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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?

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    Which company is it that excludes taxes? Tell us so we can avoid them. – DJClayworth Feb 19 '18 at 23:16
  • I used the rental car insurance program provided by MasterCard (specifically, a CapitalOne Spark Business card). Is it unusual for these card-provided insurance services to exclude taxes? FWIW, my experience with MasterCard while processing this claim has been overwhelmingly positive. – Delta_HF Feb 20 '18 at 0:01
  • My Mastercard doesn't exclude them. – DJClayworth Feb 20 '18 at 0:03
  • @DJClayworth it could make sense for business coverage, as business can recover the VAT paid from the tax administration. If the insurer pays you the VAT and you deduct it, then you are actually making money out of the accident. – SJuan76 Feb 20 '18 at 0:09
  • @Delta_HF Read the wording for your insurance. It should specify clearly. – Jim MacKenzie Feb 20 '18 at 0:18
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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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    I think his question is more whether insurance should cover taxes, not whether taxes are owing (they clearly are). Here in Canada, insurance generally covers taxes paid as a result of a claim (unless a person is eligible for a tax refund or rebate, in which case the rebatable portion is deducted s othat the claimant is net neutral, less deductible), but I'm not aware of what normal European procedure is. – Jim MacKenzie Feb 19 '18 at 23:28
  • @JimMacKenzie well, the insurance policy already covered that pretty much completely - "but per their policy, they do not pay for VAT fees". Who else is left to pay the VAT but the policy holder. In the UK (and probably the rest of Europe), the insurer covers the entire cost of the claim, excluding the excess - so, they pay the VAT as well. – Moo Feb 19 '18 at 23:45
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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.

  • If the invoice was in Sixt name you would be right about that part, but the OP does not have to pay an invoice not in his name. But then, when Sixt issued its own invoice towards the OP, they would have to include VAT in it. From Sixt POV the affaire is VAT-neutral (they paid X to the repairers, they receive X either from the OP or his insurer). In the end, the OP receives an invoice and has to pay for it, the insurer covers the value without VAT and the OP has to pay the VAT. – SJuan76 Feb 20 '18 at 0:36
  • Assuming my comments in my answer hold, Sixt shouldn't be invoicing the OP at all. Either the staff at Sixt don't understand the process, which is likely, or they're attempting to double-dip (also possible). We need input from an expert in EU vat – Hobo Sapiens Feb 20 '18 at 0:42
  • Sixt hasn't even done any repairs yet. The invoice is just a collection of administrative fees with an "Expert's estimate of our loss caused by the damage" line item, so I don't think they've actually paid any VAT for this incident. – Delta_HF Feb 20 '18 at 1:09

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