Greece’s Tax Administration acknowledged in
Decision A. 1035 on February 5 2019 a reduction in the taxable
amount for value added tax (VAT) for rebates granted by
pharmaceutical companies to social security organisations and
hospitals (Article 35, Paragraph 3 of Law
The issue has been a long-standing debate between
pharmaceutical businesses and the Greek State. Under the former
system, VAT corresponding to rebates was a cost suffered by the
Greece’s Supreme Administrative Court has
already issued decisions that determine that rebates constitute
an obligatory limitation of monetary claims by pharmaceutical
companies against the social security organisations, when
supplying medicinal products to the latter for the benefit of
the insured persons. The cost of these supplies is covered
totally or partially by the social security organisation.
In simple terms, this is a reduction/discount to the
original amount for the supply of the medicinal products. This
is seen in Decisions 3447/2015, 3448/2015, 3449/2015 and
3450/2015, 2049/2017 and 1282/2017 of Greece’s
Supreme Administrative Court.
Greece’s Tax Administration has previously
accepted in Decision 1115/2016 a reduction in the taxable
amount for VAT in similar situations where there is a claw-back
granted by pharmaceutical companies to social security
organisations (Article 11 of Law 4052/2012) and hospitals.
This is also the case of rebates granted by private
pharmacies (Article 34 of Law 3918/2011) and private health
services providers (Article 100 of Law 4172/2013) to social
security organisations. As a result, rebates and claw-backs are
now treated in a uniform manner from a VAT point of view, on
account of application of the principle of equal treatment.
Consequently, the Greek Tax Administration is aligned with
the judgment of the Court of Justice of the European Union
(CJEU) in C-462/16 (Boehringer Ingelheim Pharma GmbH. & Co.
KG), as well as in C-317/94 (Elida Gibbs), with respect to the
correct interpretation and application of Article 90, Paragraph
1 of Directive 2006/112/EC (VAT Directive).
This provision embodies one of the fundamental principles of
the VAT Directive, according to which the taxable amount is the
consideration received, and the corollary of which is that the
tax authorities may not collect an amount of VAT exceeding the
tax that the taxable person received.
Finally, the CJEU has upheld that one of the principles on
which the VAT system is based is neutrality. In that sense,
each country with similar goods should bear the same tax
burden, whatever the length of the production and distribution
The impact of this development is that pharmaceutical
companies will now be able to enhance their cash position by
the amount of VAT corresponding to the rebates granted to
social security organisations and hospitals.
This article was written by Nikoletta Merkouri of EY