VAT Treatment of Transactions by Insurance Managers |
| Written by Franco Falzon — Tue, 08 June 2010 |
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The VAT department in Malta has recently issued certain guidelines reflecting the position of the department on the VAT treatment of certain transactions by Insurance Managers. In setting these guidelines consideration have been given to the relative provisions of the VAT Act (Chapter 406), the VAT Directive (Council Directive 2006/112/EC), ECJ case law as well as EU proposals currently being discussed at Council level. The supply of insurance services by an Insurance Manager to an insurer, reinsurer or to an insurance broker consisting in underwriting of risk, including the issuance of insurance policies or certificates or their cession, renewal, amendment or rescission fall under the exemption of Item 2 of Part Two of the Fifth Schedule to the VAT Act. Risk and investment management in the course of an insurance service and claims handling, by an Insurance Manager authorised by Malta Financial Services Authority (MFSA) also fall under the exemption provided that such services are not supplied individually under separate contracts and provided further that such services are not supplied to an insurer, reinsurer or to an insurance broker through a sub-contractor. The supply of “related services” by an Insurance Manager to an insurer, reinsurer or to an insurance broker which may include the following:
Are not exempt including when one or more of the above services is supplied individually having a characteristic of “outsourcing” by an insurer, reinsurer or an insurance broker. However, if these related services are provided as one whole service as part of an insurance service referred to above in the course of executing a contract for an insurer, reinsurer or to an insurance broker and they are strictly related to and essential for the core insurance activity of the Insurance Manager, then they are to be considered as falling under the exemption, provided they are not supplied through a sub-contractor. For more information, kindly contact:Neville Cutajar - Managing Partner: neville.cutajar@3a.com.mt
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| Last Updated on Thu, 30 December 2010 |
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