Tax on Motor Insurance

Danno

It bemuses me to here that

[An Insurance Company] is regulated by the Irish Financial Services Regulatory Authority

on the radio every day.

Seeming that I have payed €1000+ for insurance that means that the government has got a tidy €200+ off me as insurance is 21% VAT.

Now, the last time I checked, services were charged at 13.5% right?

This reminds me of how the Telcos were charging 21% VAT on phone line installs, but a landmark court case proved that this should have been taxed as a service!

Am I right here?

puntosporting

To my knowledge as far as car insurance goes the government have a 2% levy on every policy!

vector

puntosporting wrote:

To my knowledge as far as car insurance goes the government have a 2% levy on every policy!

I've seen this thread before.

It was concluded that the 2 percent levy is on ALL insurance policies
(an "emergency" measure that never died)
and that there is no VAT on insurance policies.

Someone else mightsearch for the thread, and correct me, but this is what I think at the moment.

Victor

There is the 2% insurance levy (introduced because insurance companies needed to be bailed out by the government). the is no VAT on any financial services, so in effect general business is subsidising insurance.

antoinolachtnai

I think you are oversimplifying. VAT-o-nomics is fairly complex. You could try collecting VAT on it, but it would probably be very messy indeed.

The current setup isn't as unfair as it looks because the insurer doesn't receive any refund on VAT incurred on claims by consumers. (If you crash your car, and the insurer pays for it, the insurer also pays the vat and can't refund or offset it.)

If the insurer did collect VAT, it would also be able to claim a refund on expenses arising in the business. This could actually result in a net loss to the VAT collector, because the amount an insurer collects in premiums is generally less than the amount paid out in claims.

Victor

antoinolachtnai wrote:

This could actually result in a net loss to the VAT collector, because the amount an insurer collects in premiums is generally less than the amount paid out in claims.

Most sectors of the insurance industry are making money (except personal injuries), so not really.

antoinolachtnai

I didn't say they weren't making money. Just that claims often exceeded premiums. They must be making money in personal injuries too, otherwise they'd all quit the business.

Horeb

From, what has been rumoured about the budget, I think the 2% Levy and the Credit Card Levy maybe dropped.

So fingers crossed.

Danno

Are you SURE that there is not 21% VAT on motor insurance, private motor insurance that is...?

Victor

Danno wrote:

Are you SURE that there is not 21% VAT on motor insurance, private motor insurance that is...?

Yes, definite.