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.

Take Action

Keep up to date with the latest developments by subscribing to our blogs and following us on LinkedIn and Twitter. We also host regular webinars with our in-house specialists who are on hand to help.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

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.
Share This Post

LATAM VAT & Fiscal Reporting
May 20, 2020
Sovos Acquires Taxweb, Extends Tax Determination Capabilities in World’s Most Challenging Compliance Landscape

Earlier this month Sovos announced its second acquisition of 2020, completing our solution for Brazil with an unparalleled offering that solves tax compliance in the place where it is most challenging to do so.  Too many companies doing business in Brazil have been burdened by managing multiple point solutions for continuous transaction controls (CTCs), tax […]

Sales & Use Tax United States
October 30, 2020
Reviewing the Michigan Sales Tax Nexus

When the South Dakota v. Wayfair, Inc. decision took place, nearly every state started to adopt to new sales tax nexus requirements, including Michigan. The state enacted Revenue Administrative Bulletin 2018-16 (RAB 2018-16), which addresses economic nexus and how Michigan sales and use tax nexus standards changed. We have outlined several of the major points […]

Sales & Use Tax United States
October 30, 2020
What Are the Virginia Sales Tax Nexus Requirements?

The Virginia sales tax nexus requirements changed in 2019, following the South Dakota v. Wayfair, Inc. decision. The Commonwealth passed its own legislation to specify how remote sellers or marketplace facilitators have economic nexus, but it essentially opted to replicate the specifications outlined in the Wayfair decision – as did many other states. Even so, […]

Sales & Use Tax United States
October 30, 2020
How Does the District of Columbia Economic Nexus Work?

When the South Dakota v. Wayfair, Inc. decision was made, remote businesses needed to take note of how states and territories were requiring the collection and remittance of sales tax. The District of Columbia economic nexus was also impacted, with D.C. adopting requirements in line with South Dakota’s, which were laid out in the Supreme […]

Tax Information Reporting
October 30, 2020
Latest Updates: State Direct Reporting Requirements for Form 1099-NEC

With the latest IRS announcement in Publication 1220 stating that information reporting data for the new Form 1099-NEC  will not be included in the Combined Federal/State Filing (CF/SF) program,  numerous states are beginning to publish direct reporting requirements. The Sovos regulatory analysis team will continuously update this page with the latest state requirements for Form […]

EMEA VAT & Fiscal Reporting
October 29, 2020
“OSS” Explained – Explanatory Notes for July 2021 VAT E-Commerce Rules

On 30 September 2020, the European Commission published its “Explanatory Notes on VAT E-Commerce Rules,” to provide practical and informal guidance on the upcoming July 2021 e-commerce regulations. This “EU VAT e-commerce package” was initially adopted (under Directive 2017/2455 and Directive 2019/1995) and set to be implemented on 1 January 2021 but has since been […]