What Cross-border Insurers Need to Know About French, Spanish and Portugese IPT

Christophe Bourdaire
April 16, 2020

When operating across multiple regions, it’s challenging to stay abreast with every jurisdictions’ insurance premium tax (IPT) rates, particularities and exemptions. Country-specific filing and audit processes vary country to country too.

If you operate in Portugal, France or Spain, or are looking to expand your business into these European territories, we’ve compiled a quick guide covering key IPT developments in these countries.

Portugal

The most significant announcement is delay related.

Portugal was set to switch to a new digital filing system for Stamp Duty declaration this year. This has now been officially delayed until at least 2021 due to the coronavirus pandemic.

This may be frustrating for some, as many organisations will have worked tirelessly on the run up to the original deadline, digitising operations and putting systems in place, however this postponement provides some welcome extra breathing room to validate changes and to make any additional improvements needed to processes.

When the new system is eventually introduced, taxpayers will be required to provide detailed information on a transactional basis in order to issue their Stamp Duty return. With this new requirement on the horizon, it’s clear the Portuguese tax authorities are looking to tighten up reporting by requesting more granular detail. Understanding and interpreting local tax rules can be challenging – ensure your data collection processes match the requirements.

France

France is one of the most significant IPT collectors in Europe, with a 15% increase between 2014 and 2018. These increases have been due to sickness and legal expenses insurance contracts, and an increase in the contribution to the Common Fund for Victims of Terrorism.

Elsewhere, The Fonds de Garantie introduced two new annual contributions for companies writing “Dommages Ouvrage” in France after many insurance companies writing construction insurance went bankrupt.

The first one is a 5% contribution that applies to the difference of “Dommages Ouvrage” premiums written over the last 10 years, for which set coefficients and previous year’s technical provisions deductions are applied. The second one is a contribution whose rate can range from 0% to 12% and that is calculated on the total “Dommages Ouvrage” premiums written during the previous year. Its aim is to cover the charges incurred by the Fonds de Garantie on its activities related to Dommages Ouvrage.

Spain

Spain recently introduced a new software system for all of its compulsory surcharges such as Extraordinary Risk contributions and Environmental Damage surcharges.

The Consorcio de Compensación de Seguros (CCS) requires insurers to report their policy information on a more granular level. Insurers must provide information at a transactional level on an ongoing monthly basis for all surcharges now. The change has had a significant impact on the insurance industry and it’s taken some time for insurers to become accustomed to the new level of detail.

Spain’s approach could be adopted by other European nations in the future so our team of regulatory analysis experts will be keeping a close eye on developments – it will be interesting to see what can be learned from this new approach.

IPT generally

The current global situation is affecting some IPT tax filings, but economic effects are still coming through and there could be further changes in a short space of time.

Our team of regional IPT experts ensure our software is always kept up-to-date with the latest regulations and changes so you can be confident that your tax reporting and filing is correct. We also have a live updates blog to keep you informed.

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Author

Christophe Bourdaire

Senior Regulatory Specialist, Regulatory Analysis. Christophe joined Sovos FiscalReps in 2011 and has been managing the IPT compliance process for a portfolio of captives and French speaking clients. Based in France, he focuses on the development of the global IPT content and technology offering. Christophe completed a degree (certificate) in Journalism at Ecole Nouvelles in Nice, France. He is a native French speaker, and also speaks fluent Spanish.
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