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V2640-14 7 October 2014 · SG de Impuestos sobre el Consumo Criterion in force
IVA · indemnización

Payments for vehicle damage or insurance excess are subject to VAT

A query was raised regarding whether payments made by a vehicle lessee for vehicle damage or for the settlement of an insurance excess are subject to VAT. The DGT ruled that these amounts do not constitute compensation, but rather consideration for services subject to the tax.

The question raised

Taxability of payments made by the lessee in the event of an accident.

The DGT's ruling

Payments made by the user to cover repair, transport, towing, or vehicle replacement costs following an accident or theft constitute the consideration for said operations and are subject to VAT. Likewise, the payment of the deductible of an insurance policy contracted to limit the lessee's economic liability is a transaction subject to tax, as its amount is correlated with the repair services arising after the accident.

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