LETTER OF THE STATE TAX SERVICE OF UKRAINE

of March 12, 2012 No. 7020/7/15-3417-26

According to subitem 196.1.3 of Item 196.1 of article 196 of the Tax Code of Ukraine of December 2, 2010 No. 2755-VI (further - the Code) are not the taxation object of the VAT of transaction on provision of services on insurance, joint insurance or reinsurance by persons having the license for implementation of insurance activity according to the law, and also the services connected with such activities insurance (reinsurance) brokers and insurance agents.

According to Article 9 to the Law of Ukraine of March 7, 1996 No. 85/96-BP "About insurance", with changes and amendments, insurance payment - sum of money which is paid by the insurer in accordance with the terms of the insurance contract in case of loss occurrence. The size of insurance sum and (or) the amount of insurance payments are determined by agreement between the insurer and the insurer during the conclusion of the insurance contract or modification of the insurance contract or in the cases provided by the current legislation.

As provision of services on insurance and reinsurance is not the taxation object, payment of insurance payments is also not the taxation object of the VAT and when implementing insurance payments the insurance company shall not add tax amount on value added to insurance payment, reduce insurance payment by tax amount on value added.

In case of payment by insurance company due to insurance payments of repair of the insured car it is necessary to consider the following.

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