Reinsurance suffers VAT ruling

The European Court of Prison has ruled that VAT is now payable on reinsurance contracts, in a about-turn of standard industry practice.

It raises fears that those selling reinsurance and protection will suffer damage to cash flow in light of the ruling, made on a encase involving Swiss Re.

The case related the sale of reinsurance contracts between Swiss Re entities in Germany, considered nearby the local authorities to constitute a supply of service liable in behalf of 19% VAT.

The European Court of Justice ruled in favour of the German toll authorities, and the ruling now applies to all the member states of the EU.

TMF VAT & IPT Services’ spokesman Richard Asquith has described the ruling as hugely suggestive, with the implication that it might not only affect reinsurance but cover as well.

The insurance industry is now undergoing an urgent look at into its future transactions, and any in the recent past caught close to the ruling.