In the Polish case of BGZ Leasing sp zoo v Dyrektor Izby Skarbowej w Warszawie (CJEU Case C-224/11) a leasing company (B) required its customers to insure the goods which it leased to them and offered to arrange such insurance. It treated the insurance charges as exempt from VAT under article 135(1)(a) of EC Directive 2006/112/EC. The tax authority issued a ruling that the insurance was ancillary to the principal supply of leasing and was liable to the standard rate of VAT. B appealed and the case was referred to the CJEU which issued judgment in favour of B holding that ‘the supply of insurance services for a leased item and the supply of the leasing services themselves must in principle be regarded as distinct and independent supplies of services...
