If a vehicle is sold with warranty insurance, the warranty premium must be charged with VAT. This was decided by the BFH, thereby changing its case law. The VAT liability applies at least to the usual combined models, where the buyer has a claim against either the dealer or the insurance company.



In its current May issue, "Auto Steuern Recht" points out that premiums for pure repair cost insurance, where the buyer only has a claim against the insurer, should continue to be exempt from VAT.



The new case law is generally applicable with immediate effect. However, VAT assessments or advance returns submitted by March 31, 2010 are protected under Section 173 (1) no. 3 of the German Fiscal Code.



The May issue of "Auto Steuern Recht" can be ordered free of charge at www.kfzbetriebe.de.



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