Ireland clarifies VAT on vehicle-hire extras and insurance

The taxable amount

The update adds paragraph 7 to Revenue’s hiring and leasing manual. In the Law Reform Commission’s revised text, updated to 1 August 2026, section 37(1) of the Value-Added Tax Consolidation Act 2010 includes taxes, commissions, costs and charges in consideration, but excludes VAT itself. Revenue applies the taxable amount to the full contractual amount receivable for the hire.^[1][2][3]

The manual says charges for motor tax, accidental-damage waivers, cleaning and maintenance follow the hire’s VAT rate. Accessories such as GPS equipment and roof-boxes also follow that rate, even when separately priced. Payments specifically for petrol or diesel instead attract the standard rate.^[2]

Independent insurance is different

Where insurance and hire are distinct, independent supplies, Revenue treats the insurance as exempt. The manual also treats additional insurance for damage, theft protection or personal accident as exempt. This should not be confused with its treatment of an accidental-damage waiver within the hire charge.^[2]

Schedule 1, paragraph 8(1), exempts insurance and reinsurance transactions and related services supplied by insurance brokers and agents. In the Law Reform Commission’s revised text, section 47 distinguishes a composite supply, which follows its principal supply, from multiple supplies, for which consideration is apportioned by relative value and each individual supply receives its appropriate VAT treatment.^[4][5]

Maintenance and separately invoiced repairs

A combined hire-and-maintenance contract follows the hire rate. The manual distinguishes separately invoiced repair services, whose treatment remains subject to the two-thirds rule. Under section 41, where qualifying goods exceed two-thirds of total consideration, the amount is generally treated as consideration for goods, with apportionment where goods attract different rates.^[2][6]

For multinational leasing and fleet businesses, the practical distinction is therefore between elements of the hire package and genuinely independent supplies—not simply whether an invoice shows separate lines. This is administrative guidance, not an announced legislative amendment or a new commencement date.^[1][2][5]