Do I have to pay VAT on rental car repairs that were covered by insurance?
I rented a car from Sixt in Italy, and it received a minor scratch while parked on a street. The rental car insurance provided by my credit card (MasterCard) covered the damage, but per their policy, they do not pay for VAT fees.
Now, Sixt is asking me to pay the VAT charges for the damages ($107 USD).
Do I have to pay this? Being a U.S. citizen, can I get reimbursed for this VAT?
Best Answer
Do I have to pay this?
Yes you do, a VAT-able service was provided.
Being a U.S. citizen, can I get reimbursed for this VAT?
No, only goods presentable at the point of exit of the EU can have VAT refunded - you cannot claim a VAT refund on a service provided during or after your stay.
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Is there VAT on insurance UK?
Insurance supplied within the UK is exempt from VAT. Insurance supplied outside the UK is outside the scope of UK VAT. In normal circumstances, VAT cannot be recovered on goods and services bought in to make supplies that are exempt or would be exempt if they were supplied in the UK.Can you claim VAT back on a car?
Due to the private use restriction, it is usual that no VAT can be recovered on the purchase of a car. However, you may be able to claim all the VAT on a new car if it's mainly used as as taxi, for driving instruction and for self drive hire. If you are buying a commercial vehicle, you can usually reclaim the VAT.What does VAT qualifying mean on a car?
What is a VAT qualifying car? A VAT Qualifying Car is a car that has previously been owned by a business or is a brand-new car from a main franchiser. A VAT Registered individual or company buying the car solely for business use or for export outside of the EU can reclaim the 20% VAT from the purchase price.Can you claim VAT on car rental South Africa?
Bad news! You can't claim input tax on car rental Vat is charged at 15% on car rental in South Africa. However, the bad news is you can't claim this as an input deduction. SARS doesn't allow an input tax deduction on the purchase of a motor car or double cab vehicle.What to do if your rental car gets damaged.
More answers regarding do I have to pay VAT on rental car repairs that were covered by insurance?
Answer 2
Don't pay this. The split billing is normal where a VAT registered entity is involved. The insurers pay the repairers the cost of repair. The repairers bill the owners for the VAT portion of the bill. The VAT registered owners then reclaim the VAT as part of their normal VAT accounting process.
If Sixt get paid by you they can still reclaim the VAT elsewhere and thus get paid twice.
Note: This is the way it works in the UK. I couldn't find a specific reference to this scenario, but this page covers VAT reclaim under Additional Costs. It is possible that the system is different in Italy, but VAT regulations don't differ much, and if it is different then the insurers should deal with it.
Sources: Stack Exchange - This article follows the attribution requirements of Stack Exchange and is licensed under CC BY-SA 3.0.
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