,

IPT Compliance in Denmark

Alessio Follesa
November 25, 2021

Continuing our blog series looking at specific IPT-related tax acts around the world, we head to Denmark.

This insight is shared in Sovos’ Guide on IPT Compliance. Written by our team of IPT and regulatory specialists, this guide is packed full of insight to navigate the ever-changing regulatory landscape.

Non-life insurance tax registration and reporting

First, a primer.

Insurance policies with a risk located in Denmark are subject to Danish insurance tax, if taxable under the Danish Non-Life Insurance Tax Act (Skadeforsikringsafgiftsloven).

Registration applications must be submitted to the Danish Central Business Register before Danish and foreign insurers can legally settle tax in Denmark.

Foreign insurers located within EU Member States or other permitted countries can choose to register in Denmark with a representative (individual or business) residing in Denmark.

Once registration criteria has been met, a tax identification number equivalent to a VAT Number (CVR number) is issued.

This number is used for an online portal administered by the Danish tax authority (SKAT), where various tax returns can be submitted.

The non-life insurance tax model, rate, and exceptions

The tax model and rate in Denmark for most non-life insurance classes is the taxable premium and 1.1% respectively.

Exemptions and exceptions to this treatment include:

  • Pleasure craft insurance tax. This is applicable on pleasure crafts, such as windsurfers and houseboats, registered in Denmark. A reduced rate of 1% of the sum insured was introduced in the 2019 Finance Act and is still effective as of 1 February 2021. Separate registration documentation and returns are to be submitted to report pleasure craft liabilities.
  • Motor vehicle liability insurance tax. This is applicable on insurance premiums relating to statutory motor vehicle liability insurance. Examples include liability insurance for registered motor vehicles, tractors and trailers. Insurers can elect to use one of two methods to calculate the tax on motor liability insurance. Separate registration documentation and returns need to be submitted to report motor vehicle liabilities.
  • The Danish Guarantee Fund. This was recently implemented and is currently administered by Topdanmark Insurance A/S. As of 1 January 2019, a fixed contribution of DKK 40.00 per policy for specific private line insurance policies must be paid to the Danish Guarantee Fund for non-life insurance companies. An enrolment fee of DKK 50.00 per policy in force as of 1 January 2019 is required. In addition, the minimum contribution upon enrolment is DKK 100,000 (approx. GBP 12,000) regardless of the volume of business being written.
  • Flood and Storm Levy. This applies to all fire insurance policies relating to buildings. This levy is reported to the Danish Storm Council and the previous rate of DKK 60.00 per policy was reduced to DKK 40.00 effective from 1 July 2021.

Additional taxes to be aware of in Denmark

Whilst the majority of commonly reported non-life taxes are mentioned above, additional taxes may be applicable to policies located in Denmark and therefore cannot be disregarded.

For example, an Environmental Contribution is applicable to third party liability insurance of large transport vehicles, while the Danish Terrorism Scheme contribution is due annually on policies which cover specific fire risks, implemented to compensate damages caused by terrorist acts.

Key filing frequencies, deadlines and statute of limitations

Insurance policies may be subject to none or all of the above taxes in Denmark, depending on the type of coverage. It’s therefore essential that both the insurer and its representative understand when each tax is applicable.

Key information for non-life insurance tax and all of the exceptions is outlined below:

ipt-in-denmark

Key information for non-life insurance tax and all of the exceptions is

How Sovos can help

Sovos helps ease the burden of IPT compliance through a blend of regulatory knowledge and expertise, and best-in-class software built to handle compliance obligations now, and in the future.

Take Action

Download our IPT compliance guide for help with navigating the changing regulatory landscape and deadlines successfully, across the globe.

Sign up for Email Updates

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

Author

Alessio Follesa

Alessio Follesa is a Compliance Services Representative at Sovos. He completed a degree in Property Finance & Investment and subsequently joined Sovos within the registrations team in 2018. Alessio now primarily focuses on assisting with the reporting of IPT for a portfolio of clients, however he is also responsible for the submission of all insurance tax returns due in Denmark for all clients of Sovos.
Share This Post
Share on facebook
Share on twitter
Share on linkedin
Share on email

EMEA IPT
January 21, 2022
IPT Compliance in Slovakia: A Primer on Error Corrections

A new year has arrived, marking an excellent opportunity to continue our blog series addressing Insurance Premium Tax (IPT) compliance in different countries. You can read other blogs in this series by visiting our Denmark, Finland, and the UK entries or by downloading Sovos’ Guide on IPT Compliance. Written by our team of IPT and […]

North America ShipCompliant
January 20, 2022
5 Highlights from the 2022 Direct-to-Consumer Wine Shipping Report

This January, Sovos ShipCompliant released the 2022 Direct-to-Consumer (DtC) Wine Shipping Report with our partner, Wines Vines Analytics. The report is the most comprehensive, complete and exclusive collection of data and insights on the state of the industry. Wine shipments to consumers reached a record $4.2 billion in 2021, meaning this is a fantastic time […]

EMEA
January 17, 2022
What is a VAT Health Check?

At Sovos, our consultants are the leading experts in cross-border tax, saving both time and money for our customers. In this episode of the Sovos Expert Series, Becca Taylor sits down with Russell Hughes, Consulting Services Manager at Sovos to explore what our consultancy team do and how they can work with your current processes […]

North America ShipCompliant
January 17, 2022
Beating the Post-Holiday Sales Slump with DtC Wine

By Zach Kamphuis, Vice President of Business Development at Commerce7 October, November and December represent the best direct-to-consumer (DtC) sales months for many wineries. With the 2021 holiday season now behind us, how can wineries capitalize on the new customers gained through the past months and avoid falling into a post-holiday sales slump for DtC […]

EMEA VAT & Fiscal Reporting
January 13, 2022
Brexit One Year On – What Do We Know?

The Northern Ireland Protocol regarding goods moving from Great Britain to Northern Ireland continues to cause problems, leading to calls to suspend it via Article 16. But at the same time, some NI politicians are looking to capitalise on the possibility of inward investment by companies that can benefit from being in both the UK […]