This blog was last updated on November 13, 2023
Meet the Expert is our series of blogs where we share more about the team behind our innovative software and insurance premium tax (IPT) compliance 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 Mai Nguyen, senior compliance services representative who explained why it’s so important for insurers to get IPT filing right and shared her top three tips for submitting IPT liabilities.
Can you tell me about your role and what it involves?
I’m a senior compliance services representative – specialising in IPT at Sovos. I joined the company over four years ago and I deal with a diverse portfolio of 30+ clients, helping them with the entire cycle of IPT submission.
My team reviews data provided by our clients, creates a summary of tax due and confirms IPT and parafiscal liabilities due for a specific period. My day-to-day tasks include approving the IPT liabilities to be declared correctly and compliantly and authorising payments to be made on behalf of our clients.
My role is to oversee the day-to-day operational management whilst ensuring all compliance requirements are met consistently. I also work closely with clients to answering their queries to ensure their IPT submissions meet the strict regulations set by global tax offices.
Could you explain the IPT filing process and why it’s important for insurers to get it right?
The IPT filing process varies from one territory to another and it’s crucial for insurers to follow it accurately and compliantly. There are many elements that need to be considered in this process:
- Frequency of the report: monthly, bimonthly (e.g. Greece’s Private Life Insurance Guarantee Fund contribution), quarterly (e.g. Malta, Netherlands, Luxembourg), biannually (e.g. Belgian INAMI contribution on hospitalisation insurance, Portuguese ASF) or annual (e.g. Austria, Italy).
- Tax point: this is one of the most important criteria for IPT filing as it defines when the IPT is due. Cash received date is the most common tax point date used in many countries. Other tax point dates are used such as maturity date in France and Belgium, invoice date in Greece or the earlier of inception date or cash received date in Malta.
- Class of business: understanding the risk coverage of a product is of great importance to ensure correct tax application for a specific risk that needs to be applied.
- IPT calculations: calculations must be compliant and correct. IPT can be either insurer borne or insured borne. IPT calculation methods should be applied correctly (taxable premium multiplied by tax rate, sum insured multiplied by tax rate, fixed fee – e.g. terrorism in France, Guarantee Funds and Flood Levy in Denmark, Stamp Duty in Cyprus, threshold calculation (e.g. Malta) or sliding scales (e.g. Hungary).
- Location of risk: these rules lay the foundation to determine in which jurisdiction the IPT is due.
IPT filings can be made online in Portugal, Spain, Ireland, Finland and Germany. This filing method is becoming a common trend and is likely to be introduced in other jurisdictions.
In Portugal a data file must be uploaded to a web portal which requires detailed information for each policy such as NIF number (policyholder Tax ID), postcode, country code and territoriality.
In Spain the IPT portal determines the declaration period for each transaction, tax payment or any interest payment due. The portal links the payments due directly to the bank account, meaning the payment is made by direct debit.
IPT filings can be made by post or in person. With any method, it’s important to make sure that deadlines are met to avoid unnecessary penalties.
The consequence of noncompliance is not only the penalty or interest regimes imposed by tax offices but also the indirect costs to insurers which are more significant. These can include the cost for correcting the mistake, as well as additional associate or representative costs. Noncompliance could also have an adverse impact on the insurer’s reputation.
What are your top tips for audit controls when submitting IPT liabilities?
To avoid the unnecessary consequence of noncompliance when submitting IPT liabilities, here are my three top tips:
- Firstly, carefully review IPT obligations to avoid under or overpayment and ensure taxes are filed within the latest rules and regulations.
- Secondly, be aware of the tax reporting and filing requirements in each territory and ensure sufficient data information is collated to settle returns and reports.
- Last, but not least, establish an efficient and competent internal audit team to ensure the IPT filing process is strictly and effectively supervised. Insurers can outsource the IPT filings to an external service provider for peace of mind while maintaining compliant and accurate filing.
How can Sovos help insurers with their IPT compliance?
It can be very challenging for insurers to ensure that IPT is declared accurately and compliantly while adhering to the latest rules and regulations. Here at Sovos, our dedicated IPT Compliance Services team is equipped with in-depth expertise and the most up-to-date changes to help insurers meet all IPT requirements to make submissions efficient and compliant.
All IPT compliance information can be found through Sovos’ blogs, webinars, tax alerts, LinkedIn, Twitter and newsletters.
Take Action
Have questions about IPT compliance? Speak to our tax experts or download our e-book, Indirect Tax Rules for Insurance Across the World.
