The Federal Court of Finance (BFH, ruling of 07.12.2016, file no. II R 1/15) decided that when the policyholder (VN) provides insurance cover for any insured person (VP), the full, non-aggregated sales price counts as the assessment basis for the insurance tax (VSt): The prerequisite for this is that the insurer (VR) participates in the pricing to the CP.
Insurance tax in case of insurance for third party account?
For example, travel insurance via credit card providers, but also insurance contracts with tour operators – VP are then the travellers – are insurance for third party account. If a tour operator as policyholder (UN) purchases the insurance cover for the benefit of the travellers (VP), “the insurance fee corresponds to the amount of the sales price for the travel insurance”.
Even if the sales mark-up remains with the UN as distribution remuneration, an insurance tax is payable on it and on the net premium: ‘Since the Merchant owes the non-disaggregated sales price (to the UN), it cannot be assumed that the remuneration included in the sales price by the BoD and the UN is based on a commission agreement between the UN and the Merchant’.
Insurance tax with InsurTechs – a question of contract design
Insurance and Technology (InsurTech) offers alternative value chains in insurance sales. Insurance tax is always due on the total remuneration if the BoD had specifically determined the total remuneration and the net premium to be paid by the UN.
Obviously, the Federal Court of Finance would see things differently if the UN could set the total remuneration of the CP independently of the BoD, or if other parts of the agreement (as further mentioned by the Federal Court of Finance, e.g. sharing of fate in the event of resignation) had been structured differently.
Procurement of insurance cover – a brokerage business?
The Federal Court of Finance leaves it open whether a different structure would then be permissible under “insurance law” or how a brokerage business would be assessed. The provision of BoD protection is permissible in both ways (with or without influence of the BoD on the final price for the VP). It is not a brokerage activity or any other insurance brokerage or advice, as no contract between the CP and BoD is brokered or arises.
Procurement of insurance cover – without regulation ?
If the UN only provides insurance cover to others (the CP), it does not become a BoD for regulatory purposes and does not require the usual millions of euros in equity capital. This also means that no approvals from the IHK or BaFin are required – a simple business registration is sufficient. He is completely free in the calculation of his (re)sales price – the General Equal Treatment Act (AGG) for insurance companies does not apply here either.
There is then also no obligation to provide advice under the Insurance Contract Act (VVG), and there is no need to hand over VR documents together with consumer information. There are also no “commission ceilings” and no other intermediary regulation, such as the IDD, to be observed.
Business model for (still) non-insurers?
This business model is suitable not only for “department stores and chains”, but also for any insurance intermediary looking for an alternative. He is then neither dependent on the BoD’s commission, nor does he have to disclose a fee to the CP, but only states the “total price”, which is not called the BoD premium, but is the price for the provision of BoD protection or can be named in any other way. Of these, even any discounts and “price transfers” are permitted as an alternative to the prohibited commission transfer. A licence as an intermediary is not required for this.
Alternative via support fund?
The situation is similar with the support fund (UK) for property, personal and other damages, as it has been operating for many decades as a health support fund. The UK can be an association, but also a corporation at home or abroad, or a foundation. It also does not require BaFin approval, because if the content of the articles of association is appropriate, there is no legal entitlement to a specific UK service, even if the promised services are in fact always provided. For tax purposes, however, it still counts as an insurer and must therefore also pay insurance tax in addition to biometric life and health risks.
In the event of the assumption of larger risks, the UK will purchase a reinsurance policy (RDV) as a UN from a BoD. The benefit claims from the RDV could be assigned to the CP – a pledge would not be sufficient, as the UK itself does not offer a legal claim to its own benefits.
Reinsurance via international correspondent insurance
All of the above-mentioned insurance policies or RDVs can be taken out by the UN by way of correspondence insurance, in principle internationally, e.g. also via a simple-to-establish own primary insurer in Delaware, according to the law there. The latter can also, for example, calculate favourable term life insurance policies for women, completely without the unisex tariffs imposed only in the EU. This will then provide access to the international reinsurance market.
In particular, this is also suitable as a sales model for InsurTechs, as distance sales via the Internet can thus be arranged without permission at the company’s own practical discretion, independent of insurance and agent regulations. Instead of having to use documents of the BoD, the contractual provisions can be presented electronically to the respective CP with self-designed simplified documents – if necessary, only the most important information. The power regulation can be done by yourself – or via a VR.
by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm
by courtesy of
www.experten.de (published on 12.04.2019)
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Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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