Global

Details

  • Service: Tax, Global Indirect Tax, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 1/18/2013

Spain - Reduced VAT rate on pharmaceuticals, medical equipment  

January 18:   The Court of Justice of the European Union (CJEU) this week released its judgment concluding that because Spain applied reduced rates of value added tax (VAT) to a broader range of goods than provided for under the VAT Directive in the field of pharmaceutical products and medical equipment, Spain had not fulfilled its obligations under the VAT Directive. Commission v. Spain, C-360/11 (17 January 2013).

The CJEU found that the VAT rate applicable to specific health care equipment is to be the general 21% rate of VAT.


Read the judgment: C-360/11

KPMG observation

Now that the CJEU has issued its judgment, it remains to be seen what changes will be introduced into the Spanish VAT law. Observers anticipate that changes could:


  • Increase of the costs for acquisition of goods for hospitals
  • Reduce commercial margins
  • Possibly increase the financial costs of VAT refunds for those manufacturing medicines and pharmaceutical products

Read a January 2013 report (English) [PDF 137 KB] or Spanish [PDF 156 KB]) prepared by the KPMG member firm in the Spain: VAT. ECJ considers that Spain wrongly applies the reduced VAT rate to specific health care products, and declares applicable the general 21% VAT rate




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