European Court decrees insurer services not VAT-exempt

The European Court of Justice has decreed that services provided to insurance companies, such as claims handling and IT support, should not be VAT-exempt.

The decision was made in a ruling on the liability of back-office services provided by Accenture Insurance Services to Royal Nederland Verzekeringasgrope, a Dutch subsidiary of the insurance group Allianz.

According to the judgement, these activities "do not constitute the performance of services relating to insurance transactions carried out by an insurance broker or an insurance agent" and should not be exempt from VAT.

Insurers have been able to avoid paying VAT on services such as claims management or independent engineers’ inspections by giving outsourced providers ‘delegated authority’ to handle business without reference to the insurer.