EU vs non-EU: Rising legal challenges in local EU courts on fiscal importation with non-EU entities

The release of EU Good Manufacturing Practice (GMP) Annex 21 in 2022 has introduced new challenges for the pharmaceutical industry, particularly regarding importation requirements into the EU. While Annex 21 aims to streamline and clarify the importation process which is commonly used in supply chain set-ups with EU neighbours, it failed to clarify ambiguities related to fiscal importation practices. 

Countries such as Switzerland and the United Kingdom, despite not being part of the EU, host a significant number of pharmaceutical and biotech companies that play active roles in the complex supply chains of EU-based pharmaceutical companies.

The recent draft of the EU Directive issued in April 2023 (Directive of the European Parliament and of the Council on the Union Code relating to medicinal products for human use) introduces a new layer of complexity by explicitly prohibiting an EU WDA holder from procuring medicinal products from a wholesaler without EU WDA, including through financial transactions. Although enforcement of the Guidance is not slated to begin until 2026, pressure is building up within the pharmaceutical industry due to local court rulings in EU countries that address fiscal importations. Notably, Sweden and Germany authorities have taken significant actions in this regard.

• The German Federal Administrative Court states, that pharmaceutical suppliers must possess a WDA granted by an EU member state (BVerwG 3 C 1.20).
• The Swedish Medicines Agency has contested Swiss invoicing practices at a Swedish pharmaceutical firm (Swedish Administrative Court, Decision 3084-24).

Common non-EU principal entity model

With the effectiveness of the new EU Directive, the national discretionary space will perish and procurement of medicinal products from a non-EU WDA holder, including through fiscal transitions will be not allowed. That means that for goods staying within EU borders, fiscal flows involving Switzerland, UK and other non-EU countries will no longer be possible for European wholesalers.

Cross-functional impact with potential next steps

To ensure compliance with the changes, we recommend that pharma and biotech companies consider potential next steps.

EU Fiscal Import Compliance: Strategic Decision Framework

The challenges each company faces are unique. Deloitte guides our clients in navigating complex issues through a strategic decision framework. A team of multi-disciplinary advisors in the pharmaceutical sector will be mobilised to help you determine the optimal strategy and next steps that are tailored to your needs.

Deloitte offers two critical sets of services: Financial Flow Restructuring and Supply Chain-Specific Adaptation. Depending on factors such as your company's location, key markets, and manufacturing sites, we can guide you in choosing between a holistic solution or targeted strategies for supply chain adaptations.

How Deloitte can help

We bring the right expertise and experience to support you in preparation for 2026. To allow sufficient time to design and implement the best solution for your organisation, it is essential to start working towards clarity now.

Partner with us and gain insights from our has extensive experience in supporting global pharma organisations with compliance assessments of their trade models for EU portfolios, specifically concerning European regulatory requirements, in particular Annex 21 related regulations as well as fiscal importation.

Contributors

We are grateful to Agata Gorska, Dr. Florian Zischka, Juliette Odorico and Federico Sasso for their valuable contribution to this report.