? If yes, you could benefit from the following information in connection with Swiss VAT.
The list of special drugs and therapies defines the sale price of the drugs. They are also the basis of the insurer. Especially for expensive drugs the above mentioned list defines the pharmaceutical rebate that the insurer can be issue towards the pharmaceutical company.
What is new?
Recently the list of special drugs and therapies outlines that the Swiss VAT cannot be reclaimed in addition to the defined rebate amount.
In practice we see that the insurer issues this rebate in Switzerland in a different manner to the pharmaceutical companies, e.g.:
- without a remark related to Swiss VAT
- including a remark related to Swiss VAT (incl. 2.5% VAT)
- including a remark related to Swiss VAT (incl. VAT)
- including a remark related to Swiss VAT (amount plus 2.5 % VAT)
Your Swiss VAT risk / opportunity
If you are an insurer
In practice we see that some insurer issues respective invoices to pharmaceutical companies including Swiss VAT – even if they are not registered for VAT purposes in Switzerland. Furthermore, we see in practice that sometimes insurer do not include issued invoices with a respective remark on VAT in their Swiss reporting obligations.
If you are a pharmaceutical company
In practice we have noticed that pharmaceutical companies do the input VAT recovery on invoices received by the insurer without any further analysis (risk). On the other hand pharmaceutical companies do not render an input VAT recovery on invoices of insurer without a respective Swiss VAT (opportunity)
Recommended next steps
- pharmaceutical companies should address the outlined topic to their insurers, in order to assess the respective Swiss VAT risk (severity and probability)
- have a look at the incoming invoices of insurers that are issued without Swiss VAT (opportunity of recovery)
An ideal solution for Switzerland for the topic at hand would be a similar approach as the one taken in the EU (ECJ case Böhringer-Ingelheim EU end of 2017): based on this case the pharmaceutical companies are granted a diminution of consideration on the rebates, even if the insurers do not issue VAT conform invoices.
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by Dr. Sandra Ragaz-Fumia
Partner Tax & Legal Services
Leader Pharma & Life Science VAT Switzerland