Case C-308/01

GIL Insurance Ltd and Others

v

Commissioners of Customs & Excise

(Reference for a preliminary ruling from the VAT and Duties Tribunal, London)

(Sixth VAT Directive – Tax on insurance premiums – Higher rate applicable to certain insurance contracts – Insurance connected with the rental or sale of domestic appliances – State aid)

Summary of the Judgment

1. Tax provisions – Harmonisation of laws – Turnover taxes – Common system of value added tax – Prohibition of the levying of other national charges which can be characterised as turnover taxes – Definition of turnover tax – Scope – Tax on insurance premiums – Excluded – Introduction of a rate identical to that of value added tax – Whether permitted with regard to the exemption of insurance transactions – No obligation to follow the procedure for the introduction of special derogating measures

(Council Directive 77/388, Arts 13(B)(a), 27 and 33)

2. State aid – Definition – Selectivity of the measure – System of differentiated taxation on insurance premiums – Justification because of the nature and general scheme of the system established

(Art. 87(1) EC)

1. A tax on insurance premiums is compatible with Article 33 of Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes, which prohibits the Member States from introducing or maintaining taxes, duties or charges in the nature of turnover taxes, in so far as it is not a general tax, since it is not intended to attach to all economic transactions in the Member State concerned but applies only to a specific service, the supply of insurance; is not levied at each stage of the production and distribution process, since it is charged once only, on conclusion of the insurance contract; and does not apply to the added value of the goods and services.

Since it is compatible with Article 33 of the Sixth Directive, Article 13(B)(a) of that directive, under which insurance transactions are exempt from value added tax, does not preclude, in the case of that tax on insurance premiums, the introduction of a special rate which is identical to the standard rate of value added tax. Consequently, the procedure provided for in Article 27 of the directive, which obliges any Member State wishing to introduce special measures for derogation from that directive to seek prior authorisation from the Council, does not have to be complied with before the introduction of that rate.

(see paras 31, 35-37, 47, operative part 1-2)

2. A system of taxation of insurance premiums characterised by the existence of two different rates cannot be regarded as constituting State aid within the meaning of Article 87(1) EC where the application of the higher rate in that system to a specific part of the insurance contracts previously subject to the standard rate is justified by the nature and the general scheme of the national system of taxation of insurance, even if the introduction of the higher rate involves an advantage for operators offering contracts subject to the standard rate.

(see para. 78)

JUDGMENT OF THE COURT (Fifth Chamber) 29 April 2004 (1)

(Sixth VAT Directive – Tax on insurance premiums – Higher rate applicable to certain insurance contracts – Insurance connected with the rental or sale of domestic appliances – State aid)

In Case C-308/01,

REFERENCE to the Court under Article 234 EC by the VAT and Duties Tribunal, London (United Kingdom), for a preliminary ruling in the proceedings pending before that tribunal between

and

on the interpretation of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1) and of Articles 87 EC and 88 EC,

THE COURT (Fifth Chamber),,

composed of: C.W.A. Timmermans, acting for the President of the Fifth Chamber, A. Rosas (Rapporteur) and S. von Bahr, Judges,

Advocate General: L.A. Geelhoed,

after considering the written observations submitted on behalf of:

after hearing the oral observations of GIL Insurance Ltd, UK Consumer Electronics Ltd, Consumer Electronics Insurance Co. Ltd, Direct Vision Rentals Ltd, Homecare Insurance Ltd and Pinnacle Insurance plc, represented by D. Vaughan, C. McDonnell and C. Simpson; the Kingdom of the Netherlands, represented by S. Terstal, acting as Agent; the United Kingdom Government, represented by R. Caudwell, acting as Agent, and K.P.E. Lasok; and the Commission, represented by R. Lyal and J. Flett, at the hearing on 19 June 2003,

after hearing the Opinion of the Advocate General at the sitting on 18 September 2003,

gives the following

‘Without prejudice to other Community provisions, Member States shall exempt the following under conditions which they shall lay down for the purpose of ensuring the correct and straightforward application of the exemptions and of preventing any possible evasion, avoidance or abuse:

‘1.

2.‘Without prejudice to other Community provisions, in particular those laid down in the Community provisions in force relating to the general arrangements for the holding, movement and monitoring of products subject to excise duty, this Directive shall not prevent a Member State from maintaining or introducing taxes on insurance contracts, taxes on betting and gambling, excise duties, stamp duties and, more generally, any taxes, duties or charges which cannot be characterised as turnover taxes, provided however that those taxes, duties or charges do not, in trade between Member States, give rise to formalities connected with the crossing of frontiers.’

Observations submitted to the Court

Findings of the Court

Observations submitted to the Court

Findings of the Court

On those grounds,

THE COURT (Fifth Chamber),

in answer to the questions referred to it by the VAT and Duties Tribunal, London, by order of 24 July 2001, hereby rules:

Timmermans

Rosas

von Bahr

Delivered in open court in Luxembourg on 29 April 2004.

R. Grass

V. Skouris

Registrar

President