VAT on medicines in Europe: rates, traps, and how to handle them in a comparison
VAT on medicines runs from zero to the full standard rate depending on the country and on whether the product is prescribed. Published retail prices usually include it; manufacturer prices never do. The rates, the structural differences, and the arithmetic for comparing prices across borders.
Published 24 October 2026 · Last reviewed 24 October 2026 · MPA Business Services
Why it matters
Two countries can publish the same retail price for a medicine and have manufacturer prices twenty per cent apart, because one charges VAT at 20 per cent and the other at zero. Any comparison that uses retail prices has to strip VAT first, and any trader or buyer working across borders has to know which rate applies to which product in which hands.
The structure
The EU VAT Directive sets a minimum standard rate of 15 per cent and allows member states to apply reduced rates (minimum 5 per cent, with some older derogations below that) to listed categories, which include pharmaceutical products. Each state decides whether to use a reduced rate for medicines at all, and whether to distinguish prescription from over-the-counter, reimbursed from non-reimbursed, or human from veterinary.
Three patterns result:
- Standard rate on everything (for example Germany, Denmark): no concession for medicines.
- Reduced or super-reduced rate (most of Southern and Western Europe): a single low rate for medicines, sometimes lower still for reimbursed products.
- Zero rate or exemption for prescriptions (the UK, Ireland, Sweden): prescribed medicines carry no VAT; over-the-counter products carry the standard rate.
Working rates (to be verified before publication)
| Country | Prescription medicines | OTC medicines | Note |
|---|---|---|---|
| United Kingdom | 0% (dispensed on prescription) | 20% | Zero rate applies to dispensing, not to wholesale supply |
| Ireland | 0% (oral medicines) | 23% / 13.5% | Non-oral prescription products can be standard-rated |
| France | 2.1% (reimbursed) | 10% (non-reimbursed) | Super-reduced rate for reimbursed products |
| Germany | 19% | 19% | No reduced rate for medicines |
| Netherlands | 9% | 9% | |
| Belgium | 6% | 6% | |
| Spain | 4% | 10% | Super-reduced rate for medicines for human use |
| Italy | 10% | 10% | |
| Portugal | 6% | 6% / 23% | Depends on reimbursement status |
| Austria | 10% | 10% | |
| Switzerland | 2.6% | 2.6% | Not EU |
| Denmark | 25% | 25% | No reduced rate |
| Sweden | 0% (exempt) | 25% | |
| Norway | 25% | 25% | Not EU |
| Finland | 10% | 10% | Rate under review in recent budgets |
| Poland | 8% | 8% | |
| Czechia | 12% | 12% | Rates consolidated in 2024 |
| Hungary | 5% | 5% / 27% | |
| Greece | 6% | 6% |
Every figure above is a working value to be checked against the current Commission table and national law; rates change, and several countries changed theirs between 2023 and 2026.
The traps
Retail includes it, manufacturer prices do not. Strip VAT from retail prices before comparing them to each other or to ex-factory prices. Dividing by (1 + rate) is enough.
The rate can depend on who is buying. In the UK, the zero rate attaches to a medicine dispensed on prescription by a registered pharmacist; the same pack sold wholesale is standard-rated and the pharmacy recovers the input tax. A price list aimed at pharmacies and one aimed at patients can both be “incl. VAT” at different rates.
Reimbursement status changes the rate in some countries. France and Portugal tax non-reimbursed products at a higher rate than reimbursed ones, so delisting changes the retail price twice.
Hospital and wholesale supplies. Hospital purchases are often standard-rated and recovered, or exempt under different rules; hospital tender prices should be compared net of VAT only.
Cross-border supply. Intra-EU business-to-business supplies of goods are zero-rated at origin with acquisition VAT due at destination; parallel traders deal in net prices and account for VAT in the destination country at its rate for the product.
The arithmetic
To compare a published retail price in country A with one in country B at ex-factory level: divide each by (1 + VAT rate), remove the pharmacy margin or fee using that country’s formula, then the wholesale margin, then convert currency at a stated date. The margins piece in this section gives the structure of those formulas.
MPA records prices at the published price type with VAT status, so the stripping is done once, consistently, before anything is compared.
Sources
General information, not legal advice. The position for any particular product and country must be checked against the registers.
The position in every country, kept current
MPA Search holds the patent, SPC, licence and price position for products across the UK and Europe, with the reference to the original record. Book a free demonstration.