Coordination Committee: Tax base correction upon payment of bonuses to insurance companies

Within the Coordination Committee (No. 586/15 September 2021), the Chamber of Tax Advisors and the General Financial Directorate (GFD) discussed the issue of correcting the tax base for payments (bonuses) paid in arrears to health insurance companies by pharmaceutical companies. The GFD confirmed that the reduction of the tax base can be performed by the pharmaceutical company that pays the bonus to the health insurance company regardless of whether it holds a decision on the registration of medicinal products and on their placement on the Czech market.


Pharmaceutical companies (drug manufacturers) supply medicines to distributors who dispense them to patients either directly or through other healthcare providers. If the patient is insured with a health insurance company, it is the insurance company that pays for the medicine. The latter has a contract to limit the risks/costs associated with the reimbursement of the medicines with the drug manufacturer (pharmaceutical company), which holds a decision on the registration of medicinal products in the Czech Republic in compliance with the Medicines Act. Under this contract, the drug manufacturer pays a bonus in arrears to the health insurance company once the agreed limit of the insurance company’s annual cost for the medicine is reached.

The holder of the decision on the registration of medicinal products may place medicines on the Czech market directly or through a pharmaceutical importer (i.e., the registration holder and the importer are two different persons). The importer procures the medicines and supplies them to distributors or healthcare providers on the Czech market who then dispense them to patients. In most cases, the importer is a VAT payer in the Czech Republic.

Where a health insurance company enters into a contract to limit the risks/costs associated with the reimbursement of medicinal products directly with the importer, it is the importer’s tax base that will be reduced upon the payment of the bonus to the health insurance company, as the importer is economically burdened by the payment of the bonus.

However, if a health insurance company has concluded a contract to limit the risks/costs associated with the reimbursement of medicinal products with the registration holder, but the bonus is in fact paid by the importer, doubts have arisen in practice as to who should reduce the tax base on account of the paid bonus paid. The GFD confirmed the conclusions of the Coordination Committee that if the importer paying the bonus is in a contractual relationship with the registration holder, the importer may even in this case correct the tax base when the bonus is paid to the health insurance company.

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