Who is an insurance agent
Table of Contents
1.1 Definition according to the HGB
1.2 Differentiation from insurance brokers
2 income tax
2.1 Income from business operations
2.2 Other income from services
2.2.2 BFH of 2.3.2004
2.2.3 BFH of July 17, 2007
3 trade tax
4 sales tax
4.1 Tax exemption according to § 4 No. 11 UStG
4.2 Individual cases
1.1. Definition according to the HGB
Insurance intermediary is the generic term for insurance agents and insurance brokers.
They mediate commercial insurance contracts in particular. Insurance representation is an activity that is carried out for an insurer.
An insurance or building society representative can be an independent trader (Section 84 (1) HGB) or an ArbN (Section 84 (2) HGB). According to Section 84, Paragraph 1, Clause 2 of the German Commercial Code (HGB), anyone who is essentially free to organize their work and determine their working hours is self-employed.
According to Section 92 (1) HGB, an insurance or building society representative is anyone who, as a commercial agent, is entrusted with brokering or concluding insurance contracts. An insurance or building society representative is constantly entrusted with arranging business for another entrepreneur or concluding them on his behalf. For the contractual relationship between the insurance agent and the insurer, the provisions for the contractual relationship between the commercial agent and the entrepreneur apply. An insurance or building society representative is only entitled to commission for transactions that can be traced back to his activity (Section 92 (3) HGB). The claim to commission arises (Section 87a (1) in conjunction with Section 92 (4) HGB) as soon as the policyholder has paid the premium from which the commission is calculated according to the contractual relationship.
1.2. Differentiation from insurance brokers
In contrast to this, an insurance or building society broker works commercially for other people without being entrusted with it on the basis of a contractual relationship (Section 93 BGB).
2. Income tax
2.1. Business income
Insurance agents who broker insurance contracts themselves (so-called special agents) are to be viewed as fully independent. This also applies if you receive a moderate fixed salary in addition to commission payments. If a special agent has also taken on administrative tasks and the collection of premiums or contributions, the income from this is to be treated as remuneration for independent secondary activity. It is irrelevant whether, for example, collection commission relates to insurance that the special agent has advertised himself or to other insurance. Insurance agents who have their own office for a certain district both to manage the portfolio and to conclude new business and who work mainly on a commission basis are usually traders (R 15.1, Paragraph 1 EStR; → Income from business operations).
Self-employed insurance agents also carry out a commercial activity if they are only allowed to work for a single insurance company (BFH judgment of October 26, 1977, I R 110/76, BStBl II 1978, 137; H 15.1 [insurance agent] EStH).
In terms of income tax law, the commercial agent realizes profit when the entrepreneur has carried out the brokered business and has thus accepted the agency's brokerage service. The point in time when the brokerage service is accepted is the point in time at which the building society customer pays the initial premium.
Commissions that an insurance agent receives from the insurance company for taking out his own private insurance (e.g. life insurance for himself or his wife) in the same way as for arranging insurance contracts with third parties are operating income (BFH judgment of May 27, 1998, XR 17/95, BStBl II 1998, 618).
In the case of so-called general agents, a division of the activity into self-employed and non-self-employed activity is generally out of the question. In general, the general agent is a trader if he bears the risk of his activity, maintains an office with his own employees, is largely free in the organization of his office and his time management despite the existing instructions in the design of his office and the success of his activity is not insignificant from his efficiency and initiative and the parties themselves refer to him as a commercial agent and not as an ArbN (BFH judgment of October 3, 1961, I 200/59 S, BStBl III 1961, 567). This also applies to general agents of a health insurance company (BFH judgment of April 13, 1967, IV 194/64, BStBl III 1967, 398; H 15.1 [general agent] EStH).
2.2. Other income from services
According to Section 22 No. 3 EStG, other income within the meaning of Section 2 Paragraph 1 Clause 1 No. 7 EStG includes income from services, unless they belong to other types of income (Section 2 Paragraph 1 Clause 1 No. 1 to 6 EStG) nor income within the meaning of Section 22 No. 1, 1a, 2 or 4 EStG, e.g. income from occasional brokerage and from the rental of movable property. Such income is not subject to income tax if it was less than € 256 in the calendar year.
2.2.2. BFH of 2.3.2004
In a judgment of 2.3.2004 (IX R 68/02, BStBl II 2004, 506), the BFH decided on the benefits of the policyholder by forwarding the agent's commission to him.
A policyholder does not provide any benefits within the meaning of Section 22 No. 3 EStG if he (only) achieves through an agreement with an insurance agent that the latter passes on part of his commission to him (→ taxation of pension benefits, → pension expenses / pension expenses, → income from Benefits within the meaning of Section 22 No. 3 EStG).
2.2.3. BFH of July 17, 2007
A commission that is accepted as payment for a brokerage activity is included in the income from services within the meaning of Section 22 No. 3 EStG (BFH of July 17, 2007, IX R 1/06, BFH / NV 2007, 2263; → Income from services in According to § 22 No. 3 EStG). In the case of the judgment, the policyholder's wife brokered a capital life insurance contract between her husband and the insurance company and received around € 2,100 in return.
Another service within the meaning of Section 22 No. 3 EStG is any action, toleration or omission that can be the subject of a paid contract and that triggers a consideration. It is crucial whether the consideration (the remuneration) is due to the behavior of the Stpfl. is caused. It is sufficient that he accepts a consideration given as such in the economic context of his activity. In this way, he assigns his behavior to the sphere that is important in terms of business and tax law.
3. Business tax
According to § 2 Abs. 1 GewStG every standing business enterprise is subject to trade tax, as far as it is operated in Germany. A commercial enterprise is to be understood as a commercial enterprise within the meaning of the EStG. A commercial enterprise is operated in Germany if there is one for it in Germany or on a merchant ship registered in a domestic shipping register Permanent establishment is entertained. The permanent establishment is defined in § 12 AO.
As a commercial agent, the insurance agent is an independent trader and is therefore subject to trade tax (→ trade tax).
4. Sales tax
4.1. Tax exemption according to § 4 No. 11 UStG
According to § 4 No. 11 UStG (Art. 135 Paragraph 1 Letters a and b of the VAT Directive), sales from activities as a building society agent, insurance agent and insurance broker are tax-free. The exemption provision of § 4 No. 11 UStG contains an exclusive list of the beneficiary professional groups. It cannot be applied to other professions, e.g. bank representatives, even if they have similar job characteristics. The terms insurance agent and insurance broker are to be interpreted in accordance with EU law and not in terms of commercial law within the meaning of § 92 and § 93 of the German Commercial Code (HGB). This is a fake tax exemption without the possibility of the option within the meaning of § 9 UStG (§ 4 No. 11 UStG is not listed in § 9 Paragraph 1 UStG).
One of the essential aspects of insurance brokerage activity which is tax-free under Article 135 (1) (a) of the VAT Directive is to look for customers and bring them together with the insurer. Services by insurance agents and brokers are only tax-free if they are related to the insurer and the policyholder at the same time. Services such as the setting and payment of the insurance agents' commissions, keeping in contact with them and passing on information to the insurance agents, on the other hand, are not part of the activities of an insurance agent. In general, support services for the performance of the tasks incumbent on the insurer itself are taxable. In this respect, there are no differences between the tax exemptions for the insurance sector and for the banking and financial sector according to Art. 135 Para. 1 Letters a and b of the VAT Directive.
A so-called advertising agent does not make any sales tax-free within the meaning of Section 4 No. 11 UStG. The advertising agent is not involved in the search for potential buyers and does not bring them together with insurers. The activity of the advertising agent to be decided in the judgment case was essentially limited to the mere collection of data. It is true that the insurance could not be taken out without prior data collection. However, this is not sufficient for tax exemption, as it was only a matter of taking stock of the current insurance situation of the interested party without even explaining insurance offers to the customer.
The tax exemption is also activity-related; see wording "... sales from the activity as ...". The exemption thus extends to all services that are provided in the exercise of the beneficiary activities (Section 4.11.1, Paragraph 2, Clause 1 UStAE). The typical occupational activity of a building society agent, insurance agent or insurance broker also includes, for example, the support, supervision or training of subordinate independent agents (Section 4.11.1, Paragraph 2, Clause 6 UStR). However, this presupposes that the entrepreneur who takes on the support, monitoring or training services can indirectly influence one of the contracting parties by examining each contract offer (see BMF letter of October 9, 2008, BStBl I 2008, 948 on VAT Treatment of sales from the activity as a building society agent, insurance agent or insurance broker and the consequences of the BFH judgment of September 6, 2007, VR 50/05, BStBl II 2008, 829). The payment of performance-based remuneration (so-called super commission) is evidence that typical professional services are being provided (BFH judgment of July 9, 1998, V R 62/97, BStBl II 1999, 253). According to the wording of the regulation, however, auxiliary transactions are excluded from the tax exemption (Section 75 Paragraph 2 Clause 9 UStR).
The following question has currently been submitted to the ECJ for a preliminary ruling: Is there a service associated with insurance and reinsurance sales that is provided tax-free by insurance brokers and agents within the meaning of Art. 135 Para. 1 lit. carries out an intermediary activity for an insurance company, also provides this insurance company with the brokered insurance product (BFH decision VR-58/17 of 5.9.2019, LEXinform 5022613).
4.2. Individual cases
Back office services
In its judgment of March 3, 2005 (C-472/03, UR 2005, 201; note from Wäger), the ECJ ruled on services in the insurance sector as distinct from back-office activities that are not provided by insurance brokers or agents.
These paid back office services for an insurance company are not tax-exempt activities of an insurance broker.
Debt-financed pension insurance for a one-off payment
The administrative office of OFD Koblenz dated March 29, 2007 (S 7160 A - St 44 2, UR 2007, 707) commented on the treatment of services under the tax-saving model of "externally financed pension insurance against a single amount".
In the opinion of the BFH (judgment of 3.8.2017, VR 19/16, BStBl II 2017, 1207), the support, training and monitoring of Insurance agents, the setting and payment of commissions as well as keeping in contact with the insurance agents.
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