Taxation of Motor Insurance Policies: Spain

James Brown
November 29, 2023

There is a wide variety of indirect taxes and parafiscal charges that apply to the different elements of coverage that can be included under a motor insurance policy in Spain. You can read our blog to learn more about taxation of motor insurance policies in Europe, this blog focuses on some of the specifics to consider in Spain.

Which taxes are payable in relation to motor insurance policies in Spain?

The application of Insurance Premium Tax (IPT) and a surcharge to finance winding-up activity are common across all classes of insurance typically found in a motor insurance policy, with the latter being declared to Consorcio de Compensación de Seguros (“Consorcio”). For coverage such as roadside assistance and legal protection, this is likely to be the extent of the taxes due.

Additional Consorcio surcharges are due on other elements of the cover. For example:

  • Personal accident coverage attracts a separate surcharge for direct damages to person.
  • Motor damage and motor third-party liability insurance entail the application of fixed fees on a per-vehicle basis.
  • Contributions to the Motor Guarantee Fund in Spain (also administered by Consorcio) are currently due on compulsory motor third-party liability coverage. It is worth highlighting that this obligation should cease for insurers writing on a freedom of services or establishment basis in light of Directive 2021/2118, subject to domestic implementation of the Directive expected by 23 December 2023.
  • The Green Card regime applies to compulsory motor third-party liability coverage per Green Card issued. If no Green Card is issued, this does not apply.

How are taxes on motor insurance policies calculated in Spain?

Most motor insurance taxes and parafiscal charges are calculated as a percentage of the taxable premium. These taxes are then added to the premium and charged directly to the insured.

There are some exceptions including direct damages surcharge and fixed fees. The direct damages surcharge applicable to accident coverage is a percentage that applies to the sum insured rather than the taxable premium.

Additionally, there are fixed fees due to Consorcio on motor damage and motor third-party liability coverage that vary based on the type of vehicle. Categories with their own fixed fee include mopeds, passenger cars, and industrial vehicles, amongst many others.

The fixed fee for the Green Card should be treated as insurer-borne and is therefore not a cost directly passed onto the insured.

What vehicles are exempt from tax?

Spain has a fairly narrow scope for any IPT exemption under a motor insurance policy in comparison to other European jurisdictions.

As a rule, there are currently no exemptions that apply to particular categories of vehicle but there is an exemption for certain international coverage. In the case of any goods in transit insurance relating to cross-border transport that is included under a motor policy, that portion can be treated as exempt from IPT. The Consorcio Surcharge to Finance Winding-up Activity would remain applicable in these circumstances though.

Still have questions about taxation of motor insurance policies or IPT in Spain? Speak to our experts.

Sign up for Email Updates

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

Author

James Brown

James Brown is a Consultant at Sovos. His academic background is in Law having studied the subject at undergraduate level, and he has since enjoyed various roles in the IPT Managed Services Department at Sovos.
Share this post

February 20, 2024
Why the Market is Ready for the Sovos Compliance Cloud

The emergence of digital transformation fundamentally changed how many governments and tax authorities around the world handle modern tax and compliance. What is unique about this process is that each individual government operates under its own set of rules, and global businesses are expected to keep up. In their efforts to address compliance, ironically, many […]

North America Tax Information Reporting
February 16, 2024
ACA Reporting Deadlines and More for Tax Year 2023

Affordable Care Act (ACA) reporting has started for tax year 2023. ACA reporting can quickly become complicated and costly with IRS penalties if your business does not have an efficient process in place. Although regulations have generally stayed the same for this reporting season, there are some important updates all businesses should be aware of […]

North America Unclaimed Property
February 16, 2024
Consequences of Non-Compliance with Unclaimed Property Laws

Building and maintaining a program to ensure compliance with the ever-changing unclaimed property laws is challenging, costly and time consuming. As a result, many companies put off or delay coming into compliance or do not put enough resources into creating a robust program. Those delays, erratic reporting and even ignorance that unclaimed property laws exist […]

North America ShipCompliant
February 16, 2024
Most Popular Wine Varietals Shipped in 2023 and More

Last month, Sovos ShipCompliant and WineBusiness Analytics released the 2024 Direct-to-Consumer Wine Shipping Report, marking the fourteenth consecutive collaboration between the two companies. Alex Koral and Andrew Adams presented an overview of the data and analysis from the report, highlighting key trends and statistics. Here, we summarize some of the noteworthy findings starting with the […]

EMEA IPT
February 13, 2024
Liechtenstein IPT: An Overview

Liechtenstein is one of many countries with Insurance Premium Tax (IPT) requirements, specifically the Swiss Stamp Duty and Liechtenstein Insurance Levy. This blog provides an overview of IPT in Liechtenstein to help insurance companies remain compliant.   What kind of taxes are applicable in Liechtenstein on insurance premium amounts? In Liechtenstein, there are two types […]