Indirect Tax Alert | Deloitte Nederland


Indirect Tax Alert

Rebates paid to a public health insurer under a voluntary agreement should lead to reduction of the taxable amount

On October 6, 2021, the Court of Justice of the European Union (“CJEU”) ruled in the second Boehringer case with respect to the reduction of the taxable amounts resulting from rebates granted to public health insurers.

11 October 2021

The CJEU ruled that pharmaceutical companies are allowed to reduce their taxable amount when voluntary rebates are granted to public health insurers and that administrative obligations to claim this reduction imposed by Member States must be limited.


In the second Boehringer case (C-717/19) a pharmaceutical company supplied medicines via a wholesaler to a pharmacy which distributed the medicines to patients in Hungary.

In Hungary, medicines can be subsidized by NEAK (the Hungarian health insurance fund). The remuneration for the supply of medicines, supplied by pharmacies, has two components: the NEAK subsidy and the ‘own contribution’ paid by the patient.

Boehringer concluded an agreement with NEAK. Based on the agreement, Boehringer will grant NEAK a rebate based on the quantity of medicines marketed. Concluding such an agreement is not a statutory obligation, but it gave Boehringer certainty that its medicines would be subsidized by NEAK.

No invoice has been issued by NEAK for the rebates paid by Boehringer.

The Hungarian tax authorities decided that Boehringer was not entitled to reduce its taxable amount with the rebates paid.

Judgment of the CJEU

The CJEU disagrees with the Hungarian tax authorities. By concluding the agreement with NEAK and paying the rebates, Boehringer waived part of the remuneration received for its supplies from the wholesaler. The CJEU rules that because part of the remuneration that Boehringer was entitled to on the basis of its supplies is not received because of the rebate paid to NEAK, that partly paid the price of the medicines back to the pharmacies, it should be assumed that the price of the medicines supplied by Boehringer is reduced after the transaction took place. As a result, the taxable amount of Boehringer’s supplies should be reduced, resulting in a VAT refund.

In this respect, the CJEU also confirms that the fact that the paid rebate was based on a contractual agreement instead of a statutory obligation, does not impact the above.

Furthermore, the CJEU confirms that EU Member States can impose administrative obligations for taxable persons in order to reduce the taxable amount. Since being in possession of an invoice is a mandatory condition based on national laws to reduce the taxable amount, the neutrality of VAT would be affected when it is (nearly) impossibly for a taxable person to receive such invoice. In such case, the principles of VAT neutrality and proportionality require that the EU Member States allow taxable persons to establish the entitlement to reduce the taxable amount by other means. This is certainly the case when transactions took place with a national institution such as NEAK.

Practical impact

For pharmaceutical companies that pay rebates to public health insurers the outcome of this case is very positive.

Based on the first Boehringer case (C-462/16) the Dutch tax authorities were reluctant to allow a reduction of the taxable amount because i.a. there was no statutory obligation to pay the rebates. Based on the current judgment, we do not see any legal grounds for the Dutch tax authorities that this argument can still be used as the CJEU confirmed that a (voluntary) payment made under a contractual obligation should also result in a reduction of the taxable amount.

For the sake of completeness, we note that at the end of 2020 a Dutch court ruled in a similar case that a pharmaceutical company has to take into account the discount paid to the health insurers when calculating the VAT taxable amount. However, the Dutch tax authorities have lodged an appeal against the Dutch Court’s decision. We will keep you informed about further developments in this case.


The outcome of this case is in our view an additional confirmation that pharmaceutical companies can request for a VAT refund on such rebates. Pharmaceutical companies should evaluate their reimbursement schemes throughout the different EU Member States to see how they can benefit from this judgement.

If you have any questions regarding the above, please contact your VAT advisor.

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