On 17 March 2016, the ECJ (in Minister Finansów v Aspiro SA, formerly BRE Ubezpieczeniasp. z o.o.2) ruled that claim settlement and other services provided by a Polish company in the name and on behalf of an insurance company did not benefit from the VAT exemption for insurance-related services.
This is the latest in a series of decisions that highlight the narrow scope of the VAT “insurance” exemption. See here and here for our commentary on two recent UK decisions that also illustrate the limitations of the exemption.
In this case the company, under a contract with the insurer, carried out a comprehensive range of services in connection with the settlement of claims. These services included the receipt and registration of claims, investigating the claim, taking steps to establish liability and amount of damage suffered, settling claims, conducting proceedings for third party recovery and considering appeals and complaints in respect of settlements.
The company argued that its services were indispensable to the insurer and were entirely related to the insurer’s business. Therefore the services should be exempt as “insurance services” within the scope of the exemption in the EU VAT Directive3.
The Court had little difficulty in finding that the company did not make supplies of “insurance transactions”. Although the company had a contractual relationship with the insurer, it had no such relationship with the insured person.
The Court then considered whether the company provided “insurance related” services. The VAT exemption, which must be interpreted strictly, states that only insurance related services performed by insurance brokers and agents can fall within the exemption. The Court held that the services provided could not fall to be treated as such because the company’s activities did not involve the bringing together of insurer and insured.
The UK currently does exempt the provision of claims handling services, but this decision may lead to a change in legislation.
The decision can be found here.