The European Commission has decided not to oppose a series of tax reductions introduced by Belgium as part of the reform of the tax paid by pharmaceutical companies on sales of reimbursed medicines, which could have violated EU state aid rules.
In November 2005, the Belgian government announced a series of tax measures to assist the pharmaceutical sector, which contributes to financing the health system of the country through a tax calculated on the basis of sales of reimbursed medicines. The Belgian government decided to grant two types of exemption/reduction in relation to this tax.
The first type is related to the exemption for medicines for serious and rare diseases, medicines which are reimbursed at a low rate and medicinal products derived from blood from voluntary unpaid donors.
The second type is not an exemption but a reduction granted to pharmaceutical companies which invest in research and development, companies which voluntarily reduce their marketing budgets, and small companies which invest in the production of medicinal products. The reduction for research and development is the key element of the tax package which amounts to 35 million euro of the total estimated budget of 47 million of reductions and exemptions.
The law reforming the Belgian tax on the turnover of pharmaceutical companies was adopted in June 2006, but has subsequently been amended twice in December and the following April 2007. Since then, however, it has not yet come into force, because the Belgian authorities were waiting for the decision of the European Commission.
During the review period, the Commission asked Belgium to adjust the tax reductions for investments in research and development and for the reduction of marketing budgets. After these amendments, the law is now considered compatible with the common market.
At the same time, the Belgian authorities have committed to assess rigorously the efficiency of the aid for research and development, which has only been approved by the Commission for six years.