Norway has an indirect tax that applies to elements of coverage under a motor insurance policy. This blog details everything you need to know about it.

As with our dedicated Spain IPT overview, this blog will focus on the specifics in Norway. We also have a blog covering the taxation of motor insurance policies across Europe.

 

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

In 2018, Norway replaced the collection of traffic insurance tax with a new fee known as the Traffic Insurance Fee (TRIF). This fee is collected by the insurance companies on behalf of the Norwegian State, together with the premium for third-party motor liability insurance coverage.

The annual insurance tax needed significant administration. As such, implementing a new tax scheme on mandatory automobile third-party liability insurance policies aimed to streamline and speed up tax and excise administration. With the new approach, insurance companies must invoice TRIF together with the premium amount sent to registered vehicle owners. The fee is clearly stated on the invoice in a distinct line aptly named “Traffic Insurance Fee”.

 

How is TRIF on motor insurance policies calculated in Norway?

In Norway, the TRIF is charged for all registered cars that weigh under 7,500 kg. The Norwegian Tax Office collects the so-called weight-year tax on heavier vehicles, in which the TRIF is not due.

Norway charges the fee for insurance contracts on compulsory third-party liability insurance regarding motor vehicles registered domestically. The fee also applies to the sum received by the Norwegian Motor Insurers’ Bureau for uninsured motor vehicles or when the new owner has not taken out insurance for the motor vehicle.

There is no insurance premium tax on insurance policies covering Class 3 policies.

As stated above, insurance companies collect TRIF at the same time as the premium, so the fee is distributed in accordance with the frequency of premium payment. This can be monthly, quarterly, semi-annually or annually.

TRIF is a daily fee based on the type and usage of the vehicle. Vehicles are classified into five classes, from a) to f).

The new rates take effect on 1 March each year. This means that if the policy is issued or renewed on or after this date, the new rates will apply. The rates for 2024 range from NOK 0.37 (approx. EUR 0.032) for group e) to NOK 9.11 (approx. EUR 0.80) for group b).

 

What vehicles are exempt from tax in Norway?

Exemptions from TRIF occur based on the car’s usage or the owner. For example, motor vehicles registered at the Nordic Investment Bank that are used for official bank operations are exempt from TRIF. Vehicles registered at NATO or NATO headquarters, forces or personnel, as defined by international agreements, are also excluded. The exemption also applies to stolen cars.

The Ministry has the authority to issue regulations for implementation, delimitation and exemption criteria.

It is also worth mentioning that if liability insurance is not compulsory to take out, for example, in the case of the Norwegian state, municipalities or local institutions, the person responsible for the motor vehicle will be considered “self-insured”. In these circumstances, TRIF is not due.

Read our IPT Guide to learn more about Insurance Premium Tax compliance.

Have questions about the taxation of motor insurance policies or IPT in Norway? Speak to our experts.

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 of taxes that apply to premium amounts received by insurance companies:

  1. Swiss Stamp Duty (CHSD)
  2. Liechtenstein Insurance Levy (LIL)

These taxes complement each other. LIL is only applicable if CHSD is not applicable.

Swiss Stamp Duty is applicable in Liechtenstein based on Customs Union Treaty of March 29, 1923, which regulates the federal rules of stamp duties. Liechtenstein levy on Insurance premium amounts only applies if the Swiss stamp legislation does not apply.

It is necessary to highlight that Liechtenstein is a member of the EEA. As a result, the Location of Risk provisions outlined in the Solvency II Directive apply to LIL.

Therefore, to determine whether a premium amount triggers LIL, the rules of the referred Directive should be applied. This is not the case for Swiss Stamp Duty.

Premium payments made by Liechtenstein resident policyholders and/or to insurance companies based in Liechtenstein are generally subject to Swiss Stamp Duty.

 

What are the tax rates in Liechtenstein?

Premiums on non-life insurance policies are taxable at the rate of 5% and life policies at a rate of 2.5%, unless one of the exemptions listed in the regulations apply. These rates and exemptions apply to both CHSD and LIL.

Examples  of exemptions include:

 

What is the basis of a CHSD and LIL calculation in Liechtenstein?

For the Liechtenstein Insurance Levy, the taxable basis is the premium payments based on an insurance relationship created by an insurance policy where the location of risk is deemed to be in Liechtenstein.

Whereas, for the Swiss Stamp Duty, the taxable basis is the premium payments for insurance:

  1. based on a domestic portfolio of a domestic Liechtenstein insurer
  2. that are paid by a domestic policyholder having an insurance contract with a foreign insurer

 

What are the CHSD and LIL filing and payment frequencies in Liechtenstein?

CHSD is filed on a quarterly and paid alongside the submission of the tax return. On the other hand, LIL is due biannually.

Each return is due within 30 days following the last day of the reporting period.

 

What are the penalties and interest for CHSD and LIL in Liechtenstein?

In case of late payment, a default interest should be paid on the amounts paid late. The interest rate is determined by the Swiss Federal Department of Finance.

 

What are the challenges for Insurance Premium Tax in Liechtenstein?

The main challenge is to determine which tax is due, CHSD or LIL. Secondly, it is challenging to determine whether the premium amount and the risk covered are exempt from taxation. The list of exemptions is long.

If LIL is due, these returns can only be filed by a fiscal representative based in Liechtenstein. It can be challenging to find one locally.

 

Want to learn more about Insurance Premium Tax?

Read more about IPT in general here: IPT Guide

Find your solution: Complete IPT Compliance for Insurers

Questions on location of risk? Download our Location of Risk Rules eBook

 

Want help for IPT in Liechtenstein?

Contact our team of experts today.

In less than six months, Poland is going to introduce its long-awaited CTC clearance e-invoicing mandate – a tax reform that will impact a large amount of businesses.

It has been possible to issue and receive e-invoices voluntarily via Krajowy System E-Faktur (KSeF) since January 2022, but from 1 July 2024 it will become mandatory for suppliers and buyers that are in scope of mandatory e-invoicing to do this via KSeF.

A detailed understanding of the new regime, plus timely and proper preparation, is critical for compliance. Whilst there is a six-month grace period on financial penalties, non-compliance can negatively impact your business in many other, often unexpected, ways.

In this 45-minute deep-dive webinar, Marta Sowińska from our Regulatory Analysis and Design team will cover:

Join us on 8 February at 2pm GMT | 3pm CET for a thorough review of the Polish KSeF e-invoicing mandate and the opportunity to submit your questions.

Register today

As tax authorities continue to digitize processes in their mission to reduce fraud and close their VAT gaps, they are introducing requirements that provide greater visibility into a company’s financial operations in the form of Continuous Transaction Controls (CTC).

It would be a mistake to think that being prepared to meet obligations in one of the countries where you operate can simply be replicated in another – CTCs are far from a ‘one-size-fits-all’ solution.

Join us on 24 January 2024 in our latest quarterly VAT Snapshot webinar series where regulatory experts Dilara Inal and Marta Sowinska will examine how tax authorities in Poland, Romania, Israel, Greece and Spain – all simultaneously implementing CTC regimes – are doing so with different sets of requirements.

Don’t miss this opportunity to learn more about these unique regimes and what they mean for your business.

Register now.

Monaco is one of many countries with Insurance Premium Tax (IPT) requirements, specifically the Special Annual Tax and Fire Brigade Tax. This blog provides an overview of IPT in Monaco to help insurance companies remain compliant.

 

What kind of taxes are applicable in Monaco on insurance premium amounts?

In Monaco, there are two types of taxes that apply to premium amounts received by insurance companies. These taxes apply to domestic as well as foreign insurance companies who write business in Monaco, whether or not they have a branch office there.

It is necessary to highlight that Monaco is not a member of the EU/EEA. As a result, the Location of Risk provisions outlined in Directive 2009/138/EC, often referenced as the Solvency II Directive, do not apply. Therefore, determining whether a premium amount triggers Monegasque insurance premium tax or not requires understanding the local territorial rules.

The Monegasque insurance premium taxes are:

 

What are the tax rates in Monaco?

SAT rates vary based on the risks covered. The lowest rate is 0.20% for policies covering export credit risks, while the highest rate is 25% for policies covering property risks with a fire element. Most taxable insurance is subject to a 7% rate.

There are various exemptions from SAT, such as life insurance and related contracts, reinsurance, and risks located outside of Monaco.

There is a fixed rate of 9% for Fire Brigade Tax.

 

What is the basis of SAT and FBT calculation in Monaco?

The taxable premium is the taxable basis for both SAT and FBT. It is defined as the sum stipulated for the benefit of the insurer, including any extra fees or charges paid directly or indirectly by the insurer. The taxable basis for FBT can be different from SAT.

 

What are the SAT and FBT filing and payment frequencies in Monaco?

SAT and FBT are filed quarterly on one return. The payment must be made alongside the filing. The settlement deadline is the tenth day of the third month after the reporting period ends.

In addition to the quarterly return obligation, insurance businesses must file an annual return by 31 May of the year after the reporting year.

 

What are the penalties and interest for SAT and FBT in Monaco?

Penalties are imposed for payment delays, as well as inaccuracy, omission, inadequacy, or any other violations that may cause damage to the Monegasque treasury.

The late payment interest rate is 6%, and is charged on the entire month, regardless of when in the month the late payment becomes due. For every other error, the default penalty is EUR 150 or EUR 1,500. The latter applies if the violated legal provision is punishable.

 

What are the challenges for Insurance Premium Tax in Monaco?

The fiscal representation regulations are the most difficult aspect of Monegasque insurance premium taxation. A foreign insurance business must have a representative authorised by the Minister of State to declare taxes in Monaco.

This representative should be a private individual and is fully liable for the payment of any Monegasque duties and fines. In addition, a certain amount of guarantee is payable if the representative is not based in Monaco.

 

Want to learn more about Insurance Premium Tax?

 

Want help with IPT in Monaco?

Speak to our IPT experts

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:

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.

The convergence of traditional Value Added Tax (VAT) and transactional compliance regimes is creating new obligations and responsibilities for companies doing business around the world. When it comes to VAT, compliance is so much more than just reporting.

Here are six pitfalls you should avoid in the pursuit of VAT compliance:

 

1. Making the wrong VAT decision at the outset

Companies with multijurisdictional supply chains must ensure their VAT determination decisions are accurate every time. Managing the validation process with VAT Determination software that checks validity before invoices are cut can save time and improve data accuracy from the outset.

It’s also best practice to complete your buyer VAT ID checks at this point in the process to avoid nasty surprises later. Checking manually can be incredibly resource-intensive so using a solution that can automate this for you can save both time and hassle.

 

2. Not having a legally valid invoice

To be considered legal for VAT purposes, invoices need to meet a specific set of requirements which vary by jurisdiction. Without legally valid invoices, you may be presented with a host of problems when the time comes to reclaim input VAT. If you have accepted an invoice that doesn’t tick the boxes that make it legal for VAT purposes, you invite the scrutiny of the tax authorities.

Aside from possible fines, the delay while anomalies are reviewed can impact your cash flow and cause reputational damage. Even in a paper world, VAT deduction is not permitted for improperly formatted invoices.

 

3. Missing reporting deadlines

With VAT obligations always growing and adapting, the pressure on internal tax teams is greater than ever. Each government has its own approach to penalties for late submissions or overdue payments. Manual processes can no longer be relied upon to meet the demands of the authorities on time, and with accuracy.

It’s possible to streamline the reporting process using software, outsourced services or a hybrid approach; what’s best for your business depends on how your tax team is organised.

 

4. Manual error

With new requirements coming thick and fast, teams are working harder and faster. As a result, opportunities for manual error are at an all-time high.

Manually processing VAT invoices can be incredibly time-consuming and leaves room for oversight and human error. Even individual errors can lead to bigger problems down the line, attracting the attention of the authorities and impacting your ability to do business.

 

5. Challenges with data extraction and mapping

Extracting the right data from the appropriate system modules, and then processing and mapping it so that it can be summarised, is a complicated and detailed task. To complicate matters further, each jurisdiction has its own unique reporting requirements you must meet. Automating these processes can improve accuracy and your ability to comply.

 

6. Not reviewing data prior to submission

Preparing VAT Returns, EC (European Commission) Sales Lists, Intrastat Declarations and other country-specific reports for regular submission can be demanding. Add in the need to prepare a SAF-T (Standard Audit File for Tax) report and the complexity intensifies. SAF-T requirements differ by country, including transactional data (about sales and purchases) and accounting data at a minimum, but often need information about assets and inventory as well.

Combining detailed data from different source systems with an exacting submission format means the report cannot be easily eyeballed to check for possible errors. Tax Authorities use software to analyse the SAF-T filings   they receive and decide where to follow up with further auditing. To safeguard the quality of the submission and avoid a call from the tax authority, it’s essential that data is thoroughly analysed before it’s submitted – ideally using tools of the same calibre that each Tax Authority is using.

 

It’s never been more important to seek the right advice for VAT. Admitting you need help can be a daunting but crucial step, but the fear of non-compliance should be a bigger concern.

Simply put, there comes a time for every multinational organisation when managing complex tax obligations in-house just isn’t viable anymore. Consolidating your compliance with Sovos gives you access to industry-leading software, consulting services and regulatory experts, all of which are focused on ensuring you’re compliant now and will remain so in the future.

To find out more, get in touch today.

Infographic

The Tax Authorities are in Your Data

A reactive or ad hoc approach to tax compliance across the markets you do business in can mean the authorities have a better overall view of your data than your own internal teams. How confident are you that you have the same view of your data as the tax authorities?

Staying informed about VAT Reporting and SAF-T can be challenging when it requires keeping up with ever-changing and demanding regulations.

Ensuring you are well-informed about the latest updates from tax authorities is a crucial step in preparing for potential consequences.

In Sovos’ most recent quarterly update webinar on VAT Reporting and SAF-T, Regulatory Counsel Inês Carvalho explores the most recent legislative amendments and their potential impacts on your business.

During this webinar, our expert will cover:

EU-based companies must grapple with VAT charges on a myriad of goods transactions within the EU. As a manufacturing company, this intricate web of varying VAT rates can pose significant challenges. Choosing the right EU entry point is a pivotal decision, complicated by each country’s unique VAT regulations. Compounding the complexity, you may not always know the precise location of your goods in transit.

Manufacturers face supply chain disruptions, potentially jeopardising their already sophisticated operations. The question is, where should you commence your VAT journey?

Our VAT expert Russell Hughes guides you in this immersive webinar, where you will gain insights into:

Join us on this transformative journey through the VAT labyrinth and gain a competitive edge in the EU market. Don’t miss this opportunity to optimise your expansion strategy.

 

Register now.

Join our insightful Insurance Premium Tax webinar where Sovos’ IPT experts James Brown and Khaled Cherif delve into the lesser-known, insurer-borne taxes in Belgium, France and Ireland. These taxes, whilst not directly charged to policyholders, can significantly impact insurers’ bottom lines.

Explore the intricate landscape of the following areas, considering the impact that they can have on insurers’ financials:

Discover the background to these taxes and how you can ensure compliance with their requirements to mitigate business risk and maximise profitability. Don’t miss this opportunity to shed light on the hidden financial burdens that can significantly affect your insurance business.

Register now.

When it was announced recently that the introduction of a new French e-invoicing mandate had been delayed until September 2026 there was a collective sigh of relief amongst many in the tax and finance world. More time to adequately prepare, put systems and methodologies in place and have your business ready to be compliant from the get-go.

Sounds optimal, but let’s focus on reality. First, the reported delay is a bit deceiving. While it may not officially take effect until 2026, you only have a matter of months to get prepared to participate in the extended trial. Human nature may be to push it to the side and focus on more short-term deadlines. However, to not take advantage of the extra time provided would be shortsighted at best.

Here are five ways you can make this extra time work for you: 

  1. Take time to fully understand the mandate and how it impacts your organization. Be prepared to answer questions such as, where will e-invoicing and e-reporting data come from? Do we need to involve IT. Use this time to eliminate surprises.
  2. Study and consider what other aspects of the business may be impacted by this mandate. Understand what other business data is required for a smooth integration and approvals. Consider confidentiality and data privacy.
  3. Begin to align internal processes, workflows and systems in preparation for impending changes. This is your opportunity to test different approaches and workstreams to ensure a high-level of efficiency. How will you manage the process and who in your organization will have operational responsibility when extended trials go live?
  4. The first list of officially registered service providers will go live in spring, 2024. Use this time to do your research on which service providers make sense for your organization, both during the trial period and as a potential long-term partner.
  5. Evaluate your current compliance management strategy. As you begin working with a registered service provider through the trial period, consider how this differs from your approach to other government mandates. What can you learn from this experience and what other areas might you be able to improve upon?

 

More on the France B2B E-Invoicing Mandate

Note: portions of this section originally appeared in the Sovos blog, France: B2B E-Invoicing Mandate Postponed, updated 19 September 23.

Businesses will soon be able to register proactively for the pilot program, which has been designed to allow businesses to test the PDP platform. This program is intended to build knowledge and confidence and ensure businesses are on the path to readiness.

Therefore, it would be prudent to regard the delay as a mere six-month postponement, with the beginning of the pilot program acting as the de facto starting date. To understand the full impact on their business processes and data flows, companies will need to thoroughly test up to 36 use-cases.

The good news is that the many software vendors helping companies to streamline their purchase-to-pay and order-to-cash processes will be eager to test the compliance of their solutions as early as possible in what has become a completely new ecosystem.

We are proud to say that Sovos is one of the first 20 candidates for service provider (PDP) accreditation in France and as such, will be fully prepared to assist your organization through the trial process and beyond.

Take action:

Looking for more information about how to comply with the French Mandate?

Download our French Mandate eBook or Contact our expert team.

Greece’s VAT reform started back in 2020 and it has manifested itself in three continuous transaction control (CTC) initiatives.

Namely, the initiatives are:

Recently, the introduction of an e-transport mandate was included in the country’s VAT reform strategy, although not much detail has been published yet.

More progress has been made in implementing the myDATA scheme and the new cash registers than for CTC e-invoicing. However, in the last few months, the authorities have taken steps towards setting up the right framework to make CTC e-invoicing – which is currently voluntary for B2B transactions – mandatory for all.

myDATA e-audit reform

myDATA went live as a voluntary system in 2020 and followed a gradual implementation timeline which is ongoing. It is an e-audit system that requires taxpayers to report transactional and accounting data to the tax administration, in real-time or periodically, which populates a set of online ledgers maintained on the government portal. The goal of myDATA is for the online ledgers to be the only source of truth of the taxpayer’s tax and financial results, and for their respective information to pre-fill the taxpayer’s VAT returns and financial statements.

Greece’s myDATA is a reporting obligation of ledger-type data and it is not to be confused with e-invoicing as it doesn’t require invoices to be issued and exchanged in electronic form. Greece allows for invoices (in B2B transactions) to be issued and exchanged on paper or electronically following the standard e-invoicing rules of the EU VAT Directive.

B2B e-invoicing reform in Greece

In parallel with the roll-out of myDATA, the authorities established an accreditation framework for e-invoicing service providers and introduced a voluntary e-invoicing scheme involving accredited entities. These entities are accredited by the government to perform certain functions, namely:

To encourage the uptake of CTC e-invoicing, the government provided several incentives to businesses to use e-invoicing facilitated through accredited service providers. It also obliged businesses who opt for CTC e-invoicing to use no other methods to fulfil the myDATA requirements e.g., ERP reporting, except through accredited service providers. This implies that a business selecting CTC e-invoicing for its B2B transactions must use the same method for issuing and reporting all other invoices, including B2G transactions, and vice versa.

B2G e-invoicing reform in Greece

CTC e-invoicing became mandatory for B2G transactions on 12 September 2023 for VAT-registered suppliers to certain government agencies. The mandate will continue to roll out in phases with the next main milestone coming up in January 2024. This obligation covers the vast majority of public contracts, from defence and security to general supplies and services, with some exceptions (e.g. contracts in defence and security which are classified as secret).

With the introduction of the B2G e-invoicing mandate, the use of CTC e-invoicing has indirectly become mandatory for B2B transactions too, encompassing both issuance and reporting to myDATA. It means that businesses in the scope of the B2G e-invoicing mandate have the obligation to use CTC e-invoicing through accredited e-invoicing service providers to issue and report both their B2B and B2G e-invoice flows to myDATA.

While a B2B e-invoicing mandate cannot be introduced without prior approval by the European Commission, the Greek Ministry of Finance announced that it has started a dialogue with the Commission to discuss the conditions required to implement a nationwide mandate.

Although an ambitious timeline, the Ministry envisions a full implementation of a B2B e-invoicing mandate within 2024.

Looking ahead

Clearly, Greece’s CTC initiatives are in line with the EU paradigm shift towards increased governmental control over transactional and accounting data – it recognises the benefits of tighter tax compliance and taking steps to close its tax gap.

Significant progress has been made, with myDATA operational since 2021. With the addition of CTC e-invoicing and the e-transport mandate in the VAT reform strategy, the Greek government and businesses face a demanding period in the coming years.

Need help with the current VAT reform in Greece? Our expert team can help.

E-documents or electronic documents are rapidly growing in usage across businesses of all shapes and sizes, in countries around the world.

While the automated exchange of e-documents is a relatively new phenomenon which is being adopted on a country-by-country basis, there is basic universal information that your business would benefit from understanding – and potentially utilizing.

This blog will serve as your one-stop shop for required e-document knowledge.

What is an e-document?

An e-document is an electronic transactional document or message and is typically used in an automated business process.

As the digitisation of business accelerates, so too does the use of electronic documents – whether that be an electronic invoice sent in real-time to a national tax authority or an electronic goods receipt note exchanged between companies.

The difference between electronic documents and other digital documents such as PDFs is that e-documents are machine-readable and are generally exchanged by online platforms or software.

That said, there are numerous types of e-documents and there is little standardisation as each country has its own stance and potential mandate on their adoption. The European Union has long been working on its approach to e-documents for increased interoperability with definitions and rules as part of its efforts under the eGovernment Action plan and eIDAS regulation to facilitate digital transactions and services in the EU.

In addition, the UK recently adopted the UK’s Electronic Document Trade Act which is a huge step towards the digitization of trade documents and potentially paperless global trade.

Types of e-documents

There is a wide variety of electronic documents to suit a number of applications across business, helping to streamline workflows and operations, facilitate cross-border trade and save on costs.

E-document mandates in Turkey, for example, include:

Other electronic documents that are used in some countries include:

There has been a notable implementation of e-documents in transport in recent years, with the likes of Romania adopting a system that requires taxpayers to use an electronic waybill system to obtain clearance of the transport document before the transport of goods begins. Read our dedicated blog to find out more about the global rise of e-transport documents.

One particular e-document that has had an exponential rise in utility over the past few years is the e-invoice. Electronic invoices have grown in popularity as countries develop their continuous transaction controls (CTC) and e-invoicing regulatory obligations. The likes of France, Spain and Poland all plan to introduce e-invoice mandates, requiring taxpayers to send invoices electronically.

Read our comprehensive e-invoicing guide for more information.

Why use electronic documents?

There is a host of reasons that electronic documents can be beneficial, which explains why tax administrations globally are implementing e-document mandates.

A primary reason for the use of e-documents is that they generally allow for the automation of workflows, increasing safety, accuracy, transparency and cost-saving for the involved parties. Automating the process of generating and exchanging documentation reduces the risk of error, allows for seamless transmission of information (including to tax authorities who seek greater transparency) and reduces the reliance on paper (providing an environmental benefit).

Another reason businesses use electronic documents is simply because they are mandated to do so as part of tax digitization controls. An increasing amount of tax authorities are making it an obligation to send documents electronically, and facing a penalty due to non-compliance is not desirable. As CTC regime adoption grows, so too does the need for businesses to meet their new e-document obligations.

Compliance conditions of e-documents

The compliance conditions of e-documents vary depending on the national rules, but there are some typical conditions across regimes.

In the context of tax digitization controls, the conditions that apply to some of the most regulated e-document types, such as the e-invoice, include:

What’s the difference between a digital document and an electronic document?

The difference between electronic documents and digital documents is a hot topic. It’s easy to get confused between the two considering that “digital” and “electronic” are used interchangeably by many, but it’s important to understand the difference.

Digital documents are often a digital analogue of a physical document – think a scanned document, photograph, or PDF – and oftentimes are simple for people to read and digest. An example of a digital document would be an invoice sent as a PDF via email.

Electronic documents are files of data that are generated by and for computers, making them hard for people to read due to their formatting. Such data – like that seen in a structured e-invoice (e.g. XML) – is meant to be sent from one system to another without interference from humans.

How Sovos can help

Sovos’ software allows businesses to manage CTC obligations, including e-invoicing compliance and archiving.

As the world continues its digitisation, it’s important to stay on top of evolving regulations and to keep up with best practices for your business. Working with Sovos, your business can:

Find out more about Sovos’ CTC solutions.

When considering motor insurance, it’s worth remembering that everything is high – from tax rates to the amount of administration required.

This blog includes general information about the taxation of motor insurance policies in Europe, covering the types of applicable taxes, how they are calculated, vehicle exemptions and more. We also have blogs for some of the more complex taxation requirements in the region, written by our regulatory experts.

 

Update: 2 November 2023 by Edit Buliczka

Guarantee Fund Contributions Are Not Payable by Foreign Insurers

The Amendment to the Sixth Motor Insurance Directive, also known as the “MID,” was published in the Official Journal of the European Union on 2 December 2021. MID relates to insurance against civil liability in relation to the use of motor vehicles and the enforcement of the obligation to insure against such liability.

The measures of the Directive 2021/2118 (the “Amendment”), which was signed on 24 November 2021, must be transposed into national law by 23 December 2023, at the latest.

 

Effects of the amendment

Among other important measures, this Amendment is relevant to insurance premium taxation. Two new articles were added to the MID regarding the contributions that may be payable by the insurance companies to the national guarantee funds.

According to Article 10a and Article 25a, every EU Member State is required to ensure that there are sufficient resources available to compensate injured parties in a motor vehicle accident where the relevant insurer is subject to bankruptcy or winding-up proceedings. The insurers may be required to contribute financially to these funds, but only insurance companies authorised by the Member State that imposed the payments may be subject to these levies.

In practice, the measures mean that contributions to the national guarantee funds related to compulsory third-party motor liability insurance policies cannot be collected from foreign insurers that write businesses on a freedom of services (FoS) basis. Since there is a requirement for the implementation of these measurements coming into national law by 23 December 2023, legally no guarantee fund contributions are payable by foreign insurers as of 24 December 2023.

Some governments, including Denmark and Ireland, have already started to draft the necessary regulations and incorporate them into their national laws. Others will likely follow shortly as there are under two months available for the implementation of these rules, at the time of the publication of this update. Perhaps several annual budgets will include the necessary legislative changes to comply with the measurements of the Amendment.

If you would like to receive further information about the guarantee fund contributions, please contact our IPT experts.

 

Insurance coverage in Europe on motor-related risks

According to Annex 1 of the Directive 2009/138/EC of the European Parliament and of the Council of the EU, often known as the Solvency II Directive, motor vehicle insurance policies are classified as Class 3 Land vehicles (other than railway rolling stocks).

This business category covers any damage or loss to:

  1. Land motor vehicles
  2.  Land vehicles other than motor vehicles

Class 10 Motor Vehicle Liability is another business class that covers motor-related risks. This business class covers all risks associated with liabilities deriving from the operation of motor vehicles on land.

A third-party motor vehicle insurance coverage guarantees that if an accident happens and/or damage occurs to another person’s vehicle, the expenses of the accident or damage are covered by the insurer of the person who caused the accident or damage.

We must not forget Directive 2009/103/EC on civil liability insurance for motor vehicles which governs mandatory motor insurance policies throughout Europe. One of the directive’s main principles is that all motor vehicles in the EU must have third-party liability insurance.

We should also mention that the European Parliament and the Council adopted the Directive (EU) 2021/2118 on 24 November 2021, aiming to modernise and amend the aforementioned directive with a deadline for the transposition of 31 December 2023.

In this blog, we outline the main characteristics of the taxation of motor-related insurance policies.

 

Which taxes are payable in relation to motor insurance policies?

Premiums derived from motor-related policies are often subject to several types of insurance premium taxes. Class 3 risks are primarily subject to insurance premium tax (IPT), whereas mandatory third-party liability (MTPL) policies are subject to a wide range of taxes.

This may include IPT and/or payments to guarantee funds, as well as additional levies, charges, or contributions such as:

There is also the traffic safety fee, Automobile Rente (CAR) payment, automobile insurance bureau levy and rescue tax. This list goes on.

The disclosure and payment rules are also diverse. These fees can be paid yearly, monthly, quarterly or in instalments – with or without prepayments or final adjustments.

 

How taxes on vehicle insurance policies are calculated

If IPT is charged on the motor hull or the MTPL policies, it is typically based on the premium amounts received, with the tax being a percentage of the premium. This is not the case in Austria, for example, where the computation of MTPL taxes is complicated.

The tax is calculated based on the engine’s horsepower and CO2 emissions. It also varies depending on the registration date of the vehicle, the frequency of payment and whether the 2017/1151 EU law applies to the vehicle. On top of that, no payment is due if the size of the engine does not reach 24kW or 65 kW. Contrary to the Austrian example, the IPT rate in Hungary is 23% – based on the premium amount.

Contributions to the Guarantee Fund are typically calculated as a percentage of the premium, as in France, Greece or Sweden. However, this fee can also be fixed as it is in Denmark, for example.

 

What vehicles are exempt from tax?

Most countries exempt premium amounts from policies covering motor hull or MTPL risks based on the following:

If the vehicle is operated by the authorities – such as police vehicles, fire trucks, or ambulances – or the armed services, it is typically exempt. Cars driven by disabled individuals and buses used for public transportation are likewise excluded in most cases. Insurance policies covering electric or hybrid vehicles may be excluded as well.

 

How Sovos can help with Insurance Premium Tax on vehicle tax

Sovos can provide advice on motor-related insurance premium taxation. Our compliance team may be able to help you in settling IPT in various countries across Europe, contact us today.

5 Questions Every Non-EU Manufacturer Must Ask when trading in the EU

With the rate of change in tax digitization not set to slow down any time soon, it’s more important than ever to keep up with what’s happening where you do business.

This quarter, our VAT Snapshot webinar looks in detail at CTC and e-invoicing implementation timelines across six different countries.

Join Dilara İnal and Carolina Silva from our Regulatory Analysis and Design team for an examination of scope, key timelines and essential milestones for compliance across these jurisdictions.

The webinar will cover:

As always, please bring your questions for our experts in the Q&A at the end.

Stay up to date with the evolving landscape of tax mandates by registering today.

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Intrastat thresholds are value thresholds which decide if companies in an EU Member State qualify to file a return to tax authorities, based on their intra-community trading. These thresholds change annually, prompting businesses to conduct an annual recalculation to know their obligations.

This blog contains all the Intrastat reporting thresholds for 2024, as well as important information for businesses trading within the EU. It will be updated to reflect any changes as soon as they are implemented.

Level up your Intrastat knowledge with our handy Intrastat guide, which covers reporting requirements, returns and declarations, commodity codes, how Sovos can help and more.

What are Intrastat thresholds?

Intrastat thresholds are annual value thresholds that decide whether businesses must declare their intra-EU trades to the relevant national tax authorities.

While Intrastat is based on a European Union regulation, Member States have implemented the rule differently. As such, companies trading across the EU must be aware of the exemption threshold for each country they trade in – whether that’s acquiring or dispatching goods.

When a business exceeds the threshold in a Member State, it must continue to file Intrastat returns with the country until the applicable January-to-December period has concluded.

How can I calculate Intrastat thresholds?

Intrastat thresholds must be calculated each year as they change annually, and there are separate values for arrivals and dispatches.

To make it easy for your business, we have listed all the Intrastat thresholds below in a table – country-by-country. Find out whether your company needs to file an Intrastat return in EU Member States where you do business.

Intrastat thresholds in 2024

The current Intrastat thresholds have been in place since the beginning of the year. They are due to change again in 2025. For the current applicable thresholds for your business, view the table below.

The table will be kept updated with the latest threshold values.

Country Arrivals Dispatches
Austria EUR 1.1 million EUR 1.1 million
Belgium EUR 1.5 million EUR 1 million
Bulgaria BGN 1.65 million BGN 1.9 million
Croatia EUR 400.000 EUR 200.000
Cyprus EUR 270.000 EUR 75.000
Czech Republic CZK 15 million CZK 15 million
Denmark DKK 22 million DKK 11 million
Estonia EUR 700.000 EUR 350.000
Finland EUR 800.000 EUR 800.000
France No threshold No threshold
Germany EUR 800.000 EUR 500.000
Greece EUR 150.000 EUR 90.000
Hungary HUF 250 million HUF 140 million
Ireland EUR 500.000 EUR 635.000
Italy EUR 350.000 (goods)
EUR 100.000 (services)
No threshold
Latvia EUR 330.000 EUR 200.000
Lithuania EUR 550.000 EUR 400.000
Luxembourg EUR 250.000 EUR 200.000
Malta EUR 700 EUR 700
Netherlands The Netherlands have abolished the Intrastat threshold. Intrastat has become a report to submit “on demand” of the Dutch authorities. The Netherlands have abolished the Intrastat threshold. Intrastat has become a report to submit “on demand” of the Dutch authorities.
Poland PLN 6.2 million PLN 2.8 million
Portugal EUR 400.000 EUR 400.000
Romania RON 1 million RON 1 million
Slovakia EUR 1 million EUR 1 million
Slovenia EUR 200.000 EUR 270.000
Spain EUR 400.000 EUR 400.000
Sweden SEK 15 million SEK 4.5 million
United Kingdom GBP 500.000 GBP 250.000

Intrastat threshold exemptions and exceptions

Businesses that trade within an EU Member State but at figures lower than those listed in the above table are not required to file Intrastat returns. There are additional nuances that exist on a country-by-country basis that may change the obligations of a company.

The Netherlands removed its threshold in 2023. Its tax authorities will notify taxpayers subject to submitting Intrastat returns. They monitor intra-community transactions performed by domestic taxpayers monthly.

Italy and France differ from other countries as it has combined Intrastat returns and ECSL returns into a single declaration.

It can be difficult to stay on top of Intrastat, especially with the variety among countries, but Sovos can help. Contact our team of experts to find out how we can assist.

If you are interested in learning more about European VAT compliance, download our free eBook.

How Sovos can help with Intrastat

Sovos’ Advanced Periodic Reporting (APR) is a cloud solution. It mitigates the risks and costs of compliance, futureproofing and streamlining the handling of your periodic reporting – including Intrastat.

Our solution automates, centralises and standardises the preparation, reconciliation, amendment and validation of summary reports to make meeting your obligations simple.