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Cortex - Life Sciences Insights

| 1 minute read

Italy modifies medical device payback system for 2015-2018: Companies have to make quick and important choices

With Law Decree no. 34/2023, the Italian government has approved significant changes to the Italian medical devices payback system for 2015-2018. The changes come after several weeks of intense political pressure from the medical device industry:

  • A fund has been established to be distributed to regions and autonomous provinces to reduce the total share that companies have to pay back.
  • Companies that haven’t started a legal proceeding or that waive their legal proceedings will pay a reduced amount, equal to the 48% of the amount originally requested, by 30 June 2023.
  • Companies that don’t waive the pending legal proceedings will have to pay the full amount, without benefiting from the reduction.

These new rules don’t cancel the medical device payback system, as was hoped. Companies have to choose whether to renounce their legal proceedings started against the payback measure and sign an ex lege settlement. They can then benefit from a discount on the payback amount or continue to fight before the Administrative Court to try to cancel the retroactive application of the payback.

The Italian government has clarified that once companies pay the payback amount, they’ll be able to deduct the VAT on payback payments. The payments can be carved out through a credit note pursuant to art. 26 of Presidential Decree no. 633/1972.

The right to deduct VAT embedded in payback payments arises when the payments are made to the relevant public authority and can be exercised, at the latest, with the annual VAT returns for the fiscal year in which the right arose. To do this, companies have to issue a credit note (or similar accounting document) with details of the regional and provincial regulations that impose the payback payments. The accounting document must be stored by companies in accordance with rules in art. 39 of Presidential Decree no. 633/1972.

From an income tax perspective (IRES and IRAP purposes), payback payments are deductible in the fiscal year when they are performed to the public authority (deduction on a “cash basis”).


medical devices, regulation, europe, regulation-devices