taxud/2414/08 - European Commission - Europa

(10) Loan loss insurance
Contracts where – for example - the risk of the debtor going bankrupt is taken over by a
person with the obligation to pay the debt of debtor and/ or the additional costs related to
that bankruptcy, cover in the view of DG Taxud a risk and involve the supply of
insurance services where they fulfil the other conditions of Article 135a (1).
(bb) Insurance elements set out separately
Where a complex transaction includes an element of insurance which is set out
separately, the insurance shall be a distinct service exempted under Article 135 (1b) of
Directive 2006/112/EC. The Regulation does not contain any implementing provisions in
this respect. In fact it is self-explanatory that the intention here is to grant the economic
operator concerned the possibility to get insurance services under the exemption if he's
able and willing to be more transparent on the elements of which the price for his goods
or services is composed and where he accepts the administrative charges of supplying
taxable and exempt services with corresponding consequences for his right to deduct
input VAT.
(cc) granting of credit
Under Article 135a (2) of Directive 2006/112/EC "granting of credit" means the lending
of money or the promise to lend money.
Article 135a (2) is complemented by Article 3 of the Regulation which resolves the
following cases:
1. The definition of the "granting of credit" provided for in point (2) of Article 135a of
Directive 2006/112/EC shall cover the provision of at least the following:
(a) loans, whether syndicated or not, including loans granted as a financing element
in conjunction with the supply of goods or services provided the financing
element is not an integral part of the consideration;
Under a loan money is lent and usually paid back in instalments. A syndicated loan (or
"syndicated bank facility") is a large loan in which a group of banks work together to
provide funds for a borrower. There is usually one lead bank (the "Arranger" or "Agent")
that takes a percentage of the loan and syndicates the rest to other banks. A syndicated
loan is the opposite of a bilateral loan, which only involves one borrower and one lender
(often a bank or financial institution.); loans can also be granted as a financing element in
conjunction with the supply of goods or services. Where such a financing element
remains visible not becoming a part of the remuneration for the goods or services and
where it is available separately, it usually constitutes an aim in itself for the client;
(b)
loans secured on real property, including mortgage loans;
This provision is self-explanatory;
(c)
loans secured on movable property, including pawn broking;
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