Pharmaceutical researchers involved in clinical trials face a wide range of protocols and regulations, and clinical trials are an essential step for assessing the safety and efficacy of newly developed medical products. However, in dealing with these many important and detailed issues, other obligations may be overshadowed. VAT and customs obligations, for example.
What should you bear in mind during your first steps in setting up a suitable supply chain for clinical trials? Our experts discuss the challenges of the customs and VAT treatment of products that are part of clinical trials within the EU.
Pharmaceutical companies are not always fully aware of their VAT and customs position. Determining this position is often challenging, especially for companies that are not established inside the EU. A clear view of the tax consequences and formalities regarding, for example, moving samples or products between countries, is essential. The VAT and customs implications of clinical trials in the EU are often overlooked.
By ensuring a clear view on the EU VAT and customs implications beforehand, companies can prevent unexpected additional costs which could easily been avoided. And it may even uncover specific opportunities and benefits. A proper preparation is important when expanding to a new area, and this is no different for pharmaceutical businesses entering the EU market.
Importation of goods into the EU: NL as an ideal gateway
In order to run clinical trials, it is often necessary to import goods into the EU. This immediately triggers a number of matters that pharmaceutical companies have to bear in mind.
For example, before actually entering EU territory, the (test) products must be imported, i.e. customs cleared with the customs authorities. Additionally, customs duties and import VAT are due upon importation into the EU.
Setting up your supply chain correctly from the start is crucial, as it enables you to optimise your position and prevent unnecessary complications. You may for example wish to make use of a centralised import country. In that case, the Netherlands might be your ideal gateway to Europe. With unique hubs such as the Port of Rotterdam and Schiphol Airport, as well as professional logistics companies and an infrastructure well suited for international trade and transport, the Netherlands has an excellent position within the EU.
Additionally, you can make use of various beneficial schemes such as the Article 23-license and visa and wage tax benefits for highly skilled migrants. And there are various tax facilities available for R&D, depending on the nature of your activities in the Netherlands.
Movement of products within the EU: optimise administrative simplification
Once imported into the EU, goods will often be transported from the Netherlands to the clinical trial sites across different EU countries. Although the EU market does not have any physical/customs borders, there are special VAT obligations for such movements. As a result, transporting goods to the clinical trial sites may trigger VAT registrations and other VAT obligations in various EU countries. By looking into a centralised distribution model beforehand and optimising your supply chain, you may be able to apply useful EU administrative schemes and simplifications.
Need help determining an ideal plan?
There are many points of attention companies have to keep in mind when performing clinical trials in the EU. Penalties, fines and delays may jeopardise your schedule for the planned clinical trials. By correctly setting up your business structure, your supply chain and VAT compliance, you can prevent unpleasant surprises such as retroactive assessments and fines. In fact, substantial administrative and financial benefits may be achieved with the right advice.
The experts at Baker Tilly would be happy to assist you in this matter. As independent member firm of the Baker Tilly International network, we are well positioned to help you oversee and tackle the challenges you may face when introducing your pharmaceutical and biotech products int the European market.
If you have any questions about importation, customs or VAT, contact our pharma expert Marc van Weert at VAT & Customs Advisory.
The legislation and regulations in this area may be subject to change. We recommend that you discuss the potential impact of this with your Baker Tilly advisor.
