New administrative VAT decision: Travel package and insurance services – Impact for Belgian lease industry


The Belgian VAT authorities have published a new administrative decision clarifying the VAT treatment of offerings by travel agencies consisting of both travel services and insurance services, based on the ‘old’ CJEU case BGZ Leasing of 2011 (C-224/11).

These guidelines adjust the initial viewpoint of the Belgian VAT authorities to the CJEU case BGZ Leasing and will consequently have an impact on the Belgian VAT treatment of insurance services offered by tax payers not active in the insurance industry.

The Belgian VAT regime applicable to an insurance policy offered by travel agencies in combination with travel services depends on the manner in which these services are offered to customers (“mode of offering”).

In summary, the Belgian VAT authorities have identified 3 specific offerings, depending on whether the insurance is included in the travel package offered by the travel agency and, if not, whether the insurance is contracted by means of either an individual insurance policy or a collective insurance policy in the name of the customer.

According to this decision, the on-charging of insurance premiums to the lessee will under specific circumstances no longer qualify as a disbursement outside the scope of VAT but will be considered as a separate VAT exempt insurance transaction (without input VAT credit), with an impact on the travel agent’s right to deduct input VAT.

The Belgian VAT authorities provide specific guidelines to calculate the travel agent’s input VAT deduction using the pro rata mechanism, taking into account the specifications of the margin scheme for travel agents. Note that only the earned “insurance commission” will have to be taken into account.

Impact for whole lease business in Belgium

Although this decision of the VAT authorities currently only covers the travel agencies that offer insurance policies, these guidelines should be considered as potential general future VAT guidelines applying the CJEU case BGZ Leasing and therefore impacting the whole lease business as the “disbursement” qualification of the insurance premium outside the scope of VAT and without impact on the input VAT deduction position will quite possibly no longer be retained.

In any case, affected businesses may wish to review their current contractual and commercial arrangements so as to assess whether they are impacted by the decision, and take appropriate measures to safeguard their interests.

For more information, please contact your local PwC adviser.