In her opinions of 15 May 2026, Advocate General Ettema addressed a fundamental question concerning the VAT treatment of services performed by Dutch pension funds: does the implementation of a pension scheme by a pension fund constitute an exempt insurance transaction within the meaning of Article 135(1)(a) of the VAT Directive and Article 11(1)(k) of the Dutch VAT Act 1968?

The opinions, delivered in two related cases before the Dutch Supreme Court and accompanied by a common annex under ECLI:NL:PHR:2026:493, concern the dividing line between taxable pension administration services and VAT-exempt insurance transactions. That distinction is not merely theoretical. If a pension fund’s activities are exempt, input VAT on administration, actuarial, accounting and advisory costs is generally not deductible. If the activities are taxable, the fund may, in principle, recover that input VAT.

Contrary to what might be expected, the pension funds in these proceedings did not seek application of the insurance exemption. They argued that their services were not exempt, precisely because that would preserve their right to deduct input VAT. The State Secretary, by contrast, defended the application of the exemption, at least to a substantial extent.

Facts, Background, and the Dispute

Both cases concerned pension funds implementing Collective Defined Contribution arrangements structured as average salary schemes with the character of defined benefit agreements. The funds incurred costs from external service providers for administration, actuarial support, accounting, and policy advice, on which VAT was charged.

The first case, Supreme Court number 23/01314, concerned an occupational pension fund. The fund argued that its premium should be split into two components: an amount funding pension entitlements and a separate surcharge for administration and implementation costs. Only the latter, it argued, related to its own service, which should not be regarded as an exempt insurance transaction.

The District Court Noord-Holland and the Court of Appeal Amsterdam rejected that approach. They held that the fund performed one single, indivisible service, the implementation of the pension scheme, which had the essential characteristics of an insurance transaction. The exemption therefore applied, and the fund could not deduct the relevant input VAT.

The second case, Supreme Court number 25/04078, concerned a mandatory sectoral pension fund. This case was more nuanced, since the scheme distinguished between employee participants, director participants, self-employed entrepreneurs, and voluntary pension accrual. 

The Court of Appeal Arnhem-Leeuwarden likewise held that the fund performed a single composite service, but reached a differentiated conclusion: for director participants, self-employed entrepreneurs, and voluntary accrual, the exemption applied; for employee participants, it did not, because the element of prior payment of a premium was missing. Under Dutch pension law, an employee may retain pension rights even where the employer fails to pay the contribution, which, in the Court’s view, broke the required link between premium payment and entitlement.

In the Amsterdam case, the fund challenged the application of the exemption in cassation. In the Arnhem-Leeuwarden case, the fund challenged the exemption’s application to the non-employee categories, while the State Secretary lodged an incidental appeal arguing that the exemption should also apply to the employee category.

Despite their different outcomes, both cassation proceedings ultimately raise the same underlying question: whether implementation of a Dutch pension scheme by a pension fund qualifies as an insurance transaction for VAT purposes. The question must be assessed under EU law: Article 135(1)(a) of the VAT Directive exempts "insurance and reinsurance transactions, including related services performed by insurance brokers and insurance agents", implemented through Article 11(1)(k) Wet OB. Since the Directive does not define the concept, it must be interpreted autonomously and uniformly throughout the Union.

The funds argued that their activities lacked the essential features of insurance: they did not fully assume risk from participants, were not formal insurers, and the relationship with participants did not amount to the contractual relationship required for an insurance transaction.

A further, more specific issue concerned prior payment of a premium. The existence of a premium was not seriously in doubt; employers were contractually and statutorily obliged to pay contributions. The real question was narrower: can there still be “prior payment of a premium” for VAT purposes if the employee’s entitlement may not be made legally dependent on actual payment by the employer? That question lies at the heart of ECLI:NL:PHR:2026:493.

Legal Framework

In Card Protection Plan (CPP, C-346/96), the CJEU held that an insurance transaction is characterised by the insurer undertaking, in return for prior payment of a premium, to provide the insured with the agreed service if the insured risk materialises. Subsequent judgments, including Skandia (C-240/99), Taksatorringen (C-8/01), Aspiro (C-40/15), Rádio Popular (C-695/19) and Generali Seguros (C-42/22), refined this concept: there must be an insured risk, a commitment to provide a benefit if that risk occurs, and a legal relationship between provider and insured. The case law repeatedly returns to prior payment of a premium as a defining element.

The CJEU has not yet ruled on a situation comparable to Dutch occupational pension schemes, where contributions are due but statutory protection may prevent a fund from denying pension rights solely because an employer failed to pay. That tension with the traditional insurance model is the gap A-G Ettema’s opinions try to bridge.

The Advocate General’s Analysis

A-G Ettema’s analysis does not treat the entire dispute as uncertain. On several points, she clearly rejects the funds’ arguments. First, full risk assumption is not a separate requirement for an insurance transaction. What matters is not whether the fund assumes every financial or actuarial risk in an absolute sense, but whether it undertakes to provide a benefit when the insured risk, such as old age, death, or incapacity, materialises.

Second, a pension fund need not be a formally authorised insurer, nor must it itself use the services of one. The exemption is not limited to regulatory insurers; what matters is the nature of the transaction, not the label attached to the provider.

Third, the required legal relationship may exist within the triangular structure between employer, employee, and pension fund. It need not be contained in one bilateral contract directly between fund and participant, as long as the fund is, from its own perspective, legally obliged to provide the agreed benefit once the insured risk occurs.

On these points, the A-G’s reasoning largely favours the position defended by the State Secretary and the lower courts that applied the exemption. Uncertainty arises only on one specific point: prior payment of a premium. There is, on one hand, a clear obligation to pay contributions, forming part of the legal and contractual structure of the scheme. On the other hand, Dutch pension law contains the principle known as the prohibition of “no premium, no right”: pension accrual and payment may not generally be made dependent on actual payment by the employer, so a participant may retain rights even where the employer defaults.

This raises the decisive question of EU law: does prior payment of a premium refer to the legal obligation to pay, or does it require a stronger link under which the entitlement itself is conditional on actual payment? The A-G considers that existing CJEU case law offers no clear answer. Although she appears inclined to the view that non-payment by the employer should not necessarily prevent an insurance transaction from existing, she concludes that the matter is not beyond reasonable doubt.

Proposed Preliminary Question

Because of this uncertainty, A-G Ettema advises the Dutch Supreme Court to stay the proceedings and refer a preliminary question to the CJEU under Article 267 TFEU.

The proposed question asks, in essence, whether the requirement of prior payment of a premium is satisfied where an employer has a contractual and statutory obligation to pay pension contributions to a pension fund, but the employee’s pension entitlement may not be made dependent on actual payment of those contributions. This is the central importance of the opinion. The A-G does not invite the CJEU to reconsider the entire concept of insurance. Instead, she seeks clarification on a specific element of that concept in the context of statutory pension protection.

Consideration and Taxable Amount

The opinions also address the funds’ alternative argument on the taxable amount: if their services were taxable, the taxable amount should be limited to the administrative surcharge rather than the full premium. 

The A-G rejects this. In her view, the funds do not merely receive a segregated contribution over which they have no freedom of disposal; the premium is paid for implementation of the scheme as a whole, and the surcharge cannot artificially be separated from it where the fund performs a single indivisible service. If the exemption ultimately does not apply, the full premium, not just the surcharge, would form the taxable consideration.

Conclusion

These opinions are highly relevant for pension funds, employers and VAT practitioners. They confirm that the VAT treatment of pension fund services cannot be determined solely by reference to Dutch pension law or regulatory classifications; the decisive test remains the autonomous EU law concept of an insurance transaction.

At the same time, the A-G’s reasoning shows that Dutch pension funds may well perform services that largely resemble insurance transactions for VAT purposes. Arguments based on the absence of full risk assumption, the absence of formal insurer status, or the lack of a direct bilateral contract do not appear persuasive. The real unresolved issue is narrower but fundamental: whether statutory protection of employees against the consequences of an employer’s non-payment prevents the pension service from being regarded as supplied in return for prior payment of a premium.

Until the Supreme Court and potentially the CJEU provide further guidance, the VAT position of Dutch pension funds remains uncertain, with significant consequences for their ability to recover input VAT on administration, actuarial and advisory costs. ECLI:NL:PHR:2026:493 is therefore more than a technical annex to two cassation proceedings; it exposes a structural tension between the social protection logic of pension law and the transactional logic of VAT law.