Legal provisions of COM(2007)746 - Implementing measures for the VAT Directive, as regards the treatment of insurance and financial services

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dossier COM(2007)746 - Implementing measures for the VAT Directive, as regards the treatment of insurance and financial services.
document COM(2007)746 EN
date November 28, 2007

Contents

Chapter I - Subject-matter

Article 1

This Regulation lays down measures for the implementation of Article 135(1)(a) to (g) and (1a) and Article 135a of Directive 2006/112/EC.

Chapter II - Exempt insurance and financial services

Article 2

The definition of 'insurance and reinsurance' provided for in point (1) of Article 135a of Directive 2006/112/EC shall cover at least the following:

(1) life insurance, whether individual or group life policies, and insured pensions and annuities where the insurance, pension or annuity covers mortality or longevity risks, including diagnosis of a terminal illness, diagnosis of a critical illness, disability due to ill health, permanent disability, accidental death, and requirement for long term care;

(2) sickness disability and unemployment insurance;

(3) health insurance;

(4) peril insurance, including coverage against fire, flooding, natural disasters, accidents, breakdown of machinery, crime and terrorism;

(5) liability insurance;

(6) insurance against financial loss;

(7) retrocession, co-insurance and pooling of insurance or reinsurance.

Article 3

1. The definition of the 'granting of credit' provided for in point (2) of Article 135a of Directive 2006/112/EC shall cover the provision of at least the following:

(a) loans, whether syndicated or not, including loans granted as a financing element in conjunction with the supply of goods or services provided the financing element is not an integral part of the consideration;

(b) loans secured on real property, including mortgage loans;

(c) loans secured on movable property, including pawn broking;

(d) credit arrangements under which a person is entitled to dispose of funds up to a fixed amount.

2. The definition of the 'granting of credit' provided for in point (2) of Article 135a of Directive 2006/112/EC shall not cover the following:

(a) agreements under which payment by instalments, or an extended period for payment, is provided for in respect of the supply of goods or services;

(b) the grant of credit in connection with hire purchase and lease purchase arrangements where the consideration for that credit constitutes an integral part of the consideration for the hire purchase and lease purchase;

(c) the provision of debit and prepaid card services.

Article 4

1. The definition of the 'guaranteeing of debts' provided for in point (3) of Article 135a of Directive 2006/112/EC shall cover the provision of at least the following:

(a) credit default swaps;

(b) customs bonds.

2. The definition of the 'guaranteeing of debts' provided for in point (3) of Article 135a of Directive 2006/112/EC shall not cover the following:

(a) the provision of warranties for the repair and replacement of faulty goods;

(b) the handing over of assets to be used as collateral for a debt not resulting from the granting of credit;

(c) the provision of guarantees as security for any outstanding rental payment or payment resulting from defaults on rental payments;

(d) the provision of export credit guarantees;

(e) the assumption of obligations of a non-pecuniary nature.

Article 5

1. The definition of 'financial deposit' provided for in point (4) of Article 135a of Directive 2006/112/EC shall cover at least the following:

(a) sight deposits (deposits on call);

(b) saving deposits;

(c) time and term deposits;

(d) deposits in the form of saving certificates;

(e) saving bonds;

(f) deposits made in return for a guaranteed annuity or an accumulated cash balance upon retirement, including deposits made under a pension saving plan;

(g) capital redemption bonds;

(h) insured pensions and annuities where the mortality or longevity risk covered is merely ancillary.

2. The definition of 'financial deposit' provided for in point (4) of Article 135a of Directive 2006/112/EC shall not cover the following:

(a) the deposit for safekeeping of collectors' items or of instruments evidencing rights, claims or titles;

(b) hiring of security boxes and securitised space and location.

Article 6

The definition of 'account operation' provided for in point (5) of Article 135a of Directive 2006/112/EC shall cover at least the following:

(1) the operation of deposit accounts;

(2) the operation of current accounts;

(3) the deposit, transfer and withdrawal of money to or from a bank account, whether electronic or not;

(4) cheque services related to a specific account;

(5) standing orders;

(6) direct debits;

(7) the access to and the operation of internet and telephone banking;

(8) debit and smart card services related to a specific account;

(9) the clearance and the transfer of funds between financial operators;

(10) the transfer of funds from a specific account into other money media such as telephone cards, credits for mobile phones and other media which allow payment for goods and services;

(11) sorting and counting of money related to a specific account;

(12) the arrangement of credit facilities.

Article 7

The definition of 'exchange of currency' provided for in point (6) of Article 135a of Directive 2006/112/EC shall not cover the following:

(1) transactions involving collectors' items, such as gold, silver or other metal coins or bank notes normally not used as legal tender or coins of numismatic interest;

(2) the exchange of currencies not of legal tender.

Article 8

1. The 'provision of cash' as referred to in point (d) of Article 135(1) of Directive 2006/112/EC shall cover at least the following:

(a) cash dispensing, whether manual or automatic;

(b) traveller cheque services;

(c) cheque services not related to a specific account;

(d) letters of credit;

(e) the exchange of bank notes and coins within the same currency.

2. The 'provision of cash' as referred to in point (d) of Article 135(1) of Directive 2006/112/EC shall not cover the following:

(a) transactions involving collectors' items, such as gold, silver or other metal coins or bank notes normally not used as legal tender or coins of numismatic interest;

(b) dispensing of currencies not of legal tender.

Article 9

The definition of the 'supply of securities' provided for in point (8) of Article 135a of Directive 2006/112/EC shall cover the provision of at least the following:

(1) equity securities, including shares;

(2) instruments recording the promise of repayment of a debt, including debentures, bonds and corporate bonds, promissory notes, euro debt securities and other tradable commercial papers;

(3) hybrid securities, including preference shares, equity warrants, convertible instruments in the form of bonds or preferred stock which may be converted into the common stock of the issuing company;

(4) instruments recording unit ownership in undertakings for collective investment such as open and closed-ended funds, exchange traded funds, mutual and pension funds, hedge funds and real estate investment funds.

Chapter III - Exempt intermediation and management services

Article 10

1. For the purposes of point (9) of Article 135a of Directive 2006/112/EC, an activity shall constitute a distinct act of mediation at least where one or more of the following conditions is fulfilled:

(a) the intermediary has the authority to bind the supplier or the customer of the exempt insurance or financial service;

(b) the activity may result in the creation, continuation, alteration or extinction of parties' rights and obligations in respect of an exempt insurance or financial service;

(c) the activity consists in the provision of advice which reflects specialised knowledge regarding an exempt insurance or financial service.

2. Where in situations other than those covered by paragraph 1, a service is standardised in such a way that a person may provide it on the basis of prior instructions, it shall not constitute a distinct act of mediation for the purposes of point (9) of Article 135a of Directive 2006/112/EC.

Article 11

1. The definition of 'intermediation in insurance and financial transactions' provided for in point (9) of Article 135a of Directive 2006/112/EC shall cover at least the following:

(a) the supply of services involving negotiation on the conditions of the product;

(b) stock and mortgage brokering.

2. The definition of 'intermediation in insurance and financial transactions' provided for in point (9) of Article 135a of Directive 2006/112/EC shall not cover the following:

(a) standardised services provided by call-centres;

(b) brand hosting, web-hosting, other web-services or hosting service;

(c) advertising and other information services.

Article 12

1. The definition of 'management of investment funds' provided for in point (11) of Article 135a of Directive 2006/112/EC shall cover at least the following:

(a) strategic and tactical asset management and asset allocation, including currency and risk management;

(b) operational asset management, including stock selection, decision making and implementation, decisions to buy and sell investments, netting of trades, pre-trade broker liaison, administration and control of trades and post-trade liaison with brokers and custodian;

(c) guarantee provision, including the operation of a hedging portfolio;

(d) administration of shares or units, including distribution and trustee liaison;

(e) arranging and processing loans of stocks and bonds;

(f) fund order processing, including automated processing;

(g) market and company analysis;

(h) performance measurement, including the provision of investment performance reports and attribution analysis of returns;

(i) the provision of valuations, tax refund claims and management information and the calculation of the net asset value;

(j) safe custody, security safe-keeping and control;

(k) oversight of the fund by the depositary;

(l) payment of income to customers and proxy voting.

2. The definition of 'management of investment funds' provided for in point (11) of Article 135a of Directive 2006/112/EC shall not cover the following:

(a) external audit of the fund, marketing and management of fund overheads;

(b) development of systems, such as planning and implementation of new technology, major enhancements to existing systems and systems maintenance;

(c) services relating to regulatory compliance.

Chapter IV - Services which have the specific and essential character of an exempt service

Article 13

1. For the purposes of Article 135(1a) of Directive 2006/112/EC, at least the following shall be considered to have the specific and essential character of an exempt service:

(a) portfolio management;

(b) the issuance of contracts and certificates evidencing the title of the customer of an exempt insurance or financial service;

(c) the cession, renewal, amendment and rescission of contracts relating to an exempt insurance or financial service;

(d) credit rating services, including the assessment of the credit worthiness of a supplier or customer of insurance or financial services;

(e) valuation of financial collateral.

2. For the purposes of Article 135(1a) of Directive 2006/112/EC, the following shall not be considered to have the specific and essential character of an exempt service:

(a) safekeeping;

(b) administrative tasks;

(c) debt collection or recovery;

(d) legal services, accountancy, audit and bookkeeping;

(e) services relating to regulatory compliance;

(f) identity verification, money laundering and anti-fraud checks;

(g) data collection services for the recycling of banknotes and coins;

(h) marketing, research, identification and development of new products or opportunities;

(i) the supply and design of software;

(j) hire of security boxes and other secured spaces;

(k) services which grant the right or the option of receiving goods or services.

Article 14

1. The following shall be considered to be services having the specific and essential character of 'insurance and reinsurance' as defined in point (1) of Article 135a of Directive 2006/112/EC:

(a) underwriting of risk;

(b) risk and investment management;

(c) claims handling;

(d) the issuance of non-tradable insurance derivatives.

2. Damage assessment shall not be considered to be a service having the specific and essential character of 'insurance and reinsurance' as defined in point (1) of Article 135a of Directive 2006/112/EC.

Article 15

The following shall be considered to be services having the specific and essential character of 'granting of credit' as defined in point (2) of Article 135a of Directive 2006/112/EC:

(1) the measurement, the prediction and the control of credit risks and losses due to credit risk, including credit strategy;

(2) underwriting of credits;

(3) record keeping, arrangement and monitoring of payments made for a credit;

(4) the issuance of credit derivatives;

(5) valuation of non-financial collateral.

Article 16

1. The following shall be considered to be services having the specific and essential character of 'guaranteeing of debts' as defined in point (3) of Article 135a of Directive 2006/112/EC:

(a) arrangement and monitoring of means for guaranteeing a debt;

(b) credit guaranteeing derivatives.

2. The sale of repossessions after mortgage default shall not be considered to be a service having the specific and essential character of 'guaranteeing of debts' as defined in point (3) of Article 135a of Directive 2006/112/EC.

Article 17

The following shall be considered to be services having the specific and essential character of transactions concerning 'financial deposit' as defined in point (4) of Article 135a of Directive 2006/112/EC:

(1) sorting and counting of money for the purpose of making a deposit;

(2) reporting on the balances of deposits and calculation of interest, production of statements of account and carrying out of commitment overviews;

(3) calculation of tax and fees with regard to the cancellation of pension saving plans;

(4) budgeting of accounts, including economic feasibility studies for appraisal of customers' requirements;

(5) safekeeping of certificates for deposits;

(6) automated acceptance of money for deposits;

(7) the issuance of deposit derivatives.

Article 18

1. The following shall be considered to be services having the specific and essential character of 'account operation' as defined in point (5) of Article 135a of Directive 2006/112/EC:

(a) services between operators for the transfer of funds between monetary accounts and clearing of the transfer;

(b) membership, joining or subscription services for payment cards or systems for an account;

(c) control services with safety features for the proper processing of transfers of funds between monetary accounts;

(d) the issuance of customer and merchant statements;

(e) verification of payments;

(f) the issuance of cheque books for a specific account.

2. The following shall not be considered to be services having the specific and essential character of 'account operation' as defined in point (5) of Article 135a of Directive 2006/112/EC:

(a) general printing of cheque books;

(b) the supply of blank cards;

(c) internet hosting;

(d) the rental of terminals and other machinery for the processing of card payments.

Article 19

1. The following shall be considered to be services having the specific and essential character of 'exchange of currency' or 'provision of cash' as referred to in point (d) of Article 135(1) of Directive 2006/112/EC:

(a) the issuance of customer and merchant statements for the exchange and the distribution of bank notes and coins;

(b) operating services for cash machines supplied between financial institutions;

(c) the issuance of spots, forward transactions, futures, currency swaps, foreign exchange options and forex swaps;

(d) the issuance of exchange derivatives.

2. The following shall not be considered to be services having the specific and essential character of 'exchange of currency' or 'provision of cash' as referred to in point (d) of Article 135(1) of Directive 2006/112/EC:

(a) safekeeping and storage of money;

(b) courier and security transport services;

(c) the publication of information on exchange rates;

(d) the installation of cash machines.

Article 20

The following shall be considered to be services having the specific and essential character of the 'supply of securities' as defined in point (8) of Article 135a of Directive 2006/112/EC:

(1) the issuance of options, futures and forward contracts for securities;

(2) the issuance of equity swaps and other total return swaps in securities;

(3) the issuance of tradable debt derivatives, including interest rate swaps;

(4) performance measurement, rating, prediction and control of securities;

(5) arrangement and monitoring of transactions under the security agreement, including possible voting rights .

Chapter V - Final provisions

Article 21

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union .

It shall apply from …. [date when Directive transposed + 1]

This Regulation shall be binding in its entirety and directly applicable in all Member States.