1. Taxing Insurance Products: Sickness and Health Insurance Paul Chater Client Director, European Tax Practice, FiscalReps Christophe Bourdaire Senior Client Manager – European Tax Practice, FiscalReps

2. Agenda What is Sickness & Health? o Context and statistics o 1 st Non-Life Directive o General insurance/Long term insurance o Industry experience and practice o Accident and other classes included Location of Risks considerations o 2 nd Non-Life Directive o European Court of Justice Cases o Example of group/expats policies Focus on countries o United Kingdom o Ireland o France o Spain

3. What is Sickness and Health? Non-Life premiums per type of class of business – 2012 (Total premium: 451 billion euros) Source: Insurance Europe

4. What is Sickness and Health? Class of insuranceTotal European premium in EUR million Motor131,845 Accident32,821 Health113,108 Property89,365 General Liability33,189 Legal Expenses7,494 Marine Aviation Transport17,306 Other Non-Life26,201 Total Non-Life451,330 Source: Insurance Europe

5. What is Sickness and Health? Health premiums written in Europe between 2003 and 2012 (EUR million) Source: Insurance Europe

6. What is Sickness and Health?

7. Definition: Sickness or Health? o First non-Life Directive 73/239/EEC Classified as class of insurance 2 “Sickness: Fixed pecuniary benefits or benefits in the nature of indemnity or combinations of the two” Can be grouped with class of insurance 1 – Accident to form “Accident and Health insurance” Non-life / life insurance o Sickness non-life Supplementary contract Comprehensive contract o Sickness life Permanent Health insurance (Class IV Annex 1 Life Directive 2002/83/EC In some countries (UK, Ireland)

8. What is Sickness and Health? Industry experience and practice o Sickness/Accident policies taken out by a company on behalf of its employees o Insurance products covering several risks including sickness/health o Taxation of permanent health in countries that do not recognize this class of business o Application of CMU tax in France

9. What is Sickness and Health? Class of insuranceTotal premium in EUR million Motor131,845 Accident32,821 Health113,108 Property89,365 General Liability33,189 Legal Expenses7,494 Marine Aviation Transport17,306 Other Non-Life26,201 Total Non-Life451,330 Source: Insurance Europe

10. What is Sickness and Health? Source: Insurance Europe

11. What is Sickness and Health? Accident and other classes included o First non-Life Directive 73/239/EEC Accident (including industrial injury and occupational diseases): fixed pecuniary benefits, benefits in the nature of indemnity, combinations of the two and injury to passengers o Industry definition Coverage for bodily injury and/or death resulting from accidental means (other than natural causes) Accident = Permanent health? o Short term / Long term disability o IPT application Miscellaneous financial losses o Loss of income o IPT application Care

12. What is Sickness and Health? Sickness cover included in a multi-risks contract Examples o Travel/Assistance insurance o Professional insurance (Expats) o Motor insurance Which tax application? o On the whole premium o Apportionment of premium On which basis?

13. Location of Risks considerations 2nd Non-Life Directive 88/357/EEC o Article 2 (d) Member State where the risk is situated' means: The Member State in which the property is situated, where the insurance relates either to buildings or to buildings and their contents, in so far as the contents are covered by the same insurance policy The Member State of registration, where the insurance relates to vehicles of any type The Member State where the policy-holder took out the policy in the case of policies of a duration of four months or less covering travel or holiday risks, whatever the class concerned The Member State where the policy-holder has his habitual residence or, if the policy-holder is a legal person, the Member State where the latter's establishment, to which the contract relates, is situated, in all cases not explicitly covered by the foregoing indents

14. Location of Risks considerations European Court of Justice Case o Case 191/99 known as the “Kvaerner case” o Case 243/11 RVS Levensverzekeringen NV v Belgium Static vs dynamic location of risks rules Examples of group/expat policies o Global program/cover o Tax application

15. Focus on countries United KingdomFranceIrelandSpain Sickness alone or within a multi-risks policy Permanent health and long term IPT cases A large range of IPT rates with regular increases Solidaire/Non- solidaire contracts Parafiscal taxes Recent changes Anticipated changes A specific levy on Sickness contracts Permanent health IPT Exemption… …But other taxes/parafiscal taxes may be due

16. Questions