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Insurance transactions EU VAT case law

13 cases of the Court of Justice and the General Court of the European Union on this point of VAT law, from 1999 to 2023.

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Under each case, what the Court decided, from its summary. The summaries are AI-generated and are not official documents: open the case for the Court’s own text.

C-42/22 Generali Seguros

Judgment · 9 March 2023 · Portugal

Sale of salvage by an insurer, no insurance exemption

No on all three points. The resales rest on contracts separate from, and separable from, the insurance policies, are made to persons other than the insured, involve no coverage of risk and raise no difficulty in determining the taxable amount. The salvage value is the residual value of the vehicle, not part of the compensation, so there is no single indivisible supply. Being a supply of goods, it cannot be a broker's or agent's related service. Goods bought merely to be resold unaltered are not "used" for the exempt insurance activity, and neutrality cannot widen an exemption. Where an insurer recovers and resells salvage, those sales are taxable supplies of goods whatever the domestic practice, and the salvage price cannot be treated as embedded in the claims settlement.

C-695/19 Rádio Popular

Judgment · 8 July 2021 · Portugal

Warranty extension commissions in the deductible proportion

Subject to national verification, the retailer is in direct contact with both insurer and insured and performs the essential functions of an insurance agent, so the commissions are exempt under Article 135(1)(a). Article 174(2) does not refer to point (a), and Article 135(1) clearly separates insurance from financial transactions. An insurance transaction therefore cannot be an incidental financial transaction, whether or not it is incidental. Fiscal neutrality cannot widen an exemption or derogation absent clear wording. Retailers, motor dealers and other suppliers earning insurance commissions on extended warranties, payment protection or similar cover must include that exempt turnover in the denominator of their partial exemption fraction.

C-907/19 Q-GmbH (Special risk insurance)

Judgment · 25 March 2021 · Germany

Licensing an insurance product to an insurer and the insurance exemption

The exemption does not apply. Granting a licence to use an insurance product is neither an insurance transaction (no contractual link with the insured, no risk borne) nor a service performed by an insurance broker or agent, as the licensor is not linked to the insured and the activity does not cover the essential aspects of an agent's work. If that licence is the principal supply, the whole single supply is taxable. Whether a single supply exists, however, is for the national court. The Court doubted it. Insurance product designers, MGAs and technology providers licensing policy wordings or platforms to insurers cannot shelter the licence fee behind an accessory mediation role.

C-235/19 United Biscuits (Pensions Trustees) and United Biscuits Pension Investments

Judgment · 8 October 2020 · United Kingdom

Pension fund management services and the insurance exemption

Such fund management services are not insurance transactions. An insurance transaction requires the supplier to undertake, for a premium, to provide an agreed service on materialisation of a covered risk. Fund management for the trustees' account alone, with no indemnity from risk, fails that test. The listing of "management of group pension funds" in the annexes to the insurance directives does not help. Those annexes classify activities requiring authorisation, and cover both insurance and related "operations", which are not insurance. Pension fund management remains standard rated whoever supplies it, so the historic UK split between insurers and non-insurers cannot be levelled up by exempting the non-insurers. Relevant to trustees, scheme administrators, insurers and fund managers, and to advisers running historic overpayment claims.

C-40/15 Aspiro

Judgment · 17 March 2016 · Poland

Outsourced insurance claims handling and the insurance exemption

Such services are not exempt. There is no insurance transaction because the provider assumes no risk and has no contractual relationship with the insured, even though claims handling is an essential part of insurance. Nor are they related services of a broker or agent. Although the provider has direct and indirect relationships with insurer and insured, its activities have nothing to do with finding prospective clients and introducing them to the insurer with a view to concluding contracts. Outsourced claims handling, loss adjusting and back office insurance administration are taxable, whatever the label the parties use, and the SDC line of authority on financial services does not transfer to Article 135(1)(a), which covers insurance transactions in the strict sense only.

C-584/13 Mapfre asistencia and Mapfre warranty

Judgment · 16 July 2015 · France

Extended warranties on second-hand cars as insurance transactions

Such a warranty constitutes an exempt insurance transaction. The provider undertakes, against a premium certain but limited, to relieve the purchaser of uncertain repair costs, and the requisite legal relationship exists whether the contract is concluded directly, through the dealer as intermediary or by assignment. How the provider prices or manages the risk is irrelevant. The warranty and the vehicle sale are in principle distinct and independent supplies. Both characterisations are left to the referring court on the facts. Relevant to motor retail, extended warranty and breakdown cover providers, and to administrators structuring cover as "after-sales service" outsourced by dealers.

C-224/11 BGŻ Leasing

Judgment · 17 January 2013 · Poland

Insurance re-invoiced by a lessor with the leasing service

Leasing and insurance of the leased asset are in principle distinct and independent supplies. Insurance is an end in itself for the lessee, and a contractual requirement to insure, or a termination clause covering unpaid premiums, does not make it ancillary. The national court must still verify the specific circumstances. Where the lessor insures the item and re-invoices the exact cost, that is an exempt insurance transaction. The reasoning does not apply if the lessee is charged more than the insurer charged the lessor. Lessors and other asset finance providers offering block cover to customers can treat the re-invoiced premium as exempt, and insurance costs of that kind do not fall into the taxable amount of the lease under Article 78. Relevant to leasing, equipment and vehicle finance, and to advisers reviewing composite supply analyses generally.

C-582/08 Commission v United Kingdom

Judgment · 15 July 2010 · United Kingdom

Refunds to non-EU businesses for exempt insurance and financial supplies

The Court dismissed the action. Article 2(1) of the Thirteenth Directive is lex specialis in relation to Articles 170 and 171 of the VAT Directive, so the generally worded refund entitlement in Article 170 cannot override its clear and precise wording, which covers only Article 169(a) and (b) transactions. Even if the Commission were right that the legislature erred, and that the reading is inconsistent with the logic of the VAT system, it is not for the Court to correct the provision or extend Member States' obligations. Confirms that non-EU insurers, banks and other financial services providers have no directive-based right to a Thirteenth Directive refund of input VAT attributable to exempt insurance and financial supplies, even though EU-established competitors recover under the Eighth Directive (now Directive 2008/9).

C-242/08 Swiss Re Germany Holding

Judgment · 22 October 2009 · Germany

Transfer of a portfolio of life reinsurance contracts

The transfer is a supply of services, not of goods, since reinsurance contracts are not tangible property. It falls outside Article 9(2)(e), fifth indent, and Article 13B(a). It sits between the transferor's and the transferee's own reinsurance relationships and extinguishes the former. It is not financial in nature, so Article 13B(d)(2) and (3) do not apply, and it is a single supply that cannot be artificially split. The negative value attributed to 18 contracts within a single global price is irrelevant. Article 13B(c) does not apply. Insurers and reinsurers restructuring by portfolio transfer, and their advisers, cannot assume the exemption for insurance and reinsurance transactions follows the underlying contracts. Relevant to run off transactions, Part VII style transfers and financial services exemption analysis generally.

C-13/06 Commission v Greece

Judgment · 7 December 2006 · Greece

Road assistance subscriptions as exempt insurance transactions

The Court declared the infringement. Undertaking, against prior payment of a premium, to provide aid should the risk of breakdown or accident materialise is an insurance transaction. The agreed service need not be a money payment and may be assistance in kind of the type covered by Directive 73/239. Nor need the supplier be an insurer. The concept is broad enough to cover a taxable person who is not himself an insurer. Confirms that motoring clubs, roadside assistance operators and providers of travel or breakdown assistance schemes funded by subscriptions are supplying exempt insurance, not taxable services, with the consequent loss of input tax recovery and possible insurance premium tax exposure.

C-8/01 Taksatorringen

Judgment · 20 November 2003 · Denmark

Cost sharing groups and the distortion of competition condition

Such assessments are neither insurance transactions, there being no contractual relationship with the insured, nor related services of brokers or agents, who must have a relationship with both insurer and insured. Exemption under Article 13A(1)(f) must be refused only where there is a genuine risk that the exemption itself, now or in the future, distorts competition. A notional risk is insufficient. Temporary exemptions are permissible where doubt exists. That large insurers use in-house assessors is irrelevant. Relevant to cost sharing groups generally, and to insurance sector shared service vehicles in particular.

C-240/99 Skandia

Judgment · 8 March 2001 · Sweden

Running a subsidiary insurance business is not an exempt insurance transaction

The Court holds that it is not. An insurance transaction implies by its nature a relationship between the insurer and the person whose risks are covered. The parent had no such relationship with the policyholders, who remained contractually bound to the subsidiary. The fact that the provision separately mentions related services performed by brokers and agents confirms that insurance transaction cannot be read to cover every service supplied by an insurance company. With CPP and Taksatorringen this fixes the two limbs of Article 135(1)(a): a genuine insurance relationship with the insured, or intermediation by a broker or agent.

C-349/96 CPP

Judgment · 25 February 1999 · United Kingdom

Single or multiple supplies and the insurance exemption for block policy holders

Procuring insurance cover for customers under a block policy, in one's own name and account, is itself an insurance transaction. "Insurance" includes the listed assistance categories. Each supply is normally distinct, but a single economic supply must not be split artificially. A single supply exists where elements are ancillary, not an aim in themselves but a means of better enjoying the principal service. A single price is not decisive. If two distinct services are bought, the insurance part must be apportioned by the simplest method. Classification is for the national court. Restricting the exemption to authorised insurers is unlawful. The source of the composite supply test now applied across the board.

Related topics

Exemptions · Supply of services · Single and composite supplies · Fiscal neutrality · Proportional deduction · Right of deduction · Refund of VAT