Are supplies of plasma to the pharmaceutical industry exempt?
Our pick of this week's cases
In TMD Gesellschaft für transfusionsmedizinische Dienste mbH v Finanzamt Kassel II – Hofgeismar (Case C-412/15) (5 October 2016), the CJEU found that supplies of plasma to the pharmaceutical industry are not exempt as supplies of human blood (Principal VAT Directive art 132(1)(d)).
TMD managed a blood donor centre. Its business involved collecting blood plasma and, after applying a chemical process, supplying it to businesses in the pharmaceutical sector. The issue was whether the supply of plasma came under the exemption for supplies of human blood, so that TMD was unable to recover input tax incurred in its production.
The CJEU observed that the concept of ‘human blood’ was not defined in the Principal VAT Directive; and that its meaning must be determined ‘by considering its usual meaning in everyday language while also taking into account the context in which it occurs and the purposes of the rules of which it is part’. The court also noted that the exemption for supplies of human blood aimed to ensure that those supplies contributing to healthcare, or which have a therapeutic purpose, do not become inaccessible by reason of the increased costs of those products if their supply were subject to VAT.
The CJEU added, however, that the exemption must be interpreted strictly by applying it only where the plasma is used directly for healthcare or therapeutic purposes. Consequently, plasma intended to be incorporated into an industrial production, to manufacture medicinal products, did not come under the exemption.
Why it matters: In finding that supplies of plasma intended to be used in a manufacturing process did not come under the exemption for supplies of human blood, the CJEU drew a clear distinction between supplies for therapeutic purposes (which are exempt) and those for pharmaceutical purposes (which are taxable).
Are supplies of plasma to the pharmaceutical industry exempt?
Our pick of this week's cases
In TMD Gesellschaft für transfusionsmedizinische Dienste mbH v Finanzamt Kassel II – Hofgeismar (Case C-412/15) (5 October 2016), the CJEU found that supplies of plasma to the pharmaceutical industry are not exempt as supplies of human blood (Principal VAT Directive art 132(1)(d)).
TMD managed a blood donor centre. Its business involved collecting blood plasma and, after applying a chemical process, supplying it to businesses in the pharmaceutical sector. The issue was whether the supply of plasma came under the exemption for supplies of human blood, so that TMD was unable to recover input tax incurred in its production.
The CJEU observed that the concept of ‘human blood’ was not defined in the Principal VAT Directive; and that its meaning must be determined ‘by considering its usual meaning in everyday language while also taking into account the context in which it occurs and the purposes of the rules of which it is part’. The court also noted that the exemption for supplies of human blood aimed to ensure that those supplies contributing to healthcare, or which have a therapeutic purpose, do not become inaccessible by reason of the increased costs of those products if their supply were subject to VAT.
The CJEU added, however, that the exemption must be interpreted strictly by applying it only where the plasma is used directly for healthcare or therapeutic purposes. Consequently, plasma intended to be incorporated into an industrial production, to manufacture medicinal products, did not come under the exemption.
Why it matters: In finding that supplies of plasma intended to be used in a manufacturing process did not come under the exemption for supplies of human blood, the CJEU drew a clear distinction between supplies for therapeutic purposes (which are exempt) and those for pharmaceutical purposes (which are taxable).
