Can I claim a VAT credit for business use of my car?
Car insurance is typically based on the car’s list price. When insuring a business vehicle, you can deduct the VAT. The list price is then reduced by the VAT. This may qualify you for a lower car insurance premium.
Discount on Your Premium
Once you are subject to VAT, the declared catalog and/or market value may be reduced by the VAT amount. This is because you can offset the VAT portion of a claim against the tax authorities, and the insurer therefore does not have to pay out that portion. Since the value of your car is a factor in determining your premium, in many cases this will also result in a lower premium because you do not have to pay a premium on the VAT amount. This rule applies regardless of whether you purchased the insurance with or without VAT included.
VAT on any damages
If it is determined that you are eligible to claim a VAT credit, the insurer will always pay out the insurance proceeds excluding VAT. This means that you must pay the VAT charged by a repair shop for the repairs yourself. You can then claim this VAT back from the tax authorities.
Update Your Auto Insurance
If you would like to adjust your auto insurance to the insured value excluding VAT, you can let us know by clicking the link in the email you received from us. Having trouble? Please contact us at 088-6883712.
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