IPT Regulation Changes in Europe for 2021

Christophe Bourdaire
March 8, 2021

2021 sees several significant regulation changes for insurers when complying with insurance premium tax (IPT) across Europe. These include a new reporting system, an IPT increase, and new exemptions. To help insurers understand these changes, in this blog we’ll look at each of these changes.

Spain – IPT increase

Probably the most significant change this year, is Spain’s IPT rate increase from 6% to 8%. The main reasons for the rise are that the rate hadn’t increased since 1998 and is still lower than the rate of other countries, such as France, Italy, Germany or the UK. While the increase was expected it has only been officialised at the very end of December 2020. Insurers have been given some leniency with two months to file premiums not subject to the increase and taxed at 6% that are yet to be declared.

Portugal – New Stamp Duty Reporting

After several delays, mainly due to the COVID-19 pandemic last year, the new Portugal’s Stamp Duty reporting portal has finally been implemented and insurers could do their first filing using this new system in February 2021. The portal allows for manual input of tax information but given that the tax authorities now require detailed reporting and information on each transaction, the upload of the tax data file is a better option. But the reporting challenges are still high for the insurance industry. The information required to declare Stamp Duty is not always provided as we saw with the first filing. It’s important to ensure that all fields are filled in with the right information to ensure a compliant tax filing. Insurers should also be aware that detailed tax filings are likely to become more popular with tax authorities going forward.

Germany – Modernisation of IPT

Germany passed a Law on the Modernisation of IPT in December. Its content includes various topics of interests. These range from the expected compulsory online filing taking place in 2022 to clarifications on the application of IPT on Marine insurance and on the IPT exemption for Accident insurance. Perhaps the most important and challenging change is the updated location of risks rules. This will undoubtedly be a topic of discussion throughout 2021.

France – Motor insurance related to electric vehicles exemption

France is used to including changes to how it taxes insurance. Due to COVID-19, French legislators have increased taxation of insurance companies with the so-called “COVID tax” at the rate of 2.6% for 2020, a tax that will still be applicable for 2021 but with a lower rate. At the same time, France has introduced a temporary exemption on Motor insurance related to electric vehicles. This applies to Motor insurance for electric vehicles registered between 1 January 2021 and 31 December 2023.

Luxembourg – Alignment of IPT filings with VAT filings

Not good news for insurance companies, Luxembourg has moved the IPT filing deadline forward to 15 days after quarter end. Online filing is also now compulsory. This move is aimed at streamlining internal processes for tax authorities between VAT and IPT. It will increase pressure on insurance companies as they’ll have less time to comply with their tax obligations. On a lighter note, local tax authorities have taken the opportunity of the new year to introduce an IPT exemption on space objects (spacecrafts, satellites, etc.).

Denmark – Flood Levy reduces to DKK 40 in July 2021

Denmark once again marks its difference with other EU countries. It has announced a reduction of tax rate on insurance. This time, it applies to the Flood Levy. The rate is currently DKK 60 per contract (and per year), and will reduce to DKK 40 per contract from 1 July 2021. This is the third time in the last 10 years that Denmark has reduced a tax on insurance. Prior to the flood levy rate reduction, Stamp Duty was replaced by a reduced IPT rate of 1.1% and the tax on pleasure boat insurance was reduced from 1.34% to 1%.

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Christophe Bourdaire

Senior Regulatory Specialist, Regulatory Analysis. Christophe joined Sovos FiscalReps in 2011 and has been managing the IPT compliance process for a portfolio of captives and French speaking clients. Based in France, he focuses on the development of the global IPT content and technology offering. Christophe completed a degree (certificate) in Journalism at Ecole Nouvelles in Nice, France. He is a native French speaker, and also speaks fluent Spanish.
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