Accenture Vat

4 March 2005, Issue 4

ECJ ruling Andersen case

For a more detailed elaboration on the facts of this case and the Opinion of the AG we refer to earlier issues of the PwC Financial Services VAT Alert: Report on ECJ Hearing Andersen case: VAT Treatment of Insurer's Back Office Activities (2004/1) and Opinion AG Andersen case: Red Flag for Outsourcing in the Insurance Sector (2005/1). On March 3, the European Court of Justice delivered its decision regarding the Andersen/Accenture case (C-472/03) concerning the VAT status of back office activities provided to an insurer. 1. Background

Accenture (formerly Arthur Andersen Consulting) provided back office services to Universal Life, a Dutch insurance company. The services provided to the insurance company included the following:          handling insurance applications; assessing the risks to be insured; determining whether a medical examination is required; deciding whether to accept the risk where such an examination is deemed unnecessary; issuing, managing and rescinding insurance policies and making amendments to contracts and modifying premiums; receiving premiums; managing claims; setting and paying commission for insurance agents and maintaining contact with them; and handling aspects relating to reinsurance and supplying information to insured parties and insurance agents and to other interested parties, such as the tax authorities.

Accenture considered that the services provided are VAT exempt under Article 13B(a) EC Sixth VAT Directive. This article stipulates that “insurance and reinsurance transactions, including related services performed by insurance brokers and insurance agents” are VAT exempt. The Dutch Supreme Court referred the question to the ECJ and requested whether Accenture’s activities qualify for the exemption of Article 13B (a) EC Sixth VAT Directive.

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2. Ruling ECJ The European Court of Justice ruled (in line with the opinion of the...