A new year has arrived, marking an excellent opportunity to continue our blog series addressing Insurance Premium Tax (IPT) compliance in different countries.
You can read other blogs in this series by visiting our Denmark, Finland, and the UK entries or by downloading Sovos’ Guide on IPT Compliance. Written by our team of IPT and regulatory specialists, this guide is packed full of insight to navigate the ever-changing regulatory landscape.
How does IPT operate in Slovakia?
To start, IPT in Slovakia became effective on 1 January 2019, with the default IPT tax rate of 8%.
There are three tax points for IPT in Slovakia:
Booked date – when the premium receivable is booked into the system
Cash received date – when the premium payment is received
Payment due date – when the premium is due to be paid
Insurers are not required to separately notify or request permission to use one tax point over another but an insurer must notify on the quarterly tax return which tax point they’re using. It’s important to note the choice of tax point must be used for eight consecutive calendar quarters.
Interestingly, Slovakia’s approach to tax points provides flexibility for insurers when choosing to pay tax, giving the option to pay upfront or spread out IPT payments in instalments across multiple returns.
Slovakian IPT is due on a calendar quarterly basis (e.g. January to March return declared in April). This is the same for the payment due at the end of the month. It’s worth noting that all returns are filed electronically so there are no paper returns.
An issuance of a premium is treated according to the relevant class of business and is placed in the corresponding section on the return. A renewal would be treated in the same manner.
For treatment of mid-term adjustments, in the case whereby a premium or part thereof, is increased, reduced or cancelled, there is a separate box on the return used for submission (Box 19). This is unusual in comparison to other countries, predominantly because an increase in premium results in a different treatment.
What happens with the treatment of error corrections?
A correction error can be categorised in two ways.
Mistakes can happen and typos can occur in the supply chain. Maybe there was a multi global risk covering multiple countries and apportionment was incorrectly allocated in the first instance.
In the case of a correction of an error a supplementary declaration must be submitted for the appropriate period affected.
For example, if in the first quarter EUR 1,000 was declared for a particular risk based on apportionment produced. Later down the line in Q3, on further review it should have been EUR 1,200. In this case, the additional EUR 200 cannot be submitted on the Q3 declaration. An amended return would need to be considered for Q1 and submitted separately – this is true for both increases and decreases.
Overall, negatives are allowed and the Slovakian tax authority should refund the money back to the insurer. Therefore, the credit cannot be carried over to the next reporting period. There are no limits regarding how much the insurer can regularise but a degree of caution is advised.
Whilst there’s no official guidance, it would be wise to keep any documentation as evidence if a large amount needs to be reclaimed.
Historicals need to be submitted as a supplementary return (i.e. outside the current return). The Slovakian tax authority can impose penalties between EUR 30.00 and EUR 32,000.00.
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Download our IPT Compliance Guide for help navigating the changing regulatory landscape across the globe.
Update: 12 January 2024 by Edit Buliczka
Upcoming Submission Deadline for Polish Claims Report
The Polish Financial Ombudsman Office (Rzecznik Finansowy), like other regulatory bodies such as the Italian IVASS, requires insurance companies to submit various reports about their activities. One of these is the Claims Report.
According to the Act on the Consideration of Complaints by Financial Market Entities and on the Financial Ombudsman (Act of 5 August 2015) a report titled “Handling of complaints and the number of cases” is due within 45 days of the reporting period ending.
Subsequently, the deadline for the 2023 reporting year is 15 February 2024. This report must be submitted through the Polish Financial Ombudsman Office’s website.
The regulation determines the scope of the financial market entities, including domestic insurance companies, branch offices and foreign insurance companies.
The form and instructions for producing this report are published on the ombudsman’s website during the first week of January.
The following information should be reported:
1) Number of complaints
2) Accepted and unacknowledged claims resulting from submitted complaints
3) Information on the value of claims submitted in lawsuits and amounts awarded by final court judgments to clients during the reporting period
For in-depth information on Insurance Premium Tax, read our guide.
Poland: Withholding tax not due on insurance income
Update: 16 October 2023 by Edit Buliczka
Withholding tax (“WHT”) is an income tax, not an insurance premium tax, and is governed by the Polish Corporate Income Tax Law (CIT Law). However, in the case of foreign insurers that are operating business in Poland on a Freedom of Services (FoS) basis, it could be an important element of the taxable base calculation for the Financial Ombudsman Charge (“FOC”).
In this blog, we will explain why the judgement of the Polish Administrative Supreme Court on the application of withholding tax is relevant from the perspective of IPT and FOC.
The Financial Ombudsman confirmed to Sovos that FOC is owed on the full premium amount as stated in the policy documents, with no deductions. This implies that even if the foreign insurer receives a reduced premium after deducting WHT, FOC will still be due on the whole amount of the premium.
The WHT was applied to insurance services because the Polish Tax Office considered insurance contracts to be “performance of a similar nature” to a guarantee under CIT Article 21(1)(2a) and so wanted to deduct WHT from the premium amount paid to a foreign insurer.
The Provincial Administrative Court in Wrocław in its decision on 24 August 2023 concluded that a contract whose content corresponds to the essentialia negotii (“essential elements”) of an insurance contract is not a “performance of a similar nature”. Therefore, Polish policyholders are not obliged to withhold income tax at source on insurance premium income.
This decision also determines that payments made by the Polish policyholder for intermediate insurance services, generally referred to as brokerage services, do not constitute payment for “performance of a similar nature.” As a result, the policyholder company is not required to deduct withholding tax on brokerage fees.
Poland: Transitioning from the Insurer Ombudsman Charge (IOC) to the Financial Ombudsman Charge (FOC)
The first annual FOC return is complete, and the first payment for the newly imposed Polish Financial Ombudsman Charge (FOC) has been made. The Ombudsman Office implemented the new charge in 2023, with an effective date of 1 January 2023. The first settlement was due on 31 March 2023.
Sovos obtained knowledge during the settlement process on how to proceed with the settlement of this new charge and what the transitional procedures are for transitioning from IOC to FOC. In this blog update, we summarise what we learnt during this process.
This is what we learnt about the process:
There is no need to re-register for the FOC. Firms can use the existing registration to report FOC obligations.
If the starting date of writing insurance business in Poland is in 2023, there is no need to proceed with the registration in 2023 because the first settlement will be due in 2025.
It was not possible to submit the quarterly IOC advance payment return for Q1 2023. This supports the advice Sovos received earlier from the Polish Ombudsman Office, which said that quarterly IOC advance payments are abolished, including for Q1 2023, based on premium amounts collected in Q4 2022.
Following an upgrade, it is now possible to process historical declarations for IOC liabilities applying the correct rates.
Some questions remained:
The 2022 IOC annual return: The IOC annual return was formerly due on 30 June. Is the 2022 IOC annual return still due in June 2023?
Annual settlement: The Ombudsman Office used to issue the annual settlements during the October-November period of the year after the declaration period. Will this be sent this year for 2022?
The premium collected in 2021 or 2022: Is it necessary to disclose IOC, FOC or both on these premium amounts?
Although Poland still lacks an Insurance Premium Tax (IPT) system, there are various other taxes and fees in the country. The Insurance Ombudsman Charge (IOC) implemented in 2014 is one of the most well-known parafiscal charges. As of January 2023, the Financial Ombudsman Charge (FOC) replaces the Insurer Ombudsman Charge regulation.
There are differences and similarities between the new Financial Ombudsman Charge (FOC) and the previous Insurer Ombudsman Charge (IOC). We have also noticed some anomalies which we will discuss.
How are FOC and IOC similar?
Both IOC and FOC are parafiscal charges that should be paid to the Ombudsman Office. Payment is still in PLN with a payment threshold of PLN 16.00.
As in the case of IOC, the FOC is declared online and with NIL report submission requirement.
Similarly to the IOC, the FOC is applicable to Domestic (DOM insurers) and foreign insurers writing business in Poland on a freedom of services (FOS) basis (FOS insurers). FOC rates for DOM and FOS insurers are different as was the case with the IOC regime.
The tax point date is the same for the IOC and the FOC and it is the date when the cash is received.
What is different about the Financial Ombudsman Charge?
Although the threshold is the same for FOC and IOC, the FOC threshold refers to an annual period rather than a quarter.
IOC triggered quarterly advance payments with an annual return by 30 June and an annual settlement. FOC is due annually without additional adjustment later on.
FOC rates are higher.
There are no advance payments for FOC.
The reporting period for FOC is the two years before the charge is due, while for IOC the reporting period was either the previous quarter (advance payments) or the previous year (annual report).
Anomalies around the Ombudsman Charges in Poland
Sovos contacted the Ombudsman office to clarify some questions raised around anomalies with the Financial Ombudsman Charge. We have received responses so please get in touch if you would like to learn more.
The legislation is silent about the transitional rule. More specifically, there is no mention whether Q1 2023 advance payment based on premium collect in Q4 2022 is payable. It is unclear whether the 2022 annual return is due or not and whether the Ombudsman office will issue settlement letters regarding 2022 reporting year.
FOC settlement is based on the premium amounts collected 2 years earlier. For example, premium collected in 2021 is the basis of the charge in 2023. If so, what is the compliant rule if an insurance company collects premium in 2023, does it need to register in 2023 or in 2025 only?
Why is the threshold of PLN 16.00 now applicable for an annual return?
If an insurance company has overpayment in IOC can it be used and offset against future FOC liabilities?
Currently, Poland doesn’t have an IPT. Instead, there is a parafiscal tax called Insurance Ombudsman Contribution (IOC). It is currently charged at a rate of 0.02% and was effective from 1 January 2020 for all insurance companies operating under Freedom of Services (FOS) in Poland.
IOC applies to all 18 classes of non-life insurance. It is applicable to all insurance companies either selling insurance in Poland or collecting premiums from Polish persons. Prior to its origination date of 1 February 2014, it only applied to domestic insurers or foreign insurers with Polish branches.
The basis for IOC is the premium that must be paid to the insurer to obtain the insurance cover.
Reporting for IOC can be tricky because of the different name and numbering system for quarterly declarations. For Example: Quarter I (Quarter 1) of the current year covers October, November and December of the previous year. The quarterly submission is due 90 days from the reporting period. In this example, Q1’s declaration must be filed by 31 March of the current year.
All the payments made throughout the year are considered prepayments or advance payments. For instance, the liabilities that arose in Q1 2021 are declared in the Q2 2021 tax period as an advanced payment for Q2 2021.
The Annual Report is due by 30 June of the following year. This report is submitted to the Insurance Ombudsman summarising the actual premiums received in the previous year (i.e., for 2020, a report is submitted by 30 June 2021 summarising the total amount of premiums received by the insurer in 2020).
The Insurance Ombudsman then determines its funding requirements, and an adjustment is made based on the difference between the insurer’s share of the market percentage multiplied by the funding requirements and the previously made payments for the reporting year.
The Ombudsman’s adjustment may result in the tax authorities requiring additional funds or providing a refund. Either result is communicated by the authorities through Annual Settlement Letters that usually arrive by the end of October.
Insurers are obligated to keep records of insurance contracts and the documents required for tax declaration for five years from the contract’s expiry date.
If the taxpayer doesn’t declare and remit the tax in accordance with the regulations, the relevant authority may demand delayed interest and require an assessment of the tax. In such cases, the court can award a penalty fee and/or imprisonment of the company’s management for up to three years, as per the fiscal penalty code from 10 September 1999.
For any insurance company operating under FOS in Poland, understanding the details of the Insurance Ombudsman Contribution and the reporting requirements are key to ensuring compliance.
But there are variations and identifying which class the policy is covering can be a challenge.
This article will cover what insurers need to know about Aviation Hull and Aviation Liability policy and what IPT rate to apply.
Variations in the Aviation policy
Aviation can fall under Class 5, Class 11 or General Liability.
There are five different variations of an Aviation policy, either taken out individually or in combination. Although the descriptions vary, the most referred to are:
Public and passenger liability insurance
Ground risk hull insurance, whilst in motion or stationary
In-flight insurance
Class 5 Aviation policies are focused on the hull and physical aspect of the aircraft, whereas Class 11 Aviation Liability mainly covers the public and passengers or damage to property owned by third parties.
Defining and applying the correct classification
Defining between Aviation Liability Class 5 and 11 can be a headache. As aviation policies can include a combination of liabilities, it can be difficult to know the correct classification to apply.
Some tax authorities have recognised this and applied similar rates for both, but there are exceptions.
For example, in Hungary Class 5 is considered CASCO , which stands for Casualty and Collision (automobile insurance). So, it has a higher IPT rate of 15% whereas IPT for Class 11 on Aviation Liability is 10%.
There are also parafiscal taxes to consider. These mainly come into effect when the policy includes a fire element. But as always there are exceptions – in Greece both classes are exempt from IPT, but TEAEAPAE (or Pension Fund) can be due on Class 5 Aviation when cover includes the maintenance of the aircraft.
Once the correct class of insurance has been applied to the policy, an additional reference to an AVN clause is made.
AVN clauses are additional to the main risk and more specific than some of the other coverages, which are also included in aviation contracts. There are over 214 AVN clauses and most fall under Class 13 General Liability.
Reporting
The last piece of the puzzle is how to report a policy document that could have up to three different classes.
The territory could have apportionment rules, meaning an insurer could benefit from some of those exemptions. Some insurers choose to take the prudent approach and apply the highest rate from the three classes to avoid noncompliance or penalties.
Easing the IPT compliance burden of aviation liability
For most insurers, classification of an aviation policy is only the beginning of the journey. There are other considerations such as location of risk rules outside of Europe, which can mean double taxation, or exemptions depending on the use of the aircraft.
To ease the burden on compliance, many insurers work with a managed service provider with IPT expertise.
A tax authority audit can come in various forms, whether it be directly to the insurer itself or indirectly through a policyholder or broker.
It can be targeted, for example, where an insurer has been specifically identified to be investigated due to a discrepancy on a tax return, or it can be indiscriminate in its nature as part of a wider exercise being carried out by an authority.
Whatever form the audit takes, the key to responding is in the preparation beforehand.
What information should be kept for a tax authority audit?
First and foremost, insurers should ensure they are retaining copies of evidence that can be used to justify the tax amounts declared and settled. This may include the insurance contracts themselves, the invoices issued to policyholders and a record of their data that comprises the declarations that have been made.
It’s worth noting that in Italy there is a formal requirement to maintain IPT books which detail each of the premiums received during each annual period. Although this is not necessarily a specific requirement in other countries, applying this approach to all premiums received will put an insurer in a strong position if an audit is carried out.
Further documentation demonstrating compliance is also useful. If external advice has been sought, e.g., to determine the appropriate class of business for a policy and the consequent tax application, then retaining a record of this advice is advised in case this is required later.
There may be cases where a tax authority’s advice has specifically been sought and such correspondence will inevitably hold considerable weight if tax treatment is queried during a subsequent audit. Documentation of any processes in place to ensure compliance is also valuable.
As statutory limitation periods vary across jurisdictions, evidence should be kept as long as is practicable (subject to relevant data protection laws where applicable) so that it can be produced if an audit takes place.
The consequences of noncompliance
In the digital age, this practice should hopefully not seem overly burdensome. It’s worth referring to the penalty regimes in place in some countries to put the potential repercussions of an unsatisfactory audit into context.
The UK is an example of where a behaviour-based approach to determining penalties is used, with the highest level of penalties reserved for cases of deliberate and concealed undeclared tax where the authority itself has prompted the declaration.
Lower penalties (or indeed no penalties at all) will be levied where reasonable care is taken, and reasonable care will be far more likely to be considered to have been taken where records are kept in the ways described.
Audits can happen at any time so it’s important insurers have taken the necessary steps to ensure information and data to demonstrate compliance is available to the tax authority when requested.
Ensuring the accurate and timely submission of tax returns is likely to reduce the possibility of a targeted audit. The IPT managed services team at Sovos has a huge amount of experience with tax filings in the UK and across Europe and has assisted many insurers with unexpected audits.
Insurance Premium Tax in Germany is complex. From IPT rates to law changes, this quick guide will help you navigate the challenges of IPT in Germany. For an overview about IPT in general, read our Insurance Premium Tax guide.
Last update: 24.01.2023
What is the filing frequency for IPT declarations in Germany?
Based on IPT declarations made for the year 2022:
Below €1,000.00 – annually
Between €1,000.00 and €6,000.00 – quarterly
Above €6,000.00 – monthly
What is the filing frequency for Fire Brigade Charge declarations in Germany?
Based on FBC declarations made for the year 2022:
Below €400 – annually
Between €400 and €2,400.00 – Quarterly
Above €2,400.00 – monthly
Last update: 07.12.2022
What is the IPT rate in Germany?
Different IPT rates are applicable in Germany, depending on the type of insured risk provided to the policyholder. Sovos’ IPT Managed Services ensures your company complies with the latest Insurance Premium Tax requirements in Germany.
Are life and sickness policies exempt from German IPT?
Yes. Life and sickness policies are exempt from German IPT.
What is the basis of a German IPT calculation?
German IPT is a charge to the policyholder in addition to the premium. The taxable premium is the total amount paid by the policyholder to obtain the cover. The Insurance Tax Act specifically includes charges and other ancillary costs within the scope of the definition.
What are the IPT challenges in Germany?
The main challenges in Germany regarding IPT relate to two areas:
For policies classified under regulatory insurance class 8 Fire and natural forces: it’s important insurers and policyholders understand the risks covered and apply the correct IPT rates and Fire Protection Tax (FPT) rates to the premium, so they can be settled with the authorities. There are different IPT and FPT rates depending upon the type of insured risk. As FPT is an insurer-borne parafiscal charge deducted from the premium paid by the policyholder to them, it’s important to use the correct tax rates.
The changes to the Insurance Tax Act in 2020 has led to uncertainty over how to tax some global policies where there is a German policyholder. This has increased the possibility of double taxation taking place, which we will explain in more detail.
Updates on German IPT
Insurance Tax Act reforms in Germany, effective from 10 December 2020, have continued to cause some uncertainty in the insurance market.
The main area of concern relates to the location of risk for Insurance Premium Tax (IPT) purposes. The reform can impact a policy taken out with either an EEA or non-EEA insurer where the policyholder is established in Germany, i.e., a German enterprise, permanent establishment, or corresponding institution, or an individual habitually resident in Germany, where the policy covers non-EEA risks.
These changesaffect all classes of business and are irrespective of the physical location of any insured risk.
Double taxation in Germany with policies written by EEA insurers
If a policy for the German policyholder includes non-EEA countries, then German IPT is due on the premium allocated to Germany and to premiums allocated to non-EEA countries. This could be in addition to any applicable premium taxes due in non-EEA countries.
Therefore, double taxation is a possibility. However, if the policy includes other EEA countries, then German IPT cannot be charged on premiums allocated in these EEA countries.
Double taxation in Germany with policies written by non-EEA insurers
If a policy for the German policyholder includes both other EEA and non-EEA countries, then German IPT is due on the premium allocated to Germany and to 100% of the premiums allocated to all the other countries. This could be in addition to any applicable premium taxes due in all these countries. Therefore, again, double taxation is a possibility.
What is a ‘permanent establishment’ or ‘corresponding institution’ for German IPT purposes?
The law reforms did not specifically clarify at the time what a ‘permanent establishment’ or ‘corresponding institution’ was that would bring a non-EEA risk within the scope of German IPT. The primary concern related to global policies such as liability and miscellaneous financial loss risks that are not considered ‘special risks’ (i.e., don’t relate to fixed property, vehicles and travel). These types of global programmes for German policyholders, in particular financial institutions, are common in the insurance market.
4 March 2021
Guidance from the Federal Ministry of Finance (BMF) published confirmed that a non-EEA branch of a German policyholder would be deemed to constitute a permanent establishment. But it was silent on whether the same applied to a non-EEA subsidiary. Also included in this guidance were several scenarios to aid insurers and brokers with taxing policies correctly, but unfortunately there wasn’t one for this subsidiary scenario.
20 July 2021
The BMF issued a new version of their general leaflet on insurance tax and fire protection tax for EU/EEA insurers. This included a flowchart showing the changes in taxability of policies as a result of IPT law reforms, but the non-EEA subsidiary question was not specifically answered here.
28 April 2021
The German Insurance Association (GDV) issued a Frequently Asked Questions (FAQs) document to help insurers understand the reforms in several areas, including answering some questions around the treatment of non-EEA subsidiaries.
Whilst the answers appeared to provide hope that these subsidiaries did not constitute a permanent establishment, there was a caveat at the beginning of the FAQs document. It said it was non-binding, and that every insurer could interpret and apply the statutory provisions (and the associated BMF letter from 4 March 2021) at their discretion.
This meant if insurers decided not to tax non-EEA subsidiaries based solely on this guidance, they could be subject to tax assessments later, where German IPT has not been charged.
7 September 2021
The BMF subsequently resolved this matter. They published a further decree confirming that for policies taken out by a German policyholder with an EEA insurer not relating to ‘special risks’, any premium apportioned to a non-EEA subsidiary is not subject to German IPT. This is because the Fiscal Code of Germany does not consider a subsidiary to be within their definition of a permanent establishment for tax purposes.
Need to learn more about IPT?
Guides: Read more about Insurance Premium Tax in our Guide to IPT
For anyone relatively new or unfamiliar with insurance premium tax (IPT), an understanding of each of the core components is key to ensuring compliance. They also sit in a logical sequence of five distinct areas.
Location of risk
Class of business
Applicable taxes and tax rates
Declaration and payment
Additional reporting
1.Location of risk rules
This essentially is having a clear understanding of where the risk lies to determine in which jurisdiction the premium taxes should be declared. The rules can be complex and vary across different territories but having a clear process will help.
You’ll need to determine:
Is the policy insurance or reinsurance?
What is the nature of the risk?
Who is insured and where are they located?
Next, check which rules apply. The EU’s four rules determine the correct jurisdiction depending on the nature of the risk:
Location of property
Registration of vehicles
Country of residence in which you took out the travel policy
Anything else that doesn’t fall into the above categories
A class of business is basically the category the risk falls under. Within the EU there are 18 classes of non-life business, ranging from accident and motor to miscellaneous financial loss and general liability.
Local rules vary so it’s important to understand your insurance policies to ensure the correct and relevant class of business is applied. Some policies may include more than one class of business which will affect the proportions of the premium that relate to each business class.
Having determined the location of risk and the correct class of business the next step is to determine the taxes that apply and need settling.
Tax rates across the EU are fragmented and there are even more variations when you look at the varying tax rates within a jurisdiction. For example, in Spain you have an IPT rate applied at 6% yet you might also have some extraordinary risks surcharges calculated at 0.0003%.
Also consider who must carry the cost of these taxes. Is it the insured or the insurer? In most cases it’s the insurer’s responsibility, however it can fall to the policyholder.
Insurer borne taxes generally can’t be shown to the policyholder and are therefore a cost to the insurer
Taxes borne by the insured must be shown on policy documents, so the policyholder knows what taxes they are liable for.
Key to being able to determine which taxes and what rate to apply is having access to reliable software.
Here again the rules vary country by country around the frequency for declaring and settling liabilities. They can be monthly, quarterly, bi-annually and annually. Failure to declare within the deadline will result in penalties and/or interest so knowing the deadlines for each return and when payment must be made are crucial.
Some tax authorities have strict rules and are quick to enforce them. Others are more lenient dealing with penalties on a case by case basis, and some (such as the UK) take a behaviour led approach where full disclosure and cooperation could lead to a far reduced penalty.
5.Additional reporting – will IPT follow where VAT leads?
Tax authorities across the world are taking a more granular approach to tax reporting to prevent fraud and reduce the tax gap. With VAT mandates in place across Latin America and more recently spreading into Europe and Asia, the VAT gap is reducing. So as governments transition to digital tax compliance wanting more data and faster, you can expect IPT will in time follow. The Spanish authorities, for example, have already started on this journey with the introduction last year of new digital reporting requirements for Extraordinary Risk Surcharges.
To stay ahead of the curve, the more prepared you are today the easier it will be to face the challenges that lie ahead as the pace of change in digitising tax compliance increases.
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Keeping up to date with the latest rates, rules, and regulation of Insurance Premium Tax (IPT) is a challenge for insurers. Not to mention this is especially complex for insurers writing across multiple territories.
Written by Sovos’ team of regulatory specialists, IPT Compliance – A Guide for Insurers provides everything you need to know about the IPT regulatory landscape.
A mix of deep dive country-by-country information in addition to guidance on IPT and the digital tax landscape, this guide is for any insurer wanting to know more about IPT compliance.
Despite its focus on Europe, our guide also explores other jurisdictions in Asia, Australia, North and South America. This guide is your trusted source of information wherever in the world you write business.
Tax compliance intensifies – the cost of getting it wrong
Technology disconnect and why IPT needs prioritising
The changing landscape for European captives and the challenges ahead
Easing the stress of IPT filings
The complexities for insurers when writing insurance through third parties
Indirect tax rules for insurance across the world
European country deep dives
How Sovos can help
The digital future of IPT
The tax landscape is changing. Governments across the globe are looking to technology that helps to fill tax revenue gaps and also speed up tax collection. As a result, tax authorities are increasing their focus on the insurance industry. They are ensuring IPT and parafiscal taxes are collected correctly, accurately, and on time.
In light of the rise of digital tax regimes and granular reporting, IPT compliance should be a priority for insurers. Incorrect filing or reporting can lead to costly penalties and reputational damage otherwise.
Our IPT Compliance Guide for Insurers e-book provides guidance on the many elements of IPT compliance. This includes tax point, tax rates, currency, filing, submission and the importance of accurate data.
Owing to the recent changes in IPT across Europe, including Spain’s complex and detailed reporting requirements and Portugal’s Stamp Duty reporting, this guide will help you navigate the ever-changing IPT landscape.
The IPT Compliance Guide for Insurers takes an in-depth look into some of the more complex and unique IPT jurisdictions across Europe. This includes Italy, Slovakia, Portugal, France, Germany, Spain, Finland, Denmark, and the UK.
Europe is the third largest insurance captive domicile in the world. Around 15% of companies are established within the continent. This e-book also contains relevant IPT rules, applicable charges, and guidance for captives.
Meet the Expert is our series of blogs where we share more about the team behind our innovative software and managed services.
As a global organisation with indirect tax experts across all regions, our dedicated team are often the first to know about new regulatory changes, ensuring you stay compliant.
We spoke to Wendy Gilby, technical product manager at Sovos, to find out more about her role developing Sovos’ Insurance Premium Tax (IPT) software to help customers meet the demands of a constantly changing regulatory environment.
How did you come to work at Sovos?
Prior to joining Sovos I worked at an investment bank in London, working my way up from trainee programmer to programmer, analyst, business analyst, systems analyst, project manager, global production support manager and eventually vice president.
Due to personal circumstances, I started working part time and was even briefly a rowing coach before heading back to university to complete a Computing and IT degree.
I was looking for another role in IT and originally worked for FiscalReps (now part of Sovos) on a short-term contract in 2016 or 2017. This is the product that we now know as Sovos IPT which needed testing to ensure it was fit for purpose.
After completing the project, I came back on a six month contract, which became a full-time permanent position and I’m still here today!
What is your role and what does it involve?
My role is to work out how to implement any modifications to the Sovos IPT system. We agree with the wider Sovos IPT team what new functionality or changes they want and work closely with the development team to convert the ideas into the solutions that our customers use.
I’ve recently been looking at the Sovos VAT solution to try and see the synergies between VAT and IPT in terms of user set up, user roles, uploading data, and initial validation on the files that we get from clients to improve the overall user experience for our IPT solutions.
What’s your team responsible for and how do they help customers?
We’re always trying to make the whole process of filing taxes more efficient, and a lot smoother for customers, whichever country they file their taxes in.
We’ve spent a lot of time refining the IPT Portal to make the process of filing and reporting IPT easier but also more compliant. We’re trying to eliminate as many of the manual steps involved in filing taxes as possible to reduce errors.
Sovos is a blend of technology and human expertise so we work closely with the compliance team who ensure reporting is accurate and compliant across all the tax authorities our customers file IPT in.
Our aim is to automate and integrate as much of the filing process as possible from data submission to receiving funds and submitting to the tax authorities to ensure we don’t miss any tax return dates and avoid late fees.
How are you using the latest technology to improve Sovos customers’ experience?
This probably ties into the work we’re doing on the IPT Portal. We’re trying to make everything more transparent so customers can see everything in one place including the status of their tax returns.
We’ve also introduced APIs as well, so customers can send us a file straight from their system, it’s a lot less hassle for them. We’re always focused on making it easier for customers to send us their data and providing as many options as possible to do this.
How have you seen the technology change since you joined Sovos? What has had the biggest impact?
I think the biggest impact has been the IPT Portal. When I started, much of the reporting processes were still paper based which meant a lot of sifting through paper tax return documents for the compliance team ahead of filing.
So having the IPT portal with all the documents that used to be printed out in one place, where clients can view everything online, has been the biggest change and one that our customers and our compliance team value, especially over the past year when companies have had to adapt to working remotely and not having as easy access to resources in the office.
What particularly excites you about future tax technology?
I think it’s the move towards a more connected reporting processes, joining all these disparate elements of tax returns to make the IPT reporting and filing process even easier and far less error-prone. As certain elements still require some manual input there’s still opportunities for mistakes so eliminating this concern altogether and making it a simple process from initial upload to submission to the tax authorities is really exciting.
Automated returns are becoming more prevalent and we’re in the process of working on these for Germany, France and Hungary so when I say future it’s actually already happening which is very exciting.
The introduction of the new Portuguese Stamp Duty system has arguably been one of the most extensive changes within IPT reporting in 2021 even though the latest reporting system wasn’t accompanied by any changes to the tax rate structure.
The new reporting requirements were initially scheduled to start with January 2020 returns. However this was postponed until April 2020 and once again until January 2021 due to the COVID-19 pandemic.
How does this affect reporting?
In addition to the information currently requested, mandatory information required for successful submission of the returns now includes:
Territoriality: The precise location the risk has been issued from (i.e., within or outside Portugal)</
Insured Name (Tax ID): The policyholder’s tax ID</
Insured Country Code: The policyholder’s country code to which the tax ID resides
Location of the risk insured in Portugal: The postcode to which the contract relates to, due to the requirement by the Portuguese authorities to file Stamp Duty on a provincial level, or at least whether the risk is located in Mainland Portugal, Azores, or Madeira.
Lessons learned and how Sovos helps you adapt
Our reporting systems have evolved to help customers meet these new requirements.
For example, our technical department have built a formula that confirms a valid ID to ease data validation and reporting. Consequently, a sense check was built within our systems to determine whether an ID is valid.
With the recent change in the treatment of negative Stamp Duty lines, we’ve also changed our calculations to account for two contrasting methods of treating negatives within our systems.
Previously, both the Portuguese Stamp Duty and parafiscal authorities held identical requirements for the submission of negative lines. However, the introduction of the more complex Stamp Duty reporting system called for amendments to the initial declaration of the policy.
Understandably, this new requirement is a more judicious approach towards tax reporting and will likely be introduced within more tax systems in the future.
Looking ahead
As with any new reporting system, changes within your monthly procedures are necessary. Our IPT compliance processes and software are updated as and when regulatory changes occur providing peace of mind for our customers.
And with each new reporting system, we learn more and more about how tax authorities around the world are trying to enter the digital age with more streamlined practices, knowledge and insight to increase efficiency and close the tax gap.
Take Action
Contact our experts for help with your Portugal Stamp Duty reporting requirements.
As our webinar explored in depth, location of risk rules are complex and constantly evolving.
The Sovos compliance team covered many topics on the session, such as sources for identification of the location of risk and location of risk vs location of the policyholder.
Despite this deep dive, there were plenty of questions that we didn’t have time to answer. As was the case with our IPT Changes in Europe 2021: Your Questions Answered blog, we’ve provided answers to these questions in this blog.
General Liability policies
Is there a case for a General Liability policy where the activity is held in Spain and the policyholder is in France?
Where the coverage doesn’t relate to property, vehicles or travel risks then it will be dealt with by the “catch-all” provision in article (13)(13)(d). As a result, assuming that the policyholder is a legal person in this scenario, it will be the policyholder’s establishment that determines the contract. Based on the limited information provided with this question, it seems that the policyholder’s only establishment here is in France, in which case the location of risk would be in France.
UK and Brexit
If you have a risk located in EU with a local EU policy, can the premium be paid by the entity of the company in UK?
The entity within a policyholder’s group that pays the premium to the insurer doesn’t have a bearing on the location of risk for IPT purposes.
Do the location of risk rules in the UK still follow those used in the EU following Brexit, and could a UK-based policyholder declare the tax instead of the insurer?
The location of risk rules haven’t changed in the UK following Brexit and, as such, the rules remain the same as is seen in Solvency II with each of the different four categories of risk.
For declarations made by UK-based policyholders, although there are provisions in the UK legislation allowing for the tax authority to pursue policyholders in certain circumstances, these are intended as a last resort when they’ve been unable to recover IPT from an insurer and there are no relevant agreements between the UK and the insurer’s country of establishment that enable the issue to be resolved.
The general rule remains therefore that the insurer should declare the tax, assuming they’re still authorised in the territory.
Germany
Could there be double taxation caused by the new approach in Germany towards group contracts?
Based on the natural interpretation of the new German legislation and, specifically, the Ordinance for its implementation, we see there is the potential for double taxation.
In particular, if there is the potential for double taxation within the EU then this would make it considerably more controversial. We could see this in the case of a policyholder based in a Member State other than Germany and an insured person based in Germany.
Double taxation across EU Member States would be inconsistent with EU law. As mentioned, we’ll closely monitor developments to see how group contracts are treated in practice and whether the position in the new legislation is challenged at EU level in the future.
I understand the German authorities may be issuing further guidance on whether non-EEA subsidiaries of a German policyholder do create an establishment for IPT purposes if a policy written by an EEA insurer covers them alongside the German policyholder, as the amended law from December last year only mentions that non-EEA branches would be caught in the net and subject to double taxation. Up to now, the guidance seems to have been that the answer is yes, but that the Ministry of Finance may be rethinking this. Have you heard anything on this point?
We’re continuing to monitor developments in this area. Most recently, the issue is considered in the guidance issued by the Ministry of Finance on 4 March 2021, as mentioned in our webinar. As is always the case, we’ll ensure that our customers are informed of any updates as they happen.
Malta
If vehicles in Malta only include motor vehicles, how do you determine the location of risk for ships and aeroplanes?
This would be another example of when article 13(13)(d) can be used. As a result, it would be either the policyholder’s establishment to which the contract relates (assuming it’s being insured by a legal person) or the habitual residence of the policyholder (if it’s being insured by an individual). This could be the same country as where it’s registered but it may not be.
Treatment of fire charges is tricky in almost all jurisdictions. Fire coverage can vary from as high as 100% to 20%.
No-one would dispute that the most complex fire charge treatment is in Spain. In Portugal, whilst the rules are less complex, they have a unique reporting system for how the policies covering fire must be reported.
How Portuguese Fire Brigade Tax reporting is unique
The Portuguese Fire Brigade Tax (FBT), otherwise known as National Authority for Civil Protection Fire Brigade Charge or ANPC (Autoridade Nacional de Proteção Civil), is due on certain policies covering fire risks. Such policies can be mapped as Class 3-13.
The tax rate is 13%, but usually the fire coverage is set at 30%, so the applied rate is only 3.9%. As per market practice, if the fire proportion is not separately identified in the policy, then 30% fire proportion is assumed. ANPC is settled to the ASF (Autoridade de Supervisão de Seguros e Fundos de Pensões), the body that administrates parafiscal taxes in Portugal, on a monthly basis together with the other parafiscal taxes such as INEM (medical emergencies). There is currently no speciality in the regulation.
The unique feature of the Portuguese fire tax is the five yearly reporting requirement. This five yearly report was last due in 2016 and will be due again in 2021. The report requires insurers to prepare a summary which lists total ANPC or Fire taxes paid in respect of the year when it’s due. So although the report itself is due every five years, the reportable policies are limited only to the policies subject to ANPC in that reporting year.
Another unique feature of this reporting is that although all insurers are subject to settle ANPC liabilities monthly, not all insurers are necessarily obliged to submit this report. ASF informs the insurance companies who are required to submit this report.
How to report Portugal’s Fire Brigade Tax
Reporting is biannual. In 2016 the first semester data (01-01-2016 to 30-06-2016) was due to be reported by 31 August 2016 and the second semester data (01-07-2016 to 31-12-2016) was due by 28 February 2017.
In 2016, when this report was last due, ASF issued an official circular about the reporting requirements. A template has been published to provide help for insurance companies to fulfil their obligations.
In 2016 the report requested a total of the ANPC charges per county and per district. That included more than 300 districts. As yet, we’ve not seen a circular about the requirements for 2021, so we’re in contact with ASF to find out if the report is still due and if yes, the requirements and when the notifications will be sent to the insurance companies.
We hope the complexity of this reporting hasn’t been further increased by the ASF. This unique reporting is time consuming for insurance companies and looking at the global trends in reporting requirements we expect the FBT report will still be due this year.
Meet the Expert is our series of blogs where we share more about the team behind our innovative software and managed services. As a global organisation with indirect tax experts across all regions, our dedicated team are often the first to know about new regulatory changes, ensuring you stay compliant.
We spoke to Christina Wilcox, Director of Customer Success, EMEA at Sovos to find out more about the role her team has in delivering an excellent service to customers.
What is your role and what does it involve?
I manage the customer success team for the EMEA region. It’s a relatively new team having started in November last year. Before this role I was part of the Insurance Premium Tax (IPT) team. Our Senior Customer Success Manager, Roberta Folta, worked in the VAT side of our business. So together we have key areas of indirect tax covered. We understand both the market and the key priorities and challenges our customers face.
This is key to helping us make sure our customers get the best value from Sovos across the board. From our consultancy and managed services to our VAT and IPT compliance software. We proactively reach out to customers and then apply their feedback. So we’re always aligned and can improving our service offering to meet their changing needs.
Why is the customer success team an important part of Sovos?
Providing a personal approach and excellent customer service has always been important for us as a company; the customers who have been with us for over a decade are testament to that.
Having a dedicated customer success team gives us the opportunity to continue to connect with our customers from the moment they sign their contract, as well as strengthening the relationships we have with existing customers.
As a separate department this enables our software and services teams to focus on delivering the wide range of offerings we’re known for. The Customer Success team acts as the friendly face that’s always here to help.
For example, software customers don’t have the need to interact with us as much as our managed service customers. So we can focus on providing regular check-ins and see if there’s anything they need help with. We can check if there are additional services we can provide such as further training.
The team also helps with onboarding new customers. We make sure they understand all the services and solutions available to them as a Sovos customer. Our focus is on creating long-standing and strong customer relationships; being approachable and proactive to any potential concerns or questions that could arise.
What is the most common feedback you get from customers?
Customers are always impressed with our managed service offering. People are very happy with the service our compliance teams provide to ensure tax returns are filed correctly and on time. They recognise the benefit of having access to our knowledgeable team of in-house tax experts. Being a global company, we’ve got experience of mandates in other parts of the world. So we can really help customers prepare for the shift to real-time reporting. This is prevalent across Latin America and now spreading throughout Europe and other parts of the world where our customers operate.
We also get great reviews on how intuitive and user friendly our software is.
Customers refer to us as their tax gurus. I think reflects our global knowledge and experience which we pass on through our monthly newsletters, blogs, and regular webinars on everything relating to the world of VAT and IPT.
The feedback we receive from customers, good or bad, helps us continue to meet their needs by being incorporated into planning for future developments.
We’re very much looking forward to the future and speaking with more of our customers to help build the best service offering we can.
Take Action
Have a tax problem you need help with? Speak to our experts to see how Sovos can help you solve tax for good.
There are a variety of different approaches to Insurance Premium Tax (IPT) treatment for marine insurance across Europe. Before looking at how individual countries treat marine insurance, it is worth noting the challenges in determining the country entitled to levy IPT and any associated charges.
The location of risk relating to marine vessels falls within article 13(13)(b) of the Solvency II Directive. This outlines that in the case of ‘vehicles of any type’ the risk location is the ‘Member State of registration’. There is no definition provided for ‘vehicles of any type’. So there is some uncertainty as to whether this is limited to land motor vehicles or whether it extends to marine vessels and aircraft. Most EU jurisdictions adopt the latter, broader approach, but Malta limits it to motor vehicles.
Marine Insurance IPT Across Europe
Additionally, the German tax authority has been known to rely on a 2017 decision made by the Cologne Fiscal Court to levy IPT in circumstances where a P&I club member had a registered office in Germany, but no ship was registered there. This raises the possibility of double taxation. This is with IPT potentially levied in both Germany and the country of the registration of the vessel. The Law on the Modernisation of Insurance Tax passed in December last year.
Once an insurer has navigated the choppy waters of the location of risk rules, regimes across Europe vary considerably. Marine insurance is a class of business that sees a number of IPT exemptions. Some countries like Bulgaria and Ireland offer fairly broad exemptions for damage and loss to marine vessels.
Other countries adopt a more nuanced approach in distinguishing between commercial vessels and pleasure craft. Belgium offers an exemption in the case of the former, whereas they levy IPT as normal in the case of the latter. A similar distinction exists in France between vessels conducting commercial activities and those operating for pleasure.
Germany has a reduced IPT rate of 3% in relation to marine hull. Where the ship exclusively serves commercial purposes and has insurance against perils of the sea.
Denmark has an exemption for its tax on non-life insurance, but it does impose a separate tax on pleasure boats. Denmark calculates on the sum insured of the vessels themselves.
Reduced Rate Extension
One final point of note is the extension of the regime for the reduced rate, like that in the Portuguese territory of Madeira, in April. The extension lasts until the end of this year at least. The European Commission has extended the State aid initiative which gave rise to the reduction until 31 December 2023, so it may be that this will be reflected in Portuguese legislation in due course.
It’s essential for insurers to understand the tricky location of risk rules associated with marine insurance. In addition to the various approaches taken by different countries in Europe. This ensures companies pay the correct amount of Marine Insurance Tax to the correct administration.
Take Action
Get in touch to discuss your marine insurance requirements with our IPT experts.
INFOGRAPHIC, PRODUCT BROCHURE
IPT compliance – taking care of the detail so you don’t have to
Insurance premium tax (IPT) is a complex thing to deal with. Get it wrong and the implications can be problematic.
At Sovos we take care of the detail, giving you the complete peace of mind you need. We are compliance specialists and we solve tax for good. IPT is one of our specialisms, so we know it well. We’ve been in it from the start and, as a result, many of the world’s largest insurers trust us with their IPT compliance business.
As regulations change and become more complicated throughout Europe, you need the certainty that you can trade effectively and without problems. That’s what we provide. Our team of tax compliance specialists cover over 100 countries and know the ins and outs of each jurisdiction. It’s this depth and accuracy of knowledge that ensures you have the right level of compliance, are only paying what you need to pay, while having the latest information to always keep you aware of changes and stay ahead of the curve.
Compliance peace of mind
Our leading software gives you the freedom to achieve this yourself. It integrates seamlessly into your existing system and is easy to use. Simplify the preparation of IPT and parafiscal returns and use accurate, real-time rates and calculations to help you reduce both the amount of errors and reprocessing needed.
Or, if you prefer, we can manage it all for you, from registration through to fiscal representation. Either way, we’re always here for you to make the process simple and smooth no matter what the future holds. And because our team works together in the same location and knows how different tax authorities prefer to operate, you can be sure that whether you’re trading in a new jurisdiction, or across multiple different jurisdictions, the process will be fast and free from any niggles, big or small.
We’re a market leader for IPT compliance in Europe with award winning solutions.
IPT Determination – calculate and apply global IPT rates at quotation
IPT Reporting – generate returns needed for IPT compliance on a global basis
Full managed service solution
Fiscal representation
Consultancy
Bespoke approach to meet your changing business needs
Trusted by Fortune 500 companies
We actively work with 80% of insurers across Europe including many of the top 100 UK insurers, FTSE Eurotop 100, in addition to Fortune Global 500 companies.
As the challenges and complexities of IPT compliance continue to rise, more companies are realising the benefits of taking both a holistic and global approach. Sovos was built to solve the complexities of the digital transformation of tax with complete connected offerings for tax determination, and tax reporting and more.
IPT in Spain is complex. Navigating the country’s requirements and ensuring compliance can feel a difficult task.
Sovos has developed this guide to answer prominent and pressing questions to help your understanding of Insurance Premium Tax in the country. Originally created following a Spain IPT webinar we hosted, the guide contains questions asked by industry insiders and answered by legislative experts.
What is the IPT rate in Spain
The current IPT rate in Spain is 8%, as of 2022 and is applied to all classes of insurance, with some exemptions. Classes exempt from IPT include life, health, reinsurance, group pensions, export credit, suretyship, goods and passengers in international transit, agricultural risks, aviation and marine hull insurance.
What makes Insurance Premium Tax in Spain challenging?
The most challenging aspect is correctly submitting to the five different tax authorities: Alava, Guipuzkoa, Navarra, Statal and Vizcaya.
What is the Basis of Spanish IPT Calculation?
The basis of the IPT calculation is the total amount of the premium payable by the insured, excluding funds for the insurance of extraordinary risks and fire brigade tax. Companies must show the tax in addition to the premium.
Spanish IPT Liability
The insurer is liable for calculating and paying the tax. EEA insurers operating under the Freedom of Service regime must appoint a fiscal representative in Spain.
Is all health insurance exempt from IPT in Spain?
Health and sickness insurance is exempt from IPT in Spain, under Article 5 of the IPT law. However, this doesn’t include Accident cover which should be taxable at 8%.
International insurance risks belong to the exemptions. Is this also true for international freight forwarder liability insurance? And for international marine cargo insurance?
Article 5 of the IPT law provides an exemption for “insurance operations related to ships or aircraft that are destined for international transport, except for those that carry out navigation or private recreational aviation”.
Under Act 22 of Law 37/1992 (VAT Law), “international transport is considered to be that which takes place within the country and ends at a point located in a port, airport or border area for immediate dispatch outside the Spanish mainland and the Balearic Islands”.
Therefore, we understand insurance, such as freight forwarder liability and marine cargo, gain the IPT exemption, to the extent they relate to international transport.
I’m preparing CCS monthly reporting manually in Excel. Is there a Microsoft tool that can create the final report?
We’re unaware of any Microsoft tools to prepare the CCS file for monthly reporting. This file can be complex.
What is CLEA?
CLEA is the surcharge to fund the winding-up activity of insurance undertakings. It was included in the Modelo 50 CCS and is due for all insurance contracts signed on risks in Spain. This excludes life insurance and export credit insurance on behalf of or with the support of the State.
The type of surcharge destined to finance the winding-up activity of insurance companies is made up of 0.15% of the premiums above.
Do insurers have to be registered in all the provinces in Spain?
All insurers should register in the provinces where the location of risk is. It is a compliant requirement because insurers must declare premium taxes to the correct tax authorities according to the location of risk.
Policies can be submitted monthly to Consorcio even if the postcode is wrong. How should we proceed in the future for Insurance Premium Tax in Spain?
The postcode is compulsory data that must be sent to the Consorcio monthly, as the CCS needs to know the Location of the risk for each policy subscribed in Spain.
The Fire Brigade Charge (FBC) annual reports are also submitted through the CCS portal. The postcode is a compulsory field that helps the different Councils identify the policies that were subscribed in their territories and collect their portion of FBC accordingly.
When reporting Consorcio liabilities in Spain, should the lead insurer declare on behalf of its co-insurers?
Insurers can elect to declare only their share of the co-insurance agreement, should that be the agreement amongst the insurers that are party to the contract.
Where Consorcio cannot recover an outstanding sum from a co-insurer, it will likely hold the lead insurer accountable for that amount. Alternatively, the lead insurer can pay the surcharges for all fellow insurers. So there is, to some extent, an element of discretion by the relevant insurers.
Is there a list or explanation of each movement and declaration type to report to Consorcio?
We’re able to provide this to our customers upon request. Get in touch with our IPT experts for support.
More Questions about Insurance Premium Tax in Spain?
It’s difficult to pinpoint exactly when new taxes or tax rate increases will happen. Covid-19 has impacted almost everything, including a massive deficit in the economy. Many banks have applied negative interest and governments have put funding in place to aid recovery. It’s highly likely that tax authorities will be looking at ways to bring in additional funding, including Insurance Premium Tax (IPT) rate increases.
Europe’s IPT rate increases
Some of the steepest increases across Europe can be recognised not as an instant from one rate to another but a gradual incline.
The Dutch IPT regime is one of the highest rates across Europe, currently at 21%. Until 2008, the IPT rate was 7% and raised in various stages, finally settling at 21% in 2013. An increase of 14% in a five-year period!
Why the sudden rate increase? Was it because the Dutch tax authorities realised theirs was one of the lowest rates in Europe? Was it due to the economic climate at the time to gain extra revenue? Or was it because tax authorities were beginning to realise IPT was becoming a more recognised tax?
The Netherland’s isn’t the only country to have experienced a dramatic IPT rate increase over a short period of time.
HMRC, the UK tax authority, has also taken the opportunity to implement more rigorous increases, especially with their standard rate. In 2011, the rate increased to 6%, increasing at various intervals until stabilising at 12% in 2017. The rate doubled in a five-year period!
The similarity between the two territories and the way they have increased their rates is uncanny. The five-year structure of rate changes either by 1 or 2%, ultimately reaching much higher rates than initially expected in the market. Looking back at the economy during the time of the increase, Europe was beginning to recover from a recession that hit most territories hard with rising interest rates on loans and mortgages and increased unemployment.
There are changes in the market now that could influence IPT rates. Many insurance companies have increased the scope of insurances offered. Classes of business are more varied and premiums quoted are higher. Emphasis is on ensuring the invoicing is correct with the insurer versus carefully considering insured taxes.
What’s Next?
Many territories now require more granular detail for submissions. Will this trigger more audits? Will it cause more tax authorities to analyse this information to enforce their penalty regimes? Or will there be a number of rate increases across the board? Increases could begin at 1 or 2% and follow the trend of five years as set out above. Either way, there is a financial gap which will need to be filled.
We’ll be keeping a close eye on the latest Insurance Premium Tax rate updates to see how tax authorities respond to this current economic climate.
Insurance Premium Tax (IPT) in Spain is tricky. There are national and regional tax authorities. Let’s not forget numerous IPT variations. Compliance requires in-depth and far-reaching knowledge – mountains of which have been added to our ebook.
We’re here to help. The Sovos IPT team has created this ebook to help explain the rates, exemptions, settlements and penalties.
Use this practical guide to stay on the right side of risk.
Understand IPT in Spain on a macro and micro level
Minimise compliance and business risk
Written by IPT experts who know Spain top to bottom
Download now to navigate the nuanced IPT landscape in Spain, no matter where your company is based within the country or from afar.
As well as IPT on a national and regional level, it breaks down the fundamental components of the Consorcio de Compensación de Seguros (CCS) and the Fire Brigade Tax.
Overview of IPT
IPT rates and exemptions, challenges, settlement and penalty regime
Overview of the CCS
CCS rates and exemptions, challenges, settlement and penalty regime
Overview of Fire Brigade Tax (FBT)
FBT rates and exemptions, challenges and settlement
IPT is complex and failing to comply can have serious implications.
At Sovos, we focus on the details to provide you with peace of mind. We’re global tax compliance specialists. Our team of regulatory specialists monitor and interpret regulations around the world, so you don’t have to.
From understanding and meeting the demands of national IPT regulations to delivering dedicated fiscal representation and payment solutions, our business is in helping your business meet its specific regulatory requirements.
Sovos is a market leader for IPT compliance in Europe, filing up to 30,000 tax returns annually valued at €600m+ for our insurance clients. We do this in over 100 countries and 19,000+ jurisdictions around the world.
Ease your IPT compliance burden
Whether it’s meeting the demands of specific country IPT declarations or providing dedicated fiscal representation and payment solutions, our combined approach of people, skills and software can help you stay ahead of the constantly changing filing requirements.
Navigating Location of Risk can be quite daunting. This ebook is your compass, helping you sail smoothly to IPT compliance. With use cases and examples to follow, this ebook will help you successfully navigate one of the more complex elements of insurance premium tax.
This ebook will help you navigate Location of Risk and the rules that apply in the 27 member countries of the European Union (EU), the European Economic Area (EEA) and the UK.
It guides you through the countries where the rules apply, the legal framework that prompted the rules, examples of the criteria used to determine Location of Risk, local implementations that differ from the norm and how premium allocation works in practice.
Geopolitical background
Legal framework
Solvency II Directive 2009/138/EC, Article 13(13) including examples of the four criteria to determine Location of Risk
Solvency II Directive 2009/138/EC, Article 157(1)
Local implementation of Location of Risk rules – Switzerland, Liechtenstein, United Kingdom and Germany
Following the Solvency II Directive 2009/138/EC, Article 13(13) enables insurers to identify the correct Location of Risk. This directive, amongst other things, defines the four criteria to determine which territory the risk is deemed to be located in and where it should be taxed.
After identifying Location of Risk, Solvency II Directive 2009/138/EC, Article 157(1) outlines that the Member State can tax that premium.
Consider these three points when determining Location of Risk:
1
IPT is not harmonised
Consider local IPT law when determining Location of Risk
2
Risk determines the criterion
Assess the risk to know what criterion to use: e.g. property, vehicle, holiday or travel, other
3
Non-EU / EEA region
Local rules typically differ from EU/EEA Location of Risk rules
If you need more information, use our chat box to chat with our experts right away.
IPT is complex and getting it wrong can have serious implications.
At Sovos, we take care of the detail, giving you the peace of mind you need. We’re global tax compliance specialists and we solve tax for good. Our team of regulatory specialists monitor and interpret regulations around the world, so you don’t have to.
Whether it’s meeting the demands of specific country insurance premium tax declarations or providing dedicated fiscal representation and payment solutions: easing your IPT compliance burden is our business.
Sovos is a market leader for IPT compliance in Europe filing up to 30,000 tax returns annually valued at €600m+ for our insurance clients. We do this in over 100 countries and 19,000+ jurisdictions around the world.
Whether it’s meeting the demands of specific country IPT declarations or providing dedicated fiscal representation and payment solutions, our combined approach of people, skills and software can help you stay ahead of the constantly changing filing requirements.
