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Belgian tax breaks for pharma

The European Commission has approved the introduction of reductions and exemptions on the tax paid by pharma companies in Belgium.

The European Commission has approved the introduction of reductions and exemptions on the tax paid by pharma companies in Belgium.

The changes will represent an annual budget of around EUR47m. The Commission has concluded that, following adjustments made by the Belgian authorities, the measures are compatible with the EU.

Competition Commissioner Neelie Kroes said: "As shown by the sector inquiry into the pharmaceutical industry, launched on 16 January, I am determined to ensure that competition plays a full role in the pharmaceutical sector. The detailed review carried out by the Commission indicates that the Belgian tax reductions, in particular those granted for research, are not against EU interests."

In Belgium pharma companies contribute around EUR300m a year to the financing of the health system, through a tax calculated on the basis of sales of reimbursed medicines. In November 2005, the Belgian government decided to grant tax exemptions and  reductions, in specific circumstances, in order to assist pharma.  First it granted an exemption for orphan medicinal products, for medicines which are reimbursed at a low rate (such as contraceptive pills) and for products derived from blood donated by unpaid volunteers.

It then granted a tax reduction to pharma companies that invest in R&D or that reduce their marketing budgets voluntarily, and also to small companies that invest in the production of medicinal products. 

The reforms were adopted on June 10 2006 and have been amended twice, in December 2006 and April 2007. However, they are yet to come into force because the Belgian authorities have been waiting for approval by the Commission.

30th January 2008

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