Report 2011 - EFTA Court

22 July 2009, ESA forwarded those comments to the Liechtenstein
authorities which responded by letter of 2 October 2009.
26 By Decision No 97/10/COL of 24 March 2010 (“the Decision”),
ESA found that the tax provisions on captive insurance companies
constituted State aid incompatible with Article 61(1) EEA. ESA
found that the granting of a full or partial tax exemption involved
a loss of tax revenues for the State which was equivalent to
consumption of state resources in the form of fiscal expenditure.
Accordingly, the special tax rules applicable to captive insurance
companies were granted through state resources.
27 in its Decision, ESA concluded that activities carried out
by captive insurance companies in providing insurance or
reinsurance services to their associated companies constituted
an economic activity. On that basis, the captive reinsurance
companies qualified as undertakings within the meaning of
Article 61(1) EEA.
28 ESA noted that, according to the case-law of the Court of Justice
of the European Union (“ECJ”), the notion of undertaking within
the meaning of Article 87(1) of the EC Treaty, now Article 107(1)
of the Treaty on the Functioning of the European Union (“TFEU”),
which corresponds to Article 61(1) EEA, encompasses every entity
engaged in economic activity, regardless of its legal status and
the way in which it is financed. Moreover, any activity consisting
in offering goods or services on a given market is an economic
activity. in this regard, ESA found that providing insurance is
a service, which in principle is an economic activity, and that
captive insurance companies offer such services for a premium on
a given market.
29 ESA took the view that this conclusion was not altered by the fact
that the clients of captive insurance companies were restricted
to undertakings of the same group to which they belonged. As
the undertakings of the group had chosen to purchase insurance
from another company within the group, instead of a third-party
insurance company, the service provided by the captive insurance
was an alternative to purchasing insurance from a third party. On
Joined Cases E-4/10, E-6/10 and E-7/10 Principality of Liechtenstein, Reassur Aktiengesellschaft,
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Swisscom RE Aktiengesellschaft v EFTA Surveillance Authority