There’s no harmonisation across Europe for how tax declarations are submitted. And methods vary tax by tax, country by country, and even region by region. This can be challenging for many insurers in not only meeting current requirements but in also keeping up with the ever changing insurance premium tax (IPT) landscape.
Although there are no common rules across Europe for the regularity of tax return submissions, the settlement period can vary from just a month to up to 5 years. The most common are a month or a calendar quarter.
But in the IPT world, there are bi-monthly submissions, like the Greek Private Life Insurance Guarantee Fund contribution; bi-annual with the Belgian INAMI contribution on Hospitalisation insurance; and then annual submissions for the Austrian IPT and Fire Brigade Tax (FBT) return, or the Italian IPT return. There’s one other unique example to highlight. The Portuguese ANPC (Fire Brigade Charge) report is due every five years although it only covers a year and must be submitted bi-annually in that year. The next submission period is in 2021.
Without automation and specialist local knowledge, meeting local compliance deadlines can be time consuming and daunting for insurers writing cross border policies.
To pay, or not to pay?
“That is the question” as Shakespeare would have said. A declaration is not necessarily followed by payment. And it’s also true that payment doesn’t always need submission of a tax return.
For example, submission of the annual Italian IPT return ideally won’t require any payments or if so limited ones, as 100% of the previous year’s IPT will have been prepaid. On the other hand, the monthly Austrian IPT and FBT payments are only followed by an annual return in April of the following year.
And finally in Portugal, where from next year insurers will need to report premiums exempt from Stamp Duty on their returns.
How to submit
One of the most difficult questions we’re often asked is how a tax return can and should be transmitted to tax offices. In the 1970s and 80s, due to the lack of modern IT technologies, most returns were made either in person with the local tax authority or by post. Today thankfully there are more sophisticated ways although in some countries, the “traditional” methods are still used. Perhaps most surprising is France, where the most common way to submit an IPT return is by posting the physically signed returns. For VAT however, returns are now submitted online. Hungary is more advanced where most of the State returns, including IPT, can only be submitted online.
COVID-19 has forced tax offices to be more lenient and flexible appreciating that companies have had to produce tax returns with staff working remotely. In addition some tax offices have been temporarily closed preventing submission in person or by post. So, in the last six months, electronically signed tax returns sent via email have become the norm.
Whether submissions are made online, by post or in person, it’s important to be aware of the different methods and to make sure that deadlines are met in good time to avoid unnecessary penalties.
A tax office rarely requires returns to be submitted in the first week of the month following the reporting period. The most often applied deadlines are the 15th, 20th, or the last day of the month. But for example, in Cyprus Stamp Duty returns are due by the 8th, while in Greece the IPT return deadline is 90 days after the last day of the tax period.
We’re often asked about the impact of weekends and public holidays and whether the submission is due before or after the weekend or public holiday. Again, there’s no common approach here. In Germany the deadline moves to the next working day while in Ireland the deadline can move to either the 23rd or 24th if 25th falls on a Saturday or Sunday.
As always, proactive thinking, questioning the applied methods, looking for IT solutions to help automate a time-consuming process, and seeking advice from specialists will guarantee timely submission of tax returns.
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