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Details

  • Service: Tax, Global Indirect Tax
  • Type: Business and industry issue
  • Date: 6/24/2013

Spain – VAT rate applicable to pharmaceutical products 

GITB June 2013 - Spain
On 17 January 2013, the CJEU issued its judgment in case C-360/11 “European Commission v the Kingdom of Spain”, regarding the VAT rate applicable in Spain for the supply of pharmaceutical products.

The supply of these products have been taxable under the reduced VAT rate (currently 10 percent).


These products mainly consisted of the following:


  • medicinal substances used in the manufacturing of medicinal products
  • medical devices, material, equipment and appliances which, viewed objectively, can be used only to prevent, diagnose, treat, alleviate or cure human or animal illnesses or ailments, but which are not normally intended to alleviate or treat disability, for the exclusive personal use of the disabled
  • aids and equipments aimed to be used, mainly, for physical animal deficiencies
  • aids and equipments mainly used for physical human deficiencies.

The court ruled against Spain. As a consequence, the general VAT rate (currently 21 percent) must now be applied to these products.


This change will increase the cost of these products when buyers (such as doctors or hospitals) are not entitled to recover input VAT, or could decrease the profit margins of the company selling these goods, triggering disputes when contracting with public entities (VAT is in principle included in the price).


A similar case happened some years ago when Spain was forced by the CJEU to modify the VAT rate applicable to road tolls. In this case, the legal change to the rate of VAT came into force some months after the court issued the ruling, without any retrospective effects.


Spanish taxpayers involved in this industry sector are now waiting to see when and how the Spanish VAT law will be amended and which products will be covered.

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Global Indirect Tax Brief: June 2013

GITB: June 2013
Articles in this edition highlight the increasing importance of indirect tax as one of the most important sources of revenue for governments around the world.