Meet the Expert is our series of blogs where we share more about the team behind our innovative software and managed services.
As a global organisation with indirect tax experts across all regions, our dedicated team are often the first to know about regulatory changes and developments in global tax regimes, to support you in your tax compliance.
We spoke with Hector Fernandez, principal compliance tax services representative, who explained the complexities surrounding Spanish insurance premium tax (IPT) and how Sovos helps insurers operating in Spain.
Can you tell me about your role and what it involves?
I’m a principal compliance tax services representative at Sovos. As part of my role I work with the different teams helping them with the tax requirements of different tax authorities.
I also work with clients with IPT requirements in Spain, helping them with the many elements of tax compliance.
Ensuring compliance with Spain’s IPT reporting requirements is especially complex, why is this the case?
As mentioned in previous blogs about Spanish IPT, Spain has one of the most complex monthly and annual IPT reporting procedures. It’s challenging due to many factors such as multiple IPT tax authorities (national and provinces), additional entities to deal with including the Fire Brigade Tax (FBT) and the surcharges that must be paid to the Consorcio de Compensación de Seguro (CCS) or other bodies like Spanish Motor Insurers Bureau (OFESAUTO).
Modelo 480 – IPT Form:
In Spain, five tax authorities charge IPT: the National Tax Authority (AEAT) and four provinces (Alava, Guipuzcoa, Navarra and Vizcaya). They are responsible for the policies in those territories. The Modelo 480 contains the same information for different tax authorities, but the formats and requirements can vary.
The annual submission coincides with the December monthly period, which means that it occurs at the same time as submitting the last monthly submission of the year and the annual report.
The Modelo 480 is a yearly overview form submitted by insurance entities that summarise monthly returns and payments. Insurers must include exempt premiums written during the year on this form because this information is not included in the monthly returns.
The data provided in this summary form will be broken down by class of business and monthly payment. While this form is purely informative, it’s vital since it helps tax authorities to find any mistakes, inconsistencies or fraud that could have been committed in the monthly submissions.
Fire Brigade Charge:
There is a compulsory annual return for those entities that subscribe to Fire and Multi-risk policies in Spain (Class 8 & 9). The report is submitted through a specific portal provided by CCS. Insurers must submit the return before the last day of April.
In this report, the different Fire or Multi-risk policies must be declared and broken down by the postcode where the risk is located and include the taxable premium of each policy.
CCS will share this information with the local bodies with competencies to calculate and charge the Fire Brigade in Spain, including councils and provincial councils or the body that helps the insurance companies to deal with this surcharge such as GESTORA (Gestora de Conciertos para la Contribución a los Servicios de Extinción de Incendios).
Those insurance companies that provide car insurance must deal with the Green card surcharge paid to OFESAUTO, the body in charge of this surcharge. Companies must provide the number of car insurance policies issued during the year, and the body will issue the invoice.
How can Sovos help with these reports?
Spanish IPT complexity is based on the timing and the high amount of data that insurers must take into account to provide accurate data to the tax authority. It’s important to have software that can compile and process vast amounts of data in an accurate way.