Transfer is subject to VAT

A German insurance company specialised in life reinsurance work. It sold to S a Swiss company 195 life reinsurance contracts. The issue arose as to whether the transaction was subject to VAT.

The German tax authority claimed it was a taxable supply of goods while Swiss Re argued it was an exempt supply of services. The German court found that it was a taxable supply of services but referred the matter to the European Court of Justice.

The European Court of Justice said that as life reinsurance contracts could be regarded as tangible property their transfer could not be a supply of goods within article 5(1) of the Sixth Directive but was a supply of service under article 6(1).

However the transfer of life reinsurance contracts did not have the characteristics of an insurance transaction neither was it a reinsurance transaction...