A new year brings a raft of Insurance Premium Tax (IPT) rate changes and other new developments affecting insurance companies writing cross-border business in the EEA.
Following are the major rate changes in the European Economic Area, and a little more background for insurers.
Two of the Consap (Concessionaria Servizi Assicurativi Pubblici S.P.A) contributions have had their annual rate changes finalised. The deduction of the taxable amount has been fixed by the Instituto Per La Vigilanza Sulle Assicurazioni (IVASS) at 3.6%, down from 4.4%. This means the tax base for the Road Accident Victims Fund (RAVF) and Hunting Accident Victims Fund (HAVF) is now 96.4% of premium.
The effective RAVF contribution has therefore increased from 2.39% to 2.41% as of 1 January 2016, and the effective HAVF contribution increased from 4.78% to 4.82% on the same date. We would expect the contributions to change once again in 12 months’ time.
As of 1 January 2016, the percentage of the INAMI ‘Risk Accident’ contribution - due on coverage of Accidents at Work - has changed from 4.19% to 3.81%. The insurer contribution is still 0.06%, meaning that the insured contribution will now be 3.75%.
The way Health and Motor insurance is taxed changed on 1 January 2016. We examined the changes in detail last year in this article, but to summarise:
- The Social Security Contribution for Motor business has been abolished, and the tax rate has been incorporated into the main IPT return
- IPT on Health business has been abolished, and the rates have been incorporated into the Health Social Security Contribution
The Contribution to the Common Fund for the Victims of Terrorism has increased from €3.30 per contract (the rate set in January 2004) to €4.30 per contract. This was formalised under the Ministerial Decree on 30 October 2015. As this is a fixed fee on a per-contract basis, the Fonds de Garantie will not expect the old rate to be applied on returns for 2016.
As announced during the 2016 French Budget, the IPT rate on Legal Expenses increased from 11.6% to 12.5% from 1 January 2016. This has now been confirmed in Section 1001 of the French Tax Code. As with the increase from 9% to 11.6% in January 2015, there are certain types of contract that fall outside the scope of the increase; those contracts remain unchanged. Note that a further increase was announced - to 13.4% - as of 1 January 2017.
It is now compulsory for non-resident European insurance companies to pay their IPT liabilities by Direct Debit. Insurers need to provide the French authorities with their bank account details in order to arrange this. The monthly tax liability will be taken on or after the 15th of each month, tying in with the current IPT deadline. It is worth noting that it is not necessary to have a French bank account to fulfil this obligation. TMF Group is making the necessary arrangements on behalf of our clients.
There has been some talk of a new 3% tax on Motor Liability premiums in Luxembourg. Unfortunately at time of writing, no official details have been published. TMF Group will monitor the situation and inform our clients as and when this information is made public.
It is not beyond the realms of possibility that additional changes will be announced in the near future – recent history suggests that some changes to IPT regimes in Europe can be formally announced after the event. TMF Group’s IPT Quote software remains the most up to date resource for insurance taxes around the globe, and our team are constantly monitoring rate updates and budgets to provide our clients with access to the latest information.
Got questions? Get in touch with our IPT experts.
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