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Parliamentary questions
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17 December 2018
Answer given by Mr Moscovici on behalf of the European Commission
Question reference: P-005752/2018

According to point 3 of Annex III of the Value Added Tax (VAT) Directive(1), Member States may apply a reduced rate of VAT to pharmaceutical products of a kind normally used for healthcare, prevention of illnesses and as treatment for medical and veterinary purposes. Point 3 covers medicaments classified under heading 3004 of the Combined Nomenclature(2) as long as they are finished goods, which can be used directly by final consumers(3).

Member States may also choose to apply a reduced VAT rate to specific pharmaceutical products among those mentioned in point 3, while applying the standard rate to other such products.

Concerning the principle of fiscal neutrality, it follows from settled case-law of the Court of Justice of the European Union (CJEU) that, this principle precludes similar goods or services which are in competition with each other being treated differently for VAT purposes. As regards an assessment of the similarity of medicaments, it is clear from the Court’s case-law(4) that account must be taken primarily of the point of view of an average consumer. Products are similar where they have similar characteristics and meet the same needs from the point of view of consumers, the test being whether their use is comparable, and where the differences between them do not have a significant influence on the decision of the average consumer to use one or the other product. The assessment of whether certain products are similar and whether they are in competition with each other, is first and foremost a matter for a national court to determine, taking into account the guidance provided by the CJEU.

(1)Council Directive 2006/112/EC of 28.11.2006 on the common system of value added tax (OJ 347, 11.12.2006, p. 1).
(2)Annex I to Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff (OJ 1987 L 256, p. 1).
(3)Judgment of the CJEU in Case C-360/11 of 17 January 2013.
(4)E.g. judgment of the CJEU in Case C-499/16 of 9 November 2017.

Last updated: 19 December 2018Legal notice