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V3738-16 7 September 2016 · SG de Impuestos sobre el Consumo Criterion in force
IVA · arrendamiento financiero

Insurance invoiced by a lessor in a leasing agreement is VAT exempt if the exact cost is passed on

A company sought clarification on whether the cost of truck insurance, invoiced separately from the financial leasing contract, was exempt from VAT. The DGT ruled that if the insurance constitutes an independent service and the lessor passes on the exact cost without adding a margin, the transaction is exempt.

The question raised

Legal classification of the insurance portion invoiced in the financial lease installment.

The DGT's ruling

The provision of insurance in a leasing contract is an independent provision if the lessee can choose their own insurance company. If it is an independent provision and the lessor invoices the exact cost of the insurance to the client without modifying the amount, said operation is exempt from VAT. However, if the insurance is not independent (the client cannot choose the company or cannot contract it separately), it is considered a single provision subject to tax.

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