Card Protection Plan Ltd v Commissioners of Customs and Excise [1998] EUECJ C-349/96_O (11 June 1998)


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Court of Justice of the European Communities (including Court of First Instance Decisions)
You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Card Protection Plan Ltd v Commissioners of Customs and Excise [1998] EUECJ C-349/96_O (11 June 1998)
URL: http://www.bailii.org/eu/cases/EUECJ/1998/C34996_O.html
Cite as: ECLI:EU:C:1998:281, [1998] EUECJ C-349/96_O, EU:C:1998:281

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OPINION OF ADVOCATE GENERAL

FENNELLY

delivered on 11 June 1998 (1)

Case C-349/96

Card Protection Plan Ltd

v

Commissioners of Customs & Excise

1.
    'Special difficulties arise, in the mystic twilight of VAT legislation, wherethere is what in modern jargon is called ”a package” of services, some of whichmay, and others of which may not, be within a VAT exemption‘. (2) The Court isasked in this case to interpret for the first time the scope of the 'insurance‘exemption in Community VAT law, as well as to elucidate the correct approach tothe VAT characterisation of supplies of services comprising several elements, whichmay individually merit different VAT treatment. (3) Essentially, the national courtseeks particular guidance as to whether the various services involved in the supplyof a credit-card protection plan may benefit wholly or in part from the insuranceexemption.

I — The legal context

A — Community provisions

2.
    Under Article 2(1) of the Sixth Directive, 'the supply of goods or serviceseffected for consideration within the territory of the country by a taxable personacting as such‘ shall be liable to VAT. Although the Sixth Directive does notdefine the notion of the 'supply of services‘, Article 6 provides that it 'shall meanany transaction which does not constitute a supply of goods within the meaning ofArticle 5‘. In the present case, although some of the elements of the 'package‘of services at issue constitute goods, it has nevertheless not been contended thatany component of the various services supplied may be regarded as constituting a'supply of goods‘ for VAT purposes. (4) Accordingly, it is appropriate to treat thecase as concerning only the supply of services.

3.
    Article 13 of the Sixth Directive provides for various exemptions from VATliability under Article 2. Whereas Article 13A deals with 'exemptions for certainactivities in the public interest‘, Article 13B concerns a number of othermiscellaneous exemptions, among which is the 'insurance‘ exemption undersubparagraph (a). Article 13B(a) is worded as follows:

'Without prejudice to other Community provisions, Member States shall exemptthe following under conditions which they shall lay down for the purpose ofensuring the correct and straightforward application of the exemptions and ofpreventing any possible evasion, avoidance or abuse:

(a)    insurance and reinsurance transactions, including related services performedby insurance brokers and insurance agents;

... .‘

Furthermore, the terms of Article 6(4), according to which, 'where a taxableperson acting in his own name but on behalf of another takes part in a supply ofservices, he shall be considered to have received and supplied those serviceshimself‘, are also relevant, particularly in respect of the third question.

4.
    Since the Sixth Directive contains no definition of the notion of 'insurance‘,and as Article 61(2) of the Treaty mentions 'insurance services‘ only in connectionwith liberalisation of capital movements, reference has been made to some of therelevant Community insurance directives. The First Council Directive 73/239/EECof 24 July 1973 on the coordination of laws, regulations and administrativeprovisions relating to the taking-up and pursuit of the business of direct insuranceother than life insurance (hereinafter the '1973 Directive‘) was intended tofacilitate the provision of 'direct insurance‘ by insurance companies outside theirhome countries. (5) Although 'insurance‘ was not there defined, (6) Article 1provided that the Directive would apply to 'the classes of insurance defined in theAnnex ...‘. Point A of the Annex, which deals with the 'classification of risksaccording to classes of insurance‘, includes the following heading:

'16.    Miscellaneous financial loss

    —    other financial loss (non-trading)

    —    other forms of financial loss.‘

The 1973 Directive was amended by Council Directive 84/641/EEC of 10 December1984 (hereinafter 'the 1984 Directive‘). (7) Article 1 of the 1984 Directive replacedthe original Article 1 of the 1973 Directive, and now reads:

'1.    This Directive concerns the taking-up and pursuit of the self-employedactivity of direct insurance, including the provision of assistance referred toin paragraph 2, carried on by undertakings which are established in theterritory of a Member State or which wish to become established there.

2.    The assistance activity shall be the assistance provided for persons who getinto difficulties while travelling, while away from home or while away fromtheir permanent residence. It shall consist in undertaking, against the priorpayment of a premium, to make aid immediately available to the beneficiaryunder an assistance contract where that person is in difficulties following theoccurrence of a chance event, in the cases and under the conditions set outin the contract.

    The aid may consist in the provision of benefits in cash or in kind. Theprovision of benefits in kind may also be effected by means of the staff andequipment of the person providing them.

    The assistance activity does not cover servicing, maintenance, after-salesservice or the mere indication or provision of aid as an intermediary.

3.    The classification by classes of the activity referred to in this Article appearsin the Annex.‘

Article 14 of the 1984 Directive provides for the addition to point A of the Annexof the following new heading of insurance class:

'18.    Assistance

    Assistance for persons who get into difficulties while travelling, while awayfrom home or while away from their permanent residence.‘

5.
    More relevant to the second part of the exemption regarding 'relatedservices‘ contained in Article 13B(a) of the Sixth Directive is Council Directive77/92/EEC of 13 December 1976 on measures to facilitate the effective exercise offreedom of establishment and freedom to provide services in respect of theactivities of insurance agents and brokers (ex ISIC Group 630) and, in particular,transitional measures in respect of those activities (hereinafter 'the 1977Directive‘). (8) Article 2(1) of the 1977 Directive refers, at paragraph (a), to'professional activities of persons who ... bring together, with a view to theinsurance or reinsurance of risks, persons seeking insurance or reinsurance andinsurance or reinsurance undertakings, carry out work preparatory to the conclusionof contracts of insurance or reinsurance and, where appropriate, in theadministration and performance of such contracts, in particular in the event of a

claim‘, while paragraph (b) refers to 'professional activities of persons instructed... to act in the name and on behalf of, or solely on behalf of, one or moreundertakings in introducing, proposing and carrying out work preparatory to theconclusion of, or in concluding, contracts of insurance, or in assisting in theadministration and performance of such contracts, in particular in the event of aclaim‘. Article 2(2) states that the Directive 'shall apply in particular to activitiescustomarily described in the [United Kingdom] as ... [those of an] insurance broker... agent or sub-agent‘.

B — National provisions

6.
    At the material time for the purposes of the main proceedings, the relevantlegislation applicable in the United Kingdom was the Value Added Tax Act 1983(hereinafter 'the VAT Act 1983‘). Section 17 and Schedule 6, Group 2 of theVAT Act 1983 exempted, inter alia, from VAT:

'1.    The provision of insurance and reinsurance by persons permitted, inaccordance with Section 2 of the Insurance Companies Act 1982, to carryon insurance business.

2.    ...

3.    The making of arrangements for the provision of any insurance orreinsurance in Items 1 and 2.

4.    The handling of insurance claims by insurance brokers, insurance agents andpersons permitted to carry on insurance business as described in Item 1.‘ (9)

7.
    The 1973 Directive was transposed into the law of the United Kingdom bythe Insurance Companies Act 1982 (hereinafter 'the IC Act 1982‘). (10) Heading 16of point A of the Annex to the 1973 Directive was implemented by class 16 ofPart I of Schedule 2 of the IC Act 1982. The 1984 Directive was transposed by theInsurance Companies (Assistance) Regulations, 1987, whose regulation 2(b) andschedule added a new class to Part I of Schedule 2 of the IC Act 1982 whichtransposes into United Kingdom law heading 18 added to the 1973 Directive by the1984 Directive. (11)

8.
    Under Section 132 of the Financial Services Act 1986, insured persons mayclaim enforcement of insurance contracts entered into with persons who are not

authorised to carry on insurance business. Thus, although only persons authorisedunder section 2 of the IC Act 1982 may lawfully provide insurance services, theabsence of such an authorisation does not affect the enforceability of a contract ofinsurance underwritten by an unauthorised person, at least as against the insurer.

II — The factual context

A — The card protection plan

9.
    The appellant in the main proceedings, Card Protection Plan Ltd(hereinafter 'CPP‘), provides a service, of the same name (hereinafter 'the Plan‘),to holders of credit cards that offers protection against financial loss orinconvenience resulting from the loss or theft of their cards, as well as certain otheritems such as car keys, passports, or insurance documents. The service comprises,in particular, indemnification against financial loss arising from the unauthoriseduse of credit cards, the execution by CPP of the necessary notification formalitiesin the event of loss or theft of a card, and a number of forms of assistance, forinstance medical, designed to operate where the loss or theft occurs away from thecardholder's home. For the element of indemnification against financial loss, CPPobtains block cover, via a broker (RK Harrison Insurance Brokers Ltd), from aninsurance company. (12) At the material time, the insurer was the ContinentalAssurance Company of London plc (hereinafter 'Continental‘). (13) Althoughexpress reference is made to CPP in the policy, it seems to be generally accepted,at least in the observations submitted to this Court, that it is its customers who arethe named 'assureds‘ under the policy. When a customer purchases CPP'sservices, his name is added to the schedule of 'assureds‘. CPP pays insurancepremiums to Continental at the beginning of the policy year: necessary adjustmentsarising from cardholders entering and leaving the Plan during the course of the yearare made at the end of that year.

10.
    In the event of a claim, the customer cardholder is required to give noticeof the loss to CPP within 24 hours of discovering it. CPP handles claims for lessthan UK £5 000 by virtue of an authority granted in the insurance policy. Continental either deals with larger claims itself or delegates authority on an ad hoc

basis to CPP. If claims occur, it is Continental which provides the underlyingfinance, although CPP sends the cheque to the customer. (14)

11.
    The insurance cover provided in the policy of Continental is described in theschedule to that policy. It may be summarised as follows:

(A)    An indemnity in respect of fraudulent use of cards (amount insured duringthe first 24 hours following discovery of the loss or theft UK £750 for anyone claim as agreed by underwriters);

(B)    An indemnity in respect of costs of reuniting the cardholder with lostluggage, lost bags or property when tagged with labels issued by CPP(amount insured UK £25 for any one claim);

(C)    An indemnity in respect of the costs incurred in assisting police and/ormaking insurance claims on items of valuable property and/or importantdocuments whose serial numbers have been registered with CPP (suminsured UK £25 for any one claim);

(D)    Provision of underwriters' representatives to provide 24-hour telephoneadvice on access to medical facilities including the arrangement of medicalappointments overseas;

(E)    An indemnity against any emergency cash advance following loss of cardslimited to UK £500 for any one claim repayable within 14 days;

(F)    An indemnity in respect of the provision of an airline ticket from anywherein the world to the cardholder's home following loss of cards (indemnity upto UK £1 500 for any one claim repayable within 14 days).

12.
    In an advertising brochure CPP mentions, under 15 headings, the forms ofservice which potential customers may expect under the Plan:

'—    Item 1:    the maintenance by CPP of a computerised record of customers'credit cards;

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

—    Item 4:    in the event of loss, a 24-hour telephone line is available toreceive loss notifications and to allow appropriate action to betaken to pass on the information to credit card issuers and alsothe supply of adhesive stickers bearing the 24-hour phone linenumber;

—    Item 5:    in the event of loss, assistance is provided to obtain replacementcredit cards;

—    Item 6:    in the event of a change of address, assistance is provided innotifying card companies;

—    Item 7:    supply of pre-printed key tabs enabling them to be refound inthe event of loss;

—    Item 8:    analogous to point (C) of the policy;

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

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

—    Item 11:    analogous to point (D) of the policy;

—    Item 12:    analogous to point (F) of the policy;

—    Item 13:    supply of an annual printout for the customer to check;

—    Item 14:    supply of a medical card for the entry on it of personal medicalinformation;

—    Item 15:    car hire discounts.‘

B — The procedure before the national court

13.
    From 1983 to 1990, the Commissioners of Customs & Excise (the relevantUnited Kingdom VAT authority, hereinafter the 'Commissioners‘) considered theservices supplied by CPP to be exempt. However, the Commissioners altered theirassessment by a letter of 23 February 1990 and informed CPP that a specimensupply of its services over a three-year period in consideration of an annualmembership fee of UK £16 was subject to VAT at the standard rate. (15) Essentially, the Commissioners' new approach classified the Plan as comprising a'package of services‘ concerning the registration of credit cards which serviceswere all taxable, whilst Continental could not be regarded as supplying insuranceto CPP's customers since 'there was no privity between it and those customers‘.

14.
    This decision was challenged by CPP before the VAT Tribunal. On14 December 1990, the VAT Tribunal, London, held that CPP's supply constituteda single supply of a card-registration service which was taxable at the standard rateand that the lack of privity of contract meant that Continental had not providedany insurance to the customer.

15.
    This decision was appealed to the High Court of England and Wales,Queen's Bench Division, which held (per Popplewell J.), on 1 July 1992, that theVAT Tribunal's finding regarding the supposed lack of privity of contract wasincorrect and, in any event, irrelevant, since the policy effected by CPP withContinental operated to confer a direct right of insurance on CPP's customers. TheHigh Court held that, even if the contract of insurance were ineffective, some ofCPP's services would constitute 'the making of arrangements for the provision ofinsurance‘ within Group 2 of Schedule 6 of the VAT Act 1983. It concluded thattwo separate services were supplied by CPP: the supply of the exempt service of'the making of arrangements for the provision of any insurance‘; and the supplyof taxable 'services of convenience‘. It then directed that an enquiry be made asto the appropriate apportionment between exempt and taxable supplies. CPPappealed against the High Court ruling that the supplies at issue were not a singleexempt supply of insurance, while the Commissioners cross-appealed contendingthat there was a single supply of a card-registration service. On 23 November 1993,the Court of Appeal of England and Wales, Civil Division, allowed theCommissioners' cross-appeal and dismissed the appeal. The Court of Appeal heldthat the Plan was 'a card registration service‘ and that the insurance elementswere merely incidental to the supply of the card-registration service. Consequently,it held that the plan was taxable at the standard rate. Balcombe L.J., with whomButler-Sloss L.J. agreed, also expressed the view that Item 1 of Group 2 ofSchedule 6 of the VAT Act 1983, in limiting the insurance exemption to authorisedinsurers, was compatible with Article 13B of the Sixth Directive. (16)

16.
    CPP sought leave to appeal to the House of Lords principally on thegrounds that the Court of Appeal had failed: (i) to apply the correct test foridentification of insurance services; (ii) to take into account the entire transactionwhen classifying the supply made; (iii) to apply the correct test for determiningwhether the transaction comprised one or more supplies; (iv) to give effect to the'related services exemption‘ in Article 13B(a) of the Sixth Directive.

17.
    The Commissioners, in their response, contended that the correct test to beadopted towards the issue of single/multiple supplies was to determine what wassupplied as a matter of fact and then to decide, essentially as a matter of commonsense, whether it could appropriately be described as a single or composite supply,and, in the latter case, whether it could still be regarded as constituting a singleeconomic supply. If CPP were to be regarded as having made two supplies (of acard registration service and insurance), they should none the less be regarded ascomprising a single economic transaction under which the principal supply was thatof a card registration service.

18.
    Leave to appeal to the House of Lords was granted by the AppealsCommittee on 27 June 1994. The Judicial Committee of the House of Lordsdecided subsequently, by order of 15 October 1996, to make a reference to theCourt. The House of Lords has described the essence of CPP's case as beingwhether its supplies constitute wholly or principally transactions related toinsurance transactions for the purposes of Article 13B(a) of the Sixth Directive andwhether any component of the Plan, not so classifiable, is not separable becauseit should be viewed as de minimis or ancillary having regard to the Plan as a whole. The following are the questions referred to the Court:

'(1)    Having regard to the provisions of the Sixth VAT Directive and inparticular to Article 2(1) thereof, what is the proper test to be applied indeciding whether a transaction consists for VAT purposes of a singlecomposite supply or of two or more independent supplies?

(2)    Does the supply by an undertaking of a service or services of the kindprovided by Card Protection Plan (CPP) through the card protection planoperated by them constitute for VAT purposes a single composite supplyor two or more independent supplies? Are there any particular features ofthe present case, such as the payment of a single price by the customer orthe involvement of Continental Assurance Company of London plc as wellas CPP, that affect the answer to that question?

(3)    Do such supply or supplies constitute or include ”insurance ... transactionsincluding related services performed by insurance ... agents” within themeaning of Article 13B(a) of the Sixth VAT Directive? In particular, forthe purpose of answering that question:

(a)    does ”insurance” within the meaning of Article 13B(a) of the Sixth VATDirective include the classes of activity, in particular ”assistance” activity,listed in the Annex to Council Directive 73/239/EEC (the First CouncilDirective on Non-Life Insurance), as amended by CouncilDirective 84/641/EEC?

(b)    do the ”related services of ... insurance agents” in Article 13B(a) of theSixth VAT Directive constitute or include the activities referred to inArticle 2 of Council Directive 77/92/EEC?

(4)    Is it compatible with Article 13(B)(a) of the Sixth VAT Directive for aMember State to restrict the scope of the exemption for ”insurance ...transactions” to supplies made by persons permitted to carry on insurancebusiness under the law of that Member State?‘

III — Observations submitted to the Court

19.
    Written and oral observations were submitted by CPP, the United Kingdomof Great Britain and Northern Ireland and the Commission; the Federal Republicof Germany submitted only written observations.

IV — Analysis

20.
    All of the questions referred by the House of Lords are linked in one wayor another to the issue of whether the services provided by CPP are exempt fromVAT by reason of their insurance content. The third and fourth questions raisespecific issues concerning the interpretation of the insurance exemption. However,the first two questions regarding the treatment of those services as 'singlecomposite supplies or two or more independent supplies‘ arise only because of thepresumed presence of an exempt element.

21.
    Accordingly, I think it is important to consider, in the first instance, theimplications of the fact that the Plan may comprise elements of insurance to suchan extent that exemption from VAT is validly claimed in whole or in part.

A — Question 3

22.
    As the Court has emphasised, for example, in Commission v Netherlands,'... the Sixth Directive is characterised by its general scope and by the fact that allexemptions must be expressly provided for and precisely defined‘. (17) In principleVAT should be imposed on all supplies of services for consideration by a taxableperson and, as the Court has also repeatedly stated, the 'exemptions provided forby Article 13 of the Sixth Directive are to be interpreted strictly since they

constitute exceptions to the general principle that turnover tax is levied on allservices supplied for consideration by a taxable person‘. (18)

23.
    The consequences of this principle of interpretation will depend on thewords used to give effect to the exemption in question and, in particular, anyconditions attached. For instance, Article 13A(1)(g) obliges Member States toexempt supplies of services 'clearly linked to welfare and social security work ...performed by bodies governed by public law or by other organisations recognisedas charitable ...‘. (19) The Court recalled in Bulthuis-Griffioen that the exemptions'have their own independent meaning in Community law‘ and the same 'must alsobe true of the specific conditions laid down for these exemptions to apply and inparticular of those concerning the status or identity of the economic agentperforming the services covered by the exemption‘. (20) Consequently, the Courtheld that since the exemption referred expressly to the concept of a 'body‘ or'organisation‘, it 'did not avail a trader who was a natural person‘. (21) For similarreasons, the exemption expressed in Article 4(5) of the Sixth Directive for activitiesof, inter alia, bodies governed by public law applies only 'in respect of those[activities] which form part of their specific duties as public authorities‘, so that itdid not apply to the official services of notaries. (22)

24.
    This does not mean, on the other hand, that a particularly narrowinterpretation will be given to the terms of an exemption which have beenunambiguously laid down. Thus, in Muys' en De Winter's Bouw-enAannemingsbedrijf Staatssecretaris van Financiën and SDC v Skatteministeriet, wherethe Court considered the scope of some of the exemptions contained inArticle 13B(d), (23) which, broadly speaking, concerns credit transactions, it heldthat, notwithstanding the strict-interpretation principle, '... in the absence of anyspecification of the identity of the lender or the borrower, the expression ”thegranting and negotiation of credit” is in principle sufficiently broad to include creditgranted by a supplier of goods in the form of deferral of payment‘. (24) It, thus,

rejected in Muys the Commission's argument that the provision was limited to loansand credits granted by financial institutions. Similarly, in SDC, the Courtemphasised the importance of 'the type of transaction effected‘ (paragraph 31)and, referring to Muys, rejected the contention that the benefit of the exemptionscontained in points 3 and 5 of Article 13B(d) was limited to banks or financialinstitutions or otherwise dependent upon the specific legal form of the servicesupplier (paragraphs 34 to 35). However, as Advocate General Cosmas hasrecently stated, the Court has 'declined to apply an extensive interpretation of theexemptions permitted under the Directive where there are no interpretativeelements to allow extension of the exemption permitted under the relevantprovisions and in particular Article 13‘. (25)

25.
    These principles are, in my view, relevant to the solution of most of theproblems raised in this case. For example, they are relevant to the identity of theservice-provider who enjoys the benefit of the insurance exemption, but also, moregenerally, to the questions raised as to the treatment of the Plan as one singleservice or as several. However, the first task is to interpret Article 13B(a) and, inparticular, the term 'insurance and reinsurance transactions‘.

(a)    The Community notion of insurance

26.
    Although CPP and the Commission are correct in submitting that it isnecessary to apply a uniform Community-law meaning to the notion of insurancefor the purposes of applying the exemption granted by Article 13B(a) of the SixthDirective, the Community legislature has not chosen to provide any definition ofthe terms 'insurance ... transactions‘ or 'related services performed by insurance... agents‘. The legislative history, to which Germany refers in its observations,provides little assistance. (26) It has been stated 'that taxation of the insurancesector would have been particularly complex‘, since, though the 'pure insuranceelement of insurance premiums‘ could legitimately be taxed, 'it would beinappropriate to treat gross insurance premiums as normal taxable turnover sincethe insurer's net receipt is the premium less the actuarial cost of providing theinsurance cover to the insured person‘. (27) The same authors point out thatinsurance lends itself more to special taxes and that Article 33 of the SixthDirective expressly permits Member States to introduce taxes other than turnover

taxes on insurance contracts. Advocate General Jacobs has similarly suggested that'insurance‘ is 'structurally unsuited‘ to subjection to turnover taxes. (28)

27.
    In order to interpret a provision of Community law, it is well settled that 'itis necessary to consider not only its wording but also, where appropriate, thecontext in which it occurs and the objects of the rules of which it is part‘. (29) Since,as I have already pointed out, an exemption must be given an independent meaningin Community law, it follows that, in the absence of a definition, regard should behad, as the Commission proposes and the House of Lords implies, to generalCommunity legislation concerning insurance. This conclusion applies withoutdifficulty to the 1973 and 1977 Directives, which formed part of Community law atthe time of the adoption of the Sixth Directive. The 1984 Directive may, however,have a significant bearing on the assessment of the plan. As I have pointed out inparagraph 4 above, that Directive amended Article 1 of the 1973 Directive so asto extend the scope of 'the self-employed activity of direct insurance‘ to include'assistance activity‘, as described, which may 'consist of the provision of benefitsin cash or in kind‘. In my opinion, for the purposes of the exemption for insurancetransactions expressed in Article 13B(a) of the Sixth Directive, the term insuranceshould be interpreted conterminously with the scope of the insurance directives forthe time being in force. That is consistent with a purposive approach (30) and withthe view adopted by the Commission in its Second Report on the application of thecommon system of value added tax, submitted in accordance with Article 34 of theSixth Directive. (31) I also believe that the inclusion of assistance services can betested by a simple example. Assume a policy directly written by an authorisedinsurer provides cover against risks of simple direct financial loss but also againstevents giving rise to the right to assistance services: it would not, I think, beconsonant with a 'straightforward application‘ of the exemption as enjoined byArticle 13B or with convenience and simplicity of administration of the tax thatexemption be provided for part only of the service. Consequently, I believe thatthe exemption must be interpreted in the light of all the insurance directives,including that of 1984.

(b)    Related services performed by insurance brokers and agents

28.
    The exemption, as expressed in Article 13B(a), extends to both 'insuranceand reinsurance transactions‘ and to 'related services performed by insurancebrokers and insurance agents‘. Having regard to the limitation to insurancebrokers and agents imposed by the latter part of the exemption, I think it will beconvenient to address Question 3(b) first before returning to the meaning of'insurance transactions‘.

29.
    As pointed out in paragraph 6 above, Section 17 and Group 2 of Schedule 6of the VAT Act 1983 exempt, at Item 3 of the latter, persons who make'arrangements for the provision of any insurance‘. The exemption of suchtransactions has influenced the approach of some of the national courts which haveconsidered the Plan. (32) The Court has, however, not been asked to considerwhether such transactions are covered by the exemption granted in Article 13B(a)of the Sixth Directive by the House of Lords. (33) It is, thus, only necessary toconstrue the exemption in order to determine whether it would cover services suchas those provided by CPP.

30.
    CPP submits that the notion of 'related services performed by insurance ...agents‘ must be given a Community-law meaning. In its view, it clearly acted asan insurance agent in connection with the formation of the insurance contract,while, in so far as it carried out claims notification, handling and settlementfunctions, it may be regarded as having undertaken the provision of 'relatedservices‘ in an agency capacity. Finally, any other supplies may, according to CPP,be viewed as having been made by it in support of the insurance transaction in itscapacity as an intermediary. In its written observations the United Kingdom

submitted, in substance, that whether CPP acted as an agent or principal was amatter to be determined by national law. In its oral observations, the UnitedKingdom contended that the agreement between CPP and its customers providedno support for the view that CPP acted as a broker or agent. In this respect, itscounsel stressed that only one single fee was provided to CPP by its customers inrespect of the entire Plan. Furthermore, both counsel for the United Kingdom andthe agent for the Commission, supported on this point by Germany, contended thatthe services provided by CPP could not be regarded as constituting a normal orcharacteristic activity of an insurance agent. The Commission asserted that CPPwas not an insurance agent or intermediary 'in the strict sense‘ but, instead, theholder of a group policy on behalf of its customers.

31.
    It is clear from the wording of Article 13B(a) of the Sixth Directive that'related services‘ are exempt only if provided by insurance agents or brokers. Theexpression 'related services‘ is broad enough to include any services that may beregarded as related to the provision of insurance. As it is clear that at least thosecomponents of the Plan comprised in the Continental policy constitute insurance,then some, at least, of its non-insurance services may reasonably be regarded asrelated to insurance. As the Commission correctly pointed out in its writtenobservations, the circumstances of the instant case clearly involve a service ofinsurance provided by Continental and received by CPP's customers which isneither provided by Continental to CPP nor by CPP to its customers. SinceContinental is the insurer and CPP's customers are the 'assureds‘, CPP wouldappear to play an intermediary role which is related, at least partially, to theprovision of insurance. However, the crucial issue raised by the second part of thethird question is whether CPP may be regarded, for the purposes of Article 13B,as having acted as an insurance agent or broker.

32.
    Since there is nothing in either the text of Article 13B or in its legislativehistory to indicate what particular notion of 'insurance brokers and insuranceagents‘ the Community legislature had in mind when it adopted the Sixth Directive,it is again appropriate to refer to the relevant contemporaneous Communityinsurance legislation, namely the 1977 Directive. CPP contends in its writtenobservations that its activities in connection with the provision of the Plan fall, inparticular, within Article 2(1)(b) of the 1977 Directive. I do not agree. AlthoughGermany may be correct in submitting that the Community notion of an insuranceagent or broker cannot be confined to persons who hold express Member Stateauthorisations to act as such, there is nothing in the 1977 Directive that wouldsupport the view that a legal person, like CPP, which, for the purpose of providinga specific package of services to its customers, negotiates through another legalperson, who is clearly an insurance broker, to arrange a policy of insurance for thebenefit of its customers, should be regarded as an insurance 'agent‘ or 'broker‘. The authors of the Sixth Directive chose to refer separately to 'insurance agents‘and 'insurance brokers‘, rather than to use a more general term such as insurance'intermediaries‘. In my view, they thereby described persons whose named

professional activity comprises the bringing together of insurance undertakings andpersons seeking insurance as provided by Article 2 of the 1977 Directive. (34) Although those parts of the activities of CPP, in arranging insurance and in settlingclaims, are akin to the normal activities performed by an insurance agent or broker,an undertaking like CPP cannot, in my opinion, be regarded as such an agent orbroker. On the basis of the information contained in the order for reference, Iagree with the Commission that its usual business does not seem to be that of aninsurance broker or agent in the strict sense. The limitation of the exemption of'related services‘ to 'insurance brokers and insurance agents‘ would be deprivedof any meaning if any intermediary whatever which is incidentally involved inarranging insurance ipso facto came within the definition.

33.
    Consequently, the Court should answer the second part of the third questionto the effect that the notion of 'related services performed by insurance brokersand insurance agents‘ does not extend to the incidental activity of arranginginsurance as part of the business of providing a credit-card protection plan of thetype at issue in the main proceedings. However, it is, of course, ultimately for thenational court to determine the precise question whether CPP is an insurancebroker or an insurance agent.

(c)    The scope of the insurance-transactions exemption

34.
    It remains then to consider the scope to be given to the expression'insurance transactions‘, as distinct from related activities. (35) As alreadysuggested, I believe that it should be interpreted in the light of the 1973 and 1984Directives, which do not, however, define the nature of insurance. The essentialsof an insurance transaction are, as generally understood, that one party, the insurer,undertakes to indemnify another, the insured, against the risk of loss (includingliability for losses for which the insured may become liable to a third party) inconsideration of the payment of a sum of money called a premium: it is the givingof 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 thepresent case. The question has to be whether CPP, as a taxable person, suppliesinsurance services to subscribers to the Plan. The insurance service, as distinctfrom any 'related services‘, consists, as the Commission says, in the assumption by

the insurer of a risk borne by the insured. In so far as the services provided in theContinental policy comprise insurance, they are not supplied by CPP.

35.
    CPP, in its written observations, analyses the several elements of the Planin great detail and says what the customer receives has both the aspect andstructure of insurance, but CPP also explicitly accepts that it was not itself'promising to supply‘ the insurance cover which was to be supplied by Continental. The United Kingdom emphasises that CPP could not be supplying insuranceservices because it is not an authorised insurer, which is the issue raised by thefourth question. The Commission is correct, in my view, in stating that theinsurance services in question were provided neither by Continental to CPP nor byCPP to its customers.

36.
    In truth, CPP's involvement in the provision of the Continental insuranceservices was, as the Commission says, only as intermediary (but not as an'insurance agent‘). It 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 undertaking such as CPP, because it lacked thecharacter of an 'insurance broker‘ or 'insurance agent‘, but then to treat it as theprincipal supplier of the main insurance element when, in respect of that element,its function was only that of intermediary.

37.
    I would draw support for the view I have just expressed from Muys andSDC, where the Court was called upon to interpret the 'credit‘ and 'credit-transfertransactions‘ exemptions contained in points 1, 3 and 5 of Article 13B(d) of theSixth Directive. (36) As in Article 13B(a), there is no reference to the identity of theservice-provider in Article 13B(d). In Muys and SDC, the Court found that the'credit‘ exemption was not limited to credit granted by financial institutions butalso extended to that granted by a supplier of goods, while the 'credit-transfertransactions‘ exemption extended to operations carried out by a data-handlingcentre which were essential for effecting, inter alia, monetary transfers andpayments. However, unlike the present case, where CPP does not itself providean insurance service, the undertakings concerned in Muys and SDC were involvedin providing credit or providing services essential for credit-transfer operations. The focus of the Court in Muys and SDC was, thus, on whether the type oftransaction effected was covered by the exemptions at issue. Applying that logicto the present case, whatever CPP has provided through the Plan, it has notprovided the insurance that was set out, at the material time, in what was clearlythe insurance policy of Continental.

38.
    For the sake of completeness, I should add that the possible application ofArticle 6(4) of the Sixth Directive (quoted in paragraph 3 above), to which theCommission referred in its written observations and upon which CPP relied at the

hearing, cannot, in my view, affect the above analysis. It is concerned with agency. CPP does not, as envisaged by Article 6(4), in its 'own name but on behalf of‘Continental take part in the supply of the insurance. The reverse is actually thecase. In this case, the insurance was supplied by Continental in its own name andnot that of CPP.

39.
    Consequently, the first part of the third question should be answered to theeffect that the services supplied by the provider of a credit-card protection plan,such as that provided by CPP in the main proceedings, cannot constitute theprovision of insurance within the meaning of Article 13B(a) of the Sixth Directive,since the exemption in respect of insurance transactions contained in that provisioncovers only insurance provided by the person who undertakes the liability ofindemnifying the insured in the event of materialisation of an insured risk.

B — Questions 1 and 2

40.
    By the first two questions, which should be taken together, the nationalcourt formulates, firstly, a general question concerning the identification of atransaction, for VAT purposes, as constituting a single composite supply or two ormore independent supplies and, secondly, a very specific question concerning theapplication of that concept to the instant case.

41.
    It appears that this issue has been the source of much doubt and evenconfusion in United Kingdom courts and, hence, counsel for the United Kingdomexplained, at the oral hearing, the need for clear guidance on this issue for futurecases, regardless of the outcome of the present case.

42.
    I would immediately make two observations. Firstly, as the Commissionsays, the VAT legislation contains no provisions concerning the treatment of mixedtransactions. The Sixth Directive does not envisage any mechanism for theseparation of the elements of a single transaction so as to enable them to receivedifferent VAT treatment. Secondly, the order for reference shows that the issueis raised in the present case only because of the presence of an insurance element,claimed to confer exemption, in whole or in part, on the transaction.

43.
    I would accordingly reformulate the first and second questions as askingwhat criteria are to be applied for the purposes of the Sixth Directive when a singletransaction comprises the supply of several distinguishable services, one of whichis the subject of the exemption of insurance transactions provided byArticle 13B(a).

44.
    CPP argued for an analytical approach in preference to a so-calledcommon-sense approach, which, it submits, would mask proper analysis. TheCommission, though emphasising the perspective of the average consumer, islargely in agreement. Each element of the transaction should be ascertained so

that, on a comparison, it can be seen whether one element is subordinate to or notdissociable from another. CPP relied, in particular, on the strict interpretationapplied by Advocate General Mancini, in Commission v United Kingdom, (37) to thedistinction between supplies of goods and services. In that case the UnitedKingdom was held to have exceeded the permitted scope of the exemptionconferred by Article 13A(1)(c) on medical care services by also exempting relatedsupplies of goods (medicines). CPP does not, thus, agree with the GermanGovernment's suggestion that, in cases where factors of equal weight contribute tothe attainment of a single economic objective, they should be regarded as sointerwoven as to recede behind the transaction as a whole.

45.
    The United Kingdom lays emphasis on common sense, meaning that thecharacter of the whole transaction should be identified, and submits that a supplierwho undertakes to perform a particular obligation in consideration of a single priceshould be regarded as making, at least at first sight, a single supply. (38) Germany,with whose observations on this point counsel for the United Kingdom agreed atthe hearing, submits that it flows from Articles 2(1), 5(1) and 6(1) of the SixthDirective that the supply of what comprises for economic purposes a single serviceshould not be artificially divided up into individual components which are noteconomically independent. The United Kingdom suggested that consumers of foodon board ships such as that at issue in Faaborg-Gelting Linien v FinanzamtFlensburg do not, for instance, receive the supply of food, a table or cutlery but,instead, the supply of what may best be described as restaurant services. (39) In theUnited Kingdom's view, a strict approach should be adopted as concerns argumentswhose effect would result in splitting up unnaturally a single price among thecomponent elements of a package of services so as to extend what would normallybe regarded as the primary scope of a VAT exemption.

46.
    Several related arguments persuade me that the first two questions in thiscase should be answered in a way which would undoubtedly favour the treatmentof the Plan as a single non-exempt service, although it is ultimately, of course, amatter for the national court to apply the answers to the facts of the case.

47.
    Firstly, I agree with the emphasis placed by the United Kingdom andGermany on the desirability of treating the transaction as involving a single supply. The Plan is marketed by CPP as a single useful service, though comprising a clusterof different elements. A single price is charged. The price or cost of the individualelements are not readily discernible. The case is different from the purchase in a

supermarket of a bundle of individually priced goods, though a single sum is paidat the check-out. (40) Neither the Community nor the Member States have aninterest in complicating the administration of the VAT system by artificially splittingthe prices of services sold as one.

48.
    It has been generally accepted that the segregation of elements of a singlesupply would not be warranted if, for example, the exempt service was purelyincidental to the main supply. The Commission gave, as an example of anincidental insurance supply, the provision of 'free‘ travel insurance as a bonus bysome credit-card companies; the small annual fee paid for the use of the cardcould not, in its view, be regarded as including a payment for the insurancecomponent. (41) However, once it is conceded that an ostensibly single transactionmay comprise several elements, it will be difficult to draw the line. Accordingly,I would propose an interpretation to the effect that a single supply should beconsidered to have been given for a single price unless the exempt elements areclearly distinguishable in the price.

49.
    Apart from a general convenience argument, I would also draw attention tothe requirement in the introductory words of Article 13B that Member States laydown conditions 'for the purpose of ensuring the correct and straightforwardapplication of the exemptions ...‘. I take the word 'straightforward‘ to refer to anobjective of simplicity of application and administration of the exemption. I do notthink that that objective would be served by costly and complex argumentsregarding the relative values of different elements of a single service. (42) The finaldecision in this respect must, however, be made by the national court.

50.
    Accordingly, if the Plan is to be treated as a single supply, the question ofwhether it is exempt will need to be addressed. It follows, in my view, from theneed for strict interpretation of the insurance exemption that the taxpayer shouldestablish clearly the insurance character of the composite service, in this case thePlan. In my view, the most straightforward approach to this issue is to require that

the service supplied be predominantly the supply of insurance services. (43) SinceI have already expressed the opinion that insurance services are provided only bythe insurer, it is likely in practice that this part of the exemption will enure to thebenefit only of insurers or, in effect, their clients. That, however, is in my view fullyin keeping with a straightforward interpretation of the exemption. In simple terms,it was not intended to exempt insurance services except when provided by insurers.

51.
    The second question effectively asks the Court to decide the nature of thePlan. This is, of course, ultimately a question for the national court. It will havebecome apparent that, in my view, although the Plan constitutes a composite supplyin the sense that it comprises several elements, that is not strictly relevant to theresolution of the central issue as to whether the insurance element of the Planshould lead to its exemption in whole or in part from VAT. CPP's function in thesupply of the insurance element was as a non-exempt intermediary. (44)

52.
    Accordingly, I would suggest that the first and second questions be answeredtogether to the effect that a service or services of the kind provided by CPPthrough the card-protection plan operated by it is (are) exempt from VAT pursuantto Article 13B(a) of the Sixth Directive only if the insurance component of the Planis supplied by the insurer who undertakes the risk. Furthermore, the entire Planis exempt from VAT only if insurance constitutes the predominant element in thePlan. If the insurance component is not predominant, it is exempt only if its priceis clearly distinguishable in the price of the whole service.

C — Question 4

53.
    In the light of the answers proposed for the first three questions, there doesnot appear to me to be any need to answer the fourth. The exemption applies, inmy view, only to insurance services provided by insurers. No question arises in thiscase of the unauthorised or unlicensed supply of insurance services. Continental,whose insurance policy is at issue, is clearly accepted as being authorised; CPP isnot, but then it is not an insurer. The fourth question is, therefore, purelyacademic.

V — Conclusion

54.
    In the light of the foregoing I recommend that the Court answer thequestions 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 fromVAT pursuant to Article 13B(a) of the Sixth Council Directive 77/388/EECof 17 May 1977 on the harmonisation of the laws of the Member Statesrelating to turnover taxes — Common system of value added tax: uniformbasis of assessment, only if the insurance component of the Plan is suppliedby an insurer who undertakes the risk. Furthermore, the entire Plan isexempt from VAT only if insurance constitutes the predominant element inthe Plan. If the insurance component is not predominant, it is exempt onlyif its price is clearly distinguishable in the price of the whole service;

(2)    The services supplied by the provider of a credit-card protection plan, suchas that provided by CPP in the main proceedings, cannot constitute theprovision of insurance within the meaning of Article 13B(a) of the SixthDirective since the exemption in respect of insurance transactions containedin that provision covers only insurance provided by the person whoundertakes the liability of indemnifying the insured in the event ofmaterialisation of an insured risk. Furthermore, the notion of 'relatedservices performed by insurance brokers and insurance agents‘ does notextend to the activity of providing a credit-card protection plan of the sortat issue in the main proceedings;

(3)    In light of the recommendations contained in points (1) and (2) above,there is no need to answer the fourth question referred in the present case.

1: Original language: English.

2: —    See the partially dissenting judgment, in the main proceedings, of Sir John Megaw in theCourt of Appeal; [1994] STC 199, at p. 209.

3: —    See Article 13B of the Sixth Council Directive 77/388/EEC of 17 May 1977 on theharmonisation of the laws of the Member States relating to turnover taxes — Commonsystem of value added tax: uniform basis of assessment; OJ 1977 L 145, p. 1 (hereinafter'the Sixth Directive‘).

4: —    The goods at issue comprise adhesive stickers, pre-printed luggage labels and key tabs aswell as a medical card for entering personal medical information. They are supplied inrespect of Items 4, 7, 10 and 14, respectively, of the package; see further paragraph 12below.

5: —    OJ 1973 L 228, p. 3; see Article 1.

6: —    Articles 2 to 4 described the types of insurance not covered, none of which is relevant inthe present case.

7: —    Council Directive 84/641/EEC of 10 December 1984 amending, particularly as regardstourist assistance, the First Directive (73/239/EEC) on the coordination of laws, regulationsand administrative provisions relating to the taking-up and pursuit of the business of directinsurance other than life insurance; OJ 1984 L 339, p. 21.

8: —    OJ 1977 L 26, p. 14.

9: —    Item 4 is not raised in the present case.

10: —    1982 c 50.

11: —    S.I. 1987 No 2130.

12: —    It appears from the correspondence between CPP's VAT advisers and the Commissionersof Customs & Excise, which is annexed to CPP's written observations, that CPP has sought— presumably without success — to become a permitted provider of insurance under theIC Act 1982.

13: —    The Continental policy referred to in the main proceedings ran from 1 September 1989 to31 August 1990.

14: —    The Court has not been informed whether such cheques are drawn on CPP or Continental.

15: —    The membership application in question (of a certain Dr Howell) was made on25 November 1989. It appears from a later letter of 15 August 1990 that theCommissioners took the view that CPP should have registered for VAT with effect from1 August 1989.

16: —    Sir John Megaw (see footnote 1 above) considered that CPP became the agent of itscustomers in arranging that an insurer would become directly liable to them. Althoughagreeing with Balcombe L.J. that it would be wrong to treat the totality of the Plan asbeing an arrangement(s) for the supply of insurance services, he thought that the properapproach to classification in cases where both exempt and taxable supplies are involved isto look primarily at the nature of the service supplied. He also expressed the view that 'asa matter of principle it would, at best, be rare‘ that a package of services need be divided'where, as here, the payment for the whole of the supplies given in the package is onesingle individual sum‘; [1994] STC 199, at pp. 209-210.

17: —    Case 235/85 [1987] ECR 1471, paragraph 19.

18: —    Case 348/87 Stichting Uitvoering Financiële Acties v Staatssecretaris van Financiën [1989]ECR 1737. This principle has subsequently been consistently affirmed by the Court: see,most recently, Case C-346/95 Blasi v Finanzamt München I [1998] ECR I-0000, atparagraph 18.

19: —    Case C-453/93 Bulthuis-Griffioen v Inspecteur der Omzetbelasting [1995] ECR I-2341,paragraphs 21 and 22 (hereinafter 'Bulthuis-Griffioen‘).

20: —    Ibid., paragraph 18.

21: —    See paragraphs 20 and 21.

22: —    Case 235/85 Commission v Netherlands, loc. cit., paragraph 21.

23: —    See, respectively, Case C-281/91 [1993] ECR I-5405 (hereinafter 'Muys‘) and Case C-2/95[1997] ECR I-3017 (hereinafter 'SDC‘).

24: —    Muys, paragraph 13.

25: —    Case C-149/97 The Institute of the Motor Industry v Commissioners of Customs & Excise,Opinion of 14 May 1998, paragraph 44.

26: —    The Commission's proposal envisaged, at Article 14B(a) (see OJ 1973 C 80, p. 1), anexemption of 'insurance and reinsurance transactions and services relating thereto suppliedby insurance brokers and insurance agents‘, which is almost identical to the text ultimatelyadopted.

27: —    See Farmer & Lyal, EC Tax Law (Oxford, 1994), at pp. 181-182.

28: —    Case C-38/93 Glawe [1994] ECR I-1679; see paragraph 9 of the Opinion, where he dealsprincipally with taxes on betting and gaming.

29: —    Case C-340/94 De Jaeck v Staatssecretaris van Financiën [1997] ECR I-461, paragraph 17.

30: —    'In interpreting a provision of Community law it is necessary to take account of how thelaw stands at the date when the provision in question must be applied‘; see Case C-35/90Commission v Spain [1991] ECR I-5073, paragraph 9.

31: —    COM (88) 799 final of 20 December 1988. Referring to the 'disparities‘ which hademerged regarding the application of the Sixth Directive to 'tourist assistance services‘,the Commission noted that, on referral of the matter to the VAT Committee, a 'largemajority‘ felt that the provision of cover in respect of such risks, for instance thereimbursement of medical expenses or of travel expenses of the insured in the event of thedeath of a member of his family, should, save where supplied by automobile clubs, beregarded as 'insurance services coming under Article 13B(a) ...‘; see p. 34.

32: —    It would seem, however, that the High Court and the Court of Appeal adopted the viewthat Item 3 could be regarded as transposing the first part of the Article 13B(a) exemption. Only the High Court expressly addressed the possibility that the second part of theArticle 13B(a) exemption might be applicable. Popplewell J. held, notwithstanding thatCPP's services were related to insurance and that it might have acted as an agent on behalfof its customers in obtaining insurance, that its activities did not make it an insuranceagent. In the Court of Appeal, Balcombe L.J. merely stated that '... if the insuranceelement were predominant in the package ... the supply would be exempt under item 3 ...‘; [1994] STC 199, at p. 208.

33: —    In their response before the House of Lords, the Commissioners contended (at point 4.8)that Item 3 exempts 'the making of arrangements for the provision of any insurance‘ bya person permitted to provide such insurance under section 2 of the IC Act 1982 andcovers 'the services of brokers and others who act as intermediaries between the insurerand insured in putting an insurance policy into place‘. If it were necessary to express aview on this matter, I would be inclined to regard the service of 'the making ofarrangements for the provision of any insurance‘ as only capable of coming within thesecond part of Article 13B(a), namely if it is 'performed by insurance brokers andinsurance agents‘.

34: —    Quoted at paragraph 5 above. This view is supported by recital 8 in the preamble to the1977 Directive which refers to the 'activity of agent‘ as including 'the exercise of apermanent authority from one or more insurance undertakings empowering the beneficiary,in respect of certain or all transactions falling within the normal scope of the business of theundertaking or undertakings concerned, to enter in the name of such undertaking orundertakings into commitments binding upon it or them ...‘ (emphasis added).

35: —    No question has been referred in the present case regarding the notion of 'reinsuranceservices‘.

36: —    Loc. cit., footnote 22 above.

37: —    Case 353/85 [1988] ECR 817; Opinion at p. 829.

38: —    In this respect the observations of the United Kingdom and Germany are not ad idem,since the latter contends, citing Muys, loc. cit., that the fact that a recipient has to pay asingle price does not justify the presumption of a single supply.

39: —    Case C-231/94 [1996] ECR I-2395.

40: —    Indeed, modern information technology now installed in many supermarkets permits thecustomer to see readily how much VAT (and, often, at what rates) has been included inthe total charged.

41: —    Of course, on the definition of the scope of the insurance exemption that I have proposedabove, the credit-card company could only seek to claim the benefit of the insuranceexemption if it (or one of the companies in its group) undertook to underwrite theinsurance component itself.

42: —    The facts of the present case are distinguishable from those in Case 73/85 Kerrutt vFinanzamt Mönchengladbach-Mitte [1986] ECR 2219, where the Court held that thesimplicity of administration objective could not justify grouping together in a singletransaction for VAT purposes what are in reality separate taxable transactions; seeparagraph 14. Unlike in Kerrutt, there is nothing unusual or artificial in this case aboutthe grouping together of the various services included by CPP in the Plan.

43:

—    The principle of accessorium sequitur principale has been applied on several occasions bythe Court; see, in particular, Case 126/78 Nederlandse Spoorwegen v Staatssecretaris VanFinanciën [1979] ECR 2041, paragraph 11, and Case 173/88 Skatterministeriet v Henriksen[1989] ECR 2763, paragraph 14.

44: —    The fact that CPP will be liable to pay VAT on supplying the Plan to its customers whilstunable to deduct the cost of the insurance component as a VAT input will not lead to anunfair windfall for the Commissioners, as CPP claims, since the supply of the insuranceostensibly to CPP by Continental will be exempt from VAT and CPP may be able todeduct other inputs incurred in respect of provision of the Plan.

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