Italian Parafiscal Complexities

Hellen Msangya
June 3, 2020

Premium tax and parafiscal compliance for insurers authorised to operate under the Italian regime can be challenging. For the experienced, it may seem that each year brings a different obligation to be met with new requirements often being introduced. There are almost always links between an upcoming year’s reporting requirements and declarations made in previous years. For example, IPT prepayments, a uniform requirement for all insurers. And, there are other similar obligations that are specific to the class of business covered. This is especially true for insurers writing policies to cover risks of damage caused by motor vehicles, boats, and hunting activities.

Road Accident, and Hunting Accident Victims Funds

For these specific risks, insurance cover is compulsory however there are many variables that can cause the cover to be ineffective. For instance, the most common cases involve damages caused by uninsured vehicles and craft in circulation as well as cases in which an insurance undertaking is placed under compulsory liquidation at the time of the accident. To this end, CONSAP, (the General Agency for Italian National Insurance) set up two Funds (the Road Accident Victims Fund – RAVF; and the Hunting Accident Victims Fund – HAVF) aimed at paying compensation within the specific limits set up by compulsory insurance law. Insurers covering the above risks should register with CONSAP and meet biannual obligations to report and make contributions in line with the total taxable premiums collected.  

Provisional payments

Each year CONSAP circulates an article in which applicable rates are set for the payment due for the year. Interestingly, the rates published are those of the taxable basis (e.g. the portion of the insurance premium on which the contributions should apply). The contribution rate usually remains the same with the notable exception of the HAVF contribution where its rate doubled in 2018. Insurers writing business relative to the above risks should calculate the amount due based on the provided rates and make a provisional payment for the year before the end of January. CONSAP specifies that the premiums taken into consideration should be those declared for IPT in the closing financial statements.

Adjustments

As opposed to the quasi-linear IPT prepayment, the second obligation for both RAVF and HAVF contributions is an adjustment declaration due at the end of September each year. The adjustment process varies from the provisional one as they relate to different periods. The main difference is that the adjustment in September is for the previous year, while the provisional payment is for the current year. Any differences arising from the adjustment either lead to a reclaimable or a payable amount.

A common query regarding these contributions is where the burden of payment lies. The key point here is that neither contributions can be charged to the insured and are therefore both borne by the insurer. Any refunds due can be reclaimed from CONSAP.

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Author

Hellen Msangya

Compliance Services Representative, IPT. Hellen joined Sovos in 2017 bringing in experience in research on Economic and Statistical Research. Her current focus is in reporting and managing compliance issues with the Italian and San Marino Tax Authorities.
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