Netherlands – VAT treatment of Advance Therapy Medicinal Products

The Dutch tax authorities informed HollandBio (the interest group of biotech companies in the Netherlands) about the Dutch VAT treatment of Advanced Therapy Medicinal Products (ATMPs), such as cell and gene therapy and tissue engineered products. According to the Dutch tax authorities, Advanced Therapy Medicinal Products (ATMPs) qualify as medicines, which means that these products are subject to the reduced Dutch VAT rate of 9%. This is in line with European regulations, where ATMPs are regarded as medical products.

Previously, the view of the Dutch tax authorities varied depending on the exact treatment involving ATMPs. In some cases, the Dutch tax authorities were of the view that the ATMPs qualified as “medical treatment” instead of “medicines”, which is VAT exempt. The main disadvantage of the VAT exemption is that pharmaceutical companies can not reclaim input VAT related to such VAT exempt activities, which leads to VAT becoming a cost for the company. The fact that the reduced Dutch VAT rate of 9% applies to ATMPs (instead of a VAT exemption) is therefore very advantageous for companies, especially given the large investments which are currently being made in the Netherlands.

For further information or in case of any questions please contact Usman Mohammad, usman.mohammad@pwc.com.

Image source: http://unsplash.com

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