Michaela Merz


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Italy – VAT deduction on pharmaceutical pay back amounts


Discounts reduced the VAT value of pharmaceutical supplies:
Boehringer Ingelheim Pharma GmbH & Co. KG (C-462/16). Decision available here.

The Taxpayer, a German manufacturer, supplies pharmaceutical products to pharmacies. Retrospective discounts linked to the value of those supplies are paid, not to the pharmacies but to private health insurers which reimburse the insured persons buying the products from the pharmacies. The ECJ held that the Taxpayer can adjust the VAT due on its supplies retrospectively, even though the insurer was not in the original chain of supply. This judgment may be significant, and  businesses may wish to consider protecting their position on adjusting VAT.

One question that may arise from this judgment is whether the fact that the discount in this case is a statutory discount restricts its scope. This might be one way that tax authorities could seek to narrow the scope of a favourable judgment. But this should not discourage suppliers in similar situations from considering protecting their position, as this is very positive and the ‘statutory’ aspect is only one consideration in a complex issue.

Please find information on how Italy will deal with the issue:
Newsalert – IVA e pay back farmaceutico (PwC, final 8 gennaio 2018)