Opinion of the Advocate General — ECLI:EU:C:2020:380
Date: 2020-05-14
Language of the case: English
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: United Kingdom

summary of the main arguments put to the Court of Appeal, by way of
further background.
The Trustees' Arguments in Summary
34. In summary, the Trustees' case is that:
a. The supply of insurance is exempt from VAT as a matter of EU law. The
exemption for "insurance transactions" has direct effect between taxpayers and
HMRC.
b. The provision of PFM services is to be treated as a class of insurance business
and/or an insurance activity for the purposes of the l " Life Directive and the
regime created by the EU insurance directives. Thus, such services are deemed to
be an insurance activity for EU law purposes. At the very least, the provision of
PFM Services by an Insurer is indeed to be treated as or deemed to be
"insurance" as a matter ofEU law.
c. When considering the meaning and scope of the VAT exemption for "insurance
transactions", that notion needs to be given an autonomous meaning which is
applicable across all Member States. As the Court of Justice has consistently
stated (see CPP (C-349/96, EU:C:1999:93), at paragraph 18, and Skandia (C-
240/99 EU:C:2001:140), at paragraph 30), the starting point in any analysis of
what is to constitute insurance is the regime in the insurance directives, including
the l " Life Directive (as amended). Therefore, one should adopt the same
autonomous concept of "insurance" as employed in the insurance directives,
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namely one which treats PFM Services as a form of insurance activity or class of
insurance business.
d. Once the supply is regarded as a form of insurance transaction then it is exempt
regardless of the status of the supplier. The supply of PFM Services to the
Trustees should therefore have been mandatorily exempt in the UK.
e. In the alternative, given that the provision of PFM Services by an Insurer is to be
treated as or deemed to be "insurance" as a matter of EU law, the application of
the principle of fiscal neutrality would lead to the same result. Thus, if such
services by Insurers are exempt from VAT then the provision of the same or
similar PFM Services by Non-Insurers should also be exempt.'
HMRC's Arguments in Summary
35. In summary, HMRC contend as follows:
a. The PFM services supplied by Non-Insurers were not "insurance transactions"
within the meaning of the exemption in Article 13B(a) of the Sixth Directive and
Article 135(1)(a) of the VAT Directive.
b. That term is an independent concept in EU law, and like all exemptions is to be
interpreted strictly." The transactions at issue lack the essential features of
insurance transactions. In a series of eight cases starting with CPP, the Court has
repeatedly explained that for the purpose of the VAT exemption: "the essentials
of an insurance transaction are, as generally understood, that the insurer
undertakes in return for the payment ofa premium, to provide the insured, in the
event of materialisation of the risk covered, with the service agreed when the
contract was concluded." 5
3 It is accepted by the Trustees that if the provision of PFM Services by Insurers were not properly
exempt, then fiscal neutrality is irrelevant and that the Trustees cannot rely upon what will be, on this
hypothesis, HMRC's prior unlawful exemption of such PFM Services by Insurers.
4 CPP, C-349/96, EU:C:1999:93, para 15, Skandia, C-240/99 EU:C:2001:140, para 32.
5 CPP, C..349/96, EU:C:1999:93, para 17; Skandia, C-240/99 EU:C:2001:140, para 37;
Taksatorringen, C-8/01, EU:C:2003:621, para 39; Commission v Greece, C-13/06, EU:C:2006:765,
para 10; Swiss Re Germany Holding, Case C-242/08, EU:C:2009:64, para 34; BGZ Leasing, C-
12
c. In at least two of those cases, the Court has held that where a party carries out all
of the functions of an insurer except the assumption of risk pursuant to a contract
of indemnity, the transactions in question were not insurance transactions for the
purposes of the VAT exemption."
d. Those essential features are not present in the transactions in this case: it is
common ground between the parties that the providers of the PFM Services do
not provide any indemnity from risks to the Trustees and are not in a contractual
relationship with any person whose risk is covered by any insurance, i.e. an
insured person. Thus, the transactions at issue do not fall within the scope of the
exemption.
e. The case-law relied upon the Trustees does not alter this analysis. The Court's
reference to the 1st Non-Life Directive (as amended) in CPP was in the context of
considering whether "insurance" could include the provision of services, in the
event of accident/loss, consisting of benefits in kind rather than provision of a
sum of money. The 1si Life Directive extends to "operations" irrespective of
whether they involve "insurance transactions" (within the meaning of the VAT
Exemption) so as to enable to enable an authorised Insurer to carry out that type
of activity as part of its insurance business. In Skandia, the Court rejected the
argument that "insurance transaction" was enough to encompass regulated
activities which do not have the "essential characteristics" identified in CPP.
f.There are no cases in which the Court has departed from the "essential" meaning of
insurance transaction, as identified in CPP, whether by reference to the insurance
directives, or otherwise.
g. The scope of the insurance exemption is governed exclusively and exhaustively
by the VAT Directives. It cannot be extended by reference to the principle of
fiscal neutrality: Aspiro at paragraph 31. Nor may a person rely, in support of his
claim, on an unlawful act committed in favour of a third party: Rank Group, C-
224111, EU:C:2013:15, para 58; Mapjre, C-584/13, EU:C:2015:488, para 28; Aspiro, C·40/15,
EU:C:2016:172, para 22.
6 Skandia, C-240/99, EU:C:2001:140; Aspiro, C-40/1S ECLI:EU:C:2016:172.
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259/10 and C-260/10, EU:C:2011 :719, paragraph 62 (and as accepted by the
Trustees).
The Reasons Wby a Preliminary.Ruling is Sought
36. The Court of Appeal considers that the interpretation and application of Article
135(1)(a) of the VAT Directive and its relationship to the 1st Life Directive (as
amended) in the circumstances of this case is not acte clair.
37. For these reasons, the Court of Appeal considers that a preliminary ruling from the
Court of Justice on the question set out below is necessary before it can rule on the
appeal.
The Question Referred
38. Are supplies of such PFM Services as are provided to the Trustees by (a) Insurers
and/or (b) Non-Insurers "insurance transactions" within the meaning of Article 135(1)(a)
of the VAT Directive (formerly Article 13B(a) of the Sixth Directive)?
14
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ORDER
Copies to:
Chancery Division - Revenue List
DX 160040
Strand 4
HM Revenue & Customs Solicitor'S Office
Bush House
1st Floor North Sw Wing
Strand
London
WC2B4RD
Ref: STUARTHATHAWAY
Pricewaterhouse Coopers LLP
One Embankment Place
London
WC2N6RH
Ref: TL44/DSAlCEM
•This order was drawn by A Marie Smith (Associate) to whom all enquiries regarding this order should be made. When
communicating with the Court please address correspondence to A Marie Smith, Civil Appeals Office, Room E307, Royal Courts of
Justice, Strand.London WC2A 2LL (DX 44450 Strand) and quote the Court of Appeal reference number. The Associate's telephone
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