France: Product warranty exempt from VAT, as insurance

France: Product warranty exempt from VAT

The Court of Justice of the European Union (CJEU) issued a judgment in a case concerning the value added tax (VAT) exemption available for insurance—specifically, extending the VAT exemption for a warranty granted for a particular period at a predetermined fixed price. As the CJEU noted, under certain circumstances, the warranty and sale of a product may be so interconnected that the sale of the product and the warranty must be regarded as a single VAT-taxed transaction for VAT purposes.


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The case name is: Mapfre Asistencia, Mapfre Warranty SpA v. Directeur général des finances publiques


The European VAT Directive stipulates that “insurance and reinsurance transactions” are exempt from VAT. The taxpayer in this case provided a warranty (for a limited period) with respect to certain components of used cars. Used car dealers offer this warranty to their customers when buying a used car. The taxpayer received a fixed fee from the used car dealers for this service.

The French tax authorities believed that the service provided by the taxpayer was a VAT-exempt insurance service and not (as the taxpayer claimed) a VAT-able service.

The CJEU upheld its broad interpretation of the term “insurance” and concluded that the warranty agreement would be included. However, finding that the French court did not present the facts clearly enough (the legal relationships of the parties were unclear), the CJEU explicitly stated that its judgment was conditioned on a more detailed determination of the facts by the French courts. 

Read a July 2015 report prepared by the KPMG member firm in the Netherlands: CJEU: warranty may be VAT-exempt insurance

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