VAT refund due to taxpayer on pharmaceutical rebates

The Dutch Court of First Instance has found in favour of the taxpayer in a case involving indirect rebates paid to pharmaceutical companies. In essence, the court granted a refund of VAT to a pharmaceutical company based on the CJEU Boehringer case (C-462/16), although the pharmaceutical company was not obliged to grant the rebates under national law. Although the case was concerned with price arrangements with the Minister of Health, Welfare and Sport, it is possible that the same rationale could be applied to other rebate schemes, such as rebate arrangements between pharmaceutical companies and insurance companies.

Summary of the case

A Dutch established pharmaceutical company produces medicines (the Medicines) with a so-called high list price. The list price is the price that is generally known in the market and is the price at which manufacturers sell medicines to pharmacists/wholesalers/etc for use by patients. The Minister of Health, Welfare and Sport has decided to negotiate the price of medicines with a high list price first, before a decision is made about the inclusion of an expensive medicine in the basic insurance package. If medicines are not included in the basis insurance package, patients will not be reimbursed for these medicines.

The pharmaceutical company sells the medicines on the high list price to, for instance, pharmacists. If a patient orders the Medicines from the pharmacist, the pharmacist hands the Medicines directly to the patient and sends an invoice to the health insurer. The patient does not pay the pharmacist himself. The health insurer pays the pharmacist (and settles the excess with the patient if necessary).

At the end of the year, the pharmaceutical company transfers the difference between the high list price (received from the pharmacists) and the negotiated price (i.e. the rebate) to a Third Trusted Party. This Third Trusted Party distributes the rebates to the insurance companies.


The Court of First Instance ruled that the above mentioned arrangements meet the requirements set by the CJEU in the Boehringer case and that the pharmaceutical company can reduce the taxable amount with the rebate. In other words, the pharmaceutical company is allowed to receive a Dutch VAT refund on the rebates granted to the insurance companies via the Third Trusted Party.

Happy to discuss the potential implications of this case in more detail with you personally.

Dr. Sandra Ragaz, Partner
Leader Pharma & Life Science VAT Switzerland
Mobile: +41 79 792 72 98

Usman Mohammad, Director
PwC Netherlands
Mobile: +31 (0) 6 53904538

Photo by Rik van der Kroon on Unsplash