VAT and insurance services: the judgment of the European Court of Justice in case C-907/19 of 25 March 2021

Di Nicola Pardini -

Abstract

The note discusses a recent judgment of the European Court of Justice concerning the VAT treatment of a package of insurance services. The sentence is significant because it focuses on the issues related to VAT exemption of insurance services and it demonstrates the importance of identifying single/multiple supplies correctly in order to recognize the right VAT position.

IVA e assicurazioni: la sentenza della Corte di Giustizia nel giudizio C-907/19 del 25 Marzo 2021. – L’articolo riguarda un recente intervento della Corte di Giustizia rigurdante il trattamento IVA di un pacchetto di servizi assicurativi. La sentenza è rilevante poichè tratta le questioni relative all’esenzione IVA dei servizi assicurativi e dimostra l’importanza di riconoscere un’unica prestazione al fine di identificare il corretto trattamento IVA.

Summary: 1. Introduction. – 2. The case. – 3. The single supply for VAT purposes: the EU perspective, the Italian law and the Court’s legal reasoning in case C-907/19. – 4. Art. 135 (1)(a) of Directive 2006/112/EC: the rationale of the exemption, the extempted services and the Italian law. – 5. Conclusion.

1. In its judgment of 25 March 2021 (case C-907/19), the Court of Justice of the European Union (CJEU), issued an important decision regarding the application of the VAT exemption to insurance services. In particular, the CJEU stated that the grant of a license to use an insurance product does not meet the conditions for the VAT exemption. After the analysis of the factual and legal aspects of the sentence, the note will focus on the concept of single supply for VAT purposes, which the CJEU deals with in the first part of the sentence. Subsequently, the case note will focus on the right scope of application of Article 135 (I)(a) of Directive 2006/112/EC with regard to the VAT exemption for insurance and reinsurance transactions, as well as for related services performed by insurance brokers and intermediaries.

 

2. The case concerns Q-Gmbh (hereinafter “Q”), a company that develops, markets and sells insurance products. During its business, the company entered into a contract with the insurer F-Versicherungs AC (hereinafter “F”). Under this contract, Q:

  • granted to F a license to use an insurance product;
  • placed the insurance products on behalf of F by adapting their content (however the insurance contracts were concluded between the insurer and the insured);
  • managed the insurance contracts concluded as well as the settlement of claims.

In return for these services, F paid Q a brokerage commission as remuneration.

In its VAT return, Q requested the exemption from VAT in relation to these services. Nevertheless, by means of a notice of assessment, the Tax Office applied VAT  to the granting of the licence to use the insurance product as well as to the management of contracts, recognizing the exemption only to insurance mediation services. The Court of first instance accepted the Office’s argument. Conversely, in accepting the subsequent appeal lodged by Q, the German Federal Tax Court qualified the services provided by Q as a single supply for VAT purposes. According to the German  Federal Tax Court, the second activity carried out by Q, the ancillary service of product placement, undoubtedly falls within the scope of Article 135(1)(a) of Directive 2006/112. However, the identification of the applicable VAT regime depended on the nature of the principal service: the licensing of insurance products. Therefore, in order to identify the tax treatment of this service, the German Federal Tax Court decided to suspend the proceedings and asked the European Court of Justice the following question «Does a service related to insurance and reinsurance transactions that is performed with exemption from tax by insurance brokers and insurance agents within the meaning of Article 135(1)(a) of Directive [2006/112] exist if a taxable person who carries out intermediary work for an insurance company also provides that insurance company with the mediated insurance product?».

Before examining whether or not the grant of an insurance product, the main service provided by Q, was subject to VAT, the Court of Justice focused on the concept of a single supply for VAT purposes. In particular, the Court outlined the necessary process to qualify a number of services as a single supply for VAT purposes. In that regard, the case law has stated that a single supply exists when two or more acts are so connected as to form an indissoluble economic supply, which it would be artificial to split. This is the case, for example, of a service provided as a means of making the best use of the main service. In the present case, the CJEU assumed that Q made a single supply for VAT purposes. In particular, the Court limited itself to point out that the activity of insurance mediation offered by Q was not essential for the distribution of the insurance product. Therefore, the placement of insurance products to clients could have been managed by the insurer or by a third party, without splitting  up the activity. In consideration of the above, the Court of Justice stated that «the grant of a license to use the insurance product in question to an insurer, on the one hand, and the mediation services provided by Q, on the other, do not appear to have to be classified as a single supply for VAT purposes». However, the Court noticed that pursuant to Article 267 TFEU, the CJUE is not entitled to give a final ruling on the facts in question, but rather to interpret EU law. For this reason, the Court did not decided on the question of the configurability of a single supply for VAT purposes and therefore, assessed whether the licensing of insurance products benefited from VAT exemption, falling within the scope  of application of Art. 135 (1)(a) of Directive 2006/112. In particular, the law exempts (i) «insurance and reinsurance transactions» and (ii) «related services performed by insurance brokers and insurance agents». The granting of an insurance product by Q could not fall within the first category because insurance transactions assume the conclusion of a contract between the insurer and the party whose risks are covered. On the other hand, the second category of exempt transactions requires two conditions:

  • the services must be related to insurance transactions;
  • the services must be performed by insurance brokers and insurance agents.

In relation to the first requirement, the Court seemed to accept that the granting of an insurance product may constitute a service “related” to an insurance transaction. In fact, it states that «it cannot therefore be ruled out that the grant of a licence allowing an insurer to use an insurance product designed by a third party and, on that basis, to conclude insurance contracts may constitute a service related to an insurance transaction».

Regarding the second condition, the Court of Justice, on the basis of previous case law, stated that the subject who provides a service may be qualified as an insurance broker or insurance agent when two requirements are complemented. Firstly, the provider must  be linked to the insurer and the insured. Secondly, the activity of insurance mediation requires the performance of essential activities such as searching for potential costumers as well as putting them in contact with the insurer. In case of the licensing of an insurance product, the insurer can directly conclude contracts with clients and, moreover, the granting of an insurance product does not include the performance of essential activities such as searching for potential clients. Therefore, the Court of Justice excluded that the grant of a licence to use an insurance product, can be qualified as a related service performed by insurance brokers and insurance agents. Hence  the Court concluded that «Article 135 (1)(a) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning  that the value added tax (VAT) exemption which it lays down does not apply to services provided by a taxable person, which include the supply of an insurance product to an insurance company and, accessorily, the placement of that product on behalf of that company and the management of insurance contracts concluded, in the event that the referring court categorises those services as a single supply for VAT purposes».

3. The judgment under consideration is significant because it focuses on ancillary services and their treatment for VAT purposes.

EU case law has developed the principle according to which, in case of complex  transactions, ancillary services are not independently subject to VAT. Therefore, when the principal service is subject to taxation, the ancillary services follow the same tax treatment and are part of the taxable amount. On the contrary, if the principal service  is exempted, the ancillary services are not subject to tax. This is a tax application of the latin saying “accessorium sequitur principale”. It is not defined in EU law but has been developed by case law (see Raggi N., L’intermediazione assicurativa nella giurisprudenza della Corte di Giustizia, Diritto e Pratica Tributaria, 2007, 6, I, 1077). At the most, with regard to statutory law, it should be noted that Directive 2006/112/EC does not expressly envisage the principle in question, but a rule that states the inclusion of incidental expenses in the VAT taxable amount (see Art. 78, Directive 2006/112/EC).

The EU case law identifies the hermeneutical rules to qualify or not a service as ancillary to the main one.

As a preliminary point, according to EU case law, the main service and the ancillary   ones could be carried out by different parties, since it is not necessary their overlapping. However, this diversity has been accepted just in relation to cultural, artistic, sporting, educational and similar services (see Santacroce B., L’imposta sul valore aggiunto, Milano, 2020, 490) as shown by judgment C-114/05, Gillan Beach Ltd, as well as by judgment C- 327/94, Jurgen Dudda. In particular, in this last case, the European Court of Justice stated that «any services supplied which, although not themselves constituting inter alia an artistic or entertainment activity, are a prerequisite for its performance, must be regarded as a supply of services ancillary to that activity. The services in question are, therefore, ancillary to the principal activity from an objective point of view, irrespective of the person providing them».

In general, a transaction is qualified as a single supply for VAT purposes in two cases (on this point see C-463/16, Stadion Amsterdam CV):

  • where two or more elements or acts supplied by the taxable person are so closely linked that they form a single indissociable economic transaction, the separation of which would be artificial;
  • one supply is ancillary to an other, the main supply.

In particular, a service is ancillary when it does not constitute for the customers an aim in itself but a way to improve the principal service offered by the provider. «It is clear from  the case-law of the Court that, assuming that there is a single complex supply, a service must be regarded as ancillary to a principal service if it does not constitute for costumers  an aim in itself, but a means of better enjoying the principal service supplied» (C-111/2005, Aktiebolaget NN). As regards the ancillary relationship between two services, it has been established that the prevalent element must be identified according to the point of view of the average consumer and considering the qualitative and not merely quantitative importance of the elements.

It is clear that the interpreter must consider the specific characteristics of the supply under consideration. «In order to determine whether the taxable person supplies to the customer – envisaged as a typical consumer – several separate principal supplies or a single supply, it is necessary to ascertain the essential characteristics of the transaction and to take account of all the circumstances in which that transaction takes place». In particular, the Court of Justice has focused on the relevance of certain circumstances in order to identify or not a single supply.

First of all, it follows from the case law that the invoicing of a single price is not crucial. It is instead relevant the intention of the parties to purchase or not two separate services (on this point, judgment C-41/2004, Levob Verzekeringen BV and judgment C-349/96, Card Protection Plan Ltd). Secondly, the mere fact that a service is provided by a contract (among other services) do not make it automatically ancillary. For example some  services, by their nature, could not be objectively regarded as inseparable from or ancillary to the main service of property lease. Since those services have only an artificial link with that principal service, all the services do not constitute a single supply (C-392/11, Field Fisher Waterhouse LLP). Finally, the possible supply of two services,   in different moment, does not automatically exclude the existence of a single supply for VAT purposes. In case C-44/11, Finanzamt Frankfurt am Main V-Hochst, the Court of Justice specified that «the     average client investor, in the context of a portfolio management service such as that performed by Deutsche Bank in the main proceedings, seeks precisely a combination of those two elements». Therefore it was not relevant the fact that the activity of analysis and  custody of assets on one side and the purchase and sale of securities on the other side could be provided separately.

It is worth noting that Italian law expressly provides for the principle “accessorium sequitur principale” with regard to the VAT system. Article 12(I)  of Presidential Decree no. 633/1972 provides that the transport, installation, packing,  packaging, supply of containers and other supplies ancillary to the supply of goods or services, carried out directly by the supplier or on his behalf and at his expense, shall not be subject to tax. Therefore, pursuant to Article 12, (II), if the principal supply is subject to tax, the consideration for the ancillary services shall be included in the taxable amount.

In compliance with the abovementioned principle, Law Decree no. 50/2017, as amended on conversion into law no. 96/2017, introduced a rule on the VAT regime for the                   services of passenger transport vehicles. These services are in fact ancillary to the main  passenger transport services and are consequently subject to the reduced rates of 5% and 10%, following the VAT treatment of the main service.

The most important domestic sources are listed below.

With regard to the subjective profile of the ancillary relationship, the Italian Revenue Agency, in accordance with EU case law, has provided a broader interpretation,  in relation to cultural, scientific and similar services. In these cases, in order to qualify a service as ancillary to an other, it is appropriate to disregard the identity of the subjects  involved in the main and ancillary transaction (see Revenue Agency, Circular no. 37/E of 29 July 2011). Moreover, the Court of Cassation has also provided an even broader interpretation. In its judgment no. 351 of 9 January 2019, the Supreme Court stated that, in general, a transaction may be considered ancillary, even if not performed directly by the person who carried out the main transaction or on his behalf.

The Tax Authorities in line with the mentioned EU case law have stated that services, formally distinct, must be considered as a single service when  they are linked to each other because the ancillary one improved the use of the other, or when they form, objectively, a single inseparable economic service, the separation of which would be artificial (see Resolution no. 348/E of 17 May 2021).

There must be a link or a necessary causality in order for a service to be treated as ancillary  to a main operation; this means that the main service cannot disregard the existence of the ancillary one (see Circular no. 198 of 13 August 1996). The ancillary transaction cannot be independent of the existence of the main transaction. It is necessary “that the ancillary service merges with the main transaction and not only that the latter is made possible or easier by the execution of the  ancillary service” (see Resolution no. 230/E of 15 July 2002).

In detail, Ministerial Resolution no. 6/1998 identified the following necessary requirements to qualify an operation as ancillary:

  • the pursuit of the realisation of a single aim by both the main service and the ancillary one;
  • the subjective identity of the person who provides for the main service and the person who provides for the ancillary one (with the exceptions set out above);
  • a common recipient of the supply of services;
  • the purpose of the ancillary service to supplement, complete or enable the main service.

By its judgment no. 24049 of 16 November 2011, the Court of Cassation clarified that the ancillary service must, therefore, be instrumental to the main service and have the purpose of enabling the main service to be carried out or better enjoyed; the decisive  element is represented by the fact that the ancillary transaction is essentially a means for  completing or carrying out the main transaction.

It is clear that the practical verification is based on the circumstances of the case and the content of the contract (see Resolution 6 August 2002, no. 267/E; Resolution 23 maggio 2002 no. 153/E).

As said, the CJEU addressed without solving the question the issue of the relationship between the licensing  of an insurance product on one hand and the placement of that product and the management of the contracts on the other. In particular, the Court stated that it is not entitled to qualify the facts of the main proceedings since such qualification falls solely within the               jurisdiction of the national court. The Court’s role is limited to interpretate the UE law (see C-231/19, Blackrock Investment Management (UK) Ltd).

Nevertheless, it is worth noting that in the present case there was a lack of documents ruling  the relationship between Q and F which could help to establish whether the complex transaction under consideration must be qualified as a single supply for VAT purposes. However, the nature of the services under consideration, suggests that there was not a single supply for VAT purposes (in line with the  view suggested by the Court of Justice). Firstly, it should be noted that the services were  not objectively so connected to make their separation artificial. In this regard, it should be borne in mind that F is an insurer, a company that offers other insurance products to its clients. Therefore F could place the insurance product without the additional service provided by Q. Secondly, the placement of the insurance product on the market did not allow a better use of the service provided by the product. The Court explained this assumption: «it does not appear that the mediation for which Q is responsible allows an insurer to better use the license granted by that company or that it alone can guarantee, through its mediation services, that the insurer enjoys that license under the best possible conditions». It follows from the above that it is irrelevant the subjective identity of the person who provides for the main supply and the person who provides for the ancillary supply (a requirement which is fulfilled in the present case because Q carried out both the  activities). For the reasons set out above, the complex transaction performed by Q does not represent a single supply for VAT purposes. Consequently, each activity carried out by Q will be subject to its own VAT treatment. In relation to the tax treatment of   each activity, it can be noted that:

  • the activity of insurance mediation is exempt from VAT taxation as provided for by Article 135(1)(a) of Directive 2006/112/EC;
  • the contract management activity is exempt from VAT taxation as it is carried out by an insurance intermediary (see also C-40/15, Aspiro SA);
  • the licensing of an insurance product is subject to taxation according to the legal  reasoning which will be covered below.

4. As mentioned above, Article 135(1)(a) of Directive 2006/112/EC of 28 November 2006, reproduces the content of Article 13(B)(a) of Directive 77/388/EEC of 17 May 1977 (the so-called “Sixth Directive”). It envisages VAT exemption for «insurance and reinsurance transactions, including the supply of services relating thereto, carried out by insurance brokers and insurance intermediaries».

Before dealing with the exempted services, we will focus on the rationale behind the exemption of these services.

In general, the exemption from VAT is to avoid divergences in the  application of the VAT system between one Member State and an other. Exemptions constitute independent concepts of EU law and must be placed in the overall context of the common VAT system (on this point see C-240/99, Försäkringsaktiebolaget Skandia (pubi), C-472/03, Arthur Andersen & Co. Accountants c.s.; C-453/05, Volker Ludwig v. Finanzamt Luckenwalde; C-124/07, J.C.M. Beheer BV).

In relation to the exemption from VAT of insurance services, the doctrine suggests that  the reason of the exemption is purely pragmatic: it is complicated to tax these services. In fact it is difficult to determine the taxable base since the real added value inherent in the services provided for by insurance undertakings is a consequence of the mutualisation  of risk so that it can only be determined at an aggregate level. The main reason for the exemption from VAT of most financial services is that calculating the value added by  a financial firm to a financial product is extremely complicated due to the fact that, in most cases, the charges for financial services are not explicitly stated as fees or commissions. Indeed they are implicitly included in interest rate spreads and other margins (see Garbarino C. – Allevato G., The global architecture of financial regulatory taxes, in Michigan Journal of International Law, 2015, 626).

In addition to this, it has been pointed out that the exemption avoids the overlapping of VAT with the various insurance taxes in force in the different Member States (see Fransoni G., Prestazioni di intermediazione esenti ai fini dell’imposta sul valore aggiunto e “comparatori di prezzo”, in Rass. trib., 2020, 2, 342).

As regards the exemption of insurance mediation services, it seems clear that the legislator has taken into account the fact that insurance services are generally carried out through a network of intermediaries. It is clear that the legislator, in defining the scope of the scheme, took into account the typical industrial structure of the insurance company whose products are generally placed on the market through networks of intermediaries.  However, the Court of Justice has pointed out that exemptions must be strictly interpreted, as they constitute exceptions to the general principle that VAT must be charged on all services supplied by a taxable person (see C-453/05, Volker Ludwig).

As said, the following services are exempted from VAT under Article 135(1)(a) of Directive 2006/112/EC:

  • insurance transactions;
  • reinsurance transactions;
  • the provision of services relating to such transactions, performed by insurance brokers and insurance

In case of insurance transactions «the insurer undertakes, in return for prior payment of a premium, to provide the insured, in the event of the materialization of the risk covered, with the service agreed when the contract was concluded» (see C-349/96, Card protection plan ltd). From a subjective point of view, the Court of Justice stated that «the expression ‘insurance transactions’ covers not only transactions carried out by the insurers themselves and is, in principle, sufficiently broad to include the provision of insurance cover by a taxable person who is not himself an insurer but, in the context of a block policy, procures such cover for his customers by making use of the supplies of an insurer who assumes the risk insured. However, such transactions necessarily imply the existence of a contractual relationship between the provider of the insurance service and the person whose risks are covered by the insurance, that is to say, the insured party» (see C-40/15, Aspiro SA). Regarding the insurer’s service, case law has specified that it may consist not only in the  payment of a sum of money but also in an assistance activity (see C-360/96 Card Protection plan ltd; C-13/06, Hellenic Republic). Moreover, the exemption covers the company that «promised its customers to do what was necessary for insurance to be provided to them by a third party, and that it did not itself undertake to provide insurance cover» (see C-349/96, Card protection plan ltd).

The reinsurance allows the reduction of the risks insured by an insurance company thanks  to their transfer to reinsurance companies (companies specialised in this line of business). Therefore, the splitting of the business carried out by insurance companies allows a better distribution of risks.

The exemption of services related to reinsurance and insurance transactions carried out by brokers and insurance agent is subject to two conditions:

  • the transactions must be “related” to insurance transactions;
  • the transactions must be “carried out by insurance brokers and intermediaries”.

In particular, it is worth anticipating that the interpretation of the second requirement has been discussed by EU case law which has restricted the scope of application of Article 135(1)(a) of Directive 2006/112/EC.

As to the first requirement, the meaning of the term “related” is undoubtedly broad so that it refers to several services. For this reason, in ruling C-40/15, Aspiro SA, the CJEU extended the scope of the provision 135 (1)(a) also to the settlement of claims in the name and on behalf of an insurance company. More recently, in ruling C-695/19, Radio Popular – Electrodomésticos SA, the Court of Justice qualified the sale of extended warranties as an activity related to an insurance transaction. In this case, a company selling domestic appliances offered, as additional service, the extension of the warranty coverage period on purchased items provided to its customers. This extension resulted from an insurance  contract signed between an insurance company and the customers.

The exemption of Article 135 was initially applied to the activity of seeking customers and also of concluding insurance contracts. The power to bind of the insurer was crucial. In this respect, it is worth mentioning C-8/01, Taksatorringen. In this case, the Court of Justice had to assess whether Taksatorringen’s valuation activity, i.e. the assessment of damages on behalf of insurance companies, fell within the scope of the  exemption granted to “services relating to insurance transactions carried out by brokers and insurance intermediaries“. The Court held that this activity was not exempted because Taksatorringen did not have the power to enter into commitments on behalf of the insurance company.

Subsequently, it was accepted an indirect relationship between intermediary and insurer,  as is the case of subagent. In this regard it is worth mentioning case C-472/03, Arthur Andersen & Co. Accountants c.s. (see also C-124/07, Beheer). The case concerned the VAT treatment of a series of collaborative activities in the management and execution of insurance contracts. The activities included: the acceptance of applications for insurance, the handling of amendments to contracts and premiums, the issuing, management and rescission of policies, the management of claims, the setting and paying of commission to insurance agents, the organisation and management of information technology, the supply of information to UL and to insurance agents and the drafting of reports for insured parties and third parties, such as the Fiscale Inlichtingen- en Opsporingsdienst (Tax inquiry and inspection service). The Court recognized the exemption even in the presence of indirect representation of the insurer. Therefore, it was crucial, for recognizing the status of intermediary, the power to seek out and connect customers with the insurer, instead of the power to bind the insurer. In this case, the Court denied the VAT exemption because Arthur Andersen dealt with the processing of insurance applications without carrying out any customer research.

Lastly, in the aforementioned case C-40/15, Aspiro SA, the Court clarified that the two conditions are required to apply the exemption:

  • «in the first place, the service provider must have a relationship with both the insurer and the insured party (…). That relationship can be only indirect if the provider is a subcontractor of the broker or agent (..);
  • in the second place, its activities must cover the essential aspects of the work of an insurance agent, such as the finding of prospective clients and their introduction to the insurer».

As said, in case C-907/19 the grant of a licence to use an insurance does not meet these two conditions.

As regards Italian law, in relation to VAT exemption of insurance services, it is worth mentioning the Italian provisions on insurance, reinsurance and insurance intermediation.

The Italian Civil Code regulates the insurance contract in book IV, title III, chapter XX (Articles 1882-1932). Insurance is defined as the contract whereby the insurer, against the payment of a premium, undertakes to refund the insured for the damage suffered by a claim, or to pay a capital or an annuity upon the occurrence of an event regarding the human life.

In relation to the reinsurance contract, Article 1928 of the Italian Civil Code establishes that general reinsurance contracts relating to a number of insurance relationships must be evidenced in writing. There  is not definition of this contract.

Conversely, the service of insurance mediation, according to Article 106 of Legislative Decree no. 209 of 7 September 2005, consists of:

  • providing advice, according to Article 1(1)(m-ter), on insurance contracts;
  • proposing insurance contracts or carrying out other services for their conclusion;
  • concluding such contracts or assisting, in particular in case of a claim, in the administration and execution of such contracts, including the provision of information on one or more insurance contracts according to criteria chosen by the customer through a website or by other means and to the ranking of insurance products, including price and product comparison or discount on the premium of an insurance contract, if the customer is able to directly or indirectly conclude an insurance contract through a website or by other

The mentioned Article 106, Legislative Decree no. 209/2005, provides also a definition of reinsurance distribution activities. They consist of advising on reinsurance contracts within the meaning of Article 1(1)(m-ter), proposing reinsurance contracts or offering services for their conclusion, concluding such contracts or assisting in their administration and performance, particularly in the event of a claim.

In relation to the VAT treatment, Article 10 of Presidential Decree no. 633/72 lists the exempted operations, including insurance, reinsurance and insurance brokerage services.

The main issue is the identification of the conditions for the recognition of the activity of insurance mediation (from which depends the application of the VAT exemption). In this regard, it is worth mentioning resolution no. 190/E of 8 May 2008 concerning the activity of a permanent establishment of an insurance company based in Germany. In this case, the permanent establishment was involved in the management and processing of claims on behalf of the foreign insurance company that had appointed it. With regard to the VAT regime, the Tax Authorities stated, according to the aforementioned Article 106 of Legislative Decree no. 209 of 7 September 2005, that the company was involved in the event of a claim and not  in the promotion or conclusion of insurance contracts on behalf of the foreign companies. Therefore, in this case the Tax Authorities acknowledged the application of VAT. A more precise definition of the content of insurance mediation is provided by Resolution no. 267/E of 30 October 2009. The Tax Authorities stated that the exemption referred to in Article 10(9) of Presidential Decree 633/1972 applies to the following services:

  • advice and assistance in the presentation and proposal of insurance products;
  • collaboration in the management or execution, particularly in the event of claims, of insurance contracts.

In light of the above, the Tax Authorities have acknowledged the application of the exemption for the activities of analysis and subsequent coverage of risks as well as for the collaboration in the management of claims and recovery of damages. More recently, the resolution no. 63/E of 5 October 2020, concerning the VAT treatment of claims management services, clarified the scope of the exemption according to the most recent EU case law. Therefore, in accordance with EU case law, the Tax Authorities have stated that an activity may be qualified as insurance mediation if two requirements are met. Firstly, the link of insurance intermediary must be with both the insurer and the insured; secondly, the service provided must include essential aspects of the insurance mediation, such as researching potential clients and putting them in contact with the insurer.

Finally, with particular regard to national case law, it is worth mentioning a strong contrast in relation to the VAT treatment of co-insurance operations. Co-insurance exists when the same risk is covered on a quota basis by several insurers. In this case, the insured enters into a contract with all the insurers. In particular, Article 1911 of the Italian Civil Code envisages that if the same insurance of risks relating to the same facts is divided among several insurers by specific quotas, each insurer is bound to pay the insured an indemnity only in proportion to its respective quota, even in case of only a  single contract signed by all the insurers. National Case law is predominantly oriented  to consider the activities carried out by the delegated co-insurer exempted from VAT. Nevertheless, the Court of Cassation recently excluded the exemption from VAT in relation to the services provided by the delegated co-insurers, noting that they do not carry out insurance mediation activities (see Escalar G., Per l’applicabilità dell’esenzione da IVA alle attività di coassicuratrice  delegataria, in Corriere tributario, 2018, 39, 2995).

 

5. The case has revealed the legal uncertainty regarding the application of the VAT exemption to insurance services. In particular, the case note has focused on the difficulties in identifying the exact boundaries of the VAT exemption in relation to insurance mediation. That is also the reason why the EU institutions are discussing a possible revision of the VAT treatment of insurance and financial services. To this aim, the European Commission ran a public consultation between 8 February and 3 May 2021 in order to gather the views of stakeholders and public authorities of the Member States on the current VAT rules for financial and insurance services and their functioning as well as on possible changes to these rules. This consultation is named “VAT rules for financial and insurance services today and tomorrow”. The European Commission has already issued a short factual summary that shows a considerable level of interest on the public consultation. In a later “synopsis report”, the EU Commission will conclude on all consultations carried out and feedback received during the project. In particular, the synopsis report will contain an analysis of all contributions to the public consultation (including responses to open questions and position papers uploaded in addition to the questionnaire). It will also incorporate the feedback provided at the start of the project to the roadmap of the combined evaluation and impact assessment – and a review of other position papers submitted by stakeholders to the Commission. Finally, it will reflect findings from regular meetings with stakeholders and Member States alike. The analysis of all these consultations eventually feeds into the preparation of an Impact Assessment presenting the overall analysis, findings and options for the review of VAT rules for financial and insurance services. The synopsis report will be added as specific annex on stakeholder consultations to that Impact Assessment. As announced in the “Action plan for fair and simple taxation supporting the recovery strategy” of 15 July 2020, this process is aimed at the presentation of a legislative proposal in 2021 to amend the VAT rules on financial and insurance services. The revision aims, in particular, to overcome the issues of lack of VAT neutrality, legal uncertainty as well as regulatory complexity. The present case note has highlighted these two latter aspects.

REFERENCES

 

Bargagli M. – Cesarano C., La prestazione unica ai fini IVA nel settore assicurativo, in L’IVA, 2021, no. 6, 24 ss.

Cagnoni D. – D’Ugo A. – Germani A., Profili IVA dell’attività di liquidazione dei sinistri nelle compagnie assicurative, in il fisco, 2016, no. 28, 2726 ss.

Centore P., La via romana verso l’esenzione IVA delle attività assicurative, in Corriere tributario, 2018, no. 34, 2611 ss.

Corso R. – Maspes P., Nuovi chiarimenti dell’Agenzia delle entrate sulla gestione dei sinistri: non avrai altra sentenza al di fuori di “Aspiro”?, in il fisco, 2020, no. 42, 4029 ss.

De Petris G., Accessorietà delle prestazioni ai fini iva e criteri distintivi dell’unicità dell’operazione economica: luci e ombre di un recente intervento della Corte di Cassazione, in Diritto e pratica tributaria, 2019, no. 3, 1288 ss.

Escalar G., Per l’applicabilità dell’esenzione da IVA alle attività di coassicuratrice delegataria, in Corriere tributario, 2018, 39, 2995 ss.

Fransoni G., Prestazioni di intermediazione esenti ai fini dell’imposta sul valore aggiunto e “comparatori di prezzo”, in Rassegna Tributaria, 2020, 2, 342 ss.

Garbarino C. – Allevato G., The global architecture of financial regulatory taxes, in Michigan Journal of International Law, 2015, 626 ss.

Portale R., IVA-imposta sul valore aggiunto – 2019, Milano, 2019

Postal M. – E. Gobbi E., Commento all’art. 10 del T.U. IVA – operazioni esenti dall’imposta, in Plusplus 24, Fisco, 2021

Raggi N., L’intermediazione assicurativa nella giurisprudenza della Corte di Giustizia, in Diritto e Pratica Tributaria, 2007, 6, I, 1077 ss.

Rossi B. – Coaloa F.T., I servizi di liquidazione sinistri scontano l’IVA, in Eutekne.Info, 25 marzo 2016

Santacroce B., L’imposta sul valore aggiunto, Milano, 2020

 

Scarica il commento in formato pdf

Tag:, , , , , , , , , , , , ,