ECJ: Re/Insurance Portfolio Transfers Subject To VAT

On 22 October 2009 the European Court of Justice (ECJ) delivered judgment concerning the VAT treatment of portfolio transfers of both primary and reinsurance business¹, a case that came before the ECJ upon referral from the German Federal Tax Court (BFH).

The background to the case was this: in 2002, the former Swiss Re Germany Holding GmbH transferred 195 reinsurance contracts to an affiliated company within the Swiss Re group situated in Zurich, Switzerland, and received in return the payment of a single purchase price. Of the transferred reinsurance contracts, some 18 were assessed as having a negative value, thereby reducing the net agreed price.

This being reinsurance business, the policy holders of the transferred contracts were themselves insurance companies, all of them located outside Germany, both in other EU member states and in non-member countries. They each gave their consent to the transfer. Upon execution of the transfer, however, the local Munich