Services performed by insurance intermediaries are mostly exempt from VAT

In 2019, the Tax Administration paid extra attention to the value added taxation of services sold by insurance intermediaries. The services include, for example, insurance intermediation. It has not been clear how VAT should be applied to the insurance intermediaries’ sales and purchases. 

The VAT treatment of services provided by insurance intermediaries depends on the content of the service. The fact that the service is sold by an insurance intermediary does not in itself mean that the sale would be exempt from VAT.

Insurance intermediation service provided by an insurance intermediary for an insurance company is exempt from VAT. However, the insurance intermediary can also sell other services and goods. Whether these other services and goods are subject to VAT must be determined separately. 

If the insurance intermediary has sales subject to VAT, the insurance intermediary must register for VAT. However, they do not have to register for VAT if their turnover for the accounting period is less than €10,000. The turnover also includes VAT-exempt fees for insurance intermediation services.

If the insurance intermediary has registered for VAT and has sales subject to VAT, they have the right to deduct input VAT. This right concerns goods or services bought insofar as they are directly associated with the insurance intermediary’s sales subject to VAT. If the goods or services bought are associated with the insurance intermediary’s activities that are not subject to VAT, the intermediary cannot deduct the VAT included in the purchase price.

The insurance intermediary can request written guidance or an advance ruling from the Tax Administration on the VAT treatment of the services they provide, if the situation is not clear. 

The Tax Administration will send a guidance letter about this matter to insurance intermediaries at the turn of February/March.