431. VAT on payments made by tenant in respect of insurance.

Insurance transactions are exempt from VAT1. However, where, for example, a landlord takes out insurance on a building he is renting out that covers damage to the building which he is liable to repair under the terms of the rental agreement, and he passes on the cost of the insurance to his tenants, the additional amount charged in respect of insurance will follow the VAT liability of the property rental services, and will not be exempt as insurance because it is the landlord's risk that is covered by the insurance and not the tenant's