An Introduction to Insurance Premium Tax VAT on

An Introduction to Insurance Premium Tax & VAT on Claims Costs 11 May 2016 © Fiscal Reps Limited

CONTENTS • Introductions – the Fiscal. Reps Team • From birth to settlement – The life of a tax liability o Pricing the premium o Registration considerations o Tax point o Settlement deadline o Foreign currency o Late submissions o Reporting • Key European issues • VAT on claims costs Global Premium Tax Compliance Solutions © Fiscal Reps Limited

INTRODUCTIONS: THE FISCALREPS TEAM Jo Finbow CLIENT DIRECTOR Global Premium Tax Compliance Solutions Peter Hewitt CLIENT DIRECTOR - VAT Oana Popescu CLIENT MANAGER © Fiscal Reps Limited

From Birth to Settlement The Life of a Tax Liability Jo Finbow © Fiscal Reps Limited

PRICING THE PREMIUM Location of Risk Article 13 (13), EU Directive 2009/138/EC Member State where the risk is situated means: a) the Member State in which the property is situated, […] b) the Member State of registration, where the insurance relates to vehicles of any type, c) the Member State where the policy-holder took out the policy in the case of policies of a duration of four months or less covering travel or holiday risks, […] d) In all cases not explicitly covered by (a) (b) or (c) the Member State where the policy-holder has his habitual residence or, if the policy-holder is a legal person, the Member State where the latter's establishment, to which the contract relates, is situated Global Premium Tax Compliance Solutions

PRICING THE PREMIUM Location of Risk For example, a policy where: • A ship registered in the UK • Policyholder is located in Switzerland • Ship Operates between Germany and Spain Global Premium Tax Compliance Solutions

PRICING THE PREMIUM • National Taxes / Parafiscal Charges applicable? • Current Rate? • Rate Model? o Taxable Premium o Sum Insured o Fixed Fee o Reduced rates • Insurer or Insured? Global Premium Tax Compliance Solutions

REGISTRATION CONSIDERATIONS • • • Registered / Authorised? Fiscal Representative or Agent? Length of registration process Provincial registrations Branches Multiple taxes Global Premium Tax Compliance Solutions

TAX POINT • • • Booked Date Cash Received Contract Start Date Renewal Date Invoice Date Maturity Date Global Premium Tax Compliance Solutions

SETTLEMENT DEADLINE • • • Monthly Bi-monthly Quarterly Half Yearly Annually • e. g. Spanish property policy – incepting January and premium received February • Filings required in – February, March, April + FBC Global Premium Tax Compliance Solutions

FOREIGN CURRENCY • Appropriate FX policy Global Premium Tax Compliance Solutions

LATE SUBMISSIONS • Penalties and interest • Audits from tax authorities • Legality of the policy • Exposure to additional risk Global Premium Tax Compliance Solutions

REPORTING & OTHER CONSIDERATIONS • Annual Reports • Prepayments • Record Keeping • Tax Authority Audits Global Premium Tax Compliance Solutions

KEY EUROPEAN ISSUES

AT - AUSTRIA • 1 Return – 12 payments Global Premium Tax Compliance Solutions

BE - BELGIUM • Multiple taxes with multiple rates Global Premium Tax Compliance Solutions

BG - BULGARIA • Single tax • Currency issues Global Premium Tax Compliance Solutions

CY - CYPRUS • Very low value tax • High penalty Global Premium Tax Compliance Solutions

DE - GERMANY • High rates • Authority very strict, but very clear cut Global Premium Tax Compliance Solutions

DK - DENMARK • Pre 01/01/2013 change in taxes • High tax rate 42. 9% for MTPL Global Premium Tax Compliance Solutions

ES - SPAIN • IPT, Consorcio & FBC • Provincial filing • Offsetting not permitted Global Premium Tax Compliance Solutions

FI - FINLAND • High rates • IPT calculation on premium and FPF • Annual filing and FPF Global Premium Tax Compliance Solutions

FR - FRANCE • 8 taxes • Various tax rates • Various offices • CATNAT & GAREAT Global Premium Tax Compliance Solutions

GB - UNITED KINGDOM • Two rate changes in 12 months – complex transitionary rules • 2 possible tax points Global Premium Tax Compliance Solutions

GR - GREECE • Strict fiscal representative rules • Bureaucratic and expensive to operate in • IPT on Marine? TEA EAPAE? • Motor Guarantee Fund – an exclusive club Global Premium Tax Compliance Solutions

HU - HUNGARY • Progressive tax Global Premium Tax Compliance Solutions

IE - IRELAND • Fairly straightforward regime • Special treatment for Captive Risks Global Premium Tax Compliance Solutions

IS - ICELAND • Currency issues • Complex property – sum insured Global Premium Tax Compliance Solutions

IT – ITALY • High rates of tax • Prepayment • No refunds Global Premium Tax Compliance Solutions

LU - LUXEMBOURG • Fairly low rate • New tax? Global Premium Tax Compliance Solutions

MT - MALTA • Minimum tax contribution • Location of risk issues Global Premium Tax Compliance Solutions

NL - NETHERLANDS • High rate of tax Global Premium Tax Compliance Solutions

PT - PORTUGAL • ASF – retrospective tax Global Premium Tax Compliance Solutions

SE - SWEDEN • Only MTPL taxed, but at 32% Global Premium Tax Compliance Solutions

SI - SLOVENIA • Market practice vs Tax Authority view Global Premium Tax Compliance Solutions

VAT on Claims Costs Peter Hewitt © Fiscal Reps Limited

VAT ON CLAIMS COSTS ‘Beyond the everyday world…lies the world of VAT, a kind of fiscal theme park in which factual and legal realities are suspended or inverted. ’ LJ Sedley C&E v Royal & Sun Alliance (2003) UKHL 29

THE EU 28 countries: Austria Belgium Bulgaria Cyprus Croatia Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Global Premium Tax Compliance Solutions Italy Latvia Lithuania Luxembourg Malta Netherlands Poland Portugal Romania Slovakia Slovenia Spain Sweden United Kingdom

THE EU • • 28 countries 24 official languages! 11 currencies Population over 500 m • Gibraltar • Channel Islands • Isle of Man • • Candidate countries (Turkey, Iceland, Montenegro, Serbia, Macedonia) Potential candidate countries (Albania, Bosnia and Herzegovina, Kosovo) Switzerland, Norway, Iceland Everywhere else! Global Premium Tax Compliance Solutions

LEGAL BACKGROUND • EU Directives • EU Regulations • National Legislation • Court of Justice of the European Union (ECJ or CJEU) • European Commission (EC) • UK VAT Law • Mutual Assistance/Administrative Cooperation Reg 904/2010 • VIES Global Premium Tax Compliance Solutions

THE SCOPE OF VAT • A tax on supplies • Goods and Services Tax (GST) • Sales Tax, Services Tax • Article 2(1) of the VAT Directive 2006/112/EC: – The supply of goods for consideration… by a taxable person acting as such – The supply of services for consideration… by a taxable person acting as such – The importation of goods – The intra-Community acquisition of goods by a taxable person Global Premium Tax Compliance Solutions

THE SCOPE OF VAT UK Provision: Section 4 VAT Act 1994 VAT shall be charged on any supply of goods or services made in the United Kingdom, where it is a taxable supply made by a taxable person in the course or furtherance of any business carried on by him. Global Premium Tax Compliance Solutions

THE SCOPE OF VAT Questions: • • What is a supply? Can there be a supply of goods or services without consideration? What is a supply of goods, as opposed to a supply of services? What is a taxable supply? Where is the place of supply? Who is a taxable person? What is meant by business? • If one of the conditions is failed, the transaction is not within the scope of (UK) VAT • The questions may be asked in any order, but let us look at the important ones for claims costs – consideration and taxable supplies • Place of Supply is extremely important and will be covered in more detail later Global Premium Tax Compliance Solutions

SCOPE OF VAT - SUPPLY Section 4 VAT Act 1994 VAT shall be charged on any supply of goods or services made in the United Kingdom, where it is a taxable supply made by a taxable person in the course or furtherance of any business carried on by him. Global Premium Tax Compliance Solutions

SUPPLY AND CONSIDERATION Some forms of supply: • • • Sale Lease Hire Sale or return Sale on approval Process or repair Grant of a right Surrender of a right Agreement not to do something Global Premium Tax Compliance Solutions

SCOPE OF VAT - SUPPLY What is a supply? • s 5(2)(a) VATA 1994 – “Supply” in this Act includes all forms of supply, but not anything done otherwise than for a consideration • This reflects Article 2 of the VAT Directive • So, we need to answer the question “what is consideration”? Global Premium Tax Compliance Solutions

SUPPLY AND CONSIDERATION European case law • Key case law includes – The ‘Dutch Potato’ case – Apple & Pear Development Council – Tolsma – Naturally Yours Cosmetics – Empire Stores – Iliffe & Holloway Global Premium Tax Compliance Solutions

SUPPLY AND CONSIDERATION What is consideration? • It is anything received or to be received in return for a supply of goods or services • It is not necessarily money but it must be capable of being expressed in monetary terms • It must have direct link with the goods or services supplied • It is payable as a result of a legal relationship between the parties • And its value is based on the subjective value to the recipient Global Premium Tax Compliance Solutions

TAXABLE SUPPLY Section 4 VAT Act 1994 VAT shall be charged on any supply of goods or services made in the United Kingdom, where it is a taxable supply made by a taxable person in the course or furtherance of any business carried on by him. Global Premium Tax Compliance Solutions

TAXABLE SUPPLY What is a taxable supply? • A taxable supply is a supply of goods or services made in the United Kingdom other than an exempt supply – Section 4(2) VATA 1994 • Exempt supplies are listed in Schedule 9 VATA 1994 – Which is the UK’s application of Articles 131 -136 of the VAT Directive Global Premium Tax Compliance Solutions

EXEMPT SUPPLIES Exempt Schedule 9, VAT Act 1994 Group 1 Group 2 Group 3 Group 4 Group 5 Group 6 Group 7 Group 8 Global Premium Tax Compliance Solutions Land Insurance Postal services Betting, gaming & lotteries Finance Education Health & welfare Burial & cremation

EXEMPT SUPPLIES Exempt Schedule 9, VAT Act 1994 Group 9 Group 10 Group 11 Group 12 Group 13 Group 14 Group 15 Group 16 Global Premium Tax Compliance Solutions Trade unions etc. Sports, sports competitions etc. Works of art etc. Charity fund-raising Cultural services Sale of ‘input tax blocked’ goods Investment gold Supplies of services by groups involving cost sharing

TAXABLE SUPPLY • Supplies other than exempt supplies – Supplies at the standard rate (20% from 4 January 2011) – Supplies at the reduced rate (5%) – Supplies at the zero rate (0%) • NB supplies at the zero rate are taxable supplies • In European terminology, ‘exemption’ covers both – Zero-rating (exemption with credit for input tax) – ‘True’ exemption (exemption with no credit for input tax) Global Premium Tax Compliance Solutions

TAXABLE SUPPLY Determining VAT liability • If not exempt, the supply is taxable • Unless specifically stated, all taxable supplies are standard-rated • Zero-rated supplies are described in Schedule 8 • Reduced-rated supplies are described in Schedule 7 A Global Premium Tax Compliance Solutions

IS VAT CHARGEABLE? SCOPE OF VAT Out of scope Within scope Taxable No VAT to charge 0% No VAT to charge Global Premium Tax Compliance Solutions 5% 20% Exempt No VAT to charge

SCOPE OF VAT – PLACE OF SUPPLY Section 4 VAT Act 1994 VAT shall be charged on any supply of goods or services made in the United Kingdom, where it is a taxable supply made by a taxable person in the course or furtherance of any business carried on by him. Global Premium Tax Compliance Solutions

PLACE OF SUPPLY What is the UK? • For VAT purposes, the UK is made up of – Great Britain and Northern Ireland – Plus the Isle of Man – And the territorial waters within 12 miles of the coastline • The VAT territory of the UK excludes the Channel Islands and Gibraltar • The territory is different for customs and statistical purposes – The Channel Islands and Gibraltar are included Global Premium Tax Compliance Solutions

PLACE OF SUPPLY Place of supply rules: • Place of supply of goods: – If not removed, place where the goods are when title is transferred – Title = right to dispose of the goods as owner – If removed/delivered, the rules become more complex Global Premium Tax Compliance Solutions

PLACE OF SUPPLY Place of supply rules: • Place of supply of services: – Basic rule for B 2 B supplies is now where the recipient belongs – Basic rule for B 2 C is where the supplier belongs – Some exceptions • The rules for goods tend to be more straightforward! Global Premium Tax Compliance Solutions

PLACE OF SUPPLY OF SERVICES General rule: supplies to taxable persons “B 2 B” • Article 44 – The place of supply of services to a taxable person acting as such shall be the place where that person has established his business – However, if those services are provided to a fixed establishment of the taxable person located in a place other than the place where he has established his business, the place of supply of those services shall be the place where that fixed establishment is located • Where does the customer belong? • Who IS the customer? • Insurer or insured? Global Premium Tax Compliance Solutions

PLACE OF SUPPLY OF SERVICES Implementing Regulation No. 282/2011 • Sets out the meaning of “business establishment” and “fixed establishment” • Not seen as changing “belonging” treatment in the UK: – If the person has no establishment – usual place of residence – If the person has only one establishment – where that establishment is located – If the person has more than one establishment – where the ‘relevant establishment’ is located • The ‘relevant establishment’ is defined (s 9(4) VATA) as ‘the establishment which is most closely concerned with the supply’ Global Premium Tax Compliance Solutions

EXCEPTIONS TO THE GENERAL RULES General exceptions: • Services connected with immovable property – Passenger transport services • Short-term hire of means of transport – Restaurant and catering services – Cultural, artistic, sporting services etc. • More detail later on the first category • USE AND ENJOYMENT RULES Global Premium Tax Compliance Solutions

REVERSE CHARGE • B 2 B general rule – place of supply of services where the customer is established – Supplier would have to register for VAT everywhere he had customers – The customer is usually VAT registered (B 2 B) – Therefore, it is easier to have the customer account for the VAT • Customer pays output tax (on service bought in) • Customer is also entitled to input tax (at the applicable recovery rate) • If 100% recovery – contra entry on VAT return • If not, there is a VAT cost for the insurer Global Premium Tax Compliance Solutions

USE AND ENJOYMENT PROVISIONS Designed to avoid… • Non-taxation – Services falling outside the scope of EU VAT under the normal place of supply rules – But which are effectively used and enjoyed within the EU • Double taxation – Services falling within the scope of EU VAT under the normal place of supply rules – But which are effectively used and enjoyed outside the EU (and potentially subject to VAT there) • Distortion of competition Global Premium Tax Compliance Solutions

USE AND ENJOYMENT PROVISIONS • Article 59 a(a) – Where services would be treated under the normal rules as supplied within an EU Member State • But the effective use and enjoyment takes place outside the EU – Member States may treat the place of supply as outside the EU • Article 59 a(b) – Where services would be treated under the normal rules as supplied outside the EU • But the effective use and enjoyment takes place within the EU – Member States may treat the place of supply as the Member State in which the service is used and enjoyed Global Premium Tax Compliance Solutions

USE AND ENJOYMENT PROVISIONS • Generally, Member States have freedom over the extent to which the provisions are applied • Member States may apply these rules to any services within – Articles 44 and 45 (the two general rules) – Article 56 (hiring of means of transport) – Article 59 (services to non-taxable persons outside the EU) Global Premium Tax Compliance Solutions

USE AND ENJOYMENT PROVISIONS Application in the UK • Schedule 4 A VATA 1994 • Use and enjoyment provisions apply to: – – – Hire of means of transport (paragraph 3) Hire of goods (paragraph 7) Telecommunications services (paragraph 8) Radio/TV broadcasting services (paragraph 8) Electronically-supplied services supplied to a ‘relevant business person’ (paragraph 9) • And the latest – repair services to moveable tangible property under an insurance contract – 1 June 2016? • The use and enjoyment provisions are applied more widely in some other Member States Global Premium Tax Compliance Solutions

USE AND ENJOYMENT – UK MOTOR – CURRENT POSITION England Gibraltar Ins. Co Gib Motor Repairer Repair, no VAT Motor car is used in the UK, repair is carried out in the UK Insured or third party owner Global Premium Tax Compliance Solutions

USE AND ENJOYMENT – UK MOTOR – FUTURE POSITION England Gibraltar Ins. Co Gib Motor Repairer Repair + VAT Motor car is used in the UK, repair is carried out in the UK Insured or third party owner Global Premium Tax Compliance Solutions

USE AND ENJOYMENT – UK MOTOR EXAMPLE –CURRENT AND FUTURE POSITION England Gibraltar Motor Repairer Ins. Co Gib Repair + VAT Insured or third party owner Motor car is used in the UK, repair is carried out in the UK Global Premium Tax Compliance Solutions

SCOPE OF VAT Section 4 VAT Act 1994 VAT shall be charged on any supply of goods or services made in the United Kingdom, where it is a taxable supply made by a taxable person in the course or furtherance of any business carried on by him. Global Premium Tax Compliance Solutions

SCOPE OF VAT The questions which must be asked • Is there a supply of goods or services for a consideration? • Is it a taxable supply? • Is it made in the UK? • Is it made by a taxable person? • Is it made in the course or furtherance of that person’s business? Unless the answer is ‘yes’ to every question, the transaction is not within the scope of (UK) VAT Global Premium Tax Compliance Solutions

VAT: LIABILITY OF INSURANCE • Provision of insurance is exempt • There is a different treatment for insurance provided inside and outside the EU • Insurance services by EU insurers to non-EU clients are outside the scope of VAT – chance to recover input tax • Insurance back office services (e. g. claims handling) may become taxable, following ECJ’s decision in Andersen and CJEU’s decision in Aspiro – a very big issue for many insurance companies which have a low recovery rate of input tax • This will give a Gibraltar insurer another competitive advantage – back office services not subject to VAT so no VAT cost Global Premium Tax Compliance Solutions

VAT: SUPPLY CHAIN Expenses • Consultants etc. charge a fee plus expenses • Expenses incurred by a supplier in making a supply – part of the value of the supply • Not a separate supply or indemnification • Therefore subject to VAT at the same rate • BUT, usually the consultant will be able to recover the VAT charged to him on the supply (e. g. car parking) so no net cost • Rail fares? Global Premium Tax Compliance Solutions

OUTPUT TAX Disbursements • Incidental expenses incurred in making supply must be treated as part of the value of a supply – Article 78(b) of the VAT Directive – For example, travelling expenses, postage, telephone etc. • But amounts paid to a third party on behalf of a client may be treated as a disbursement – Article 79(c) of the VAT Directive – These are not treated as part of the value of a supply – VAT is calculated only on the value of supply Global Premium Tax Compliance Solutions

OUTPUT TAX Disbursements for VAT Purposes • Some of the conditions to be met are: – The agent acted for the client when paying the third party – The client actually received and used the goods or services provided by the third part – The client was responsible for paying the third party – The agent recovers only the exact amount charged • NB agent in this context is simply anyone who pays an expense on behalf of another – a paying agent • This could include an insurance company! - VAT on invoice? Global Premium Tax Compliance Solutions

VAT ON CLAIMS COSTS • Need to consider place of supply for each cost, to determine whether VAT is chargeable • Then, need to consider VAT law in that jurisdiction • Therefore look at: – – – Establishment of supplier Who is the recipient – insurer or insured? Establishment of recipient Whether the cost is land-related (more later) Whether use and enjoyment rules apply Whether the cost is subject to VAT in the place of supply Global Premium Tax Compliance Solutions

VAT ON CLAIMS COSTS • Where UK VAT is charged to a UK insurer; – it should be recovered in full if it relates to a policy with a non-EU policyholder – it should not be recovered at all if it relates to a policy with an EU policyholder • Where UK VAT is not charged; – insurer should account for reverse charge VAT on a taxable supply, and • Recover all of the VAT if the cost relates to a policy with a non-EU policyholder • Recover none of the VAT if the cost relates to a policy with an EU policyholder • There is no mechanism for a Gibraltar insurer to recover VAT, as claims from the financial sector are excluded from the regime Global Premium Tax Compliance Solutions

WHO IS THE RECIPIENT OF THE SUPPLY? • Determines place of supply • Determines who can recover the VAT (if any) • Determines who accounts for reverse charge (if supplier not in same country as recipient) • Usually it is the policyholder – but several co-assureds? • Subrogated claims? • BIK insurance? • WHA case – Halifax in the ECJ Global Premium Tax Compliance Solutions

EXCEPTIONS TO THE GENERAL PLACE OF SUPPLY RULE - SERVICES General exceptions • Services connected with immovable property – Passenger transport services • Short-term hire of means of transport – Restaurant and catering services – Cultural, artistic, sporting services etc. Global Premium Tax Compliance Solutions

EXCEPTIONS TO THE GENERAL RULE Services connected with immovable property • • Construction or demolition of a building or permanent structure Maintenance, renovation and repair of a building or permanent structure Surveying and assessing property Valuing property, including for insurance or loan purposes Arranging the sale or lease of land or property Drawing up of plans for a building Legal services such as conveyancing The supply of warehouse space, if allowed to use specific land Global Premium Tax Compliance Solutions

EXCEPTIONS TO THE GENERAL RULE Services NOT connected with immovable property • Drawing up of plans for a building or part of a building that do not relate to a particular site • Arranging the supply of hotel accommodation etc. • Installation, assembly, repair or maintenance of machines or equipment which are not part of the land or property • The hiring out of civil engineering plant on its own, which is the letting on hire of goods • The secondment of staff to a building site • Advice or information relating to land prices or property markets because they do not relate to specific sites • The supply of storage services (i. e. taking goods to store) Global Premium Tax Compliance Solutions

PLANNING FOR VAT – CLAIMS FULFILMENT • Goods – consideration must be given to goods being supplied to the insured party, if they can recover the VAT • Services – if services are VATable (e. g. land-related, or use and enjoyment rule) it may be better to have the services received by the insured, if they can recover the VAT • Services – if the insurer is in a non-VAT jurisdiction, it may be better to have the services supplied to the insurer, if the insured cannot recover the VAT (subject to use and enjoyment override) Global Premium Tax Compliance Solutions

ISSUES TO CONSIDER – GENERAL POINTS FOR GIBRALTAR INSURERS 1. Consider upfront if claims costs should be borne by insurer directly or by insured and reimbursed by insurer 2. On suffering a loss, consider whether any VAT charged by fulfilment providers is correctly charged 3. Make sure invoicing is to the correct party: – insured if supply is to the insured, so that the insured can reclaim, or – insurer if supply is to the insurer, so that no VAT is charged Global Premium Tax Compliance Solutions

EXAMPLES – PROPERTY INSURANCE • Insurer should indemnify UK VAT registered policyholder for cost of repairs (not settle the costs directly to the builder) • This is because the policyholder may be able to recover the VAT, so the claim to the insurer can be net of recoverable VAT • Claims handling is likely to be supplied to the insurer so is VAT free • Legal advice may be supplied to the insurer (no VAT) or the insured in UK (plus VAT which may be recoverable) • Invoicing must follow the supply route so recovering VAT is possible Global Premium Tax Compliance Solutions

EXAMPLES – MOTOR OWN DAMAGE • Most of insured base is private individuals in UK • Currently, a Gibraltar insurer may both arrange and settle the repair cost directly with the repairer (with no VAT) – benefits in kind insurance • This is because, if the insurer buys the services directly, there is no VAT charged on this service • However, HMRC frown on this process as a lot of insurers set up in Gibraltar to gain such an advantage, and if it can be proved that the non. EU establishment is purely to avoid VAT it can be ignored (Halifax) • Even if the Gibraltar location of the insurer is not purely for VAT avoidance, soon the use and enjoyment place of supply rule will make the repairs subject to UK VAT if there is a UK based motor (1 st June 2016? ) Global Premium Tax Compliance Solutions

EXAMPLES – CONTENTS OR STOCK INSURANCE • An EU or a Gibraltar insurer should indemnify the UK policyholder for the cost of replacement of UK contents or stock • Benefits in Kind insurance is not advisable • This is because VAT on goods is charged where the goods change hands - If UK policyholder buys the replacement goods, they may be able to recover the VAT, whereas the insurer will not Global Premium Tax Compliance Solutions

SUMMARY • VAT is a complex tax which varies by jurisdiction and by type of goods or services • Insurance is exempt in the EU, which means that EU based insurers cannot recover input VAT on purchased goods and services • Sums insured should take into account any VAT cost, so underwriters must consider this upfront • Most insurers based in jurisdictions with no VAT can avoid input VAT as Article 44 states that the rate applicable shall be the rate in the place of establishment of the purchaser (changes 1 st June 2016? ) • EU based insurers may not be able to avoid input VAT on services received by them, but can consider having the policyholder receive the services instead Global Premium Tax Compliance Solutions

SUMMARY • In order to ensure that the most effective tax treatment is achieved, the insured and insurer should agree upfront: o Who should pay for the immediate cost of losses arising in relation to different types of loss? The insured or the insurer? o How should the supplier of goods or services invoice for their supply? (e. g. inclusive of VAT if supplied to the UK, or exclusive of VAT if supplied to Gibraltar) o When should VAT be charged? Always in relation to UK Property claims, but otherwise only when the supply is within the UK or another VAT jurisdiction o Why should VAT be charged? It is charged if the supply is not exempt and the supply is within the UK or another VAT jurisdiction o What rate should apply, if VAT is correctly chargeable? • The answers to these questions should be explicit within the policy documents and / or any claims handling agreements / protocols Global Premium Tax Compliance Solutions

QUESTIONS AND ANSWER SESSION

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