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Taxation

Background The VAT rules for financial and insurance services are back on BIPAR’s EU Directive on Mandatory Disclosure of Reportable Tax Arrangements
agenda since the Commission is currently analysing the functioning of the
provisions of the VAT Directive and the impacts of possible future changes On 25 June 2018, a new EU Directive (Council Directive 2018/822/EU -DAC6-) entered into force which introduces an obli-
Financial and insurance services are to the existing VAT rules. In particular, the analysis focuses on the rules gation on qualifying “intermediaries” and relevant taxpayers to disclose to national tax authorities certain cross-border
today exempt from VAT as provided in relating to the VAT exemption for certain financial and insurance servic- tax arrangements perceived as potentially aggressive. Such cross-border tax arrangements are considered reportable
es, the VAT opt-in regime for financial service providers, the cost-sharing based on specific characteristics which indicate a risk of tax avoidance or evasion.
the EU VAT Directive which dates back
arrangements, the rules for proportional deduction, and the VAT groups. For the purposes of this Directive, intermediary means “any person that designs, markets, organizes or makes available
to 1977. for implementation” a reportable cross-border arrangement or any person that “provides, directly or by means of other
On 27 November 2007, the In recent years, there have been problems in ensuring a clear and con- persons, aid, assistance or advice” in relation to such arrangements. Consequently, financial and insurance interme-
sistent application of the VAT exemption across the EU countries which diaries who may design, market or even provide assistance/advice on potentially aggressive tax arrangements will be
European Commission adopted two
led to a significant growth in litigation with the European Court of Justice obliged to report it to the tax authorities.
proposals for a new Directive and a
(ECJ) being asked to clarify the correct interpretation of the legislation. The
new Regulation with the objective ruling of the Aspiro case (C-40/15) has had a great impact on the inter- The Directive shall start to apply on 1 July 2020. However, reportable cross-border arrangements the first step of which
of simplifying and updating the pretation of “activities of insurance brokers and insurance agents” for the is implemented between the date of entry into force -25 June 2018- and the date of application of the Directive -1 July
purposes of the VAT exemption laid down in the VAT Directive. Accord- 2020- must also be reported.
current VAT rules for financial and
ing to the Aspiro case, such activities should be connected with the core
insurance services. However, since activity of a broker or agent, namely the finding of prospective clients and

the EU Member States failed to reach a their introduction to the insurer with a view to the conclusion of insurance In response to the difficulties that businesses and EU Member States are facing due to the coronavirus (COVID-19) pan-
contracts. In addition, the Skandia case (C-7/13) had also an impact on the demic, the Commission proposed on 8 May 2020 to postpone the deadlines for information reporting and exchanging
unanimous agreement, the European
insurance business model as it considered the transactions between the under the DAC6. However, the Member States were unable to reach an agreement on this original proposal. In response
Commission decided in 2016 to
head office and the company branch as taxable transactions which are to the Commission proposal, the Member States (COREPER II) agreed that each Member State will have the option to
withdraw the two proposals. provided by a separate taxable person. Moreover, decisions in the DNB defer the reporting dates as follows:

Since the VAT exemption dates from Banka case (C-326/15) and Aviva case (C-605/15) also have the potential to • Postpone to 1 January 2021 the date for the beginning of the 30-day period for reporting cross-border arrangements.
affect the sector in relation to the provision stipulating the supply of ser-
1977, the legislation has not kept
vices by independent groups of persons (IGP) whose members carry out • Postpone to 28 February 2021 the date for the reporting of the cross-border arrangements that became reportable
abreast of latest developments and activities under the public interest exemption (e.g. education, healthcare), between 25 June 2018 and 30 June 2020.
the recent judgments of the Court of excluding thereby the financial sector from benefitting thereof. Previously,
it had been understood that this provision can cover services provided by • Change the date for the first exchange of information on reportable cross-border arrangements from 31 October
Justice of the EU (CJEU) have shown
cost-sharing groups (CSGs) to their members that are directly necessary 2020 to 30 April 2021.
that there is a need to adapt the VAT
for the VAT exempt activities of these members, regardless of the type of
Directive to current market realities VAT exempt or out of scope activities conducted by the members.
in order to ensure legal certainty and The European Parliament is due to give its opinion by 30 June 2020.
BIPAR has a Working Party on Taxation and closely monitors the VAT regu-
establish a level-playing field on VAT
latory and case-law developments in relation to financial and insurance
for all financial service providers. intermediation services at EU level and at Member-State level.

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