A new “tax” on medical device manufacturers and distributors? The Italian Council of State questions the constitutional legitimacy of the Medical Device Governance Fund

By Ordinance No. 1589/2026, the Council of State has suspended several appeals brought by major industry players against the Ministry of Health's Decree of 29 December 2023. The dispute concerned the obligation for all economic operators that supply medical devices, large equipment, and in vitro diagnostic devices to the National Health Service to make an annual payment equal to 0.75% of the turnover generated by those supplies, to finance the Medical Device Governance Fund (the “Fund”) established by Legislative Decrees Nos. 137 and 138/2022.

In a marked departure from the first-instance ruling, the Council of State found that the 0.75% levy bears the defining hallmarks of a tax under constitutional case law, in that it entails a definitive reduction in the taxpayer's assets, lacks reciprocity (i.e., no specific service is provided in return), and is intended to finance public expenditure.

That said, the Council of State observed that the 0.75% levy may infringe the constitutional “ability‑to‑pay” principle under Article 53, as it is assessed on gross SSN turnover without deducting production costs and thus may not reflect actual economic capacity or profitability. The ordinance also engages the principle of equality under Article 3, questioning the rationale for singling out medical‑device companies compared with other suppliers to the public administration, in the absence of evidence of “extraordinary profits” or limited competition that could justify a targeted levy.

The judges emphasized that SSN procurements are awarded through competitive tenders, which by design preclude positional rents and market distortions. In a particularly incisive passage, the Council highlighted a troubling economic paradox: because the levy is not calibrated to documented financial needs, it risks both eroding margins – discouraging participation in public tenders and reducing the quality of technology available to the SSN – and being passed on to public purchasers, thereby neutralizing the Fund's intended benefits.

Beyond the specific constitutional concerns, the Council of State cautioned against the stratification of patrimonial exactions, both tax in nature (as the levy to the Fund at issue) and solidaristic (as the so‑called payback mechanism). This layering exposes the disjointed character of a legislative scheme and must be weighed when assessing whether the latest contribution is consistent with the ability‑to‑pay of enterprises already subject to other levies.

What happens now?

By referring the matter to the Constitutional Court, the Council of State has effectively paused the enforcement of these payments for the appellants. If the Court declares the 0.75% levy unconstitutional, it could lead to a complete overhaul of how the Medical Device Governance Fund is financed. 

Authored by Luca R. Perfetti and Marina Roma.