France: Treatment of pharmaceutical company’s rebates for VAT purposes; refund opportunities

France: Treatment of pharmaceutical company’s rebates

France’s Supreme Tax Court (“Conseil d’Etat”) held that for value added tax (VAT) purposes, companies can reduce their taxable base to reflect certain “conventional rebates.”


The case is: Janssen Cilag (12 March 2021).

The rebates were paid under agreements of the “economic comity for health products” (comité économique des produits de santé) regime. The position of the tax authorities was that such rebates were “financial penalties” that could not be used to reduce the taxable base for VAT purposes.

The Conseil d’Etat agreed with prior findings of the Administrative Court of Appeal, Versailles, that conventional discounts paid by pharmaceutical companies could be subtracted or deducted, for VAT purposes, from the taxable base regarding sales previously made by the companies and for which the discounts were due.

KPMG observation

All levels of French courts have applied a judgment of the Court of Justice of the European Union (CJEU)—the Boehringer Ingelheim Pharma case (C-462/16, 20 December 2017)—to determine the VAT treatment of rebates.

Now that the Conseil d’Etat has issued its decision on the VAT treatment of certain rebates, eligible pharmaceutical companies can reduce their taxable base by the amount of discounts paid.

Going forward, it will be prudent to classify the types of discounts or rebates. Also, there could be VAT refund opportunities for rebates made during the years 2019, 2020, and 2021.

Read a March 2021 report [PDF 65 KB] prepared by the KPMG member firm in France

For more information, contact a tax professional with KPMG Avocat:

Laurent Chetcuti | +33 1 55 68 48 87 |

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