C-349/96

OPINION OF MR FENNELLY — CASE C-349/96

OPINION OF ADVOCATE GENERAL FENNELLY delivered on 11 June 1998 *

1. 'Special difficulties arise, in the mystic twi­ consideration within the territory of the light of VAT legislation, where there is what country by a taxable person acting as such' in modern jargon is called "a package" of ser­ shall be liable to VAT. Although the Sixth vices, some of which may, and others of which Directive does not define the notion of the may not, be within a VAT exemption'. 1 The 'supply of services', Article 6 provides that it Court is asked in this case to interpret for the 'shall mean any transaction which does not first time the scope of the 'insurance' exemp­ constitute a supply of goods within the tion in Community VAT law, as well as to meaning of Article 5'. In the present case, elucidate the correct approach to the VAT although some of the elements of the 'pack­ characterisation of supplies of services com­ age' of services at issue constitute goods, it prising several elements, which may individu­ has nevertheless not been contended that any 2 ally merit different VAT treatment. Essen­ component of the various services supplied tially, the national court seeks particular may be regarded as constituting a 'supply of 3 guidance as to whether the various services goods' for VAT purposes. Accordingly, it is involved in the supply of a credit-card pro­ appropriate to treat the case as concerning tection plan may benefit wholly or in part only the supply of services. from the insurance exemption.

I — The legal context

tions and of preventing any possible evasion, Although 'insurance' was not there defined, 5

avoidance or abuse: Article 1 provided that the Directive would apply to 'the classes of insurance defined in the Annex ...'. Point A of the Annex, which deals with the 'classification of risks according to classes of insurance', includes the following heading: (a) insurance and reinsurance transactions, including related services performed by insurance brokers and insurance agents;

'16. Miscellaneous financial loss ... .'

Furthermore, the terms of Article 6(4), according to which, '•where a taxable person — other financial loss (non-trading) acting in his own name but on behalf of another takes part in a supply of services, he shall be considered to have received and sup­ plied those services himself', are also relevant, particularly in respect of the third question.

— other forms of financial loss.'

4 — OJ 1973 L 228, p. 3; see Article 1. 4. Since the Sixth Directive contains no defi­ 5 — Articles 2 to 4 described the types of insurance not covered, nition of the notion of 'insurance', and as none of which is relevant in the present case.

The aid may consist in the provision of ben­ efits in cash or in kind. The provision of ben­ efits in kind may also be effected by means of the staff and equipment of the person pro­ viding them. 5. More relevant to the second part of the exemption regarding 'related services' con­ tained in Article 13B(a) of the Sixth Directive 6 — Council Directive 84/641/EEC of 10 December 1984 is Council Directive 77/92/EEC of 13 Decem­ amending, particularly as regards tourist assistance, the First Directive (73/239/EEC) on the coordination of laws, regula- ber 1976 on measures to facilitate the effec­ tions and administrative provisions relating to the taking-up tive exercise of freedom of establishment and and pursuit of the business of direct insurance other than life insurance; OJ 1984 L 339, p. 21. freedom to provide services in respect of the

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CARD PROTECTION PLAN v COMMISSIONERS OF CUSTOMS AND EXCISE

4. The handling of insurance claims by B — National provisions insurance brokers, insurance agents and persons permitted to carry on insurance 8 business as described in Item 1.'

6. At the material time for the purposes of the main proceedings, the relevant legislation applicable in the United Kingdom was the 7. The 1973 Directive was transposed into Value Added Tax Act 1983 (hereinafter 'the the law of the United Kingdom by the Insur­ VAT Act 1983'). Section 17 and Schedule 6, ance Companies Act 1982 (hereinafter 'the

7 — OJ 1977 L 26, p. 14. 8 — Item 4 is not raised in the present case.

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OPINION OF MR FENNELLY — CASE C-349/96

A — The card protection plan

10. In the event of a claim, the customer 9. The appellant in the main proceedings, cardholder is required to give notice of the Card Protection Plan Ltd (hereinafter 'CPP'), provides a service, of the same name (herein­ after 'the Plan'), to holders of credit cards 11 — It appears from the correspondence between CPP's VAT advisers and the Commissioners of Customs & Excise, which is annexed to CPP's written observations, that CPP has sought — presumably without success — to become a per- mitted provider of insurance under the IC Act 1982. 9 — 1982 e 50. 12 — The Continental policy referred to in the main proceedings 10 — S. I. 1987 No 2130. ran from 1 September 1989 to 31 August 1990.

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CARD PROTECTION PLAN v COMMISSIONERS OF CUSTOMS AND EXCISE

loss to CPP within 24 hours of discovering it. (C) An indemnity in respect of the costs CPP handles claims for less than UKL 5 000 incurred in assisting police and/or making by virtue of an authority granted in the insur­ insurance claims on items of valuable ance policy. Continental either deals with property and/or important documents larger claims itself or delegates authority on whose serial numbers have been regis­ an ad hoc basis to CPP. If claims occur, it is tered with CPP (sum insured UKL 25 Continental which provides the underlying for any one claim); finance, although CPP sends the cheque to 13 the customer.

(D) Provision of underwriters' representa­ tives to provide 24-hour telephone advice on access to medical facilities including 11. The insurance cover provided in the policy the arrangement of medical appointments of Continental is described in the schedule to overseas; that policy. It may be summarised as follows:

— Item 8: analogous to point (C) of the '— Item 1: the maintenance by CPP of a policy; computerised record of cus­ tomers' credit cards;

— Item 9: analogous to point (E) of the policy;

— Items 2 and 3: analogous to point (A) of the policy;

— Item 10: analogous to point (B) of the policy;

— Item 4: in the event of loss, a 24-hour telephone line is available to — Item 11: analogous to point (D) of the receive loss notifications and to policy; allow appropriate action to be taken to pass on the informa­ tion to credit card issuers and also the supply of adhesive stickers bearing the 24-hour — Item 12: analogous to point (F) of the phone line number; policy;

— Item 13: supply of an annual printout for the customer to check; — Item 5: in the event of loss, assistance is provided to obtain replacement credit cards;

13. From 1983 to 1990, the Commissioners of Customs & Excise (the relevant United Kingdom VAT authority, hereinafter the 'Commissioners') considered the services sup­ 15. This decision was appealed to the High plied by CPP to be exempt. However, the Court of England and Wales, Queen's Bench Commissioners altered their assessment by a Division, which held (per Popplewell J.), on letter of 23 February 1990 and informed CPP 1 July 1992, that the VAT Tribunal's finding that a specimen supply of its services over a regarding the supposed lack of privity of con­ three-year period in consideration of an annual tract was incorrect and, in any event, irrel­ membership fee of UK £16 was subject to 14 evant, since the policy effected by CPP with VAT at the standard rate. Essentially, the Continental operated to confer a direct right Commissioners' new approach classified the of insurance on CPP's customers. The High Plan as comprising a 'package of services' Court held that, even if the contract of insur­ concerning the registration of credit cards ance were ineffective, some of CPP's services which services were all taxable, whilst Con­ would constitute 'the making of arrangements tinental could not be regarded as supplying for the provision of insurance' within Group 2 insurance to CPP's customers since 'there was of Schedule 6 of the VAT Act 1983. It con­ no privity between it and those customers'. cluded that two separate services were sup­ plied by CPP: the supply of the exempt ser­ vice of 'the making of arrangements for the provision of any insurance'; and the supply of taxable 'services of convenience'. It then directed that an enquiry be made as to the appropriate apportionment between exempt and taxable supplies. CPP appealed against the High Court ruling that the supplies at issue were not a single exempt supply of 14. This decision was challenged by CPP insurance, while the Commissioners cross- before the VAT Tribunal. On 14 December appealed contending that there was a single 1990, the VAT Tribunal, London, held that supply of a card-registration service. On CPP's supply constituted a single supply of a 23 November 1993, the Court of Appeal of card-registration service 'which was taxable at England and Wales, Civil Division, allowed the standard rate and that the lack of privity the Commissioners' cross-appeal and dis­ missed the appeal. The Court of Appeal held that the Plan was 'a card registration service' 14 — The membership application in question (of a certain and that the insurance elements were merely Dr Howell) was made on 25 November 1989. It appears from a later letter of 15 August 1990 that the Commissioners incidental to the supply of the card-registration took the view that CPP should have registered for VAT with effect from 1 August 1989. service. Consequently, it held that the plan

16. CPP sought leave to appeal to the House of Lords principally on the grounds that the Court of Appeal had failed: (i) to apply the correct test for identification of insurance ser­ vices; (ii) to take into account the entire trans­ action when classifying the supply made; (iii) to apply the correct test for determining 18. Leave to appeal to the House of Lords whether the transaction comprised one or was granted by the Appeals Committee on more supplies; (iv) to give effect to the 'related 27 June 1994. The Judicial Committee of the services exemption' in Article 13B(a) of the House of Lords decided subsequently, by Sixth Directive. order of 15 October 1996, to make a refer­ ence to the Court. The House of Lords has described the essence of CPP's case as being whether its supplies constitute wholly or prin­ cipally transactions related to insurance trans­ actions for the purposes of Article 13B(a) of the Sixth Directive and whether any compo­ nent of the Plan, not so classifiable, is not separable because it should be viewed as de minimis or ancillary having regard to the Plan 17. The Commissioners, in their response, as a whole. The following are the questions contended that the correct test to be adopted referred to the Court: towards the issue of single/multiple supplies

15 — Sir John Megaw (see footnote 1 above) considered that CPP became the agent of its customers in arranging that an insurer would become directly liable to them. Although agreeing with Balcombe L. J. that it would be wrong to treat the totality of the Plan as being an arrangements) for the supply of insurance services, he thought that the proper approach to classification in cases where Doth exempt and taxable sup- plies are involved is to look primarily at the nature of the service supplied. He also expressed the view that 'as a matter of principle it would, at best, be rare' that a package of ser- '(1) Having regard to the provisions of the vices need be divided 'where, as here, the payment for the whole of the supplies given in the package is one single indi- Sixth VAT Directive and in particular to vidual sum'; [1994] STC 199, at pp. 209-210. Article 2(1) thereof, what is the proper

(a) does "insurance" within the meaning 19. Written and oral observations were sub­ of Article 13B(a) of the Sixth VAT mitted by CPP, the United Kingdom of Great Directive include the classes of Britain and Northern Ireland and the Com­ activity, in particular "assistance" mission; the Federal Republic of Germany activity, listed in the Annex to submitted only written observations.

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sation', it 'did not avail a trader who was a points 3 and 5 of Article 13B(d) was limited natural person'. For similar reasons, the to banks or financial institutions or otherwise exemption expressed in Article 4(5) of the dependent upon the specific legal form of the Sixth Directive for activities of, inter alia, service supplier (paragraphs 34 to 35). How­ bodies governed by public law applies only ever, as Advocate General Cosmas has recently 'in respect of those [activities] which form stated, the Court has 'declined to apply an part of their specific duties as public authori­ extensive interpretation of the exemptions per­ ties', so that it did not apply to the official mitted under the Directive where there are no 21 services of notaries. interpretative elements to allow extension of the exemption permitted under the relevant 24 provisions and in particular Article 13'.

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OPINION OF MR FENNELLY — CASE C-349/96

27. In order to interpret a provision of Com­ munity law, it is well settled that 'it is neces­

25 — The Commission's proposal envisaged, at Article 14B(a) (see OJ 1973 C 80, p. 1), an exemption of 'insurance and reinsur- ance transactions and services relating thereto supplied by insurance brokers and insurance agents', which is almost identical to the text ultimately adopted. 28 — Case C-340/94 De Jaeck v Staatssecretaris van Financiën 26 — See Farmer & Lyal, EC Tax Law (Oxford, 1994), at [1997] ECR I-461, paragraph 17. pp. 181-182. 29 — 'In interpreting a provision of Community law it is neces- 27 — Case C-38/93 Glawe (1994] ECR I-1679; see paragraph 9 of sary to take account of how the law stands at the date when the Opinion, where he deals principally with taxes on bet- the provision in question must be applied'; see Case C-35/90 ting and gaming. Commission v Spain [1991] ECR I-5073, paragraph 9.

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28. The exemption, as expressed in 31 — It would seem, however, that the High Court and the Court Article 13B(a), extends to both 'insurance and of Appeal adopted the view that Item 3 could be regarded as transposing the first part of the Article 13B(a) exemption. reinsurance transactions' and to 'related ser­ Only the High Court expressly addressed the possibility that the second part of the Article 13B(a) exemption might vices performed by insurance brokers and be applicable. Popplewell J. held, notwithstanding that CPP's services were related to insurance and that it might have insurance agents'. Having regard to the limi­ acted as an agent on behalf of its customers in obtaining tation to insurance brokers and agents imposed insurance, that its activities did not make it an insurance agent In the Court of Appeal, Balcombe L. J. merely stated by the latter part of the exemption, I think it that '... if the insurance element were predominant in the package ... the supply would be exempt under item 3 ...'; [1994] STC 199, at p. 208. 32 — In their response before the House of Lords, the Commis- sioners contended (at point 4.8) that Item 3 exempts 'the 30 — COM (88) 799 final of 20 December 1988. Referring to the making of arrangements for the provision of any insurance' 'disparities' which had emerged regarding the application of by a person permitted to provide such insurance under sec- the Sixth Directive to 'tourist assistance services', the Com- tion 2 of the IC Act 1982 and covers 'the services of brokers mission noted that, on referral of the matter to the VAT and others who act as intermediaries between the insurer Committee, a 'large majority' felt that the provision of cover and insured in putting an insurance policy into place'. If it in respect of such risks, for instance the reimbursement of were necessary to express a view on this matter, I would be medical expenses or of travel expenses of the insured in the inclined to regard the service of 'the making of arrangements event of the death of a member of his family, should, save for the provision of any insurance' as only capable of coming where supplied by automobile clubs, be regarded as 'insur- within the second part of Article 13B(a), namely if it is 'per- ance services coming under Article 13B(a) ...'; see p. 34. formed by insurance brokers and insurance agents'.

30. CPP submits that the notion of 'related 'related services' are exempt only if provided services performed by insurance ... agents' by insurance agents or brokers. The expres­ must be given a Community-law meaning. In sion 'related services' is broad enough to its view, it clearly acted as an insurance agent include any services that may be regarded as in connection with the formation of the insur­ related to the provision of insurance. As it is ance contract, while, in so far as it carried out clear that at least those components of the claims notification, handling and settlement Plan comprised in the Continental policy con­ functions, it may be regarded as having under­ stitute insurance, then some, at least, of its taken the provision of 'related services' in an non-insurance services may reasonably be agency capacity. Finally, any other supplies regarded as related to insurance. As the Com­ may, according to CPP, be viewed as having mission correctly pointed out in its written been made by it in support of the insurance observations, the circumstances of the instant transaction in its capacity as an intermediary. In its written observations the United case clearly involve a service of insurance Kingdom submitted, in substance, that provided by Continental and received by whether CPP acted as an agent or principal CPP's customers which is neither provided was a matter to be determined by national by Continental to CPP nor by CPP to its law. In its oral observations, the United customers. Since Continental is the insurer Kingdom contended that the agreement and CPP's customers are the 'assureds', CPP between CPP and its customers provided no would appear to play an intermediary role support for the view that CPP acted as a which is related, at least partially, to the pro­ broker or agent. In this respect, its counsel vision of insurance. However, the crucial issue stressed that only one single fee was provided raised by the second part of the third ques­ to CPP by its customers in respect of the tion is whether CPP may be regarded, for the entire Plan. Furthermore, both counsel for purposes of Article 13B, as having acted as an the United Kingdom and the agent for the insurance agent or broker. Commission, supported on this point by Ger­ many, contended that the services provided by CPP could not be regarded as constituting a normal or characteristic activity of an insur­ ance agent. The Commission asserted that CPP was not an insurance agent or interme­ diary 'in the strict sense' but, instead, the holder of a group policy on behalf of its cus­ tomers.

vations that its activities in connection with the Commission that its usual business does the provision of the Plan fall, in particular, not seem to be that of an insurance broker or within Article 2(1)(b) of the 1977 Directive. I agent in the strict sense. The limitation of the do not agree. Although Germany may be exemption of 'related services' to 'insurance correct in submitting that the Community brokers and insurance agents' would be notion of an insurance agent or broker cannot deprived of any meaning if any intermediary be confined to persons who hold express whatever which is incidentally involved in Member State authorisations to act as such, arranging insurance ipso facto came within the definition. there is nothing in the 1977 Directive that would support the view that a legal person, like CPP, which, for the purpose of providing a specific package of services to its customers, negotiates through another legal person, who is clearly an insurance broker, to arrange a policy of insurance for the benefit of its cus­ tomers, should be regarded as an insurance 'agent' or 'broker'. The authors of the Sixth 33. Consequently, the Court should answer Directive chose to refer separately to 'insur­ the second part of the third question to the ance agents' and 'insurance brokers', rather effect that the notion of 'related services per­ than to use a more general term such as insur­ formed by insurance brokers and insurance ance 'intermediaries'. In my view, they thereby agents' does not extend to the incidental described persons whose named professional activity of arranging insurance as part of the activity comprises the bringing together of business of providing a credit-card protection insurance undertakings and persons seeking plan of the type at issue in the main proceed­ insurance as provided by Article 2 of the 1977 ings. However, it is, of course, ultimately for 33 Directive. Although those parts of the activ­ the national court to determine the precise ities of CPP, in arranging insurance and in question whether CPP is an insurance broker settling claims, are akin to the normal activi­ or an insurance agent. ties performed by an insurance agent or broker, an undertaking like CPP cannot, in my opinion, be regarded as such an agent or broker. On the basis of the information con­ tained in the order for reference, I agree with

tions', as distinct from related activities. As 'promising to supply' the insurance cover already suggested, I believe that it should be which was to be supplied by Continental. interpreted in the light of the 1973 and 1984 The United Kingdom emphasises that CPP Directives, which do not, however, define the could not be supplying insurance services nature of insurance. The essentials of an insur­ because it is not an authorised insurer, which ance transaction are, as generally understood, is the issue raised by the fourth question. The that one party, the insurer, undertakes to Commission is correct, in my view, in stating indemnify another, the insured, against the that the insurance services in question were risk of loss (including liability for losses for provided neither by Continental to CPP nor which the insured may become liable to a by CPP to its customers. third party) in consideration of the payment of a sum of money called a premium: it is the giving of the indemnity that constitutes the insurance and, thus, the supply of the service. I believe that this definition provides the answer to the essential problem in the present case. The question has to be whether CPP, as a taxable person, supplies insurance services to subscribers to the Plan. The insurance ser­ vice, as distinct from any 'related services', consists, as the Commission says, in the 36. In truth, CPP's involvement in the provi­ assumption by the insurer of a risk borne by sion of the Continental insurance services the insured. In so far as the services provided was, as the Commission says, only as inter­ in the Continental policy comprise insurance, mediary (but not as an 'insurance agent'). It they are not supplied by CPP. was not the supplier for the purposes of the Sixth Directive. It would not make any sense to construe Article 13B(a) as not exempting the 'related services' provided by an under­ taking such as CPP, because it lacked the character of an 'insurance broker' or 'insur­ ance agent', but then to treat it as the prin­ cipal supplier of the main insurance element when, in respect of that element, its function was only that of intermediary.

'credit' and 'credit-transfer transactions' its written observations and upon which CPP exemptions contained in points 1, 3 and 5 of relied at the hearing, cannot, in my view, affect 35 the above analysis. It is concerned with agency. Article 13B(d) of the Sixth Directive. As in Article 13B(a), there is no reference to the CPP does not, as envisaged by Article 6(4), in identity of the service-provider in its 'own name but on behalf of' Continental Article 13B(d). In Muys and SDC, the Court take part in the supply of the insurance. The found that the 'credit' exemption was not reverse is actually the case. In this case, the limited to credit granted by financial institu­ insurance was supplied by Continental in its tions but also extended to that granted by a own name and not that of CPP. supplier of goods, while the 'credit-transfer transactions' exemption extended to opera­ tions carried out by a data-handling centre which were essential for effecting, inter alia, monetary transfers and payments. However, unlike the present case, where CPP does not itself provide an insurance service, the under­ takings concerned in Muys and SDC were 39. Consequently, the first part of the third involved in providing credit or providing ser­ question should be answered to the effect that vices essential for credit-transfer operations. the services supplied by the provider of a The focus of the Court in Muys and SDC credit-card protection plan, such as that pro­ was, thus, on whether the type of transaction vided by CPP in the main proceedings, cannot effected was covered by the exemptions at constitute the provision of insurance within issue. Applying that logic to the present case, the meaning of Article 13B(a) of the Sixth whatever CPP has provided through the Plan, Directive, since the exemption in respect of it has not provided the insurance that was set insurance transactions contained in that pro­ out, at the material time, in what was clearly vision covers only insurance provided by the the insurance policy of Continental. person who undertakes the liability of indem­ nifying the insured in the event of materiali­ sation of an insured risk.

44. CPP argued for an analytical approach in preference to a so-called common-sense approach, which, it submits, would mask proper analysis. The Commission, though emphasising the perspective of the average consumer, is largely in agreement. Each ele­ 42. I would immediately make two observa­ ment of the transaction should be ascertained tions. Firstly, as the Commission says, the so that, on a comparison, it can be seen VAT legislation contains no provisions con­ cerning the treatment of mixed transactions. whether one element is subordinate to or not The Sixth Directive does not envisage any dissociable from another. CPP relied, in par­ mechanism for the separation of the elements ticular, on the strict interpretation applied by of a single transaction so as to enable them to Advocate General Mancini, in Commission v 36 receive different VAT treatment. Secondly, the United Kingdom, to the distinction between order for reference shows that the issue is supplies of goods and services. In that case raised in the present case only because of the the United Kingdom was held to have presence of an insurance element, claimed to exceeded the permitted scope of the exemp­ confer exemption, in whole or in part, on the tion conferred by Article 13A(1)(c) on medical transaction. care services by also exempting related sup­ plies of goods (medicines). CPP does not, thus, agree with the German Government's suggestion that, in cases where factors of equal weight contribute to the attainment of a single economic objective, they should be

43. I would accordingly reformulate the first and second questions as asking what criteria 36 — Case 353/85 [1988] ECR 817; Opinion it p. 829.

46. Several related arguments persuade me that the first two questions in this case should be answered in a way which would undoubt­ edly favour the treatment of the Plan as a 45. The United Kingdom lays emphasis on single non-exempt service, although it is ulti­ common sense, meaning that the character of mately, of course, a matter for the national the whole transaction should be identified, court to apply the answers to the facts of the and submits that a supplier who undertakes case. to perform a particular obligation in consid­ eration of a single price should be regarded as making, at least at first sight, a single sup­ 37 ply. Germany, with whose observations on this point counsel for the United Kingdom agreed at the hearing, submits that it flows from Articles 2(1), 5(1) and 6(1) of the Sixth Directive that the supply of what comprises for economic purposes a single service should 47. Firstly, I agree with the emphasis placed not be artificially divided up into individual by the United Kingdom and Germany on the components which are not economically inde­ desirability of treating the transaction as pendent. The United Kingdom suggested that involving a single supply. The Plan is mar­ consumers of food on board ships such as keted by CPP as a single useful service, though that at issue in Faaborg-Gelting Linien v comprising a cluster of different elements. A Finanzamt Flensburg do not, for instance, single price is charged. The price or cost of receive the supply of food, a table or cutlery the individual elements are not readily dis­ but, instead, the supply of what may best be 3 cernible. The case is different from the pur­ described as restaurant services. 8In the chase in a supermarket of a bundle of indi­ United Kingdom's view, a strict approach vidually priced goods, though a single sum is should be adopted as concerns arguments 39 paid at the check-out. Neither the Com­ whose effect would result in splitting up munity nor the Member States have an interest unnaturally a single price among the compo­ in complicating the administration of the VAT nent elements of a package of services so as system by artificially splitting the prices of services sold as one.

48. It has been generally accepted that the tion. I do not think that that objective would segregation of elements of a single supply be served by costly and complex arguments would not be warranted if, for example, the regarding the relative values of different ele 41 exempt service was purely incidental to the ments of a single service. The final decision main supply. The Commission gave, as an in this respect must, however, be made by the example of an incidental insurance supply, the national court. provision of 'free' travel insurance as a bonus by some credit-card companies; the small annual fee paid for the use of the card could not, in its view, be regarded as including a

42 nantly the supply of insurance services. Since I have already expressed the opinion that insurance services are provided only by the insurer, it is likely in practice that this part of the exemption will enure to the ben efit only of insurers or, in effect, their clients. 49. Apart from a general convenience argu That, however, is in my view fully in keeping ment, I would also draw attention to the with a straightforward interpretation of the requirement in the introductory words of Article 13B that Member States lay down conditions 'for the purpose of ensuring the correct and straightforward application of the 41 — The facts of the present case are distinguishable from those in Case 73/85 Kerrutt v Finanzamt Mönchengladbach-Mitte exemptions .

The principle of accessorium sequitur principale has been 40 — Of course, on the definition of the scope of the insurance applied on several occasions by the Court; see, in particular, exemption that I have proposed above, the credit-card com- Case 126/78 Nederlandse Spoorwegen v Staatssecretaris Van pany could only seek to claim the benefit of the insurance Financiën [1979] ECR 2041, paragraph 11, and Case 173/88 exemption if it (or one of the companies in its group) under- Skatterministeriet v Henriksen [1989] ECR 2763, para- took to underwrite the insurance component itself graph 14.

53. In the light of the answers proposed for 52. Accordingly, I would suggest that the first the first three questions, there does not appear and second questions be answered together to to me to be any need to answer the fourth. the effect that a service or services of the kind The exemption applies, in my view, only to provided by CPP through the card-protection insurance services provided by insurers. No question arises in this case of the unautho­ rised or unlicensed supply of insurance ser­ 43 — The fan that CPP will be liable to pay VAT on supplying vices. Continental, whose insurance policy is the Plan to its customers whilst unable to deduct the cost of the insurance component as a VAT input will not lead to an at issue, is clearly accepted as being autho­ unfair windfall for the Commissioners, as CPP claims, since rised; CPP is not, but then it is not an insurer. the supply of the insurance ostensibly to CPP by Conti- nental will be exempt from VAT and CPP may be able to The fourth question is, therefore, purely aca­ deduct other inputs incurred in respect of provision of the Plan. demic.

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V — Conclusion

54. In the light of the foregoing I recommend that the Court answer the questions referred by the House of Lords as follows:

(1) A service or services of the kind provided by Card Protection Plan ('CPP') through the card-protection plan ('Plan') operated by it is exempt from VAT pursuant to Article 13B(a) of the 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, only if the insurance component of the Plan is supplied by an insurer who undertakes the risk. Furthermore, the entire Plan is exempt from VAT only if insurance constitutes the predominant element in the Plan. If the insurance component is not predominant, it is exempt only if its price is clearly distinguishable in the price of the whole service;