The Complexity of Insurance Premium Tax Compliance in Spain: Your Questions Answered

Sovos
May 27, 2021

We hosted a webinar about Insurance Premium Tax (IPT) in Spain.

Topics covered included the Conscorcio reporting system, tips for effective and accurate compliance, the penalty regimes currently in place and the latest regulatory updates.

Although our expert team answered plenty of questions they didn’t have time for everyone. Here’s a helpful summary.

Is all health insurance exempt from IPT in Spain?

We understand that health and sickness insurance are exempt from IPT in Spain. For completeness, this doesn’t include Accident cover, which should be taxable at 8%. Article 5 of the IPT law provides for the exemption.

You mentioned that 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”. Two pieces of case law (1073-00 (09/05/2000) and V1233-03 (13/06/2008)) provide further details on the exemption.

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”. We therefore 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 on a monthly basis manually in Excel. Is there a Microsoft tool that can create the final report?

We’re not aware of any Microsoft tools that can prepare the CCS file for monthly reporting. This file can be complex. For our customers we use our proprietary software to generate the relevant file from an Excel input template.

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, other than life insurance and export credit insurance on behalf of or with the support of the State.

The type of surcharge destined to finance winding-up activity of insurance companies is made up by 0.15% of the aforementioned premiums.

Do insurers have to be registered in all the provinces in Spain?

We understand all insurers should register in the provinces where they have risks located. This is a compliant requirement because insurers need to declare premium taxes to the correct tax authorities according to the location of risk.

I understand you can submit monthly policies to Consorcio even if the postcode is wrong. How should we proceed in the future?

The postcode in addition to the correct address where the risk is based are very important. Spanish law states that businesses must declare the premium tax according to the location of the risk. Sometimes, non-domestic insurers provide the location of risk based in Spain using the address of the insured. For example, a German insurer who issues a policy insuring a house in Spain, should provide the address and postcode of the house in Spain.

If we don’t have this data for the monthly submission we will need, in the future, to declare the Fire Brigade charge report. The CCS system will reject a report with an incorrect postcode as a result.

When reporting Consorcio liabilities, 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, however, it’s likely that it will hold the lead insurer accountable for that amount. Alternatively, the lead insurer can pay the surcharges on behalf of all follow 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.

Take Action

Still have questions about IPT in Spain? Contact our experts or watch our recent webinar, The Complexity of Insurance Premium Tax in Spain

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Author

Sovos

Sovos was built to solve the complexities of the digital transformation of tax, with complete, connected offerings for tax determination, continuous transaction controls, tax reporting and more. Sovos customers include half the Fortune 500, as well as businesses of every size operating in more than 70 countries. The company’s SaaS products and proprietary Sovos S1 Platform integrate with a wide variety of business applications and government compliance processes. Sovos has employees throughout the Americas and Europe, and is owned by Hg and TA Associates.
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