Capitalization of commission claims for insurance agents
According to Section 87a (1) sentence 1 of the German Commercial Code (HGB), a commercial agent is generally entitled to commission as soon as and to the extent that the entrepreneur has executed the transaction. In contrast, Section 92 (4) HGB contains a different system of rules for the commission claims of insurance agents, who constitute a special group of commercial agents. According to this provision, the insurance agent is entitled to commission within the meaning of Section 87a (1) HGB as soon as the policyholder has paid the premium from which the commission is calculated in accordance with the contractual relationship. In its decision of April 30, 2025 (case no. X R 12-13/22), the German Federal Fiscal Court had to clarify at what point commission claims arising from activities as an insurance agent or broker are to be capitalized in accordance with Section 92 (4) HGB.
In the case in dispute, an insurance company made voluntary payments to an insurance broker for brokering contracts subject to cancellation even before the commission claim arose legally. These payments were to be refunded on a pro rata basis if the brokered contract was terminated before the end of the cancellation liability period. To secure these pre-financed amounts, the insurance company made a retention designated as a provision. In its annual accounts, it reported, among other things, the target provisions (i.e., amounts calculated on the basis of the pre-financed commissions and the contractual provision percentage) and the actual provisions (i.e., amounts actually retained). The tax office and the tax court were of the opinion that the insurance broker had to capitalize the amount of the target provision as a commission claim in its balance sheet. The Federal Fiscal Court assessed the dispute more decisively and referred it back to the tax court for further hearing and decision.
The point in time at which commission claims by insurance agents are to be capitalized is determined by the contract terms in each individual case. These may be based on the legal model set out in Section 92 (4) HGB, but are not required to do so. If the relevant commission rules indicate that a commission claim for a brokered transaction has not yet arisen, any payments made by the client are merely commission advances. These must be recognized as advance payments received by the insurance agent and do not yet have any profit-realizing effect; this also applies to all commercial agents within the scope of Section 87a (1) HGB.
In contrast, a commission claim must be capitalized if it has arisen legally and the party liable to perform has fulfilled its obligation in economic terms. If the specific contract - in deviation from Section 92 (4) HGB and in favor of the insurance agent - agrees that the commission claim arises when the respective insurance contract is concluded, the claim must be capitalized at that point in time. The risk of a subsequent loss must be priced in or reflected in a provision for contingent liabilities, in practice referred to, for example, as a cancellation provision or subsequent liability risk. Such a provision does not necessarily have to be identical to the amount of the remaining commission receivable to be capitalized, as the principles for measuring both balance sheet items are not necessarily the same.
Since the tax court did not address the above principles and did not make any factual findings, the Federal Fiscal Court referred the cases back to the tax court for further consideration. With regard to the disputed question of whether the insurance broker – assuming that there is a fundamental obligation to capitalize – must capitalize the mathematically correct amount of the retention (“target provision”) or the actual amount of the retention (“actual provision”), the Federal Fiscal Court tends to favor the latter. This is because the target provision is likely to be only a theoretical calculation that does not reflect the actual amount of the retention – and thus the corresponding claim of the insurance broker.
