Opinion of the Advocate General — ECLI:EU:C:2000:665
Date: 2000-12-06
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Taxation;Value added tax
Procedure: Action for failure to fulfil obligations - unfounded
Origin: France

Summary of the Judgment 
Tax provisions — Harmonisation of laws — Turnover taxes — Common system of 
value added tax — Option for Member States to apply a reduced rate on a temporary 
basis — Application of a reduced rate of 2.1% only to medicinal products reimbursable 
under the social security system and of 5.5% to other medicinal products — Whether 
permissible — Compliance with the conditions laid down in Article 28(2)(a) of the Sixth 
Directive 
(Comicil Directives 67/228, Art. 17, final indent, and 77/388, Arts 12(3)(a) and 28(2)(a)) 
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SUMMARY — CASE C-481/98 
By introducing and maintaining in force 
legislation on value added tax under which 
medicinal products reimbursable under the 
social security system are taxed at the 
reduced rate of 2.1% whereas other med­
icinal products are taxed at the reduced 
rate of 5.5%, a Member State has not failed 
to fulfil its obligations under Article 12 of 
Sixth Directive 77/388 on the harmonisa­
tion of the laws of the Member States 
relating to turnover taxes. 
The rate of value added tax of 2.1%, which 
is below the minimum rate of 5% laid 
down in Article 12(3)(a) of the Sixth 
Directive, is justified under Article 28(2)(a) 
of that directive in so far as that rate existed 
on 1 January 1991, is in accordance with 
Community law, in so far as it is consistent 
with the principle of fiscal neutrality inher­
ent in the common system of value added 
tax, given that reimbursable and non­
reimbursable medicinal products are not 
similar products in competition with each 
other, and meets the criteria set out in the 
final indent of Article 17 of the Second 
Directive inasmuch as the application of 
the reduced rate to reimbursable medicinal 
products clearly constitutes a social reason, 
as it necessarily reduces the charges borne 
by the social security system and also 
benefits final consumers, whose health 
expenses are thereby reduced. 
(see paras 21, 25, 32-33) 
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