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BFH: Full sales tax for drug manufacturers' own advertising
A high-dose mixture of vitamins and nutrients can be considered a medicinal product and is therefore subject to the full sales tax of 19 percent. This is the case if, according to the package information, the preparation should help acutely or at least preventively against very specific diseases, as the Federal Finance Court (BFH) in Munich decided in a judgment published on Wednesday, January 16, 2019 (file number: VII R 9 / 17). According to this, it is not necessary to describe a very specific mechanism of action or to prove actual effectiveness.
Specifically, it is about capsules with a nutrient mixture of high-dose vitamins and trace elements. According to the package insert, it is a "dietary food for special purposes, supplementary balanced diet for adults for the dietary treatment of age-related macular degeneration".
The manufacturer believes that the capsules are a "food preparation" and, like food, are therefore subject to the reduced sales tax rate of seven percent. In contrast, the tax office regards the capsules as medicinal products, which are subject to the VAT rate of 19 percent.
In the first instance, the Lower Saxony Finance Court (FG) in Hanover agreed with the manufacturer. Because this did not describe a "mechanism of action" as it is based on a drug.
But this is not necessary, the BFH has now clarified. The FG had misunderstood an earlier BFH decision here. The tax office also does not have to check the accuracy of the manufacturer's information or even prove the effectiveness of the agent in order to be able to classify it as a medicine.
The decisive factor is whether the manufacturer himself “attributes therapeutic or prophylactic properties to his preparations there with regard to certain diseases” on the packaging, the label or in the package insert. Then he had to let himself be held on.
In the event of a dispute, the manufacturer specifically named the age-related macular degeneration. This goes far beyond the usual information on dietary supplements such as "for healthy eyesight", it says in the judgment of September 18, 2018, which has now been published in writing.
According to the BFH, the package insert is somewhat contradictory to the information on the packaging consulted by the Finanzgericht. The FG Hannover should therefore examine the case again. mwo / fle