Latest IPT increases and exemptions – TMF Group

The latest changes to insurance premium taxes (IPT) and other taxes and charges affecting global insurance programmes have been highlighted by TMF Group.

France – TSA exceptional contribution
The French Social Security Budget for 2021 introduced a new exceptional contribution, due alongside the TSA. The new contribution, although temporary, has been introduced with retroactive effect and is due on most French health insurance premiums collected from 1 January 2020 onwards. The rate of the TSA exceptional contribution is 2.6% for the year 2020 and 1.3% for 2021. This temporary contribution is intended to raise an additional €1.5bn to fund additional healthcare costs arising from Covid-19.

France – New IPT exemption for electric vehicles introduced
The French 2021 Finance Bill (Law No. 2020-1721 of December 29, 2020) introduced an IPT exemption for insurance of land motor vehicles solely powered by electricity and which are registered on or after 1 January 2021. The exemption applies to risks of any kind related to the vehicle. The exemption is a temporary measure and is due to come to an end on 31 December 2023.

Spain – IPT rate increase
The 2021 General State Budget of Spain increased the IPT rate from 6% to 8%, effective from 1 January 2021. This is first change in the rate of Spanish IPT for 23 years and only the second time the rate has ever increased.

Denmark – Reduction to the Flood Damage Levy from July 2021
The Stoåmrådet has announced a reduction to the Flood Damage Levy, which currently applies at DKK60 per taxable policy. The storm surge and flood pool now exceeds its funding goal of DKK500m, and as a consequence the new levy amount will be set at DKK40 per taxable policy. The new rate will apply to insurance policies with a first premium charged on or after 1 July 2021.

Italy – RAVF and HAVF rates set for 2021
The Road Accident Victims Fund (RAVF) and the Hunting Accident Victims Fund (HAVF) contribution rates for the year 2021 are set at 2.5% and 10%, respectively (Decree 28th December 2020, published on 4 January 2021). The method of calculation requires prescribed management costs to be deducted from the premium collected before calculating the contribution. Ordinance No. 104 issued by IVASS sets the management costs for 2021 at 4.07% of premium collected. Therefore, the effective rate of contribution for 2021 to the RAVF is 2.398% and to the HAVF is 9.593%. The new effective rates take effect from 1 January 2021.

Canada – Yukon Territory – IPT
The 2020/2021 Yukon Budget announced an increase to the rate of IPT. From 1 January 2021, the rate is 4%, increased from the previous 2%. For insurance policies covering fire, which are subject to an extra 1% fire premium tax, the effective rate has therefore increased from 3% to 5%.

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