VAT on Insurance Claim - does insurance company have to pay it?

D

DB74

Registered User
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Hypothetical situation (kind of!)

Water damage to a property - property owner claims under insurance policy.

Company A does the work and invoices the Insurance company for €1,135 (€1,000 + VAT)

How much money does the Insurance company have to pay out if

A. the property owner IS registered for VAT, and

B. the property owner is NOT registered for VAT
 
If the property owner is VAT registered, AND if the damage is related to the business, then the insurance company should pay the net amount, and ask the property owner to pay the VAT element, and then reclaim through thier VAT return.

Otherwise, if the property owner is not registered, the insurance company will pay the full amount.
 
No No No. An insurance company is VAT exempt meaning it does not charge or reclaim VAT. Therefore, if they are invoiced for the work, they pay the VAT inclusive amount and can't reclaim it. The property owner can't claim VAT on an invoice made out to the insurance company - this is called fraud.

The only logical way around this is if the company bills you, you pay invoice, you reclaim VAT and the insurance company pays you the net amount.
 
Insurance companies are generally not invoiced for work done.

The invoice is made out to the insured but paid directly by the insurance company, either including or excluding VAT depending on the status of the insured.
 
Paddy199, having worked in insurance for years and from experience the Insurance Company will not pay a VAT registered person the VAT portion of the invoice, they will pay the net amount and the Insured person simply claims back the VAT element of the invoice from Revenue.

It has nothing to do with the Ins Co being registered for VAT or not OP just wanted to know if the Ins Co pays including or excluding VAT to a registered or unregistered person.
 
As per the OP, If the invoice is made out to the insurance company, the insured party cannot reclaim VAT and therefore it is irrelevant if they are VAT registered or not.

Maybe DB74 meant the invoice was to the insured party.
 
In claims involving damage to a car owned by a VAT-registered person, the insurance company sometimes pays the VAT-exclusive repair bill to the garage or repairer and asks them to bill the VAT element to the customer, on the basis that they can reclaim the VAT element of the bill on their VAT returns. If this ever happens you, take great care. Most VAT-registered persons are prohibited from reclaiming VAT on cars or car repairs and in the event of an audit Revenue will seek repayment of any overclaim, possibly together with interest and penalties.
 
Paddy199 said:
Maybe DB74 meant the invoice was to the insured party.
Click to expand...

Yes I meant that the invoice is made out to the claimant but will be paid by the insurance company.

I understand that the insurance company has to pay the VAT on invoices made out to them directly (eg ESB, telephone etc).
 
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