Pharma and Life Sciences Tax News - Vol 7, No. 1
German law authorizes a manufacturer discount to be granted to pharmacies and health insurers. Fiscal authorities generally assume that the turnover tax base of pharmaceutical companies could be reduced by a maximum of 100/116th. This limitation is due to the discount representing a price reduction, and therefore a gross amount.
The Baden-Württemberg Finance Court has now decided that the manufacturer discount, which is determined on the basis of the net manufacturer sales price, has, in contrast to the predominant opinion of the fiscal authorities, to be a net amount that could not be reinterpreted into a gross amount.
This legal opinion would lead to the fact that the relevant pharmaceutical companies could reduce the tax base for sales generated from pharmacies by the full discounted amount. This would result in a respective higher adjustment of turnover tax than it has been claimed by now by the companies on the basis of the fiscal authorities' opinion.
| Assumption: | | | | | | |
| Net manufacturer sales price | 100.00 € |
| Manufacturer discount 6% | 6.00 € |
| |  | | | | | |
| Opinion | Fiscal authorities | | | Ba.-Wü. Finance Court |
| Turnover tax rate | 16% | 19% | | | 16% | 19% |
| Tax base | 100.00 € | 100.00 € | | Tax base | 100.00 € | 100.00 € |
| less manufacturer discount | -5.17 € | -5.04 € | | less manufacturer discount | -6.00 € | -6.00 € |
| Tax base new | 94.83 € | 94.96 € | | Tax base new | 94.00 € | 94.00 € |
| Turnover tax | 15.17 € | 18.04 € | | Turnover tax | 15.04 € | 17.86 € |
| less turnover tax paid | -16.00 € | -19.00 € | | less turnover tax paid | -16.00 € | -19.00 € |
| Adjustment of turnover tax | -0.83 € | -0.96 € | | Adjustment of turnover tax | -0.96 € | -1.14 € |
| | | | | | | |
| Adjustment difference | | | | | | |
| Fiscal authorities | -0.83 € | -0.96 € | | | | |
| Ba.-Wü. Finance Court | -0.96 € | -1.14 € | | | | |
| | 0.13 € | 0.18 € | | | | |
Independent of the fact whether the fiscal authorities will appeal against the decision of the court or whether the decision will become definitive, it is decisive that the respective companies make sure that the relevant assessment periods remain "open", i.e. to avoid that the tax assessment becomes definite or even to offensively claim respective amounts to be refunded. This could be done - according to the individual case - through appeals, applications or amended tax returns.
Please do not hesitate to contact us in this regard, also in order to clarify whether the structures existing in your company for handling the manufacturer discount are comparable to the case decided.
Publications Search Page
