Clarity on the Dutch VAT position of the international life sciences industry with regard to the qualification of cell and gene therapies
The international life sciences sector involved in the development of cell and gene therapies will no longer suffer any competitive disadvantage by choosing the Netherlands as its place of incorporation. This brings the Dutch approach in line with the approach in, for example Belgium. This is because the tax authorities have provided clarification on the applicable rate and have ruled that the development of cell and gene therapies is subject to VAT (at the reduced rate of 9%). This allows internationally oriented companies to deduct input VAT on investments, research costs and other similar expenses.
What was the situation like before?
Advanced Medical Therapy Products (AMTPs) are medicines developed from the body's own cells. Until now, there was no uniform treatment in the Netherlands of companies engaged in the development of AMTPs. Sometimes the Dutch Tax Authorities ruled that no VAT was due. This resulted in major disadvantages in the VAT deduction right on expenses of these companies. Choosing the Netherlands as their country of establishment was therefore not an evident choice.
What is the situation like today?
Such AMTPs are now treated as medicines and subject to VAT at the reduced rate of 9%. As a result of this explicit clarification by the Dutch Tax Authorities, the development of AMTPs constitutes a supply subject to VAT and provides for a right to deduct the input VAT from the costs incurred. This makes the carrying out of R&D activities for many American and European players in the life sciences sector also attractive to conduct via the Netherlands. Contrarily, Dutch companies do not have to move their headquarters abroad due to this issue. This, combined with the high-quality infrastructure in the Netherlands, the educational level of employees, and the ICT facilities, makes the Netherlands an excellent choice as a gateway to Europe.
What should you do?
Are you involved in the development and/or supply of AMTPs? If so, this clarification can be very beneficial for your business. Consult your VAT advisor to assess your situation. If you are a start-up or other type of business that wants to choose the Netherlands as its country of establishment, feel free to contact our VAT specialist Anne Kin by phoning +31 (0)13-5915125 or send Anne an e-mail.