Germany: VAT treatment of license granted by underwriting agent to insurer and insurance mediation services

Germany: VAT treatment of license

The Court of Justice of the European Union (CJEU) issued a judgment holding that the grant of a license by an underwriting agent to an insurer to use an insurance product is, in itself, subject to value added tax (VAT).


According to the CJEU, if the insurance mediation services performed by the underwriting agent for the insurer are ancillary to the granting of that license, then these are also subject to VAT. The CJEU noted that it would be for the referring German court to categorize this.

The case is: Q-GmbH (C-907/19, 25 March 2021)

Scope of VAT insurance exemption

Under the EU VAT Directive, insurance and reinsurance transactions and related services, performed by insurance brokers and insurance agents are exempt from VAT. In a number of cases, the CJEU has provided some guidance on the scope of the exemption. There is a VAT-exempt insurance activity if (1) the insurer (2) in exchange for the prior payment of a premium (3) undertakes to pay the insured (4) in the event the insured risk occurs (5) the payment (6) agreed when the contract was concluded—in other words, provides insurance.

Insurance-related services are present if (1) the service provider has a relationship with both the insurer and the insured and (2) performs activities essential to the function of an insurance intermediary, such as finding prospective clients and introducing those new clients to the insurer (in other words, insurance mediation).


The taxpayer (an underwriting agent) concluded an agreement with an insurer under which it performs the following types of services:

  • The provision of a (non-exclusive) license to use an insurance product against piracy
  • Placing insurance contracts for that insurer, adapting policies if necessary, and assessing risks
  • Managing the insurance contracts and settling claims

The insurer paid the taxpayer a fee, in the form of a brokerage fee.

CJEU judgment

The CJEU held that the granting of a license by an underwriting agent to an insurer to use an insurance product is—in itself—subject to VAT. According to the CJEU, the granting of a license does not qualify as insurance, nor is it insurance mediation. The CJEU explained that this was subject to verification by the German national court, but that verification seems more of a formality.

In addition, the CJEU addressed the relationship between the granting of a license and the insurance mediation services provided by the taxpayer. The CJEU referred the case back to the German court to further establish the facts.

The CJEU thereby took into account that the referring court regarded the granting of the license as the principal service and that this service is subject to VAT.

Read a March 2021 report prepared by the KPMG member firm in the Netherlands

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