C-248/23 Novo Nordisk (VAT – Contributions paid pursuant to an ex lege obligation)

JUDGMENT OF THE COURT (First Chamber)

12 September 2024 ( *1 )

(Reference for a preliminary ruling – Common system of value added tax (VAT) – Directive 2006/112/EC – Article 90(1) – Reduction of the taxable amount consequent on a price reduction after the supply takes place – Contributions paid by a pharmaceutical company to the national health insurance agency – National tax legislation excluding contributions paid by a pharmaceutical company to the public health insurance agency pursuant to an ex lege obligation from the benefit of the reduction of the taxable amount)

In Case C‑248/23,

REQUEST for a preliminary ruling under Article 267 TFEU from the Fővárosi Törvényszék (Budapest High Court, Hungary), made by decision of 30 March 2023, received at the Court on 18 April 2023, in the proceedings

Novo Nordisk A/S

v

Nemzeti Adó- és Vámhivatal Fellebbviteli Igazgatósága,

THE COURT (First Chamber),

composed of A. Arabadjiev, President of the Chamber, T. von Danwitz, P.G. Xuereb (Rapporteur), A. Kumin and I. Ziemele, Judges,

Advocate General: T. Ćapeta,

Registrar: I. Illéssy, Administrator,

having regard to the written procedure and further to the hearing on 19 March 2024,

after considering the observations submitted on behalf of:

Novo Nordisk A/S, by T. Bodrogi-Szabó, Z. Hegymegi-Barakonyi and G. Riszter, ügyvédek,

the Hungarian Government, by M.Z. Fehér and K. Szíjjártó, acting as Agents,

the European Commission, by V. Bottka and J. Jokubauskaitė, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 6 June 2024,

gives the following

Judgment

Legal context and the dispute

1This request for a preliminary ruling concerns the interpretation of Article 90(1) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1) (‘the VAT Directive’).

2The request has been made in proceedings between Novo Nordisk A/S and the Nemzeti Adó- és Vámhivatal Fellebbviteli Igazgatósága (Appeals Directorate of the National Tax and Customs Administration, Hungary; ‘the Appeals Directorate’), regarding the decision by which it refused to permit Novo Nordisk to deduct ex lege payments made to the Nemzeti Egészségbiztosítási Alapkezelő (National Health Insurance Fund Management Agency, Hungary; ‘the NEAK’) from the taxable amount for value added tax (VAT) purposes.

Legal context

European Union law

3Article 73 of the VAT Directive provides:

‘In respect of the supply of goods or services, other than as referred to in Articles 74 to 77, the taxable amount shall include everything which constitutes consideration obtained or to be obtained by the supplier, in return for the supply, from the customer or a third party, including subsidies directly linked to the price of the supply.’

4Article 78 of that directive reads as follows:

‘The taxable amount shall include the following factors:

taxes, duties, levies and charges, excluding the VAT itself;

incidental expenses, such as commission, packing, transport and insurance costs, charged by the supplier to the customer.

For the purposes of point (b) of the first paragraph, Member States may regard expenses covered by a separate agreement as incidental expenses.’

5Chapter 5 of Title VII of that directive, entitled ‘Miscellaneous provisions’, contains Article 90 thereof, which provides:

‘1. In the case of cancellation, refusal or total or partial non-payment, or where the price is reduced after the supply takes place, the taxable amount shall be reduced accordingly under conditions which shall be determined by the Member States.

2. In the case of total or partial non-payment, Member States may derogate from paragraph 1.’

6Article 401 of that directive states:

‘Without prejudice to other provisions of Community law, this Directive shall not prevent a Member State from maintaining or introducing taxes on insurance contracts, taxes on betting and gambling, excise duties, stamp duties or, more generally, any taxes, duties or charges which cannot be characterised as turnover taxes, provided that the collecting of those taxes, duties or charges does not give rise, in trade between Member States, to formalities connected with the crossing of frontiers.’

Hungarian law

7Paragraph 65 of the az általános forgalmi adóról szóló 2007. évi CXXVII. törvény (Law No CXXVII of 2007 on value added tax) (Magyar Közlöny 2007/155. (XI.16.)) provides:

‘In respect of the supply of goods or services, the taxable amount, unless otherwise specified in the present law, shall consist of the consideration, expressed in money terms, obtained or to be obtained by the supplier from the purchaser of the goods, the recipient of the services or a third party, including any type of subsidies directly linked to the price of the supply of goods or services.’

8Paragraph 36 of the a biztonságos és gazdaságos gyógyszer- és gyógyászati segédeszköz-ellátás, valamint a gyógyszerforgalmazás általános szabályairól szóló 2006. évi XCVIII. törvény (Law No XCVIII of 2006 laying down general provisions on the reliable and economically viable supply of medicinal products and medical equipment and on the marketing of medicinal products) (Magyar Közlöny 2006/146. (XI.29)) (‘the Gyftv’) states, in its subparagraph 1:

‘The holder of the marketing authorisation for a medicinal product or, where the holder does not carry on any distribution activities in Hungary, the distributor – appointed by agreement concluded between them and approved by the State tax authority – and the person who has submitted an application for a social security subsidy for a preparation and, if that person does not distribute the preparation, the distributor thereof …, shall be subject, as regards medicinal products and preparations … sold in pharmacies and benefiting from any kind of public funding, with the exception of the medicinal products referred to in Paragraph 38(1) and the preparations referred to in the legislation on infant formula and follow-on formula, to the obligation to pay 20% of a part of the social security subsidy, based on the sales data according to medical prescriptions for the reference month, in proportion to the production price or the import price … The holder of the marketing authorisation for the medicinal product shall be subject, as regards the preparations referred to in the legislation on infant formula and follow-on formula sold in pharmacies and benefiting from any kind of public funding, to the obligation to pay 10% of a part of the social security subsidy, based on the sales data according to medical prescriptions for the reference month, in proportion to the production price (production price/consumer price). The amount of the payment obligation shall be calculated for each product and for each type of subsidy. …’

9Paragraph 37 of the Gyftv is worded as follows:

‘(1) The National Health Insurance Fund Management Agency shall forward to the person liable for payment or shall publish on its website, no later than the tenth day of the second calendar month following the reference month, the subsidy and sales data needed to discharge the payment obligations laid down in Paragraph 36(1) and (2).

(2) In accordance with the payment obligations laid down in Paragraph 36(1) and (2), the holder of the marketing authorisation for the medicinal product or of the wholesale distribution authorisation for the medicinal product shall, no later than the twentieth day of the third calendar month following the reference month, file a return with the State tax authority using the form made available by that authority and, at the same time, shall make payment into the account opened for that specific purpose by the State tax authority with the Treasury.’

10Paragraph 40 of the Gyftv states:

‘The State tax authority

immediately after collecting the amounts received pursuant to Paragraph 36(1), (2), (4) and (4a),

[abrogated]

shall transfer them to the account of the National Health Insurance Fund opened with the Treasury, laid down in a special provision.’

11Paragraph 40/A of the Gyftv provides:

‘(1) In addition to the payment obligation laid down in Paragraph 36(1), and provided that there is no product benefiting from public funding placed on the market under another brand name by another holder of a marketing authorisation, but whose active substance and method of administration correspond to those of the product concerned, the holder of the marketing authorisation for a medicinal product or, where the holder does not carry on any distribution activities in the country, the distributor appointed by agreement concluded between them and approved by the State tax authority … shall be subject, as regards medicinal products sold in pharmacies and benefiting from any kind of public funding for at least 6 years, the price of which, taken as the basis for that funding, exceeds 1000 [Hungarian forint (HUF)] [approximately EUR 2.63], to the obligation to pay 10% of a part of the social security subsidy, based on the sales data according to medical prescriptions for the reference month, in proportion to the production price or the import price … The payment obligation shall be calculated for each product and for each type of subsidy.

…

(5) The State tax authority shall inform the health insurance agency of the approval of the agreement concluded between the holder of the marketing authorisation and the distributor, referred to in subparagraph 1, within 8 days of the date of approval.

(6) The National Health Insurance Fund Management Agency shall forward to the person liable for payment or shall publish on its website, no later than the tenth day of the second calendar month following the reference month, the subsidy and sales data needed to discharge the payment obligation laid down in subparagraph 1.

(7) In accordance with the payment obligation laid down in subparagraph 1, the holder of the marketing authorisation for the medicinal product shall, no later than the twentieth day of the third calendar month following the reference month, file a return with the State tax authority using the form made available by that authority and, at the same time, shall make payment into the account opened for that specific purpose by the State tax authority with the Treasury.

(8) The National Health Insurance Fund Management Agency shall provide, at the same time as the data forwarding service referred to in subparagraph 6, an electronic data forwarding service for the benefit of the State tax authority concerning the data needed to monitor the persons liable for payment.

(9) The State tax authority shall transfer the amount received pursuant to subparagraph 1 to the account of the National Health Insurance Fund opened with the Treasury, as indicated in special rules, and shall carry out that transfer immediately after payment is made.’

The dispute in the main proceedings and the question referred for a preliminary ruling

12Novo Nordisk is a company registered in Denmark that manufactures and markets medicinal products. As part of its activities, that company sells its medicinal products in Hungary.

13The retail sale of medicinal products in that Member State is carried out, with the exception of hospitals, through pharmacies. Pharmacies are supplied by wholesale distributors, and wholesalers by distributors of pharmaceutical products, such as Novo Nordisk.

14Some medicinal products may be subsidised by the NEAK, by means of a ‘purchase price subsidy’ scheme. Under that scheme, the NEAK subsidises the purchase price of medicinal products that are sold on prescription and funded by the social security system in the context of outpatient care (‘the social security subsidy’). Payment of the price of the subsidised medicinal product is shared between the NEAK and the patient. The latter pays the pharmacy an amount, known as ‘the subsidised price’, which corresponds to the difference between the price of the medicinal product and the amount of the social security subsidy. The NEAK subsequently reimburses the amount of that subsidy to the pharmacy. The price of the medicinal products received by pharmacies, which is the taxable amount for VAT purposes, thus comprises two parts: first, the social security subsidy and, second, the ‘subsidised price’ paid by the patient. The pharmacy is therefore required to pay VAT on both the amount paid by the patient and the sum paid by the NEAK.

15First, Novo Nordisk belongs to a group of companies that, in its own name and on behalf of Novo Nordisk, entered into a subsidy agreement with the NEAK on a portfolio of medicinal products and agreements on subsidised price volumes (‘the price volume agreements’). In accordance with the price volume agreements, Novo Nordisk undertook to make a payment to the NEAK – of an amount fixed in those agreements by reference to the volume of subsidised medicinal products distributed by it – to be deducted from the revenue obtained from the sale of those medicinal products.

16Secondly, pursuant to Paragraph 36(1) and Paragraph 40/A(1) of the Gyftv, Novo Nordisk, as a distributor of medicinal products, is subject to an ex lege obligation to make payments corresponding to 20% and 10%, respectively, of a portion of the social security subsidies relating to all medicinal products that are sold in pharmacies and benefit from public funding and that were sold by it (‘the ex lege obligation’).

17The amounts due under that obligation are paid into the account of the tax authority, which immediately transfers them to the account of the health insurance fund managed by the NEAK.

18By fulfilling that obligation, Novo Nordisk forgoes a proportion of the consideration obtained from the wholesalers after the sale of the medicinal products, thereby reducing its turnover by a predetermined percentage set by national legislation. Whether or not the ex lege obligation applies and, where appropriate, the overall amount payable thereunder depend on the volume of medicinal products sold and the amount of the social security subsidy.

19As a distributor of medicinal products, Novo Nordisk filed a corrected VAT return with the first-tier tax authority for January 2016, including a reduction in the taxable amount for the period concerned. The amount of that reduction corresponded to the payments made by Novo Nordisk in accordance with the price volume agreements and the ex lege obligation.

20The first-tier tax authority rejected that corrected tax return and refused the subsequent reduction in the taxable amount.

21The Appeals Directorate, which heard Novo Nordisk’s complaint against that decision, considered, based on the judgment of 6 October 2021, Boehringer Ingelheim (C‑717/19, EU:C:2021:818), that Novo Nordisk was allowed to deduct from the taxable amount the amounts which it had paid pursuant to the price volume agreements.

22However, the Appeals Directorate refused to deduct from that taxable amount the payments made by Novo Nordisk under the ex lege obligation (‘the disputed payments’). The Appeals Directorate considered that those payments, which were made pursuant to a statutory obligation, do not constitute a price reduction deductible from the taxable amount for VAT purposes. It stated that payments made under Paragraph 36(1) and Paragraph 40/A(1) of the Gyftv should be considered to be a tax, since, first, they are not intended for the final consumer but rather for the tax authority, and, second, they are primarily a means to achieve budgetary and health objectives.

23Novo Nordisk brought an appeal against the decision of the Appeals Directorate before the Fővárosi Törvényszék (Budapest High Court, Hungary), which is the referring court.

24Relying on the case-law arising from the judgments of 24 October 1996, Elida Gibbs (C‑317/94, EU:C:1996:400), and of 20 December 2017, Boehringer Ingelheim Pharma (C‑462/16, EU:C:2017:1006), the referring court considers, first of all, that the NEAK must be considered to be the final consumer of the medicinal products supplied by Novo Nordisk. The fact that the direct beneficiary of those supplies is not the NEAK, which subsequently reimburses the amount of the subsidy to the pharmacy, but the insured persons themselves who pay the subsidised price to the pharmacy is not such as to break the direct link between those supplies and the consideration received, with the result that the amount collected by the tax authority cannot exceed that paid by the final consumer.

25Next, that court observes that the explanatory notes to the draft law establishing the ex lege obligation describes the disputed payments as a discount.

26Lastly, that court states that the ex lege obligation amounts to a price reduction within the meaning of Article 90(1) of the VAT Directive, since, in the circumstances of the case in the main proceedings, Novo Nordisk did not receive the full consideration for the products it sold.

27The referring court notes, however, that the Court has not yet ruled on the question whether the fact that the disputed payments are made pursuant to an ex lege obligation precludes their classification as a price reduction, within the meaning of Article 90(1) of the VAT Directive.

28In those circumstances, the Fővárosi Törvényszék (Budapest High Court) decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:

‘Must Article 90(1) of [the VAT Directive] be interpreted as precluding the national legislation at issue in the main proceedings, under which a pharmaceutical company which makes [ex lege payments] to the State health insurance agency based on the revenue obtained from publicly funded pharmaceutical products is not entitled subsequently to reduce the taxable amount [for VAT purposes], by reason of the fact that the payments are made ex lege, [while] payments made under a [price] volume agreement and investments made by the company in research and development in the health sector may be deducted from the base amount for the payment obligation, and [where] the amount payable is collected by the State tax authority, which immediately transfers it to the State health insurance agency?’

Consideration of the question referred

29By its question, the referring court asks, in essence, whether Article 90(1) of the VAT Directive precludes national legislation under which a pharmaceutical company, which is required to pay a portion of its revenue obtained from its sales of publicly funded pharmaceutical products to the State health insurance agency, is not entitled to a subsequent reduction in the taxable amount for those payments, by reason of the fact that those payments are made ex lege, while its taxable amount can be reduced by deducting payments made under a price volume agreement and expenses incurred by the company in research and development in the health sector, and where the amounts due are collected by the tax authority, which immediately transfers them to the State health insurance agency.

30In accordance with Article 90(1) of the VAT Directive, in the case of cancellation, refusal or total or partial non-payment, or where the price is reduced after the supply takes place, the Member States are required to reduce the taxable amount and, consequently, the amount of VAT payable by the taxable person whenever, after a transaction has been concluded, part or all of the consideration has not been received by the taxable person. That provision embodies one of the fundamental principles of the VAT Directive, according to which the taxable amount is the consideration actually received and the corollary of which is that the tax authorities may not collect an amount of VAT exceeding the tax which the taxable person received (judgment of 6 October 2021, Boehringer Ingelheim, C‑717/19, EU:C:2021:818, paragraph 41 and the case-law cited).

31As regards the context to which that provision relates, it is important to note that Article 73 of the VAT Directive provides that the taxable amount is to include, in respect of the supply of goods or services, everything which constitutes consideration obtained or to be obtained by the supplier, in return for the supply, from the customer or a third party, including subsidies directly linked to the price of those supplies.

32In that regard, it should be borne in mind that the basic principle of the VAT system is that VAT is intended to tax only the final consumer and to be completely neutral as regards the taxable persons involved in the production and distribution process prior to the stage of final taxation, regardless of the number of transactions involved (judgment of 6 October 2021, Boehringer Ingelheim, C‑717/19, EU:C:2021:818, paragraph 39 and the case-law cited).

33In the present case, it is apparent from the order for reference that Novo Nordisk markets, on the Hungarian market, medicinal products subsided by the NEAK through wholesalers to pharmacies which sell them to persons covered by the State health insurance, subject to payment by those persons of the difference between the price of the medicinal product and the amount of the social security subsidy paid directly by the NEAK to pharmacies. By virtue of the ex lege obligation, Novo Nordisk pays to the NEAK, through the tax authority, amounts corresponding to 20% and 10%, respectively, of a portion of the social security subsidies relating to all medicinal products, distributed in pharmacies and benefiting from public funding, sold by Novo Nordisk. Those amounts are retained from the revenue from the sale of those medicinal products. Even if the formal recipient of the disputed payments is the tax authority, that authority is required to transfer immediately the amounts paid to the NEAK.

34In that context, both the tax authority and the Hungarian Government consider that the terms under which the disputed payments were made by Novo Nordisk justify their classification as a tax, within the meaning of point (a) of the first paragraph of Article 78 of the VAT Directive, and, consequently, that those payments must be included in the taxable amount for the supply of the medicinal products.

35In that regard, the Court has already clarified that, in order for taxes, duties, levies and charges to be included in the taxable amount for VAT, even though they do not represent any added value and do not constitute the financial consideration for the supply of goods or services, they must have a direct link with that supply, and the question whether the chargeable event for the tax, duty, levy or charge concerned coincides with that for VAT is a decisive factor for the purposes of establishing the existence of such a direct link (see, to that effect, judgments of 20 May 2010, Commission v Poland, C‑228/09, EU:C:2010:295, paragraph 30, and of 11 June 2015, Lisboagás GDL, C‑256/14, EU:C:2015:387, paragraph 29 and the case-law cited).

36First of all, it is apparent, subject to verification by the referring court, that the disputed payments do not represent any added value.

37Next, it must be stated that, since the portion of the sale price of the subsidised medicinal products which is paid by Novo Nordisk, through the tax authority, to the NEAK is fixed in advance and is mandatory, it cannot be regarded as part of the financial consideration for the supply of those medicinal products actually received by Novo Nordisk (see, to that effect, judgment of 19 July 2012, International Bingo Technology, C‑377/11, EU:C:2012:503, paragraph 28).

38Lastly, it is apparent from the order for reference, first, that the event giving rise to the ex lege obligation on the taxable person, as provided for in Paragraph 36(1) and Paragraph 40/A(1) of the Gyftv, is the sale of the medicinal products and, second, that the overall amount due under that obligation is determined according to the volume of medicinal products sold and the amount of the social security subsidy.

39As for the option, afforded by the national legislation to pharmaceutical companies, to deduct from the amount of the disputed payments the contributions paid under the price volume agreements relating to the reference period, exclusive of VAT, as well as the expenses allocated to research and development, if the exercise of that option is, where appropriate, likely to reduce the amount of those payments, it has no effect on the fact that, in the light of the considerations set out in paragraphs 36 to 38 of the present judgment, those payments may be classified as a tax, within the meaning of point (a) of the first paragraph of Article 78 of the VAT Directive.

40First, the NEAK is the final beneficiary of the payments made under both the ex lege obligation and the price volume agreements.

41Secondly, the Hungarian Government has not provided any details concerning the operating procedures of the mechanism for deducting the amount of payments arising from the ex lege obligation regarding expenses in research and development in the health sector; consequently, there is nothing to suggest that that option is relevant for considering that the disputed payments are taxes that must be included in the taxable amount for VAT purposes under point (a) of the first paragraph of Article 78 of the VAT Directive.

42In those circumstances, the chargeable event for the disputed payments may coincide with that of the VAT due for subsidised medicinal products sold. Those payments can therefore be included in the taxable amount for VAT purposes under point (a) of the first paragraph of Article 78 of the VAT Directive.

43As regards the question whether the amounts paid by pharmaceutical companies to social security agencies consequent on the sale of subsidised medicinal products may, nevertheless, fall within Article 90(1) of the VAT Directive, it should be borne in mind, first, that the Court has already held that a discount granted, under national law, by a pharmaceutical company to a private health insurance company results, for the purposes of Article 90(1) of the VAT Directive, in a reduction of the taxable amount in favour of that pharmaceutical company, where it supplies medicinal products via wholesalers to pharmacies which make supplies to persons covered by private health insurance that reimburses the purchase price of the medicinal products to persons it insures (judgment of 20 December 2017, Boehringer Ingelheim Pharma, C‑462/16, EU:C:2017:1006, paragraph 46).

44In that regard, the Hungarian Government’s argument that, in the case which gave rise to that judgment, the private nature of the health insurance company constituted a fundamental difference, whereas, in the present case, the disputed payments are tax revenue in nature, is irrelevant. As is apparent from paragraph 33 of the present judgment, the actual beneficiary of the disputed payments is not the tax authority but the NEAK, which uses them to subsidise the purchase price of the medicinal products, in the same way as in that case.

45Secondly, the Court has held that Article 90(1) of the VAT Directive precludes a national law that provides that a pharmaceutical company may not deduct from its taxable amount for VAT the portion of its revenue obtained from the sale of medicinal products subsidised by the State health insurance agency, which it reimburses to that organisation under a contract concluded between the latter and that company, because the amounts paid in that regard were not determined in accordance with terms set out in advance in that company’s commercial policy and that those payments were not made for promotional purposes (judgment of 6 October 2021, Boehringer Ingelheim, C‑717/19, EU:C:2021:818, paragraph 55).

46The terms under which, in the present case, the disputed payments were made under the ex lege obligation cannot call into question the classification of those payments as a price reduction within the meaning of Article 90(1) of the VAT Directive.

47First, the Court has already clarified that the scope of Article 90(1) of the VAT Directive covers price reductions resulting both from agreements concluded between a pharmaceutical company and a State health insurance agency and from ex lege obligations such as those at issue in the main proceedings (see, to that effect, judgment of 6 October 2021, Boehringer Ingelheim, C‑717/19, EU:C:2021:818, paragraphs 48 and 49).

48Furthermore, the parties to the proceedings confirmed at the hearing that the purpose of the payments made under the ex lege obligation is identical to that of those made on the basis of the price volume agreements concluded between the social security agency and the pharmaceutical companies, namely to subsidise the purchase price of medicinal products sold on prescription and funded by the social security system in the context of outpatient care.

49Secondly, the fact that, in the dispute in the main proceedings, the direct beneficiary of the supply of the medicinal products at issue was not the State health insurance agency, which subsequently reimburses the amount of the subsidy to the pharmacy, but the insured persons themselves who paid the subsidised price to the pharmacy, is not such as to break the direct link between the supply of services made and the consideration received (judgment of 6 October 2021, Boehringer Ingelheim, C‑717/19, EU:C:2021:818, paragraph 45 and the case-law cited).

50In so far as the pharmacy must pay VAT on the amount paid by the patient and on the amount paid to it by the State health insurance agency for the subsidised medicinal products, that State health insurance agency must be regarded as being the final consumer of a supply made by a pharmaceutical company, which is a taxable person for the purposes of VAT, such that the amount payable to the tax authority may not exceed that paid by the final consumer (judgment of 6 October 2021, Boehringer Ingelheim, C‑717/19, EU:C:2021:818, paragraph 46).

51In that regard, as regards the determination of the final consumer, the argument put forward by the Hungarian Government that the amounts due under the ex lege obligation are collected by the tax authority is not relevant. As recalled in paragraph 44 of the present judgment, the latter transfers those amounts immediately to the NEAK, which grants a subsidy covering the purchase price of medicinal products sold on prescription and funded by social security in the context of outpatient care.

52The mechanism of that immediate transfer supports the classification of the disputed payments as a price reduction within the meaning of Article 90(1) of the VAT Directive.

53Contrary to what the Hungarian Government maintains, Article 401 of that directive does not preclude that interpretation, in the light of the context of that article. The fact that Member States may maintain or introduce certain taxes, duties or charges under the conditions laid down in that article does not, in any way, prevent such taxes, duties or charges from being taken into account, pursuant to point (a) of the first paragraph of Article 78 of that directive, for the purposes of determining the taxable amount for VAT, as a price reduction, within the meaning of Article 90(1) of that directive.

54Furthermore, it is apparent from the order for reference that, by the disputed payments, Novo Nordisk is waiving a proportion of the consideration paid by the wholesaler.

55It would not be consistent with the principle of fiscal neutrality recalled in paragraph 32 of the present judgment for the taxable amount on which the VAT, for which the pharmaceutical company is liable, as a taxable person, is calculated to be higher than the amount which it ultimately received. If this were the case, that principle would not be complied with (see, to that effect, judgment of 6 October 2021, Boehringer Ingelheim, C‑717/19, EU:T:2021:818, paragraph 44 and the case-law cited).

56Thus, since a portion of the consideration obtained from the sale of the medicinal products by the pharmaceutical company has not been received by the latter because of the contribution it pays to the State health insurance agency, which refunds part of the price of those medicinal products to the pharmacy, it must be found that there has been a reduction in the price of the medicinal products after the supply took place within the meaning of Article 90(1) of the VAT Directive (judgment of 6 October 2021, Boehringer Ingelheim, C‑717/19, EU:C:2021:818, paragraph 47).

57The pharmaceutical company was not able to freely dispose of the full amount of the price received on the sale of its products to wholesalers (see, by analogy, judgment of 20 December 2017, Boehringer Ingelheim Pharma, C‑462/16, EU:C:2017:1006, paragraph 43 and the case-law cited).

58In the light of the foregoing considerations, the answer to the question referred is that Article 90(1) of the VAT Directive must be interpreted as precluding national legislation under which a pharmaceutical company, which is under an obligation to pay to the State health insurance agency a portion of its revenue obtained from its sales of publicly funded pharmaceutical products, is not entitled to a subsequent reduction in the taxable amount under those payments by reason of the fact that those payments are made ex lege, while its taxable amount can be reduced by deducting payments made under a price volume agreement and expenses incurred by the company in research and development in the health sector, and where the amounts due are collected by the tax authority, which immediately transfers them to the State health insurance agency.

Costs

59Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

Operative part

On those grounds, the Court (First Chamber) hereby rules:

Article 90(1) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax

must be interpreted as precluding national legislation under which a pharmaceutical company, which is under an obligation to pay to the State health insurance agency a portion of its revenue obtained from its sales of publicly funded pharmaceutical products, is not entitled to a subsequent reduction in the taxable amount under those payments by reason of the fact that those payments are made ex lege, while its taxable amount can be reduced by deducting payments made under a price volume agreement and expenses incurred by the company in research and development in the health sector, and where the amounts due are collected by the tax authority, which immediately transfers them to the State health insurance agency.

Signatures

[Signatures]

( *1 ) Language of the case: Hungarian.

OPINION OF ADVOCATE GENERAL

ĆAPETA

delivered on 6 June 2024 ¹

(Reference for a preliminary ruling – Taxation – Value added tax (VAT) – Directive 2006/112/EC – Article 90(1) – Reduction of the taxable amount – National tax legislation excluding from the benefit of the reduction of the taxable amount contributions paid by a pharmaceutical undertaking to the public sickness insurance body pursuant to a statutory obligation – Price reduction)

I. Introduction

Introduction

1‘Oh, save me, save me, save me from this squeeze’. ²

2Indeed, this case is about taxes, more precisely, about the value added tax (VAT). It is pending before the Fővárosi Törvényszék (Budapest High Court, Hungary), which asked the Court to interpret Article 90(1) of the VAT Directive, ³ which allows for the reduction of the taxable amount if the price is reduced after the supply takes place.

3The dispute arose between Novo Nordisk AS (‘Novo Nordisk’), a pharmaceutical company that supplies medical products to the Hungarian market and the Nemzeti Adó- és Vámhivatal Fellebbviteli Igazgatósága (Appeals Directorate of the National Tax and Customs Administration, Hungary; ‘the Appeals Directorate’), which refused Novo Nordisk’s request for a subsequent reduction of the amount of VAT paid for the supply of subsidised medicinal products.

4The Court is required to interpret whether certain payments imposed by Hungarian law and calculated on the basis of the price of subsidised medicinal products should be treated as a price reduction or as a tax. If it is a price reduction, the taxable amount should be reduced on the basis of Article 90(1) of the VAT Directive. If that payment is to be characterised as a tax, however, Novo Nordisk is not entitled to a reduction of the taxable amount for VAT purposes.

II. The background to the dispute in the main proceedings, the question referred and the procedure before the Court

5In Hungary, the retail sale of medicinal products is carried out through pharmacies. Pharmacies are supplied by wholesale distributors and those distributors are, in turn, supplied by distributors of pharmaceutical products.

6Medicinal products may be subsidised by the Nemzeti Egészségbiztosítási Alapkezelő (National Health Insurance Fund Management Agency, Hungary; ‘the NEAK’) through the ‘purchase price subsidy’ scheme. Under that scheme, the NEAK subsidises the purchase price of medicinal products that are sold on prescription and funded by the social security system in the context of outpatient care. The price of the subsidised medicinal product is then shared between the NEAK and the patient. The patient pays the pharmacy an amount –the ‘subsidised price’ –, which is the difference between the price of the medicinal product and the subsidy paid by the NEAK. The NEAK subsequently reimburses to the pharmacy the amount of the subsidy paid. The price of the medicinal products received by the pharmacy, which is the taxable amount for VAT purposes, thus comprises two parts: the subsidy paid by the NEAK and the ‘subsidised price’ paid by the patient. The pharmacy is therefore required to pay VAT on both the amount paid by the patient and the sum paid by the NEAK.

7Novo Nordisk, the applicant in the main proceedings, is a company registered in Denmark that manufactures and markets medicinal products in Hungary.

8Novo Nordisk, together with Novo Nordisk Hungária Kft., belongs to a group of companies that, in its own name and on behalf of Novo Nordisk, entered into agreements with the NEAK on the portfolio of subsidised products and on price volume (‘the price volume agreements’). In accordance with these agreements, Novo Nordisk undertook the obligation to pay to the NEAK a sum which depends on the volume of sales of medicinal products subsidised by the social security system (‘the payment obligation under the price volume agreements’) and, to that end, used a portion of the revenue obtained from the sale of those medicinal products.

9In addition to the price volume agreements, pursuant to Paragraph 36(1) and Paragraph 40/A(1) of A biztonságos és gazdaságos gyógyszer- és gyógyászatisegédeszköz-ellátás, valamint a gyógyszerforgalmazás általános szabályairól szóló 2006. évi XCVIII. törvény (Law No XCVIII of 2006 laying down general provisions on the reliable and economically viable supply of medicinal products and medical equipment and on the marketing of medicinal products; ‘the Law on the marketing of medicinal products’), Novo Nordisk is obliged to make additional payments of 20% and 10% ‘of a part of the social security subsidy’ for medicinal products benefiting from any kind of public funding sold by it through pharmacies (‘the ex lege payment obligation’).

10In the order for reference, the referring court explains that in discharging the ex lege payment obligation after the sale of the products, Novo Nordisk waives part of the consideration it receives from the wholesaler, that is to say, part of its turnover. Whether or not the ex lege payment obligation applies and the overall amount that is to be paid on that ground thus depend on the quantity of subsidised medicinal products sold and the amount of the social security subsidy. More precisely, according to Paragraph 36(1) of the Law on the marketing of medicinal products, the amount to be paid concerning the ex lege payment obligation is ‘based on the sales data according to medical prescriptions for the reference month, in proportion to the production price’.

11On 16 July 2021, Novo Nordisk filed a corrected tax return with the first-tier tax authority of the Appeals Directorate for the tax period covering January 2016, in accordance with Paragraph 195 of the az adózás rendjéről szóló 2017. évi CL. törvény (Law No CL of 2017 on general taxation procedures; ‘the Law on general taxation procedures’). In its corrected tax return, Novo Nordisk reduced the amount of VAT payable for the tax period by 7832000 forint (HUF) (approximately 20,353.47 euros), citing the payments it had made under both the price volume agreements entered into with the NEAK and the payments it made under Paragraph 36(1) and Paragraph 40/A(1) of the Law on the marketing of medicinal products.

12The first-tier tax authority rejected Novo Nordisk’s corrected tax return and refused the reduction in the taxable amount. Following Novo Nordisk’s complaint, in which the judgment in Boehringer Hungary ⁴ was invoked, the Appeals Directorate allowed the reduction in the taxable amount as regards the sums paid pursuant to the payment obligation under the price volume agreements.

13However, the Appeals Directorate refused the reduction in the taxable amount regarding the ex lege payment obligation. It stated that the statutory payment obligation is not a price reduction, but a special tax. In its view, the ex lege payment obligation stems not from the price volume agreements, but directly from statutory provisions. It is, therefore, not a price reduction because it is not given by the distributor of pharmaceutical products to the final consumer and because the payments are primarily mechanisms to achieve budgetary and health objectives. As mentioned above, ex lege payment obligations are governed by the Law on general taxation procedures; the sums paid in that respect must be credited to the tax authority and, under Paragraph 6(2)(a) of that law, are treated as taxes. The defendant in the main proceedings therefore maintains that the ex lege payment obligation is a tax payable under a mandatory statutory provision which cannot be regarded as a price reduction.

14In those circumstances, the Fővárosi Törvényszék (Budapest High Court) decided to stay the proceedings and refer the following question to the Court of Justice for a preliminary ruling:

‘Must Article 90(1) of [the VAT Directive] be interpreted as precluding the national legislation at issue in the main proceedings, under which a pharmaceutical company which makes payments ex lege to the State health insurance agency based on the revenue obtained from publicly funded pharmaceutical products is not entitled subsequently to reduce the taxable amount, by reasons of the fact that the payments are made ex lege, that payments made under a funding volume agreement and investments made by the company in research and development in the health sector may be deducted from the base amount for the payment obligation, and that the amount payable is collected by the State tax authority, which immediately transfers it to the State health insurance agency?’

15Written observations were submitted to the Court by Novo Nordisk, the Hungarian Government and the European Commission.

16A hearing was held on 19 March 2024 at which Novo Nordisk, the Hungarian Government and the Commission presented oral argument.

III. Legal framework

European Union law

17Article 90(1) of the VAT Directive reads:

‘In the case of cancellation, refusal or total or partial non-payment, or where the price is reduced after the supply takes place, the taxable amount shall be reduced accordingly under conditions which shall be determined by the Member States.’

Hungarian law

18Paragraph 36(1) of the Law on the marketing of medicinal products reads:

‘The holder of the marketing authorisation for a medicinal product or, where the holder does not carry on any distribution activities in Hungary, the distributor appointed by agreement concluded between them and approved by the State tax authority, and the person who has submitted an application for a social security subsidy for a preparation and, if that person does not distribute the preparation, the distributor (for the purposes of this Chapter, together, “the holder of the marketing authorisation for the medicinal product”), shall be subject, as regards medicinal products and preparations (for the purposes of this Chapter, together, “medicinal products”) sold in pharmacies and benefiting from any kind of public funding, with the exception of the medicinal products referred to in Paragraph 38(1) and the preparations referred to in the legislation on infant formula and follow-on formula, to the obligation to pay 20% of a part of the social security subsidy, based on the sales data according to medical prescriptions for the reference month, in proportion to the production price or the import price (together, “the production price”) (production price/consumer price). The holder of the marketing authorisation for the medicinal product shall be subject, as regards the preparations referred to in the legislation on infant formula and follow-on formula sold in pharmacies and benefiting from any kind of public funding, to the obligation to pay 10% of a part of the social security subsidy, based on the sales data according to medical prescriptions for the reference month, in proportion to the production price (production price/consumer price). The payment obligation shall be calculated for each product and for each type of subsidy. “Social security subsidy” means the gross subsidy, including value added tax. “Consumer price” means the gross consumer price. “Production price” means the net production price, excluding value added tax.’

19According to Paragraph 40 of that law, the State tax authority:

‘(a) shall transfer the amount received pursuant to Paragraph 36(1), (2), (4) and (4a) to the account of the National Health Insurance Fund opened with the Treasury, as indicated in special rules;

(b) shall carry out that transfer immediately after payment is made.’

20Paragraph 40/A of that law provides:

‘1. In addition to the payment obligation laid down in Paragraph 36(1), the holder of the marketing authorisation for a medicinal product or, where the holder does not carry on any distribution activities in Hungary, the distributor appointed by agreement concluded between them and approved by the State tax authority (for the purposes of this Paragraph, together, “the holder of the marketing authorisation for the medicinal product”), shall be subject, as regards medicinal products sold in pharmacies and benefiting from any kind of public funding for at least six years, the price of which, taken as the basis for that funding, exceeds HUF 1000, to the obligation to pay 10% of a part of the social security subsidy, based on the sales data according to medical prescriptions for the reference month, in proportion to the production price or the import price (together, “the production price”) (production price/consumer price), provided that there is no other product which is also publicly funded and whose active pharmaceutical ingredient and route of administration are identical to those of the product in question, but which is sold under a different trade mark by a different marketing authorisation holder. The payment obligation shall be calculated for each product and for each type of subsidy.

…

4. The payment obligation laid down in subparagraph 1 shall be governed by the Law on tax administration and the Law on general taxation procedures, subject to the differences established in this law.

5. The State tax authority shall inform the health insurance agency of the approval of the agreement between the holder of the marketing authorisation and the distributor, referred to in subparagraph 1, within eight days of the date of approval.

6. The health insurance agency responsible for managing the National Health Insurance Fund shall forward to the person liable for payment or shall publish on its website, no later than the tenth day of the second calendar month following the reference month, the subsidy and sales data needed to discharge the payment obligation laid down in subparagraph 1.

7. In accordance with the payment obligation laid down in subparagraph 1, the holder of the marketing authorisation for the medicinal product shall, no later than the twentieth day of the third calendar month following the reference month, file a return with the State tax authority using the form made available by that authority and, at the same time, shall make payment into the account opened for that specific purpose by the tax authority with the Treasury.

8. The health insurance agency responsible for managing the National Health Insurance Fund shall provide, at the same time as the data forwarding service referred to in subparagraph 6, an electronic data forwarding service for the benefit of the State tax authority concerning the data needed to monitor the persons liable for payment.

9. The State tax authority shall transfer the amount received pursuant to subparagraph 1 to the account of the National Health Insurance Fund opened with the Treasury, as indicated in special rules, and shall carry out that transfer immediately after payment is made.’

IV. Analysis

21The present case requires an interpretation of the VAT Directive which will enable the referring court to decide whether the ex lege payment required by national law is a price reduction allowing the reduction of the taxable amount.

22If a taxable person, for whatever reason, reduces the price of a good or service it supplies, such a reduction is deductible from the taxable amount on the basis of which the VAT is calculated. Price reductions can be offered at the moment of supply, in which case Article 79 of the VAT Directive is applicable. However, prices can also be reduced after the supply takes place. In that case, Article 90(1) of the VAT Directive provides for the reduction of the taxable amount. The applicability of that provision is at issue in the present case.

23Those provisions are an expression of a fundamental principle of the VAT Directive, according to which the taxable amount is the consideration actually received, and the corollary of which is that the tax authorities may not collect an amount of VAT exceeding the tax which the taxable person received. ⁵

24Under the Law on the marketing of medicinal products, Novo Nordisk was obliged to pay the NEAK an amount that was directly connected to the quantity and price of the products supplied, the payment and the performance of which occurred after the supply of those products.

25Is such a payment a price reduction, in which case the taxable amount should be reduced for the amount of that payment on the basis of Article 90(1) of the VAT Directive, or is such a payment a discharge of the obligation to pay a special tax, in which case it does not affect the taxable amount?

26To my mind, there are different elements in the present case which can favour both conclusions. The existing case-law, particularly the judgments in Boehringer Germany ⁶ and in Boehringer Hungary, provide some elements, but cannot provide a final answer for the present case.

27I will proceed as follows. First, I will explain why the ex lege payment at issue may be considered a price reduction (A). Second, I will explain why, even though the payment at issue possesses most of the elements of a special tax, it may not be considered as such in the present case (B). I will therefore propose to the Court to find, in the present case, that the ex lege payment at issue should be considered as a price reduction (C).

A. The ex lege payment at issue as a price reduction

28It follows from Boehringer Germany that a price reduction need not be voluntary, but can result from an obligation grounded in legislation, in order to be characterised as a price reduction in the sense of Article 90(1) of the VAT Directive. ⁷

29Boehringer Germany concerned the discount on the price of medicinal products that a pharmaceutical company was required to grant, on the basis of law, to a private health insurance company which reimbursed the patient. The main reason why the Court found that discount to be a price reduction within the meaning of Article 90(1) of the VAT Directive was that, as a result of the German legislation at issue, a pharmaceutical company could only dispose of a sum corresponding to the price of the sale of those products to pharmacies, reduced by that discount. ⁸

30The fact that the insured person, and not the insurance company, was a direct beneficiary of the supply did not break the direct link between the supply of services made and the consideration received. In fact, according to the Court, the private health insurance company at issue was to be regarded as being the final consumer of a supply made by a pharmaceutical company and, therefore, the amount payable to the tax authority could not exceed that paid by the insurance company as the final consumer. ⁹ The consideration that the company actually received and which represented the taxable amount was therefore reduced by the discount imposed by law. ¹⁰

31In the present case, as described by the referring court, under the ex lege payment obligation, Novo Nordisk reimburses the NEAK, which funds the medicinal products, a fixed percentage set in advance in respect of each medicinal product with a subsidised purchase price.

32Even if the NEAK is not a direct beneficiary of the supply of the medicinal product, it may nevertheless be characterised as a final consumer in the same sense as the insurance company was a final consumer in Boehringer Germany. The NEAK, namely, pays part of the price of the supplied medical products.

33Given that the amount owed by Novo Nordisk under the Hungarian law to the NEAK is calculated on the basis of the price of the supplied prescription medicinal products, and that the reimbursement is made to the same institution which is also a final consumer, such reimbursement represents the price reduction of the supplied medicinal products granted after the supply took place within the meaning of Article 90(1) of the VAT Directive.

34Consequently, an ex lege payment obligation such as the one in the main proceedings, may constitute a price reduction so that, for the purpose of VAT, the ‘taxable amount’ of that company may be reduced as a result of the price reduction resulting from such ex lege payment.

B. The ex lege payment at issue as a tax

35If, however, the ex lege payment at issue is not a reimbursement of the part of the price paid by the NEAK as a final consumer, but rather a payment to the NEAK, as a public health insurance fund, of a special tax imposed by law, Article 90(1) of the VAT Directive would not apply. In such a scenario, there would be no reason for the reduction of the taxable amount, as payment of that tax would not decrease the amount of consideration received by Novo Nordisk for its supplies of the subsidised medicinal products.

36In Boehringer Germany, the discount which had to be granted by the pharmaceutical company was for the benefit of the private insurance company that had no public role. It was therefore clear in Boehringer Germany that the ex lege payment in that case directly reduced the consideration received for the products supplied.

37On the contrary, the NEAK, according to the Hungarian Government, is an institution of public power with responsibilities not only for the subsidising of medicinal products, but also with other responsibilities in the organisation of public health. In the present case, therefore, the payment which is subsequent to the moment when the supply takes place might also be considered as contributing to the portion of the State budget for which the NEAK is responsible, and which may be used not only for alleviating the patients’ burden when buying medicinal products, but can also be used for other public purposes of organising the public health system. For that reason, to my mind, the findings in Boehringer Germany cannot automatically be applied in the present case.

38In Boehringer Hungary, the Court had the opportunity to decide about the payments made by a pharmaceutical company to the NEAK that were also calculated on the basis of the price and volume of the supplied subsidised medicinal products. The Court considered such payments a price reduction. Nevertheless, the payments in that case were based on the contractual relationship between the NEAK and a pharmaceutical company and not on law, so that they could not be treated as taxes. It was also clear that those payments were agreed upon precisely for the purpose to reduce the price of medicinal products to be paid by the NEAK. For that reason, the Court’s findings in that case that Article 90(1) of the VAT Directive was applicable cannot be automatically applied to the present case, in which the payment is based on law and goes towards the general State budget, from which it is automatically transmitted/transferred to a portion of that budget managed by the NEAK.

39The question that therefore arises is whether the ex lege payment obligation at issue could be understood as a tax.

40The Hungarian Government considers that the ex lege payments in question are special taxes which do not have the character of turnover taxes within the meaning of Article 401 of the VAT Directive (1), and that such special taxes do not reduce the taxable amount (2). ¹¹

1. A tax within the meaning of Article 401 of the VAT Directive

41Article 401 of the VAT Directive provides that ‘without prejudice to other provisions of [EU] law, this Directive shall not prevent a Member State from maintaining or introducing … any taxes, duties or charges which cannot be characterised as turnover taxes, provided that the collecting of those taxes, duties or charges does not give rise, in trade between Member States, to formalities connected with the crossing of frontiers.’

42Thus, Article 401 of the VAT Directive does not preclude the maintenance or introduction of a tax, provided that it does not display one of the essential characteristics of VAT.

43It is apparent from the case-law that there are four such characteristics: VAT applies generally to transactions relating to goods or services; it is proportional to the price charged by the taxable person in return for the goods and services which he or she has supplied; it is charged at each stage of the production and distribution process, including that of retail sale, irrespective of the number of transactions which have previously taken place; the amounts paid during the preceding stages of the process are deducted from the VAT payable by a taxable person, with the result that the tax applies, at any given stage, only to the value added at that stage and the final burden of the tax rests ultimately on the consumer. ¹²

44Even if the payment at issue is calculated on the basis of the company’s turnover, there is no doubt that the sums due under the legislation at issue in the main proceedings are not collected at each stage of the production and distribution process, but are paid only once by the pharmaceutical companies to the NEAK via the tax authorities.

45Therefore, an ex lege payment obligation such as that in the main proceedings indeed does not fall within the concept of a tax having the character of turnover taxes within the meaning of Article 401 of the VAT Directive.

46The ex lege payment obligation introduced by Hungarian law is therefore not a tax which the VAT Directive prohibits Member States from introducing. However, that still does not answer whether that ex lege payment obligation can be qualified as a tax.

2. The ex lege payment obligation as a tax remaining in the taxable amount

47According to settled case-law, the nature of a tax, duty or charge must be determined by the Court, under EU law, according to the objective characteristics by which it is levied, irrespective of its classification under national law. ¹³

48According to Article 78(1)(a) of the VAT Directive, the taxable amount for VAT includes taxes. The Court has explained that to fall within the scope of that provision, the chargeable event for the likely tax at issue needs to coincide with that for VAT and has to qualify as a tax, those criteria being cumulative. ¹⁴

49In the present case, the first criterion has been met: it is undisputed that the delivery of the medicinal products is the chargeable event for the ex lege payment and for the VAT.

50However, as the Commission has pointed out, the case-law relating to Article 78 of the VAT Directive does not provide guidance on what qualifies an ex lege payment as a tax. The Commission proposes that the following should be taken into consideration ¹⁵: whether the payment is compulsory and results from the law, ¹⁶ whether it has a predetermined tax base and tax rate, the identification of the beneficiary of the payment, as well as what was the intention of the national legislator and the objectives of the tax itself.

51In the present case, it is clear that the payment at issue is based in law and that it is compulsory. However, even if that characteristic allows that the payment at issue is characterised as a tax, as I explained in point 28 of this Opinion, it does not prevent it from being characterised as a price reduction. In other words, not every payment based in law is a tax, but to be a tax, a payment has to be based in law and compulsory.

52The ex lege payment obligation also has a predetermined tax base and rate. It could thus be characterised as a tax. However, that base is also linked to the price of supplied medicinal products, so that the characterisation of that payment as a price reduction cannot be excluded either.

53The identification of the beneficiary of the payment was proposed as another criterion relevant for determining whether a payment is a tax. In that respect, the payment at issue is made to the central budget, which is an element in favour of seeing it as a tax. However, it is also undisputed that it is immediately and automatically transferred to the part of the budget managed by the NEAK. That, in itself, should not deprive it of a fiscal nature. However, it can also be an indication that it is a payment which reduces the price payable by the NEAK as a final consumer of medicinal products.

54The enumerated characteristics of the ex lege payment at issue allow for its characterisation as a tax, but are not conclusive, as they also can lead to the conclusion that that payment is a price reduction.

55The Hungarian Government offered two additional arguments in favour of the characterisation of the ex lege payment at issue as a tax. First, it referred to the Court’s case-law in which it considered that for the purposes of a payment to be considered a ‘tax’, it is important not only to establish that there is an obligation to pay an amount, but also that, in the event of non-compliance with that obligation, the person liable for payment is prosecuted by the competent State authorities. ¹⁷ In that regard, at the hearing, the Hungarian Government indicated that pharmaceutical producers which would fail to fulfil their ex lege obligation to pay could be prosecuted like any other taxable person. ¹⁸

56Second, the Hungarian Government explained that the research and development expenditure may be used to reduce the basis of assessment of the amount payable as ex lege payment at issue. The taxpayer would be entitled to claim this reduction, without the administration enjoying any discretion in this respect, and any taxable person could benefit from it under identical conditions. Such a reduction of the taxable base would not be possible, according to the referring court, if the ex lege payment at issue were not a tax.

57Even if those two arguments speak in favour of qualifying the payment at issue as a tax, they are not sufficient. The payment obligation at issue fails, to my mind, to fulfil the last (but not least) feature a tax must possess.

58The last characteristic proposed by the Commission for a payment to be characterised as a tax is that of the intention of the State. If a State intended to collect taxes, a payment obligation could be understood to be a tax.

59However, it is often difficult to ascertain the intention of the legislature. The Hungarian Government indeed claimed before the Court that their intention was to introduce a tax. To my mind that is not sufficient, because it is also necessary that such legislative intention is understood by the taxable persons.

60I am therefore of the opinion that a more appropriate criterion would be the foreseeability by a taxable person of the intention of a legislature that an ex lege payment is imposed as a tax. ¹⁹

61In that respect, and subject to verification by the referring court, it seems that the Hungarian legislation has not clearly revealed the possibly intended fiscal nature of the ex lege payment at issue.

62To the contrary, as noticed by the Commission, the relevant provisions of Hungarian law do not mention the fiscal nature of the payment at issue. They do not call the payment at issue a tax, but rather refer to it as ‘an obligation to pay’.

63Furthermore, as Novo Nordisk and the Commission point out, the explanatory memorandum to the legal provisions relevant to the present case seem to characterise the ex lege payment as a discount, rather than a tax. According to the Commission, that explanatory memorandum provides that ‘social security is the largest purchaser of medicines, so the beneficiary of the rebate on sales of subsidised medicines must be the insurer’.

64Questioned on this point at the oral hearing, the Hungarian Government admitted that the use of those terms was unfortunate.

65In that regard, it should be recalled that the principle of legal certainty, which is one of the general principles of EU law, requires that rules of law be clear, precise and predictable in their effects, especially where they may have negative consequences for individuals and undertakings, so that persons may ascertain unequivocally what their rights and obligations are and may take steps accordingly. ²⁰

66As Advocate General Sharpton argued, it is indeed crucial that a tax should be defined in legally binding rules accessible to taxable persons in advance in a manner that is sufficiently clear, precise and exhaustive so as to allow the taxable person in question to foresee and determine the amount of tax due at a given point in time on the basis of the texts and data available or accessible to him or her. ²¹

67The ex lege payment obligation at issue in the present case does not fulfil those requirements of clarity and foreseeability, which means that a taxable person could not have known in advance that the payment at issue is owed as a tax and not as price reduction.

C. Proposal

68In my view, the Hungarian law at issue is not such as to make a clear, precise and foreseeable rule which enables Novo Nordisk as a taxable person to understand that the ex lege payment obligation is a tax and could not be treated as a price reduction. At the same time, the requirements set by the case-law for that payment to be characterised as a price reduction are fulfilled.

69I therefore propose that the Court conclude that in the circumstances of the present case, the ex lege payment obligation does not fulfil all the legal requirements of the concept of a tax, and is to be qualified as an ex lege price reduction, within the meaning of Article 90(1) of the VAT Directive.

70That, however, does not prevent a Member State to enact, in a more explicit manner, a fiscal measure which would fulfil a similar objective of financing the public health policy.

V. Conclusion

Conclusion

71In light of the foregoing, I propose that the Court of Justice answer the question referred by the Fővárosi Törvényszék (Budapest High Court, Hungary) as follows

Article 90(1) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted

as precluding a national legislation, under which a pharmaceutical undertaking which, by law, is obliged to pay to a State health insurance body a proportion of its turnover deriving from its sales of pharmaceutical products financed by public funds, is not entitled to an ex post reduction in the taxable amount in respect of those payments if the national legislation at issue does not state in a clear, precise and foreseeable manner that the payment at issue is owed as a tax.

¹ Original language: English.

² The Kinks, Sunny Afternoon, 1966, Pye Records.

³ Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1), as amended by Council Directive 2009/162/EU of 22 December 2009 (OJ 2010 L 10, p. 14) (‘the VAT Directive’).

⁴ Judgment of 6 October 2021, Boehringer Ingelheim (C‑717/19, EU:C:2021:818, ‘Boehringer Hungary’).

⁵ See cases quoted in the Opinion of Advocate General Kokott in E. (VAT – Reduction of the taxable amount) (C‑335/19, EU:C:2020:424, point 30).

⁶ Judgment of 20 December 2017, Boehringer Ingelheim Pharma (C‑462/16, EU:C:2017:1006, ‘Boehringer Germany’).

⁷ See, to that effect, Boehringer Germany, paragraphs 42, 43 and 46.

⁸ Boehringer Germany, paragraph 35.

⁹ Boehringer Germany, paragraphs 40 and 41.

¹⁰ Boehringer Germany, paragraph 36.

¹¹ In its written submissions, that government relied on Article 78(1)(a) of the VAT Directive. At the hearing, it more generally contended that the ex lege payment amounts to a tax without necessarily qualifying as such within the meaning of said provision.

¹² See, to that effect, judgments of 8 June 1999, Pelzl and Others (C‑338/97, C‑344/97 and C‑390/97, EU:C:1999:285, paragraphs 20 and 21 and the case-law cited); of 3 October 2006, Banca popolare di Cremona (C‑475/03, EU:C:2006:629, paragraph 21 and the case-law cited); and of 25 February 2021, Novo Banco (C‑712/19, EU:C:2021:137, paragraph 48 and the case-law cited).

¹³ See, to that effect, judgments of 13 February 1996, Bautiaa and Société française maritime (C‑197/94 and C‑252/94, EU:C:1996:47, paragraph 39 and the case-law cited); of 12 December 2006, Test Claimants in the FII Group Litigation (C‑446/04, EU:C:2006:774, paragraph 107 and the case-law cited); and of 3 March 2021, Promociones Oliva Park (C‑220/19, EU:C:2021:163, paragraph 45 and the case-law cited).

¹⁴ See, to that effect, judgment of 20 May 2010, Commission v Poland (C‑228/09, EU:C:2010:295, paragraph 30 and the case-law cited).

¹⁵ The Commission relied on the judgment of 21 December 2011, Air Transport Association of America and Others (C‑366/10, EU:C:2011:864, paragraphs 143 to 147). On the appropriateness of those criteria, see Opinion of Advocate General Campos Sánchez-Bordona in IRCCS – Fondazione Santa Lucia (C‑189/15, EU:C:2016:287, footnote 35).

¹⁶ There are claims that the compulsory dimension is a central if not the most crucial characteristic of a tax: Suchy, G., ‘Some propositions on tax as a legal concept’, in Peeters, B., The Concept of Tax, EATLP, 2005, pp. 49 to 54, p. 49. There are also proposals that taxes may be conceptualised as compulsory contributions paid to the government to finance public expenditure. Barassi, M., ‘The notion of tax and the different types of taxes’, in Peeters, B., The Concept of Tax, EATLP, 2005, pp. 59 to 72, p. 72.

¹⁷ Judgment of 18 January 2017, IRCCS – Fondazione Santa Lucia (C‑189/15, EU:C:2017:17, paragraph 32 and the case-law cited).

¹⁸ That seems to corroborate that government’s written submissions, which referred to Paragraph 36(5) and Paragraph 40/A(4) of the Law on the marketing of medicinal products, which explicitly refer to Az adózás rendjéről szóló 2003. évi XCII. Törvény (Law XCII of 2003 on general taxation).

¹⁹ See, in that respect, judgment of the European Court of Human Rights of 9 November 1999, Špaček, s.r.o. v the Czech Republic (CE:ECHR:1999:1109JUD002644995, § 54 and the case-law cited). See also, Directorate-General for Research and Documentation of the Court of Justice of the European Union, Research Note, ‘Scope of the principle of the legality of taxation, particularly in relation to value added tax’ (September 2018), available at: https://curia.europa.eu/jcms/upload/docs/application/pdf/2020-11/ndr-2018-005_neutralisee_synthese_en.pdf.

²⁰ Judgment of 16 February 2023, DGRFP Cluj (C‑519/21, EU:C:2023:106, paragraph 105 and the case-law cited).

²¹ Opinion of Advocate General Sharpston in Związek Gmin Zagłębia Miedziowego (C‑566/17, EU:C:2018:995, point 114).