Meet the Expert: Menuka Thajali – Senior Compliance Services Representative – IPT at Sovos

Sovos
November 19, 2021

This blog was last updated on January 11, 2024

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 is often the first to know about new regulatory changes and the latest developments on tax regimes worldwide to support you in your tax compliance.

We spoke to Menuka Thajali, senior compliance services representative here at Sovos, to discover how her work helps ensure Sovos customers remain IPT compliant.

Can you tell me about your role and what it involves?

As a senior compliance services representative within the Insurance Premium Tax (IPT) Compliance Services Department, I oversee the day-to-day operational management and delivery of IPT compliance for an extensive portfolio of customers within the captives practice. Whilst most of my work is with Sovos captive clients, I also work with a mix of mutual insurers, protected cell companies (PCC) and some standard insurers.

One of the roles of the IPT Managed Services Department is to review data sent over by clients. It’s important to understand the risks covered to ensure correct tax application for the specific risk and territory has been applied, and that the data is within the relevant reporting requirements. We assist with the preparation of IPT and parafiscal returns and submit the declarations in addition to processing payments for our customers to the relevant tax authorities within the statutory deadlines.

Can you tell us about your work with captives?

Working with captives requires our team’s extensive knowledge of international tax regulations, including working alongside our consultancy team. This is because for captives, unlike standard insurers, the risks covered are specific to its parent company. We help them ensure their product’s risk is correctly mapped to territorial tax legislation and any other relevant risks based on the Solvency II Classes of business.

Alongside this, we also assist captives with any queries on location of risk rules, treatment of negative premiums, exemptions applicable to their specific products, tax reclaims and anything IPT-related. A key part of working with captives includes reviewing the premium allocation for their annual programs, providing confirmation of taxes chargeable to the policyholder and insurer before invoicing.

What should captives be aware of when it comes to premium allocations and invoicing requirements?

There are many facets to IPT compliance, premium allocations, and invoicing requirements, and it’s my team’s job to ensure captives understand them. There are many details captives need to be aware of when considering premium allocations and invoicing requirements, including understanding the location of risk and its applicable rules and ensuring the premiums are allocated to the correct territory by following the location of risk rules for EU territories.

It’s also essential to know the tax point, in other words the event that triggers the tax liability to become due, within specific territories. Within the EU/EEA, the tax points vary territory by territory with the most common tax point being the premium paid date. However, there are some territories which require taxes to be declared before premium collection, i.e., on the inception date or on invoicing. Having knowledge the relevant tax points will ensure that the filings deadlines are being met, and the insurer budgets for cash flow where taxes are due prior to premium collection.

In terms of invoicing requirements, captives should be aware that these can vary depending on the territory. For example, in Germany, insurers are required to include the tax ID of the insurer on the invoice, and only the taxes that can be passed onto the policyholder should be shown. In general, taxes borne by the insurer should not be included on the invoice.

Do you have any tips for captives to ensure IPT compliance?

The best tips to ensure IPT compliance are to be aware of the tax reporting and filing requirements for the territories that captive insurer operates in and ensuring that the taxes are filed within the latest rules and regulations. Due to limited in-house expertise with some businesses, captives may choose to outsource the cross-border IPT compliance to an external service provider or consultants, for compliant and accurate filing.

Having a clear picture of the varied IPT regulations and requirements enables companies to prepare in advance of deadlines, alleviating any possibility of misfiling or penalties.

With an increased amount of digital reporting requirements being introduced across various territories, such as Spain CCS and Portugal Stamp Duty, which involves reporting of detailed policy information at a granular level, it’s essential to have all the policy details collected during underwriting level. It’s also vital for insurers to have the appropriate tools and systems in place to assist with the extraction and storage of the policy information to avoid errors and reporting delays.

How can Sovos help captives?

IPT expertise can be very limited within in-house insurance teams. Sovos has developed several solutions to ensure captives and other insurers can be confident in their tax filing and reporting and invoice management. This includes the Sovos Captives Solutions Tool, built specifically to assist with captive’s premium allocations and IPT requirements.

Many captives use Sovos’ IPT Managed Services to ensure their IPT compliance. The Sovos IPT Managed Services Team includes tax experts across many jurisdictions to deliver IPT compliance for insurers. As well as managed services, the Sovos consultancy team is available for specific IPT and policy queries or for those that don’t need a fully managed service for their IPT needs.

Take Action

Get in touch about the benefits a managed service provider can offer to ease your IPT compliance burden.

Sign up for Email Updates

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

Author

Sovos

Sovos is a global provider of tax, compliance and trust solutions and services that enable businesses to navigate an increasingly regulated world with true confidence. Purpose-built for always-on compliance capabilities, our scalable IT-driven solutions meet the demands of an evolving and complex global regulatory landscape. Sovos’ cloud-based software platform provides an unparalleled level of integration with business applications and government compliance processes. More than 100,000 customers in 100+ countries – including half the Fortune 500 – trust Sovos for their compliance needs. Sovos annually processes more than three billion transactions across 19,000 global tax jurisdictions. Bolstered by a robust partner program more than 400 strong, Sovos brings to bear an unrivaled global network for companies across industries and geographies. Founded in 1979, Sovos has operations across the Americas and Europe, and is owned by Hg and TA Associates.
Share this post

dtc spirits new york
North America ShipCompliant
February 14, 2025
A New Era for DtC Spirits Shipping: How New York’s Market is Taking Shape

This blog was last updated on February 14, 2025 In the fall of 2024, New York became the latest state to open its doors to direct-to-consumer (DtC) spirits shipping, marking a significant milestone for the industry. As one of the most populous states with a thriving market for craft and high-end spirits, the shift was […]

North America Unclaimed Property
February 10, 2025
Delaware Announces 2025 VDA Invitation Dates

This blog was last updated on February 14, 2025 Mark your calendars – April 11, 2025 and August 15, 2025 are this year’s anticipated release dates for the Delaware’s Secretary of State (SOS) VDA program invitations. In the event that an organization receives an invitation to participate in the Voluntary Disclosure Agreement (VDA) program  , […]

North America Sales & Use Tax
February 6, 2025
The Tariff and Sales Tax Mishmash – Untying the Mess

This blog was last updated on February 14, 2025 Talk of tariffs dominates the current news cycle with some commentators suggesting that tariffs will spell disaster for our economy while others say the exact opposite. We’ve seen the stock market sometimes fluctuate as tariffs are announced but later suspended, leaving us to wonder whether an […]

retailer dtc wine shipping
North America ShipCompliant
February 6, 2025
Retailer DtC Wine Shipping: The Time Has Come

This blog was last updated on February 14, 2025 By Tom Wark, Executive Director, National Association of Wine Retailers We are often reminded by the media and those in the wine industry—as well as by wine enthusiasts—that the three-tier system of alcohol distribution in most states hinders consumer access to the expansive number of wines […]

Montana 1099-DA
North America Tax Information Reporting
February 5, 2025
State Filing Alert: Montana’s New 1099-DA Requirements for Crypto Brokers

This blog was last updated on February 5, 2025 Reporting digital asset transactions on Form 1099-DA just got a little more complicated. For 2025 transactions, crypto brokers that file Form 1099-DA with the IRS will be required to file the 1099-DA with the State of Montana. This makes Montana the first state to introduce a […]