Ruling 588: Sums agreed to compensate damage are outside scope

Where the purpose of the agreement is the determination of the damage to be compensated, this sum of money is not causally linked to any provision of services or a supply of goods for which it may represent the consideration but performs an exclusively compensatory function, therefore it is excluded from the scope of VAT due to lack of objective prerequisite.

The matter concerned three companies, which had stipulated a “Trilateral Agreement’, under which one (Delta) undertook, among other things, to distribute the insurance policies issued by the second (Alfa), with the intermediation of the third ( Beta) Delta, following the incorporation into another company, was no longer able to execute the contractual agreements. The three subjects therefore decided to start a confrontation at the end of which a sum was established that Delta should have paid to Beta and Alfa as compensation for the damage suffered.

Note from the editors: it is interesting to see if this is in line with the recent ECJ Apcoa case, which suggests that if the compensation of damages is arranged in the service agreement, it’s payment would be considered as part of the remuneration of that service.

Sources:

• ipsoa.it
• gov.it
• eutekne.info

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