Judgment;Summary — ECLI:EU:C:2021:818
Date: 2021-10-06
Language of the case: Hungarian
Court formation: Seventh Chamber
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: Hungary

Translation C-717/19 - 1 
Case C-717/19 
Request for a preliminary ruling 
Date lodged: 
27 September 2019 
Referring court: 
Fővárosi Közigazgatási és Munkaügyi Bíróság (Budapest 
Administrative and Labour Court, Hungary) 
Date of the decision to refer: 
16 September 2019 
Applicant: 
Boehringer Ingelheim RCV GmbH & Co. KG Magyarországi 
Fióktelepe 
Defendant: 
Nemzeti Adó- és Vámhivatal Fellebbviteli Igazgatósága (Appeals 
Directorate of the National Tax and Customs Authority, Hungary) 
      
[...] 
In the administrative tax dispute proceedings brought by Boehringer Ingelheim 
RCV GmbH & Co. KG Magyarországi Fióktelepe ([...] Budapest, [...]), the 
applicant, against the Nemzeti Adó- és Vámhivatal Fellebbviteli Igazgatósága 
(Appeals Directorate of the National Tax and Customs Authority, Hungary) ([...] 
Budapest, [...]), the defendant, the Fővárosi Közigazgatási és Munkaügyi Bíróság 
(Budapest Administrative and Labour Court, Hungary) has issued the following 
Decision 
This court orders that proceedings be suspended and, simultaneously, that the 
following questions be referred to the Court of Justice of the European Union for a 
preliminary ruling pursuant to Article 267 of the Treaty on the Functioning of the 
European Union: 
1) Should Article 90(1) of Council Directive 2006/112/EC of 28 November 
2006 on the common system of value added tax be interpreted as precluding a 
EN 
REQUEST FOR A PRELIMINARY RULING — CASE C-717/19 
 
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provision of national law, such as that at issue in the main proceedings, under 
which a pharmaceutical company which, pursuant to an agreement it is not 
obliged to enter into, makes payments to the state health insurance agency 
based on the revenue obtained from pharmaceutical products and which, 
therefore, does not retain the full amount of the consideration for those 
products is not entitled subsequently to reduce the taxable amount, solely 
because the payment method is not set out in advance in its commercial 
policy and the payments are not principally for promotional purposes? 
2) If the answer to the first question is in the affirmative, should 
Article 273 of Council Directive 2006/112/EC of 28 November 2006 on the 
common system of value added tax be interpreted as precluding a provision 
of national law, such as that at issue in the main proceedings, under which, in 
order to be able subsequently to reduce the taxable amount, an invoice made 
out to the person entitled to the refund providing proof of the transaction 
giving entitlement to that refund is required, even though the transaction 
that enables the subsequent reduction in the taxable amount is duly 
documented and can subsequently be verified, is based in part on truthful, 
publicly available information, and enables the tax to be collected correctly? 
[...] [procedural consideration of domestic law] 
Grounds 
I. Factual background 
In accordance with Article 195 of the az adózás rendjéről szóló 2017. évi CL. 
törvény (Law CL of 2017 on General Taxation Procedures, ‘the new Law on 
General Taxation Procedures’), on 13 November 2018 the applicant, a 
pharmaceutical company, submitted a supplementary return in respect of its VAT 
return for the September 2018 tax period to the defendant tax office. In this 
supplementary return, the applicant reduced the amount of VAT it was required to 
pay for the tax period in question by HUF 354 687 000, citing the payments made 
under the special civil law agreements (known as funding volume agreements; 
‘the agreements’) concluded by the applicant and the Nemzeti Egészségbiztosítási 
Alapkezelő (National Health Insurance Fund, ‘NEAK’), as the state health 
insurance agency. 
The agreements were entered into in respect of the medicinal products marketed 
by the applicant, JARDIANCE, JENTADUETO, PRADAX, SPIRIVA, 
TRAJENTA, STRIVERDI RESPIMAT, SPIOLTO RESPIMAT, SYNJARDY 
and OFEV, for the period from 1 October 2013 to 31 December 2017. Under the 
agreements, the applicant undertook to make payments to NEAK to reflect sales 
of those medicinal products that had social security funding, by deducting part of 
the revenue obtained from the sale of the products. The amount of the payment 
obligations was expressed in the form of a percentage of the gross social security 
funding for each packaged unit (each box) sold with funding (calculation per box); 
BOEHRINGER INGELHEIM 
 
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under certain agreements, it was set at 100% where the funding provided by social 
security for certain products exceeded a maximum amount (calculation based on 
annual maximum amounts). The payment obligation was settled either each 
calendar month or annually (in a single payment). 
For outpatient healthcare, NEAK funds the price of prescription medicinal 
products that receive social security funding through what is known as the ‘price 
subsidy scheme’. Under this scheme, payment of the price of the funded product 
takes place within the framework of a multilateral legal relationship, with 
responsibility for payment being shared between the patient and NEAK. The 
patient pays the pharmacy what is termed the subsidised price for the product he 
receives, which is the difference between the price of the product and the funding 
provided by social security. The marketing authorisation holder (in this case, the 
applicant) determines the price of the medicinal products funded by NEAK, which 
decides on approval of the price under a social security funding acceptance 
procedure, following a complex examination that incorporates health policy, 
professional and cost-effectiveness considerations, after which it sets the 
appropriate amount of funding. 
The applicant sells the medicinal products direct to the wholesaler, the wholesaler 
sells them to the pharmacy, and the pharmacy sells them to the patients; in the 
latter case the price is reduced by the amount of the social security funding. 
Lastly, NEAK reimburses the pharmacy the amount of the funding. The 
consideration received by the pharmacy, which constitutes the VAT base, has two 
parts: the first is the payment made by the patient (the price reduced by the 
amount of the funding, known as the subsidised price), and the second is the 
payment from NEAK (the funding). The pharmacy has to pay the appropriate 
VAT on both amounts. 
As far as the applicant is concerned, there is no legal requirement to enter into the 
agreements, but by doing so it ensures that the medicinal products it markets 
benefit from social security funding. At the same time, when it enters into the 
agreements, the applicant waives part of the consideration it receives from the 
wholesaler for the medicinal product (that is, part of the revenue it obtains), 
because the applicant pays part of that revenue to NEAK. 
The agreements also benefit NEAK because, within the limits of its resources, 
they enable patients in need to have ongoing access to treatment with new and 
state-of-the art medicinal products using social security funding, while at the same 
time ensuring adherence to budget allocations by keeping expenditure on the 
medicinal products covered by the agreements within predetermined limits. 
Although no invoice is issued for the payment made by the applicant to NEAK, 
there is documentary evidence of the agreements and of the payments made under 
them, which can subsequently be verified: 
REQUEST FOR A PRELIMINARY RULING — CASE C-717/19 
 
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– The basis for the payments is provided by the claim for payment issued to 
the applicant by NEAK, as the state health insurance agency. 
– The bank record of the transfer is available. 
– NEAK publishes the main details of the agreements on its website, in 
accordance with the provisions in the legislation. 
– The price that provides the basis for the social security funding for medicinal 
products and the details of the funding are held on an official public register 
managed by NEAK. 
– The pharmacy receives the balancing payment in the form of the social 
security funding from NEAK under a price subsidy agreement between the 
pharmacy and NEAK. The method for the balancing funding is set out in the 
legislation, in the price subsidy agreement and in the general terms of contract, 
which means that the balancing payment is based on valid prescriptions or 
working documents that have been duly completed with the relevant details. 
– Traceability and monitoring of sales of the medicinal products in question 
can be ensured through the public information on the sale of medicinal products 
published by NEAK on its website and the applicant’s own sales data. 
In the light of all the above, the defendant tax office rejected the supplementary 
return submitted by the applicant; that is, it did not allow the subsequent reduction 
in the taxable amount. Following an appeal by the applicant, the defendant upheld 
the original decision. According to the defendant, Article 77 of the Law on VAT 
contains all the grounds for a reduction in the taxable amount listed in 
Article 90(1) of the VAT Directive, and therefore it cannot be concluded that there 
is any discrepancy between EU law, because in transposing the directive into 
national law there is no requirement for the wording of the provisions in national 
law to be exactly the same as those in the directive. The directive simply 
establishes certain regulatory objectives, leaving the national legislature free to 
decide how to achieve them. It argued that the judgment of the Court of Justice of 
20 December 2017 in Boehringer Ingelheim Pharma (C-462/16) was based on 
different facts and therefore does not apply in the present case. In its opinion, 
having regard to their content, the payments to NEAK do not satisfy the 
requirements in Article 77(4) of the Law on VAT (that they must be determined 
by the commercial policy or be made for promotional purposes). By contrast, the 
purpose of the requirements in Article 78(3) and (4) of the Law on VAT is to 
ensure the correct collection of tax and to prevent tax evasion. 
BOEHRINGER INGELHEIM 
 
5 
II.1. Hungarian law 
Az adózás rendjéről szóló 2017. évi CL. törvény (new Law on General Taxation 
Procedures) 
Article 195: 
‘Where the taxpayer has submitted a supplementary return claiming only that the 
legal provision on which the liability for tax is based is unconstitutional or 
contrary to a legal act of the European Union of general application which is 
directly applicable, or that a municipal decree is contrary to another legal 
provision, the tax authorities shall give a decision on the supplementary return 
within 15 days of the filing date of that return without carrying out any checks, 
provided that the Constitutional Court, the Kúria (Supreme Court) or the Court of 
Justice of the European Union had not yet given a ruling on that issue at the time 
of filing the supplementary return or that return does not comply with the terms of 
the published ruling.’ 
Az általános forgalmi adóról szóló 2007. évi CXXVII. törvény (Law CXXVII of 
2007 on Value Added Tax, ‘Law on VAT’) 
Article 65: 
‘In respect of the supply of goods or services, unless otherwise specified in the 
present law, the taxable amount 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 form of subsidy 
directly linked to the price of the supply of goods or services.’ 
Article 77: 
‘1. In respect of the supply of goods or services or the intra-Community 
acquisition of goods, amendment or termination of the contract ― including cases 
where the contract is invalid or there is no contract ― shall be grounds for a 
subsequent reduction in the taxable amount corresponding to the amount of any 
payment on account or consideration that has been or is to be refunded. 
[…] 
4. If, after he has supplied the goods or services, the taxable person refunds a 
sum of money for promotional purposes in accordance with the conditions set out 
in his commercial policy, to a person (irrespective of whether that person is a 
taxable or a non-taxable person) who did not purchase the goods or services 
giving rise to the entitlement to the refund directly from the said taxable person, 
the taxable person making the refund may subsequently reduce the taxable amount 
in respect of the supply of goods or services for which the refund is given 
REQUEST FOR A PRELIMINARY RULING — CASE C-717/19 
 
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(transaction giving entitlement to a reduction in the taxable amount), provided 
that: 
a) the supply of goods or services that was made directly to the person entitled 
to the refund (transaction giving entitlement to a refund) is a taxable transaction 
carried out within national territory, and 
b) the amount to be refunded is less than the sum arrived at by multiplying the 
number of the transactions giving entitlement to a refund by the lower unit price, 
including tax, of the goods or services supplied under the promotional campaign 
in question, with respect to all transactions giving entitlement to a reduction in the 
taxable amount. 
5. For the purposes of applying paragraph 4, the amount refunded shall be 
deemed to include the amount of the tax.’ 
Article 78: 
‘3. In order for Article 77(4) to apply, the taxable person providing the refund 
must have: 
a) a copy of the invoice made out to the person entitled to the refund which 
provides proof of the transaction giving entitlement to the refund and which 
demonstrates unequivocally that the transaction in question is a taxable transaction 
carried out within national territory, and 
b) proof of the money transfer or payment in cash which demonstrates 
unequivocally that the taxable person has refunded the sum specified in his 
commercial policy to the person entitled to receive it. 
4. The proof of payment referred to in paragraph 3(b) shall contain the 
following information: 
a) The name and address of the person entitled to the refund and, where the 
person in question is a taxable person, his tax identification number. 
b) Information on the right to a deduction in respect of the transaction in 
question, based on the declaration by the person entitled to the refund.’ 
A kötelező egészségbiztosítás ellátásairól szóló 1997. évi LXXXIII. törvény (Law 
LXXXIII of 1997 on the services provided by the compulsory health insurance 
system) 
Article 30/A: 
‘The health insurance agency may enter into agreements with the marketing 
authorisation holders referred to in Article 36(1) of Law XCVIII of 2006 on the 
marketing of medicinal products, with operators who market medical supplies, 
BOEHRINGER INGELHEIM 
 
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and with health service providers, in respect of the prices, quantities and quality 
requirements for any products and health services that may be marketed at 
subsidised prices, or in respect of any other matters the parties consider essential.’ 
A biztonságos és gazdaságos gyógyszer- és gyógyászatisegédeszköz-ellátás, 
valamint a gyógyszerforgalmazás általános szabályairól szóló 2006. évi XCVIII. 
törvény (Law XCVIII of 2006 on general provisions concerning the reliable and 
economically viable supply of medicinal products and medical supplies and on 
the marketing of medicinal products, ‘Law on the marketing of medicinal 
products’) 
Article 17: 
‘4. Advertising is not permitted for medicinal products and foodstuffs that are 
available only on prescription from a pharmacy or that have been approved for 
social security funding, or for medical supplies funded by the social security 
system.’ 
Article 26: 
‘2. In order to adhere to the budgetary framework, the health insurance agency 
may enter into the funding volume agreements referred to in paragraph 5 in 
respect of medicinal products which already receive funding or have recently been 
approved for funding or in respect of certain categories or types of such products, 
and in respect of medicinal products funded on grounds of fairness. 
[…] 
5. The payment obligation stipulated in the funding volume agreements may be 
determined: 
a) in proportion to the price subsidy paid per subsidised unit sold; 
b) on the basis of the difference between the total subsidy paid for one or more 
products during the period referred to in the agreement and the maximum amount 
fixed in the agreement; 
[...] [irrelevant provisions] 
e) it may also be determined in accordance with the dosage instructions for the 
medicinal product in question, based on the difference between the prescribed 
dose and the reference dose fixed in the agreement in accordance with cost-
effectiveness considerations. 
6. The provisions in paragraph 5 may also be applied concurrently in respect of 
a preparation.’ 
Article 28: 
REQUEST FOR A PRELIMINARY RULING — CASE C-717/19 
 
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‘1. For the purposes of funding medicinal products that have been approved for 
social security funding, the health insurance agency may use the following 
funding methods: 
[…] 
c) Funding volume agreements. 
[…]’ 
A törzskönyvezett gyógyszerek és a különleges táplálkozási igényt kielégítő 
tápszerek társadalombiztosítási támogatásba való befogadásának szempontjairól 
és a befogadás vagy a támogatás megváltoztatásáról [szóló] 32/2004. (IV 26.) 
ESzCsM rendelet (Ministry of Health Regulations No 32/2004 of 26 April 2004 
on the criteria for the acceptance for social security funding of registered 
medicinal products and foodstuffs for specific nutritional uses and on changes 
to acceptance or funding) 
Article 11: 
‘1. In the case of the funding volume agreements referred to in Article 26 of the 
Law on the marketing of medicinal products, the amount of the volume of funding 
shall be determined having regard to the recommendation made by a professional 
healthcare association as to the number of patients who may be treated, taking into 
account the prevalence or incidence of the disease.’ 
II.2. EU law 
Council Directive 2006/112/EC on the common system of value added tax 
(‘VAT Directive’) 
Article 73 
‘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 any form of subsidy directly linked 
to the price of the supply.’ 
Article 90 
‘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. 
BOEHRINGER INGELHEIM 
 
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2. In the case of total or partial non-payment, Member States may derogate 
from paragraph 1.’ 
Article 273 
‘Member States may impose other obligations which they deem necessary to 
ensure the correct collection of VAT and to prevent evasion, subject to the 
requirement of equal treatment as between domestic transactions and transactions 
carried out between Member States by taxable persons and provided that such 
obligations do not, in trade between Member States, give rise to formalities 
connected with the crossing of frontiers. 
The option under the first paragraph may not be relied upon in order to impose 
additional invoicing obligations over and above those laid down in Chapter 3.’ 
III. Reasons for the request for a preliminary ruling 
The first question referred 
In its judgment of 20 December 2017 in Boehringer Ingelheim Pharma 
(C-462/16), the Court of Justice held that Article 90(1) of the VAT Directive must 
be interpreted as meaning that the discount granted, in accordance with national 
law, by a pharmaceutical company to a private health insurance company results, 
for the purposes of that article, in a reduction of the taxable amount in favour of 
that pharmaceutical company, when 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. 
The Hungarian funding system is similar to the German funding arrangements for 
private health insurance, with the difference that, in Hungary, the payments made 
to NEAK, as the public health insurance agency, are not based on a mandatory 
law but on a civil law agreement which the parties enter into voluntarily. The 
applicant is not obliged to enter into a contract of this type with NEAK, but the 
consequence of the agreement is the same as in Case C-462/16. Specifically, that 
consequence is that the applicant could only dispose of a sum corresponding to the 
price of the sale of those medicinal products to pharmacies, reduced by that 
discount, (judgment of 20 December 2017, Boehringer Ingelheim Pharma, 
paragraph 35). However, the Court of Justice did not address the question of 
whether it is still possible to make a subsequent reduction in the taxable amount 
where the discount is not granted under a mandatory provision of law but is 
instead voluntary, as in the present case. 
According to the defendant, the sums paid to NEAK cannot be classed as a 
subsequent refund for promotional purposes. Given that the advertising of 
medicinal products funded by social security is prohibited under Article 17(4) of 
Law XCVIII of 2006 on the marketing of medicinal products, sales promotions 
for prescription-only medicinal products covered by the agreements are not 
REQUEST FOR A PRELIMINARY RULING — CASE C-717/19 
 
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permitted. Moreover, the requirement that the sums in question should be 
determined by the taxable person ‘in accordance with the conditions set out in his 
commercial policy’ is not satisfied either, as the amounts of the payments made 
under the agreements are not determined by the applicant but by a professional 
healthcare association under Article 11(1) of the Ministry of Health Regulations 
No 32/2004 of 26 April 2004. 
Under Article 90(1) of the VAT Directive, the taxable amount is to be reduced by 
the appropriate amount under conditions to be determined by the Member States. 
While the Member State appears to be free to establish the conditions for the 
subsequent reduction of the taxable amount, in Boehringer Ingelheim Pharma the 
Court of Justice did not address the question of the extent to which, where 
conditions are imposed on the subsequent reduction of the taxable amount, a 
restriction is proportionate to the regulatory objective. The question is justified 
because, in order to reach a decision on the case, it is necessary to determine 
whether the Hungarian legislation breaches the principle of fiscal neutrality and 
whether it constitutes a disproportionate restriction, having regard to the objective 
pursued by the legislation. Indeed, the Hungarian legislation deprives all 
pharmaceutical companies that have concluded agreements similar to those at 
issue in the main proceedings of the possibility of subsequently reducing the 
taxable amount. 
In the opinion of this court in the present case, NEAK should be deemed to be the 
final consumer of the supply provided by a pharmaceutical company, meaning 
that the amount received by the tax authorities may not in any circumstances 
exceed the amount paid by the final consumer (judgment of 24 October 1996, 
Elida Gibbs, C-317/94, paragraph 24). Consequently, given that the taxable 
person retains part of the consideration because of the discount granted by the 
applicant to NEAK, in effect there has been a reduction in the price after the 
supply took place in accordance with the provisions of Article 90(1) of the VAT 
Directive. In these circumstances, the applicant was not able freely to dispose of 
the full amount of the price received on the sale of its products to pharmacies or to 
wholesalers (judgment of 20 December 2017, Boehringer Ingelheim Pharma, 
paragraphs 41 to 43). 
The second question referred 
In order to be able subsequently to reduce the taxable amount, the Hungarian 
legislation requires a copy of the invoice made out to the person entitled to the 
refund as proof of the transaction giving entitlement to the said refund, together 
with proof of a money transfer or cash payment. 
In the present case, no invoice was issued in respect of the applicant to NEAK; all 
that is available is a claim for payment sent to the applicant by NEAK and the 
bank receipt providing proof of the transfer payment. According to the method 
stipulated in the agreement, NEAK calculates the amount stated in the claim for 
payment on the basis of information on the volume of medicinal products sold and 
BOEHRINGER INGELHEIM 
 
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prescriptions for the relevant period. Therefore, although there is no invoice, the 
transaction is duly documented, since details of the agreements and of the volume 
of medicinal products sold are publicly available, and the funding is settled on the 
basis of official public registers. It is also important to note that NEAK is a state 
health insurance agency, and therefore it can unquestionably be taken for granted 
that the details it includes in the claim for payment are correct. 
Article 273 of the VAT Directive allows Member States to impose additional 
obligations to ensure the correct collection of VAT and to prevent tax evasion. 
This court considers that the restrictions must be proportionate to the objective 
pursued. In the case at issue here, the possibility of tax evasion has not been raised 
and has not been invoked by the defendant, while the correct collection of VAT 
can be ensured, even if there is no invoice, based on the information referred to in 
the previous paragraph and taking into account the involvement of the public 
body. 
In Boehringer Ingelheim Pharma the Court of Justice did not examine what the 
formal requirements are and what documents are necessary in order to enable a 
subsequent reduction in the taxable amount, and therefore the question referred is 
justified. 
[...] [procedural consideration of domestic law] 
Budapest, 16 September 2019. 
[…] 
[signatures]