The judge confirms that PharmaMar could not deduct 5.6 million for the development of Yondelis

The National Court has dismissed the appeal of the biotechnology company PharmaMar regarding the payment of 5.6 million euros in Corporation Tax between 2010 and 2012. The court does not allow the company to apply a reduction in income from the exploitation of the patent of its antitumor Yondelis in the USA.

The company, chaired by José María Fernández, loses the legal battle for the moment although it can present a cassation appeal, a decision that the company has not taken, according to a spokesperson for the laboratory.

In a March 26 ruling to which this newspaper has had access, the second section of the contentious-administrative chamber rules against PharmaMar’s appeal, confirming a previous ruling of the Administrative Economic Court (TEAC).

The ruling explains that the company applied article 23 of the Corporation Tax – on the reduction of income from the transfer of the right to use or exploit certain intangible assets – when it had no right to do so.

The facts refer to two agreements signed in 2001 and 2011 by the company with subsidiaries of the Johnson & Johnson group for the development of research and approval of the drug Yondelis in the US In an inspection in 2015, the Tax Agency reflected that the company He couldn’t deduct the 5.6 million on his taxes.

Judge Javier Eugenio López Candela, rapporteur for the judgment, details that the appeal must be dismissed, referring to the provisions of the settlement agreement and the challenged TEAC resolution, which consider that the contract signed in 2011 provides for a reimbursement of expenses of research and development for an amount of up to 110 million dollars linked to the fulfillment of certain milestones.

“The contract at no time establishes that the aforementioned payments are made as consideration for the transfer of the right to use or exploit an intangible asset, which are the only income that could give rise to the tax benefit of income reduction of article 23” of the Corporation tax, according to the sentence. “At no time is it said that they are ex gratia payments”, is stated in the ruling, as the company alleged.

However, the National Court does not order the company to pay the costs, since it considers that there were “relevant doubts” and the appeal was reasonable. From PharmaMar it is pointed out that the ruling will have no effect on the company’s cash and that it can be offset with negative tax bases from previous years.

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