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Pharma contribution: new modulation program

Pharma contribution: new modulation program

The Royal Decree of 29th March 2019, implementing the new “modulation” of the pharma contributions (based on article 191quinquies of the Coordinated law of 14th July 1994 regarding the obligatory health insurance), has come into force on the 15th of April 2019. This modulation mechanism basically provides for a subsidy for certain pharmaceutical research, funded via the pharma contributions collected by government.

The pharmaceutical companies should take into account the following new principles of the modulation mechanism:

  • Extension of the modulation mechanism to pharmaceutical companies, who have no reimbursable medicines on the Belgian market
  • Maintaining of the current modulation mechanism, but with the possibility to take into account planned investments in research and development     


In order to benefit from the new tax modulation mechanism, a specific form will need to be completed and signed by the applicant and by the statutory auditor, or an auditor in case no statutory auditor is appointed by the applicant.  Based on our information, we understand that the complete application file will need to be introduced by the 10th of May (extension of the deadline).

In view of the above, we would like to draw your attention to the potential consequences from a VAT perspective.  The Belgian VAT Authorities have already recognized that pharma contributions to be paid by the pharma industry to the Belgian public health insurer (INAMI/RISIV) entitles a reimbursement of the VAT paid by the pharma company for the sale of medicines.  This viewpoint was based on a judgement of the European Court of Justice - case (C-317/94) Elida Gibbs and confirmed by a judgement in the case (C-462/16) Boehringer Ingelheim. The latter case relates specifically to the rebates granted by pharma companies to private health insurance companies in Germany whereby the Court concluded that the taxpayer was entitled to a reduction in its taxable amounts for discounts / rebates paid to private health insurance companies.

Our understanding is that indeed the Belgian VAT Authorities recognizes that pharma contributions (based on article 191 of the Coordinated law of 14th July 1994) paid by the pharma companies to the public health insurer, can be considered for a reduction of the VAT due over sales of medicines.  Note that it should be analysed on a case-by-case basis whether the pharmaceutical company indeed has the right to submit a request for reimbursement of VAT.

Therefore it is important to re-evaluate the impact on the potential VAT refund in view of the new “modulation” and also more in general the process already in place regarding the approach from a VAT perspective of the pharma contributions.

Additionally, KPMG can issue an assurance report in our role as statutory auditor, or in our role as auditor in case no statutory auditor is appointed. This assurance reporting is a mandatory step in the proper application of the modulation mechanism. Therefore, we can also support you in the preparation of the file for submission to the authorities.

Contact details:

Séverine Kerkhove 

Director Tax & Legal Advisers

Luchthaven Brussel Nationaal 1K
B-1930 Zaventem


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