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Boehringer Ingelheim Pharma (C-462/16) – CJEU Judgment

Boehringer Ingelheim Pharma (C-462/16) – CJEU Judgment

The CJEU has concluded that the taxpayer can reduce its taxable amount when rebates were paid to private health insurers.


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This reference considers whether a pharmaceutical company is entitled to an Elida Gibbs (C-317/94) adjustment under Article 90 of the VAT Directive. The taxpayer manufactures medicinal products and supplies those products to pharmacies via wholesalers to both public and private providers. As part of these supplies it is statutorily required to provide a price rebate to public insurance funds. The German tax authority accepted that Boehringer was entitled to make a VAT adjustment where these rebate payments were made to public health insurers on the basis that such payments equated to a payment made to the final consumer (i.e. in line with the decision in Elida Gibbs). The case concerns whether or not Boehringer could make such an adjustment in respect of rebates made to private health insurers. The Court of Justice of the European Union (the Court) has followed the advocate general’s opinion (AGO) concluding that the taxpayer could make such adjustments.

The German tax authority considered that this was not the case on the basis that the private health insurer could not be identified as the final consumer receiving the supply, rather, the private health insurer is merely reimbursing the insured persons who incurred the costs when they purchased the pharmaceutical products. The goods in question are taxable medicinal products.

The Court noted that in paragraph 31 of Elida Gibbs (C-371/94), the reference was made to, what is now Article 90, which requires a reduction in the taxable amount in the case of cancellation, refusal or total or partial non-payment, or where the price is reduced after the supply takes place. It states that this Article ‘refers to the normal case of contractual relations entered into directly between two contracting parties, which are modified subsequently.’ However, the Court was of the view that this does not mean that an Article 90(1) reduction requires modification of a contract. The Court adds in the same paragraph that this provision is an expression of the principle of neutrality and this should not be undermined. The Court added that Article 90(1) requires the Member States to reduce the taxable amount whenever, after a transaction takes place, part or all of the consideration has not been received by the taxable person.

Agreeing with the AGO, the Court noted that the payments made by individuals in a pharmacy are third party consideration. The private health insurance companies reimburse the individuals and then obtain the rebate from the pharmaceutical company. The private health insurance companies, who receive the rebates, are therefore the final consumer. On the basis that the amount payable to the tax authority may not exceed that paid by the final consumer, the Court concluded that the taxpayer was entitled to a reduction in its taxable amounts for discounts / rebates paid to private health insurance companies.

The Court therefore concluded that the taxpayer was entitled to a reduction in its taxable amounts for discounts / rebates paid to private health insurance companies. To access this judgment click here.

For further information please contact:

David Yeomans

Heather Carmichael

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