This blog was last updated on January 11, 2024
For cross-border insurers, navigating the complex tax landscape across multiple jurisdictions can feel overwhelming.
Tax authorities continue to take measures to boost revenues, increase efficiency and reduce fraud. There is a notable shift towards digital insurance premium tax (IPT) reporting, which places an additional burden on insurers.
Ensuring that taxes are filed correctly and are compliant is increasingly demanding and complex, with many insurers looking for outside help for guidance and assistance with meeting their filing obligations.
There are many reasons why organisations turn to managed service providers in this case. Below are some of the most common reasons we hear from our customers.
Lack of resources for training
It’s important to ensure your tax teams have all the knowledge and expertise they need to correctly file taxes. But training an in-house tax team is both costly and time consuming.
Managed service providers will have a wealth of experience, at a fraction of the cost of employing people full time. Filing in any country not only requires a deep understanding of the local law and reporting standards, but in most cases there’s often also a requirement to file in the country’s native language.
Specialist providers can give you access to a wealth of knowledge and expertise through their team of experts. They can help you navigate these changing requirements and with native speakers where necessary who should have local knowledge and good working relationships with the tax authorities where you’re writing insurance. Working closely with you, this marriage can simplify domestic IPT requirements and accelerate regular filings. The specialist can also correspond on your behalf with revenue authorities whenever reviews, audits or other queries occur.
Maintaining technology
The list of countries adopting digital reporting systems is increasing. Countries such as Spain and Portugal are a prime example where the tax reporting obligations for insurers are becoming more and more granular.
Investing in an in-house system to assist with IPT filing and reporting is a significant investment – from initial setup to ongoing management and maintenance. This can seem an unnecessary expenditure, especially if filing is only undertaken once a year.
Digital requirements for IPT filing are on the rise and technology not only speeds up the process of collecting the specified data, but also ensures accurate filing and compliance should an audit occur.
Working with a managed service provider means you can take advantage of the efficiency and compliance benefits of tax determination and reporting technology without the responsibility or cost of maintaining these solutions in-house.
Keeping ahead of changing rates
Although it’s possible to use a tax rate card to keep up to date with the latest rate changes, this manual approach is prone to human error and requires updating regularly to avoid over or under payments and incorrectly pricing a policy (which of course can have broader economic impacts).
With changing rates, a real-time solution ensures filing is based on the latest information. With many countries introducing new digital requirements in 2021 (including Portugal’s delayed stamp duty reporting), staying ahead of upcoming changes is vital to avoid unnecessary errors and potential fines.
Take Action
Get in touch about the benefits a managed service provider can offer to ease your IPT compliance burden.