Registering Branches for Insurance Premium Tax

Dawn Rowlands
October 4, 2022

Update: 27 July 2023 by Edit Buliczka

Changes to IPT registration requirements in Austria

The registration requirements for settling taxes in a country are similar – if not the same, usually involving the central tax administration or tax authority.

This, however, is not always the case and there are exceptions. For example, due to a recent change in Austria, the registration requirements for Insurance Premium Tax (IPT) in favour of third-country insurers have been modified.

Third-country insurers can register and settle IPT liabilities directly with the Austrian Tax Office under this legislation, which takes effect on 1 January 2024. Currently, IPT payable on insurance premiums with third-country insurers must be handled by an authorised representative or the policyholder.

In Austria, IPT is levied on the collected premium and Fire Brigade Tax (FBT) may also be due if the policy includes fire risks.

The Austrian Tax Office has not changed the law that governs FBT rules. The FBT legislation is simpler than the IPT law, with no special regulations for local, EU or EEA-based or third-country insurers. The FBT Law states: “if the insurer has no domicile (seat) in a contracting state of the Agreement on the European Economic Area, but an authorised representative has been appointed to accept the insurance premium, then the latter is liable for the tax.”

There’s a possibility the FBT laws were purposefully left unaltered because the term “insurer” may be understood in a way that covers third-country insurers. As a result, third-country insurers can already register directly with the Austrian Tax Office for FBT purposes.

Interestingly, in Austria, both IPT and FBT are controlled by the Central Tax Administration – commonly referred to as the Austrian Tax Office and there is just one taxID used for both IPT and FBT.

Contact our team of experts if you have any questions concerning the Austrian IPT Registration.

 

Update: 4 October 2022 by Dawn Rowlands

Understanding the role of branches with IPT

Registering for (IPT) across Europe is often complex and can raise several additional questions. This is particularly pertinent if your company has branches established in different territories: can we register our head office and file a single return for all branches via this registration? What about branches operating on a freedom of service (FoS) basis? What about domestic branches? Is it mandatory or optional to register branches?

Before we dive into these questions, let’s take a closer look at why branches are useful. Some insurers prefer to have a separate IPT registration for their branches, even if it’s not a mandatory requirement of the country. It’s often an easier method of handling IPT compliance for the country, based on the reports generated from internal accounting systems. For acquisitive insurance companies who may be using legacy systems, it’s simpler to have individual branch registrations rather than consolidating all branches into a single return filed via the head office.

Can we register our head office and file a single return for all branches via this registration?

For many territories, it’s not mandatory to have branches operating as it’s possible for EU domiciled companies to register and file taxes through their head office, operating under FoS across the European Union. However, this is territory dependent and some require branch registration, as we will explain later.

Can branches operate on a Freedom of Services basis?

In addition to the registration of your head office operating on a FoS basis, it’s also possible to register branches in some territories. Each branch must also be authorised independently by the regulators in their country of domicile to operate on a FoS basis.

Is it mandatory to register branches for IPT?

In some territories such as Spain, Portugal and Italy it’s not mandatory to have a branch as taxes can be filed via a company’s head office. However, if your company does operate branches in these territories it is mandatory to be registered separately to head office. This requires companies with multiple branches to have multiple registrations, each with their own independent tax identification number. The registrations are managed separately, and a tax return is required for each of them.

Country requirements are also subject to change. For example, in Austria it was previously mandatory for branches to be registered separately to their head office. This rule changed and branch registrations are no longer permitted, with all returns being filed through the FoS head office. Any existing branch registrations had to be deregistered with the Austrian tax authorities.

Domestic branches – what are they and when is IPT registration required?

A domestic branch is a branch of a company whose headquarters are located in a different country to where the branch is domiciled, and where the registration is required. For example, your head office could be in Germany, you write insurance business liable to IPT in Italy and you have an established branch domiciled in Italy – the Italian branch will be considered as your domestic branch.

If your company has branches and wishes to register for IPT in the country where your branch is domiciled, some tax authorities insist the domestic branch has a separate registration to its head office. This applies in Hungary, Germany, Italy, Portugal, Slovakia, and Spain.

Are there different rules for domestic branches?

In some instances, domestic branches will have different tax points to those operating under FoS.

Why is this information so important?

If a branch or head office operating in the territory is operating noncompliantly, this will directly impact all parts of the business operating in the territory, and the fines will be levied accordingly.

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Want to learn more about branches and IPT registration? Speak to Sovos’ tax experts today.

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Author

Dawn Rowlands

Dawn Rowlands is a senior compliance services representative in the registrations team and is currently providing maternity cover as registration team manager. She joined Sovos early in 2020 and has a background in customer services and accounting having run a small business for over 15 years. Dawn’s focus is in the day to day running of the registrations team.
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