6 July 2014

Assistance covers or ‘guarantees’ should attract IPT at the rate of 9% in France if the cover is not provided as part of a motor insurance contract. This is the decision released by the Cour de Cassation on 7 January 2014 in a case between Inter Partner Assistance France and the French Administration. A prior judgment in favour of the French Administration stated that the IPT rate should be 18%, which is the rate for “insurance against risks of any nature related to motor land vehicles” rather than 9%.
The insurance at the centre of this dispute is a ‘warranty’ product supplied by a motor dealer to persons who purchase a motor vehicle from them, which enables the purchaser to claim for certain repairs or towing services if the vehicle breaks down. As the product is not sold as part of a motor insurance contract, the Cour de Cassation concluded that it should not be considered to be an integral risk (‘risque indissociable’) of a motor insurance contract and therefore the lower 9% IPT rate should apply.
This decision has not yet resulted in a change or clarification of the IPT legislation. Therefore, FiscalReps understand that this tax application should be applied with caution on a case-by-case basis. An assistance guarantee supplied as part of a motor insurance contract will still attract the 18% IPT rate.