CJEU - Recent Developments in Value Added Tax 2024

1. Introduction

In the intricate world of value-added tax (VAT) regulations, legal discussions can often feel overwhelming as they are overloaded with intricate regulations and complex interpretations. However, recent cases before the European Court of Justice (ECJ) provide critical insights that can elucidate these for businesses, particularly in the pharmaceutical sector. The recent ECJ case C-248/23 Novo Nordisk A/S alongside those of Boehringer Ingelheim (C-462/16 and C-717/19) address significant questions regarding the treatment of pharmaceutical subsidies and contributions to state healthcare systems under VAT law.

2. Novo Nordisk: A Humorous Prelude to Serious Implications

Novo Nordisk serves as an important touchstone in the discussion of VAT treatment in the pharmaceutical industry. At the heart of this case lies a crucial inquiry: Are the contributions made by pharmaceutical companies to the Hungarian social security system considered a “tax” under Art. 78(a) of the VAT Directive, or can they be classified as a “price reduction” under Art. 90(1)? This distinction has far-reaching implications for how these contributions impact the VAT base for pharmaceutical firms, as a pri...