VAT on insurance and financial services * European Parliament legislative resolution of 25 September 2008 on the proposal for a Council directive amending Directive 2006/112/EC on the common system of value added tax, as regards the treatment of insurance and financial services (COM(2007)0747 — C6-0473/2007 — 2007/0267(CNS))
Date: 2008-09-25
Institutions: Committee on Economic and Monetary Affairs, European Parliament
Subjects: VAT, amendment, consultation procedure, drafting of EU law, financial services, insurance, provision of services, resolution of parliament, tax exemption, tax harmonisation, tax relief








CE2010008EN.01039601.xml










14.1.2010   


EN


Official Journal of the European Union


CE 8/396





Thursday 25 September 2008VAT on insurance and financial services *
P6_TA(2008)0457
European Parliament legislative resolution of 25 September 2008 on the proposal for a Council directive amending Directive 2006/112/EC on the common system of value added tax, as regards the treatment of insurance and financial services (COM(2007)0747 — C6-0473/2007 — 2007/0267(CNS))
2010/C 8 E/49
(Consultation procedure)

The European Parliament,
having regard to the Commission proposal to the Council (COM(2007)0747),
having regard to Article 93 of the EC Treaty, pursuant to which the Council consulted Parliament (C6-0473/2007),
having regard to Rule 51 of its Rules of Procedure,
having regard to the report of the Committee on Economic and Monetary Affairs (A6-0344/2008),






1.


Approves the Commission proposal as amended;










2.


Calls on the Commission to alter its proposal accordingly, pursuant to Article 250(2) of the EC Treaty;










3.


Calls on the Council to notify Parliament if it intends to depart from the text approved by Parliament;










4.


Asks the Council to consult Parliament again if it intends to amend the Commission proposal substantially;










5.


Instructs its President to forward its position to the Council and the Commission.










TEXT PROPOSED BY THE COMMISSION


AMENDMENTS





Amendment 1






Proposal for a directive — amending act


Recital 1











(1)


The financial service industry makes an important contribution to growth, competitiveness and job creation but can fulfil its role only under neutral conditions of competition in an internal market. It is necessary to provide a framework which provides 
legal certainty as
 to the value added tax (VAT) treatment of financial products and their marketing and management.












(1)


The financial service industry makes an important contribution to growth, competitiveness and job creation but can fulfil its role only under neutral conditions of competition in an internal market. It is necessary to provide a framework which provides 
such neutral conditions in regard
 to the value added tax (VAT) treatment of financial products and their marketing and management.









Amendment 2






Proposal for a directive — amending act


Recital 2











(2)


The existing rules governing the exemptions from VAT for financial and insurance services laid down in Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax are out of date and have led to uneven interpretation and application. The complexity of the rules and the variation in administrative practices generates legal uncertainty for economic operators and tax authorities. This uncertainty has led to considerable litigation and has increased the administrative burden. It is therefore necessary to clarify which insurance and financial services are exempt and thereby create greater legal certainty and reduce the administrative burden for operators and authorities.












(2)


The existing rules governing the exemptions from VAT for financial and insurance services laid down in Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax are out of date and have led to uneven interpretation and application. The complexity of the rules and the variation in administrative practices generates legal uncertainty for economic operators and tax authorities 
and fails to secure a level playing field in the EU
. This uncertainty has led to considerable litigation and has increased the administrative burden. It is therefore necessary to clarify which insurance and financial services are exempt and thereby create greater legal certainty 
and a level playing field in the EU
 and reduce the administrative burden for operators and authorities.









Amendment 3






Proposal for a directive — amending act


Recital 5











(5)


Insurance services and financial services require similar forms of intermediation. It is therefore appropriate for intermediation in insurance and intermediation in financial services to be treated in the same way.












(5)


Insurance services and financial services require similar forms of intermediation. It is therefore appropriate for intermediation in insurance and intermediation in financial services to be treated in the same way
, including intermediation by an agent who has neither a contractual relationship nor any other direct contact with any of the parties to an insurance or financial transaction to whose conclusion the agent has contributed. In such cases the tax exemption should uniformly cover all activities that are typical of an insurance or financial services agent, including all activities preparatory and subsequent to concluding a contract
.









Amendment 4






Proposal for a directive — amending act


Recital5a (new)





 










(5a)





It is appropriate for activities constituting management of investment funds to continue to fall within the exemption if carried out by third-party economic operators.










Amendment 5






Proposal for a directive — amending act


Recital 7











(7)


Suppliers of insurance and financial services are increasingly able to allocate input VAT on costs incurred by them precisely to the output to be taxed. Where the services they supply are fee-based, they can establish the taxable amount for these services easily. It is therefore appropriate to extend the possibility to opt for taxation for such operators.












(7)


Suppliers of insurance and financial services are increasingly able to allocate input VAT on costs incurred by them precisely to the output to be taxed. Where the services they supply are fee-based, they can establish the taxable amount for these services easily. It is therefore appropriate to extend the possibility to opt for taxation for such operators
, preventing any double taxation concerns that may arise by coordinating such taxation with national taxes on insurance and financial services
.









Amendment 6






Proposal for a directive — amending act


Recital 8a (new)





 










(8a)





In adopting measures under Directive 2006/112/EC governing the right of option for taxation, the Council should ensure the uniform application of such rules in the internal market. Pending the adoption of such rules by the Council, Member States should be able to lay down the detailed rules governing the exercise of the option. Member States should notify the Commission of draft measures in this regard six months before their adoption. During that period, the Commission should assess the draft measures and issue a recommendation.










Amendment 7






Proposal for a directive — amending act


Article 1 — point 1 — point a


Directive 2006/112/EC


Article 135 — paragraph 1 — point a











(a)


insurance 
and
 reinsurance;












(a)


insurance
, including
 reinsurance;









Amendment 8






Proposal for a directive — amending act


Article 1 — point 1 — point a


Directive 2006/112/EC


Article 135 — paragraph 1 — point d











(d)


exchange of currency 
and
 provision of cash;












(d)


exchange of currency
,
 provision of cash 
and cash claims transactions
;









Amendment 9






Proposal for a directive — amending act


Article 1 — point 1 — point a


Directive 2006/112/EC


Article 135 — paragraph 1 — point e











(e)




supply of
 securities;












(e)




transactions concerning trading in
 securities;









Amendment 10






Proposal for a directive — amending act


Article 1 — point 1 — point a


Directive 2006/112/EC


Article 135 — paragraph 1 — point g a (new)





 










(ga)





derivatives of all kinds;










Amendment 11






Proposal for a directive — amending act


Article 1 — point 1 — point b


Directive 2006/112/EC


Article 135 — paragraph 1a





1a.   The exemption provided for in 
points (a) to (e)
 of paragraph 1 shall apply to the supply of any constituent element of an insurance or financial service, which constitutes a distinct whole and has the specific and essential character of the exempt service.


1a.   The exemption provided for in 
points (a) to (f)
 of paragraph 1 shall apply to the supply of any constituent element of an insurance or financial service, which constitutes a distinct whole and has the specific and essential character of the exempt service.





Amendment 12






Proposal for a directive — amending act


Article 1 — point 2


Directive 2006/112/EC


Article 135a — point 1











(1)


‘insurance 
and reinsurance
’ means a commitment whereby 
a person is
 obliged, in return for a payment, to provide 
another person
, in the event of materialisation of a risk, with an indemnity or a benefit as determined by the commitment;












(1)


‘insurance’ means a commitment whereby 
one or more persons is or are
 obliged, in return for a payment, to provide 
one or more other persons
, in the event of materialisation of a risk, with an indemnity or a benefit as determined by the commitment;









Amendment 13






Proposal for a directive — amending act


Article 1 — point 2


Directive 2006/112/EC


Article 135a — point 8 — introductory part











(8)


‘
supply of
 securities’ means the 
supply
 of tradable instruments other than an instrument establishing title to goods or to the rights referred to in Article 15(2), representing financial value and reflecting any one or more of the following:












(8)


‘
transactions concerning trading in
 securities’ means the 
sale
 of tradable instruments other than an instrument establishing title to goods or to the rights referred to in Article 15(2), representing financial value and reflecting any one or more of the following:









Amendment 14






Proposal for a directive — amending act


Article 1 — point 2


Directive 2006/112/EC


Article 135a — point 8 — point c











(c)


unit ownership in undertakings for collective investment 
in the securities referred to in points (a) or (b), in other exempted financial instruments referred to in points (a) to (d) of Article 135(1) or
 in other undertakings for collective investment;












(c)


unit ownership in 
investment funds, as defined in point 10, or in
 undertakings for collective investment in other undertakings for collective investment;









Amendment 15






Proposal for a directive — amending act


Article 1 — point 2


Directive 2006/112/EC


Article 135a — point 8 — point c a (new)





 










(ca)





title to cash-settled financial, credit, and commodity derivatives and related options;










Amendment 16






Proposal for a directive — amending act


Article 1 — point 2


Directive 2006/112/EC


Article 135a — point 9











(9)


‘intermediation in insurance and financial transactions’ means the supply of services rendered 
to, and remunerated by, a contractual party
 as a distinct act of mediation in relation to the insurance or financial transactions referred to in points (a) to (e) of Article 135(1), by 
a

third party

intermediary
;












(9)


‘intermediation in insurance and financial transactions’ means the supply of services rendered as a distinct
, direct or indirect
 act of mediation in relation to the insurance or financial transactions referred to in points (a) to (e) of Article 135(1), by third-party

intermediaries, provided that none of the intermediaries is a counterparty to those insurance or financial transactions
;









Amendment 17






Proposal for a directive — amending act


Article 1 — point 2


Directive 2006/112/EC


Article 135a — point 10











(10)


‘investment funds’ means 
undertakings for collective investment in the exempted financial instruments referred to in points (a) to (e) of Article 135(1) and in real estate
;












(10)


‘investment funds’ means 
specially constituted investment vehicles created for the sole purpose of gathering assets from investors and investing those assets in a diversified pool of assets, including pension funds and vehicles used to implement and execute collective pension schemes
;









Amendment 18






Proposal for a directive — amending act


Article 1 — point 2


Directive 2006/112/EC


Article 135a — point 11











(11)


‘management of investment funds’ means activities aimed at realising the investment objectives of the investment fund concerned.












(11)


‘management of investment funds’ means activities aimed at realising the investment objectives of the investment fund concerned 
and shall include at least strategic and tactical asset management and asset allocation, including advisory services, as well as currency and risk management
.









Amendment 19






Proposal for a directive — amending act


Article 1 — point 3


Directive 2006/112/EC


Article 137 — paragraph 1 — point a













(3)





In Article 137(1), point (a) is deleted.









deleted







Amendment 20






Proposal for a directive — amending act


Article 1 — point 4


Directive 2006/112/EC


Article 137a — paragraph 1





1.   From 1 January 2012, Member States shall allow taxable persons a right of option for taxation in respect of the services referred to in 
points (a) to (g)
 of Article 135(1).


1.   From 1 January 2012, Member States shall allow taxable persons 
in each individual case
 a right of option for taxation in respect of 
one
 of the services referred to in 
points (a) to (ga)
 of Article 135(1)
, where that service is provided to another taxable person established in the same Member State or elsewhere in the Community
.





Amendment 21






Proposal for a directive — amending act


Article 1 — point 4


Directive 2006/112/EC


Article 137a — paragraph 1a (new)





 




1a.
   
The Commission shall report to the European Parliament and the Council on the operation of the right of option under paragraph 1 by (1). If appropriate, the Commission shall present a legislative proposal concerning detailed rules governing the exercise of that right of option and any other amendments of this Directive in this regard
.





Amendment 22






Proposal for a directive — amending act


Article 1 — point 4


Directive 2006/112/EC


Article 137a — paragraph 2





2.   The Council shall adopt the measures necessary for the implementation of paragraph 1 pursuant to the procedure provided for in Article 397. So long as the Council has not adopted such measures, Member States may 
lay down
 the detailed rules governing exercise of the option under paragraph 1.


2.   The Council shall adopt the measures necessary for the implementation of paragraph 1 pursuant to the procedure provided for in Article 397. So long as the Council has not adopted such measures, Member States may 
maintain
 the 
existing
 detailed rules governing exercise of the option under paragraph 1.





Amendment 23






Proposal for a directive — amending act


Article 1 — point 4


Directive 2006/112/EC


Article 137b — point 1











(1)


the group itself 
and all its members are
 established 
or resident
 in the Community;












(1)


the group itself 
is
 established in the Community;









Amendment 24






Proposal for a directive — amending act


Article 1 — point 4


Directive 2006/112/EC


Article 137b — point 3











(3)


members of the group are supplying services which are exempt under 
Article 135(1)(a) to (g)
 or other services in respect of which they are not taxable persons;












(3)


members of the group are supplying services which are exempt under 
Article 135(1)(a) to (ga)
 or other services in respect of which they are not taxable persons;









Amendment 25






Proposal for a directive — amending act


Article 1 — point 4


Directive 2006/112/EC


Article 137b — point 4











(4)


the services 
are
 supplied by the group 
only to its members and
 are necessary to allow members to supply services which are exempt pursuant to 
Article 135(1)(a) to (g);














(4)


the services supplied by the group are necessary to allow members to supply services which are exempt pursuant to 
Article 135(1)(a) to (ga);











Amendment 26






Proposal for a directive — amending act


Article 1 — point 4


Directive 2006/112/EC


Article 137b — point 5











(5)


the group claims from its members only the exact reimbursement of their share of the joint expenses
, excluding any
 transfer-pricing adjustments made for the purposes of direct taxation.












(5)


the group claims from its members only the exact reimbursement of their share of the joint expenses
;
 transfer-pricing adjustments made for the purposes of direct taxation 
shall not affect the group's exemption from turnover tax
.









Amendment 27






Proposal for a directive — amending act


Article 1 — point 4 a (new)


Directive 2006/112/EC


Article 169 — point c





 










(4a)





In Article 169, point (c) is replaced by the following:









(c)





transactions which are exempt pursuant to points (a) to (ga) of Article 135(1), where the customer is established outside the Community or where those transactions relate directly to goods to be exported out of the Community.














Amendment 28






Proposal for a directive — amending act


Article 2 — paragraph 1 — subparagraph 1





1.   Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive 
by 31 December 2009 at the latest
. They shall forthwith communicate to the Commission the text of those provisions and correlation table between those provisions and Directive.


1.   Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive 
while ensuring that end-consumers benefit from the restructuring of the present VAT arrangement
. They shall forthwith communicate to the Commission the text of those provisions and correlation table between those provisions and Directive.






(1)  …Three years after the entry into force of Directive …/…/EC.