Supreme Court Rules on Reduced Sales Tax Rate for Certain Categories of Products in EU Member States
In a recent ruling, the Supreme Court has stated that EU member states, including the Netherlands, have the authority to introduce a reduced sales tax rate on deliveries of specific categories of products. Member states are allowed to selectively apply the reduced rate to certain goods or services, as long as it does not conflict with the principle of fiscal neutrality.
The Supreme Court has clarified that the similarity of goods must be assessed from the perspective of the average consumer, who is considered to be reasonably informed and attentive. This assessment involves determining whether the goods in question are interchangeable for the average consumer. Interchangeable goods are those that are comparable in terms of their properties and use, and where any differences do not significantly impact the consumer’s choice. If a difference in sales tax rates could influence consumer choice for interchangeable goods, it would violate the principle of fiscal neutrality.
In the case at hand, it must be determined whether the different sales tax rates for the categories of “medicinal products” and “pharmaceutical products” are based on differences that are important to the average consumer when making a purchase. These distinctions should be apparent to the average consumer at the time of purchase.
The Supreme Court has acknowledged that the Medicines Act provides quality and control guarantees for registered, prescription, and non-prescription medicines. This also applies to the regulations for pharmaceutical products, which impose less stringent requirements on the marketing of medical devices compared to the Medicines Act. The court recognizes that these legal guarantees may meet different needs for the average consumer, and that the distinction between products with and without these guarantees can influence their choice.
The Supreme Court has determined that registered medicines differ significantly from medical devices, and this distinction has a significant impact on the average consumer’s choice between comparable products. Therefore, the court has concluded that the interested party’s products cannot be considered interchangeable with registered medicines for the purpose of levying sales tax, even if they are available without a prescription. As a result, there is no violation of the principle of fiscal neutrality.
The ruling of the Supreme Court remains in effect and provides clarity on the application of reduced sales tax rates for specific categories of products. Member states must ensure that any distinctions made in applying the reduced rate are based on valid differences that are apparent to the average consumer. This ruling will have implications for the taxation of goods in the Netherlands and other EU member states.
Source: hogeraad.nl
