BGZ Leasing: single vs multiple supplies

The CJEU has ruled in the case of BGZ Leasing that where a lessor insures the asset subject to the lease and recharges the cost of the insurance to the lessee, there are likely to be two supplies for VAT purposes: a taxable supply of the leased asset; and an exempt insurance supply. The key indicators of a separate exempt supply in these circumstances are that the lessee has the option of obtaining the insurance from elsewhere and only the exact cost of the insurance is recharged. The court found that if the transaction were treated as a single taxable supply, this might frustrate the purpose of the insurance exemption.