Update: 9 March 2023 by Hector Fernandez
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?
Watch our webinar, IPT: Spotlight on Spain for a deep dive into Spain’s CCS
Learn how to navigate the complex region with our ebook, Is IPT simplicity in Spain possible?
Read our blog to understand the more challenging aspects of IPT reporting in Spain
Need immediate help for IPT in Spain?
Our team of tax experts are ready to help. Get in touch today. For more information about IPT read our free guide to Insurance Premium Tax. For an overview about other VAT-related requirements in Spain read this comprehensive page about VAT compliance in Spain.
