The tax authority’s VAT services recently addressed a query from a wholesale trading company regarding the proper tax treatment for certain products, as detailed in an official document on the Finance Portal.
The VAT Code permits a reduced rate (6%) for “pharmaceutical and similar products and their active substances.” The company inquired whether the wipes it sells fall under this category (item 2.5 of the code).
Upon reviewing the product description, the tax services determined that the wipes are categorized under item 2.5, which includes “cotton pads, gauze, hydrophilic cotton, strips, adhesive dressings, and other similar supports, even impregnated or coated with any substances, for hygienic, medicinal, or surgical uses.”
The justification provided is based on the characteristics of the wipes, which align with the definition of “similar supports” mentioned in that section.
In its inquiry, the company clarified that the wipes are “a disposable product intended for hygienic use in hospital, clinical, and home settings, with features similar to other medical and surgical items (such as compresses, gauze, or special wipes),” and are supplied to retail and wholesale companies “of health and hygiene articles, as well as nursing homes, hospitals, and health centers,” according to the published tax information.
When assessing if the wipes met the criteria to be included in the list of pharmaceutical and similar products, the tax services dismissed the possibility of categorizing the wipes under another item related to “medicines, pharmaceutical specialties, and other pharmaceutical products intended exclusively for therapeutic and prophylactic purposes.” For such classification, medical devices must cumulatively possess an international market authorization certificate (CE), be classified “as such” by Infarmed, and be “primarily or exclusively intended for therapeutic and prophylactic purposes.”
Alternatively, it considered that the wipes could be included in the list of “cotton pads, gauze, hydrophilic cotton, strips, adhesive dressings, and other similar supports, even impregnated or coated with any substances, for hygienic, medicinal, or surgical uses,” which are also subject to the reduced rate.
The tax services accepted this classification, placing foam wipes within “similar supports,” as the product meets the criteria of a pharmaceutical product “either by its composition or its use” on the human body. In this case, the wipes are for “single-use and medicinal use.”
