The CJEU’s judgment in Mapfre provides clarification of the breadth of the term ‘insurance’ for VAT purposes. However, the judgment does raise questions about the tax treatment of certain warranty contracts in the UK. Providers of warranties that may now be classified as insurance will need to consider pricing and other commercial matters, taking into account the restriction of input tax, together with IPT and regulatory compliance. Depending on how HMRC reacts to the judgment, there may well be ramifications for others, such as those intermediating the sale of warranties and those providing financial loss cover to warranty providers.
The CJEU’s judgment in Mapfre provides clarification of the breadth of the term ‘insurance’ for VAT purposes. However, the judgment does raise questions about the tax treatment of certain warranty contracts in the UK. Providers of warranties that may now be classified as insurance will need to consider pricing and other commercial matters, taking into account the restriction of input tax, together with IPT and regulatory compliance. Depending on how HMRC reacts to the judgment, there may well be ramifications for others, such as those intermediating the sale of warranties and those providing financial loss cover to warranty providers.
The CJEU’s judgment in Mapfre provides clarification of the breadth of the term ‘insurance’ for VAT purposes. However, the judgment does raise questions about the tax treatment of certain warranty contracts in the UK. Providers of warranties that may now be classified as insurance will need to consider pricing and other commercial matters, taking into account the restriction of input tax, together with IPT and regulatory compliance. Depending on how HMRC reacts to the judgment, there may well be ramifications for others, such as those intermediating the sale of warranties and those providing financial loss cover to warranty providers.