Premium bases: exclusive of tax or inclusive of tax?

Why are the premium bases in construction insurance expressed in exclusive of tax or inclusive of tax?

The premium bases are in fact expressed in exclusive of tax or inclusive of tax depending on the type of guarantee concerned:

  • The premium base for the project owner's Civil Liability cover is expressed in inclusive of tax because the compensation will be paid to a third party, who, in turn, will have to pay a company in inclusive of tax to have it carry out the repairs following the damage
  • The premium base of the All Risks Construction Site guarantee is, most often, expressed in exclusive of tax. In fact, repairs are usually carried out by the companies in question. The repair borne by the company responsible for the damage is then considered as the fiscal accessory of its market of origin on which it has already paid the VAT. It is therefore not liable to pay any new VAT on the repair work which it carries out itself or which it subcontracts to another firm..

The basis of assessment will therefore only be expressed in euros including inclusive of tax if the Contracting Authority takes on the task of selecting a new firm (which has not already paid VAT on an original contract and will therefore have to pay VAT for this new contract) to carry out the repairs.

  • The premium base for the Work Damage Guarantee is expressed in inclusive of tax, which is easy to understand, since the repairs can take place 10 years after acceptance and can be made by the company that carried out the initial work or not. Moreover, the repair can no longer be considered as a fiscal accessory of the first building site.