On March 17, 2016, the ECJ issues its decision in the case C-40/15 (Aspiro) related to the applcation of the VAT Exemption on ”Insurance Transactions”.
Context: Reference for a preliminary ruling — Taxation — Value added tax — Directive 2006/112/EC — Article 135(1)(a) — Exemption for insurance — Definition of ‘insurance’ transactions and of ‘related services performed by insurance brokers and insurance agents’ — Claims settlement services provided by and on behalf of an insurer
Article in the EU VAT Directive
Article 135 (Exemption)
1. Member States shall exempt the following transactions:
(a) insurance and reinsurance transactions, including related services performed by insurance brokers and insurance agents;
Facts
- Aspiro, a company established in Warsaw, is liable to VAT. Aspiro supplies, in the name and on behalf of an insurance company, on the basis of a contact concluded with that company, comprehensive services for the settlement of insurance claims. Aspiro is remunerated in accordance with a flat rate, depending on the type of claim concerned.
- The referring court makes it clear that Aspiro is neither an insurance company, nor an insurance broker, nor an insurance agent. In particular, Aspiro does not have a liability towards the insured persons. Under the contract, Aspiro performs the following 18 tasks, but delegates some of them to an external subcontractor:
- receiving insurance claims;
- registering claims in an IT system, including updating data throughout the claims procedure;
- establishing the reasons for and circumstances of the claims, including inspecting the insured asset and place where damage occurred, preparing the required documentation and taking the necessary steps to establish liability, the amount of damage suffered and amount of compensation, and all other services due to the insured person;
- conducting correspondence, as necessary, with the client, including fulfilling notification obligations in relation to injured or insured persons and exchanging correspondence with other entities involved in the process of settling the claims;
- settling substantive claims, analysing the assembled documents and taking substantive decisions on claims;
- making technical assessments and any additional damage assessments in the case of motor insurance claims;
- producing photographic documentation showing the extent of damage;
- producing copies of the documents required when making a claim;
- drawing up the comprehensive documentation necessary for the purposes of processing a claim for compensation or other services;
- archiving claim documents;
- providing insured persons with detailed information on the claims settlement procedure and their rights;
- conducting proceedings, other than court proceedings, for recovery against third parties;
- considering appeals and complaints in respect of claim settlements;
- making claim files available to the insured person concerned for inspection;
- drawing up transfers and remittances in the computer system;
- sending and receiving correspondence relating to claims settlement;
- preparing, at the client’s request, a report on the handling of the claim;
- any other activity required in order to settle claims arising under insurance contracts, related to the activities referred to above.
- Aspiro lodged a request with the Finance Minister for an individual written interpretation of the Law on VAT to establish whether the claims settlement services that it provided were exempt.
- According to Aspiro, the services that it performs, in the name and on behalf of an insurance company, on the basis of a mandate, constitute insurance services, within the meaning of Polish law. They form a distinct whole, entirely related to the business of that insurance company and indispensable to it, which does not pursue a purpose in itself. Aspiro submits that those services constitute a single supply of services, of complex nature, which must be exempted as a whole.
- In his written interpretation of 31 August 2012, the Finance Minister only partially confirmed Aspiro’s position. The Finance Minister considered that only the fifth category of services, namely settling substantive claims, including the analysis of the relevant documents and the decision as to whether the claim was covered, was an insurance activity. He found that all the other services performed by Aspiro were linked to the settlement of claims, but did not constitute insurance services. According to the Minister, they did not benefit, therefore, from the exemption, because they were of a technical and administrative nature and could be performed in the context of activities other than insurance services.
- Aspiro brought an action against that interpretation before the Wojewódzki Sąd Administracyjny (Regional Administrative Court, Warsaw; ‘WSA’). That court upheld the action and annulled the interpretation, finding that the Polish legislature had intended the exemption to extend beyond what was provided for by the VAT Directive, and held that the Finance Minister could not rely on the stricter terms of that directive against the taxable person.
Questions
Must Article 135(1)(a) of the VAT Directive be interpreted as meaning that services such as those in the present case, which are supplied on behalf of an insurance undertaking by a third party — in the name and on behalf of the insurer — which has no legal relationship with the insured person, are covered by the exemption referred to in that provision?
AG Opinion
Settlement of insurance claims which is carried out in the name and on behalf of an insurer by a third party which has no contractual relationship with the insured person and whose activity does not include the finding of prospects and their introduction to the insurer with a view to the conclusion of insurance contracts does not come under the exemption referred to in Article 135(1)(a) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax.
Decision
Article 135(1)(a) Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that claims settlement services, such as those at issue in the main proceedings, provided by a third party in the name and on behalf of an insurance company, do not fall within the exemption laid down by that provision.
Source
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