insurance premium tax spain

Spain IPT: How to stay compliant in a complex tax jurisdiction

Spain is one of the most complex countries within Europe for insurance premium tax compliance.

This is due to the different tax authorities involved in the process. Spain has a national tax authority and four provincial tax authorities – within those, four of the 50 provinces have an independent tax authority. These are all within the Basque country and Navarra regions and are Álava, Guipúzcoa, Vizcaya, and Navarra.

The complexities and challenging means of reporting liabilities only adds to the difficulties for insurers writing policies in the country.

Download our new e-book to learn more about the challenges faced and how Sovos can help insurers comply with Spain’s complex reporting system.

The e-book covers three main topics:

  1. Insurance Premium Tax
    Filing requirements at a provincial level
  2. The Consorcio de Compensación de Seguros (CCS)
    Recently introduced reporting system and its requirements
  3. The Fire Brigade Charge (FBC)
    Overview of the complex and lengthy reporting process

Get the e-book

Here is a summary of some of the main challenges faced by insurers writing in Spain:

Spain’s IPT rate

Unlike other countries in Europe, there is only one rate that applies to taxable insurance premiums in Spain. The rate is applied to premium received by an insurer but there are several exemptions that insurers need to be aware of.

Common data challenges

IPT data issues are fairly limited in Spain, but there are often difficulties with requirements from the CCS, the national tax scheme for compulsory catastrophic risk insurance.

IPT submissions

Keeping up with the different submission processes for the five different tax authorities in Spain can be daunting as well as meeting different deadlines and complying with the varying legislations. In the future it’s expected that IPT submissions will follow VAT and become more automated.  Key to overcoming these challenges is to have comprehensive software that can help with the submission process due to the level of data needed to be processed and the amount of information the different tax authorities require in the annual tax return.

Late payments and penalties

IPT penalties levied by the tax authorities will depend on whether the late or historical declaration is voluntary or not in nature and take account of the amount of time between the IPT deadline and the settlement of the liabilities.

Consorcio surcharges

One of Consorcio’s main functions it to compensate policyholders in the event of an extraordinary risk event declared by the government. These broadly fall into three categories from natural disasters to violent acts, and acts by armed forces or law enforcement agencies during times of peace.  To carry out that activity, Consorcio requires insurers to contribute by charging extraordinary risks surcharges on their insureds and then for it to be declared within several Modelo returns.

As the Consorcio was the first tax filing system in Europe to declare policy by policy, the system is better suited to domestic insurers and to those whose principal business is based in Spain.