Pharmaceutical product = Medicinal product?

Any pharmaceutical product is not necessarily a medicinal product with regard  to VAT regulation and may  enjoy the benefit of the reduce rate of VAT only if it can be considered as a finished good which may be used directly by final consumers.

In a judgment of January 2013 the EUCJ, when considering the possible application of the VAT reduced rate to pharmaceutical products, has considered that the concept of « pharmaceutical product » as understood under point 3 of Appendix III to the VAT Directive does not include « medicinal substances » used habitually and suitably in the production of medicinal products.

Rejecting the position of the Commission whereby the concept of pharmaceutical products should be judged as being comparable to the concept of medicinal products given by Directive 2001/83, setting the Community code relating to medicinal products for human use, The Court notices that the majority of the language versions of this Directive use different terms in relation to the two concepts and hence considers that the concept of « pharmaceutical products » must be interpreted as having a broader meaning than « medicinal products ».
The Court stresses though that in application of the provisions of article 3 of Appendix II such defined « pharmaceutical products » must also be « normally used for health care, prevention of illness and as treatment for medical and veterinary purposes ».
The Court concludes that the reduced rate of VAT may only apply to medicinal substances only if they are likely to be used directly by final consumers for health care, prevention of illness and as treatment for medical and veterinary purposes.

Such an interpretation corroborates the purpose and the very existence of the reduced rate of VAT which is to render essential products less onerous and more accessible to final consumers.

Finally, one will note with interest that The Court , although conducting a pure fiscal VAT analysis, has however made reference to the definition of « pharmaceutical products » as provided under Customs law under chapter 30 of the European Combined Nomenclature as per Appendix I to Regulation 2658/87.