Under the Bonnet: Spanish IPT Reporting

Beverleigh Gunner
July 4, 2022

The complexities of Spain’s insurance premium tax regulations can be daunting for anyone responsible for IPT reporting and compliance for this country.

Apart from the different tax authorities involved with Spanish IPT reporting and various submission processes, there are also many different declarations that tax compliance teams must be aware of.

Here we’ll look at some of the more challenging aspects of IPT reporting.

What is a Modelo 480 form?

Although the Spanish tax authorities receive declarations monthly for insurance premium tax they also require an annual declaration. The annual declaration form is referred to as a Modelo 480. This form contains a monthly summary of information by class of business and a section to provide exempt premiums. Modelo 480 is also due to the four tax authorities for the Basque region provinces, which are different formats but contain the same information. The deadline remains in January alongside the December declarations.

What is the Modelo 50?

Most of the insurance classes include a charge for the Fund for Winding up of Insurers (or the Modelo 50) even if the policy is exempt from IPT. The Modelo 480 acts as another form of review by the Spanish authorities to ensure they receive the correct amount of tax. They can cross reference the premium amount declared for the Fund for Winding up of Insurers against the premium reported on Modelo 480.

Spain’s Fire Bridge Charge

Another of the more notorious annual reports is the Fire Brigade Charge. The Fire Brigade Charge report can take around four years to complete one tax period. With prepayments and adjustments, incorrect submissions can take equally as long to fix. Reports require careful attention to detail as taxpayers cannot make corrections after submission.

Historically, an insurer could apply either a 2.5% for a multi-risk policy or a 5% rate for pure fire and be confident that the total requested by the tax authority would be around that number. More recently, this is no longer the case with the change in economic climates and more instances where the claims are higher.

How to comply with Spain’s Fire Brigade Charge reporting

The process begins with a report concerning Property and Fire policies written in the previous year. At the beginning of the following year, the taxpayer makes a prepayment based on that report. The year after, the taxpayer submits a report with the actual premiums written during the previous year. Finally, in the fourth year, the difference between the prepayment and actual premiums written is confirmed and adjusted should there be any discrepancies. Simply put, the 2022 Fire Brigade tax period will be closed in 2026!

Modelo 0-6 becomes obsolete

Another of the more complicated annual reports was the Modelo 0-6, which became obsolete with the introduction of the new reporting system. This report focused on the Extraordinary Risk taxes due on Property Damage, Fire, Business Interruption and Accident. The new system allows real-time information to be accessed should a claim against a policy be made.

Take Action

Still have questions about IPT in Spain? Get in touch with Sovos’ team of IPT experts or watch our webinar on The Complexity of Insurance Premium Tax in Spain.

Sign up for Email Updates

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

Author

Beverleigh Gunner

As a director, compliance services for IPT, Bev leads the compliance function to fulfil its obligations to customers. Since joining the company in 2007, she has a wealth of dedicated IPT experience working across process management, business analysis, as well as continuing to drive our program of digitization.
Share This Post

North America ShipCompliant
December 5, 2022
Is Delaware DtC Wine Shipping Right Around the Corner?

Delaware State Rep. Mike Smith (R-Pike Creek Valley) plans to introduce legislation that will open up direct-to-consumer (DtC) wine shipping to Delawareans. Currently, state residents can legally purchase wine through the three-tier system but are not able to purchase directly from a winery and have the product shipped to their front door. Smith’s bill would […]

North America Sales & Use Tax
December 5, 2022
5 Sales Tax Compliance Questions MS Dynamics 365 Users Want Answered

Microsoft users have been pushing toward the shift to the cloud and modernizing their IT strategy. However, it is essential they do not overlook their sales tax strategy as a factor in these decisions. As businesses grow and tax regulations become more complex, it will be beneficial to keep sales tax compliance manageable. Sovos recently […]

North America ShipCompliant
December 5, 2022
Beverage Alcohol Regulation in 2022 – A Year in Review

As 2022 draws to a close, it’s time to look back and reflect on the year that was. For beverage alcohol regulation, 2022 saw an interesting mix of big changes on one hand and stagnation on the other. On the direct-to-consumer (DtC) shipping front, there was little overall change, at least compared to the admittedly […]

North America Tax Compliance
December 2, 2022
Four Pillars of a Strong Technology Match

There are many technology vendors out there promising you the world.  With a technology vendor partnership, those miracle solutions to all your business needs are available at your fingertips.  However, as with most things in life, it’s important to ensure you check off all the important boxes before making a purchasing decision. When you’re shopping […]

North America Tax Information Reporting
November 28, 2022
The Great Resignation to the ‘Great Confusion’ — What It Means for 1099s

The Great Resignation may technically be behind us, but the ripple effects are far from being complete. More than ever people are pursuing a side gig in addition to a job (full- or part-time). In some cases it’s out of economic necessity, while in others it can be for a lifestyle choice or based on […]