This guidance explains when extended warranties should be treated as insurance for VAT purposes rather than as manufacturer warranties.
Ireland’s tax authority, Irish Revenue, has published a new Tax and Duty Manual (TDM) VAT Treatment of Extended Warranties (Revenue eBrief No. 232/25) on 8 December 2025 to provide guidance on the VAT treatment of Extended Warranties.
This guidance sets out the VAT treatment of extended warranties and the circumstances where an extended warranty should be treated as insurance for VAT purposes and not as a manufacturer’s warranty.
What is an Extended Warranty?
When goods (such as furniture, household electrical appliances and other computer equipment) are sold, the consumers may also purchase an extension of the warranty as a separate insurance service plan, which provides, in the event of a claim, for the repair of the article purchased or, possibly, its replacement, for a period beyond the period covered by the warranty provided by the manufacturer. These separate insurance service plans are referred to in this guidance as extended warranties.
What is insurance?
Insurance is a service whereby the insurer undertakes, in return for prior payment of a premium, to provide the insured, in the event of materialisation of the risk covered, with the service agreed when the contract was signed.
What is a Manufacturer’s Warranty?
A manufacturer’s warranty is a guarantee provided by a manufacturer of a product, that the product will function as expected for a specific period. In general, where the product does not function as expected within the warranty period due to defects in the workmanship or the materials, the manufacturer will repair or replace it.
VAT Treatment: Insurance
The supply of insurance is exempt from VAT.
VAT Treatment: Extended Warranties
The supply of an extended warranty is a VAT exempt supply of an insurance service, in circumstances where it meets the definition of insurance, i.e., where the provider undertakes, in return for payment, to provide the consumer, in the event of materialisation of the risk covered, with the repair/replacement service agreed when the insurance service plan (extended warranty) was signed.
Example 1
Retailer A is a retailer of electrical household goods. It also offers extended warranties that consumers can purchase when they buy goods, whereby in consideration for a fee, and subject to conditions, Retailer A will arrange for the repair or replacement of the goods sold.
Consumer A buys a washing machine and opts to purchase the extended warranty, that provides for the repair of the washing machine or, possibly, its replacement, for a period of 3 years.
Where a claim is made, a third party will repair the washing machine and will charge Retailer A for the service. There is no extra charge to the consumer for the repair.
The supply of the extended warranty by the retailer to the consumer is exempt from VAT.
