ECJ rules VAT can be adjusted on pharmaceutical rebates

The Taxpayer in this case is a Hungarian pharmaceutical company. It sold medicinal products to wholesalers which sold them on to pharmacies. The pharmacies sold them on to private patients covered by the Hungarian state health insurance body, which subsidised the patients’ purchases by paying part of the price to the pharmacies. The Taxpayer agreed to rebate to the state health insurance body part of the income it received from the wholesalers. The tax authority rejected a reduction of the Taxpayer’s output VAT because (i) the price reduction was not part of its terms of business or a business promotion, and/or (ii) there was no invoice to support the reduction. Based on an unofficial translation, the ECJ has upheld the Taxpayer’s right to reduce its output VAT, provided that there is sufficient evidence to support the reduction (Boehringer Ingelheim: C-717/19).