Insurance VAT free questions

Youngblood.III

Insurance is VAT free which is good, but what happens when insurers sell a non -insurance product....do they have to apply VAT?

To Elland Back

Youngblood.III wrote: »

Insurance is VAT free which is good, but what happens when insurers sell a non -insurance product....do they have to apply VAT?

Have you an example of such a product? Insurers are not VAT registered so they can't charge VAT

Carawaystick

The AA as an example, they sell stuff, and charge vat on the stuff that has vat and no vat on the rest.

There's thresholds on turnover for registering, I think it was 45k for services and 35k for goods. I presume the insurance turnover counts to the vat threshold.

Carawaystick

The AA as an example, they sell stuff, and charge vat on the stuff that has vat and no vat on the rest.
Tesco's are another insurance co with a sideline in vattable goods..
There's thresholds on turnover for registering, I think it was 45k for services and 35k for goods. I presume the insurance turnover counts to the vat threshold.

To Elland Back

The AA are brokers, not insurers. The breakdown service they provide is an insurance product, I couldn't tell you about the things they sell but I would presume that wing is set up separately.

Carawaystick

If you go into their shop you can buy insurance and headlight deflectors in the same transaction. One of those has vat at 23%

Marcusm

To Elland Back wrote: »

Have you an example of such a product? Insurers are not VAT registered so they can't charge VAT

Nearly all serious insurance companies will be VAT registered and most will employ VAT technicians! Insurance companies which sell policies outside the EU will be able to recover a portion of their VAT inputs as those policies may be outside the scope with recovery; others will need serious VAT advice in relation to the minimisation of VAT expense (eg on property or on repairs costs eg motor). Financial services businesses are generally conglomerates which have both VATable supplies (for example leasing) and non VATable supplies (loans). Their level of VAT recovery is generally determined by what is colloquially referred to as a partial exemption mechanism.

To Elland Back

Marcusm wrote: »

Nearly all serious insurance companies will be VAT registered and most will employ VAT technicians! .

Insurers are VAT exempt

http://www.revenue.ie/en/tax/vat/rates/decision-detail-03542.jsp

peteb2

Marcusm wrote:

Nearly all serious insurance companies will be VAT registered and most will employ VAT technicians! Insurance companies which sell policies outside the EU will be able to recover a portion of their VAT inputs as those policies may be outside the scope with recovery; others will need serious VAT advice in relation to the minimisation of VAT expense (eg on property or on repairs costs eg motor). Financial services businesses are generally conglomerates which have both VATable supplies (for example leasing) and non VATable supplies (loans). Their level of VAT recovery is generally determined by what is colloquially referred to as a partial exemption mechanism.

You trying to bolster your post count? Insurers look for policy holders to reclaim the vat in the normal manner.

Marcusm

To Elland Back wrote: »

Insurers are VAT exempt

http://www.revenue.ie/en/tax/vat/rates/decision-detail-03542.jsp

Insurance services provided to EU customers are outside the scope of VAT with no recovery. Providers of insurance services are generally part of groups which provide other services and are included within VAT group. Additional services provided by insurers may also attract VAT depending on the circumstances. VAT is regularly charged by insurers and VAT issues regularly arise for insurers.

Marcusm

peteb2 wrote: »

You trying to bolster your post count? Insurers look for policy holders to reclaim the vat in the normal manner.

That's a silly comment; not all policyholders are in a position to recover VAT. Many insurers, perhaps only a minority in Ireland, do not simply provide financial indemnification but provide replacement items. The VAT treatment of these is not so simple!

To Elland Back

I really don't know what you are trying to say here. There is no VAT in insurance premiums, Insurers have a Vat exempt status. Insurers aren't liable to incur VAT in claim settlements, what they do is indemnify their clients according to their individual VAT status with Revenue. Private, unregistered policyholders get paid in full, whereas VAT registered businesses get paid net and the the VAT element of their loss is dealt with by way of their usual returns. The insurer isn't involved here.

Where an insurer has incurred costs for legal services (which include VAT) in their defence of a claim, they ask the VAT registered policyholder to recoup this element from Revenue and reimburse them. The insurer does not recoup the VAT here, the policyholder does.

Some Insurers do provide some engineering inspection services (not insurance cover) and there is VAT on these

Marcusm

To Elland Back wrote: »

I really don't know what you are trying to say here. There is no VAT in insurance premiums, Insurers have a Vat exempt status. Insurers aren't liable to incur VAT in claim settlements, what they do is indemnify their clients according to their individual VAT status with Revenue. Private, unregistered policyholders get paid in full, whereas VAT registered businesses get paid net and the the VAT element of their loss is dealt with by way of their usual returns. The insurer isn't involved here.

Where an insurer has incurred costs for legal services (which include VAT) in their defence of a claim, they ask the VAT registered policyholder to recoup this element from Revenue and reimburse them. The insurer does not recoup the VAT here, the policyholder does.

Some Insurers do provide some engineering inspection services (not insurance cover) and there is VAT on these

Read your own post back and you'll see that I am saying the same thing but in a more correct way. Insurers don't have a VAT exempt status - the vast bulk of their services do which is why when they provide taxable services (such as the engineering services which you've acknowledged), they result in being partly exempt.

To Elland Back

Marcusm wrote: »

Read your own post back and you'll see that I am saying the same thing but in a more correct way. Insurers don't have a VAT exempt status - .

If that is your position, I can only assure you that we are not saying the same thing.

I repeat my earlier link

http://www.revenue.ie/en/tax/vat/rates/decision-detail-03542.jsp

Marcusm

To Elland Back wrote: »

If that is your position, I can only assure you that we are not saying the same thing.

I repeat my earlier link

http://www.revenue.ie/en/tax/vat/rates/decision-detail-03542.jsp

I think you are confusing the fact that insurers providing insurance (or other financial services) are generally outside the scope of VAT without recovery of input tax in relation to those services but it is the service which is "exempt" (although most VAT practitioners would not use that phrase any more). An insurer (ie a body corporate licences to write insurance business) is fully within the scope of VAT in respect of other services. You may not see the distinction but a very important one exists!

To Elland Back

Ah, that's super