The tax authorities have just commented on the conditions for the exemption from VAT of insurance and reinsurance transactions and the provision of services related to these transactions carried out by insurance brokers and intermediaries (BOFiP news of April 27, 2022).
2 exemption conditions for brokerage ¶
Insurance and reinsurance operations as well as the services relating to these operations carried out by insurance brokers and intermediaries are in principle exempt from VAT (2° of article 261 C of the CGI).
For the services of brokers and intermediaries to benefit from the exemption, the following 2 conditions must be met:
- The insurance broker or intermediary must maintain a link with the insurer and with the insured: this relationship may be indirect if the service provider is a subcontractor of the broker or intermediary. This is particularly the case when the service provider exercises its activity in the name and on behalf of an insurer and is in contact with the insured. The exemption also applies when the brokerage gives rise to the intervention of several brokers and to a sharing of the remuneration.
- The insurance broker or intermediary must perform the services characteristic of an insurance intermediary. This must involve finding prospects and putting them in touch with the insurer with a view to concluding insurance contracts.
The tax administration thus incorporates in its documentation the case law of the Court of Justice of the European Union (judgment of March 17, 2016, case C-40/15, Aspiro SA).
Services not benefiting from the exemption ¶
The tax administration also specifies that support or management services, more commonly known as “back-office”, do not benefit from the VAT exemption when they are not related to an insurance or reinsurance.
This is particularly the case when a service provider who does not act as an insurance broker or intermediary limits itself to settling claims in the name and on behalf of an insurer, or limits itself to placing at its a computer system or to provide it with accounting and financial expertise.
Conversely, if these services are carried out by an insurance broker or intermediary and they are linked to insurance or reinsurance transactions, they benefit from the VAT exemption provided for in 2° of the article 261 C of the CGI.
Source: BOFiP news of April 27, 2022
VAT – Exemption for insurance and reinsurance transactions and services relating to these transactions carried out by insurance brokers and intermediaries