The tax administration has just commented on the conditions for exemption from VAT on insurance and reinsurance transactions and the provision of services related to these transactions carried out by brokers and insurance intermediaries (actualitate BOFiP din 27 aprilie 2022).
2 conditions for exemption for brokerage ¶
Insurance and reinsurance operations as well as the services related to these operations carried out by brokers and insurance intermediaries are in principle exempt from VAT (2 ° of article 261 C of the CGI).
For court services and exempt intermediaries, the following 2 conditions must be met:
- The insurance broker or intermediary must maintain a link with the insurer and the insured: this relationship may be indirect and the claimant is a subcontractor of the broker or intermediary. This is particularly the case when the claimant carries out his 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 multiple brokers and a share of the remuneration.
- The insurance broker or intermediary must perform the characteristic benefits of an insurance intermediary. This involves looking for prospects and linking them to 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 17 March 2016, case C-40/15, Aspiro SA).
Non-exempt services ¶
The tax administration also states that support or stewardship services, more commonly referred to as “back-office”, do not benefit from a VAT exemption when they are not involved in an insurance or reinsurance transaction.
This is especially the case when a claimant who does not act as an insurance broker or intermediary merely settles claims in the name and on behalf of an insurer, or merely a computer system is available or accounting and financial expertise is provided.
Conversely, if these services are provided by an insurance broker or intermediary and are linked to insurance or reinsurance transactions, they benefit from the VAT exemption provided for in Article 2 (2). 261 C of the CGI.
Source: Actualité BOFiP from April 27, 2022
VAT – Exemption from insurance and reinsurance transactions and services related to such transactions by insurance brokers and intermediaries